Paul Collier’s last book, The Bottom Billion, proposed that there are four “traps” in which the poorest countries can become enmeshed (a conflict trap, resource trap, geography trap and governance trap).   He vividly explains why he thinks that “business as usual” will not lift these countries out of poverty, creating the prospect that 58 countries, home to the poorest billion people, will fall further and further behind the standards of living of the rest of the world.

At a conference at Wilton Park this week a number of people gathered together to review progress since the Africa Commission and Gleneagles Summit in 2005, and to discuss the prospects for a transformation in Africa over the coming years.  One participant (one of the authors of the Africa Commission report) argued that the Commission set out a comprehensive action plan which, if implemented across the range of its recommendations, could address these traps and lead to real progress.

I am not so sure. I think there is a fifth trap facing Africa which is more chronic and pervasive than any of the four traps identified by Paul Collier. It is the “unfair rules” trap, and I think it makes it very hard for Africa to make much progress on the other four.

Development and an improved standard of living for people in developing countries will come not from aid but from industrialisation and economic growth.  We do not know exactly how to ensure that these economic transformations occur, though there is much we can do to create the conditions in which it is more likely.  (Aid can help create the conditions for growth, and can help people to live better lives while the process is under way).  But as the world economy becomes more integrated and more globalised, many (though by no means all) of the determinants of a country’s opportunities for economic development are determined by international institutions, systems, rules and agreements.

The “unfair rules” trap is that the rules of the game are determined by the rich for the rich.  And the consequence for the poorest countries is that they are having to fight uphill to create conditions for their development; so they continue to fall behind the rest of the world economically.  Their relative lack of economic power reinforces their lack of political influence internationally and so makes it harder for them to influence the institutions and rules which contribute to their continued economic marginalisation.

This “unfair rules” trap takes many forms.  There is a myriad of complicated rules and institutions that affect a huge swathe of economic and political life.  These international agreements range from highly political – such as the global allocation of the right to emit greenhouse gases under the post Kyoto framework for climate change – to the deeply technical such as phyto-sanitary standards which unnecessarily limit exports of groundnuts from Africa to Europe.

On BBC World this weekend there is a debate among a group of African leaders in which Linah Mohohlo, the Central Bank Governor of Botswana, points out that new global rules are currently being devised to promote financial stability – an issue that affects every country in the world – without any participation by Africans.

Consider our attitude to property rights.  Rich countries have attached considerable importance to the establishment and global enforcement of intellectual property rights, which enable their firms to secure revenues from the use of their intellectual property. They have, for example, pursued this through the WTO.  Whatever you think about intellectual property rights, there is no doubt that they can be expensive for developing countries, both because of the huge revenues that flow from Soweto to Seattle and because of the restrictions imposed on access to vital knowledge rich products such as pharmaceuticals, software and business practices.    But consider a parallel property right: the right to emit greenhouse gases.  Like intellectual property rights, emission rights are an institutional construct designed to bring about an improvement in economic efficiency (by rewarding innovation in the case of IPRs, and by taxing polluters in the case of emissions rights).   Emissions rights, if properly designed, fairly allocated and enforced around the world, would entail a reallocation of wealth from rich countries to poor countries.  But while the rich world is happy to insist on the importance of intellectual property rights (of which it is a seller) it is unwilling to consider the establishment of property rights over assets for which it would be a buyer.  In the run-up to the summit in Copenhagen, there was no serious discussion of the idea that every citizen should be entitled to an equal share of the atmosphere, and that anyone wanting to occupy more than their fair share should pay compensation to those who are using less. The discourse is limited to the realpolitik of what rich countries are likely to accept.

Of course, it was ever thus.  Nobody should be surprised to hear that the rich and powerful set the rules, and that these are not always to the benefit of the poor.  But within nation states this dilemma is partly addressed through the political process.  Universal suffrage has made it impossible for national institutions, laws and regulations completely to ignore the interests of the poor; though of course there is still a long way to go before the interests of the poor are given the attention they deserve.

But the international system does not benefit from the equal representation implied by universal suffrage within nations.  In some international institutions, power is formally one-dollar-one-vote.  In many others  this is not the formal position, but it is true in practice.  The global political system does not rebalance economic power between nations in the way that political processes can within nations.

