The Bottom Billion Book Review

I have been working towards learning more about humanitarian work and what is actually going to work when Education Through Travel starts doing humanitarian trips. We will not be able to do any trips until it is safe to do so in light of the current pandemic, but it is still something I want to make sure we do correctly when the time comes. I recently read a book called The Bottom Billion by Peter Collier. This was an excellent book that was well researched and transparent.

This book is about why the poorest countries are failing and what can be done about it. There are certain countries that have the bottom billion citizens according to income levels. This book was published in 2006, so there have been some things that have changed in the past 14 years, but there are still policies and research points that are still applicable.

The premise of the research in this book is that there are four traps that these bottom billion countries have fallen into that prevent these countries from emerging from poverty. These traps are “the conflict trap, the natural resources trap, the trap of being landlocked with bad neighbors, and the trap of bad governance in a small country.” The author posits that these countries have fallen into one or more of these traps and are struggling to get out. It is possible to get out of these traps, but it is also very difficult without some help, often from the global community.

To explain what can be done, there must first be an understanding of what these traps are. The conflict trap is a trap that is defined by a pattern of violent internal challenges to government. These can be either prolonged violence, such as civil wars, or swift violence such as a coup d’état. While a civil war is not necessarily a trap, as evidenced by the United States, Russia, and the United Kingdom, civil wars can be a trap in certain circumstances. When a country is poor, especially if that country is in a slow economic growth phase, and when there is a dependence on natural resources, there is a danger of civil war. The part of a civil war that makes it a trap is that once a war has begun the economic damages that occur, and it can make a country more susceptible to another war or coup. Approximately half of civil wars are post-conflict relapses. The same idea is true for coups as well. If a country has had one coup it is much more likely to have further coups. Peace is an issue when there is continuous conflict and the economy is not able to recover.

The natural resources trap is a trap that when a country fails to grow, and yet has natural resources. The reason this can be a trap is that the natural resource exports reduce growth. There is something called the “resource curse” that essentially means that when there is an excess of a certain resource the exports of these resources “cause the country’s currency to rise in value against other currencies. This makes the country’s other export activities uncompetitive. Yet these other activities might have been the best vehicle for technological progress.” Another issue with natural resources is when there is a democratic country there must be limitations on power. When there are checks and balances in a government this can be undermined by resources rents. Resources rents are “the excess of revenues over all costs including normal profit margins.” When there is an abundance of rents, or excess revenues, there is a greater issue that in elections there will be bribery and other means of using these rents for campaigning and marketing. While this is not a trap unique to the bottom billion, it is an issue especially for the bottom billion because it can close off paths that could lead to true economic growth, and it can affect political development as well.

The landlocked trap is a trap that is a little more difficult because it based on where the country is located geographically. There have been studies that suggest that being landlocked takes off around half a percentage point off of the country’s growth rate. Part of the landlocked problem depends on who are the neighbors of the landlocked country. When a landlocked country has bad neighbors that country is essentially a hostage of their neighbor. There is also a correlation between neighbors’ growth and the growth of the landlocked country. Growth spills over. When a country is resource-scarce and landlocked, especially if the neighbors are not helpful, it almost always condemns a country to slow economic growth. There are a few things that landlocked countries can do to help their growth, including: (1) increase neighborhood growth spillovers, especially with regard to infrastructure and trade policy; (2) improve neighbors’ economic policy, especially creating a more integrated economies; (3) improve costal access; (4) become a haven for the region, this is with regard to policies that are more beneficial for the residents in the country; (5) don’t be air-locked or e-locked, this means that there needs to be air transport and access to e-services; (6) encourage remittances and allow people who have emigrated to come back and with their knowledge and education to the country; (7) create a transparent and investor-friendly environment for resource prospecting; (8) rural development; and (9) trying to attract aid.

The last trap is the bad governance in a small country trap. There are many countries that have some form of corruption. There was a survey that tracked money released by the Ministry of Finance in Chad. The survey found that less than one percent of money that was sent to clinics in the country actually arrived at the clinics. There are many countries in the bottom billion that need economic reform. There is a technical and political aspect to reforming the economy, and there is often a shortage of people in the bottom billion countries that have the know-how for this type of work. The main issue with bad governance is the countries that are in this trap have a difficult time getting out because “[t]urnarounds are rare because reformers are often suppressed and sometimes pay a high price for their efforts.” To create a turnaround there are certain preconditions that will help to encourage this type of change: (1) a larger population, (2) a greater proportion of the population with secondary education, and (3) if it had recently emerged from a civil war. The third precondition may be surprising, but makes sense because after a civil war there are often more fluid politics and more options for change. It is important to help countries get out of this trap, because the benefits to the global community can be huge.

