Thanks for writing about this great book by professor Collier. I have just started reading it myself after hearing an interview with Collier on EconTalk podcast last year. I teach IB economics, and used an excerpt from the hour long interview when Collier talks about “development traps”, or those characteristics shared by numerous countries in the bottom billion that can help explain why they are “trapped” in absolute poverty.

As I read the book now, I constantly question whether the developed world is doing what’s best for those in the bottom billion. Collier also points out that MOST development aid from the rich world goes into the countries where the middle 4 billion live, in other words, the countries that are already developing. The simple and obvious reason for this is that the rich world wants to point its aid in a direction where real returns on their investments are likely and visible.

Micro-finance programs in Bangladesh and India have been wildly successful, and these high profile programs like the Grameen bank receive deserved recognition. But India, Bangladesh, China, these countries are already developing, yet receive the most attention from the rich world… it’s those poorest that are left behind not just by the world of development aid but of trade liberalization as well.

Opening the markets of the poorest countries will only bring them development if the richest countries stop subsidizing and otherwise protecting their own producers. Farm subsidies in the west bring cheap industrially grown food to Sub-sahara Africa, undercutting the prices charged by domestic farmers. Cheap food, good, right? Well not for poor world farmers who have no source of income anymore. Without income, there is no savings, without savings there is no capital available for local entrepreneurs to borrow and invest. Without domestic investment, these countries have no hope of achieving any sort of growth or development.

The first step to escaping the development trap in the bottom billion countries is for the West to truly open their markets, and stop protecting domestic farmers and manufacturers. Only then can these poor countries, many whose only abundant resource is cheap labor and abundant farmland, can begin competing in the global marketplace.

Thanks for posting this article… I think I’ll spend a little less time blogging and a little more time reading Collier’s book now. I’m taking a group of Econ student to Egypt next month to study development issues, this may be the right book to have them reading from in preparation for this learning experience!