4 WHAT'S THE ISSUE? chaos.And it matters now.As the bottom billion diverges from an increas- ingly sophisticated world economy,integration will become harder,not easier. And yet it is a problem denied,both by development biz and by develop- ment buzz.Development biz is run by the aid agencies and the companies that get the contracts for their projects.They will fight this thesis with the tenacity of bureaucracies endangered,because they like things the way they are.A definition of development that encompasses five billion people gives them license to be everywhere,or more honestly,everywhere but the bot- tom billion.At the bottom,conditions are rather rough.Every development agency has difficulty getting its staff to serve in Chad and Laos;the glamour postings are for countries such as Brazil and China.The World Bank has large offices in every major middle-income country but not a single person resident in the Central African Republic.So don't expect the development biz to refocus voluntarily. Development buzz is generated by rock stars,celebrities,and NGOs.To its credit,it does focus on the plight of the bottom billion.It is thanks to development buzz that Africa gets on the agenda of the G8.But inevitably, development buzz has to keep its messages simple,driven by the need for slogans,images,and anger.Unfortunately,although the plight of the bot- tom billion lends itself to simple moralizing,the answers do not.It is a problem that needs to be hit with several policies at the same time,some of them counterintuitive.Don't look to development buzz to formulate such an agenda:it is at times a headless heart. What of the governments of the countries at the bottom?The prevail- ing conditions bring out extremes.Leaders are sometimes psychopaths who have shot their way to power,sometimes crooks who have bought it, and sometimes brave people who,against the odds,are trying to build a better future.Even the appearance of modern government in these states is sometimes a facade,as if the leaders are reading from a script.They sit at the international negotiating tables,such as the World Trade Organiza- tion,but they have nothing to negotiate.The seats stay occupied even in the face of meltdown in their societies:the government of Somalia contin- ued to be officially "represented"in the international arena for years after Somalia ceased to have a functioning government in the country itself.So don't expect the governments of the bottom billion to unite in formulating
chaos. And it matters now. As the bottom billion diverges from an increasingly sophisticated world economy, integration will become harder, not easier. And yet it is a problem denied, both by development biz and by development buzz. Development biz is run by the aid agencies and the companies that get the contracts for their projects. They will fight this thesis with the tenacity of bureaucracies endangered, because they like things the way they are. A definition of development that encompasses five billion people gives them license to be everywhere, or more honestly, everywhere but the bottom billion. At the bottom, conditions are rather rough. Every development agency has difficulty getting its staff to serve in Chad and Laos; the glamour postings are for countries such as Brazil and China. The World Bank has large offices in every major middle-income country but not a single person resident in the Central African Republic. So don’t expect the development biz to refocus voluntarily. Development buzz is generated by rock stars, celebrities, and NGOs. To its credit, it does focus on the plight of the bottom billion. It is thanks to development buzz that Africa gets on the agenda of the G8. But inevitably, development buzz has to keep its messages simple, driven by the need for slogans, images, and anger. Unfortunately, although the plight of the bottom billion lends itself to simple moralizing, the answers do not. It is a problem that needs to be hit with several policies at the same time, some of them counterintuitive. Don’t look to development buzz to formulate such an agenda: it is at times a headless heart. What of the governments of the countries at the bottom? The prevailing conditions bring out extremes. Leaders are sometimes psychopaths who have shot their way to power, sometimes crooks who have bought it, and sometimes brave people who, against the odds, are trying to build a better future. Even the appearance of modern government in these states is sometimes a façade, as if the leaders are reading from a script. They sit at the international negotiating tables, such as the World Trade Organization, but they have nothing to negotiate. The seats stay occupied even in the face of meltdown in their societies: the government of Somalia continued to be officially “represented” in the international arena for years after Somalia ceased to have a functioning government in the country itself. So don’t expect the governments of the bottom billion to unite in formulating 4 WHAT’S THE ISSUE?
