From CornerSolution (a blog that deserves a much higher profile) comes this fascinating link to a World Bank study on Somalia which says:
Somalia has lacked a recognized government since 1991—an unusually long time. In extremely difficult conditions the private sector has demonstrated its much-vaunted capability to make do. To cope with the absence of the rule of law, private enterprises have been using foreign jurisdictions or institutions to help with some tasks, operating within networks of trust to strengthen property rights, and simplifying transactions until they require neither. Somalia’s private sector experience suggests that it may be easier than is commonly thought for basic systems of finance and some infrastructure services to function where government is extremely weak or absent.
William Butterfiled of CS goes on to say:
The report goes on to point out that the private sector is actually outperforming their African counterparts in a number of important areas, with rule of law arising out of an Austrian-orgasm-inducing “spontaneous order” based on reputation. However, the cost of a lack of a state lie precisely where we would expect: areas such as road construction where positive externalities exist. However, the short article reports that even in areas such as infrastructure and financial institutions, the private sector is producing creative substitutes for these traditionally government controlled sectors.
