The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It by Paul Collier.

3/5 rating. 195 pages.

Book #15 of 2021. Read February 10, 2021.

This book is an interesting look at data showing why the poorest countries around the world are failing, as well as some solutions that may begin to allow them to catch up to the rest of the world.

Though there has been a huge boom in the global middle-class in the last 25 years or so, there are still nearly a billion people globally who have been left behind in development and growth. Paul first sets up the unbelievably tough situations they are in:

“First, consider how people live, or rather die. In the bottom billion average life expectancy is fifty years, whereas in the other developing countries it is sixty-seven years. Infant mortality – the proportion of children who die before their first birthday – is 14 percent in the bottom billion, whereas in the other developing countries it is 4 percent. The proportion of children with symptoms of long-term malnutrition is 36 percent in the bottom billion as against 20 percent for the other developing countries.”

Paul uses many different studies that he and some colleagues have completed to show statistically the different traps that are keeping the countries in these spots.

Probably the two most interesting ideas that I gained were that GDP growth is hugely beneficial to these countries, and that while aid is very important, it is also largely dependent on many other aspects as to how beneficial it truly is.

I think anyone in the global aid business or who is working to help the bottom billion should at least read the last chapter of this book, as it sums up nicely the traps and how best to help countries and people avoid them.

Quotes:

“And then came the 1990s. This is now seen as the golden decade, between the end of the Cold War and 9/11 – the decade of the cloudless sky and booming markets. It wasn’t so golden for the bottom billion: their rate of absolute decline accelerated to 0.5 percent a year. By the turn of the millennium they were therefore poorer than they had been in 1970.”

“There is basically no relationship between political repression and the risk of civil war.”

“Ethnic minorities are just as likely to rebel with or without discrimination.”

“Anke Hoeffler and I investigated the effect of income inequality, and to our surprise we could find no relationship. We also investigated the colonial history of each country. We could find no relationship between the subsequent risk of civil war and either the country that had been the colonial power or how long the country had been decolonized.”

“But the sad reality seems to be that grievances are pretty common. Rebels usually have something to complain about, and if they don’t they make it up. All too often the really disadvantaged are in no position to rebel; they just suffer quietly.”

“Most of the costs of civil war, perhaps as much as half, accrue after the war is over. Of course, sometimes the rebellion is worth it, with rebel victory ushering in an age of social justice, but this does not happen often. Usually the political legacy is about as bad as the economic legacy – a deterioration in political rights. A rebellion is an extremely unreliable way of bringing about positive change. Rebel leaders who claim to have launched a civil war for the good of their country are usually deceiving themselves, others, or both.”

“It is true that being landlocked does not necessarily condemn a country either to poverty or to slow growth, but 38 percent of the people living in the bottom-billion societies are in countries that are landlocked – and, as you will see, it is overwhelmingly an African problem. Because Africa’s problems are usually ascribed to its being Africa, and the rest of the world hasn’t got the problem of being landlocked, the difficulties that it generates have been underplayed.”

“I think that the advocates of good governance and the advocates of good policies – rather different groups of people – have both somewhat oversold their wares. Good governance and policy help a country to realize its opportunities, but they cannot generate opportunities where none exist, and they cannot defy gravity. Even the best governance and policies are not going to turn Malawi into a rich country – it just does not have the opportunities.”

“Starting from being a failing state, a country was more likely to achieve a sustained turnaround the larger its population, the greater the proportion of its population that had secondary education, and – perhaps more surprisingly – if it had recently emerged from civil war.”

“Democracy doesn’t seem to help policy turnaround.”

“Overall, we find that the probability of a sustained turnaround starting in any year is very low: a mere 1.6 percent. Countries are therefore likely to stay as failing states for a long time. Indeed, from this annual probability we can calculate something called the mathematical expectation, which is the length of time it takes to get out of being a failing state. It comes out as fifty-nine years.”

“It is often said that globalization is inevitable, but those interwar years cast doubt on this assertion: for those who hate globalization, the retreat of trade, capital flows, and migration during the period 1914-45 should be interesting because they are a kind of a natural experiment. Unfortunately, they were a ghastly experiment: the reversal of globalization, though feasible, looks massively undesirable based on the one occasion when we did it.”

“In a successful region such as East Asia there is more than twice as much private capital as public capital. By contrast, Africa has twice as much public capital as private capital. What it and the other economies of the bottom billion really lack is private investment. This translates into a lack of equipment for the labor force to work with, and this in turn condemns workers to being unproductive and so to having low incomes.”

“Aid does tend to speed up the growth process. A reasonable estimate is that over the last thirty years it has added around one percentage point to the annual growth rate of the bottom billion. This does not sound like a whole lot, but then the growth rate of the bottom billion over this period has been much less than 1 percent per year – in fact, it has been zero. So adding 1 percent has made the difference between stagnation and severe cumulative decline. Without aid, cumulatively the countries of the bottom billion would have become much poorer than they are today. Aid has been a holding operation preventing things from falling apart.”

“A recent study by the Center for Global Development, a Washington think tank, came up with an estimate of diminishing returns implying that when aid reaches about 16 percent of GDP it more or less ceases to be effective. Africa wasn’t far off that level even before Gleneagles. So with the doubling of aid, if indeed it happens, we have broadly reached the limits to aid absorption, at least under the existing modalities.”

“In more recent times the mistake with aid to postconflict situations has been that it has been too little and too soon.”

“Technical assistance needs to be reorganized to look more like emergency relief and less like a pipeline of projects. Just as when the Southeast Asian tsunami struck in December 2004 emergency relief teams were quickly flown in, so when political opportunities arise, should aid be available.”

“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.”

“Of course, agencies are under pressure to reduce their administrative costs relative to the money they disburse; this is sometimes used as a measure of agency efficiency. But it is misplaced. The environments in which agencies should increasingly be operating are those in which to be effective they will need to spend more on administration, not less.”

“In fact, it seems that aid makes private investment more attractive and so helps to keep capital in the country.”

“Aid does have serious problems, and more especially serious limitations. Alone it will not be sufficient to turn the societies of the bottom billion around. But it is part of the solution rather than part of the problem. The challenge is to complement it with other actions.”

“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.”

“Resource revenues to the bottom billion are bigger than aid, and far more poorly used. If we could raise the effectiveness of resource revenues even to the present level of aid effectiveness, the impact would be enormous.”

“Although the reformers have truth on their side, truth is just another special interest, and not a particularly powerful one. The villains willing to lie in order to defeat change have an advantage over those constrained by honesty. Reformers do not have it easy.”

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