The Bottom BillionAccording to Paul Collier, a professor of economics at Oxford University and the author of “The Bottom Billion,” a book about the poorest one billion people in the world, “the countries at the bottom billion coexist with the 21st century, but their reality is the 14th century: civil war, plague, ignorance.”

Countries and their citizens in the bottom billion find their conditions getting worse, not better. For instance, during the 90s, while globalization lifted millions out of poverty in China and India, the income of the bottom billion “actually fell by 5 percent.”

Most of the bottom billion live in 58 countries, 70 percent of which are in Africa and most of the rest, in Central Asia. These countries are among the poorest in the category of “developing countries or Third World countries.” Some of the countries in the bottom billion include Rwanda, Congo, Sudan, Chad, Somalia and Ethiopia.

So how does a country fall within the bottom billion group? The answer to this is multidimensional and lies in what Collier terms as “poverty traps.” According to Collier, these poverty traps include conflict, being landlocked, abundant natural resources and bad governance.

When it comes to war-torn countries, Rwanda, Congo, Somalia and Sudan are some examples that fall into this category. As a result of the conflict, the economy is destroyed, lives of innocent civilians are damaged and the political unrest also causes isolation and a lack of foreign investment.

Being landlocked with bad neighbors is also a disadvantage for developing countries. When we consider a country like Switzerland, a landlocked country in the developed world, its proximity to its surrounding countries does not compromise its security and it has the ability to trade with powerful and wealthy neighboring countries. This is not the case for developing countries, which are often surrounded by poor or unstable countries.

Having abundant resources may sound like a benefit rather than a disadvantage. However, with countries like Sudan and Somalia, even though natural resources such as copper and diamonds are abundant, corrupt politicians and other leading authorities within the country are able to seize power and divide the spoils, making their economies more vulnerable.

With the levels of corruption in developing countries, it is impossible for there to be sustainable growth. Accountability, transparency, monitoring and evaluation are needed to advance these countries and lift their citizens out of poverty.

To address these issues, Collier believes that aid should be increasingly concentrated in the most difficult environments and military intervention should be focused on “protecting democratic governments.” For instance, the British helping Sierra Leone is an example of productive military intervention.

Laws and charters have also been put forward as possible solutions. Collier suggests that international charters should be adopted for natural resources, budget transparency, post-conflict situations and investment.

Finally, Collier highlights that the bottom billion need to diversify their exports and are in need of temporary protection from Asia.

The situation faced by people in the bottom billion, though dire, can be addressed. While outside intervention may be necessary in some cases, change ultimately must come from within, with the end goal being for countries to prosper autonomously and independently.

Vanessa Awanyo

Sources: The Guardian, The Economist, GSDRC
Photo: Flickr


A Brookings Institution article by Lex Rieffel and James Fox (Former Chief, Economic Growth Evaluation at USAID/Policy & Program) analyses aid effectiveness in Myanmar. “The transition in Myanmar that began two years ago — from a military to a quasi-civilian government — is the largest and most encouraging turnaround in the developing world in years.”

They give significant credit to President Thein Sein and social activist Aung San Suu Kyi for collaborating to lift the country out of turmoil. Their three main obstacles or agendas were: ending the civil war, providing an institutional framework to increase the general standard of living, and sharing the wealth of the country’s natural resources with the whole population.

When other countries saw the progress being made, then the World Bank, USAID, and more than 100 other aid agencies and international non-governmental organizations (NGOs) started to offer rapid assistance to Myanmar. This time, the aid agencies and government officials are intent on making sure aid is delivered effectively. All donors have committed to adhere to the 2005 Paris Declaration on Aid Effectiveness, and all subsequent additions to it. And the Myanmar government held an all-donor meeting in January 2013, to get an agreement on ground rules for spending aid effectively.

However, here are five common ways aid can be ineffective:

• Senior government officials of Myanmar end up spending hours every day meeting with delegations from international NGO’s and donor countries – not just their aid agencies but also their government representatives, corporations, media, and more. The endless meetings divert the attention of the local officials, not allowing them to formulate and implement actual progress.

• Each aid organization has its own pressure to “make a difference,” to show results.  For instance, USAID has allocated millions of dollars for their own agriculture sector projects, but only committed $600,000 to the multi-donor LIFT Fund – which is a more effective way of delivering aid.

• Local staff from financial institutions are overwhelmed by the donor organizations’ need to “move the money.” Pressure to distribute project funds is ever-present.

• Donors are often non-transparent as each competes to gain the most favorable position within a region.

• Host countries engage in “donor shopping” to get the most money for the least change.

So, for Myanmar, here are the three ways to make aid more effective:

• Slow down and do more collaborative operations. This act does not overwhelm local officials. Donors should help control the pace, and commit at least 30 percent of their funding to joint operations.

• Provide “scholarships for foreign study.” It will take years for Myanmar to raise its standard of education to the level required for meeting its development objectives. The solution is education abroad, so the students can return home with knowledge to invest in the country. This form of aid also has the least potential for mis-use.

• “Be more innovative” – for instance “cash on delivery aid.” This reinforces good management within the local government, minimizes the administrative burden of the rapid aid influx, and ensures that every dollar of aid goes to support successful projects.

– Mary Purcell

Source: Brookings
Photo: USA Myanmar