FALLING BEHIND AND FALLING APART 5 a practical agenda:they are fractured between villains and heroes,and some of them are barely there.For our future world to be livable the he- roes must win their struggle.But the villains have the guns and the money, and to date they have usually prevailed.That will continue unless we rad- ically change our approach. All societies used to be poor.Most are now lifting out of it;why are oth- ers stuck?The answer is traps.Poverty is not intrinsically a trap,otherwise we would all still be poor.Think,for a moment,of development as chutes and ladders.In the modern world of globalization there are some fabulous ladders;most societies are using them.But there are also some chutes,and some societies have hit them.The countries at the bottom are an unlucky minority,but they are stuck. Traps,and the Countries Caught in Them Suppose your country is dirt poor,almost stagnant economically,and that few people are educated.You don't have to try that hard to imagine this condition-our ancestors lived this way.With hard work,thrift,and intel- ligence,a society can gradually climb out of poverty,unless it gets trapped. Development traps have become a fashionable area of academic dispute, with a fairly predictable right-left divide.The right tends to deny the exis- tence of development traps,asserting that any country adopting good poli- cies will escape poverty.The left tends to see global capitalism as inherently generating a poverty trap. The concept of a development trap has been around for a long time and is most recently associated with the work of the economist Jeffrey Sachs, who has focused on the consequences of malaria and other health prob- lems.Malaria keeps countries poor,and because they are poor the poten- tial market for a vaccine is not sufficiently valuable to warrant drug com- panies making the huge investment in research that is necessary.This book is about four traps that have received less attention:the conflict trap, the natural resources trap,the trap of being landlocked with bad neigh- bors,and the trap of bad governance in a small country.Like many devel- oping countries that are now succeeding,all the countries that are the fo- cus of this book are poor.Their distinctive feature is that they got caught in one or another of the traps.These traps are not inescapable,however
a practical agenda: they are fractured between villains and heroes, and some of them are barely there. For our future world to be livable the heroes must win their struggle. But the villains have the guns and the money, and to date they have usually prevailed. That will continue unless we radically change our approach. All societies used to be poor. Most are now lifting out of it; why are others stuck? The answer is traps. Poverty is not intrinsically a trap, otherwise we would all still be poor. Think, for a moment, of development as chutes and ladders. In the modern world of globalization there are some fabulous ladders; most societies are using them. But there are also some chutes, and some societies have hit them. The countries at the bottom are an unlucky minority, but they are stuck. Traps, and the Countries Caught in Them Suppose your country is dirt poor, almost stagnant economically, and that few people are educated. You don’t have to try that hard to imagine this condition—our ancestors lived this way. With hard work, thrift, and intelligence, a society can gradually climb out of poverty, unless it gets trapped. Development traps have become a fashionable area of academic dispute, with a fairly predictable right-left divide. The right tends to deny the existence of development traps, asserting that any country adopting good policies will escape poverty. The left tends to see global capitalism as inherently generating a poverty trap. The concept of a development trap has been around for a long time and is most recently associated with the work of the economist Jeffrey Sachs, who has focused on the consequences of malaria and other health problems. Malaria keeps countries poor, and because they are poor the potential market for a vaccine is not sufficiently valuable to warrant drug companies making the huge investment in research that is necessary. This book is about four traps that have received less attention: the conflict trap, the natural resources trap, the trap of being landlocked with bad neighbors, and the trap of bad governance in a small country. Like many developing countries that are now succeeding, all the countries that are the focus of this book are poor. Their distinctive feature is that they got caught in one or another of the traps. These traps are not inescapable, however, FALLING BEHIND AND FALLING APART 5
6 WHAT'S THE ISSUE? and over the years some countries have broken free of them and then started to catch up.Unfortunately,that process of catching up has itself recently stalled.Those countries that have only broken clear of the traps during the last decade have faced a new problem:the global market is now far more hostile to new entrants than it was in the 1980s.The coun- tries newly escaped from the traps may have missed the boat,finding themselves in a limbo-like world in which growth is constrained by exter- nal factors;this will be the theme in my discussion of globalization.When Mauritius escaped the traps in the 1980s it rocketed to middle-income levels;when neighboring Madagascar finally escaped the traps two de- cades later,there was no rocket. Most countries have stayed clear of any of the traps that are the subject of this book.But countries with a combined population of around one bil- lion people have got caught in them.Underlying that statement are some definitions.For example,one of the traps involves being landlocked- although being landlocked is not sufficient to constitute the trap.But when is a country landlocked?You might think that such a matter is clear enough from an atlas.But what about Zaire,which after the ruinous reign of Presi- dent Mobutu understandably rebranded itself as the Democratic Republic of the Congo?It is virtually landlocked but has a tiny sliver of coast.And Sudan has some coast,but most of its people live far away from it. In defining these traps I have had to draw lines somewhat arbitrarily, and this creates gray areas.Most developing countries are clearly heading toward success,and others are just as clearly heading toward what might be described as a black hole.For some,however,we really cannot tell.Per- haps Papua New Guinea is heading for success;I hope so,and that is how I have classified it.But there are some experts on Papua New Guinea who would shake their heads in disbelief at that.The judgment calls are in- evitably going to be open to challenge.But such challenges do not discredit the underlying thesis:that there is a black hole,and that many countries are indisputably heading into it,rather than being drawn toward success. You will learn more about the fine judgments as the book progresses.For the moment take it on trust that I have drawn the lines defensibly. Given the way I have drawn the lines,as of 2006 there are around 980 million people living in these trapped countries.Since their populations are growing,by the time you read this the figure will be hovering around
