The Third World has shrunk. It used to mean the poorest people on the planet,
the five billion or so living in “developing” countries, looking enviously
at we rich westerners. The “millennium development goals” established by the
United Nations reflect that thinking: they track the progress of the five
billion, but the reality is that most of these people are living in
countries where globalisation is working and many are developing at amazing
speed. China and India are catching up with the rest of us at an
unprecedented rate.
Of course it’s not a seamless process. Many people in these societies are
still appallingly poor, but they can see what is happening and have hope.
But for a worrying group of countries at the bottom of the world economy,
globalisation is not working. They amount to about 1 billion people, and
they are not developing but falling behind, and often falling apart.
The bottom billion – who live on less than a dollar a day – coexist with the
21st century, but their reality is the 14th century: civil war, plague,
ignorance. They are concentrated in Africa and central Asia with a
scattering elsewhere. They live in Chad, Haiti, Bolivia, Cambodia and North
Korea.
Even during the 1990s, the supposedly golden decade between the end of the
Soviet Union and the attack on the World Trade Center, incomes in these
countries were falling, the difference between their living standards and
those of the developing world – the part that was actually developing rather
than stagnating – growing at about 5% a year.
In a world that is ever more socially integrated through information, business
and migration, having a billion people at the bottom falling away
economically is going to be unmanageable and frightening.
The 21st century world of material comfort, global travel and economic
interdependence will become increasingly vulnerable to these large islands
of chaos, which may become havens for terrorism or destabilising civil war.
Bean-counting poverty simply misses the point. Even if poverty declines in
these societies the conditions for social explosion will mount unless the
current situation is reversed. That is the coming challenge of development:
rescuing – or containing – a group of countries that for 40 years have been
shearing off from the rest of us and must start to catch up.
About 70% of the bottom billion live in Africa. Quite rightly, Africa is
repeatedly on the agenda at G8 meetings. But the same process that has
forced Africa onto the agenda, namely pressure from celebrities and
nongovernmental organisations, has inadvertently trivialised the solution,
reducing it to a question of aid. The apotheosis of this process is surely
the latest issue of Vanity Fair: devoted to Africa and edited by Bono.
If that’s what it takes to get the bottom billion onto the political agenda
then so be it, but unfortunately the problems are not going to be resolved
by money alone. More aid would be helpful, but its effect would be minor
relative to the other policies the rich world needs to adopt in order to
reverse the decline. We will need to go beyond aid if we are really to make
a difference.
Our politicians have used Africa to parade how much they “care”. But it’s not
enough to care – we have to think. In the 1930s politicians cared about mass
unemployment, but the problem wasn’t fixed until they worked out what to do
about it.
Europe was rebuilt after the second world war by a package of ap-proaches.
Yes, there was aid in the form of the Marshall Plan. But more important were
massive changes in other policies. Trade policy was switched from
protectionism to integration through the creation of the General Agreement
on Tariffs and Trade. Security policy was switched from isolationism to
mutual defence through the creation of Nato.
Government ceased to be dictated by paranoid national sovereignty and became
subject to mutual standards through the foundation of the Organisation for
Economic Cooperation and Development (OECD) and the European Economic
Community. Reversing the direction of the bottom billion is a more daunting
task than rebuilding Europe. It can be done but it will take the same
seriousness.
Getting serious means getting more sophisticated. The policy changes we need
just won’t fit on a wrist band. I’ll sketch one example: trade policy.
Africa needs to break into manufactured exports, the route taken by Asia.
Unfortunately, Asia’s very success makes it far harder for Africa to get
started.
Asia already has an established export manufacturing industry that can operate
at low cost. Africa cannot compete. Bangladesh has generated nearly 3m jobs
by exporting garments: if Ghana or Kenya could do the same it would be
transformative, but to get started they need temporary privileged access to
our markets.
