'Development in reverse'

A university course on helping the poorest of the poor abroad could now have a book reading list much more interesting than one possible five years ago. Then, my list could have included any number of boring books on foreign aid as savior of the world, some scholarly essays by Britain's P.T. Bauer, and two scintillating books by Hernando de Soto (The Other Path and The Mystery of Capital), an economist worthy of bearing a famous explorer's name.

Now, my list could include Timothy Monsma's biblically thoughtful Hope for the Southern World, Jeffrey Sachs' liberally unctuous The End of Poverty, and William Easterly's curmudgeonly conservative The Elusive Quest for Growth and The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

And let's add one more: Paul Collier's The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It (Oxford University Press, 2007). Collier is particularly interesting to read because he combines an establishment resumé with some nonestablishment views. A professor of economics at Oxford and the director of the Centre for the Study of African Economies, he has addressed the General Assembly of the UN, been a senior advisor to Tony Blair's Commission on Africa, completed a review of International Monetary Fund operations commissioned by the board of the IMF, and directed the Development Research Group at the World Bank.

Collier is a good economist because he pays attention to matters beyond economics, such as the causes and consequences of civil war, and the problems of democracy in low-income and natural-resource-rich societies. He begins The Bottom Billion by explaining that our common bifurcation of the world's countries as "developed" (1 billion people) and "developing" (5 billion) hides the real problem: 4 of those 5 billion "live in countries that are indeed developing, often at amazing speed," but the bottom billion live in countries that are going backward.

Collier expresses his concern vividly: "The average person in the societies of the bottom billion now has an income only around one-fifth that of the typical person in the other developing countries. . . . Picture this as a billion people stuck in a train that is slowly rolling backward downhill. By 2050 the development gulf will no longer be between a rich billion in the most developed countries and 5 billion in the developing countries; rather, it will be between the trapped billion and the rest." Collier then stresses that "giving those [bottom] countries our money" won't help them unless deep changes occur.

WORLD: Why do we commonly talk about the development problem as encompassing all 5 billion people, instead of concentrating on the great needs at the bottom?

COLLIER: It's a mixture of inertia and self-interest. Inertia because even 10 years ago a 5 billion view of the developing world was still reasonable and perceptions are slow to catch up with reality. Self-interest because the two main groups that draw attention to development issues each like it that way. The aid agencies like to operate globally rather than to have to concentrate on the toughest countries. For example, until very recently the World Bank had 134 of its staff resident in Indonesia but not a single one resident in the Central African Republic. For quite different reasons the left-leaning NGOs [non-governmental organizations] end up with the same bias. They like to critique "global capitalism" and so the news that it is working rather well in most developing societies is unpalatable.

WORLD: It also seems unpalatable to discuss the role civil war plays in the societies of the bottom billion, but you do that, and you also go beyond blaming income inequality and ethnic diversity.

COLLIER: Civil war is disturbingly common in the poverty-stricken, small societies of the bottom billion. It is development in reverse: Without peace these societies cannot even get started on the difficult road of economic development. Income inequality and ethnic tensions are routinely trotted out as the explanations, but I find that they are overemphasized. The major risk factors seem to be poverty itself, stagnation, dependence upon natural resource exports such as oil in the Nigerian Delta, and simply being too small, as Timor Leste. Small is not beautiful, it is dangerous. Ethnic differences compound these other problems but are seldom themselves the key difficulty: Most diverse societies are safe, some ethnically unified societies such as Somalia are a mess, and ethnicity tends to be used by politicians in situations which are already dangerous for other reasons.

WORLD: You note that "the leaders of many of the poorest countries in the world are themselves among the global super-rich." Why is bad governance so persistent in the countries of the bottom billion?

