“Why Nations Fail will change the way you look at—and understand—the world.”
Why have some countries prospered and created great living conditions for their citizens, while others have not? This is a topic I care a lot about, so I was eager to pick up a book recently on exactly this topic.
Why Nations Fail is easy to read, with lots of interesting historical stories about different countries. It makes an argument that is appealingly simple: countries with “inclusive” (rather than “extractive”) political and economic institutions are the ones that succeed and survive over the long term.
Ultimately, though, the book is a major disappointment. I found the authors’ analysis vague and simplistic. Beyond their “inclusive vs. extractive” view of political and economic institutions, they largely dismiss all other factors—history and logic notwithstanding. Important terms aren’t really defined, and they never explain how a country can move to have more “inclusive” institutions.
For example, the book goes back in history to talk about economic growth during Roman times. The problem with this is that before 800AD, the economy everywhere was based on sustenance farming. So the fact that various Roman government structures were more or less inclusive did not affect growth.
The authors demonstrate an oddly simplistic world view when they attribute the decline of Venice to a reduction in the inclusiveness of its institutions. The fact is, Venice declined because competition came along. The change in the inclusiveness of its institutions was more a response to that than the source of the problem. Even if Venice had managed to preserve the inclusiveness of their institutions, it would not have made up for their loss of the spice trade. When a book tries to use one theory to explain everything, you get illogical examples like this.
Another surprise was the authors’ view of the decline of the Mayan civilization. They suggest that infighting—which showed a lack of inclusiveness—explains the decline. But that overlooks the primary reason: the weather and water availability reduced the productivity of their agricultural system, which undermined Mayan leaders’ claims to be able to bring good weather.
The authors believe that political “inclusiveness” must come first, before growth is achievable. Yet, most examples of economic growth in the last 50 years—the Asian miracles of Hong Kong, Korea, Taiwan, and Singapore—took place when their political tended more toward exclusiveness.
When faced with so many examples where this is not the case, they suggest that growth is not sustainable where “inclusiveness” does not exist. However, even under the best conditions, growth doesn’t sustain itself. I don’t think even these authors would suggest that the Great Depression, Japan’s current malaise, or the global financial crisis of the last few years came about because of a decline in inclusiveness.
The authors ridicule “modernization theory,” which observes that sometimes a strong leader can make the right choices to help a country grow, and then there is a good chance the country will evolve to have more “inclusive” politics. Korea and Taiwan are examples of where this has occurred.
The book also overlooks the incredible period of growth and innovation in China between 800 and 1400. During this 600-year period, China had the most dynamic economy in the world and drove a huge amount of innovation, such as advanced iron smelting and ship building. As several well-regarded authors have pointed out, this had nothing to do with how “inclusive” China was, and everything to do with geography, timing, and competition among empires.
The authors have a problem with Modern China because the transition from Mao Zedong to Deng Xiaoping didn’t involve a change to make political institutions more inclusive. Yet, China, by most measures, has been a miracle of sustained economic growth. I think almost everyone agrees that China needs to change its politics to be more inclusive. But there are hundreds of millions of Chinese whose lifestyle has been radically improved in recent years, who would probably disagree that their growth was “extractive.” I am far more optimistic than the authors that continued gradual change, without instability, will continue to move China in the right direction.
The concept of federal-states intergovernmental relations is very important in understanding the operational part of a federal system since it has the tendency to alter or entirely change the constitutional division of power. It is originated in United States in 1930’s, motivated by a strong concern for the effective delivery of public services to clients. It is an omnipresent, if sometimes underestimated, inherent and dimension of any federation. This is the case, whether the federal system is the result of a process of unification or of devolution, holding together or coming together, dualist or integrated, coupled with a parliamentary or a presidential system, regardless of the legal tradition in which it is grounded. Ethiopia, since 1991 started a process of devolving considerable power, resource and responsibilities to the states and lower levels of government in an attempt to ensure good governance, democratization and development. The 1995 federal constitution apportions powers and authority between the federal government and nine regional states government and the two administrative cities of Addis Ababa and Dire dawa, though the latter is not mentioned in the constitution but through federal proclamation.
