"It Is Easier To Rename Countries Than To Change Them"

Why are the poorest countries failing? What can be done about it?

Those are the questions that Paul Collier seeks to answer in his new book.

Collier (and his partially-named research team) set about discovering why, in an era of increasing prosperity throughout the world, there are about 57 nations (comprising about 1 Billion people) that seem unable to progress; and are, according to Collier, regressing.

The Bottom Billion focuses on 3 causalities of the continued stagnation of these 57 nations:

1. Traps
2. Globalization
3. International Response

Although Collier believes that the situation in failing nations (Africa+, more on that later...) can be ameliorated, he is by no means a wide-eyed optimist who believes that all of the things that need to happen will happen just because there is a possible solution on the table.

Collier's adamant in stating that the success of these failing states rests upon a foundation of internal change that simply cannot be imported. However, Collier is equally adamant in his assertion that G-8 nations have the tools (and obligation) to legitimize and support these changes.

Collier's research and book are not without critics. We'll explore those counter-theories as well because the purpose of this project is not only to summarize Collier's positions, but also to critically examine the soundness of his conclusions by comparing it with other theories of the day.

So...let's get crackin'

Poor People In Developing Countries VS Poor People In Failing Countries

Paul Collier interviewed by Fareed Zakaria on "Foreign Exchange" If the video does not load, follow this link:
http://video.google.com/videoplay?docid=-3692837809306659969&q=paul+collier&total=49&start=0&num=10&so=0&type=search&plindex=2

"The Grim Apparatus of Professional Scholarship"

So, who is Paul Collier? What qualifies him to talk about "failing" states? Why did the Oxford University Press allow this book of criticisms and solutions to be published? And, is this book intended to be used in graduate-level classrooms in the wealthy world, or does Collier have some other hope for his book?

Well, in his own words, Collier says that this book is "written to be read" and that he has structured it in a way so as to avoid the "grim apparatus professional scholarship" with excessive quotes and footnotes that might put off the average person who wants to understand the nature of the development crisis that some nations face.

In addition, in his proposed solutions is a section that deals specifically with what "ordinary people" can do to help create an environment conducive to development and success of nations that are currently "failing."

Collier's solutions are distinctly economic in origin; his proposals assume that an economic improvement in the 58 failing nations will by natural progression lead to social improvements. While this opinion is not controversial, some of the other opinions in his book are quite so. As we explore the main themes of the book, a few of those will be discussed.

So, that is Collier's book. The question of "Who Is Paul Collier" remains.

Paul Collier is currently a professor of Economics at Oxford University and Director of the Center for the Study of African Economics. According to his homepage, his areas of interest include governance of low income countries, civil war economies and aid. Collier is the former Director of the World Bank Development Research Group from 1998 to 2003. During his tenure as Director, Collier collaborated on several reports to the World Bank about the correlation between poverty, war and the role of foreign aid.

He clearly has the theoretical qualifications to talk about development and impediments to development. But, another question remains unanswered: "Are His Ideas Sound"

Let's see, shall we...

"A Ghetto Of Misery and Discontent"

Collier chooses not to list the names of the 58 countries that he considers to be "failing" nations because he feels that naming these countries creates a "stigma" that leads to a "self-fulfilling prophecy of failure" which he believes already exists. Instead, he chooses to use some of these nations in stories that illustrate the issues that these nations face and specific ways in which the leaders of those nations (and others) reacted which ameliorated or exacerbated the problems.

Collier makes it explicitly clear that he does not believe that there is a such thing as an "Africa Effect."

In other words, Africa doesn't make things happen. Instead, African states have many of the characteristics that make a nation more prone to failure.

Collier uses the term Africa+ to describe the 58 nations that he considers to be failing; these span the globe and can be found throughout Africa, Central Asia and in areas of the Caribbean as well as a smattering in other regions.

Collier notes that these nations are very different, but they all have one commonality: they are small, which means that their per capita income is typically very low.

Collier points out that it is precisely because these countries are so small with small economies that they tend to be overlooked or devalued; if a nation does not show that it can provide some economic benefit to other nations, there will be less attention paid.

Which means that those nations/people most in need of help (absolute poor) will be overlooked in favor of those nations/peoples who have more to offer the world (relative poor).

Collier states that as time goes on these countries will form a "ghetto of misery and discontent" that will begin to impact other nations.