The author points out that there are tools that can help these countries get out of the traps. These tools, or instruments, are aid, military intervention, laws and charters, and trade policy for reversing marginalization. These instruments are mentioned to help the global economy and those in power to understand what will actually help these countries rather than simply throwing money at a problem or sweeping a problem under the rug.

When discussing the use of aid, the author comments, “[a]id alone is really unlikely, in my view, to be able to address the problems of the bottom billion, and it has become so highly politicized that its design is often pretty dysfunctional.” Aid is not a bad solution; it just cannot be the only solution. There was a study done by the Center for Global Development showed that there was diminishing returns when aid reaches about sixteen percent of GDP. Aid also becomes less effective if the government to which the aid is being given does not have a reasonable budget and plan to implement the aid. In some situations aid can be an incentive to induce rebellion and coups because capturing the state is now more valuable. Providing aid to a country can make a situation better too. After a conflict, such as a civil war, big aid is needed to help through, approximately, the first ten years after the conflict is over. For countries that are landlocked they will need welfare for a long time. For countries in the bad governance trap there are three ways in which aid can help with a turnaround: incentives, skills, and reinforcement. Aid can be an incentive to help governance stay on the up and up and distribute the money in the correct way to continue to get the aid. Aid can help provide technical assistance to a country through a supply of skilled people that can come in, help, and train the local people in the area. Aid can also be used as reinforcement to help continue any change and improvement that has happened in the country.

Another instrument that can be used is military intervention. In the modern world we live in armies are often used “to supply the global public good of peace in territories that otherwise have the potential for nightmare” and help restore order. Militaries can also be used to help maintain post-conflict peace and help protect against coups.

Laws and charters are less costly than aid and military intervention but can be hard to implement. The author suggests five charters that could help the public good, especially for those in the bottom billion. The first is a charter for natural resource revenues. This charter would make sure that resource revenues are being used effectively under international standards. The next charter would be a charter for democracy. Using checks and balances is difficult to implement because it is a continuous and complex process. Having a charter for democracy would help with how money is raised and spent on election campaigns, how the media covers the elections, and the freedom of information about elections. The next charter would be a charter for budget transparency. “How governments spend money is at the core of how they function.” If there is more scrutiny for the bottom billion there could be more honesty and efficiency in the country’s budget. The next charter is a charter for post-conflict situations. At the end of conflict situations is when a country in the bottom billion is most vulnerable. There can be a variety of outcomes at the end of a conflict from peace and growth to another chance to fall apart. If there is a charter in place there can be a guidance on how donors and the international security regime would have to act after conflicts. The last charter would be the charter for investment. An investment charter would have rules for how government and donors would have to treat each other. The way this could happen is through international arbitration and investor insurance.

The last instrument is trade policy for reversing marginalization. The main issue with trade policy is that often the bottom billion do not have manufacturing and do not have the option for companies to outsource to their countries. There are also issues with rules of origin for products that are mostly sourced in these bottom billion countries, and especially African countries for this particular instrument.

By using these instruments to combat the traps of the bottom billion, the author argues that there can be action that can help the bottom billion rise up. There must be action and a plan, rather than simply a desire. The author goes into what governments and donors can do in some detail, but I would like to focus on what ordinary people can do. The main call to action for individuals is to vote in those people that will help the bottom billion and to let those representatives know that this is an important issue. There are also three other propositions that are brought forward: (1) the development problem we are now facing is a focused problem around a billion people in countries that are stuck; (2) “within societies of the bottom billion there is an intense struggle between brave people who are trying to achieve change and powerful groups that oppose them”; and (3) we do not need to be bystanders. If enough individuals support change it can happen. In short, as the author puts it, “we need to narrow the target and broaden the instruments.”

The change will not happen today, tomorrow, next month, or even next year, but there will need to be change over time to make a difference. Gaining education over time about these issues is incredibly important. There is much that we can do, and learning is the first step. Please let me know if you need any information or want to know of some other resources. Feel free to reach out through the contact page at any time. Let me know if you have any resources you would like to share as well.