Unit 4 Reading/Viewing: The “Bottom Billion”

By | March 2, 2015

The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It is a 2007 book by Professor Paul Collier exploring the reason 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.[1]

While Collier has approximately 60 particular countries in mind, the poorest of the poor, we will try to broaden our view. In rough terms, the “bottom billion” are the one billion people in the world that live on the equivalent of $1 a day. But we don’t have to limit ourselves to that stringent measure. What we are really talking about is the large number of people who live in grinding poverty, who live a short, brutal existence, often plagued with disease or violence.

Poverty is actually a fuzzy concept. It’s difficult to measure precisely. It’s one of those “I know when I see it” concepts. The first challenge is separating out “relative poverty” vs “absolute poverty”. Relative poverty means “poorest among a selected group”. When we discuss poverty in the U.S. for example, we are often discussing relative poverty – the degree to which someone is poor relative to others in the society. For example, a family of four in the U.S. with an income of only $22,000 is defined as poor or impoverished. Clearly we are talking a different kind of poverty than what the bottom billion experience.

When discussing the bottom billion or the third world, we are talking about absolute poverty: an income that is so low that basic human survival is in jeopardy. From Wikipedia:

Absolute poverty is the absence of enough resources (such as money) to secure basic life necessities.

According to a UN declaration that resulted from the World Summit on Social Development in Copenhagen in 1995, absolute poverty is “a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.”[3]

David Gordon’s paper, “Indicators of Poverty & Hunger”, for the United Nations, further defines absolute poverty as the absence of any two of the following eight basic needs:[3]

  • Food: Body Mass Index must be above 16.
  • Safe drinking water: Water must not come from solely rivers and ponds, and must be available nearby (less than 15 minutes walk each way).
  • Sanitation facilities: Toilets or latrines must be accessible in or near the home.
  • Health: Treatment must be received for serious illnesses and pregnancy.
  • Shelter: Homes must have fewer than four people living in each room. Floors must not be made of dirt, mud, or clay.
  • Education: Everyone must attend school or otherwise learn to read.
  • Information: Everyone must have access to newspapers, radios, televisions, computers, or telephones at home.
  • Access to services: This item is undefined by Gordon, but normally is used to indicate the complete panoply of education, health, legal, social, and financial (credit) services.

For example, a person who lives in a home with a mud floor is considered severely deprived of shelter. A person who never attended school and cannot read is considered severely deprived of education. A person who has no newspaper, radio, television, or telephone is considered severely deprived of information. All people who meet any two of these conditions — for example, they live in homes with mud floors and cannot read — are considered to be living in absolute poverty

So how many people in the world are this poor? A lot.

At least 80% of humanity lives on less than $10 a day.Source 1

There are approximately 6.8 billion people in the world. 80% means 5.4 billion plus. Now many of those people live in emerging market nations such as India, China, Brazil, or Indonesia. Obviously it depends upon the cut-off one uses.

What we are primarily interested in here are those countries that are not moving forward. Countries where development has not started, has stalled, or perhaps started in the past and reversed. These countries may have missed the industrialization “train” that the rest of the world is riding, but they haven’t been forgotten. In fact, these countries have long been the targets of attention from first-world governments.

Wikipedia summarizes Collier’s thesis in the book as:

The book suggests that, whereas the majority of the 5-billion people in the “developing world” are getting richer at an unprecedented rate, a group of countries (mostly in Africa and Central Asia but with a smattering elsewhere)[2] are stuck and that development assistance should be focused heavily on them. These countries typically suffer from one or more development traps:

  • The Conflict Trap – civil wars (with an estimated average cost of $64bn each) or coups.[3]
  • The Natural Resource Trap – having to rely on natural resources which can stifle other economic activity and lead to bad governance and coups/conflict.[4]
  • Landlocked with Bad Neighbours – poor landlocked countries with poor neighbours find it almost impossible to tap into world economic growth.[5]
  • Bad Governance in a Small Country – terrible governance and policies can destroy an economy with alarming speed.[6]

He suggests a number of relatively inexpensive but institutionally difficult changes:

    1. Aid agencies should increasingly be concentrated in the most difficult environments, accept more risk. Ordinary citizens should not support poorly informed vociferous lobbies whose efforts are counterproductive and severely constrain what the Aid agencies can do.[7]>
    2. Appropriate Military Interventions (such as the British in Sierra Leone) should be encouraged, especially to guarantee democratic governments against coups.[8]
    3. International Charters are needed to encourage good governance and provide prototypes.[9]
    4. Trade Policy needs to encourage free-trade and give preferential access to Bottom Billion exports.[10] At present “Rich-country protectionism masquerades in alliance with anti-globalization romantics and third world crooks”.[11]

In this video, Collier discusses the Natural Resource Trap.

Video: What It Is About

Paul Collier, author of the book “The Bottom Billion” and a renowned development economist discusses the “resource trap” that some extremely impoverished nations experience. This is the phenomenon where a nation has significant amounts of exportable natural resources (such as oil or diamonds), yet is unable to ever translate those export riches into sustained industrial development and wealth for their people

If the following embedded video doesn’t work, won’t display, or won’t expand to full-screen, then open the following link in a new window/tab (16 minutes): http://www.ted.com/talks/paul_collier_shares_4_ways_to_help_the_bottom_billion.html

One thought on “Unit 4 Reading/Viewing: The “Bottom Billion”

  1. Pingback: Unit 4: Paul Collier on The Traps Facing the Bottom Billion | Econproph [Comp. Systems]

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