Wednesday, December 6, 2023

Why Poor Countries Are Getting Poorer, The 4 Traps


The author of ‘On The Bottom Billion: Why The Poorest Countries Are Failing And What Can Be Done About It‘, revealed the four traps that are keeping poor countries poorer. In this article, I have summarised those 4 traps.

Paul Collier, the author of On The Bottom Billion: Why The Poorest Countries Are Failing And What Can Be Done About It was born on 23 April 1949. He is a British development economist who serves as the Professor of Economics and Public Policy in the Blavatnik School of Government and the director of the International Growth Centre. He currently is a Professeur invité at Sciences Po and a Professorial Fellow of St Antony’s College, Oxford. He has served as a senior advisor to the Blair Commission for Africa and was the Director of the Development Research Group at the World Bank between 1998 and 2003.

In his book, Paul Collier tries to reveal why some countries which are considered poor are not finding their way out and are getting poorer.

Countries are becoming poorer but countries which are caught in the four traps indicated by Paul Collier in his book are falling behind and falling apart. Aid to these countries does not solve their problems because according to Collier, sometimes the proceeds from their exports superseded that from aid. So what are these traps and how do they promote the improverishness of the poorest countries.

The Four Traps

Trap 1: The Conflict Trap

According to the author, a larger percentage of people (73%) in the bottom billion countries are still fighting a civil war or recently been through one. Civil wars are likely to breakout in low income countries since it increases the risk of conflict. Low income and low growth which stands for poverty and hopelessness respectively, are the key causes of conflict in these poor countries. When there is poverty, young people are easily convinced to fight.  When the economy is weak, the state is weak and rebellion is easier. Some rebel groups negotiate with resource exporters to fund their movements in return for contracts and deals when they become successful in their quest.

Rebel groups always try to find a genuine reason for their decision and actions and if they don’t get one, they make one up. Once there has ever been a civil war in a country, the probability of another breaking out is high. According to Paul Collier, “Civil war is development in reverse.” When there is a civil war, the economy losses and diseases are highly persistent but these won’t go away once the fighting stops. It could take years to bring the economy back on track and many more to improve the health of the citizens.

Civil wars hardly bring about the change and the purpose of the rebellion. Many people who joined to fight for rebel groups are usually motivated by money without the main cause in mind and these are usually the young, the uneducated, and those without dependents.

Conflict provides territory outside government control for illegal activities to operate which is evident in the Research which indicates that 95% of global production of hard drugs comes from conflict countries. When rebels kill and extort from people during a conflict, it becomes a habit difficult to let go. All they know is how to kill for what they want and with a gun in hand, they would commit violence again.

Trap 2 – The Natural Resource Trap

The discovery of valuable natural resources could be a curse if not managed efficiently. It often results in the misuse of opportunities which brings about stagnation.

Societies at the bottom are usually resource-rich but living in poverty. If there large surpluses from natural resources or plenty money from natural resources, leaders tend to embezzle funds, overspend on projects and get involved in vote buying. The most corrupt wins the elections. When there is surplus from resources, the need to tax citizens and the zeal to efficiently collect taxes reduces.

Trap 3 – Landlocked with Bad Neighbours

The writer believes that geography accounts for the success and failure of nations. According to him, landlocked countries must export to neighbouring countries or through their infrastructures to the coast. He cites that Uganda is poor and Switzerland is rich because they are dependent upon their neighbours. Uganda shares borders with Tanzania, Kenya, South Sudan, DR Congo and Rwanda. He explains that if Uganda’s neighbours have good road infrastructure, it helps reduce the cost of moving goods to and from Uganda through her neighbours to where it is meant to go. All countries benefit from the growth of their neighbours but countries without resources must depend on their neighbours for growth.

Trap 4 – Bad Governance in a Small Country

Bad governance and policies can destroy an economy within a short period. Bad governance are common because some benefit from it. The presidents and leaders of many of the poorest countries in the world are themselves very rich. They like seeing their subordinates poor and themselves very rich.

Bad policies and governance need not be a trap: societies can learn from failure, and many do. The most dramatic error correction of modern times has occurred in China. In the 1960s Mao Zedong hurled China into ruin, to an adoring chorus from the Western media. But in response to failure, the Chinese political elite swung policy 180 degrees and generated the biggest economic success in history. In part spurred by China, India followed.

China and India have changed their policies which have benefitted them in the long run so why not other countries at the bottom billion? It’s due to bad governance.

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