The Bottom Billion by Collier Paul

Author:Collier, Paul
Language: eng
Format: epub
Publisher: Oxford University Press, USA
Published: 2007-03-25T16:00:00+00:00

Aid and the Natural Resource Trap

The second trap was the natural resource trap. Here, frankly, aid is fairly impotent. Evidently, the resource-rich countries have money coming into the government. They do not use it very well. There is nevertheless a moment for aid in these environments. That moment is when they try to reform—an incipient turnaround. I will return to it in the discussion of the trap of poor governance and policy.

Aid and the Trap of Being Landlocked

The third trap was being landlocked. These are the countries that basically need to be on international welfare for a long time. Eventually they might become viable, depending upon when their more fortunate neighbors start to grow and what market niches turn up. But we should not pretend that there are easy answers. In the meantime, there is no fast track available for these countries. In retrospect, it was perhaps a mistake for the international system to permit economically unviable areas to become independent countries. But the deed is done, and we have to live with the consequences. One of the consequences is the need for big aid as a means of raising domestic consumption in these desperately poor environments, even if the aid does not do much for growth. For these countries the psychology of aid needs to recognize that it is not there as a temporary stimulus to development, it is there to bring some minimal decency to standards of living.

Probably the key role for development aid—as opposed to direct support for consumption—in the landlocked countries is to improve their transport links to the coasts. Recall that the costs of transport to the coast vary enormously and tend to reflect the transport infrastructure of neighbors. Aid should have been financing the regional transport corridors that are the lifelines for the landlocked. It has largely failed to do so. Why?

One reason was that in the 1990s infrastructure went out of fashion, at least for aid agencies. This was partly because there was an exaggerated belief that the private sector would finance infrastructure, so the aid agencies had better find something else to justify their continued existence. For example, in the World Bank, an agency whose core business had been infrastructure, infrastructure was now lumped in with private-sector development and finance, the whole package being merely one of five “networks.” The shift away from infrastructure was also because there was growing pressure to spend aid on the photogenic social priorities—health and education—and on the increasingly sacred environmental goals (both of which got networks all to themselves at the World Bank). So agencies shifted their budgets away from infrastructure to make room for increased spending on the new priorities.

The other reason why regional transport corridors got neglected was that aid programs were overwhelmingly organized country by country. Uganda’s link to the coast depended upon transport infrastructure in Kenya, not in Uganda. But the Kenyan government did not care about Uganda, and with the growing emphasis upon “country ownership” of aid programs, if the government of Kenya did not care then neither did those donors who gave money to Kenya.

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