The scholar(s) of the field of intergovernmental relations argue that the achievement of the objectives of Intergovernmental Relation is dependent on social, political and economical factors of that particular federal state. The goals of intergovernmental relations are to promote peace and harmony, minimize (avoid) inter-jurisdictional conflicts among federal and states orders of government, improve greater natural economic integration and enhance effective and efficient utilization of available human and material resources. On the other hand, the inherent and inevitable intergovernmental relations within federations often give rise to ineffective governance, influence autonomy of one another, competition and conflicts between orders of government. According to Ethiopian constitution, each regional states government has a sovereign status and has been given considerable powers and authority, including a separate regional constitution, an elected regional assembly, and the right to use own national language and public administration and courts. In addition, the federal constitution gave the right to establish their administrative tier of government and each tier established will be autonomous. However, there are significant gaps in institutional and administrative capacity among the different states of the country, particularly in terms of size of population, land area, socio-economic development, administrative capacity and level of infrastructure and services which has its own impact on democratic and effective intergovernmental relation between federal and states orders of government.
Intergovernmental relations between two or more levels of government especially, vertical relation between federal and states has significant impact on the autonomy of states government. Since intergovernmental relations are basically based on federal and states relations, come to look at that, the federal government might have more autonomy than the latter due to the reason that the states are the last order of government in this context. The states government may depend on the federal government in their relations. This is especially true in an excessively cooperative federalism and dominant ruling party where states authorities accept everything almost in an invariable fashion and forget to account to their constituencies.
The manner of regulating intergovernmental relation depends on the nature of the relationship between the bodies intending to regulate it. If the document governing the relationship between these bodies is crafted in a way that enable one level of government to dominate the other, or if the political system is inclined in that direction, then federal-states intergovernmental relation is regulated in a manner that favors the domination of one order of government, which affects the constitutionally given autonomy of the other. When we fit this in to a state autonomy view, if states are taken as an extension of the federal government and its institution, the relationship is that of trickling down one. In other words, the states and their institutions will have the responsibility of enforcing federal programs and decisions.
Federal-States intergovernmental relations which are a continuous activity carried out on a daily basis as depict above would continuously undermine the autonomy of the states government. Due to the dominant position of the federal government and its institutions by different methods, the states autonomy may possibly eroded and ultimately fall under the auspices of the federal government and its institution. Therefore, it is wise to analyze this issue in Ethiopian federal system through this thesis.
The structure of Intergovernmental Relations has impact(s) on the efficiency and equity of service delivery, the social safety net, and poverty alleviation programs to the development of the financial sector and macroeconomic stability. Depending on the nature of the federation, federal-states Intergovernmental relation may be conducted on a cooperative, competitive, coercive and conflicting basis. When the federation is a decentralized one and is a coming together one, the tendency is towards competition and when it is a centralized and holding together one, the relationship takes the form of cooperation and the issue of autonomy comes to the scene at this point.
The links between the excessive cooperation between the two layers of governments will result centralized federalism. The constitutional grant of autonomy and power to the states can either be reduced or the federal through its institution and power may make them non-existent or invisible to describe. Thus, complexity is inherent and persistent features of intergovernmental relations and accomplishments of the federal-states intergovernmental relations objectives depend on the successful management of these complexities.
In Ethiopia, FDRE constitution (Art47/4) declares that all units of federation shall have equal rights and powers and Article (50/4) states that adequate power shall be granted to the lowest units of government to enable the people to participate directly in the administration of such unit. However, in the inevitable relations between the federal and states orders of government, the FDRE constitution has not adequately provided common forum of cooperation nor explicitly gives evidence how to manage and shape the fundamental principle of co-existence between the two spheres. Hence, the relationships between the federal government and states as well as states and lower orders (levels) of government are not adequately and clearly defined in the constitution.
Institutionally, the key federal institution in federal-states intergovernmental relations has been the Office for Regional Affairs (ORA) within the prime minister office that later devolved to Ministry of Federal Affairs (MoFA) in 2001. The role of this ministry as an institution for co-ordination of federal-states relation is obviously stated under proclamation 471/2005. However, there is a critic that practically there is no institution for federal-states intergovernmental relations than the political party mechanism in Ethiopia.
In federal-states intergovernmental relations, dominant homogeneous ruling party have impact on states autonomy, that the ruling party controls the institution of both federal and states either directly through its member parties or indirectly through joined parties that appear to be autonomous, but have strong links with the ruling party. Through the standard of cooperation, the center influences the states and takes the whole federation under its control by adopting uniform party structure and policy making system. In such situations, state governments lose their autonomy based on their consent for cooperation or because of influence of the federal government and its institution which affects not only autonomy of states but also the federal system itself as it leads to centralized federalism in practice.
