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Where Does China Fit in the Bottom Billion Narrative? JOHN HUMPHREY, IDS

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Where Does China Fit in the Bottom Billion Narrative? JOHN HUMPHREY, IDS IN IDSFOCUS Research and analysis from the ISSUE 03 IDInstitute of DevelopmentS Studies CONCERN FOR THE BOTTOM BILLION MARCH 2008 Where Does China Fit in the Bottom Billion Narrative? JOHN HUMPHREY, IDS Most of the world’s poor are in China and India, but Paul Collier argues in The Bottom Billion that development efforts should focus on slower-growing countries. This In Focus brief suggests that development agencies still need to focus on China and India as these countries still face development challenges in their poorer regions and with respect to a number of the Millennium Development Goals (MDGs). In addition these countries have become development actors themselves. It is critical to engage with them as equals in order to learn from their successes, deliver global public goods and work with them as they become increasingly important trade, investment and aid partners for the Bottom Billion countries. Three radical arguments in Clearly, this definition does not include Collier on Asia and China The Bottom Billion 95 per cent of the population of South Asia, and it does not include China. For Growth is the cure for poverty. Aid First, Collier argues that development Collier, development efforts should should be focused on slow-growing policy should focus on the Bottom exclude countries where substantial countries, not slow-growing sectors Billion of the world’s poor, defined in shortfalls in MDG attainment exist now, (agriculture) or regions within terms of countries that are failing to perhaps even excluding countries that countries. Most of Asia has escaped grow. Although this group of countries are not in line to reach the MDGs by the poverty traps. Even if most of is never defined explicitly, it clearly 2015, as long as these countries are on a the world’s poor are still in Asia, includes a substantial part of sub- growth path which will eventually bring they are in growing economies Saharan Africa, the poorer countries of people out of poverty. Development and should not be the focus of the greater Mekong sub-region efforts should be focused on those development efforts. Asia is now a (Cambodia, Lao People’s Democratic countries that are trapped in low problem for the Bottom Billion: Republic and Myanmar), a very limited growth and therefore not able to it has raised the bar for entry into number of South Asian countries (Nepal, generate the resources that would global markets. China is an obstacle but not Bangladesh, India or Pakistan), enable them to tackle by themselves the to development because of its and some Central Asian countries problems identified by the MDG targets poor policies and practice, which (definitely Afghanistan, quite possibly (low income, malnutrition, maternal undermine Western development Mongolia and some if not all of the five mortality, low educational achievement, efforts. ‘Stans’ of the former Soviet Union). etc.). IDS IN FOCUS ISSUE 03.3 WHERE DOES CHINA FIT IN THE BOTTOM BILLION NARRATIVE? MARCH 2008 www.ids.ac.uk Where Does China Fit in the Bottom Billion Narrative? The shift in world power to the East is fundamental and ‘‘will have substantial consequences over the next decades. Second, Collier identifies groups of low- They get charity as long as they stay The main argument’’ is that countries growth countries rather than low- producing the crops that have locked that are growing – and must therefore income groups within countries as the them into poverty’ (Collier 2007: 163). have escaped the traps – should not be focus of the development challenge. Instead, the focus should be on the focus of development efforts. The Collier is not the only influential writer diversifying agricultural production and logical conclusion is that development to argue that development agencies promoting production and export of agencies should stop aid as soon as should focus on the poorest. Jeffrey labour-intensive manufactures and countries are on a path of sustained Sachs makes a similar argument for a services. growth. It would not even make sense focus on the poorest. He argues that Third, Collier argues that, because of to delay cutting off aid until such there is a specific ‘crisis of extreme the successful emergence of the Asian countries ’graduate’ to middle-income poverty’ (Sachs 2005: 1), and that: economies, globalisation is no longer the status. Collier’s argument implies that aid ... certain parts of the world are panacea for growth and development to Bangladesh, India and Pakistan should caught in a downward spiral of that it would have been 20 years ago. be cut immediately. Based on impoverishment, hunger and disease ... These countries have raised the bar for projections from the UK Department it is our task to help them onto the global competitiveness in manufacturing for International Development (DFID), ladder of development, at least to gain and