|The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It
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Global poverty, Paul Collier points out, is actually falling quite rapidly for about eighty percent of the world. The real crisis lies in a group of about 50 failing states, the bottom billion, whose problems defy traditional approaches to alleviating poverty.
In The Bottom Billion, Collier contends that these fifty failed states pose the central challenge of the developing world in the twenty-first century. The book shines a much needed light on this group of small nations, largely unnoticed by the industrialized West, that are dropping further and further behind the majority of the world's people, often falling into an absolute decline in living standards. A struggle rages within each of these nation between reformers and corrupt leaders--and the corrupt are winning. Collier analyzes the causes of failure, pointing to a set of traps that snare these countries, including civil war, a dependence on the extraction and export of natural resources, and bad governance. Standard solutions do not work against these traps, he writes; aid is often ineffective, and globalization can actually make matters worse, driving development to more stable nations. What the bottom billion need, Collier argues, is a bold new plan supported by the Group of Eight industrialized nations. If failed states are ever to be helped, the G8 will have to adopt preferential trade policies, new laws against corruption, and new international charters, and even conduct carefully calibrated military interventions.
As former director of research for the World Bank and current Director of the Center for the Study of African Economies at Oxford University, Paul Collier has spent a lifetime working to end global poverty. In The Bottom Billion, he offers real hope for solving one of the great humanitarian crises facing the world today.
- Intelligent and Intelligible
Collier begins by telling us that poverty is falling rapidly for about 80% of the world. The real crisis lies in a group of about 50 failing states (70% in Africa, the rest in Asia - eg. Afghanistan, with a few in South America) comprising the bottom billion. The corrupt in these nations are winning, and civil war, dependence on extraction and export of natural resources, and poor governance acerbate problems. Their decline is not just relative - often it is absolute.
These bottom-billion nations are small, and 73% are in or recently were in a civil war. Low income and slow growth make a country prone to civil war, as well as likely to also have weak government. Raw material dependence (eg. oil, diamonds) is another factor. Political repression and income inequality do not seem to be factor, though ethnic strife is where one faction is dominant.
Civil wars average six years in length, even longer in the poorest countries. Heavy raw material exports create the "Dutch disease" - currency rises, making other export activities uncompetitive. The more ethnically-diverse a population, the worse democracy performs in a resource-rich environment as "team voting" predominates (instead of competency).
Being landlocked makes a country dependent on ones' neighbors infrastructure, though it also presents a marketing opportunity if that nation is a buyer. Switzerland benefits, Uganda does not.
Successful turnarounds are more likely with a greater percentage of the population having at least a secondary education; a larger population also helps. Democracy, however, does not help.
The poorest nations "missed the boat" in the 1990s - Asian nations now have economies of scale as well as low wages. Rich nation's protecting their agricultural industries undermine aid programs to the poorest nations.
Finally, "The Bottom Billion" goes on to make suggestions. The bad news, however, as Collier points out, is that the real cure has to come from within....more info
- Delightful and mostly intelligent
This very eloquent and mostly thoughtful book about the world's poorest countries will offend ideologues of all stripes. Collier's four different explanations for poverty traps (war, presence of natural resources, bad neighbors blocking trade routes, and corruption) clearly place him as a fox rather than a hedgehog without being complex enough that they can rationalize any result (although they can probably rationalize more results than an ideal set of explanations would). He blames both villains in poor countries and thoughtless voters in wealthy countries.
Collier sees that globalization has benefited most nations, but provides plausible mechanisms by which globalization can harm some (e.g. through enabling capital flight).
Collier mostly thinks like a good economist, but his prior work for the World Bank biases him to be overly optimistic about improving such institutions. He recognizes the incentives that cause bureaucrats to be too risk averse, but then makes a cryptic claim that the British government understands the problem and is spending money to fix it. He vaguely implies that this is a venture capital-like fund, but fails to say whether they replicated the key venture capital feature of providing unusually large rewards to employees who produce unusually good results. His silence on this subject leads me to suspect that he's asking us to blindly trust institutions that have a long track record of avoiding results-oriented incentives.
He also shows misplaced faith in authority when he tries to calculate the value to the world of rescuing a failed state by using George Bush's calculation that the benefits of installing a good government in Iraq exceeded the expected $100 billion cost. That might be a good argument if Bush had been spending his own money to help Iraq, but his willingness to spend other peoples' money doesn't say much.
