After the Break Up

On Friday, the Southern Sudan Referendum Commission issued preliminary results from the vote on independence. As expected, 98.6 percent of nearly 4 million voters opted to secede from the north, with which the southerners had uneasily coexisted in Africa’s largest country. Southern Sudan will become only the third new member of the United Nations in the last decade — and that includes a late entry by Switzerland, which previously foreswore membership of any international bodies. New countries usually face daunting challenges, but past experience suggests there is reason to hope that independence will boost the quality of life for the region’s people.

There is, of course, plenty of room for improvement. Most of the 8 million residents of Southern Sudan live in poverty. The vast majority are subsistence farmers, and surveys reported by the region’s census authority suggest only half of them live in a household that used any cash at all in the past week. Ten percent of children die before their first birthday and less than half of primary-school-aged kids are enrolled in classes.

The World Bank’s latest analysis of Southern Sudan’s finances, meanwhile, concludes that the region’s “budget and financial management concerns are acute.” Oil wealth has sparked some economic growth over the past 10 years. And if the country splits from the north, it is likely to owe relatively little in debt. But that is about the only good news facing the finance ministry. Government revenues have been inadequate to deal with the challenges of finding employment for demobilizing members of the army, let alone to start building the infrastructure of a modern state.

The broader economic picture isn’t much brighter. About half of Southern Sudan’s GDP, as well as a full 99.9 percent of its government revenues, comes from its $5 billion-a-year oil exports. Even if oil output doubles by 2035, as some predict, that still won’t be enough to provide the engine for a viable economy and government services beyond the most basic. If the south is going to improve quality of life for its people, it will have to focus on rapid economic diversification.

To foster broad-based growth in agriculture, manufacturing and services, the most important short-term prescription is for the South Sudanese to avoid fighting with their former compatriots in the north — a potential conflict that looms particularly large over Abyei province, which has seen its own referendum on whether to join the north or the south delayed. A cautionary tale is on display in neighboring Eritrea, which fought a brutal two-year border war with former co-state Ethiopia in the late 1990s; its average incomes are now below their level at independence from Ethiopia in 1993.

If Southern Sudan manages to remain stable and at peace, will the economy pick up or flat-line in the longer term? The experience of previous country divisions — post-armistice Korea, the disintegration of the Soviet Union — suggests anything is possible, though in practice, the range of potential outcomes for Southern Sudan is comparably narrow. The country will not benefit from the type of support that South Korea received from the United States, and it’s handicapped by a number of features associated with slow growth. Southern Sudan’s adult literacy rate is 27 percent. The region, like half of its neighbors, is landlocked, a geographical condition associated with far greater difficulty integrating with the global economy. The nearest point of access to the Indian Ocean, Kenya’s port of Mombasa, is about 1,000 miles away from the Southern capital at Juba. Economist Jeffrey Sachs and his colleagues estimated 12 years ago that, all else being equal, landlocked countries tend to have average incomes about $5,000 lower than countries with a coast. Southern Sudan is also tropical, another factor Sachs has associated with low incomes.

Hopes for “catch up” growth towards regional income levels are stifled by the fact that the neighborhood makes Detroit look like Silicon Valley. However poor it is today, Southern Sudan’s GDP per capita remains considerably higher than all of its neighbors but north Sudan and the Republic of Congo. And it doesn’t matter if you think institutions rather than geographic factors are the real key to growth — the new country will suffer the legacy of overall Sudanese governance that languishes near the bottom of global rankings.

On the plus side, however, despite a lot of economic theory suggesting large countries should grow faster, there really doesn’t appear to be a cost to being small — or to splitting economies. According to work by Andrew Rose at University of California, Berkeley, incomes — as well as a range of other quality-of-life measures — can be just as high in little countries as in big ones, so the south-north divide shouldn’t reduce wealth on that account. Fears of a resource curse are probably overblown as well. There’s no convincing evidence that countries with oil would be better off without it, and if natural resources are managed well they can be a significant spur to growth.

On the subject of better management, the new countries will have slightly more wiggly borders — a secret to growth, according to New York University economist Bill Easterly and colleagues, because it suggests the country concerned is less of an artificial state and thus more governable. Members of the government in the south have long since abandoned Marxist-Leninist rhetoric. And Robert Klitgaard, author of the how-to tome Controlling Corruption, suggests the region’s leaders have shown notable commitment to good governance, which might help improve their independent ranking in measures of institutional strength.

More broadly, new states usually do considerably better at providing basic services than they did before independence — think, for example, of the explosion of schooling at the time of African decolonization. And even Eritrea saw infant mortality fall from nine percent to four percent between 1990 and 2009 despite rollercoaster economic fortunes. Southern Sudan could hardly do worse, given it barely received any government services for decades. The 2006 child immunization coverage rates against common diseases stood at just 17 percent, for example.

It would be a miracle if Southern Sudan became the next Botswana, using natural resources to spur GDP per capita growth the envy of East Asia. But at the same time, it’s not unlikely that the country could — with considerable outside assistance — manage sufficient growth to alleviate poverty among the majority of its people. And history suggests that many fewer parents in the new country will suffer the agony of children lost to disease, and more kids will grow up at least somewhat educated, with hope for a better tomorrow. That’s reason enough to celebrate the arrival of the newest member of the community of nations.