Did the Cold War Produce Development Clusters in Africa?

We examine the lasting impact of Cold War alignment on African economic development. Faced with the empirical challenge of ambiguous and interdependent international alliances during the Cold War, we introduce a non-cooperative game of social interactions to determine blocs. Employing computational methods for non-convex optimization, we solve for the unique equilibrium two-bloc partition. The partition predicts UN General Assembly voting patterns in Africa during the Cold War but not after, and is uncorrelated with pre-Cold War outcomes. Surprisingly, average incomes in these two groups of countries are similar today. Yet, the alignment does affect the shape of development. Western-aligned countries have greater financial development, inequality, and democracy than Eastern-aligned ones, reflecting the Cold War’s ideological divide. JEL codes: C62, C72, F54, F55, N47, O19, O57.