Top positive review
a very good framework that emphasizes the politics in economics
Reviewed in the United States on September 12, 2018
For anyone who has ever visited a "failed state", an awful lot of Paul Collier's observations will resonate. What he accomplishes in this short and brilliant book is to put the phenomenon into context in an understandable way. While I think his proposed remedies may fall short, I feel I have gained a new clarity about the problem of those who are left behind in the new global economy, the ones who seem unable to break out of stagnation or precipitous decline (i.e. the bottom billion).
Collier sees a series of serious obstacles (or "traps") that the bottom billion face. First, there is conflict: most of these countries are threatened with violence either from without or within. War is obviously detrimental to economic development, in particular as the bottom billion tend to get caught in the negative feedback loop of funding the military only to become victims of coups. Second, the possession of raw materials - the "natural resource trap" - does not help: not only they can they divert attention from necessary reforms, but they raise the value of local currencies, thereby choking off diversification of nascent sectors in the economy, e.g. manufacturing. Third, the bottom billion tend to be landlocked and hence dependent on neighbors, with whom they must intimately cooperate and coordinate. Fourth, they tend to suffer from chronic bad governance and poor policy choices. While brave reformers may emerge, Collier notes, they need skilled administrators and time to implement policies, both of which are rare to come by or sustain; indeed they often end up in exile or prison.
Unfortunately, Collier observes, the tools for climbing out of this configuration of traps - many countries suffer from more than one, most of them in Africa - are difficult to apply. Aid can help to promote growth, but cannot suffice without private sector involvement; it is also subject to both diminishing returns and the habit of helping countries that are already doing pretty well. Furthermore, efforts to correct trade policies, in particular by tariff incentives against Asia that would nurture their manufacturing bases, are very difficult to implement, not to forget agree upon. This leaves military intervention for purposes of promoting stability and the formulation of "charters", new laws, and international regimes to promote development - also extremely problematic in any practical sense.
Collier comes up with a combination of these remedies that I find unrealistically hopeful: charters (e.g. investment protocols for private investors), selective foreign military interventions in the service of regional stability, trade protection from the Asian manufacturing juggernaut, and specific types of aid (helping the worst off, taking more risks for innovative policies, the provision of able administrators in the crucial first years, and the like). Moreover, Collier suggests that a coalition of NGOs, governments, businesses, and governments must act in concert, with common goals and methods.
It is very difficult for me to see how all of these forces could align in any sustained manner, particularly in the current political climate that seems to fall back on populist nationalism, but I suppose it doesn't hurt to try. A review this short cannot do justice to the breadth of Collier's vision, of course. Nonetheless, as he makes clear, many of these policies require massively complex coordination, not just globally but also regionally, according to which nation-states would agree on goals and pursue them, such as the development of logistical infrastructure in the furtherance of international trade. Would Nigeria by willing to invest in ports so that Niger could ferry its manufactured products to China?
Recommended with enthusiasm. This book is essential to understanding international economics that takes politics into consideration.