The Bottom Billion: Why the poorest countries are failing and what can be done about it
by Paul Collier
Oxford University Press (2007)
Summary:
“The real challenge of development is that there is a group of countries at the bottom that are falling behind, and often falling apart.” So says Paul Collier, Director of Oxford University’s Centre for the Study of African Economies and author of the highly influential book, The Bottom Billion. His premise is that there are approximately one billion people living in (mostly unnamed) countries that are diverging economically from the rest of the world. Development agencies should therefore shift their objective from ‘poverty alleviation’ to ‘economic convergence’ in order to reverse this trend.
Collier’s starting point is to ask why the poorest countries are failing. His explanation: they are stuck in traps. Armed with a plethora of empirical studies derived from statistical regression analyses, he argues that people living in the bottom billion countries are stuck in at least one of four traps:
- Conflict trap
- Natural resource trap
- Landlocked with bad neighbours
- Bad governance in a small country
These are defined as traps because the bottom billion countries find them extremely difficult to escape. For example, Collier notes that 50% of civil wars are actually post-conflict relapses. This is because fighting exacerbates the economic conditions correlated with conflict: low income, low growth, and dependence on natural resource exports. His causal hypothesis is that young men living in poverty and without hope for the future come cheap to warring factions trying to capture resource rents. These traps are by no means mutually exclusive; an unlucky country may exhibit all four and find that they reinforce one another.
Furthermore, Collier argues that globalisation is working against the bottom billion. Unlike the emerging economies that have used globalisation to launch into a period of high growth, the bottom billion may have “missed the boat.” The reason for this is economies of agglomeration; because Asia developed manufacturing export clusters first, the bottom billion economies are unable to compete and instead became suppliers of primary commodities, thus reinforcing natural resource traps. It also seems that capital flight trumps foreign investment in the bottom billion economies despite their capital scarcities, and that migration does more harm than good by draining badly-needed human capital.
In the final section of his book, Collier addresses what can be done to help the bottom billion escape from these traps. First, he optimistically argues that aid is part of the solution rather than the problem, as it reduces capital flight and makes foreign investment more attractive. Second (and most controversially), he advocates military intervention and military guarantees in order to provide stability in post-conflict situations. Third, he calls for the establishment of laws and charters to facilitate the formation of economically progressive norms in the areas of natural resource revenues, democracy, budget transparency, post-conflict situations, and investment. Finally, he suggests changes in trade policy by the rich countries to grant concessions for the bottom billion in the World Trade Organisation (WTO) and by the bottom billion countries themselves in order to promote export diversification.
Review:
Overall, this book is situated firmly in between the two other grand development narratives in recent years: Jeffrey Sachs’ The End of Poverty and William Easterly’s White Man’s Burden. Collier avoids the emotional “Westerners can fix it all” appeal of the former while side-stepping the “leave it to the market” doctrine of the latter. Rather, he presents an empirically-based analysis that suggests taking a “do whatever works” approach. For this reason, I find it the most grounded and least self-appreciating of the three.
Collier’s big insight is to propose a paradigm shift away from poverty alleviation as a goal of development. The orthodox view of development divides the world up into one billion rich people and five billion others trying to catch up. To Collier, “a definition of development that encompasses five billion people gives them license to be everywhere, or more honestly, everywhere but the bottom billion.” His argument for focusing on the bottom billion with the goal of economic convergence is conceptually appealing because it centres on hope. Possessing hope that the next generation will be more prosperous is something that I believe is ubiquitous across humanity and fundamental to the process of development. Without hope for the future, there are fewer incentives for parents to invest in their children’s education or to adopt family planning practices. Poverty alleviation is a necessary contributor to hope, but I agree with Collier that it is not sufficient.
However, the major flaw of Collier’s argument is ignoring and even discounting the four billion people living between bottom and top billion. While he is right to assert that the bottom billion deserve much more attention than they currently receive, just because the middle countries are growing does not necessarily mean that they will continue to do so indefinitely and on their own. Nor does a positive growth rate imply either equitable or pro-poor distribution, as many poor people in China would be quick to point out. Surely it is not an either-or question whether to target the bottom billion or middle four billion; as Jeffrey Sachs convincingly argues, there are enough resources in the world to address both categories if only the rich countries could readjust their priorities. What Collier is right to suggest is the need to segment countries based on their level of development and probability of becoming stuck in traps in order to effectively target interventions. This principle can be applied to all developing countries, regardless of their growth rates and income levels.
Finally, the process of development cannot be simplified into a single statistic, especially one as contentious as economic growth. Collier would surely agree, but the danger with a ‘summary book’ of empirical studies is that it will be misinterpreted, overgeneralized, and misused to prescribe solutions. Empirical studies are insightful, but they typically only tell what happens on average for quantifiable indicators in a certain area or over a specific time period. They are also backward looking and depend heavily on the methodology used and author’s interpretation of the results. Collier’s academic reputation leads one to give him the benefit of the doubt, but this does not mean his evidence should be interpreted uncritically or as universal fact.
Overall, this is a must read book for anyone interested in development and global poverty issues, if only because of its influential status. It remains to be seen to what extent The Bottom Billion will change the development discourse and contribute to practically solving the complex problems of the world’s failing economies.