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August 23, 2007

If you read only one book on Third World development, read Paul Collier's Bottom Billion, argues Richard D. North: The Bottom Billion: Why the poorest countries are failing and what can be done about it - Paul Collier

Posted by Richard D. North

The Bottom Billion: Why the poorest countries are failing and what can be done about it
by Paul Collier
Pp. 205. Oxford University Press, 2007
Hardback, £16.99

If the compassionate but sensible onlooker had only to read one book on Third World development, this ought to be it. Its author will probably not thank me for saying so, but it is a book of the right, not of the left. Though it often claims a curse on both your houses indifference to political stereotypes, there is far more comfort here for those of us who are fighting the soft-left liberal, green orthodoxy than there is for the mainstream. Even in its language and style, there's more than a little P J O'Rourke in this book.

The author accepts that capitalism and globalisation have more or less lifted five billion people into affluence. That leaves the "bottom billion", who live in around 58 countries, most of them small, many in Africa, but some in South Asia. These are what the author does not call "basket cases".

Saying that we need to refocus our thoughts and help on the bottom billion is, says Collier, an unpopular idea. The voluntary and political aid industry (the "development bizz", he calls them) prefer a wider remit, not least because they would rather be posted to Brazil than Chad. The World Bank has not a single representative in the Central African Republic, he remarks.

His swipes are wide ranging. Jeffrey Sachs, though he often has good insights, is too optimistic about the merit of increasing aid budgets. The World Bank is better at targeting effective help than the EU. Christian Aid has been very misleading in its presentation of data and is just one of many aid organisations that simply don't get the merit of economic growth. In particular, they get trade and tariffs all wrong. Collier is plainly irritated by the Live Aid and Live 8 platitudes of the "development buzz", as he calls it:

We cannot make poverty history unless the countries of the bottom billion start to grow and they will not grow by turning them into Cuba.
In spite of his general feeling that imposing conditions (better governance, and so on) on aid recipients can be counter-productive and patronising, he occasionally defends the IMF and World Bank "structural adjustment" programmes of the 1980s and 1990s which were so hated by the aid charities.

Quite often, and in spite of terrible setbacks, the West has helped the very poor, but quite often by not doing what the aid charities would have preferred. The right, he says, need to understand that aid does sometimes help the bottom billion. In some circumstances, and in spite of waste and corruption, it helps economies grow a bit. But the left needs to understand, for instance, that it may be important to build physical infrastructure which helps countries export. This doesn't obviously have the obligatory "poverty focus" (it doesn't immediately help the poorest of the poor), but it gets there quicker than anything else.

Collier is in a complicated place, and that's fine. What's more, he is probably having to be a bit more diplomatic than his larkiness and directness at first suggest. He was part of Tony Blair's Commission on Africa, and is not as robust about its merits and demerits as one would like.

Anyway, he has his own messages to get out. This book isn't merely an analysis of what other people have said and done. Rather, it claims that statistical analysis can show him and his various co-workers the real traps the bottom billion face, and what might be done about them.

The book's diagnosis of what ails the bottom billion is startling mostly by being comprehensive. More or less, you do not want to be in a small poor country if it is landlocked (and especially if it has poor and nasty neighbours). Having natural resources can be OK, but usually invites plunder by your nasty elites, or - worse - civil war. Even democracy doesn't help. Collier says,

The heart of the resource curse is that resource rents make democracy malfunction.
The unearned wealth makes different bits of the electorate greedy and bribable. Anyway, it skews the economy and scuppers "proper" exports which might employ people. Aid flows can be rather similarly problematic. Civil war and coups are both awful and are often plunder disguised by sloganising. Chaos can be made productive, however, especially if your aid donors get in quick with the right measures, and then stick with them.

Almost the worst of their woes is that the bottom billion have "missed the boat", says Collier. They face the awful fact that there are masses of Asian countries with low labour costs which are well-placed geographically and which have the human capital (Collier, an ex-Marxist, hates the term) and habits which make them very tough competitors. Upward mobility for the bottom billion is becoming more difficult, in spite of and even because of globalisation.

Collier has some solutions, and I am inclined to think that he overstates both the merits of his ideas and the ease by which they might be implemented. Still, they are attractive. For a start, the West ought to provide or encourage the use of benign military intervention to stop violent disturbance. This is not least because the armies of the bottom billion countries are both too dangerous and too expensive to be any use. They are part of the problem. Secondly, the rich world can help build tariff regimes which help. About the only acceptable tariffs would be those which help the bottom billion compete with Asia. And, thirdly, we should be helping with infrastructure and some other aid, not least to encourage good governance and "civil society".

