Thailand, Ghana and the Military “Coup Trap”

Thailand, Ghana and the Military “Coup Trap”

By Benjamin M. Friedman | Monday, December 05, 2005

Only 25 years ago, per capita income in Asia and Africa was roughly the same. Fast forward to today. Asia enjoys relative political stability, while Africa’s history is marked by turmoil. Benjamin Friedman, author of “The Moral Consequences of Economic Growth,” looks at the high correlation between low per capita income and coups — and what this means for the wider world.

With all the problems that Africa faces in the world today, few people realize that the average per capita income throughout Africa was actually 25% greater than that in Asia in the middle of the 20th century.

Two decades ago, Thailand and Ghana had the same per capita income. Today, their economic paths have sharply diverged.

Since that time, however, most Asian economies grew more rapidly than African economies. As a result, by 1975, the income differential was 25% in the opposite direction — with people in developing Asia now earning more than their counterparts living in Africa.

Worse yet, per capita income in Africa as a whole stopped growing after 1980. By the century’s end, Asian incomes were on average more than two and a half times Africa’s.

Today, nearly one African in two lives on the equivalent of less than $2 per day — and in sub-Saharan African nearly 60% of all people do. And although Africa represents only one-seventh of the world’s population, the continent now accounts for almost half of those living in such dire poverty.

Thailand versus Ghana

Country-by-country comparisons make the difference between growth and stagnation all the more evident. Twenty-five years ago, the per capita income in Thailand and Ghana was virtually identical in each case, it was not quite one-tenth that of the United States after allowing for the American cost of living.

But since then, the two countries’ economic paths have diverged sharply. Thailand has successfully pursued a classic East Asian development pattern interrupted only by the region’s 1997-98 financial crisis — from which it subsequently made a substantial recovery.

By now, only 10% of the Thai economy is still agricultural, while 40% is industrialized and half is in the service sector. Thailand’s overall economic growth since 1975 — net of both inflation and population growth — has averaged 4.9% per annum.

A faltering economy

By contrast, Ghana has faltered both economically and politically. In 1957, Ghana became the first country in sub-Saharan Africa to gain independence during the modern post-colonial period.

Even in Asia, where incomes rarely fall and coups are more unusual, political instability is systematically related to both a low standard of living and weaker than normal economic growth.

At the same time, the country enjoyed the highest average income of any West African country — and one of the highest anywhere on the continent.

The economy was heavily dependent on exports of cocoa, however, and in the mid-1960s the world cocoa price fell sharply. Over the next decade, the country’s cocoa output fell by half — and its production of minerals, another key economic sector, fell by one-third.

Even so, for political reasons the Kwame Nkrumah government resisted domestic entrepreneurship and creation of new businesses. The coup that overthrew Nkrumah in 1966 turned out to be only the first in a series that brought the country five successive military governments over the next 15 years. Ghana’s first democratic transfer of power did not take place until 2000.

An agricultural economy

All the while, endemic corruption, periodic bouts of price inflation — sometimes greater than 100% per annum — and the burden of accumulating foreign debt continually thwarted attempts to advance economically.

Today, more than one-third of Ghana’s economic output is still agricultural. Although the economy overall has grown over the past quarter-century, the population has grown nearly as fast. Income per capita has risen at only 0.4% per annum since 1975.

Negative effects of low per capita income

The difference between a 4.5% growth rate and a 0.4% growth rate — cumulated over two and a half decades — matters enormously. Today, per capita income in Thailand is $7,500. In Ghana, the average income is only $2,200. Life expectancy in Ghana is shorter than in Thailand by nine years for men — and by 14 years for women.

One study found that each doubling of per capita income reduces the probability of a country’s experiencing a successful military coup between 40% and 70%.

Infant mortality in Ghana is more than double that in Thailand. In Ghana, only 64% of the country’s children receive even a primary education — while 90% do in Thailand.

Low per capita income negatively affects mortality rates, educational systems and political stability. Poverty, an inefficient health care system and other factors often contribute to violence and instability. But there is an additional dimension worth exploring that is often overlooked in discussions of developing economies. And yet, it has often played a crucial role — as it did in the cases of Thailand and Ghana.

Military analysts have often surmised that a poor economy is one of the essential ingredients for a successful coup — and the record of the post-World War II era proves them right.

The probability of a coup

Of course, there is an enormous variety of specific circumstances in different countries and of individual histories of stability or instability. However, a systematic overview shows that the probability of any country’s undergoing a coup depends on both the level and the recent growth of its average income.

One classic study found that each doubling of per capita income reduces the probability of a country’s experiencing a successful military coup between 40% and 70%, depending on the region of the world.

Political instabilities

In light of this strong relationship — together with the parallel tendency for political instability to depress economic growth — the authors suggested that unfortunate countries might fall into a “coup trap,” in which poverty fosters more coups.

Experience around the world is consistent, both with the idea that falling incomes create a fertile environment for coups and with the idea that political instability leads to poor economic performance.

Other forms of extreme political instability, such as attempted coups that do not succeed — in practice less than half do — or political assassinations and executions also occur far more frequently in countries with low per capita incomes.

But even apart from a low average level of income, the absence of economic growth is also a key ingredient for a successful coup. From the 1960s through the early 1980s, for example, there were 121 military coups or other comparable irregular political changes in conventionally recognized countries.

Another study showed that, on average, per capita income in the countries that experienced coups was falling by 1.4% in the years in which the coups occurred.

The coup trap

But incomes in these and other countries rose on average, coincidentally also by 1.4%, in years when their governments underwent major changes but by legitimate means, and rose even faster, by 2.7%, in years when countries experienced no major change in government.

As is the case for the “coup trap” based on a low level of income, the connection between successful coups and negative income growth is consistent both with the idea that falling incomes create a fertile environment for coups and with the idea that political instability leads to poor economic performance.

Effects of low standards of living

Among African countries, those that experienced coups saw their per capita income decline by an average 2.6%, in the years when the coups happened. African countries’ incomes declined by only 0.8% on average in years when governments underwent legitimate major changes — and rose by 1.9% in years when there were no major changes.

Ghana is an example of a country that was stuck in a “coup trap” — a vicious cycle in which poverty fosters political coups, which in turn fosters more poverty — and hence more coups.

Even in Asia, where incomes rarely fall and coups are more unusual — among the few examples are Burma in 1962, Thailand in 1971 and South Korea in 1979 — political instability is again systematically related to both a low standard of living and weaker than normal economic growth.

The average growth of per capita income in the Asian countries that have experienced coups, in the years in which the coups occurred, was 1% — far superior to the situation during coup years in Africa, but still disappointing by the standards of much of Asia during the post-World War II period.

By contrast, Asian countries’ average incomes rose by slightly more (1.4%) in years when major government changes occurred in legitimate ways, and by 3.5% in years when governments did not change. Similarly, among Asian countries, doubling the level of per capita income cut the probability of a successful coup by more than 50%.

Adapted from the book “The Moral Consequences of Economic Growth” by Benjamin Friedman, copyright © 2005. Reprinted by arrangement with Random House, Inc.

Source: The Globallist

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