Inclusive political institutions are engines for economic prosperity

Police guard a crowd during the rally of presidential hopeful Raila Odinga in Nyamira in March 2022. [Stanley Ongwae, Standard]

It will be remembered that Kenya aspires to be a middle-income economy by 2030.

The next mid-term period in the Vision 2030 implementation framework between July 1, 2022 and June 30, 2027 is therefore of significance. The August General Election must be seen in this context. Can we move closer to the economy we want as a result of the choices we make in August? Daron Acemoglu and James Robinson in their book, Why Nations Fail, succinctly argue that poor countries are poor not because of their geographies or cultures, or because their leaders do not know which policies will enrich citizens. The prosperity and poverty of nations are determined by the political and economic institutions created by a nation and how politics determines what economic institutions a nation has. Poor countries are not poor because those who have political power make choices that create poverty. The opposite is true.

While countries that end up being rich are built on the foundation of inclusive political and economic institutions, poor countries are impoverished due to their extractive political institutions. Inclusive institutions are those that allow and encourage participation by the people in economic activities that make best use of their talents and skills and that enable individuals to make the choices they wish to. In this context, therefore, the political formation that ends up in power after the next elections must be inclusive in order to guarantee inclusive economic institutions that will move Kenya closer to Vision 2030.

To be inclusive, economic and political institutions must feature secure private property, an unbiased system of law and a provision of public services that provides a level playing field in which people can exchange and contract; it also must permit the entry of new businesses and allow people to choose their careers. Empirically, inclusive institutions foster political and economic activity, productivity and prosperity. They are pluralistic. Extractive economic and political institutions are the opposite and largely absolutist. Kenyans must look out for these features in the campaign manifestos of the emerging formations and make decisions that will move us closer to a middle-income economy. Campaign messaging must move beyond sloganeering to these specifics.

Inclusive economic political and economic institutions create inclusive markets, which not only give people freedom to pursue the vocations in life that best suit their talents but also provide a level playing field that gives them opportunity to do so. Those who have good ideas will be able to start businesses, workers will undertake activities where their productivity is greater and less efficient firms can be replaced by more efficient ones. The policy actions that support this thinking must be long term and not knee jerk in scope and breadth.

Inclusive economic and political institutions also pave the way for two other engines of prosperity; technology and education. Sustained economic growth is almost always accompanied by technological improvements that enable people, land and existing capital to become more productive. What does your candidate say about technology and education? Do they support the practical Competency Based Curriculum? What does your candidate say about freedom of thought and the free market economy?

A confluence of factors, in particular, a critical juncture like wars, epidemics like Covid-19, colonisation or electoral cycles, coupled with a broad coalition of those pushing for reform like the two major political formations playing out currently or other propitious existing institutions, are often necessary for a nation to make strides toward more economic prosperity. Whether we prosper or remain in poverty as a nation will be determined by our political choices, which will influence our economics post-August 2022 to a large extent. Go vote.