The Bottom Billion Part 1

THE BOTTOM BILLION

WHY THE POOREST COUNTRIES ARE FAILING AND WHAT CAN BE DONE ABOUT IT

PAUL COLLIER

OXFORD UNIVERSITY PRESS              2007

PART 1

Preface

• When I graduated I wanted to put my knowledge of economics to use in Africa. Africa’s new countries were ill-equipped, and scarcely any Africans had received the sort of education I had just been through. The father of my friend had been the governor general of a small country called Nyasaland. Renamed Malawi, it was the poorest country on the continent.
• Malawi hasn’t changed much in the last 35 years. I’m still working on Africa, now as a professor at Oxford. In between I’ve been a professor at Harvard, and directed the World Bank’s research department, focusing on the poorest countries.
• This book is about the Malawis and the Ethiopias of this world, the minority of developing countries that are now at the bottom of the global economic system. The countries now at the bottom are distinctive not just in being poorest but also in having failed to grow. Many of these countries are not just falling behind, they are falling apart.
• For the past few years much of my work has been on civil war. I realized that the conflict gap was one explanation for the countries now at the bottom of the world economy.
• Malawi has been conflict-free for its entire postindependence history, yet it still has not developed. Neither have Kenya and Nigeria. Nor do I believe that poverty itself is a trap. These development failures occurred against a backdrop of global development success – poverty is something that most people are managing to escape.
• Since 1980 world poverty has been falling for the first time in history, but elsewhere there were development failures: Haiti, Laos, Burma, and the Central Asian countries, of which Afghanistan has been the most spectacular. A one-size-fits-all explanation for development failure doesn’t ring true against such diversity.
• Part of the reason single-factor theories about development failure are so common is that modern academics tend to specialize: they are trained to produce intense but narrow beams of light. In my career I have written books on rural development, labor markets, macroeconomic shocks, investment, and conflict. This breadth has its advantages.
• Eventually I came to see that 4 distinct traps explain the countries now at the bottom. Between them they account for around a billion people. If nothing is done about it, this group will gradually diverge from the rest of the world economy over the next couple of decades, forming a ghetto of misery and discontent.
• The problems these countries have are very different from those we have addressed for the past 4 decades in what we have called ‘developing countries’ – that is, virtually all countries besides the most developed, which account for only 1/6^th of the earth’s people. For all this time we have defined developing countries so as to encompass 5 billion of the 6 billion people in the world.
• But not all developing countries are the same. Those where development has failed face intractable problems not found in the countries that are succeeding. We have, in fact, done the easier part of global development; finishing the job now gets more difficult. Finish it we must, because an impoverished ghetto of 1 billion people will be increasingly impossible for a comfortable world to tolerate.
• It is not just about giving these countries our money. With some important exceptions, aid does not work so well in these environments, at least as it has been provided in the past. Change in the societies at the very bottom must come predominantly from within.
• In all these societies there are struggles between brave people wanting change and entrenched interests opposing it. To date, we have largely been bystanders in this struggle. We can do much to strengthen the hand of the reformers. But to do so we will need to draw upon tools – such as military interventions, international standard-setting, and trade policy – that to date have been used for other purposes.
• The agencies that control these instruments have neither knowledge of nor interest in the problems of the bottom billion. They will need to learn, and governments will need to learn how to coordinate this wide range of policies.
• These ideas open horizons across the political divide. The left will find that approaches it has discounted, such as military interventions, trade, and encouraging growth, are critical means to the ends 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.
• We can crack this problem; indeed, we must. But to do so, we need to build a unity of purpose.
• To build unity of purpose, thinking needs to change, not just within the development agencies but among the wider electorates whose views shape what is possible. Without an informed electorate, politicians will continue to use the bottom billion merely for photo opportunities, rather than promoting real transformation.
• This book is an attempt to shift thinking. I have tried to write something you will enjoy reading. But don’t let that lead you to conclude that what I have to say is just a load of froth. Underpinning the book are a mass of technical papers published in professional journals and subject to blind refereeing. I list some of them at the end of the book.
• In conducting my statistical analysis I have relied on young collaborators. What they all have in common is the patience to be painstaking and the brains to have mastered difficult skills.
• This book is the big picture that emerges when you connect the dots. But the dots are a story in themselves. I hope that along the way you will get some of the flavor of how modern research is done, and a sense of the thrill that comes from cracking intractable questions.

 

PART 1: WHAT’S THE ISSUE

 

Chapter 1: Falling Behind and Falling Apart: The Bottom Billion

• The third world has shrunk. For 40 years the development challenge has been a rich world of 1 billion people facing a poor world of 5 billion people. The Millennium Development Goals established by the United Nations, which are designed to track development progress through 2015, encapsulate this thinking.
• By 2015, however, it will be apparent that this way of conceptualizing development has become outdated. Most of the 5 billion, about 80%, live in countries that are indeed developing, often at amazing speed. The real challenge of development is that there is a group of countries at the bottom that are falling behind, and often falling apart.
• The countries at the bottom coexist with the 21^st century, but their reality is the 14^th century: civil war, plague, ignorance. They are concentrated in Africa and Central Asia, with a scattering elsewhere. Even during the 1990s, in retrospect the golden decade between the end of the Cold War and 9/11, incomes in this group declined by 5%
• This problem matters, and not just to the billion people who are living and dying in 14^th century conditions. It matters to us. The 21^st century world of material comfort, global travel, and economic interdependence will become increasingly vulnerable to these large islands of chaos. And it matters now. As the bottom billion diverges from an increasingly sophisticated world economy, integration will become harder, not easier.
• The aid agencies and the companies that get the contracts for their projects will fight this thesis with the tenacity of bureaucracies endangered, because they like things the way they are. Every development agency has difficulty getting its staff to serve in Chad and Laos; the glamour postings are for countries such as Brazil and China.
• The World Bank does not have a single person resident in the Central African Republic. So don’t expect the development biz to refocus voluntarily.
• Development buzz has to keep its messages simple, driven by the need for slogans, images, and anger. Although the plight of the bottom billion lends itself to simple moralizing, the answers do not. It is a problem that needs to be hit with several policies at the same time, some of them counterintuitive. Don’t look to development buzz to formulate such an agenda; it is at times a headless heart.
• Leaders are sometimes psychopaths who have shot their way to power, sometimes crooks who have bought it, and sometimes brave people who are trying to build a better future. The government of Somalia continued to be officially ‘represented’ in the international arena for years after Somalia ceased to have a functioning government in the country itself.
• For our future world to be livable the heroes must win their struggle. But the villains have the guns and the money, and to date they have usually prevailed. That will continue unless we radically change our approach.
• Poverty is not intrinsically a trap, otherwise we would all still be poor. Think of development as chutes and ladders. In the modern world of globalization there are some fabulous ladders; most societies are using them. But there are also some chutes, and some societies have hit them. The countries at the bottom are an unlucky minority, but they are stuck.

 

Traps, and the countries caught in them