Looser once, winner now!

Once, there was a country that the British divided arbitrarely in two. Above (north) of that line, individuals would be charged a poll tax (a uniform tax on everyone)and below all income for the state would stem from duties on imports. There were no differences south or north of that line within that country. We are talking about Nigeria and that was in 1910 and that minor differences makes a huge difference now.

The use of the poll tax in the north allowed governance to be more efficient than in the south. So in the north now, population are somewhat happier with their local government and more importantly, polio and malaria vaccines are more widespread than in the south. This increased happinness allows individuals to trust their government and reduce evasion which allows for an efficient tax collection and thus the provision of services like vaccines.

The policy implications are not evident from this paper, however I believe the theoritical implications for policy proposals are clear: institutions still matter. I made the point earlier that the institutions left by colonial masters was more important in determining growth performance than several other factors. And that the level of settler mortality was the determinant of which form of institutions was left. What is more important is that the division we are talking about was actually done because of malaria because the British were afraid of sending one governor that would die because of a malarial mosquito bite.

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Taxes, Institutions and Local Governance: Evidence from a Natural Experiment in Colonial Nigeria. - By Daniel Berger