and over the years some countries have broken free of them and then started to catch up. Unfortunately, that process of catching up has itself recently stalled. Those countries that have only broken clear of the traps during the last decade have faced a new problem: the global market is now far more hostile to new entrants than it was in the 1980s. The countries newly escaped from the traps may have missed the boat, finding themselves in a limbo-like world in which growth is constrained by external factors; this will be the theme in my discussion of globalization. When Mauritius escaped the traps in the 1980s it rocketed to middle-income levels; when neighboring Madagascar finally escaped the traps two decades later, there was no rocket. Most countries have stayed clear of any of the traps that are the subject of this book. But countries with a combined population of around one billion people have got caught in them. Underlying that statement are some definitions. For example, one of the traps involves being landlocked— although being landlocked is not sufficient to constitute the trap. But when is a country landlocked? You might think that such a matter is clear enough from an atlas. But what about Zaire, which after the ruinous reign of President Mobutu understandably rebranded itself as the Democratic Republic of the Congo? It is virtually landlocked but has a tiny sliver of coast. And Sudan has some coast, but most of its people live far away from it. In defining these traps I have had to draw lines somewhat arbitrarily, and this creates gray areas. Most developing countries are clearly heading toward success, and others are just as clearly heading toward what might be described as a black hole. For some, however, we really cannot tell. Perhaps Papua New Guinea is heading for success; I hope so, and that is how I have classified it. But there are some experts on Papua New Guinea who would shake their heads in disbelief at that. The judgment calls are inevitably going to be open to challenge. But such challenges do not discredit the underlying thesis: that there is a black hole, and that many countries are indisputably heading into it, rather than being drawn toward success. You will learn more about the fine judgments as the book progresses. For the moment take it on trust that I have drawn the lines defensibly. Given the way I have drawn the lines, as of 2006 there are around 980 million people living in these trapped countries. Since their populations are growing, by the time you read this the figure will be hovering around 6 WHAT’S THE ISSUE?
FALLING BEHIND AND FALLING APART 7 the one billion mark.Seventy percent of these people are in Africa,and most Africans are living in countries that have been in one or another of the traps.Africa is therefore the core of the problem.The rest of the world has spotted that.Think of how the international commissions on develop- ment have evolved.The first major development commission was estab- lished in 1970,led by a former prime minister of Canada.The Pearson Commission took a global focus on development problems.It was followed in 1980 by a commission led by a former chancellor of Germany.The Brandt Commission took the same global focus.By 2005,when Britain's Tony Blair decided to launch a commission on development,the focus had shrunk to Africa:this was a commission for Africa,not for development.In 2006 President Horst Kohler of Germany decided that he too would have a development event.He could hardly just repeat Tony Blair-not another Commission for Africa in the very next year.So he called it a forum,but it was still a forum for Africa.In reality,however,Africa and the third world are not coterminous.South Africa,for example,is not among the bottom billion-it is manifestly not in the same desperate situation as Chad.Con- versely,much of landlocked Central Asia is disturbingly like Chad.So the countries of the bottom billion do not form a group with a convenient ge- ographic label.When I want to use a geographic label for them I describe them as"Africa+,"with the being places such as Haiti,Bolivia,the Cen- tral Asian countries,Laos,Cambodia,Yemen,Burma,and North Korea. They all either are still in one of the traps or escaped too late. I have identified fifty-eight countries that fall into this group,which highlights one typical feature-they are small.Combined,they have fewer people than either India or China.And since their per capita income is also very low,the income of the typical country is negligible,less than that of most rich-world cities.Because this is not company that countries are keen to be in,and because stigmatizing a country tends to create a self- fulfilling prophecy,I will not present a list of these countries.Rather,I will give plenty of examples in each of the traps. So,how have the countries of the bottom billion been doing?First, consider how people live,or rather die.In the bottom billion average life expectancy is fifty years,whereas in the other developing countries it is sixty-seven years.Infant mortality-the proportion of children who die before their fifth birthday-is 14 percent in the bottom billion,whereas
