How does the central state affect public goods provision by local actors? I study the effect of state capacity on local governance in sub-Saharan Africa, which I argue depends on whether traditional authorities are integrated in the country’s constitution. I use distance to administrative headquarters as a measure of state capacity and estimate a regression discontinuity design around administrative boundaries. If traditional authorities are not integrated, then the state and traditional authorities compete with each other, working as substitutes. That is, a stronger state undermines the power of traditional authorities. If traditional authorities are integrated, then the two work as complements. A stronger state then increases the power of traditional authorities. I show that these relationships are crucial to understanding the influence of state capacity on local economic development.
Despite the past centuries' economic setbacks and challenges, are there reasons for optimism about Africa's economic prospects? We provide a conceptual framework and empirical evidence that show how the nature of African society has led to three sets of unrecognized "latent assets." First, success in African society is talent driven and Africa has experienced high levels of perceived and actual social mobility. A society where talented individuals rise to the top and optimism prevails is an excellent basis for entrepreneurship and innovation. Second, Africans, like westerners who built the world's most successful effective states, are highly skeptical of authority and attuned to the abuse of power. We argue that these attitudes can be a critical basis for building better institutions. Third, Africa is "cosmopolitan." Africans are the most multilingual people in the world, have high levels of religious tolerance, and are welcoming to strangers. The experience of navigating cultural and linguistic diversity sets Africans up for success in a globalized world.
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