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Epub Institutional Repository ePubWU Institutional Repository Valentin Seidler Colonial Legacy and Institutional Development: The Cases of Botswana and Nigeria Thesis Original Citation: Seidler, Valentin (2011) Colonial Legacy and Institutional Development: The Cases of Botswana and Nigeria. Doctoral thesis, WU Vienna University of Economics and Business. This version is available at: https://epub.wu.ac.at/3169/ Available in ePubWU: August 2011 ePubWU, the institutional repository of the WU Vienna University of Economics and Business, is provided by the University Library and the IT-Services. The aim is to enable open access to the scholarly output of the WU. http://epub.wu.ac.at/ COLONIAL LEGACY AND INSTITUTIONAL DEVELOPMENT: THE CASES OF BOTSWANA AND NIGERIA Valentin Seidler Wirtschaftsuniversität Wien, 2011 Abstracts: The thesis aims to contribute to the question of the origins of efficient institutional arrangements, which are regarded essential for economic development and long-term economic growth. In Africa most institutional frameworks were established under colonial rule and then persisted to a large extent. In this sense colonialism offers a “natural experiment” - a phase in which European institutions were transferred to African countries. The thesis investigates the influence of colonial rule on the institutional development of two countries and former British colonies: Botswana and Nigeria. It applies a theoretical model of institutional legitimacy based on the theoretic work of Douglass North and Oliver Williamson. The case studies’ findings highlight the persistence of pre-colonial informal institutions grounded in cultural norms and beliefs of the local populations. In addition, pre- existing levels of urbanisation, constraints on political power and integration in colonial labour markets have been factors which influenced the transfer of European institutions. Die vorliegende Arbeit untersucht die Frage nach dem Ursprung von effizienten Institutionen, die als maßgeblich für langfristiges Wirtschaftswachstum angesehen werden. In Afrika wurde eine Vielzahl von europäischen Institutionen während der Kolonialzeit übernommen und nach der Unabhängigkeit beibehalten. In diesem Sinne bietet Kolonialism ein breites Untersuchungsfeld für institutionelle Entwicklung. Die Arbeit untersucht die institutionelle Entwicklung in zwei ehemaligen britischen Kolonien: Botswana und Nigeria. Sie bedient sich der Theorienschule der neuen institutionellen Ökonomie. Die Ergebnisse bekräftigen die Bedeutung von präkolonialen informellen Institutionen, die zumeist auf traditionelle kulturelle Normen zurückgehen. Darüberhinaus beeinflussten Urbanisierung, Beschränkung von politischer Macht und die Einbindung in koloniale Arbeitsmärkte die Entwicklung von effizienten ökonomischen Institutionen. Keywords: Institutional economics, economic history, colonialism, economic development, long-term economic growth, Botswana, Nigeria. 2 TABLE OF CONTENTS 1 INTRODUCTION ............................................................................................................... 8 1.1 Problem statement and aim of study ............................................................................ 8 1.2 Terms and definitions ................................................................................................ 10 1.2.1 Economic development and long-term economic growth .................................. 10 1.2.2 Institutions, transactions and economic development ........................................ 12 1.2.3 On institutions .................................................................................................... 14 1.3 State of the field ......................................................................................................... 23 1.3.1 How institutional economics help us explain economic underdevelopment ...... 23 1.3.2 Where do efficient institutions come from ......................................................... 24 1.3.3 Culture matters ................................................................................................... 25 1.3.4 Colonial legacy ................................................................................................... 26 1.3.5 Indicators and methodological weaknesses of current research ......................... 27 1.3.6 Building on the state of the field ........................................................................ 29 1.4 Building a conceptual framework .............................................................................. 31 1.4.1 The working hypothesis ..................................................................................... 31 1.4.2 The theoretical model ......................................................................................... 34 1.4.3 Research methodology and choice of country studies........................................ 39 2 BOTSWANA .................................................................................................................... 51 2.1 Introduction ................................................................................................................ 53 2.2 The record .................................................................................................................. 55 2.3 Pre-colonial institutions ............................................................................................. 61 2.3.1 Political institutions - constraints on rule, legitimacy of Rule and legal System62 2.3.2 Law and judiciary system ................................................................................... 66 3 2.3.3 Property rights: Cattle and land .......................................................................... 66 2.3.4 Markets ............................................................................................................... 67 2.3.5 Pre-colonial social institutions............................................................................ 69 2.3.6 Pre-colonial Tswana institutions – a short summary .......................................... 71 2.4 Institutions in the colonial period .............................................................................. 73 2.4.1 How the Bechuanaland Protectorate was created ............................................... 73 2.4.2 British rule .......................................................................................................... 74 2.4.3 General Effects on pre-colonial Tswana institutions .......................................... 77 2.4.4 Institutions in the colonial period – a short summary ........................................ 83 2.5 Institutions in post-colonial Botswana ....................................................................... 84 2.5.1 The way to independence ................................................................................... 84 2.5.2 Institutional development towards a modern state ............................................. 85 2.5.3 Political institutions ............................................................................................ 87 2.5.4 Property rights on land ....................................................................................... 91 2.6 Summary .................................................................................................................... 92 3 NIGERIA .......................................................................................................................... 95 3.1 Introduction ................................................................................................................ 95 3.2 The record .................................................................................................................. 98 3.3 Pre-colonial Bornu ................................................................................................... 108 3.4 Pre-colonial Kanuri institutions ............................................................................... 110 3.4.1 Political institutions in the 19 th century ............................................................ 110 3.4.2 Legal system and Islam .................................................................................... 115 3.4.3 Property rights of land ...................................................................................... 116 3.4.4 Economic institutions ....................................................................................... 117 3.4.5 Social factors influencing institutional development ....................................... 129 3.5 Institutions in the colonial period ............................................................................ 131 4 3.5.1 How colonial rule was established ................................................................... 131 3.5.2 Indirect rule....................................................................................................... 133 3.5.3 Important changes under colonial rule ............................................................. 135 3.5.4 Changes in Kanuri political institutions ........................................................... 136 3.5.5 Judiciary institutions: The dual system ............................................................ 140 3.5.6 Property rights of land ...................................................................................... 141 3.5.7 Market institutions ............................................................................................ 142 3.6 Post-colonial institutional development ..................................................................
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