Book #8: The Bottom Billion: Why the Poorest Countries are failing and what can be done about it by Paul Collier

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Book #8: The Bottom Billion: Why the Poorest Countries are failing and what can be done about it by Paul Collier ‪#‎Africa‬ ‪#‎100BooksChallenge2016‬

Favourite Take Aways

All societies used to be poor. Most are now lifting out of it; why are others stuck? The answer is traps. Poverty is not intrinsically a trap, otherwise we would all still be poor. Think, for a moment, 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.

The book is about four traps that have received less attention:

  1. The conflict trap,
  2. The natural resources trap,
  3. The trap of being landlocked with bad neighbors, and
  4. The trap of bad governance in a small country.The Traps

    “Conflict Trap.” It shows how certain economic conditions make a country prone to civil war, and how, once conflict has started, the cycle of violence becomes a trap from which it is difficult to escape.

    “Natural Resource Trap”

    Economists term the excess of revenues over all costs including normal profit margins “rent,” and rents seem to be damaging.

    Over time, countries with large resource discoveries can end up poorer, with the lost growth more than offsetting the one-off gain in income provided by the rents. Obviously if you have enough natural resources you can afford to forget about normal economic activity.

    The “resource curse” has been known for some time. Thirty years ago economists came up with an explanation termed “Dutch disease,” after the effects of North Sea gas on the Dutch economy; it goes like this. The resource exports cause the country’s currency to rise in value against other currencies. This makes the country’s other export activities uncompetitive. Yet these other activities might have been the best vehicles for technological progress.

    LANDLOCKED – The trap of being landlocked with bad neighbors,

    It is true that being landlocked does not necessarily condemn a country either to poverty or to slow growth, but 38 percent of the people living in bottom-billion societies are in countries that are landlocked—and, as you will see, it is overwhelmingly an African problem. Because Africa’s problems are usually ascribed to its being Africa, and the rest of the world hasn’t got the problem of being landlocked, the difficulties that it generates have been underplayed.

    The transport costs for a landlocked country depended upon how much its coastal neighbor had spent on transport infrastructure. One way of thinking about this was that landlocked countries were hostages to their neighbors.

    Why is Uganda poor when Switzerland is rich? It is indeed partly that Switzerland’s access to the sea depends upon German and Italian infrastructure, whereas Uganda’s access to the sea depends upon Kenyan infrastructure. Which do you imagine is better? If you are landlocked with poor transport links to the coast that are beyond your control, it is very difficult to integrate into global markets for any product that requires a lot of transport, so forget manufacturing—which to date has been the most reliable driver of rapid development.

    The countries at the bottom coexist with the twenty-first century, but their reality is the fourteenth century: civil war, plague,ignorance. They are concentrated in Africa and Central Asia, with a scattering elsewhere.

    This problem matters, and not just to the billion people who are living and dying in fourteenth-century conditions. It matters to us. The twenty-first-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.

    And yet it is a problem denied, both by development biz and by development buzz.

    Development Biz vs Development Buzz

    Development biz is run by the aid agencies and the companies that get the contracts for their projects.

    Development buzz is generated by rock stars, celebrities, and NGOs. To its credit, it does focus on the plight of the bottom billion. It is thanks to development buzz that Africa gets on the agenda of the G8. But inevitably, development buzz has to keep its messages simple, driven by the need for slogans, images, and anger.

    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.

    Without an informed electorate, politicians will continue to use the bottom billion merely for photo opportunities, rather than promoting real transformation.

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