Written by Sir Paul Collier, this book on development economics covers the causes (and possible solutions) for the lack of economic development in the countries which contain the poorest billion people in the world – i.e., how to help the Bottom Billion.

This book is a very engaging but academic book, containing a lot of solid theory that takes time to digest. Although I would definitely recommend it to others, I would first suggest reading an introductory book to development economics to help understand what is going on. (Doughnut Economics is a very good example of this, which you should find in the Book Reviews section soon!)

Firstly, Collier begins by outlining the four major ‘traps’ that can cause one of these countries to enter stagnant economic growth. They are:

• The conflict trap
• The natural resource trap
• The trap of being landlocked with bad neighbours
• The trap of poor governance in a small country

The 1st, 3rd and 4th traps are relatively easy to imagine. If your country enters civil war, it becomes a lot harder to grow even decades afterwards, as the risk of reentering a civil war is very high. If you have been in a war for years, then war is what people know best – when the war finally ends, how are leaders supposed to know how to function peacefully? This can keep countries in the conflict trap for decades, with outbursts of civil war every few years. The book focuses on case studies in which countries have fallen into this trap, and emphasises that to break free of this trap international aid is necessary – it is highly unlikely that the country can reform and begin growing alone.

The 3rd trap of being landlocked with bad neighbours also makes sense – if your neighbours are in the conflict trap, lack the infrastructure necessary for trade or are stuck in a different trap, then it becomes much harder to export goods and develop normally. If the country had natural resource wealth (which is the cause of the 2nd trap), then it could circumvent this as other more developed countries like China would be willing to pay for this infrastructure. However, a country with scarce natural resources and that is landlocked with bad neighbours has very few options. Therefore, aid to that specific country would be futile. Instead, as the book states, it can be resolved by helping the neighbours to the country grow and get out of any traps they are in, which in turn would allow the landlocked countries to grow.

The 4th trap of bad governance is also self-explanatory – if the government is corrupt or simply incompetent, then it would have to rely on foreign direct investment (also known as FDI). However, if the country is also small, then investors have no incentive to invest as they do not feel the returns, if any, would be substantial. Collier suggests providing educated workers and advisors to help the government make better decisions. Although one argument would be to educate locals to do this, the risk of capital flight prevents this. Essentially, once educated to an international standard, there is nothing stopping these locals from migrating abroad and earning a higher income elsewhere, as there is no incentive to stay – the country has not been reformed yet. Therefore, we must firstly supply the skilled labour to help reform the country, and once the country is stable enough to encourage locals to stay, better education should be implemented.

Now, we get to the 2nd trap – the trap of natural resource wealth. The reason why I have left this last is because it surprised me greatly that having an abundance of natural resources could be a misfortune. However, as the book went on to explain, many of these countries would focus their entire economy on natural resources, and so export diversification was extremely low and practically non-existent – essentially, the trap leads to the Dutch Disease (I will cover this concept in a future article). The economy would be very vulnerable to changes in commodity prices, and much of the natural resource revenue would not reach the majority of the population, meaning very little real growth would occur. It is very difficult to prevent this trap, as on one hand it is unfair to ask a nation to give up its main stream of income, but allowing such dependence on natural resources can also cause trouble. The only real way to help is by providing expert advice and models to base policies upon.

One of the key points that the book continues to repeat and emphasise is that it is very difficult for these countries to break free of the traps alone – other more developed countries like the UK need to help through aid. However, the book also highlights that simply providing money, known as budget support is not enough – many of these countries are prone to corruption, and so the majority of this financial aid would not reach the citizens. Instead, aid in the form of infrastructure, skilled labour and other services must be provided to truly help these nations. This is not to say that budget support is not useful, but rather that it should not be used until the government and economy are stable and fairly self-reliant.

Overall, The Bottom Billion was a very fascinating read, and it gave me a very clear insight into the reasons why certain economies become stagnant. Although I was initially surprised and confused by some of the concepts – such as the natural resource trap – the book clearly explained their relevance and helped me develop a much deeper understanding of the field of development economics.

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