Institutions, Institutional Change and Economic Performance

Institutions have (re)emerged as a popular topic in development studies, particularly after Why Nations Fail (2012). However, the study of institutions and institutional change should trace back to key work of Douglass C. North, namely the 1990 book "Institutions, Institutional Change and Economic Performance". Given several decades have passed, parts of the book are less relevant today. It is worth reading to better understand the history and development of ideas (and at only 140 pages of text, it is not a lengthy read).

The book "provides the outline of a theory of institutions and institutional change", which at the time of writing, was a relatively novel contribution. North writes in the Preface to the book that "History matters. It matters not just because we can learn from the past, but because the present and the future are connected to the past by the continuity of a society's institutions. And the past can only be made intelligible as a story of institutional evolution" (p. vii). Again, later in the text: "Path dependence means that history matters. We cannot understand today's choices (and define them in modeling of economic performance) without tracing the incremental evolution of institutions" (p. 100).

First, North takes down a dominant mode of thinking: "If political and economic markets were efficient (i.e. there were zero transaction costs) then the choices made would always be efficient. That is the actors would always possess true models or if they initially possessed incorrect models the information feedback would correct them. But that version of the rational actor model has simply led us astray. The actors frequently must act on incomplete information and possess the information that they do receive through mental constructs that can result in persistently inefficient paths. (p. 8).

Why institutions? "Institutions provide the basic structure by which human beings throughout history have created order and attempted to reduce uncertainty in exchange. Together with the technology employed, they determine transaction and transformation costs and hence the profitability and feasibility of engaging in economic activity. They connect the past with the present and the future so that history is a largely incremental story of institutional evolution in which the historical performance of economies can only be understood as part of a sequential story." (p. 118)

An Untold Story of a Medical Disaster in Colonial Africa

  • "All the villagers, women and children included, gathered, as they did every year, for their injection of Lomidine. The preventative administration of Lomidine to entire populations, then called "total Lomidinization," was a priority and a source of pride for this postwar colonial health services. The technique's efficacy was unprecedented: a single injection of Lomidine conferred protection for several months against infection by trypanosomes, the parasites that cause sleeping sickness… for the first time, eradication was within reach." (p. 1)

However, amidst the scientific certainty, and millions of injections, it was later learned that Lomidine had no preventative effects at all. What brought halts to the campaigns, however, was not a change in scientific opinion, but a series of disasters. Such as: "…A catastrophe was looming, and the diagnosis was soon obvious: the shot of Lomidine had caused a bacterial infection that progressed to gas gangrene, spreading from the buttock to the rest of the body, leading to swelling and bursting in affected tissues" (p. 2). "This may be why rumors about the campaigns were so worrying to colonial authorities, as if the irrationality and ignorance of which Africans were being accused might, in fact, be a projection of the doctors' enthusiastic and amnesic foolishness" (p. 183).

Guillaume Lachenal's "The Lomidine Files: The Untold Story of a Medical Disaster in Colonial Africa" (2017 translation by Noémi Tousignant) tells the story of Lomidine. A wonder drug scientists were fully convinced worked, only later to learn it did not work as thought. The author explains: "This book is a biography of Lomidine. It traces this medicine's trajectory from its first trials during the Second World War, when it was introduced as a miracle cure for sleeping sickness, to its abandonment in the late 1950s, when a series of incidents in Gribi and elsewhere brought Lomidinization campaigns to a grinding halt. My broader aim, however, is more ambitious: by selecting as a historical object this white powder, a power injected more than ten million times in Africa during the 1950s, I am experimenting with a novel form of inquiry into the relation between medicine and colonialism" (p. 2).

The book explores medicine for colonialists and colonized (p. 90). The testing of "native volunteers" by exposing them to tsetse flies "every two or three days" for more than a year (p. 30). Blaming medical error and scientific fallacy on the colonized (p. 157). In this regard, it provides a wealth of insight into the colonial projects. The book also provides a wealth of insight into scientific "certainty" more broadly (p. 173). However, the book could have done much better in speaking about the spread and control of sleeping sickness. While this did not need to be the focus of the work, readers are left wanting slightly more information on the bigger picture of the disease.