Afghanistan, according to Collier is an excellent example of how this happens.

http://http//www.pbs.org/newshour/indepth_coverage/asia/afghanistan/timeline/index.html

Collier argues that there are reproduceable strategies that would have been able to avert the crisis in Afghanistan and these strategies can be used to avert and/or mitigate looming crises in other nations.

All that is missing. he feels, is the will and commitment to do so.

"Heading Towards A Black Hole"

Part 2 of The Bottom Billion deals with the characteristics of failing nations. Collier likens these characteristics to "traps" that hold these 58 nations back.

Collier identifies 4 traps:

1. the conflict trap
2. the natural resource trap
3. landlocked with bad neighbors
4. bad governance in a small country

Collier does not suggest that all of the 58 nations have all of these characteristics. Development is impeded by falling into one of these traps. The main feature of all of these countries at some point has been bad governance in a small country, but not all nations have fallen into the conflict trap and not all nations have exploitable natural resources.

To understand Collier's solutions, it is important to have a good understanding of what he sees as the problems. An explanation of each trap follows...

"The Kalishnakov Is The Weapon Of Choice For Any Self-Respecting Rebel"**

Collier's first trap is the Conflict Trap.

Collier breaks conflict down into two categories because his research has suggested that it is important to understand the differences between the two main types of conflicts that plague failing nations. These are: civil wars and coups.

Collier and researcher Anke Hoeffler attempted to explain the causes of civil war looking at several possible causes:

• social


• political


• geographic


• economic

Collier's and Hoeffler's research indicates that statistically, civil wars are not fought because of social or political grievances or repression. Instead, their research indicates that civil wars are fought for multi-faceted economic reasons; specifically related to low income and low growth.

(Links to articles about this research are found under the Thirst For Knowledge section).

Collier's and Hoeffler's research also indicates that coups are carried for much the same reasons as civil wars; although coups initially tend to be much less disastrous for countries than civil wars.

Collier estimates that the average civil war will cost a country (and its neighbors) about $64B. Collier also estimates that a country engaged in civil war will lose about 2.3% of its growth annually. Collier estimates that the average 7-year civil war will cause a country to lose about 15% of its growth.

These figures are particularly devastating for countries already suffering from low growth rates that hover somewhere around the 1.7% mark.

Collier notes that once a country has a civil war or coup, they are much more likely to have more in the future. And, since low growth and low income are likely to continue without some form of intervention, the root causes of these rebellions always present, making it still more likely that they will occur in the future.

Focusing on the ethnic, social, political and geographic causes of rebellions will not decrease the likelihood of costly and deadly conflict. However, focusing on the economic reasons for these rebellions will have an enormous effect on a country's ability to break free of the conflict trap.

** Read about the production of AK-47s around the world under "everything you always wanted to know about ak-47s in the "knowledge section"**

"Curses, Curses..."

The second trap is that of an abundance of a particular natural resource such as oil in Nigeria or Forests in Togo.

Abundant natural resources are not a trap in and of themselves; they become a trap when the resources and the profits from the resources are mismanaged.

Mismanagement can take several forms:

1. resources can be depleted from overzealous extraction
2. the focus of development and technology is solely on that specific resource which retards or completely halts development of other resources which may be more beneficial in the country's eventual development potential
3. funds from the resources can be mishandled in that they are used unsparingly without necessary constraints during "boom" periods. with any boom comes a "bust" which is usually catastrophic because of the unrestrained spending during better times.

Collier notes that abundant resources are not only a trap for the poorest nations. He points out that nations like Russia and Venezuela are also vulnerable to this trap. Collier uses "Dutch Disease"** to illustrate the pitfall for any nation in relying on one resource to the exclusion of all other resource developments.

Collier's research suggests that resource-rich countries switching from autocratic to democratic governments are likely to see a decrease their annual growth rate by 3%. Collier theorizes that this is due to two key facts: newly democratic resource-rich countries (Iraq, for example) have a tendency to invest too little (and make poor choices when they do) and the switch from a minimalist autocratic government to a large democratic government can prove unmanageable; which in turn leads to poor decision-making, corruption and a host of other development hindering problems.

As an example of a fantastically successful resource-rich nation, Collier describes the economic situation in Norway. The reason that Norway has avoided the resource trap is that its system of controls was in place before the country began to exploit its oil resources. The resources in turn have served to strengthen the system of controls.

While the developing resource-rich nations do not have the option of starting over to build a system of controls before exploiting their resources, they can be given sound advice on how to put these controls in place before the resources are depleted or before the market makes those resources less valuable.

**Read about "Dutch Disease" in the "knowledge" section**