THIS COLLECTION of short stories and articles is by a writer increasingly well known for his fiction and journalism depicting the Third World. His most recent novel, Love and Death in a Hot Country, is set in South America; he is also known and admired for Journey to Nowhere, a reflective inquiry into the Jonestown deaths, and North of South, an account of his perceptions and encounters, as an Indian, in Africa.

In sum, the stories and pieces collected here reveal a writer equally at home in fiction and journalism. Yet this should have been two books, not one. The title itself, strictly speaking, refers to only half the book -- the nonfiction half, covering a disparate range of cities (Liverpool and Bombay), islands (Puerto Rico and the Seychelles), and peoples (the Iranians and the Bush Negroes of Surinam). The other half of the book -- short stories almost exclusively set in the author's birthplace, Trinidad (within the Dragon's Mouth, as it were) -- belongs elsewhere.

Luckily, the faulty packaging hasn't seriously harmed the contents.

The short stories bring to life Trinidadian society at the shop and street level, "in dusty yards overrun with pot-bellied Negro children, unmarried mothers and would-be steelbandsmen." In "The Beauty Contest" the proprietor of a hardware store is put out of business by his more imaginative competitor, whose son, having studied business management in the United States, brings home such inspirations as a neon sign featuring a man dressed cowboy-style saying, "Darn me if this ain't the finest store in town." In "The Political Education of Clarissa Forbes,"e unprepossessing Clarissa scorns Paradise (the name of her town) for the ideals of cheap English magazines with their promise of Mediterranean holidays. ("Tell me, where we does go for we holidays? I never even set foot in Tobago once in my life.")

In other stories, the idyllic life of a young couple is ruined by the husband's illusions of getting rich in America; the village delivery man carries out a scheme to organize school children to sing carols for a bogus charity, the profits of which he hopes -- but fails -- to reap. In the only story that isn't set in Trinidad, which takes place in England and involves white characters, an old man who feels imprisoned and degraded by his landlady carries out a pathetically inadequate act of revolt.

These are mostly stories about the sad comedy of small people thinking big, of failed ambitions in a circumscribed world. The characters' chit-chat is a delight to read. In fact, Naipaul's ear may be more acute than his eye. His descriptions of a person's appearance are sometimes without nuance, as in "Her face was round and full and she had big, dark eyes and a fine, straight noise." At his worst, he interrupts the momentum of a story with a deadly voice: the voice of imprecise elaboration. ("Desolation was like a curtain drawn between her and the world. Those eyes proclaimed her isolation; proclaimed that what she had been through could never be adequately told. She was a traveller who, unaccompanied, had undertaken a bizarre and dreadful journey across a stronge land.")

The Pause of commentary, so problematic in fiction, is the stuff of essays, and in Naipaul's case these are often examples of literary journalism at its best. Whether examining the attitude of Asian refugees in an English resettlement camp or the rise of the Rastafarian cult, his commentary is intelligent and entertaining, alternating nicely between fact and informed speculation. Underlying it all are the same sense of irony and feel for baloney that permeate his fiction.

Naipaul's own ancestry is Indian, so it isn't surprising that his essays on India and its "ancient misery" are among the most probing in k. (In Bihar, a province of legendary backwardness, a newspaper editor says, "What we are faced with is a human problem, a personality problem. How do you solve the personality problems of sixty million people?")

Naipaul is at his best when he scrutinizes Third World cults -- the deformed offspring of nationalistic fervor -- and when he exposes the bankrupt rhetoric mouthed by leaders trying to whitewash their dismal regimes. If there is anything that overshadows his writing, it is the inevitable comparison to another writer, also from Trinidad, also of Indian descent, also an expatriate living in England, who happens to be his older brother, V.S. Naipaul.

Apart from their family connection, the Naipauls have much in common as writers: both have known the mixed blessing of exile (the personal uncertainties and hardships, but also the richer perspectives); both have made careers out of their insights into Third World complexities and absurdities; both are squarely on the side of civilized man observing less civilized subjects; both have a biting style -- often biting the hand that feeds. The Naipauls share a technique of gathering material while abroad: getting invited to certain homes and then savaging their sources, which often include the host, the hostess, the other guests . . . and any stray servant who doesn't look sharp. (In this respect, however, V.S. seems to wield a more pointed pen; in fact he often seems to write with a surgical instrument posing as a pen.)

Regardless of which brother's hand one favors, however, V.S. seems to have an edge if only because he says things almost unimprovably well -- and says them first. If you have already read V.S., reading Shiva is like being guided by him through what at first seems like unexplored terrain, only to be reminded by intermittent signs that "V.S. WAS HERE." CAPTION: Picture, Shiva Naipaul.(c) l985 by Jerry Bauer