Tewodros of Ethiopia

The history department of Haile Sellassie I University published some excellent works, unfortunately many of these books are difficult to find. I came across "King of Kings: Tewodros of Ethiopia" (1966) by Sven Rubenson not too long ago. The book is short, but a treasure trove of insight as well as direction to unconventional sources – ones largely lost in the age when we expect everything to be Google-able.

Who was Tewodros? Sven writes: "In Tewodros II, Ethiopia received a ruler of a kind very different from any that she had known for many years or even generations. In more than one sense of the word he was a revolutionary. In more than one field of life of his nation he was an innovator of no mean proportions. The last of the mesafint, he was also the first in the line of Emperors to create modern Ethiopia" (p. 46). In another passage: "Tewodros was a man of tremendous power and great promise. He appeared to be the unifier of all Ethiopia. With most of its armed men in the ranks of his armies and a reputation of being invincible, he had more military power at his disposal than any Ethiopian ruler possessed for several generations. His keen and open mind, his boundless energy and his extraordinary sense of destiny and deep faith in his calling to restore the greatness of Ethiopia combined to make him one of the most remarkable men Ethiopia has produced." (p. 66)

The book goes into great detail about his family and early life. In so doing, there are glimpses into the political sphere, and thus the book is not only for those looking to learn about Tewodros II. For example: "According to the Kibre Negest it was the House of David and the House of David only that should rule Ethiopia. Tewodros' only possibility to make himself a legitimate Emperor would have been to make a bold claim, whether founded or unfounded, that he was a descendant of Solomon and the Queen of Sheba. In fact Tewodros did not did this at the time of his coronation nor did he appropriate the title of Ase for himself. Tewodros' contemporaries called him Nigus Tewodros. His own secretary Zeneb does not refer to him as Ase once. This title is throughout Zeneb's chronicle reserved for members of the old Imperial family. Instead Zeneb speaks of Tewodros as the man whom God had chosen to carry out his own plans." (p. 48)

Also, regarding the role of international actors in what we might call 'regime change' today: "Thus the fall of Meqdela by foreign guns and the death of Tewodros by his own hand coincided. But it would be a mistake to believe that the second was really caused by the first. As some foreigners had played a role when Tewodros set his goals for a modern Ethiopian state, so they played their part in his downfall by causing unnecessary misunderstandings, frustrations, and rash actions, which Tewodros himself no doubt regretted. But in neither case was it the major role." (p. 89)

Black Skin, White Masks

​Frantz Fanon's The Wretched of the Earth (1961) is essential reading for anyone interested in anti-colonialism, de-colonialism and post-colonialism. Fanon's "Black Skin, White Masks" (1952) was his first work, from which a few exerts are given below. For those unfamiliar with Fanon, his writing has influenced revolutionary struggles around the world and his works continue to offer valuable insight today.

  • "We are wary of being zealous. Every time we have seen it hatched somewhere it has been an omen of fire, famine, and poverty, as well as contempt for man." (p. xiii)
  • "All colonized people - in other words, people in whom an inferiority complex has taken root, whose local cultural originality has been committed to the grave - position themselves in relation to the civilizing language" (p. 2)
  • "To speak gobbledygook to a black man is insulting, for it means he is the gook. Yet, we'll be told, there is no intention to willfully give offense. OK, but it is precisely this absence of will - this offhand manner; this casualness; and the ease with which they classify him, imprison him at an uncivilized and primitive level - that is insulting." (p. 15)​
  • "He's an idealist, they'll say. Not at all; it's the others who are the scumbags. I always make a point of speaking to the "towelheads" in correct French and I have always been understood. They answer as best they can, but I refuse to indulge in any form of paternalism." (p. 16)​
  • "As long as the black child remains on his home ground his life follows more or less the same course as that of the white child. But if he goes to Europe he will have to rethink his life, for in France, his country, he will feel different from the rest. We said rather too quickly that the black man feels inferior. The truth is that he is made to feel inferior." (p. 127)​
  • "I find myself one day in the world, and I acknowledge one right for myself: the right to demand human behavior from the other." (p. 204)

The Tyranny of Metrics

​Jerry Z. Muller's "The Tyranny of Metrics" (2018) has a title suggestive of an essential read, but in detail it runs thin. The author may have aimed for a broad audience, providing a brief overview. For those versed in the challenges of metrics, this is not your book. Nonetheless, there are some interesting points, including:

