PAUL COLLIER THE BOTTOM BILLION OXFORD UNIVERSITY PRESS 2007

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PAUL COLLIER THE BOTTOM BILLION OXFORD UNIVERSITY PRESS 2007
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Paul Collier, The Bottom Billion, Oxford University Press, 2007

Paul Collier, The Bottom Billion, Oxford University Press, 2007

William Easterly, White Man’s Burden, The Penguin Press, 2006


These are two important books by two former World Bank economists addressed at the same questions: 1) why does much of the world’s population live in desperate poverty; 2) why haven’t past efforts to alleviate this poverty been more successful, and 3) what can be done now to help. My most important message is that both books are well worth a read. Easterly’s book was more enjoyable to me because it is better written and interspersed with the stories of individuals struggling and sometimes succeeding against terrible conditions. In addition, he presents much of his information with graphs and other illustrations, which I found appealing. Collier’s book is all text, although much of his argument is supported by his own research findings.


While both authors tend to agree on the answer to question 2, they are at polar extremes on the answers to 1) and 3). Collier starts by listing and explaining 4 “poverty traps:” 1) The conflict trap; 2) The natural resource trap (too much resources; which leads to corruption and unresponsive government); 3) The landlocked trap (which causes high transport costs); 4) The bad governance trap. Easterly starts his book by denying the existence of poverty traps. I believe he would, however, agree that the problems raised by Collier’s list are obstacles to development, albeit not insurmountable obstacles, and Easterly provides numerous examples of the exceptions to Collier’s rules (e.g., Botswana has succeeded in spite of being landlocked with abundant natural resources.) The most important difference between them on question 1 is that Easterly rejects the Collier’s view that what is needed for sustained development is a “big push,” with help from the West.


While Easterly’s examples were persuasive to me, Collier discusses one special problem facing would be developers that I found compelling. The path that the Asian Tigers, India and China have taken to development may no longer be available. These countries were able to exploit a comparative advantage in manufacturing, partially based on the large wage gap between themselves and the West. The gap was large enough to offset inferior technology and infrastructure. But, once manufacturing started to shift to these areas, the developing areas benefited from “agglomeration effects,” that improved technology and infrastructure and thus preserved the advantage in spite of rising wages (this is a bit like the “Infant Industry” argument applied to a whole sector). If current poor countries are going to develop a manufacturing sector, they will have to compete with the new emerging economies, which still have much lower wages than the West. Collier therefore believes that the success of the Asian Tigers has closed the door to this development strategy, or closed the door until the wage gap rises sufficiently.


On question 2, Collier and Easterly agree that past efforts have failed because aid was misdirected and not enough attention was paid to the importance of facilitators to aid such as good governance, good regulations, and security. Here is where they part company. Collier believes that the plight of the poor requires the West to learn from past mistakes and to do better. Some of what he proposes seems sensible and non-controversial (at least to me): 1) Promulgating international charters on good policies with regard to natural resource utilization, budget transparency, and the treatment of foreign investors; 2) Reforming western trade policy to open up export markets to the poorest countries; 3) Directing aid to relieve the suffering of those in the most need.


But Collier would go further. In the case of failed states and civil wars, Collier argues for international military intervention. He cites the successful British military intervention in Sierra Leone as an example of what can and must be done by the international community to avoid Rawandan-style tragedies.


In contrast, Easterly devotes a full chapter to failed US attempts at military interventions and peace keeping. His conclusion, “The … record on intervening militarily to promote the more ambitious goals of political and economic development yields a cautionary lesson _ don’t. Maybe one should never say never, but one should learn from history that the typical Western error is to do too many interventions, not too few.” Easterly’s pessimistic reading of the historical record gets at the major issue between the two economists: what is the role of international government action.


Collier looks at past failures and sees ignorance and error; Easterly sees bureaucratic failure. Easterly recounts in great detail with many examples how ambitious plans of the international development community inevitably lead to conflicting incentives made worse by the lack of accountability. He believes that development will occur when international agencies get out of the way of local people. International aid can play a role in his view, but it should be specific and narrowly focused: e.g., providing mosquito netting.


After reading the two books sequentially, I confess to being confused. I am persuaded by Easterly that there are systemic problems in the international aid agencies, and these problems are not amenable to easy fixes. I am unwilling, however, to accept his nihilism: I don’t think we know as much as Collier thinks we do, but we have learned some things and we should use this knowledge to try to help.


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