the one billion mark. Seventy percent of these people are in Africa, and most Africans are living in countries that have been in one or another of the traps. Africa is therefore the core of the problem. The rest of the world has spotted that. Think of how the international commissions on development have evolved. The first major development commission was established in 1970, led by a former prime minister of Canada. The Pearson Commission took a global focus on development problems. It was followed in 1980 by a commission led by a former chancellor of Germany. The Brandt Commission took the same global focus. By 2005, when Britain’s Tony Blair decided to launch a commission on development, the focus had shrunk to Africa: this was a commission for Africa, not for development. In 2006 President Horst Köhler of Germany decided that he too would have a development event. He could hardly just repeat Tony Blair—not another Commission for Africa in the very next year. So he called it a forum, but it was still a forum for Africa. In reality, however, Africa and the third world are not coterminous. South Africa, for example, is not among the bottom billion—it is manifestly not in the same desperate situation as Chad. Conversely, much of landlocked Central Asia is disturbingly like Chad. So the countries of the bottom billion do not form a group with a convenient geographic label. When I want to use a geographic label for them I describe them as “Africa +,” with the + being places such as Haiti, Bolivia, the Central Asian countries, Laos, Cambodia, Yemen, Burma, and North Korea. They all either are still in one of the traps or escaped too late. I have identified fifty-eight countries that fall into this group, which highlights one typical feature—they are small. Combined, they have fewer people than either India or China. And since their per capita income is also very low, the income of the typical country is negligible, less than that of most rich-world cities. Because this is not company that countries are keen to be in, and because stigmatizing a country tends to create a selffulfilling prophecy, I will not present a list of these countries. Rather, I will give plenty of examples in each of the traps. So, how have the countries of the bottom billion been doing? First, consider how people live, or rather die. In the bottom billion average life expectancy is fifty years, whereas in the other developing countries it is sixty-seven years. Infant mortality—the proportion of children who die before their fifth birthday—is 14 percent in the bottom billion, whereas FALLING BEHIND AND FALLING APART 7
8 WHAT'S THE ISSUE? in the other developing countries it is 4 percent.The proportion of children with symptoms of long-term malnutrition is 36 percent in the bottom billion as against 20 percent for the other developing countries. The Role of Growth in Development Has this gap between the bottom billion and the rest of the developing world always been there,or has it come about because the bottom billion have been trapped?To find out,we have to disaggregate the statistics that have been used in the past to describe all the countries that we label as "developing."Here's a hypothetical example.Prosperia has a big economy that is growing at 10 percent,but the country has only a small population. Catastrophia is a small economy declining at 10 percent,but it has a large population.The usual approach-employed,for example,by the Interna- tional Monetary Fund (IMF)in its flagship publication World Economic Outlook-is to average figures that relate to the size of a country's econ- omy.On this approach,Prosperia's large,growing economy skews the av- erage upward,and so in aggregate the two countries are described as growing.The problem is that this describes what is going on from the per- spective of the typical unit of income,not from the perspective of the typ- ical person.Most units of income are in Prosperia,but most people are in Catastrophia.If we want to describe what the typical person experiences in the countries of the bottom billion,we need to work with figures based not on a country's income but on its population.Does it matter?Well,it does if the poorest countries are diverging from the rest,which is the the- sis of this book,because averaging by income dismisses the poorest coun- tries as unimportant.The experience of their people does not count for much precisely because they are poor-their income is negligible. When we get the data appropriately averaged,what do we find?Those developing countries that are not part of the bottom billion-the middle four billion-have experienced rapid and accelerating growth in per capita income.Let's take it decade by decade.During the 1970s they grew at 2.5 percent a year,hopeful but not remarkable.During the 1980s and 1990s their growth rate accelerated to 4 percent a year.During the first few years of the twenty-first century it accelerated again to over 4.5 percent.These growth rates may not sound sensational,but they are without precedent in
in the other developing countries it is 4 percent. The proportion of children with symptoms of long-term malnutrition is 36 percent in the bottom billion as against 20 percent for the other developing countries. The Role of Growth in Development Has this gap between the bottom billion and the rest of the developing world always been there, or has it come about because the bottom billion have been trapped? To find out, we have to disaggregate the statistics that have been used in the past to describe all the countries that we label as “developing.” Here’s a hypothetical example. Prosperia has a big economy that is growing at 10 percent, but the country has only a small population. Catastrophia is a small economy declining at 10 percent, but it has a large population. The usual approach—employed, for example, by the International Monetary Fund (IMF) in its flagship publication World Economic Outlook—is to average figures that relate to the size of a country’s economy. On this approach, Prosperia’s large, growing economy skews the average upward, and so in aggregate the two countries are described as growing. The problem is that this describes what is going on from the perspective of the typical unit of income, not from the perspective of the typical person. Most units of income are in Prosperia, but most people are in Catastrophia. If we want to describe what the typical person experiences in the countries of the bottom billion, we need to work with figures based not on a country’s income but on its population. Does it matter? Well, it does if the poorest countries are diverging from the rest, which is the thesis of this book, because averaging by income dismisses the poorest countries as unimportant. The experience of their people does not count for much precisely because they are poor—their income is negligible. When we get the data appropriately averaged, what do we find? Those developing countries that are not part of the bottom billion—the middle four billion—have experienced rapid and accelerating growth in per capita income. Let’s take it decade by decade. During the 1970s they grew at 2.5 percent a year, hopeful but not remarkable. During the 1980s and 1990s their growth rate accelerated to 4 percent a year. During the first few years of the twenty-first century it accelerated again to over 4.5 percent. These growth rates may not sound sensational, but they are without precedent in 8 WHAT’S THE ISSUE?