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Ken Opalo's avatar

Good post.

But I think “trust” is overrated as an explanatory variable. Trust beyond closed groups is endogenous to the capacity to enforce contracts at scale - so you need scalable social institutions (religion) or states. Notice that early modern corporations often has explicit sovereign backing. They didn’t just spontaneously spring from social trust.

Another important point is that there are indeed a lot of firms in Africa that operate at scale. The point of ny piece is that the region needs more of these, and that they should be bigger.

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Performative Bafflement's avatar

Shouldn't some sprawling rich families be able to make conglomerates that are still kin network affairs, but employ lots of people?

Thinking of the Ayala family in the Philippines (Ayala malls, San Miguel corp and much more), or the chaebols in Korea (Samsung, LG, Hyundai) and zaibatsu in Japan (Sumitomo, Mitsubishi). I believe similar dynamics have happened in a large number of other countries (without a ton of additional research, I'd guess that Tata, Vingroup, and Thaibev all fit the pattern too).

All of those families employ hundreds of thousands of people through their businesses, but they're still kin network affairs at the top to a pretty large degree, even today, and moreso in the past. I don't see why this model couldn't also work in Africa?

It's the common pattern in a lot of developing countries, even those lower on capital and specialization and "rule of law" when the companies got started.

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