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The Bottom Billion

Raj Nallari's picture

 The Bottom Billion: Why the poorest countries are failing and what can be done about it? By Paul Collier. Oxford University Press, 2007
 
 The main thesis of the book is that globalization has been beneficial to a majority of the people in the developed and developing world, except for a large group of small countries in Africa, Caribbean ad Pacific countries, which comprise of a billion people (out of the total world population of about 6.5 billion). These billion people are being increasingly marginalized by globalization. For example, average per capita GDP growth of the economies of the bottom billion was 0.5% in 1970s, 0.4% in 1980s and negative 0.50% in 1990s. In comparison, per capita GDP growth in other developing countries increased from 2.5% in 1970s to 4% each in 1980s and 1990s. So there is big time divergence in income between the bottom billion and rest of the world population.
 
The main policy diagnostics and prescriptions are that, first, Africa has failed to develop jobs in export manufactures, such as garments and textiles, because except for USA, European countries impose tariffs on imports of garments from Africa. In addition, silly restrictions and regulations, such as labels are not in French language, etc are also in place. In contrast, East and South Asian countries, such as Bangladesh, Vietnam, have generated jobs in garments industry. Therefore, the G-8 policy should adopt common set of rules to encourage African exports rather than make aid commitments in an age when aid is actually declining for decades. Second, the bottom billion societies are in the midst of revenue boom because of high oil and mineral prices. Such revenue increases are higher than any conceivable aid disbursements but there is a danger that these revenue booms once again (as happened in 1970s) ignite ‘greed and grievance’ and lend to distributive conflicts, corruption at high places and other mis-governance, thereby wasting money and further impoverishing the bottom billion. Also, corrupt politicians and generals in countries where the bottom billion live can easily move large sums of money to OECD banks. Third, aid, trade, security commitments, good governance of resources are all complements in economic development. Therefore, some sort of a Marshall Plan (that helped Europe reconstruct with aid while NATO improved security arrangements) is essential to improve the lives of the bottom billion. Such a plan for bottom billion should include higher aid commitments, more trade, and commitment of troops by developed countries to troubled spots.

Comments

Submitted by Maxim Kind on
I would like to weight on the 3 "prescriptions" that Paul Collier recommends. 1st recommendation: "the G-8 policy should adopt common set of rules to encourage African exports rather than make aid commitments". Why should the G-8 countries give special privileges to Africa (and not Caribbean ad Pacific countries that are part of bottom billion)? Why can't G-8 countries open their trade policies to all the countries? Why should only G-8 change their rules? African and other states should also open their trade to the world. 2nd and 3rd suggestions go hand in hand If the countries that are awash with money from oil and natural resources, tend to have higher corruption, wouldn't the same logic apply if G-8 countries give a "Marshall Plan" aid for the bottom billion. What would stop corruption when aid is given? Furthermore, there are evidence that the "Marshall Plan" had no long-tern effects on European economies. In fact, it may have even hurt them. For example, Germany recovered relatively quickly from debris of World War II because of its liberal, pro-business policies that USA opposed but did not stop (for further information on this subject read "Commanding Heights: The Battle for the World Economy", a book by Daniel Yergin and Joseph Stanislaw).

Submitted by Mr. Wondaferahu Mulugeta on
I wish I receive and reade the full version of the thesis. Despite this I find the extract posted in this page interesting. I strongly agree with the three recommendations of Paul Collier for exports from developing countries. The problem is it will take long time to reduce the huge hand of the government and implement sound policies that encourage private investment such as good governance, which is key to utilize if the G-8 countries do their best to take encouraging measures as in the EU and AGOA and use aids efficiently and effectivelly to promote international trade and economic growth. Thank you

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