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.