  • "gaming the metrics occurs in every realm: in policing; in primary, secondary, and higher education; in medicine; in nonprofit organizations; and, of course, in business. And gaming is only one class of problems that inevitably arise when using performance metrics as the basis of reward or sanction. There are things that can be measured. There are things that are not worth measuring. But what can be measured is not always worth measuring; what gets measured may have no relationship to what we really want to know. The costs of measuring may be greater than the benefits. The things that get measured may draw effort away from the things we really care about. And measurement may provide us with distorted knowledge - knowledge that seems solid but is actually deceptive." (p. 3)
  • "What has largely gone unnoticed is the recurrence of the same unintended negative consequences of performance metrics, accountability, and transparency across a wide range of institutions... while they are a potentially valuable tool, the virtues of accountability metrics have been oversold, and their costs often underappreciated. It [the book] offers an etiology and diagnosis, but also a prognosis for how metric fixation can be avoided, and its pains alleviated." (p. 6)​
  • Education: "The unintended consequences of NCLB's [No Child Left Behind] testing-and-accountability regime are more tangible, and exemplify many of the characteristic pitfalls of metric fixation. Under NCLB, scores on standardized tests are the numerical metric by which success and failure are judged. And the stakes are high for teachers and principals, whose raises in salary and whose very jobs sometimes depend on this performance indicator. It is no wonder, then, that teachers (encouraged by their principals) divert class time toward the subjects tests - mathematic and English - and away from other subjects, such as history, social studies, art, music, and physical education. Instruction in math and English is narrowly focused on the sorts of skills required by the test, rather than broader cognitive processes: that is, students too often learn test-taking strategies rather than substantive knowledge." (p. 92)​
  • "Ultimately, the issue is not one of metrics versus judgement, but metrics as informing judgement, which includes knowledge how much weight to give metrics, recognizing their characteristic distortions, and appreciating what can't be measured. In recent decades, too many politicians, business leaders, policymakers, and academic officials have not sight of that." (p. 183)

Social Movements and Market Transformations

​In the 1990s and into the 2000s, there were effective treatments for AIDS, yet the poorest countries and people did not have access to them. How did the global transformation come about whereby treatments became more readily available, and in most countries in the Global South free? Kapstein and Busby outline how this transformation took place in "AIDS Drugs for All: Social Movements and Market Transformations" (2013). This is an excellent resource, and provides insight on 'how change happens' well beyond HIV / AIDS and health. For anyone interested in social movements, and particularly social movements that seek to change that involves markets, this is essential reading.

The authors state that their book is "about market transformations, or efforts by social movements to change global market processes and their distributive effects. Our main case study is drawn from the pharmaceutical industry, and, more narrowly, we examine how social activists and police entrepreneurs in the public and private sectors (whom we collectively refer to as "advocates") decisively shaped the market for the antiretroviral drugs (ARVs) that are used to combat HIV/AIDS" (p. vii). Why the need for the book? There are diverse narratives about why this change came about: "economists have generally argued that what brought down the price of ARVs around the world was entry by low-cost generic producers, just as these producers have driven prices down on many medications that are now on offer (see, e.g., Hellerstein 2004). In this version of events, the market acts "naturally" or "spontaneously," with new entrants forcing competition upon the incumbent firms. What this perspective overlooks, however, is that the groundwork for generic entry was laid by advocates who sought to show in the first instance that ARV delivery in the developing world was effective and who then helped to pool demand in order to create a market sizable enough to be of commercial interest. Finally, they helped spur industrialized world governments to increase foreign aid funds that were earmarked for AIDS treatment, so that developing world governments could acquire the drugs at these reduced prices. Generic drugs, in short, did not "drop by parachute" into the developing world; their entry was catalyzed by advocates, that at a minimum helped save many lives by speeding drug delivery" (p. viii).