I'm a big believer in the idea that the British Army ought to be two or three times bigger than it is and ought to become the standard bearer of "hard policing" wherever it's needed. I'm not sure the idea will catch on either at home or abroad, though. The tariff thing seems fine until one remembers Collier's strictures about bottom billion inefficiency: it's terribly hard to imagine the world creating the conditions in which the least efficient economies could really trade their way alongside the most lean ones. I am, though, convinced that "conditionality" in aid is crucial: we should be as bossy as hell about how our money is spent. On the whole, we should do as Collier says in a fascinating few pages: we should be encouraging our money to flow into good works via a bottom billion nexus of state, commercial and voluntary organisations.

One of the most interesting cases which Collier often cites is Bangladesh. Like the UK, it seems to defy gravity. It is an economic success in spite of breaking many of the rules of development, including those enunciated by Collier. Just as Irwin Stelzer thinks it's odd the UK can be both statist and entrepreneurial, so it is odd that Bangladesh could be both badly-governed and a great exporter. So rules, and even good rules, aren't infallible.

Collier seems to be in a bit of a muddle about Western bossiness, at one moment celebrating it, and the next rather scowling about it. But he is especially good on discussing how democracy is not necessarily what's needed in bottom billion countries. He doesn't use my preferred term for what ought to be preferred: "responsive" government. But he does quite closely parallel the writing of Fareed Zakaria's The Future of Freedom in describing a governance which opens itself up to accountability by its tax-payers, or by the supposed beneficiaries of state spending.

Collier is very good on describing how there are "heroes" we need to encourage amongst the bottom billion. There are many (well, there are some) civil servants and politicians even in bottom billion countries who understand that their work needs to be transparent, energetic and public-spirited. Collier is brilliant at noting how perversely dangerous populism - and populist politics - can be. It is hardly his fault that he has not written the book which I wish I had written years ago: an account of how important a middle class is to a country. (That is, unless it turns itself into a barbed wire elite, secure in its compounds.)

It is natural that Collier should try to work out how the rich West's top billion can reach past the vigour of the middle four billion and help the bottom billion stuck in their doldrums. It is also natural that he should consider how formal policy can help. More than he, I am inclined to think that the Chinese may do some unintended good as they buy up Africa, though I'd be stumped to describe quite how. More than he, I am inclined to think that the brain drain of educated people from the bottom billion may work out better than we think: maybe educated doctors and nurses are their best export, and they might as well be helped to be terrific at it. It could well be that we should make it very easy for bottom billion people to come to the rich world for a few years and very hard for them to come for very long. (Then again, it's hard to see anyone welcoming too many Muslims just now.)

My strong feeling is that the bottom billion are not really stuck in the 14th Century, as Collier says they are. Nor are they stuck in the Stone Age, as the lifestyle of many of them might make one suppose. Actually, many of them are in significant ways ordinarily modern: the things they know about the outside world will - sooner or later - transform them. The transformation will take political forms perhaps even before it takes economic form. The bottom billion may become bolshy and constructive long before they become rich. After all, that's what happened in the West.

It maybe that the dreamy unreality of my sort of response to Collier's book is the best advertisement for it. His work is plainly a very good piece of analysis and it plainly blows away some important myths. As you look around for better solutions than his, you may be tempted to see the strengths of what he proposes.

Richard D. North is the author of Rich is Beautiful: A Very Personal Defence of Mass Affluence and Scrap the BBC!: Ten Years to Set Broadcasters Free.

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Richard D. North wrote ”... This book ... claims that statistical analysis can show him and his various co-workers the real traps the bottom billion face, and what might be done about them. ...The book's diagnosis of what ails the bottom billion is startling ... Even democracy doesn't help.

The latter point was covered at length by World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability

As for “statistical analysis”, I would suggest that “plainly a very good piece of analysis and it plainly blows away some important myths.” is the empirical approach as can be found in IQ and Global Inequality From the Preface: We address ... major theories of economic growth ... and introduce the 192 countries of this study ... we define ... intelligence ... showing that intelligence is a determinant of incomes and ... educational attainment and socio-economic status ... this is the basis of our theory that ... intelligence likely to be a determinant of per capita incomes among nations ... tested by empirical evidence ... results are checked by exploring the impact of latitude and annual mean temperature on human conditions ... national IQ is correlated also with many other variables ... and concludes that the racial identity of the population is the major factor. etc.

For a professional review of this book see here

More generally, for a less non-quantitative view of human history than many see the new book Understanding Human History by Michael Hart.

To quote "The central hypothesis of this book is that genetic differences between human groups (in particular, differences in average native intelligence) have been an important factor in human history."

For a thorough and enlightening review of Hart’s book and this area in general see Steve Sailer’s, here

Posted by: Bert Rustle at September 5, 2007 09:58 PM
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