The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It is a 2007 book by Paul Collier, Professor of Economics at Oxford University, exploring the reasons why impoverished countries fail to progress despite international aid and support. In the book Collier argues that there are many countries whose residents have experienced little, if any, income growth over the 1980s and 1990s. On his reckoning, there are just under 60 such economies, home to almost 1 billion people.
Professor Paul Collier identifies the natural resource trap as one of the four causal factors that stop these nations from developing (the others are bad governance, the conflict trap, being landlocked and having ‘bad’ neighbours).
Unfortunately, the natural resource curse, bad governance and conflict tend to go hand in hand. The discovery of natural resources increases the rewards for being in power, increasing the likelihood of conflict for that power and the desperation to remain in power once there.
This is likely to destabilize the ‘soft’ institutions that underpin the functioning of markets to a greater degree in LICs than than HICs: the rule of law may be threatened, property rights become more transient, bribery becoming endemic.
Of course, all of these distort markets in all sorts of ways: there is reduced certainty, price signals are distorted and, perhaps worst of all, the likelihood of increased ‘rent-seeking’ activity will rise.
Why would you spend time doing something economically productive, when lobbying and paying bribes has become so lucrative?
This is the summary of The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It by Paul Collier.
Paul Collier, professor of economics at the University of Oxford, speaks at the closing plenary of the 2008 Skoll World Forum. His talk was entitled, “Social Entrepreneurship and the Bottom Billion: Why the poorest countries are failing and what can be done about it.”
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The MIT Press – The Natural Resources Trap