Putting in a simple word, there is no doubt that the states or ethno-national groups are recognized as the major actors in the federal system of Ethiopia based on the pages of the constitution; however the argument is based on their role and the authority to reflect their autonomous existence given constitutionally. Thus, the constitutional division of power in Ethiopia does not matter to maintain the federal system and the notion that the states are the superior actors in the Ethiopian federal system seems an argument from the constitutional eye, but the issue that remains unsettled is whether the states are in a position to use some of their powers that the constitution gives them freely without any implicit and explicit pressure from the center. In other words, in the absence of adequate constitutional provisions or legislation principles and practical institution of federal-states intergovernmental relations and existence of dominant ruling party, states autonomy in the cover of federal-states intergovernmental relations need practical assessment. On the other hand, intergovernmental relation cannot be stable if the ruling party loses its position in states in the future. This is because if there are two different political parties in both the federal government and the states, there might be intergovernmental conflict in the existence of constitutional and institutional gaps.
As academic evidences and survey of the existing literature reveal, research of the impact of federal-states intergovernmental relations on states autonomy are not adequately conducted. So, by taking into consideration all the above points, the need to conduct an assessment on the area is firmly believed.
This section deals with the methodological considerations of data collection. The aim of this section is to ensure the validity and reliability of the analysis by describing how the data are collected and interpreted. Methodologically, it is based on qualitative method. A qualitative phenomenon, phenomena related to or involving quality or kind is described qualitatively. It relied on both primary and secondary sources.
This research employed literature and document analysis as one data collection procedure. Therefore, books, journals, constitution of Ethiopia and other federations as well as Ethiopian states, reports and article are consulted. Proclamations, programmes and official documents with relevant ideas were also parts of secondary data for this study.
Back up by secondary sources mentioned above, this study also depended on data gathered from primary source. The primary source of data is obtained through the use of interview with government officials and experts at federal and state orders of government, academicians and political parties. It strategically and structurally conducted interview so that outputs depended up on the ability of interviewer to avoid bias from every sides.
This study is drawn by purposeful (non-probability) sampling technique. Key respondents are selected based on purposeful sampling method. This technique is used to get authorities, knowledgeable persons and experts in the desired information. As discussed under sample size following this sub-section, before I started the actual data collection, I had purposefully selected respondent from decided group lists.
The interviewees are selected to ensure variety of opinion, but not statistical representation, as my aim is to understand and not to measure opinions on the issue under discussion. As the list of informants shows, I have deliberately chosen respondents from the concerned government officials, academicians and political party, both ruling and opposition. Before, I started the actual data collection, I had already defined which groups and peoples that I wanted to obtain information from for a couple of reasons. These are; the primary source of this study is limited to only interview and it is decided to ensure its adequacy using different groups while the other is for triangulation purpose. Thus, the interviewees can be categorized in to four predetermined groups. Firstly, Government officials found at the state (Oromia National Regional State), including regional state council (Caffee). Secondly, Ethiopian Academic group who are familiar to the issues by taking careful procedure and telling them they are purposefully selected representing academicians and the required response has to be from academic view only. Thirdly, government officials at federal level and ministry of federal affairs Intergovernmental Relations strengthening Directorate and Finally political party group which include ruling political party and opposition political party. In doing so, the interviews include discussions with 12 peoples, each lasting a minimum of 15 and a maximum of 40 minutes. I used hand written notes through face to face communication, despite the fact that the use of tape recorder would give more accurate information, some informants refused to use tape recorder at the beginning day of interview collection. It is clear that most important of all, to make notes does not make the informant as suspicious and uncomfortable as the use of a tape recorder might do. Some names are kept confidential due to the sensitivity of the matters discussed and not willingness of respondent except those of people who have expressed their name to use visibly.
The information value of each discussion varies but close to each other to some extent. Some of the interviewees provided substantial and essential information, while others were unwilling to give their information. Some informants manipulate the reality and present it as it best serves their interests while some give information for the question which they are not asked that repeatedly faced me especially, some of government officials found at centre and regional state. When different informants give contradictory versions of information or processes, I am forced to interpret what is the most likely to have happened depending on the conceptual facts discussed under conceptual framework chapter. In such situations, it is particularly important to be aware of my own impact on the interpretation although I have tried to make all sides heard. Finally, similar values and opinions are systematically grouped under one category for better understandings and analysis.
