The Bottom Billion By Paul Collier, A Professor of Economics at Oxford University is a very elaborate piece of work that clearly nails down the issues that drags the economies of the developing world and in particular “the bottom million” economies. You may be wondering what the “bottom billion” is, it simply refers to countries whose their economies has stagnated for the last 40 years and they account of one-sixth of the world population. As you may be aware that our world has a population of 6 billion people.
If you care about poverty in the world this one is a must read book.
Professor Collier lays down the main hindrances to economic growth in the countries of the bottom billion as he refers to them as traps and I will list them here:
1. The Conflict Trap – he explains that all societies have conflict, but they can trap a country in poverty.
- I agree with Professor Collier that Civil war is costly and so is a coup d’état, very challenging to recover from especially if a country economy is stuck / stagnant with almost zero growth, The effects are amplified.
2. The Natural Resource Trap –According to the “bottom billion- the book” overtime countries with large resources discoveries can end up poorer, with the lost growth more than offsetting the one-off gain in income provided by the rents
- This trap was a new learning for me because I initially thought that the more natural resources a country is blessed with the better. Apparently it turns out that the rents from these resources will help but with no growth and no proper management it can turn to be what is referred in the book as “resource curse”. Because with resource rents democracy is undermined, no checks and balances and what you end up with in most scenarios is a dictatorship government.
3. Landlocked with Bad Neighbors – according to Jeff Sachs as reported in this book being landlocked clipped around half % point off the growth rate. The reason given is that landlocked countries are hostages to the neighbors.
4. Bad Governance – As we all know terrible governance can cripple an economy, any economy for that matter.
These traps can negatively impact any country in the world of its economic growth. However, as Paul Collier notes in the book its peculiar to the economies of the “bottom billion” because:
- 73 % of them ( the bottom billion) have been through civil war, 29 % are in countries dominated by the politics of natural resource revenues, 30 % are landlocked, resource –scarce and in a bad neighborhood.
In the Bottom Billion, Professor Collier has suggested some solutions that can help the economies of the bottom billion grow. I will list them here for you to think about it and comments are welcomed.
Here we go:
1. For the conflict trap some suggested ways are – assistance during post conflict and attempts to prevent conflicts from happening. Because the “crushing needs of the early post conflict period colliding with government incapacity” can trap a country into prolonged and even sometime repetitive conflicts which obviously will stagnate the economic growth.
2. For the Natural resource trap the key solution will be international laws and norms that will encourage checks and balances on excesses of governments. These norms will help empower reformists within these societies.
3. For the landlocked it appears like Aid is the key according to Professor Collier. It will make things much simpler if governance and policies in these countries are sufficiently decent.
4. FOR Bad governance –I totally agree with Professor Collier that reform has to come from within, and yes it takes courage.
Questions to think about – I invite all my friends and readers to come and reason with me on these. Here we go:
Q1. On the other side of the coin, the question I will ask is what role will the development agencies such as IMF, WORLD BANK et al play in helping the economies of the bottom billion?
Q2. How are their current policies helping/blocking economic growth in the developing world and especially the bottom billion?
Q3. Do IMF AND World Bank and any other organizations need to change their approach/policies in order to be development friendly to the hailing economies of the bottom billion? If yes how? And if no why?
Q4. How about the WTO (World trade organization) does it mean anything to the bottom billion; do they really get any deal?
Well your guess is as good as mine on the WTO it is all about negotiation power, which obviously disadvantages the bottom billion countries. My opinion on WTO in agreement with Prof. Collier is that trade policy need to change from extracting the best bargain to fostering development in the bottom billion.
Thanks folks your insights will be appreciated. This world of globalization is intriguing!
If you care about poverty in the world this one is a must read book.
Professor Collier lays down the main hindrances to economic growth in the countries of the bottom billion as he refers to them as traps and I will list them here:
1. The Conflict Trap – he explains that all societies have conflict, but they can trap a country in poverty.
- I agree with Professor Collier that Civil war is costly and so is a coup d’état, very challenging to recover from especially if a country economy is stuck / stagnant with almost zero growth, The effects are amplified.
2. The Natural Resource Trap –According to the “bottom billion- the book” overtime countries with large resources discoveries can end up poorer, with the lost growth more than offsetting the one-off gain in income provided by the rents
- This trap was a new learning for me because I initially thought that the more natural resources a country is blessed with the better. Apparently it turns out that the rents from these resources will help but with no growth and no proper management it can turn to be what is referred in the book as “resource curse”. Because with resource rents democracy is undermined, no checks and balances and what you end up with in most scenarios is a dictatorship government.
3. Landlocked with Bad Neighbors – according to Jeff Sachs as reported in this book being landlocked clipped around half % point off the growth rate. The reason given is that landlocked countries are hostages to the neighbors.
