The Bottom Billion
Encyclopedia
The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It is a 2007 book by Paul Collier
, Professor of Economics at Oxford University, exploring the reasons why impoverished countries fail to progress despite international aid and support. In the book Collier argues that there are many countries whose residents have experienced little, if any, income growth over the 1980s and 1990s. On his reckoning, there are just under 60 such economies, home to almost 1 billion people.
The Conflict Trap
: Civil wars (with an estimated average cost of $64bn each) and coups incur large economic costs to a country. Additionally, in the time period immediately following a major conflict, relapse is highly likely. Collier also argues that the longer a country stays in a state of conflict, the more players become established that profit from the state of tumult, making the situation increasingly intractable.
The Natural Resource Trap
: Countries that are rich in natural resources are paradoxically usually worse off than countries that are not. Collier attributes this to a variety of causes:
Landlocked with Bad Neighbours: Poor landlocked countries with poor neighbours find it almost impossible to tap into world economic growth. Collier explains that countries with coastline trade with the world, while landlocked countries only trade with their neighbors. Landlocked countries with poor infrastructure connections to their neighbors therefore necessarily have a limited market for their goods.
Bad Governance in a Small Country
: Terrible governance and policies can destroy an economy with alarming speed. The reason small countries are at a disadvantage is that though they may have a low cost-of-living, and therefore be ideal for labor-intensive work, their smallness discourages potential investors, who are unfamiliar with the local conditions and risks, who instead opt for better known countries like China and India.
In his book Wars, Guns, and Votes, Collier lists the Bottom Billion.
in the Financial Times
called it "a splendid book" and "particularly enjoyed the attack on the misguided economics of many non-governmental organisations." He says that Collier sheds much light on how the world should tackle its biggest moral challenge. It shows, too, how far western governments and other external actors are from currently giving the sort of help these countries desperately need. The Guardian
called it an important book and suggested that citizens of G8 countries should fight for change along the lines he suggests The Economist
said it was "set to become a classic" and "should be compulsory reading for anyone embroiled in the hitherto thankless business of trying to pull people out of the pit of poverty where the “bottom billion” of the world's population of 6.6 billion seem irredeemably stuck". Nicolas Kristof in the New York Times described it as "'The best book on international affairs so far this year" William Easterly
, influential American economist specialising in economic growth and foreign aid, critically assessed The Bottom Billion in The Lancet
. He lambasts it for being an "ivory tower analysis of real world poverty." Easterly notes that much of Collier's advice is constructive, but he is concerned that it is advice based on shaky argument, argument which relies on statistical correlation to establish causation. For example, Collier makes much of the "conflict trap" and clearly poverty and civil war do occur together, but this may be, according to Easterly, "[perhaps] only because they are both symptoms of deeper problems, like Africa's weak states, ethnic antagonisms, and the legacy of the slave trade and colonial exploitation." Collier counters, "At present the clarion call for the right is economist William Easterley's book The White Man's Burden. Easterly is right to mock the delusions of the aid lobby. But just as [Jeffrey] Sachs
exaggerates the payoff to aid, Easterly exaggerates the downside and again neglects the scope for other policies. We are not as impotent and ignorant as Easterly seems to think."
Paul Collier
Paul Collier, CBE is a Professor of Economics, Director for the Centre for the Study of African Economies at The University of Oxford and Fellow of St Antony's College. From 1998 – 2003 he was the director of the Development Research Group of the World Bank.-Life:Collier is a specialist in...
, Professor of Economics at Oxford University, exploring the reasons why impoverished countries fail to progress despite international aid and support. In the book Collier argues that there are many countries whose residents have experienced little, if any, income growth over the 1980s and 1990s. On his reckoning, there are just under 60 such economies, home to almost 1 billion people.
Development traps
The book suggests that, whereas the majority of the 5-billion people in the "developing world" are getting richer at an unprecedented rate, a group of countries (mostly in Africa and Central Asia but with a smattering elsewhere) are stuck and that development assistance should be focused heavily on them. These countries typically suffer from one or more development traps.The Conflict Trap
Civil war
A civil war is a war between organized groups within the same nation state or republic, or, less commonly, between two countries created from a formerly-united nation state....
: Civil wars (with an estimated average cost of $64bn each) and coups incur large economic costs to a country. Additionally, in the time period immediately following a major conflict, relapse is highly likely. Collier also argues that the longer a country stays in a state of conflict, the more players become established that profit from the state of tumult, making the situation increasingly intractable.
The Natural Resource Trap
Resource curse
The resource curse refers to the paradox that countries and regions with an abundance of natural resources, specifically point-source non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources...
: Countries that are rich in natural resources are paradoxically usually worse off than countries that are not. Collier attributes this to a variety of causes:
- Resources make conflict for the resources more likely.