Collier says it is "surely irresponsible" to leave Somalia with no government. Yet most evidence I've seen (http://www.peterleeson.com/Better_Off_Stateless.pdf) says Somalia improved by most standard criteria such as life expectancy when it had no government. I don't know how reliable that evidence is, but Collier's apparent assumption that we don't need to look at the evidence makes his opinion suspect.
The book's biggest shortcoming is the absence of anything resembling footnotes. Collier implies this is too make the book more readable, but he could have put a section of notes at the end referencing individual pages without altering the main text in any way. Instead he only gives a fairly large list of papers he's written. But I can't tell without tracking down and reading a large fraction of them which of them if any support his controversial claims (e.g. that giving money to the poorest countries helps them a bit but that doubling it would reach a limit beyond which further money would be wasted).
But his advice is good enough that its value doesn't depend much on those controversial claims being right. Following his advice to condition aid on results (e.g. sending money to countries when they stop wars, cutting it off if they have a coup or resume war) would provide incentives that would make aid beneficial.
I had previously suspected that large countries have tended to escape poverty more easily in the past few decades because "aid" organizations had enough money to prop up small corrupt governments but not enough to affect a government such as India's. Collier presents a good alternative theory: being a large country pretty much guarantees access to the sea, and by increasing the number of neighbors, increases the chance of having a neighbor which is open to trade.
Another good tidbit is this point on Fair Trade: farmers "get charity as long as they stay producing the crops that have locked them into poverty."...more info
- Elegantly brilliant, incisive clarity, quite extraordinary
I read a lot, almost entirely in non-fiction, and this book is easily one of the "top ten" on the future and one of the top three on extreme poverty, in my own limited reading.
The other three books that have inspired me in this specific area are:
The Fortune at the Bottom of the Pyramid
Creating a World Without Poverty: Social Business and the Future of Capitalism
The End of Poverty: Economic Possibilities for Our Time
There is an enormous amount of actionable wisdom in this book, which is deceptively easy to read and digest. The author's bottom line is clear early on:
A. The fifty failing states at the bottom, most in Africa, others in Central Asia, are a cesspool of misery that is terribly dangerous to all others, exporting disease, crime, and conflict.
B. The responsibility for peace to enable prosperity cannot be expected from within--it must be provided as a common good from outside. In support of this point, toward the end of the book, the author posits a 15:1 return on investment from $250M a year in investment and aid, mostly technical assistance.
This book is a superb guide for regional authorities and international coalitions with respect to the value of non-military interventions.
The author provides compelling yet concise overviews of the four traps that affect the billion at the bottom:
A. The Conflict Trap
B. The Natural Resource Export Trap
C. Landlocked in a Bad Neighbors Trap
D. Poor and Corrupt Governance
The author describes the need for a "whole of government" approach, both among those seeking to deliver assistance, and those receiving it.
I have a note, a new insight at least to me, that AIDs proliferated so quickly across Africa because of the combination of mass rape followed by mass migration. There are many other gifted turns of phrase throughout.
A study on the cost of a Kalashnikov is most helpful. The author tells us that the legacy of any war is the proliferation of inexpensive small arms into the open market.
Across the book the author points out that the gravest threat to governance and stability within any fragile economy is a standing army.
Each of the traps is discussed in depth.
The middle of the book outlines nine-strategies for the land-locked who suffer from being limited to their neighbors as a marketplace, rather than the world as a whole.
1. Work with neighbors to create cross-border transport infrastructure
2. Work to improve neighbors' economies for mutual benefit
3. Work to improve access to coastal areas (the author points out that the sea is so essential, that landlocked countries should not* be* countries, they should be part of a larger country that borders the sea)
4. Become a haven of peace, providing financial and other services.
5. Don't be air-locked or electronically-locked (the first study of the Marine Corps that I led in 1988-1989 found that half of the countries of concern did not have suitable ports but all had ample C-130 capable airfields).
6. Encourage remittances
7. Create transparent investment-friendly environment for resource prospecting
8. Focus on rural development
9. Attract aid
Toward the end of the book I am struck by the author's pointed (and documented) exclusion of democracy and civil rights as necessary conditions for reform. Instead, large populations, secondary education, and a recent civil war (opening paths to change), are key.
