Brief Look into The Bottom Billion
This post is a brief summary of the Bottom Billion. The goal is to introduce the poverty traps mentioned in the book.
If you are interested in reading The Bottom Billion, my post will give you an overview of the issues identified in the book but it is not all-inclusive. For example, the author mentions plausible solutions that are not fully covered in this blog post.
However, you are looking for a brief summary of the poverty traps. This post is right for you.
The Bottom Billion:
Why the Poorest Countries are Failing and What Can Be Done About It
The Bottom Billion by Paul Collier focuses on issues affecting the world’s poorest developing nations that have systematic issues that prevent economic vitality. Collier calls these nations ‘the bottom billion.’ Based on the text, a percentage of the world’s population, approximately 1 billion people, live in countries experiencing economic decline or stagnation.
In other words, the bottom billion are impoverished developing nations caught in cycles of decline as others nations progress. Collier describes such cycles as poverty “traps.” He identifies 58 countries predominantly located in Africa as the core of the problem and central Asia.
The text is an easy read for most audiences. Collier pinpoints significant causes of poverty, indicators of continual poverty, and plausible solutions. The text’s structure allows the reader to grasp Collier’s arguments easily through anecdotal scenarios and research metrics that parallel his arguments.
For example, Collier provides readers with statistical measurements as a point of reference. In the 1980s and 1990s, populations not included in the bottom billion experienced growth per capita of 2 to 4.5%, with generational improvements to their quality of life. Whereas countries in the bottom billion had declined by as much as .4 to .5% per year.
Collier noted that in more recent years of the book’s research period, the growth of the bottom billion had increased by 1.7%. Although the percentage shows a sign of positive growth, the economic divergence between prospering countries and the bottom billion has continued to grow. Collier predicts that it will worsen with time, indicating the poverty traps the text is centered around.
Collier identifies four traps ‘the bottom billion’ face: conflict, natural resources, landlocked (with bad neighbors), and bad governance. He argues that every country within the bottom billion face at least one of these traps. The text discusses the cause of each trap and plausible ways to address these issues.
Conflict traps are cycles of political conflict, coups, civil war, unrest, or rebellion within a county. He defines a civil war as “internal conflicts that involve at least 1,000 combat-related deaths, with each side incurring at least 5 percent of these deaths.” Political coups are groups seeking to turn over power and are more likely to occur in countries experiencing low income and slow growth. Collier argues that it takes only one successful coup to cause future coups in a country.
He discusses how geography, settlement patterns, and abundant resources lead to this trap as well. For example, geography increases the likelihood of conflict in regions where settlements disperse over large regions instead of compact and densely populated areas. Collier argues that sparse settlement patterns provide more opportunities for regimes to develop. Moreover, a resource-rich country whose economy is highly dependent on a particular commodity export is also susceptible to war.
If continual, conflict reinforces poverty in a country because it is costly to both countries engaging in the conflict and their neighboring countries. Collier also explains the link between countries and their neighbors, which will be discussed later.
Natural resources trap
Collier explains that recourse-rich countries remain poor due to dependence and focus on one primary export. Lower-demand resources that could ultimately increase in economic return over time become neglected. Collier gives Nigeria as an example. In the 1970s, demand for oil exports increased while peanuts and cocoa became less profitable. Therefore the production of peanuts and cocoa decreased, causing individuals to lose jobs.
Collier believes that low-income, resource-rich countries are at an increased risk of being caught in a “political development trap” that occurs when the governments mishandle financial resources, thus keeping the country in poverty. An example Collier gives is the Kenyan coffee boom in the 1970s. As the value increased, Kenyan governmental officials increased spending, which later hurt the city once the commodity experienced a crash.
As mentioned earlier, Collier draws the link between countries and their neighbors. His research points to the importance of neighboring countries and how they influence the growth and trade of surrounding areas. Countries benefit from cooperative neighbors that are doing well politically and economically. Countries in the bottom billion are most likely landlocked and are next to countries that are not beneficial to their economic success.
Bad neighbors can hinder a country’s economic growth potential just as much as prospering countries. According to Collier, countries located next to areas experiencing growth also prospered.
So what is the landlock trap? The landlock trap occurs when neighboring countries lack good political power and infrastructure. According to the text, people living in landlocked countries make up 38 percent of the bottom billion. These countries typically have limited resources that make exportation a challenge to overcome.
As a solution, Collier argues that landlocked, resource-scarce countries should: increase neighborhood growth spillover, improve economic policies of neighboring countries, improve coastal access, become a haven for the region, avoid air-lock or e-lock, encourage remittances, create a transparent and investor-friendly environment for resource prospecting, developing policies for rural development, and try to attract aid.
Bad governance trap
Countries benefit when they have good political infrastructure and policies. According to Collier, countries can rebound from bad governance if they have a large educated population.
As stated, Collier identifies cycles that lead to continual poverty in developing countries. He also draws out four possible solutions for the bottom billion: foreign aid, military intervention to help address conflict, laws, charters, and trade policy for reversing marginalization. I recommend reading the book to understand the traps highlighted. Then draw your conclusion on whether the solutions he mentions align with the paired poverty trap.