OXFORD UNIVERSITY PRESS, 2007
In a world of plenty, why are so many countries so poor? In his book The Bottom Billion: Why the poorest countries are failing and what can be done about it, Paul collier uses his long record of academic research to address one of the great challenges of our time. His answer is rich and detailed, most of it convincing, and his proposals are at the least thought provoking.
Collier divides the world into three groups: an affluent one billion at the top, four billion who live in developing countries that have experienced at least respectable rates of growth in the last few decades, and the eponymous 'bottom billion', living in desperately poor countries--the majority in Africa--that arrived at the new millennium poorer than they were in 1970.
This is not, however, a book about global poverty, and in this sense the title is misleading. The 'bottom billion' are not the poorest billion people in the world but the citizens of the poorest and most stagnant countries in the world. India is not one of Collier's bottom billion countries and thus he ignores the fact that there are more people living below the international $1-a-day poverty line in India alone than in the whole of Africa, and that during twenty five years of rapid growth in India the number of poor there did not decrease at all. Addressing this disconnection between growth and poverty reduction requires addressing inequality, a topic that receives very little attention in this book.
Collier identifies four traps that, he believes, explain the performance of the bottom billion: the 'conflict trap', the 'natural resources trap', the trap of being 'landlocked with bad neighbours', and the trap of 'bad governance in a small country'.
Conflict is a trap because it both causes and is caused by bad economic outcomes. Conflict has economic costs in addition to human costs, reducing growth and income levels. But slow growth and low levels of income increase the risk of conflict, creating a vicious cycle.
Having abundant natural resources also, ironically, tends to lead to slow growth, a phenomenon known in the development literature as the 'resource curse'. The resource curse operates through a number of channels, including the difficulty of managing highly volatile government revenues, and the negative impact that natural resource exports have on competitiveness in other tradable sectors. But natural resources also influence the economy through...