At present most OECD countries impose tariffs on imports of garments from
Africa. There is one exception: America. Thanks to the Africa Growth and
Opportunity Act, America allows countries such as Ghana and Kenya to export
shirts duty-free into the US. Europe doesn’t, nor does Japan.
Even the few African countries that are allowed duty-free access to Europe get
blocked by absurd technical requirements: Lesotho sells thousands of shirts
to America, but although in principle Europe allows shirts from Lesotho
duty-free, they don’t satisfy the tough “rules of origin” we set.
Over the past five years Africa’s garment exports to Europe have declined
while increasing sevenfold to the US. We could easily adopt a common set of
rules for these African exports that would generate jobs across the region.
At the very least it’s surely embarrassing that America has got African trade
policy right and we’ve got it wrong: after all, we’re supposed to be the
ones who care about Africa.
Changing trade policy is just one example of what can be done once we get
serious. The Department for International Development should be guiding
these changes. It has to become not just an aid agency but the part of
government where all policies pertinent for development are coordinated.
The challenge of transforming the future for the bottom billion may be
daunting, but it can be done: what is needed is a change of attitude from
western electorates, both left and right.
The left needs to move on from the West’s self-flagellation and idealised
notions of developing countries. Poverty is not romantic. The countries of
the bottom billion are not there to pioneer experiments in socialism; they
need to be helped along the already trodden path of building market
economies. International financial institutions are not part of a conspiracy
against poor countries; they represent beleaguered efforts to help. The left
has to learn to love growth. Aid cannot just be targeted for the photogenic
social priorities; it must help countries break into export markets.
The clarion call for the left is Jeffrey Sachs’s book The End of Poverty. Much
as I agree with Sachs’s passionate call to action, I think he has overplayed
the importance of aid. Aid alone will not solve the problems of the bottom
billion – we need to use a wider range of policies.
The right needs to move on from the notion of aid as part of the problem – as
welfare payments to scroung-ers and crooks. It has to disabuse itself of the
belief that growth is something that is always there for the taking, if only
societies would get themselves together.
It has to face up to the fact that these countries are stuck, that competing
with China and India is going to be difficult. Indeed, it has to recognise
that private activity in the global market can sometimes generate problems
for the poorest countries that need public solutions. And because not even
the US government is big enough to fix these problems by itself, these
public solutions will usually have to be cooperative.
The clarion call for the right is economist William Easterly’s book The White
Man’s Burden. Easterly rightly mocks the delusions of the aid lobby. But
just as Sachs exaggerates the pay-off to aid, Easterly exaggerates the
downside.
So how does this involve ordinary people in rich societies? I have three
propositions, each fairly novel, that encapsulate how thinking needs to
change.
The first is that the development problem we now face is not that of the past
40 years: it is not the 5 billion people of the developing world and the
millennium development goals that track their progress.
It is a much more focused problem of around a billion people in countries that
are stuck at the bottom. This is the problem we are going have to tackle,
and if we stick with present policy, it is likely to be intractable even as
the dashboard indicators of world poverty get better and better.
The second is that within the societies of the bottom billion there is an
intense struggle between brave people trying to achieve change and powerful
groups who oppose them. The politics of the bottom billion is not the bland
and sedate process of the rich democracies but rather a dangerous contest
between moral extremes.
The struggle for the future of the bottom billion is not a contest between an
evil rich world and a noble poor world. It is within the societies of the
bottom billion, and to date we have largely been bystanders.
The third is that we do not need to be bystanders. Our support for change can
be decisive. But we will need not just a more intelligent approach to aid
but complementary actions using instruments that have not conventionally
been part of the development armoury: trade policies, security strategies,
changes in our laws, and new international charters.
I have a six-year-old son: whether we take the trouble to get serious about
reversing divergence will shape the world that he and his generation inherit.
Paul Collier is director of the Centre for the Study of African Economies
at Oxford. The Bottom Billion: Why the Poorest Countries Are Failing and
What Can Be Done About It, is published Oxford University Press
