Falling behind and falling apart

Oct 12, 2009 Letters

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Dear Editor,

Today, I want to review the book, The Bottom Billion, published by Oxford University Press; the author is Paul Collier, Professor of Economics and Director of the Centre for the Study of African Economies at Oxford University.

A thorough reading of this book reminds me of Chinua Achebe “Things fall Apart”, John Galbraith’s work, “The Affluent Society” from which we embrace the term ‘Poverty amidst Plenty’; and indeed, Michael Harrington’s work “The Other America”. Collier’s book, therefore, immediately construes the idea of ‘The World Falling Apart’, ‘The Other World’ and “The Affluent World’.

Collier asserts that all the world was poor at one time; most have removed themselves from this wretched state; but others remain stuck in stagnated economies, becoming the wretched of the earth. But they are not; other people and other countries continue to spawn this wretchedness in the camouflaged name of aid, loans, and treaties; when the real motive is sustaining vested self-interests.

The main thesis of the book is that a large number of developing countries are at the bottom of the global economic system, not because they hold the distinction of being the poorest, but because they fail to grow.

As Collier puts it, these countries are not merely falling behind, they are falling apart. These countries are in the 21st century, but their reality is the 14th century bedeviled by plague, civil war, and ignorance.

Collier’s book shows that these countries are dirt poor because they are caught in one or a combination of these traps: the conflict trap, the natural resources trap, the trap of being landlocked with bad neighbours, and the bad governance trap.

Collier unravels these traps in pithily. Contrary to conventional wisdom, he argues that conflict and civil war have their roots in conditions of low income; slow, declining, or stagnated growth; and dependence on exports of primary commodities.

And for countries that have a multiethnic composition, it may be a huge mouthful to digest when Collier concluded that there is no correlation between political repression and the risk of civil war; citing the findings of Stanford University’s Jim Fearon and David Laitin, among others. Collier provides evidentiary examples of the application of ethnic exploitation and images as a camouflage for realising self-interests.

I am tempted to mention here just one, the Fiji case that Collier uses. Mahendra Chaudhry’s elevation to the Prime Minister’s position in 1999 induced him to turn over the mahogany plantations to international management.

The British Commonwealth Development Corporation (CDC) and a private U.S. company emerged as the two bidders; the CDC won the bid.

Then we saw a month later, the waging of an armed struggle to remove the Chaudhry Government. Leader of this armed struggle was George Speight, an indigenous Fijian businessman who also was consultant to the private U.S. company; his slogan ‘Fiji for Fijians’ was a very poignant rallying cry; but Collier ruminates as to whether it was merely social justice that Speight sought.

However, Collier noted that a rallying cry as ‘Give the mahogany contract to the Americans’ would not have had the same tremor as a cry on behalf of the browbeaten group.

The author contends that “When the growth process fails in a low-income society, it is exposed to risks that are hard to contain. I do not want to claim that only the economy matters, but without growth peace is considerably more difficult. And in societies of the bottom billion the economy is stuck. So breaking the conflict trap…are not tasks these countries can readily accomplish by themselves.”

Then there is the natural resources abundance trap that also could contribute to the conflict trap; that natural resource is a trap is paradoxical, as it would seem that having natural resources surely is the road to prosperity.

Especially when around 29% of the people in the bottom billion resides in resource-rich countries; yet these countries continue to decline and stagnate. Why?

The natural resource exports drive up the country’s currency value in opposition to other currencies; and this currency rise transforms the country’s other exports into uncompetitive products; and it is possible that these other exports could produce the impetus necessary for growth.

Collier argues that the furthest natural resource countries could graduate would be toward a middle-income status, as Saudi Arabia, Kuwait, Russia, etc., largely as a result of the natural resource trap.

The book addresses two other traps that stagnate growth in the bottom-billion countries: being landlocked with bad neighbours, and bad governance. Landlocked countries with very little transport links to the coast pose enormous problems to enter the global market; and it is even worse with bad neighbours.

Again, contrary to conventional wisdom, Collier notes that while good governance and good economic policies do contribute to growth, after growth reaches a ceiling of 10%, economies do not grow further, regardless of what governments do; that is, notwithstanding that good governance and good economic policies do contribute to realising opportunities, they cannot spawn opportunities where no opportunities exist.

The author uses the World Bank’s Country Policy and Institutional Assessment Index to determine poor governance and poor economic policies; countries that fall below a cut-off point determined by Collier, receives the label ‘failing states’.

However, bad governance and bad economic policies need not be a trap; a country could turnaround from being a failing state; and the criteria for turnaround are: the higher its income, the larger its population, and the larger numbers with secondary education.

This book demonstrates quite candidly how to break away from these traps and so fortify the hand of the reformers via these instruments: aid, military intervention, international laws and charters, and trade policy to reverse marginalisation.

However, each of these is being used for purposes inimical to the bottom billion; and, indeed, the people who control these instruments are those with no knowledge or any interest in alleviating the plight of the bottom billion.

If Collier wants readers to take something from this book, it would be this: the solution to this wretchedness and unhappiness has little or nothing to do with supplying aid to these countries; the change necessary in these countries at the bottom has to come from within, as the bigwig countries cannot continue to impose change on them.

These countries carry the distinction of waging struggles between those who want change and those with vested interests resisting this change.

On the other hand, left unattended, these countries housing the bottom billion will continue to move away from the global economy, transforming themselves into a ghetto of misery and discontent.

Prem Misir

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