LAPC The Poorest Countries Are Failing and What Can Be Done About It Analysis

Question Description

I’m working on a economics discussion question and need an explanation and answer to help me learn.

Watch the TED Talk below from the author of the The Bottom Billion: “Why the Poorest Countries Are Failing and What Can Be Done About It” and also review the one page summary attached – then provide your reflection on the issue I present below.
Reflection – Issue to be Examined: 
What three poverty traps help explain the plight of nations comprising the poorest billion people?
The Poorest Billion.pdf Download The Poorest Billion.pdf

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The Poorest Billion
Not long ago, the world was one-sixth rich and five-sixths poor. Now, thanks to impressive growth in places
like China, the world is more like one-sixth rich, two-thirds not rich but improving, and one-sixth poor and
going nowhere. Most developing economies are experiencing a rising standard of living. But that still leaves
about a billion people trapped in economies that are not only extremely poor, but stagnant or getting worse. All
told, about 45 countries fit into this poorest-billion category, including 30 countries in sub-Saharan Africa plus
the likes of Cambodia, Haiti, Laos, Myanmar, North Korea, and Yemen.
Economist Paul Collier, of Oxford University in England, has examined what went wrong with these
“trapped countries.” Based on decades of research, he identifies some poverty traps. About 750 million people
of the bottom billion have recently lived through, or are still in the midst of, a civil war. Such wars can drag on
for years with economically disastrous consequences. For example, the ethnic conflict in Burundi between the
Hutus and the Tutsis has lasted three decades, which helps explain why that country is among the poorest in
the world. And war in the Congo over the last dozen years has killed more than five million people.
Unfortunately, the poorer a country becomes, the more likely it is to succumb to civil war. And once a country
goes through one civil war, more are likely. Ethnic conflict, or civil war, is Collier’s first poverty trap.
But why, aside from poverty itself, are so many sub-Saharan countries mired in civil war? He finds that
three factors heighten the risk of such conflicts: (1) a relatively high proportion of young, uneducated men with
few job prospects (who, thus, have a low opportunity cost); (2) an imbalance between ethnic groups, with one
tending to outnumber the rest; and (3) a supply of natural resources like diamonds or oil, which both creates an
incentive to rebel and helps finance that rebellion. The presence of mineral wealth in an otherwise poor
country can also undermine democracy itself. Government revenue from mineral sales reduces taxes, which
dampens public debate about how taxes should be spent. For example, because of oil revenue, the Nigerian
government relies less on taxes, so there is less pressure for government accountability, and hence fewer
checks and balances on a corrupt government. Thus, misuse of natural resource wealth is Collier’s second
poverty trap. About 300 million of the poorest billion live in countries that have fallen into this trap.
This leads us to the third poverty trap: a dysfunctional or corrupt government. Government officials who
pursue self- glorification and self-enrichment do serious harm to the economy. Much of the public budget
disappears through wasteful programs rife with graft and payoffs. For example, a recent survey that tracked
government funds for rural health clinics in Chad found that less than 1 percent of the money reached the
clinics. About 750 million of the poorest billion live in countries that pursue disastrous economic policies or
where government corruption harms the economy.
Can these poorest billion be helped? It will take more than band concerts. Collier doubts that unconditional
foreign aid makes much of a difference. He points to the ill effects of oil as an unconditional source of
government revenue. International trade may help, but because these countries have difficulty competing with
the likes of China or Vietnam, they may need special trade advantages. Another way the rest of the world
could help is by requiring Western banks to report deposits by corrupt officials. The rest of the world could
also assist these poor countries develop laws and regulations to ensure the transparent management of natural
resources, to help detect fiscal fraud, and to promote a free press. But even with all that, what these countries
need most, Collier argues, is about 10 years of domestic peace—backed by an outside force if necessary, such
as the UN. All that is a tall order, but the stakes are high for the billion people trapped and going nowhere in
these poor nations.
Sources: Paul Collier, The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done
About It, (Oxford University Press, 2007); and Paul Collier, The Plundered Planet, (Oxford University Press,
2010).

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Poverty traps

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