$64 billion is the cost to the region of a civil war, with $7 billion being the minimal expected return on investment for preventing a civil war in the country itself.
Bad policies come with a sixty year hang-over.
Asia is the solid middle and makes trade a marginal and unlikely option for rescuing Africa UNLESS there are a combination of trade barriers against imports from Asia, and unreciprocal trade preferences from richer countries. In the context of globalization, only capital and people offer hope.
In the author's view, capital is not going to the bottom billion because:
A. Bottom of the barrel risk
B. Too small to learn about
C. Genuinely fragile
In terms of human resources, after discussing capital flight, the author concludes that the educated leave as quickly as they can. I am inspired by this discussion to conclude that we need a Manhattan project for Africa, in which a Prosperity Corps of Gray Eagles is incentivized to adopt one of the 50 failed states, and provided with a semblance of normal living and working conditions along with bonuses for staying in-country for ten years or more. As I reflect on how the USA has spent $30 billion for "diplomacy" in 2007, and over $975 billion for waging war, (such that the Comptroller General just resigned from a fifteen year appointment after telling Congress the USA is "insolvent") this begs public outrage and engagement.
As the book makes its way to the conclusion the author's prose grabs me:
"We should be helping the heroes" attempting reform
We are guilty in the West of "inertia, ignorance, and incompetence."
The "cesspool of misery....is both terrible....and dangerous."
Several other noteworthy highlights (no substitute for buying and reading the book in its entirety:
Aid does offer a 1% growth kick
Aid bureaucracy, despite horror stories, adds real value in contrast to funds that vanish into the corrupt local government
Misdirection of unrestricted funds leads to militarization and instability.
The author touches briefly on the enormous value that industry can offer when it is finally incentivized to do so. DeBeers and its certification process are cited with respect, perhaps saving diamonds from going the way of fur.
The author stresses that top-down transparency enables bottom-up public scrutiny and the two together help drive out corruption (something Lawrence Lessig has committed the remainder of his life to).
There is an excellent section on irresponsible NGOs, notably Christian Aid, feared by the government and not understood by the public.
I put the book down with a very strong feeling of hope.
Other books I recommend, in addition to the three above:
A More Secure World: Our Shared Responsibility--Report of the Secretary-General's High-level Panel on Threats, Challenges and Change
Deliver Us from Evil: Peacekeepers, Warlords and a World of Endless Conflict
Confessions of an Economic Hit Man
The Shock Doctrine: The Rise of Disaster Capitalism
The Unconquerable World: Power, Nonviolence, and the Will of the People
The leadership of civilization building: Administrative and civilization theory, symbolic dialogue, and citizen skills for the 21st century
Plan B 3.0: Mobilizing to Save Civilization, Third Edition
- Objectivity + Readability = Must Read
The previous reviews have done a solid job explaining the concepts. I will agree that the lack of citations is annoying, but with some unnecessary effort, you can find the citations you want from his website.
This book is not only fascinating and thought-provoking, but very easy to read. Collier distills concepts that are broad, deep and complicated like few writers I have come across. He is probably an excellent teacher because he can translate his knowledge into language I can understand.
The big reason to buy this book is that he does a great job explaining exactly why being resource-rich is a curse. Others have alluded to this phenomenon, but Collier is the first to really impact my understanding of the issue. He also explains why electoral democracies with poor checks and balances are actually worse at dealing with this curse than autocracies.
The good news is that full-fledged liberal democracies with strong checks on executive spending are able to out-compete them both.
This book is refreshing because he is not a polemic loud-mouth like so many writers on politics, aid and development. He is very conscious of over-reach and he is very measured in his praise and condemnation. He seems like a reasonable guy with a ton of experience and some very good ideas about helping make the world a better place.
The book is only 188 pages, just buy it already. You won't regret it.
- Between a Rock and a Hard Place
Developing countries are quite unlike Tolstoi's characterization of happy and unhappy families. Each happy country looks different from the other, and there are vast differences between China, India, Brazil, and other developing success stories, but there is a similarity between unhappy countries--countries that are not only failing to develop, but also going downward and falling apart. Together, these countries have a combined population of about one billion people, and what happen to this bottom billion has important consequences for the whole world.