services. Using arguments first put even countries such as Cambodia and a foothold on the bottom rung, from forward in a World Bank document Lao PDR are expected to reach a per which they can then proceed to climb (Collier and Dollar 2002), Collier argues capita income of $750 per year by on their own. that economies of agglomeration, around 2015 if baseline growth rates are (Sachs 2005: 2) particularly with respect to infrastructure maintained, so, optimistically, they too The difference between Collier and and specialised services, are so strong could merit scaled-down programmes. Sachs, however, is that Sachs' overall that they are likely to offset the effect In fact, Asia, and particularly China and message is that the focus of develop- of rising wages on the competitiveness India, remain important for development ment should be on poor people, of the Asian economies for quite some in distinct ways. The first concerns their particularly the lowest-income people in time. This argument is essentially sound. own achievement of the MDGs: the rural areas of the poorest countries. The declines in exports of garments Fast economic growth in Asia and Sachs says that aid programmes targeted from sub-Saharan Africa to the US • elsewhere may not continue. on specific interventions to overcome under the Africa Growth and Collier recognises that growth spurts problems such as disease and low Opportunity Act preference scheme occur, but are not necessarily productivity (malaria nets and fertiliser) following the phase-out of the sustained, and he also recognises cases will enable these people to escape what Multifibre Arrangement in 2005 is a of resource-based growth that are might be called the ‘low productivity good example of how China remains equally unsustainable. Clearer criteria trap’. Collier's approach could not be competitive in labour-intensive activities, are needed to identify countries more different. He sees growth in the in spite of rising wages (Kaplinsky and whose current periods of growth economy as a whole as solving the Morris 2006). should not be taken as indications of problems of the poorest, as evidenced in sustainable future growth. his reference to the work of David China and India remain Dollar (Dollar and Kraay 2001), and a important for development • Even in fast-growing economies in telling observation that Fairtrade is So, where does this leave China and Asia, there are continuing challenges useless because ‘it encourages recipients India (and much of the rest of Asia) in to fulfilling the MDGs. The Asian to stay doing what they are doing ... Collier’s narrative about development? Development Bank’s projections show IDS IN FOCUS ISSUE 03.3 WHERE DOES CHINA FIT IN THE BOTTOM BILLION NARRATIVE? MARCH 2008 IN IDIDSSFOCUS China and India are becoming development actors and ‘‘they demand attention beyond being recipients of aid. that 200 million people in South Asia governance and the good development For its increasing’’ role as a develop- • will remain below the $1-a-day practices of established donors (Collier ment actor through its rapidly poverty line in 2015: 190 million of 2007: 62, 86-7, 146 and 186). For Collier, expanding trade, investment and them in Bangladesh, India and Pakistan China is a country that needs taking in aid links in Africa and Asia. – not in the Bottom Billion countries. hand by Western development agencies In China and India substantial pockets so that its development activities are For these reasons, China and India will of poverty are found in particular brought into line with the best practice become increasingly important for provinces and states, many of which of the Organisation for Economic Co- development policy over the next few suffer from the same development operation and Development (OECD). years. But building relationships between traps as the Bottom Billion, particularly Collier's only plan for achieving this goal the established and rising global powers landlocked status and poor is to argue that China be offered will be difficult. China and India present governance. membership of the G8, or in his words a new phenomenon. They are poor but a ‘place at the top table’ (Collier 2007: Work by the UN on the achievement powerful. In the past, rich countries • 146). of the MDGs in Asia shows that even were powerful and poor countries were where poverty is falling rapidly, China (and other emerging donors) will generally powerless. China and India can progress towards other goals is slow become increasingly important for exert power in the global economy and or non-existent. In the case of the development policy and practice. China, in global politics because of their size malnourishment goal, for example, in particular, matters for the Bottom and rapid growth. But they remain India, Indonesia and Pakistan were all Billion in three ways: relatively poor, with substantial classified by the UN as ‘regressing’ in proportions of their populations living • For the lessons China offers for 2005 even though they were below the $2-a-day poverty line.
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