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The bottom billion
Why the poorest countries fail and what can be done about it
By Paul Collier
Paul Collier’s focus on the poorest group, the “bottom billion”, is reflected in this book through his insights and statistics, which not only explains why those “left behind” poor people fall into the poverty trap, but also provides a way out of this circular trap and supports the path of sustainable development. Collier quoted the phrase “the bottom billion people missed the economic boat” and proposed three ways to escape the poverty trap in order to achieve “turnaround”.
Four traps
The author argues that the first trap is recurring civil wars, a condition that leads to an imbalance between ethnic groups, with one ethnic group often outnumbering the others. In addition, the availability of natural resources such as diamonds or oil may also encourage and help finance insurgents and terrorists. The second trap is the “resource curse” or “Dutch disease,” which creates an unfavorable environment for ownership of natural resources such as diamonds and oil reserves. To escape this curse, we can learn from Norway’s policies of limiting rent-seeking and forcing resource revenues. The third trap is the geographic or productivity levels that exist between neighboring countries, which allows the host country to catch up with the development opportunities of its neighbors. Collier cites the example of Switzerland, a developed landlocked country, which has neighbors such as Germany, France, and Italy. The fourth trap is the type of poor governance or political system that exists in the country.
Three Ways Out
Collier believes that the necessity of military intervention (at least 10 years or more) in poor countries, especially in sub-Saharan Africa, can break the cycle of poverty and civil war. He also found that the implementation of laws, regulations and charters can control corruption and promote democratic prosperity, budget transparency and a good investment environment. Collier believes that giving the labor-intensive exports of the bottom billion people unrestricted access to the markets of high-income countries is another way out of the poverty trap, because as long as tariff barriers are removed and export offers are diversified, the “58” trapped countries can compete in the global market and increase trade profits.
Four traps and three ways out, will it work?
Collier’s solutions to the problems of the 58 troubled countries—home to nearly 980 million of the poorest people—are rooted in his 30 years of experience in the development field and in his key findings, which show that 73% of the bottom billion countries are mired in recurrent civil war and violence, 29% suffer from natural resource scarcity, 30% are landlocked and surrounded by unproductive neighbors, and 76% have poor governance and ineffective economic policies. These findings suggest that the bottom billion countries each face different obstacles, and Collier’s attempts to overcome them in theory have not yet been realized in reality. But his intentions are real.
Another noteworthy point of the book is Collier’s focus on Africa, because Africa is home to 70% of the bottom billion people, so Collier believes that foreign aid flows should ensure that the bottom billion people living in Africa do not miss out on the services that different multilateral and bilateral institutions are supposed to provide. In addition, Collier has serious doubts about the effective allocation of foreign aid to address the problems of the poorest people. According to him, foreign aid should actually reach one-sixth of the total population of humanity, because the remaining five-sixths are either the richest or belong to Asian economies that have already mastered the ladder of the development path (China and India). He draws a statistical conclusion – “US$75 billion in foreign aid per year can save Africa and help it escape the poverty trap.”
The bottom billion: relevance to Nepal
How do we compare Malawi, a place of suffering and hunger, to Nepal, a place of political torture? Collier’s book invites us to imagine ourselves suffering in the poorly equipped health post in the small village of Malwai, or being one of the 10 orphans raised by the only remaining grandmother in the family – a tragic consequence of HIV. For Nepal, the book offers both a vision of the future and warning signs. These warnings can guide and inspire Nepal’s policymakers and development thinkers to act strategically and honestly if Nepal is not to become another “Malawi” or “Congo”.
The four traps discussed by Collier do apply to the case of Nepal, because although Nepal is listed as a “developing country”, it is actually characteristic of famine- and hardship-ridden sub-Saharan countries like Malawi. Centralized infrastructure development and state planning have led to huge income disparities between urban and rural residents, often resulting in relative and absolute poverty.
If successfully implemented, the three ways to escape the poverty trap proposed by Collier are very useful for Nepali policymakers. For example, unrestricted access to the markets of high-income countries is very important for landlocked countries, as their trade is highly dependent on labor-intensive products such as textiles and clothing. Due to various quality and competitive factors, the export quotas of the United States and the United Kingdom to Nepal are being reduced, and Nepal’s trade deficit is likely to continue in the coming years.
In addition, Collier’s focus on the impact of geopolitical factors on the development of host countries can also be explained by the situation of two neighboring countries, China and India. These two neighbors are likely to reshape the global political and economic landscape. However, since India monopolizes the Nepalese market and Nepal’s trade relations with China are relatively passive, these two neighbors are of no benefit to Nepal.
The conflict trap Collier posits is reflected in Nepal’s decade-long Maoist insurgency and the rise of armed groups in Nepal’s Terai region after the Maoists joined peaceful politics. These conflicts even showed a negative impact on the constitution-drafting process—a phenomenon that has been going on since 2008. The natural resource trap is another example. Despite Nepal’s huge potential, the country has failed to produce from the middle class, an issue often repeated in the Nepali media. Similarly, Nepal has been plagued by poor governance and has failed to get rid of corruption, union unrest, bureaucratic constraints and party anarchy.
Collier’s hope of reimagining the “bottom billion” as equals to American and European citizens therefore sounds possible, and this hope must inspire Nepal to follow Collier’s path to prosperity, otherwise If it “turns around”, Nepal will miss the opportunity again.
Shekhar KC (08)
MDEVS First Year
Book Review Assignment-1
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