- Natural resources mean that a government does not have to tax its citizens. Consequently, the citizenry are less likely to demand financial accountability from the government.
- The exploitation of valuable natural resources can result in Dutch diseaseDutch diseaseIn economics, the Dutch disease is a concept that purportedly explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector...
, where a country's other industries become less competitive as a result of currency valuation due to the revenue raised from the resource.
Landlocked with Bad Neighbours: Poor landlocked countries with poor neighbours find it almost impossible to tap into world economic growth. Collier explains that countries with coastline trade with the world, while landlocked countries only trade with their neighbors. Landlocked countries with poor infrastructure connections to their neighbors therefore necessarily have a limited market for their goods.
Bad Governance in a Small Country
Governance
Governance is the act of governing. It relates to decisions that define expectations, grant power, or verify performance. It consists of either a separate process or part of management or leadership processes...
: Terrible governance and policies can destroy an economy with alarming speed. The reason small countries are at a disadvantage is that though they may have a low cost-of-living, and therefore be ideal for labor-intensive work, their smallness discourages potential investors, who are unfamiliar with the local conditions and risks, who instead opt for better known countries like China and India.
Solutions
He suggests a number of relatively inexpensive but institutionally difficult changes:- Aid agencies should increasingly be concentrated in the most difficult environments, accept more risk. Ordinary citizens should not support poorly informed vociferous lobbies whose efforts are counterproductive and severely constrain what the Aid agencies can do.
- Appropriate Military Interventions (such as the British in Sierra LeoneSierra LeoneSierra Leone , officially the Republic of Sierra Leone, is a country in West Africa. It is bordered by Guinea to the north and east, Liberia to the southeast, and the Atlantic Ocean to the west and southwest. Sierra Leone covers a total area of and has an estimated population between 5.4 and 6.4...
) should be encouraged, especially to guarantee democratic governments against coups. - International Charters are needed to encourage good governanceGood governanceGood governance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights. Governance describes "the process of decision-making and the process by which...
and provide prototypes. - Trade Policy needs to encourage free trade and give preferential access to Bottom Billion exports.
Bottom billion countries
The book does not include a list of bottom billion countries because Collier believes this might lead to a "self-fulfilling prophecy." However, he states that there are 58 such countries mentioned throughout the book.In his book Wars, Guns, and Votes, Collier lists the Bottom Billion.
Reception
Martin WolfMartin Wolf
Martin Wolf, CBE is a British journalist, widely considered to be one of the world's most influential writers on economics. He is associate editor and chief economics commentator at the Financial Times.-Early life:...
in the Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
called it "a splendid book" and "particularly enjoyed the attack on the misguided economics of many non-governmental organisations." He says that Collier sheds much light on how the world should tackle its biggest moral challenge. It shows, too, how far western governments and other external actors are from currently giving the sort of help these countries desperately need. The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
called it an important book and suggested that citizens of G8 countries should fight for change along the lines he suggests The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
said it was "set to become a classic" and "should be compulsory reading for anyone embroiled in the hitherto thankless business of trying to pull people out of the pit of poverty where the “bottom billion” of the world's population of 6.6 billion seem irredeemably stuck". Nicolas Kristof in the New York Times described it as "'The best book on international affairs so far this year" William Easterly
William Easterly
William Russell Easterly is an American economist, specializing in economic growth and foreign aid. He is a Professor of Economics at New York University, joint with Africa House, and Co-Director of NYU’s Development Research Institute. He is also a nonresident senior fellow at the Brookings...
, influential American economist specialising in economic growth and foreign aid, critically assessed The Bottom Billion in The Lancet
The Lancet
The Lancet is a weekly peer-reviewed general medical journal. It is one of the world's best known, oldest, and most respected general medical journals...
. He lambasts it for being an "ivory tower analysis of real world poverty." Easterly notes that much of Collier's advice is constructive, but he is concerned that it is advice based on shaky argument, argument which relies on statistical correlation to establish causation. For example, Collier makes much of the "conflict trap" and clearly poverty and civil war do occur together, but this may be, according to Easterly, "[perhaps] only because they are both symptoms of deeper problems, like Africa's weak states, ethnic antagonisms, and the legacy of the slave trade and colonial exploitation." Collier counters, "At present the clarion call for the right is economist William Easterley's book The White Man's Burden. Easterly is right to mock the delusions of the aid lobby. But just as [Jeffrey] Sachs
The End of Poverty
The End of Poverty: Economic Possibilities for Our Time is a 2005 book by American economist Jeffrey Sachs. It was a New York Times bestseller....
exaggerates the payoff to aid, Easterly exaggerates the downside and again neglects the scope for other policies. We are not as impotent and ignorant as Easterly seems to think."