Collier bottom billion
Transcript of Collier bottom billion
Bottom Billion
• Used to be one billion rich and the rest poor• The movement over the last 40 years: as
showed to us by Hans Rosling, now one billion rich, 4 billion doing pretty well, and one billion going nowhere: why
Civil wars
• Most rebels in sub-Saharan Africa are not heroic freedom fighters but self-interested brigands– The Lord’s resistance army– The Congo border war (Hutu, Tutsi)– Liberia
The Resource Curse
• Countries with extractable resources – oil, gold, diamonds– tend to worse economically than those who do not– Depends on the initial government– Five good years
Resource Curse -- why
• Conflict – fighting for a share• Taxation – when they take your money, you
pay attention• Dutch disease – increase in the real exchange
rate and salaries, making products more expensive, and less competitive
• Revenue volatility – hard to plan development with wide swings– Angola– 93.3% of exports are oil or diamonds
Why
• Excessive borrowing – made possible by resources as collateral
• Corruption – bred by large sums, contracts with foreign firms, and lack of oversight and transparency.
Post conflict recovery -- Collier
• 40 % revert to conflict within 10 years• He relates the failure to succeed to the traditional
approach:– Build a political settlement first– Short term peacekeepers – home as soon as possible– Have an election of a legitimate accountable
government --exit strategy.
• Denies the reality that there is no quick fix and the failures keep piling up
• Security risks are long term• Election doesn’t solve the problem. It gives
you a winner and a loser who has impetus to fight
• Reasonable politics can only come later if there is security and development; with long term
• Stagnation, I can only win if someone else loses
• Suggestion: recognize the interdependence of 3 key actors, now uncoordinated
• UN Security Council and their peacekeepers: works, but needs to be a decade long
• Donors who provide postconflict aid; says they tend to lose interest after a few years
• But that economic recovery is a slow process – at least a decade
• Post conflict government – has to do economic reform and inclusion
• If you don’t get the longterm security, you don’t get private investment
• If you don’t get long term aide, you don’t get economic recovery
• If you don’t get economic recovery, you have no exit strategy
Suggestion 2: Focus on a few critical objectives: needs are everywhere
• Jobs, especially for young men; likely to revert to conflict if they have nothing to do
• But: increasing civil service sets you up for later failure
• Private jobs tough: likely to be uncompetitive in international trade
• Construction sector: usually moribund; bottlenecks and graft
Access to landSkills: not Halliburton, but bricklayers without borders; local firms
Improvements in basic services, especially health
• Donors, not trusting gov’t, usually just fund NGOs to do this
• Independent service authorities—3 parts• 1.Ministry: planning and policy• 3.Delivery of services on the ground –
whoever can do it.
Improvements in basic services, especially health
• 1. Ministry• 3.Delivery on the ground• 2. In between: public independent service authority
which channels the money to the providers; – the NGOs are now part of the Government, not
independent of it Controls where the money goes; makes NGOs accountable; government seen by the people as part of the
answer: co-branded
Clean government
• Really means control of the money; else it is wasted and captured by crooks
• Needs lots of outside scrutiny: accountants without borders
Hoped for outcome:
• focus on construction give jobs, security, and infrastructure for success;
• basic services improved; • ordinary person believes the government is
doing something useful
Jeffrey Sachs on Haiti, Spring 2010
• DIA: Focusing on Haiti, you've called for America to appropriate at least $1 billion this year and next for the country. Based on what you just said, how can I be confident that the money is going to get to where it needs to go?
• Mr Sachs: I want the money to come from the US, but not to go through the US government. What I'd like is for US and other donor money to be put into a multi-donor trust fund (MDTF). My specific recommendation is that the MDTF should be located at the Inter-American Development bank. There are a lot of reasons for that. In essence the IADB is a development-finance institution that works well, has a long-term commitment to Haiti, has a lot of expertise, and is competent in handling money and organising projects with the proper monitoring, auditing and evaluation.
• And so I think that when you scan the institutional environment, the IADB seems the best place to do this. I think that relatively little of the aid should go through the bilateral development agencies of any of the major donor countries.
• DIA: Have you been happy with Barack Obama's response to the disaster?
• Mr Sachs: Yes, in the sense that he's paying significant attention to it. He's organised a massive effort by US agencies, including the military. So yes, I am happy with it.