Kapstein and Busby assess these changes with "a theory of strategic moral action" which they apply to a range of other issues. Their theory "argues that market transformations in the case of ARVs required the following: first, a market structure or favorable set of underlying economic and industrial conditions that provided opportunities or openings for an advocacy movement; second, the elaboration by the AIDS movement of a compelling frame that pitting drug company profits against global access to live-saving ARV medications; third, a political and organizational consensus or coherent "ask" on the part of the social movement that treatment should receive the highest policy priority, trumping, for example, preventing; fourth, a feasible strategy (defined in this case as one that minimized the costs of market transformation to the major players) for how a universal access to treatment market could be made to operate; finally, a set of institutional arrangements to help set the rules for the transformed market and to stabilize its operations." (p ix-x)

A tactic familiar to organizations like Oxfam, the authors argue that in "order to contest the market, however, one must first "deconstruct" is in order to identify its moving parts and target its points of weakness" (p. 10). One their point of entry is identified, the demand must be clear, consistent and coherent: "If transnational social movements are to be successful in shaping the political and economic agendas of governments and firms, they must fuse both rational / analytical and emotional / normative appeals into a single "ask"" (p. 14). Further: "Moral arguments that are diffuse do not succeed; they need focus and organization for collective action. But these are insufficient as well; they also need a feasible strategy that relates means and ends. What this suggests is that to be successful or effective, social movements also need a compelling business strategy, a feasible model of how to get from point A to point B." (p. 22) In the struggle for AIDS treatment it was not just a business case but also showing that treatment was feasible around the world: "Showing that rollout was possible in the setting of "resource constrained" economies was therefore critical to the process of getting these firms to the negotiating table" (p. 137).

They conclude: "It is our hope and belief that the AIDS example provides lessons for other advocacy movements in terms of what it takes to make a fundamental shift in market logic possible. We have been motivated to extend our argument by the many other challenges that the world now faces, including climate change, modern slavery and sex trafficking, and a host of other deadly diseases that particularly afflict women, children, and other vulnerable groups. If advocates are to help bring about market transformations, they must overcome a successive set of hurdles. These include the need to understand the market structures they face, the development of a compelling frame and coherent ask, a feasible cost-benefit strategy, and a set of institutions to stabilize any new market arrangements." (p. 276)

The Italo-Ethiopian War (1935-41)

In back alleys and old book shops in Ethiopia, you can occasionally stumble across old gems. A recent example I found was "The Italo-Ethiopian War (1935-41) Genesis Ordeal Victory", published by the Ministry of Information in 1975. It is a 28-page pamphlet that includes a large set of images. For a historian, the pamphlet is interesting not only for the historical content from a Ethiopian perspective, but also the time period in which is was written and published. The publication documents the struggle against Italian occupation, from the perspective of the government of Ethiopia, and documents the crimes committed by the Italians. 

It states: "From start to finish, the Fascist forces waged the campaign with total disregard for the rules of war established by the diverse international conventions to which Italy was a party. Red Cross camps were deliberately bombed and incendiary devices showered on fleeing refugees. Prisoners of war, whether captured in battle or wounded or incapacitated, were executed on the spot. Torture, mutiliation [sic], skinning and castration were commonly employed. Whole families were locked in their dwellings and burnt alive. Some suspects were beheaded, others tied to lorries and dragged along till the corpse became utterly unrecognizable - still others thrown overboard from planes in flight. The most terrible atrocity of all was the widespread and indiscriminate use of poison gas. Whole areas suspected of harbouring resistance units were sprayed promiscuously - destroying all living things and polluting crops, rivers and lakes." (p. 17)

One comment is reminiscent of many made after the Rwandan genocide: "It is not to be contested that the majority of the peoples of the world - even most individual members of the League [of Nations] - were fully sympathetic with Ethiopia. But in the end, delay and procrastination, empty rhetoric and opportunism, above all the duplicity of the major European powers prevailed." (p. 23)

Resistance and Decolonization

​Amilcar Cabral (1924-1973) is one of Africa's great anti- and de-colonial activists and writers, and led the struggle for the independence of Guinea Bissau and Cape Verde. Another post, on Davidson's "No Fish is Big Enough to Hide the Sky", also covers Cabral. This post focuses upon a collection of his ideas in "Resistance and Decolonization" (1977). Some of what he left us with:

  • "At the end of the day, we want the following: concrete and equal possibilities for any child of our land, man or woman, to advance as a human being, to give all of his or her capacity, to develop his or her body and spirit, in order to be a man or a woman at the height of his or her actual ability. We have to destroy everything that would be against this in our land, comrades. Step by step, one by one if it be necessary - but we have to destroy in order to construct a new life. This is the principal objective of our resistance." (p. 77)
  • "We have remained clear that we don't struggle against the Portuguese people. Everyone in our Party knows that. We do not struggle against the Portuguese or the Portuguese people; we struggle against Portuguese colonialism, against the Portuguese colonialists. We are fighting to clear out the Portuguese colonialists from our land. Yet we are even clearer: we in Guinea and Cape Verde, PAIGC, don't struggle against Salazarism or fascism in Portugal. That's the work of the Portuguese, not ours." (p. 83).​
  • "Our political resistance should orient itself around three fundamental points: 1) to realize national unity in our land and to place it entirely in the service of the struggle, in the service of our people, under our Party's flag; 2) to isolate the enemy from all of its allies, from all of its collaborators, from all those who offer some support against our struggle - without forgoing our principles; and 3) to orient our struggle in such a way, to work so well, that we should never forget our struggle is fundamentally political, and that we must assure the victory of our political resistance." (p. 89)​
  • "Our cultural resistance consists of the following: while we liquidate the colonial culture and the negative aspects of our own culture in spirit, in our midst, we have to create a new culture, also based on our traditions, but respecting everything that the world has won today for serving people." (p. 117)​
  • "Culture proves to be the very cornerstone of the liberation movement, and only societies or groups that have preserved their culture are able to mobilize, organize, and struggle against foreign domination. Whatever the ideological or intellectual characteristics of its expression, culture is an essential element in the historical process. It is culture that has the ability (or responsibility) to elaborate or enrich the elements that make for historical continuity and, at the same time, for the possibility of progress (and not regression) of the society." (p. 173-174)

Why We Lie About Aid

​"Why We Lie About Aid" (2018) appeared all over development studies social media in 2018, at one point topping Amazon's best seller list for the sub-category. For those who do not think aid is political, or who sit on the fence of development being political, Pablo Yanguas' book is an essential read. The book makes a clear and strong case, and should be essential reading for undergraduate students interested in development studies and practice.

What is the biggest challenge for aid and development in the future, according to Yanguas? It is that the simple tasks are largely complete, leaving the complex, political ones. "The reality of aid in the twenty-first century is that the most obvious problems to be fixed - maternal mortality, vaccination, literacy, and so on - are either fixed already or will be fixed by countries themselves in the coming decades. It is the intractable problems - almost all of them institutional - that will take decades or even longer to fully address. If aid donors really want to contribute to development in the twenty-first century, they need to focus on effectiveness instead of volume, strategy instead of tactics, and long-term pro-poor empowerment instead of short-term pro-poor results." (p 12)

The existing system presents donors, implementing agencies and individuals with a environment wherein the incentives push toward to the direction of action that does not enable the change Yanguas views as important: "One tragic repercussion of our short-sighted aid debates is an entirely wrong set of incentives for aid organizations and professionals. Domestic politics in donor countries has led to a strictly technical interpretation of development in the public eye, which forces aid practitioners to spend more time justifying their expenses than actually understanding and engaging with the difficult political contexts in which they operate" (p. 5)

Essentially, Yanguas makes a case for a more political understanding and approach to aid (and a recognition that it was already so, even if we pretended it was not): "aid, by its very existence, produces a number of political effects. I have called this the 'Aid Interference Principle': a donor cannot enter a political context without altering it. Despite apolitical mandates and protestations to the contrary, donor missions are very much a part of the political landscape of the countries in which they operate. Aid always benefits someone, and whenever local politics is seen as a zero-sum game, it is by definition undermining someone else. I have said this to donors many times in public presentations: an aid project can be a highly subversive thing. Support for NGOs and advocacy groups is an explicit attack on established institutions and elites. Support for technocratic reformers is an implicit attack on politics as usual and the players who benefit from limited rule enforcement. Likewise, budget support to a government represents a consolidation of centralised power by giving regime leaders new resources to distribute how they see fit. Money, ideas, and people: whatever form aid takes, it will always have a profound effect on local actors, legitimising some and delegitimising others; sanctioning existing coalitions or brokering new ones; and diffusing new models and techniques for control or contestation." (p. 145)

