The Bottom Billion Why the Poorest Countries are Failing and What Can Be Done About It by Paul Collier Oxford University Press © 2007 224 pages Focus Take-Aways Leadership & Management • Countries at the bottom of the development scale have not only failed to grow; they Strategy have actually regressed. Sales & Marketing • They are caught in one or more of four major traps that lock them in poverty. Finance • The traps are: “The Conflict Trap,” “The Natural Resource Trap,” “Landlocked with Human Resources Bad Neighbors” or “Bad Governance in a Small Country.” IT, Production & Logistics • The conflict trap involves a pattern of violence, and civil war or “coup rebellions.” Career Development Small Business • Paradoxically, natural-resource wealth may undermine democracy and institutionalize poverty, making industrial development difficult and provoking rebellion. Economics & Politics Industries • Landlocked countries need good neighbors to get their goods to market. Intercultural Management • Bad governance is a trap; rulers may benefit from graft that impoverishes Concepts & Trends their nations. • Global competition makes it harder for countries at the bottom to rise. Aid may help, but it must be judicious. Change has to come from within. • Military intervention has a role in countries at the bottom, especially in helping to address conflict. • The problems of the bottom billion are global problems, because they result in migration, terrorism and other phenomena of great concern to richer countries. Rating (10 is best) Overall Applicability Innovation Style 9 6 9 9 To purchase abstracts, personal subscriptions or corporate solutions, visit our Web site at www.getAbstract.com or call us at our U.S. office (1-877-778-6627) or Swiss office (+41-41-367-5151). getAbstract is an Internet-based knowledge rating service and publisher of book abstracts. getAbstract maintains complete editorial responsibility for all parts of this abstract. The copyrights of authors and publishers are acknowledged. All rights reserved. No part of this abstract may be reproduced or transmitted in any form or by any means, electronic, photocopying or otherwise, without prior written permission of getAbstract Ltd (Switzerland). Relevance What You Will Learn In this Abstract, you will learn: 1) What four traps lock the poorest countries in poverty; 2) What the international community should and should not do to help free them from those traps; and 3) Why helping the bottom billion is in the self-interest of developed and developing countries. Recommendation getAbstract fi nds that this concise, clearly written and hard-hitting book by Paul Collier, one of the world’s leading experts on Africa, is a must-read for anyone concerned with development, economic justice, trade, immigration, terrorism and related issues. The author has scant patience with sacred cows of either the right or the left. He penetrates the fi ctions and fantasies that have helped drive not only unproductive but actually counterproductive policies on aid, trade, investment and more. The book is enlightening, and entertaining in the way that good satire is entertaining. It is also inspiring, since Collier goes beyond merely identifying problems: He offers credible suggestions for solutions. Abstract The Poorest The world’s poorest countries, a group of 58 nations with roughly a billion people, have “The real challenge of some distinctive things in common. While the rest of the world has been getting richer, development is they have been getting poorer. Their decline is absolute, not merely relative. Some, such that…a group as the Democratic Republic of the Congo, are economically worse off now than in 1960 of countries at or 1970. These countries are caught in one or more of four traps: the “conflict trap,” “the the bottom…are natural resource trap,” the trap of being “landlocked with bad neighbors” and of “bad falling behind, and often governance in a small country.” falling apart.” Some suffer from a conflict trap, including civil wars and “coup rebellions,” that both results from and produces poverty. However, violent conflict is not the only trap to spring shut on these countries. A rich endowment of natural resources can be a trap that makes it difficult for countries to develop. A landlocked country whose neighbors have bad policies and weak infrastructures faces an enormous obstacle to development. Poor governance is also a trap. These traps prevent growth, which poor countries desperately need. The idea that growth is good may still be somewhat controversial, however, it is demonstrably true. Failure to grow is the fundamental, critical problem for the bottom “The problem of billion. Growth rarely benefits only the elites; it usually brings benefits to the population- the bottom billion at-large, but the poorest countries have had no growth. is serious, but it is fi xable. It is Solving the problems of the bottom billion is possible. In fact, a set of policy tools can help much less daunting the poorest help themselves. It is true that change must