Paul Collier pioneered the burgeoning research on the economic causes of conflicts, and his work on civil wars has proved quite controversial among political science experts. Those experts tend to interpret civil wars in terms of heroic struggles motivated by grievances or ethnic strifes reflecting deeply-rooted hatreds. The author's research shows that rebel groups are usually doing well out of war, and that greed often trumps grievance as the underlying cause of conflict. He proves this by statistical analysis, showing for instance that there is basically no relationship between political repression and the risk of civil war, or between ethnic fragmentation and conflict (although ethnic polarization does play a part).
Conflict is not the only trap. The author also goes through the natural resource trap, the trap of being landlocked with bad neighbors, and the trap of bad governance in a small country. Those traps often reinforce each other, and their combined effects condemn the bottom countries to the slow lane. In each case, Paul Collier not only successfully reviews the existing literature, but also offers original insights drawn from his own research. For instance, he demonstrates that far from being immune from the resource curse, democracies may create additional risks by inducing a phenomenon of "survival of the fattest". He is, to my knowledge, the first expert to point out that diversification of resource providers away from the Middle East in the name of energy security may actually increase the risk of disruption on world markets by creating new zones of instability: "Shifting our source of supply simply will not work as a security measure if the resource curse shifts with it."
This research has direct policy relevance. By putting a price tag on the cost of a typical civil war (about 64 billion) or the gain of a sustained turnaround placing a formerly failed state on a secure path (about 100 billion), the author allows decision-makers to base their decisions on cost-benefit analysis. He shows that some interventions have a very large pay-off: the British Operation Palliser in Sierra Leone was a huge success, worth perhaps thirty times its cost. The protection offered by the French against military coups in Africa, now tempered by a hesitation to intervene, was perhaps also worthwhile. The European Union's new rapid reaction force may play a similar role in the future by offering a guarantee to democratic governments conditional upon internationally certified free and fair elections. "Making coups history" is certainly more controversial than the global rally against poverty, but may in the end contribute more to the plight of the bottom billion than the doubling of aid flows.
Indeed, the author shows that aid offers only part of the solution, and the way it is currently managed makes it in certain cases part of the problem. Rich countries and development agencies need to narrow the target by focusing more on the bottom billion, while at the same time broadening the instruments in order to consider policy tools other than aid. This process also characterizes the author's own research, which increases the focus of economic analysis by using cutting-edge statistical tools, while broadening the scope of relevant issues, in order to inform the decisions of policy makers. To give an example, people often wonder how much of Africa's wealth has fled the continent, or how much aid leaks into military spending. Paul Collier not only addresses these issues, he answers them by giving numerical estimates (respectively 38% and 11%).
The book also contributes to the broader debate on globalization. The author has little tolerance for the protest crowds of anti-globalizers who besiege international financial institutions and G8 summits. He calls them by their name: they are anti-capitalists, and they have little interest in helping poor countries benefit from the system that they are fighting against. He also challenge people who care about global poverty but are driven by slogans, images, and anger, instead of rational analysis. But he is no rosy optimist either, and he offers a sobering view on global economic integration. Although globalization has worked wonders to lift a vast portion of humanity out of poverty, it is now making things harder for latecomers, who now face formidable competitors in China or in India. In his own words: "When Mauritius escaped the traps in the 1980s it rocketed to middle-income levels; when neighboring Madagascar finally escaped the traps two decades later, there was no rocket."
The Bottom Billion therefore opens horizons across political divides. To quote from the introduction: "The left will find that approaches it has discounted, such as military interventions, trade, and encouraging growth, are critical means to the end it has long embraced. The right will find that, unlike the challenge of global poverty reduction, the problem of the bottom billion will not be fixed automatically by global growth, and that neglect now will become a security nightmare for the world of our children."...more info
- Politicizing the Poor
It's hard not to be delighted by this marvelous book. The author does an excellent job sorting through the complexities of economic data to explain why the rising tide of the world's economy is leaving roughly one billion of the world's population, most of them in Africa, mired in what seems to be perpetual misery and poverty. Some of his conclusions are obvious, that being landlocked in a region with poor transportation hurts. Some of it is less obvious, that having a valuable mineral to be extracted may prevent a country from developing other and perhaps more stable sources of export income. We would think that one source of income, say oil or gold, could be used to jump start an economy in other areas.
