Roger Myerson Interview, Professor of Economics at the University of Chicago and winner of the 2007 Nobel Memorial Prize in Economic Sciences.

Roger Myerson, Professor of Economics at the University of Chicago

Why did you feel it was important to attend this conference?

It’s an important conference in the world.

The ASE was founded by Leonard Wantchekon, who was once a student at Northwestern University where I taught. He spoke to me about Benin and I’ve wanted to come for many years since then.

Why does the Econometric Society have a chapter in Africa?

One of the things we heard at the conference today was that economics research tends to follow the data.

African governments have not done as much as governments in other parts of the world to collect economic data in the way that is useful for economics research. Consequently, economics research follows questions that are important in other parts of the world. But there is no part of the world where understanding the principles of economic development is more pressing and worthier of every social scientist’s attention than Africa.

The idea is that the African Econometric Society should be an organisation that promotes and encourages African governments to work more systematically with economists and other governments to provide data that has some uniformity across countries and makes some attempt to measure things that could be profoundly important for the economics profession and for people.

Better understanding should yield better policy, which will yield better results for people everywhere, in Africa and elsewhere.

Why are institutions like the African School of Economics (ASE) so important?

The ASE is one of several really important institutions that have developed around the world to try and give students from those regions a chance to get a Master’s degree at an institution that is recognised as teaching economics methodology with world-class rigour.

It is hard to know whether a student has the skills necessary if they are from a university from which you haven’t met anyone. It’s hard to judge so I am sure it makes it difficult for some talented students from different parts of the world to get admitted to our programme.

A recommendation from a clergyman or a politician, who might know the student but doesn’t know what an economics degree is really about, is not as valuable to us as a recommendation from an economist who does world-class research.

Why is it important for economic research to have a global outlook?

Economics was started by people in western Europe in the 18th and 19th century, but now good economics is done pretty much everywhere. Research at great universities in Europe and America is done by people who come from every part of the world. Great universities are global institutions.

It is important that every part of the world provides students and teachers of economics. Developing an economics that’s only useful for addressing the questions of economic policymaking in successful industrialised countries is not much help for people in poor developing countries.

But understanding policymaking for both industrialised countries and poor developing countries gives us a deeper understanding of an economics which is good for everyone. And that means we want students from everywhere.  The ASE is an important part of that.

How does game theory affect your theory of democracy in Africa?

I have great difficulty understanding how a country which has honourable, educated people with good natural resources can be desperately poor compared to another society where people are just as honourable and well educated, without any more resources. Compare this country with Switzerland.

My intuition is political institutions are clearly important for development. Many development theorists have believed that the key to successful development is to increase the supply of something – steel mills for example. I consider the most important key to successful development is to increase the supply of something, but I don’t think it’s steel mills. Literacy is important, but not necessarily education.

A nation’s supply of leaders with good reputations for using public resources responsibly to provide public goods and services, that’s a very important supply which is ample in every successful society I know. It seems frustratingly scarce in the countries where people suffer the worst national poverty. The key to democratic development is to increase the nation’s supply of people who can be trusted by the public to control public resources and actually supply public services, rather than just stealing.  The best place to develop such a supply of trusted political leadership is in autonomous institutions of democratic local government.

How can local government be valued and improved?

At the time when African nations became independent, traditional local leaders were often seen as being old fashioned. The groups that lead the agitation for independence typically were educated people in the cities who scorned the traditional rural chiefs or the local government system. Local government consists of networks of trust. Where there are traditional local leaders who have trust from the local community and who can be trusted to coordinate efforts to improve the community’s public goods and services, then such trusted leaders are people whom you want to be part of the government. You want them to be able to run for higher office to leverage that trust to get a share of the public budgets.

Local government provides many opportunities for leaders to be held accountable to citizens to exercise autonomous local authority over a public budget.

When I gave a talk in Zimbabwe, it was my first opportunity to give a public talk in Africa. Suddenly it occurred to me how to start the talk: I wanted them to ask the question, “how would we change the structure of our government to make sure that 50 years from now Zimbabwe would have the best possible national leader.” To answer this question, we have to ask what he would be doing 40 years from now. How would he be proving himself? In the local government and provincial governments.

You have spoken about the need for transparency at all levels when providing public services

International assistance should be good for a country… How can it be bad for a country? That’s a good question: how can foreign assistance be bad for a country? Theoretically more money to help people with public goods can’t do harm, can it? It can do harm if it’s all given through the national government and the national leader gets to decide where it goes. He’ll use it as a fund of revenue to reward his political supporters and punish, by denying the funds, those who oppose him.

If the dynamic of the relation between local and national government is important, and they certainly are in the history of my country, the United States, then foreign aid which just gives a pot of money to the national government can upset and tilt the balance in favour of national politics. International donors need to take that into account.

How do you ensure transparency?

One of the best books on this is by Ashraf Ghani, who’s now president of Afghanistan. He argued that we must recognise that a good government is one which provides a certain amount of transparency. National budgets and public accounts must tell citizens where the money came from and where the money is going and what you get for your taxes.

If that kind of communication between responsible government officials and the rest of the citizens of a country is part of the essence of how successful societies work, then international donors need to set an example. If they are going to try and help a country, they need to be more transparent.

If international aid agencies have not been leaders in transparency that’s a problem that’s close to the essence of the matter. Many private foundations have glossy websites that tell their donors how all these poor people are benefitting from their money but that’s not the accountability that matters the most.

Of course, they need to account to their donors, for their donors to keep giving. But to do their job properly, they need to be accountable to the countries that receive their assistance. They must offer the information that we raised this much money and these are the goods and services we offered you. And I think that African recipients, if they were given that kind of report, would sometimes question where the money had been spent.

That would be an uncomfortable question for international development agencies and that’s just the kind of question citizens should be asking of their governments too. International aid agencies should subject themselves to that heat, to help Africans learn to demand more effective use of the public spending that is supposed to benefit them.