"The Most Corrupt Country On Earth"

The Fourth and final trap is that of Bad Governance in a Small Country.

As Collier puts it, economies can only grow so fast, but bad governance can destroy and economy with alarming speed.

Collier also points out that a country can be well governed, but that in order for the country to be successful there have to be opportunities to exploit; without those opportunities you're left with a well-governed, very poor country.

Good governance deals with policy and how that policy is implemented. One of the major signs of poor governance is corruption; the more extensive the corruption, the more growth will be impeded.

Collier points out that this axiom is most true in smaller countries with less resources and opportunities for joining the world market. Bangladesh is tied with Chad for most corrupt nation on Earth, but Bangladesh's economy is in much better shape than Chad's. Collier says that one interpretation of this is that corruption does not really matter, but that economic policies like tariffs and exchange rates that spur and influence growth.

Collier disagrees and states that the reason for this disparity is that separate export processing zones have created "islands of better governance" which prevents rampant corruption from totally chocking off all export activity. Chad, on the other hand is landlocked and dependant on oil and aid; as such, government is the only service provider and its ability to provide services has been greatly compromised by production.

Collier firmly believes that change cannot be imported into a country; there has to be an internal movement for change. Nowhere is that more apparent than in the trap of bad governance. The people of Bangladesh and Chad are the only ones that can change the climate of corruption in a country.

Collier states that the definition of a turnaround is difficult because the definition of 'turnaround' is subjective.

His research suggests that there are 3 conditions that made it more likely for a turnaround to take place:

1. having a large population
2. having a significant percentage of the population with a secondary education (people who are intellectually capable of creating a more responsive and transparent government)
3. having recently emerged from a civil war (because there is so much change it is easier to implement more changes)

Collier's research also suggests that democracy and political rights have little to do with the likelihood of a turnaround in a society.

Collier also points out that it is not only necessary for the turnaround to occur; it must also be sustained. Collier and his research team chose 5 years as the benchmark for sustained improvement.

With these criteria in place, it is estimated that any country in any given year had only a 1.6% probability of sustaining a turnaround.

The reasons for this can be found by examining the 3 factors that make turnaround more likely:

• large population, recent emergence from civil war and high percentage of secondary education in the population: this is difficult because people in failing nations who are able to leave will leave. Who is most able to leave? People who have managed to get a secondary (or higher) level education in a nation that is falling apart. If there has been a civil war raging in the country, it is likely that many people will have become refugees in other countries; those most likely to return are those that would not have had the skills to survive in another country (or, those who are forced to return because they are seen as a burden on their new country).

Realistically, there is very little that can be done externally to deal with the internal problem of corruption. The pressure is on the governments and businesses of trading partners of these nations to require that the corrupt nation adhere to laws regulating business and trade.

The likelihood of this happening when it will surely cost these foreign governments and businesses money is small indeed.