I do feel, however, that as an economist, he may not fully appreciate the other human factors in national success or failure, particularly non-economic ones when people are driven by obsessions with power and irrational hatreds. Two examples come to mind.
One happened recently to me when I saw someone I work with, an exceptionally kind, soft-spoken and decent man who's from East Africa, carrying a copy of Time magazine that featured Putin as "Man of the Year." When I told him that I saw that as dreadful, that Putin was a thug, he surprised me by disagreeing. Putin, he said, was a "strong man," obviously equating that to being a good leader. Pondering his reasoning, I realized that if the people in a nation lack self-control, if there's no culturally or religiously developed moral standards that keep ethnic or tribal hatreds from spiraling out of control, then a strong man who crushes everyone beneath his boots may seem a welcome relief. But a solution like that never gets rid of the problem. To rule, such a strong man often practices 'divide and conquer,' feeding anger and hatred, in an effort to feel in control. But once trapped in that cycle of hatred requiring dictatorial rule which then feeds hatred, a nation may never escape.
Nor is that pathology confined to impoverished countries. You can find it even in relatively affluent communities in this country. Pastors of virtually all-black churches have reason to fear that their considerable power in the black community will be threatened as their members find fewer and fewer differences between themselves and their white neighbors and co-workers and begin to join churches that are less multi-racial than simply places where race has become irrelevant--as in now is between Caucasians and Asians in Seattle where I live. You've seen the result of that recently in the news. Black pastors, like the Rev. Wright, whose church Obama attends, have to feed racial hatreds, branding all whites as evil and untrustworty and promoting conspiracies as weird as those of anti-Semitism, to retain their role as the "strong man" in the black community. Their power creates and feeds off hatred.
Second, because the author is so well-intentioned himself, when he discusses in Chapter 8 the role of outside military invention in countries torn by war or ethnic violence, he doesn't seem to realize that, particularly in the U.S., foreign policies have domestic implications. For several decades a major slice of the American left has demonstrated an unwillingness to support any sort of agenda that portrays a foe of the left, usually anti-communists, the Republicans, the religious and political conservatives, in a favorable light. That attitude first began with opposition to the Vietnam War. The flight of some two-million Vietnamese from South Vietnam after the US pulled out and the genocide of Pol Pot made no change in the attitude of the anti-war left because that attitude was never motivated by any concern for the Vietnamese people. Combine that deep indifference to human suffering with a willingness to engage in vicious lying and a press that seems incapable of seeing what is happening, and you have a terrible mess.
I saw that attitude myself as a grad student at the University of Washington in the early 1980s. The left on campus was simply incapable of seeing Reagan as anything but the personification of evil. And, as with Rev. Wright, with a major political group seeing everything in light of its own power and willing to slander anyone who gets in the way of that power, it's almost impossible to talk, as the author does so well, about developing sensible policies. The very success of those policies in the hands of a Republican will drive them into irrational rage. To give but one example, in the US the left hates Bush so much, that they obviously don't care what happens to the Iraqi people, all they want to see happen is for Bush to fail. In such a context, the author's hopes for well-executed military inventions in troubled countries are doomed to failure, particularly in the hands of Presidents who are less persistent in the face of criticism than Bush has been over Iraqi.
Much the same can be said about Bush's efforts to provide Africa with economic assistance. Over the short term, those programs may have benefited from their low profile. Attention directed at any success they might have would have triggered nasty attacks by a left in this country that is growing increasing unhinged. But not drawing attention to those success has a downside, it leaves those programs in danger when the Presidency passes to someone else in 2009.
In short, much of the good sense in this book is threatened by the irrationalities and hatreds of domestic politics both here and in Europe.
--Michael W. Perry, editor of Chesterton on War and Peace: Battling the Ideas and Movements that Led to Nazism and World War II...more info
- Instruments to End the World's Worst Poverty
Maybe you let your subscription to Journal of African Economics expire. Maybe you haven't leafed through the latest Oxford Bulletin of Economics and Statistics. Pity that. But, Paul Collier's "The Bottom Billion" bridges the gap between the glossy "solutions" to world poverty that adorn t-shirts, and the dense academic prescriptions that end up in these kinds of journals. Sort of like Freakanomics meets Oxfam.
Collier breaks the book up into two sections. The first talks about four traps the people in our poorest countries (the bottom billion): having bad neighbors, the resource curse, bad governance, and conflict.