4. Bad Governance – As we all know terrible governance can cripple an economy, any economy for that matter.
These traps can negatively impact any country in the world of its economic growth. However, as Paul Collier notes in the book its peculiar to the economies of the “bottom billion” because:
- 73 % of them ( the bottom billion) have been through civil war, 29 % are in countries dominated by the politics of natural resource revenues, 30 % are landlocked, resource –scarce and in a bad neighborhood.
In the Bottom Billion, Professor Collier has suggested some solutions that can help the economies of the bottom billion grow. I will list them here for you to think about it and comments are welcomed.
Here we go:
1. For the conflict trap some suggested ways are – assistance during post conflict and attempts to prevent conflicts from happening. Because the “crushing needs of the early post conflict period colliding with government incapacity” can trap a country into prolonged and even sometime repetitive conflicts which obviously will stagnate the economic growth.
2. For the Natural resource trap the key solution will be international laws and norms that will encourage checks and balances on excesses of governments. These norms will help empower reformists within these societies.
3. For the landlocked it appears like Aid is the key according to Professor Collier. It will make things much simpler if governance and policies in these countries are sufficiently decent.
4. FOR Bad governance –I totally agree with Professor Collier that reform has to come from within, and yes it takes courage.
Questions to think about – I invite all my friends and readers to come and reason with me on these. Here we go:
Q1. On the other side of the coin, the question I will ask is what role will the development agencies such as IMF, WORLD BANK et al play in helping the economies of the bottom billion?
Q2. How are their current policies helping/blocking economic growth in the developing world and especially the bottom billion?
Q3. Do IMF AND World Bank and any other organizations need to change their approach/policies in order to be development friendly to the hailing economies of the bottom billion? If yes how? And if no why?
Q4. How about the WTO (World trade organization) does it mean anything to the bottom billion; do they really get any deal?
Well your guess is as good as mine on the WTO it is all about negotiation power, which obviously disadvantages the bottom billion countries. My opinion on WTO in agreement with Prof. Collier is that trade policy need to change from extracting the best bargain to fostering development in the bottom billion.
Thanks folks your insights will be appreciated. This world of globalization is intriguing!
Comments
Anyway, what I wanted to say was, there is a tendency for "scholars" writing about Africa to leave out big chunks of information that help explain "the bottom billion." Particularly on point number two. I agree with you totally that bad governance, and poor management of conflict will ruin a country's economy.
But the natural resources trap is a bunch of crap (excuse my language). For example, countries rich in natural resources are often exploited, and threatened in various ways that prevent them from actually benefiting from their natural resources. It's peculiar but perhaps you can answer me why where there are abundant resources, there are often conflicts from locals. And I'm talking about Africa in particular here. We know that Africans aren't benefiting from the resources and we also know those involved directly in the conflicts are also not benefiting from the resources yet they continue to engage in the conflict. I personally find that very peculiar and in fact very telling when it comes to the direct relationship between resources, conflict, and economic growth.
It's often the case that countries with natural resources are swindled out of personal management of their own resources cut terrible deals, and threatened with other financial and social consequences should they not agree to the plundering terms.
I would ask professor "bottom billion" Paul Collier why and how foreign multinational corporations are able to own resource land, benefit exponentially from them -- and I'm talking about billions here -- continue to operate for decades at at time, while the conflicts only manage to sabotage the countries' own economy without affecting the multinational corporation's own bottom line. How is it possible they continue to operate in conflict areas, and still manage to grow, and expand, and produce, and become even richer?
Peculiar.
I like your "out of the box" thinking and the passion about the poor and the exploitation done on them. when i talk about exploitation Africa comes to my mind.
Absolutely the right question to ask "why and how foreign multinational corporations are able to own resource land, benefit exponentially from them while the locals suffer?"
well again this is where "scholars" tend to mislead people with their so called expertise on global issues. some of the scholars tend to perpetuate the policies of their "masters" not all but some. These policies most of the times marginalize the already marginalized of the world the so called "bottom billion"
I have to tell you that all these policies are meant to advance personal\or regionalinterests what some call "the empire interests" even if it means at the expense of the rest of the world by exploiting them and their resources.
Sometime back I wrote an essay of an hypothetical community that used to be self sufficient till when the so call Industrialiazation come to their shores and destroyed their environment and polluted their waters, and they were reduced to beggars. you will think that Industrialization will bring progress but in this case it created dependence rather than independence.
I will post that sometime soon to my blog, its a very interesting essay.
Also, recently i read this book called THE CONFESSION OF AN ECONOMIC HIT MAN and it confirmed my hypothetical village in my essay a few years ago that what i hypothesized in the essay actually may be happening somewhere in our world real time.