Will the Bottom Billion Ever Catch Up?

By Paul Collier
Sunday, October 21, 2007

OXFORD, England The World Bank's new president, Robert B. Zoellick, is passing a major milestone: his first time leading the bank's annual meetings. As the world's finance and development ministers descended on Washington last week, Zoellick established himself firmly at the head of the most important agency designed to ensure that globalization does not leave people behind, mired in desperate poverty. But he faces a planet that has changed far more rapidly than his institution has.

The Third World has shrunk, but it hasn't vanished. The new third world -- the hard core of the development challenge that Zoellick faces -- is composed of about 50 countries that are home to a billion people. Globalization is propelling China and India toward wealth, and both are closing in on the prosperous with unprecedented speed.

But globalization is not working for the bottom billion. Their incomes have been virtually stagnant. From 1960 to 2000, the new third world experienced no growth at all. Meanwhile, the economies of the rest of the developing world have enjoyed accelerating growth, decade by decade. First gradually, then rapidly, the bottom billion have fallen away from the rest of mankind. Encouragingly, Zoellick has picked up on this. "Globalization must not leave the bottom billion behind," he told the National Press Club on Oct. 10. But it already has.

During the golden decade of the 1990s, between the end of the Cold War and 9/11, the bottom billion's divergence from the middle 4 billion people on Earth accelerated to 5 percent a year, measured in per capita gross domestic product. By the millennium, the income gap between the average citizens of the bottom billion and those of the middle 4 billion was 5 to 1. And if you think that wealth gap is alarming, think about the lucky billion -- in Europe, North America, Japan and elsewhere -- at the top.

One part of the problem is the World Bank and the United Nations, which focus on poverty like a bean counter. That only confuses the real issue. It is not enough that absolute levels of poverty start to fall in the new third world. The further a billion people fall behind the rest of humankind, the more it will present the world of our children with unmanageable pressures. Even as the world's economies are bifurcating, the Earth continues to draw closer together socially through information and migration. So youth in the bottom billion know that they are being left behind. To catch up, they will need spectacular increases in growth.

Most of the bottom billion live in Africa, but the countries at the bottom are scattered across the continents: places such as Haiti and Bolivia in Latin America, Yemen in the Middle East, many of the "stans" in Central Asia, and Laos and East Timor in East Asia.

They are nearly all small, which is part of the problem. Countries with small and poor populations tend to lack the critical mass of educated and talented people to diagnose failure and do something about it.

Globalization has compounded this shortage by making exits both feasible and attractive: The bottom billion are hemorrhaging their limited talent. Chinese students go back to China, Indian students now go back to India, but students from the countries of the bottom billion don't go back.

Many of these small countries are also plagued by civil war. Imagine if India or China were divided into 50 countries. Do you think they would all be at peace? To be small is also to be at the mercy of your neighbors, especially if you are landlocked.

Suppose this country were not the United States but the Divided States, each sovereign and self-serving. The great manufacturing and agricultural heartland states would have been strangled at birth by the absence of interstate highways, railways and canals. The plight of Niger, which is dependent on Nigeria, and of Uganda, which is dependent on Kenya, is to be landlocked and located in the Divided States of Africa. A third of Africa's population lives in such countries.

So how can Zoellick and others help the bottom billion catch up? In each country of the new third world, reformers are struggling with entrenched interests. Catching up depends on the reformers winning these struggles. We can't do that for them, but we can make their battles a whole lot easier than they have been.

In 1945, the United States got serious about rebuilding Europe. Yes, there was aid, through the Marshall Plan. But there was also trade: Washington reversed the protectionism of the 1930s and created the General Agreement on Tariffs and Trade, thereby integrating Europe into the U.S. economy. And there was also security: Washington reversed the isolationism of the 1930s and created NATO, thereby stabilizing Europe by placing U.S. troops on European soil for decades. And there was also a shrewd attempt to create systems that produce good governance: Washington created the Organization for Economic Cooperation and Development and encouraged the formation of the European Economic Community, thereby starting the process of mutually setting standards that locked first Greece, Spain and Portugal and then much of Eastern Europe into democratic market economies.

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