Some of this is merely a summary of what is evident in newspapers or books today. Jeffrey Sachs has made the problems of the resource curse pretty well known, and people on the left and the right are always talking about bad governance. Obviously, conflict is a problem.
The issue of being landlocked with bad neighbors makes some common sense. It is different trying to be an export business in Missouri, where access to ports and airports is without obstacle, than it is trying to access foreign markets from inside the interior of the Democratic Republic of the Congo.
The second part of the book talks about how each "trap" imposes a different set of solutions for its resolution. For example, export-led development, while largely the mantra of NAFTA and GATT, is not effective in either resource-driven economies or in post-conflict societies. It's not easy in landlocked communities, either, although with infrastructure investment, there are opportunities.
I think that there is a temptation to view post-colonial development in the frame of a particular country. Right now, Collier says, that country is Iraq. Iraq, in this book's analysis, is a resource-rich country (trap) with deserts and access to ports (good) but some very bad governance (related to resources, but also bad on its own.) The overarching solution was military intervention, with a second emphasis on the extension of democracy. Now that Iraq has failed, both are probably less than appealing in popular politics. That can be a problem, though, as that is what allows another Rwanda to occur. When we flee Somalia after 19 deaths, it sends a message to thugs.
Collier has a few things to say, mostly negative, about some of the most popular ideas in recent years. He is not too hot on "Fair Trade," and he wonders why the West has to lead with solutions that reflect their interests (environment, labor) when the bottom billion really want better governance.
This is a good book for affluent Westerners who want to expatiate their guilt.
- A middle path?
Every year, the Council on Foreign Relations picks two books for discussion among its members across the nation. This past autumn, Paul Collier's "The Bottom Billion" was selected. I'm glad it was; otherwise, I would never have picked this book up and would have missed out on a compelling, if not necessarily inspiring, read.
To begin with, Collier's work needs to be placed in proper context. The international development community is currently engaged in a rather fierce debate, which was one of the many things that I learned while reading "The Bottom Billion." On the left, there is celebrity economist Jeffery Sachs of Columbia University and his recent book, "The End of Poverty: Economic Possibilities for Our Time," which paints an optimistic picture of just how much and how relatively quickly international aid can work to ameliorate poverty around the globe. On the right sits NYU economist William Easterly and his anti-Sachs book "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good." In his book, Easterly lampoons the West's misguided efforts to alleviate suffering around the world from their cozy offices on H Street and Morningside Heights. Collier quite consciously puts his arguments forward as a middle path between Sachs' Pollyanna vision on the constructive impact of international aid and Easterly's depressing view of the Third World as a hopeless basket case.
Within the development community, it has become fashionable to ascribe failure to achieve economic growth to a certain set of "traps," and Collier, an Oxford economist who has devoted his professional career to studying African economies, puts forth four specific traps of his own: 1) civil war; 2) natural resources; 3) landlocked with bad neighbors; and 4) poor governance. It is important to note that Collier specifically rejects any notion of "African exceptionalism" (i.e. Africa is a mess for a set of reasons unique to Africa) and stresses that the aforementioned traps apply to countries outside of Africa, specifically those in Central Asia and some isolated cases in the Caribbean, South America and South East Asia. That said, let's not kid anyone: this is a book about Africa and determining how the developed world can most effectively rescue nearly 800 million Africans from the horror of living on the precipice of starvation. Thus the term "bottom billion." Collier notes that the development community focuses on the six billion people living in the developing world, which includes such economic development stars as India, China, and Brazil, whereas they should be squarely focused on the bottom billion who reside in such backwaters as Central African Republic or Burkina Faso. Indeed, although Collier never claims this in his work, it seems to me that the author's arguments suggest that the bottom billion should be further triaged. Some countries, like CAR and Burkina Faso, which fall into the most pathetic of Collier's traps - landlocked with bad neighbors - are essentially beyond saving. Just as corpsman on the battlefield have the unenviable job of putting certain casualty cases off to the side so they can work on those that can actually be saved, it seems to me that the thrust of Collier's work is that the development community should focus on the top half of the bottom billion; countries that suffer mainly from poor governance and/or suffer from the Dutch Disease caused by dependence on oil or diamonds in their economy, and which have the greatest opportunity to achieve sustainable economic growth with the proper type and level of outside assistance.
