The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (Grove Art)

by Paul Collier

unlikely as it seems, what the aid agencies have been doing has added a whole lot of value to the financial transfer.

In 2005 the European Commission gave 20 million euros to the government of Chad in budget support.

the European Commission’s well-intentioned support for the desperately poor country of Chad is likely to have ended up largely financing the army.

around 40 percent of Africa’s military spending is inadvertently financed by aid.

aid may be an inducement to rebellion and to coups because capturing the state becomes more valuable.

rebellions are encouraged by natural resource wealth but not by aid, and coups are encouraged by aid.

raising growth and thereby cumulatively raising income, aid reduces these risks.

Technical assistance accounts for about a quarter of all the money spent on

Reforms need skills, and in the bottom billion these skills are lacking—remember, the skilled people have already left.

Technical assistance during the first four years of an incipient reform, and especially during the first two years, has a big favorable effect

spend $1 for an expected return of $15.

what seems to show up is a sequence. Aid is not very effective in inducing a turnaround in a failing state; you have to wait for a political opportunity. When it arises, pour in the technical assistance as quickly as possible to help implement reform. Then, after a few years, start pouring in the money for the government to spend.

A “venture aid fund” preserves accountability for overall performance, but managers can achieve overall success despite a lot of failures.

To its credit the British government has understood this problem and provided the World Bank with the money to launch a fund that can be used to support turnarounds.

aid makes private investment more attractive and so helps to keep capital in the country.

Until around 1990 international military intervention into failing states was just an extension of the Cold War.

Angola,

Kuwait

Somalia

Rwanda.

East Timor,

Governments that send soldiers to serve as UN peacekeepers are paid $1,000 per individual per month.

the British intervention in Sierra Leone just mentioned, Operation Palliser, has been a huge success.

Western banks have taken deposits looted from the bottom-billion societies,

Even after a Swiss court eventually ruled that the deposits belonged to the government of Nigeria, the Swiss minister of justice refused to return the money.

Until very recently, if a French company bribed a public official in a bottom-billion society, the payment was tax deductible.

Resource revenues to the bottom billion are bigger than aid, and far more poorly used.

The British government has already made a start on proposing international standards, launching the Extractive Industries Transparency Initiative in 2002.

Whereas transparency in public spending is always desirable, in the resource-rich countries it is vital.

The Extractive Industries Transparency Initiative, which was launched by the British government in 2002 as a proto-charter, has already had an effect.

There is an index called Polity that rates the degree of democracy on a scale from 0 to 10.

elections are not enough.

checks and balances take time to introduce,

Since growth itself gradually increases income to the level at which checks and balances are secured, an improvement in them eventually becomes self-sustaining.

Thus among the checks and balances I would place keeping radio out of government monopoly control as vital.

one other aspect of democracy where international standards would help to curtail massive abuse, and that it how money is raised and spent on election campaigning.

Look at Russia. An election campaign costs around four times as much there as it does in the United States,

African Peer Review Mechanism, whereby African countries volunteer for self-evaluation,

also useful within countries, as local governments can be compared against each other and ranked.

A postconflict charter

Donors should be committed for the decade,

International security forces should likewi...

reduce their own military...

transparent budgetary...

include opposition groups...

sort out conflicting and confused pr...

truth and reconciliation commissions;

investment charter

2004, Christian Aid—

campaign about trade policy for the countries at the bottom. Under the slogan “Free Trade: Some People Love It,” a capitalist, literally depicted as a pig, sat on top of an African peasant woman.