COLLIER: Because ordinary people are disempowered, both literally if either they do not have votes or elections are corrupt, or because they lack the education and information with which to hold governments to account. Elections are not the same thing as democracy. Democracy depends upon checks and balances that constrain how governments use power. These checks and balances are missing in the "instant democracies" that are now common in the bottom billion. Governments simply hold crooked elections and carry on with business as usual. But oppositions are often as bad as governments. Just because a government is bad, people tend to assume that rebels and political opponents are heroes. Sometimes they are, but commonly they are forged in the same corrupt process as the guys in power.

WORLD: You point out that during the 1980s very poor "countries that stopped shooting themselves in the foot were able to break into new export markets," but it was hard then and is much harder now. Why?

COLLIER: It was hard then because the U.S. and Europe had huge clusters of manufacturing firms-industrial conurbations-that brought costs down dramatically and so enabled them to compete despite high wages. The wage gap with Asia had to widen enormously before new entrants were competitive. Now the bottom billion have missed the boat because Asia has got established. It still has fairly low wages, but it has all the benefits of large clusters of manufactured exports. The result: Africa can't compete against Asia in manufactures. It needs help and it isn't getting it.

WORLD: So the situation is more complicated than it appears from the claims of rock bands and officials that increased aid is the ticket out. You note that "aid alone is really unlikely 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." You discuss Chad as an example of aid that was harmful. What's happened there and in some other countries that received aid, and why do armies and coup leaders tend to be the big beneficiaries?

COLLIER: I don't want to knock aid. It's part of the solution, not usually part of the problem. But I don't think that aid alone can fix the problem. It needs to be complemented by all the policies we have neglected. In Chad money clearly leaks into military spending, and the attempt to ring-fence it through the Chad-Cameroon pipeline deal in which civil society in Chad was given some limited rights of scrutiny promptly induced the government to change the rules enabling it to divert the money into the military. It is not necessarily even the fault of the president. For example, the Chad army has 60 generals for a tiny country: 60 because it's a way of co-opting the powerful people who make trouble. Once these people smell oil money, they are going to threaten to destabilize the country until they get their hands on it and they have the power to do so because coups and rebellions are easy in these situations. So, governments buy off the military to preserve themselves.

WORLD: Some celebrated the G8 summit at Gleneagles in July 2005 and its announcement of a doubling of aid, focused on infrastructure. You say such aid is likely to "amplify what is already a serious problem of misgovernance." Why?

COLLIER: The bottom billion need infrastructure, but unfortunately infrastructure projects are the most corrupt sector in the entire economy. Read, for example, the 2004 Annual Report of Transparency International which focused on the sector. Essentially, each project is unique and so very hard to monitor, and competitive bidding is easily gamed by changes in specifications after contracts have been awarded. A corrupt official agrees with a construction company in advance that the company will win the bidding with a low price but then the details of the contract will be renegotiated to give both the company and the official more money.

WORLD: You write that the large and trusted British charity Christian Aid opposed free trade and was "peddling the crudest images of Marxism," in alliance with governments of the bottom billions that "typically adopt high trade barriers . . . because they are one of the key sources of corruption." Are other Christian organizations bamboozled, and what kinds of deeper changes should they be looking for?

COLLIER: The major Christian organizations are not bamboozled. World Vision, which is by far the largest, strongly endorses The Bottom Billion (see the back cover) and invited me to address their annual board meeting. . . . Christian Aid has a severe accountability deficit-its advocacy is out of control. I suppose all those bishops are too busy to get their minds around the issues.

WORLD: You conclude that "aid cannot just be targeted for the photogenic social priorities; it has to be used to help countries break into export markets." What should Americans and Europeans do to provide aid rightly?

COLLIER: Each country needs a focused development strategy and aid needs to fit into this strategy. This will differ between countries. For example, I am just back from Ghana where they have a real chance of getting garments exports established big-time, using the market access to the U.S. afforded by the African Growth Opportunity Act. For this opportunity to be taken, Ghana will need much better export infrastructure for garments-e.g., a well-functioning port and a cluster nearby where power is reliable and transport links are good. This would be a good use for aid.