Why Somalia is a failed state

I got an e-mail the other day advertising an event titled "Why States Fail." I immediately thought maybe, just maybe, this lecture could give me some insight on the case of Somalia. In the end, it actually did clarify a few things- sort of. It's expalantion was a theory based on political economies.

The lecturer was Daron Acemoglu from MIT. His thesis is that states fail when they do not have inclusive political and economic instititutions. Hence, to prevent states from failing, make sure these institutions are strong and inclusive, rather than extractive.

Inclusive institution allow for a more level playing field, rule of law and a broader coaltition of leaders, while extractive institutions have barriers to economic and political advancement for most of the population, except for the few that extract their money and power from the rest.

When a state has inclusive institutions, according to Acemoglu, a sufficient amount of the population has their interests met, and feel as though there is space for them in the current system to improve their condition, either financially or politically. Further, there is room for growth and development when institutions are inclusive because it enables the reallocation of benefits and creative destruction- changing those institutions or practices that are no longer moving the nation forward. When institutions are extractive, the amount of freedom to allow for creative destruction no longer exists, and nations are stagnant wherever the elite believe they can benefit and extract the most from the population. Inclusive institutions are therefore more favorable to growth and development.

How does this apply to Somalia?

Somalia, with its zero-sum political climate, certainly doesnt have inclusive political institutions. According to Acemoglu, however, nations that adopt inclusive economic institutions will more likely move in the direction of inclusive political instutions as more of the population is financially empowered. There are many factors that are invovled in this transition, and Acemoglu says a "lucky confluence of factors" must occur to enable nations to make such a transformative transition. I'd sure like to hear more about what that confluence entails.

Somalia has one of the worlds most open markets, and is therefore largely economically inclusive. The problem, however, is that there is insufficient rule of law and property rights that would enable more effective economic institutions and growth. Nevertheless, this research suggests that if the transitional Somali government increases the robustness of the already largely inclusive economic institutions, then the inclusive political instutions will more likely follow.

I'm not sure of the predictive power of this theory, but it certainly is a strategy the Somali government should look into as a means of stabilizing the country and enabling development in the long-term.