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

by Paul Collier

Gradually, I developed the notion of the “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.

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

Our notions about the problems of the poorest countries are saturated with such images: not just of noble rebels but of starving children, heartless businesses, crooked politicians. You are held prisoner by these images. While you are held prisoner, so are our politicians, because they do what you want. I am going to take you beyond images.

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.

Development traps have become a fashionable area of academic dispute, with a fairly predictable right-left divide. The right tends to deny the existence of development traps, asserting that any country adopting good policies will escape poverty.

The left tends to see global capitalism as inherently generating a poverty trap.

To my mind, development is about giving hope to ordinary people that their children will live in a society that has caught up with the rest of the world.

Take that hope away and the smart people will use their energies not to develop their society but to escape from it—as have a million Cubans.

In September 2001, after an unnecessary international war with Ethiopia, half the Eritrean cabinet wrote to the president, Isaias Afwerki, asking him to think again about his autocratic style of government. He thought about it and imprisoned them all.

In Uganda the Lord’s Resistance Army, whose stated goal is to establish government according to the Ten Commandments, recruits members by surrounding a remote school with troops and setting fire to the school. The boys who manage to run out are given the choice of being shot or joining up. Those who join are then required to commit an atrocity in their home district, such as raping an old woman, which makes it harder for the boys to go back home.

Interestingly, the desertion rate varied: it was much higher in summer, despite the harsh Russian winter. Why? The recruits were peasant farmers, and in the summer, when they had crops to attend to, fighting was just too costly for them, whereas in the winter it didn’t matter so much.

A few of the developing countries stumble into civil war, and those that do get derailed for a while—examples of these are countries such as Colombia and Lebanon, which are not part of the bottom billion but for one reason or another have been unlucky. The bulk of the countries that fall into civil war are from the bottom billion.

Some years ago I found that my neighbor at a conference was a former vice president of Ghana. He explained that he was delighted to have been invited to the conference: the invitation had actually prompted his release from prison. He had been imprisoned following a coup d’état, and so we talked about that. He told me how unprepared the government had been for the coup; it was totally unexpected. Surely not, I said; coups are pretty common. He explained why the government considered itself safe: “By the time we came to power there was nothing left to steal.”

That is what happened, but it is not what Nigerians think happened. Unsurprisingly, Nigerians think that the terrible increase in poverty they experienced was caused by the economic reforms that were so loudly trumpeted. Until reform, life was getting better; then along came reform, and poverty soared. Given that belief, Nigerians go on to ask the obvious question: why did we undergo such devastating “reform”? The answer they arrive at, which is inescapable given the previous steps, is that the international financial institutions conspired to ruin Nigeria.

Economists generally think that competition produces the survival of the fittest. But where patronage politics is feasible, electoral competition leaves the corrupt as the winners. And so we arrive at the law of the political jungle: the survival of the fattest.

Tony managed to find data on the cost of transporting a container from ports in the United States and Europe to capital cities around the world. Sure enough, cities that were the capitals of landlocked countries incurred much higher transport costs. However, the big surprise was that the costs varied enormously in ways that did not seem to depend upon distance. Tony eventually tracked this down. 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.

In the 1960s Mao Zedong hurled China into ruin, to an adoring chorus from the Western media. But in response to failure the Chinese political elite swung policy 180 degrees and generated the biggest economic success in history (Mao made his own invaluable contribution by dropping dead).

In the 1980s the international financial institutions tried to coerce governments into reform through “conditionality”—a government could get extra aid only if it agreed to change some of its economic policies. Nobody likes being coerced, least of all newly powerful local elites that are hypersensitive about sovereignty and see their gravy trains threatened.

The government needs to create a convincing signal of its intentions, and to do this it has to adopt reforms that are so painful that a bogus reformer is simply not prepared to adopt them.

In the next part of the book we will at last turn from the depressing scenarios of traps and limbos to what we can do about them. Let me be clear: we cannot rescue them. The societies of the bottom billion can only be rescued from within.

Our conclusion was that some aid does indeed leak into military spending, but surprisingly little—our best estimate is about 11 percent. This is not negligible, but on the basis of this it would be grossly unfair to claim that aid is wasted. Nevertheless, in those bottom-billion societies that get a lot of aid, even 11 percent of it adds up to quite a lot of the military budget. We estimate that something around 40 percent of Africa’s military spending is inadvertently financed by aid.

In retrospect, it was perhaps a mistake for the international system to permit economically unviable areas to become independent countries. But the deed is done, and we have to live with the consequences.

In Europe the threat of war turned into a reality sufficiently often for the whole process to have been murderous, and it would probably be so again.

And as they promoted the dumb and corrupt over the bright and the honest, the good chose to leave. Economists have a term for it: “selection by intrinsic motivation.”

Trying to get an aid agency to focus its resources on an export growth strategy runs afoul of all these interests, for if there is more money to be spent on the country, you can be absolutely sure that the rural development group will lobby for its share of the spending, whether that is important for export growth or not, and the same is true of the education group, the health group, and all the others.

AFTER IRAQ IT IS DIFFICULT to arouse much support for military intervention. For me this chapter is the toughest in the book because I want to persuade you that external military intervention has an important place in helping the societies of the bottom billion, and that these countries’ own military forces are more often part of the problem than a substitute for external forces.

If you want to understand why some countries of the former Soviet Union have done well while others are becoming failing states, a pretty good guide is geography. The further away from the EU and so the less credible the prospect of EU membership, the worse they have done.

At present, resource-rich countries have to come up with their own, ad hoc systems, each different. Often these are the pet project of some reforming minister and do not survive beyond the minister’s departure. An international standard would make smoothing arrangements easier to introduce and harder to remove.

The newspapers were also bought, but it was the same story: thousands of dollars a month, not millions. Where the zeros rolled out on the checks was to buy the television stations.

We know because the government had only bothered to buy the nine biggest television channels—it decided not to bother with the tenth, a tiny financial satellite service with only ten thousand subscribers.

So in Peru the key restraint upon the government was the media, and among the media, it was television.

The vice president of Nigeria used to be a customs officer. He had talents and so was offered promotion, but he turned it down; one can imagine why.

The promulgation of charters can be done by several processes. We already have many of them. They do not have to be done by the General Assembly of the United Nations, and given Mugabe and his ilk, this route is unlikely. The Extractive Industries Transparency Initiative was launched by the British government.

The most difficult charters to place are the political ones, on campaign finance and on checks and balances.

It is time to redefine the development problem as being about the countries of the bottom billion, the ones that are stuck in poverty. When I give this message to audiences in aid agencies people shuffle uncomfortably in their seats. Some of them may be thinking, “But what about my career?” for it would no longer be in Rio but in Bangui. And when I give the message to an NGO audience they get uneasy for a different reason. Many of them do not want to believe that for the majority of the developing world global capitalism is working. They hate capitalism and do not want it to work.