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

by Paul Collier

So to an extent aid does make the conflict trap worse. But it can also make things better. Recall that the key risk factors in rebellions and coups are slow growth and low income. The indirect effects of aid on conflict risk are benign. By raising growth and thereby cumulatively raising income, aid reduces these risks. Is the payoff worth the costs? Anke and I tried to answer that question. We already had an estimate of the costs of the typical civil war—around $64 billion—and we had just estimated how aid would reduce the risk of war through raising growth. So by putting the two together we got an estimate of the payoff to aid from enhanced security. To our surprise, it turned out that the payoff was not big enough to justify the cost. The reason was that aid was not very effective at raising growth in the conditions of poor governance and policies that typified the bottom billion.