To address Paul Collier’s four traps will require concerted international action – for example, to take steps to prevent the corruption and patronage that is associated with extraction of natural resources, to limit the sale of arms which fuel conflict, or change trade rules in ways that improve Africa’s prospects of trading with the rest of the world.  That is why the trap of “unfair rules” is so profound: for as long as Africa remains politically weak in the international system, it is hard to envisage how the international cooperation is required will be brought about.

I find it hard to see how a transformation can be brought about unless we find a way to address the problem “unfair rules”.  For as long as Africa remains economically disadvantaged, it is marginalised in the setting of rules and governance of global institutions.   This in turn profoundly affects its ability to escape Collier’s four traps, and so limits its prospects for development, and thus locks in the growing divergence from the rest of the world.   Africa seems to be likely to be caught in the jaws of this trap for as long as there is no political process that allows African countries to obtain more power and influence within these international institutions than their relative economic weaknesses entails.

If you enjoyed this post, please consider leaving a comment below, and perhaps sharing this with other people using the buttons on the left. You can also sign up to have blog posts sent to you by email.

10 Responses to To them that hath … a fifth poverty trap for Africa?

  • Bravo. Well put Owen. As useful as it is conceptually to use economic theory to think through traps, the political economic complexity is where the real work is.

  • It’s funny how ideas come around. This of course is one of the fundamental tenets of the old-school dependency theory. It’s got a point, of course.

    In a broader sense I’m not sure how useful it is looking at the problems facing Africa as a finite number of fixed ‘traps’ (not least because, as you show Owen, it’s not beyond the realms of possibility to add to them).

    Decent economic analysis mixed with a much greater focus on the political economy of particular situations is where it’s at. I’m just yet to be convinced the ‘trap’ narrative is useful for more than selling books.

    An example: China was marginalised, colonised and abused for at least 100 years. It’s possible to place this in the box of a ‘trap’. Their solution was to have a Communist revolution, then put in place an agrarian strategy that, to be generous, had its ups and downs, but one offshoot was that when they came to implement gradual economic reform they had institutions in place which, whether through luck or judgement, could drive staggering levels of capital accumulation and growth. Would a ‘trap’ narrative really have helped diagnose this?

    And even if it could, we probably wouldn’t take too kindly to suggesting countries have Maoist revolutions…

    Adam: you make a good point. The word “trap” is not very helpful (except, as you say, for selling books). I certainly don’t want to imply that this is a situation from which African can never extract themselves. But I do think there is a vicious circle which makes it harder for poor countries to extricate themselves from their situation because their political weakness makes it hard to shift the rules.

  • We really need to work on changing the attitude and perspective of the global “rich.” Secretary of State Hilary Clinton’s recent speech (quotation below) demonstrates we still have a long way to go… why does she think Americans need to project their “values and leadership” in the world? Its this type of attitude that helps reinforce the “unfair rules” trap:

    “The challenges we face are numerous. So we must be selective and strategic about where and how we get involved. But whether it’s to improve long-term security in places torn apart by conflict, like Afghanistan, or to further progress in countries that are on their way to becoming regional anchors of stability, like Tanzania, we pursue development for the same reasons: to improve lives, fight poverty, expand rights and opportunities, strengthen communities, and secure democratic institutions and governance; and in doing so, advance global stability, improve our own security, and project our values and leadership in the world.”

    (http://www.foreignpolicy.com/articles/2010/01/06/hillary_clinton_on_development_in_the_21st_century)

  • People/countries make their own history but not under circumstances (including rules) of their own choosing.

    Karl Marx, more or less

    The challenge, I think, is to link the appreciation that political economy matters at a national level to the appreciation that political economy matters at a global and international level.

    Borders do matter and make a difference, but global political economy (and resulting governance arrangements at that level), does shape national political economies (and resulting governance options and arrangements at that level). (and vice-versa if the country is big and powerful). Such are the realities and challenges of multi-level governance for a capitalism that goes far beyond – and therefore takes advantage of – borders.

    … which is one of the reasons (shameless plug) why my web-site http://www.alanhudson.info is called “beyond the borders” (I am annoyed that CNN now use the strap-line “beyond borders”, but what can you do!)

    Alan – thanks. I agree. I am interested in the strange dichotomy that most of us believe that it is a role of the nation state to limit and try to reverse the inequalities and divergence caused by capitalism between people within a nation state, but that many people do not accept the need for an international polity to do that between countries.