More than anything else, I was depressed by Collier's take on globalization and what it means for sub-Saharan Africa. In short, he argues that the bottom billion missed the boat on globalization and the opportunity to establish competitive positions in low cost manufacturing. Instead, the continent remains mired in natural resource dependency or commodity mineral/or agricultural production. Collier sees factories that produce widgets for the West as the ideal path to sustainable, stable growth. And now that East Asia has effectively captured that market, there is no incentive for western manufacturers to move operations to Africa where the wage differential is minimal and the political risk is extreme. In one of Collier's many memorable phrases: "Economic growth is not a cure all, but lack of growth is a kill all." Without large scale, low cost manufacturing, Collier seems to suggest that the most vulnerable African economies will continue to cling to 1 per cent GDP growth, which tends to be fueled mainly by aid initiatives and results in its own form of Dutch Disease.
This leads to the final, notably depressing aspect of Collier's arguments: those in the development "biz" and "buzz" are fundamentally part of the problem. Collier spent some time in a senior leadership position at the World Bank, so he presumable knows what he is talking about. He writes that development professionals are rewarded for allocating funds and not taking risks. Meanwhile, the Bonos and Angelina Jolies of the world pour energy and attention to well-meaning but completely ineffective efforts like building schools for girls where there is no hope to gain employment after graduation. Meanwhile, in Collier's view, idealistic non-governmental organizations often serve as "useful idiots" for the knuckle-dragging anti-globalization movement, which views Collier's greatest, long-term development hope, low cost manufacturing, as purely exploitative to developing economies (the large British NGO "Christian Aid" comes in for a particularly withering assault by Collier on this topic). While World Bank and IMF officials engage in bureaucratic turf battles and distribute aid in the most parochial manner, rock stars shine a spotlight on photo-ops with little long term economic benefit, and NGOs contribute to the stereo-type of capitalism as something diabolic, the African leaders themselves sit back and actively thwart any attempts to instill meaningful reform so as to preserve their powerbase, which is inevitably build on graft and corruption. There are no heroes in "The Bottom Billion," that is for sure.
So what can be done about? Collier lays out a litany of international charters and norms that should be established, which all sound reasonable and plausible to implement, but hardly give one much hope for significant change any time soon. Perhaps that is the point of this book. The situation is really deplorable in sub-Saharan African - in fact, staggeringly so. The vast majority of the international development players and indigenous leaders are a fundamental part of the problem. The best hope for real improvement was lost when East Asia decisively captured the low cost manufacturing opportunity that was presented with globalization. In the end, Collier doesn't offer a middle path between Sachs and Easterly. Rather, he makes Easterly's point more humanely and persuasively, while holding out a few threads of hope on which one might close their eyes, make a wish, and pull.
absolutely the best book on development policy I have read. I am an economjst and I have at times worked for the World Bank Nd IMF but I have never reached the clarity that Paul Collier provides. every head of state needs his briefing....more info
- Pragmatic Model
A pragmatic, empirically based and for the most part apolitical view of development which stands out in a field blessed and cursed with idealism. The distinction of the bottom billion versus the typical 5 billion that is defined as developing is a critical one. This bottom billion is not "developing" and for the most part is regressing relative to the rest of the world.
Unfortunately once in this club it is very difficult to get out as so many factors work against you and sometimes that includes the people and methods intended to assist. Dr. Collier presents four traps that have kept most of these countries from escaping poverty: conflict trap, natural resource trap, landlocked/bad neighbors, and bad governance. Many countries are trapped by more than one of these. His logic framing this theory is very sound. He presents the potential tools to assist getting out of the traps as well: aid, military intervention, laws and charters, and trade policy. However each of these can have either positive or negative effects and he presents data to support both. The distinguishing factors are in the details of when, how and the who is behind the application of these tools. In one part of the book he likens development strategy to venture capital strategy where the expectation is to have many losers and a few big winners that make it a worthy and beneficial exercise. Unfortunately the present state of aid disbursement tend to either measure purely on money distributed without regard to results or one that is so focused on results that incentivizes aid towards more safe havens that are typically not in the most needy category.
