The Bottom Billion | Paul Collier

Summary of: The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It
By: Paul Collier

Introduction

Dive into the complexities of the global wealth gap with our summary of Paul Collier’s insightful book, ‘The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It’. This summary not only explores the stark disparity between the world’s wealthiest and poorest nations, but it also discusses why the poorest countries have continually failed to develop and keep up with globalization. Learn about the devastating effects of war, the dangers of high-value natural resources, the unique challenges faced by landlocked nations, and the cycle of political corruption in these countries. Finally, explore possible solutions such as targeted international aid, peacekeeping efforts, and international charters to improve nations’ governance.

The Difference in Developing and Poorest Nations

The term “developing world” is often used to describe countries other than the United States or Western Europe, but there are vast discrepancies among these nations. The poorest countries face significantly worse poverty than other developing countries. Life expectancy in the poorest regions is only 50 years, compared to 67 in other developing regions. Additionally, 36% of the population in extremely poor nations suffer long-term malnutrition, while only 20% in the rest of the developing world do. The main reason for this divide is that the poorest nations have not been able to catch up with globalization. Countries like China and India were able to benefit from high-speed industrialization and capital inflow, while the poorest were left behind. As the wealth gap between these nations and the rest of the world widens, it becomes increasingly difficult for the poorest countries to catch up. This is because industrialized countries share access to technological innovations while the poorest countries don’t have enough industry to keep up. Therefore, while other nations continue to develop, the poorest countries remain stagnant.

Devastating Effects of War on the Economy

War brings about disastrous economic consequences, costing billions of dollars and leading to humanitarian crises. Poor countries are more likely to endure prolonged conflicts due to the strong correlation between poverty, growth, and war. Conflict often arises from economic stagnation, hurting income and leading to civil unrest. Wars brought by poverty further ruin the economy, reproducing the conditions for more conflict. This cycle of bloodshed leaves poor countries with little peace in the first decade after the conflict. Violent conflict disrupts all means of production, and all legitimate ways of producing revenue are commandeered for military concerns. This prevents goods from reaching the market and thus limits growth. Food commodities are either stolen from or donated by farmers during times of war, further harming the nation’s economic growth. War’s disastrous effects keep the poorest nations poor.

The Paradox of Natural Resources

Discovering high-value natural resources may seem like a boon for a country’s economy, but the reality is much more complicated. A phenomenon called Dutch disease can occur, causing the newly discovered resource to hurt a country’s other exports. This can make the economy stagnant and lead to corruption among politicians. In poorly transparent governments, excess revenue can be diverted into the hands of a few corrupt politicians, who can then create a system that favors them. Once a culture of corruption is established, it can infect other sectors beyond the commodity revenues. In essence, the discovery of natural resources can harm more than help a country’s economic self-determination.

The Challenges of Landlocked Nations

Landlocked nations face limited poverty-alleviation strategies due to their chained economic fate to neighbors with poor infrastructures. When landlocked countries grow by 1 percent, their landlocked neighbors’ economies grow on average by 0.7 percent, while the poorest landlocked nations enjoy only a 0.2 percent growth for every 1 percent gained by their neighbors. The poor landlocked countries’ little industry makes them heavily dependent on their neighbors’ transportation infrastructure, which is often underdeveloped due to extreme poverty. The absence of reliable transport corridors increases shipping costs and slows growth. Landlocked nations can lobby for aid and improvements to transport corridors to lower transport costs, which helps to stimulate growth. Another possibility for these countries is to avoid being ‘air-locked’ by developing high-quality airports. Though being landlocked does not guarantee poverty, it doesn’t offer any advantages either, and the fate of these countries depends heavily on their neighbors’ fates.

The High Cost of Corruption

Corruption thrives in societies with minimal or dysfunctional governments, where unchecked access to resources and aid is combined with extreme poverty. In countries like Chad, where there are poor checks on government and little scrutiny of public finances, corruption is rampant. Breaking the cycle of corruption is difficult, as politicians entrenched in corruption have little incentive to campaign for reform. Unfortunately, the longer a leader remains in charge in a failing state, the less likely the country is to make an economic turnaround. The high cost of corruption is evident in cases like the rural aid clinics in Chad, where only 1 percent of the allocated money actually made it to those in need while the rest was stolen. To combat corruption, governments must establish systems of checks and balances, ensure transparency, and hold fair elections to limit the ways corruption can damage societies.

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