  • “There is a myriad of complicated rules and institutions that affect a huge swathe of economic and political life. ”

    As Adam says, funny how old ideas come around. That’s effectively “regulation srtangles growth”…..and as proponents of that like me point out, it strangles the growth of the small and the new businesses that cannot afford it much more than it does the large and established who can absorb it.

    It’s just that we who propose it as an obvious point think it happens in hte rich countries as well as the porr: the solution being simply to have less such regulation.

    Owen replies:

    Tim: You make a good point. Some such regulation serves the rich and politically powerful in society, at the expense of the poor. Most trade restrictions, for example, fall into this category.

    I was musing about this the other day when wanting to get a taxi from the airport in a country in which normal licenced cabs which people take to the airport are required to return to town empty because they are not “licensed” to pick up at the airport, while at the same time arriving passengers have to queue up for ages waiting for an “airport taxi” to arrive.

    That does not mean that all regulations are bad, of course. I imagine you are in favour of requirements that weights and measures are accurate, and I am in favour of government intervention in the case of big externalities (such as limits to pollution). I suspect I may be more in favour than you of regulations to protect the rights of workers, and I suspect you may be more in favour than me of regulations to create and protect intellectual property rights (though forgive me for making assumptions about your views). We can all argue about where the boundary should be drawn.

    But within nation states, in which political power is only partly distributed according to wealth, the poor have at least some opportunities to resist the rules and regulations imposed upon them by rent-seekers and monopolists. It is no coincidence that the Corn Laws were repealed soon after the 1832 Reform Act which extended the vote in the United Kingdom. Internationally, however, there is no such opportunity. The world’s poor have no way to overturn the regulations imposed upon them by rent-seekers of the rich world. This means we need more effective systems of global governance which give better political representation to the interests of the poor.

    Owen

  • I think the China example is quite an interesting one. At the risk of grossly over-simplifying things, I think there’s a few important factors worth noting about the reasons for China’s relative success in reducing poverty.

    1. It took steps to internally liberalise, and later it became more integrated into the global economy. I think it’s a myth that China’ success is a result of integration into the world economy, rather development (and lots of state support) preceeded the entry into the global economy.

    2. Tricky one this – but the fact that China is 90% one ethnic group (Han) is surely important. As a result, there has been relatively little internal ethnic conflict – with the exception of the Tibetan and Uighur populations in the west.

    3. China was not colonised by western powers in the same way that Africa was. As a result, it has been less influenced by the west. Instead, the country has developed in a Chinese way.

    International rules are certainly unfair on African countries. I think the China took the long term view and only joined the international system when it felt the rules worked for it. China’s size meant it had that luxury. Sadly, African countries don’t.

  • China did agriculture first. Any country that doesn’t deregulate agriculture first ain’t gonna do it.

    In Africa, in most parts, at least, agriculture is 50% or more of the economy. Lifting the State off 50% or more of the economy is important, whatever else we say about race, tribes, IP or industrialisation.

  • Good post, good comments. Let’s call unfair rules a barrier rather than a trap. Or some new term, not laden with economics jargon.
    I wouldn’t have topped the list of unfair rules with TRIPS. Ag subsidies and quotas would have been at the top of my list given the importance of ag to growth and income in Africa and how expensive and misguided some of those programs are (e.g. sugar in the U.S.).

    If you are cataloging unfair rules, I think we should also look at the rules involved in the delivery of aid. The contracting, reporting, and fiduciary requirements of virtually all major donors effectively exclude small commercial or nonprofit organizations from being the primary recipients and implementers of aid programs. Governments are the only local organization able to meet some of these donor requirements, but holding host country governments accountable is difficult to say the least. These rules explain why, in spite of significant increases in aid to Africa, organizations that have grown the most are not African, but US based or Europe based consulting firms, non profits, and charities that are able to adhere to these rules while delivering the aid.

  • Have you read the book “Confessions of the Economic Hit Man” and the “Confessions of the economic Hit Man” by John Perkins? also A game as old as Empire by Steven Hiatt. Perhaps you may want to watch him if you have not done so. You can watch him in the following websites.I will like what you think.

    http://www.youtube.com/watch?v=29GhXsx7-Rs&feature=related

Follow Owen




Email subscription

I want to receive new posts by email

Owen on Twitter
Owen on Google Plus