On aid projects in general: "Many foreign aid projects do not work as intended. Sometimes they struggle with structural constraints or demobilisation efforts. At other times, funds are wasted with incapable or unwilling implementation partners. And in more cases than practitioners would willingly acknowledge, projects are badly designed, lazily reproducing the best-practice flavour of the day with little attention to actual problem solving. However, there are also countless aid projects that do work as intended. Moveover, aid projects often have positive unintended consequences that are impossible to foresee, such as empowering erstwhile partners or diffusing new ideas about integrity, inclusion, and deservingness. Aid can train future challengers. It can generate useful information and policy models that bring together reform coalitions. It can even sway the minds of the most dominant of leaders. But of course, none of this usually makes it into project evaluations, much less the aggregate reports by aid agencies." (p. 198-199)

Ought we toss our hands in the air, or be optimistic? The latter has a chance, but requires action; work the authors calls upon many to engage in: "Without visionary leaders who are unafraid to defend the value of humane internationalism, it is up to practitioners, scholars, consultants, students, and concerned citizens to voice, argue, advocates, lobby, and demand a new moral vision for foreign aid. It is certain to be an uphill struggle, but nothing that local reformers and aid innovators do not face on a daily basis." (p. 215-216)

Civil Society: Challenging Western Models

Edited volumes seems to have a shorter shelf life than books, similar to academic articles. I recently picked up the somewhat dated (1996) edited volume of "Civil Society: Challenging Western Models", edited by Chris Hann and Elizabeth Dunn, to see what it might offer. It was written at a time when literature on civil society was just emerging, and in that regard it might be easy to criticize. However, my biggest disappointment with the book is that its aim of challenging western models was quite narrow. They write: "There is something inherently unsatisfactory about the international propagation of by western scholars of an ideal of social organization that seems to bear little relation to the current realities of their own countries" (p. 1). Yet, the contributing authors are all based in Europe or North America; the voices of the Global South were rather mute. There are chapters on Russia, Turkey, Jordan and Syria, Indonesia, Japan and China - so there is some global coverage - but challenging western models somewhat implies one ought to include non-western voices.

This edited volume has a gem of a chapter than I highly recommend students of development studies read: Chapter 6, written by Steven Sampson, called "The Social Life of Projects: Importing Civil Society to Albania" (p 121-142). Quotes from that chapter include:

"Behind the apparent rationality of projects and the discourse of 'institutional development' and 'capacity building', there also lies a considerable amount of magic or mystical thinking. Concepts such as 'human rights' or 'civil society' originate in a superlocal space (European Union (EU) in Brussels, European Parliament in Strasbourg, World Bank in Washington, the UNDP in New York, ILO in Geneva, etc.). These concepts then become programmes and projects, and the whole apparatus of fund-raising, the often unfathomable application forms, and even the currency used all have their own mystique." (p. 124)

"Many skills are also unequally distributed, and so too is access to information and symbolic resources: information about money, and information about dominant concepts. It is here that the magic of transition appears. The ability to master the symbolic resources of transition, to gain access to knowledge and to manipulate it, determine whether an enterprising young individual in Eastern Europe becomes a party politician, an NGO leader, an employee of a western agency or firm, a local entrepreneur, or a mafioso." (p. 124)

Failures are then explained in terms of 'legacies' from the past, 'socialist mentality' or 'resistance' by those being affected. In fact, many 'systems-export' schemes fail because systems or units are exported without their western context... The well-functioning NGOs and interest organisations of Danish civil society exist in an environment of effective public administration, an open press, and a political system which knows how to react to public pressure. In addition, Danish NGOs are in close contact with their funding sources; many are subsidised by state funds. Danish NGOs are thus well embedded in society, and they do what they do well. In Eastern Europe, where states are weak and finance nearly non-existent, where social problems are acute and confidence in social organisations is low, where kin, network and ethnic groups resolve problems which associations resolve in the west, the entire context of civil society differs. In this situation, the export of Scandinavian interest organisations is bound to be problematic. It is a case of what the Romanians call 'form without foundation'. (p. 125-126)

And from Susanne Spulbeck: "As Hannah Arendt points out, under conditions of totalitarian rule, friendship and any other type of social relationship arouse suspicion. The basis for an ideologically legitimised totalitarian order and its 'loyalty' (the recognition of its validity by all) can only be provided by completely isolated individuals, whose ties to family and friends have failed to secure them a place in the world. It is this isolation which prevents participation in the public sphere. From the perspective of isolation, which makes the public sphere appear to be a threat and declares the quiescence to be local history, the development of a collective civil consciousness is not only difficult but dangerous." (p. 75)

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