Limitations of the study
Choosing the right regional government for sample study was a challenge that it is not easy to get state government that could give out accurate and detailed information needed. It is due to financial and time constraints that this thesis limited its studies to only one regional state, Oromia national regional state. The extreme financial problem to use different methods of data collection like questionnaire during the course of this thesis is other limitation. Additionally, during the course of data collection, informants’ reluctance to respond for the question they are asked and giving views for the question which they are not asked, delegating the task to other peoples and giving too much appointment, especially from officials groups are major limitations faced in this study. Some of those officials whom I move toward were willing to share their views. However, higher officials were harder to get. Some of them did not bother to reply to my requests, while others delegated the task to deputies or other lower officials. In these cases, I depend on other sources, such as academic literature discussed in conceptual issue and information provided by other interviewees and based on this, make interpretations.
Organization of the Study
This thesis is organized in four chapters that each chapter has its own contributions and sub-topics. Chapter two provides conceptual frameworks of the study and experiences of other federations of the world that helps us to provide where and how to begin. This chapter deals issues through lenses of constitution, legal and institutional framework, structures and process aspects of federal-states intergovernmental relations. Chapter three is the continuity of the preceding chapter and main parts that discusses the constitutional basis, institutional effectiveness, appraises impact of federal-state relations on state autonomy, clearly shows autonomy of state influenced/enhanced because of both orders intergovernmental relations and finally, identifies the overall problems and prospects of federal-state relations in Ethiopian context. In doing so, it is based on conceptual frameworks discussed, review of literatures made and data collected through interview. The final chapter concludes the discussions and provide some recommendations for the future improved federal-states intergovernmental relations based on the study made through different mechanisms stated earlier.
 R. L. Watts, ‘Comparing Federal Systems,’ 2nd ed.; Montreal & Kingston: School of Policy Studies, Queen’s University, 2008 at 116-120
 J. Peter Meekison, ‘Intergovernmental Relations in Federal Countries’: A Series of Essays on the Practice of Federal Governance, Ottawa, Forum of Federations, 2009 at 31
 Deil S.Wright, ‘Intergovernmental Relations: An Analytical Overview’, Annals of the American Academy of Political and Social Science, –, at 4-5. See also David Cameron, ‘The Structures of Intergovernmental Relations’, Blackwell Publishers, 2001 at 122
 Ibid at 112
 Lijphart, A. ‘Patterns of Democracy: Government forms and performance in thirty-six countries’. New Haven, CT: Yale University Press, 1999 captured in Ibid at 19-21.
 Ayana Simachew, ‘Intergovernmental Relations in Ethiopian Federalism: The Role of Ministry of Federal Affairs in Facilitating Intergovernmental Relations, Lambert Academic Publishing, 2011 at 5
 Litvack and Jessica Seddon, ‘Decentralization Briefing Notes’, WBI Working Papers in Collaboration with PREM Netwo, World Bank, — at foreword at http://siteresources.worldbank.org/WBI/Resources/wbi37142.pdf as visited on 21 Nov, 2013
 Brunetta Baldi, ‘Beyond the Federal-Unitary Dichotomy,’ Institute of Governmental Studies, University of California Press, 2009 at 2
 Merera Gudina, ‘Ethnicity, Democratization and Decentralization in Ethiopia: Eastern Africa Social Science Research Review, Volume 23, Number 1, 2007 at 23
 UN-HABITAT, ‘Local Democracy and Decentralization in East and South Africa’, with support from the Rockefeller Foundation; Experience from Uganda, Kenya, Botswana, Tanzania and Ethiopia, (_), 2002 at 89-95
 Proclamation No. 471/2005 established to provide for the ‘Definition of Powers and Duties of the Executive Organs of the Federal Democratic Republic of Ethiopia’, 12th year No.1, Addis Ababa, Federal Negarit Gazeta, 17th November 2005
 Assefa Fiseha ’Ethiopia’s Experiment in Accommodating Diversity; A Twenty Years Balance Sheet; Ethiopian Journal of Federal Studies; Centre for Federal Studies; Addis Ababa University Press, Vol.1, No.1, 2013 at 125
 Lovise Aalen ‘Ethnic Federalism in a Dominant Party State: The Ethiopian Experience 1991-2000’ Report R 2002 Michelsen Institute Bergen, Norway, 2002 at 89, see also Asnake supra note 12 at 241 and Merera supra note 29 at 88
 William M. Chandler and Chritian W. Zollner ‘Challenges to Federalism: Policy Making in Canada and Federal Republic of Germany, Institute of IGR, Kingston; Queens’s University Press, 2006 at 23
 Hashim Tewfik; ‘Transition to Federalism: The Ethiopian Experience’; Forum of Federations, 2010 at 3-6
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