The bottom line from "The Bottom Billion" is that there are no easy answers and unfortunately much of the work in this area has been very black and white. More dollars for aid is needed or aid is always detrimental, trade takes advantage of the poor or trade is always the answer. Unsuccessful military interventions mean all intervention is bad and so on and so on. That's where a pragmatic and data centered approach helps. The book provides some very useful advice in developing development strategy that has a shot at working.
- It Will Challenge Your Assumptions
The Bottom Billion will challenge your assumptions and focus your mind on the problem of the world's poorest. Not just the world's poor, usually estimated at 5 billion, but those who are really at the bottom with no upward trajectory. Collier organizes the problems of the world's poor in different categories, which he calls "traps." These include being landlocked, chronic conflict, natural resources, and bad governance.
His remedies include aid, international charters to improve governance, trade, and military intervention. But each proposal offers some new twist. For example, he does not blindly call for WTO-style free trade, but actually wants to see a manipulation of trade barriers to protect the bottom billion from competing with many Asian countries.
Collier uses statistical analysis to demonstrate his points and make his conclusions. In some cases, since the book is written for a lay person like me, it glosses over the inputs used to figure out the numbers. I was not certain how certain policies were weighed against certain outcomes, such as military intervention. But the thoughts were still interesting ones.
Collier also does not list the countries in his bottom billion, though emphasizes it is not just African nations he is concerned about. But since most, if not all, of his examples were from Africa it is hard to figure out what other countries he is concerned about, Bangladesh excluded. He could also give some examples of countries that have just broken out of the bottom billion category, perhaps Ghana and others, as illustrative of the path that needs to be followed.
But overall the book is compact and interesting. It offers a grab bag of potential polices and emphasizes that there is no one answer. Global growth for all requires cooperation within individual governments and across national lines. Increased aid alone will not get the job done....more info
- Escaping the Poverty Trap
Of the 6 billion people that inhabit the earth, it has been estimated that about 1 billion live in wealthy countries, 4 billion live in developing countries, and about 1 billion live in countries whose economies are either stagnant or declining. About 70 percent of those in the last category are in Africa. Now comes Paul Collier, director of the Center for the Study of African Economies at Oxford University, adding his name to the list of those who have attempted to formulate a strategy for lifting the bottom billion out of poverty. (Others include Jeffrey Sachs in The End of Poverty: Economic Possibilities for Our Time and William Easterly in The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.)
Sachs is an optimist who believes that aid, correctly applied, can solve Africa's poverty. Easterly, on the other hand, is a pessimist, but concedes that aid, applied in a piecemeal fashion to see what works, can work. Collier is more of Easterly's persuasion, but differs in that he, Collier, is more interventionist.
According to Collier, the bottom billion live in "trapped countries," that have no visible means of improving their lot. He identifies 4 elements that cause countries to become trapped:
1)Civil war. Three-quarters of the bottom billion have been through or are currently experiencing civil war. Civil wars usually occur where there are large numbers of unemployed and uneducated young men, and where there are ethnic imbalances.
2)Natural resource curse. Countries with large amounts of natural resources tend not to develop the skill sets of their people, and they tend not to hold democratic elections. Corrupt governments and impoverished and violent masses are usually the result.
3)Landlocked countries. This is odd because many of the countries in Africa are coastel or on major waterways. Granted, being in a landlocked country is economically disadvantageous.
4)Bad governance. Bad governance is the hallmark of trapped countries often caused by elements 1 and 2.
Collier points out that aid is not a good idea since it works like the resource curse. It supports kleptocrats without making them accountable to their people. Indeed aid can retard economic development.
Furthermore, it has been established that most poor countries that have emerged from poverty have done so through labor-intensive export industries. The problem for Africa is that China and others are currently doing this making it very competitive. Collier thinks that best way for rich countries to foster growth in Africa is to eliminate or reduce tariffs on their exports. This prescription would probably fall on deaf ears in rich countries who are forever trying to protect their own industries.
More controversially, Collier argues that foreign military intervention would be helpful in stabilizing countries wracked by civil war. Currently, that would be a non-starter given the events in Iraq. There is, however evidence to support his claim: i.e. Sierra Leone.
The best advice that Collier gives is requiring trapped countries to comply with international laws and regulations in exchange for aid. Call it imperialism if you will, but the practice of the European Union of requiring recipients of aid to sign charters for better governance is really the best way to alleviate poverty. The European way of soft power is so far the most effective way to make development aid work....more info