In Paul Collier’s world, there are developed nation (~1B pp) and developing nations (~4B pp). And then there is the bottom billion. His book lays out four traps that these poorest nations fall into that keep them stuck in poverty. The author also lays out four tools, three of them untested, that might be able to break the traps and bring those worst off into the global middle class.

The Traps:

Conflict
Collier used statistical analysis in identifying factors that led to civil war and came up with: Low income, slow growth, and dependence on commodity exports. Interestingly, Collier observes that democracy does not reduce the chance of wars or coups.

Natural Resources
In addition to Dutch Disease, natural resources are a trap because they encourage governance that is either inefficient or corrupt, or both. Collier notes that autocratic regimes actually do better than their democratic counterparts, with an important caveat: it helps if you have a culturally homogeneous society, like China. Autocrats with diverse populations need not apply.

Land-Locked With Bad Neighbors
Countries that are landlocked are dependant on their neighbors for access to the sea (for global trade) and also as their closest market. If you live in a bad neighborhood, with no easy way out, and you have no resources, life is going pretty difficult. This seems to be the group for which Collier has the least hope, and his prescriptions seem to amount to ‘make the best of a bad situation’.

Small Country with Bad Government
Collier considers a ‘failing state’ to be one that falls below a threshold on the World Bank’s “Country Policy and Institutional Assessment”. This is a somewhat subjective measurement of policy goodness, including aspects such as corruption and transparency. Looking for what causes can be found for a ‘turnaround’—a sustained improvement on the CPIA score—we see that they are more likely where there is a larger populations and a higher proportion of secondary education.

Instruments

The following are Paul Collier's prescriptions for effectively helping the bottom billion. Apart from the first, none of them have been substantially adopted.

Better Aid
Critics of foreign aid to the bottom billion are many. (See my review of Dambisa Moyo’s “Dead Aid”.) Collier acknowledges aid’s failings, but rather than dismissing it, calls for smarter aid that is more nuanced and targeted. For example, providing skills, rather than cash, in the short term after a nation has embarked on a reform process.

Military Intervention
Collier makes the case for toothy military intervention (as opposed to toothless interventions like those of the UN in Rwanda or the Dutch in Bosnia ) where foreign forces, willing to make extended commitments and take casualties, are able to restore order and maintain peace and security. In the absence of such interventions, military spending goes up which, ironically, both increases the chance of a coup, or of more war.

Laws and Charters
While they cost next to nothing, laws and charters present more of a coordination problem, as they are ineffective unless a majority of developed nations agree to them. (If my company cannot offer bribes, but yours can, my company will lose.) Collier makes the case for international charters in this TED talk.

Trade Policy
Collier doesn’t mince words with activists who would advocate in favor of trade barriers, comparing them unflatteringly with Lenin’s ‘useful idiots’. Trade, he says, is essential for growth. He makes the interesting suggestion that rather than make aid grants, nations could, through the WTO, provide trade grants: essentially, aid in the form of lower tariffs for bottom billion countries.

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The book is clearly aimed at G8 policy makers, but from a layman’s perspective, it is still quite readable. What grabbed me the most, and was underlined in the book’s concluding paragraphs, was that while all these instruments of reform come across as dry and academic, there are courageous individuals, economists, government ministers, citizens of the bottom billion, who are on the ground risking everything against slim odds in efforts to make substantive, enduring changes.

Our posture should not be too relaxed, leaving the bottom billion to ‘fix itself’. Change starts and will be sustained by citizens of these countries, but neither are we free to be idle bystanders. Our toolbox is not empty.