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Collier bottom billion

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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

Factors the keep countries down

• Civil War• Resource Curse• Landlocked• Bad governance

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.

• 3. Landlocked• 4. Bad governance

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.

• I do feel, however, based on a lot of experience, that this attention will wane rather quickly, and so we want to institutionalise the response and not have it depend on the day-to-day interest of the president of the United States.