come from within these societies, than the dramatic problems that yet the international community can make change more or less likely to succeed. were overcome in the 20th century: “The Conflict Trap” disease, fascism, Conflict occurs in every society. However, sustained or repeated violent conflicts can and communism.” lock countries in poverty. This is one of the most dangerous and difficult traps. Take civil war. Conventional wisdom about civil war is often wrong. For example, political grievances and unequal incomes don’t seem to be related, and neither do historical The Bottom Billion © Copyright 2008 getAbstract 2 of 5 conflicts and the risk of civil war. However, a close relationship does exist between poverty and civil war. Countries with low incomes and slow growth are much likelier to “The story so far: A group of experience civil war. countries with Fighting-age men may find in rebellion a chance, however small, at riches, especially in nearly a billion people living in a resource-rich country. Low income, slow growth and natural resources are the three them have been primary economic factors in the risk of civil war. Once started, civil wars tend to keep caught in one going, and the poorer the country is, the longer its civil war is likely to continue. Civil or another of wars result in refugees, epidemics, poverty and loss of liberties. The murder rate is apt four traps.” to go up, even after the war. Countries that experience civil war are apt to experience it again. Peace tends to be short-lived. Coup d’états also correlate with economic factors, especially low income and slow growth. Such rebellions also often recur. A country that has experienced one coup is likely to have another. However, natural-resource wealth is not correlated with the “While the rest incidence of coup d’état, perhaps because a coup does not require a sustained source of the developing of financing. world has been growing at an unprecedented “The Natural Resource Trap” rate, they have A rich endowment of natural-resource wealth can trap countries in slow growth. Slightly stagnated or less than a third of the bottom billion live in countries whose economies depend on natural even declined.” resources. This turns out to be bad news economically and politically because natural- resource wealth puts countries at risk for so-called “Dutch disease.” The discovery of natural gas in the North Sea strengthened the Dutch currency. As a result, the prices of Holland’s manufactured exports rose. Natural-resource wealth made its manufacturing less competitive. In such countries as Nigeria, something similar occurred. Labor- intensive production might have provided a platform for growth in Nigeria, as it did “But it is very diffi cult for them in China and India. However, natural-resource wealth effectively crowded out such to implement production. As a result, the Nigerian economy depended on volatile natural-resource change because prices, and swung through boom-and-bust cycles. they inherit a civil service that…is Natural-resource wealth also makes it difficult for countries to develop healthy hostile to change political cultures. When the state has money to spend without taxing its people, voters because…civil become less vigilant and less vocal. Natural resources expand the opportunities servants profi t for patronage. Various constituencies can get what they want, because the natural from the tangled mass of regulations resources generate plenty of money. The result of this wealth is often a narrowly and expenditures based economy dependent on volatile commodity prices, and an undemocratic or just over which they functionally democratic government. preside.” “The Landlocked with Bad Neighbors Trap” Landlocked countries are handicapped. Their transportation costs tend to be higher because they depend largely on the countries that surround them. Landlocked Switzerland has neighbours –Germany and Italy – with good transportation infrastructures. By comparison, Uganda’s neighbors are Kenya, Sudan, Somalia, Tanzania and the “The resource- rich countries Democratic Republic of the Congo, countries whose transportation infrastructures are are in more need not up to European standards. Neighbors are not just corridors to the sea; they are also of checks and potential markets. Here, too, Uganda is at a disadvantage. Landlocked countries can try balances than the these nine tactics to improve their circumstances: other countries, but paradoxically have 1. Promote reduction of trade barriers both intra- and interregionally. fewer of them.” 2. Urge neighbors to pursue sound policies. 3. Take feasible measures to improve access to the sea. The Bottom Billion © Copyright 2008 getAbstract 3 of 5 4. Adopt policies that will make the nation a regional haven for businesses. 5. Encourage cost-cutting airlines and e-services. “Africans took their 6. Promote emigration and remittances. money, whether corruptly acquired 7. Encourage exploration and prospecting for resources. or honestly 8. Know that industrialization will come slowly.