Paul Collier, fully Sir Paul Collier

Collier, fully Sir Paul Collier

Professor of Economics and Public Policy at the Blavatnik School of Government, Director for the Centre for the Study of African Economies at the University of Oxford, Director of the Development Research Group of the World Bank

Author Quotes

A third key pressure point in cleaning up resource revenues is the international companies in the extractive industries. The model here is De Beers and its Kimberly Process for the certification of diamonds. For many years De Beers has been in denial that conflict diamonds were a problem. Then pressure from NGOs persuaded the company that denial was not going to work: if the image of conflict diamonds became entrenched in the mind of consumers, diamonds could go the way of fur. To their considerable credit, De Beers radically changed tack.

By contrast, the British intervention in Sierra Leone just mentioned, Operation Palliser, has been a huge success. It has imposed security and maintained it once the RUF was disposed of. The whole operation has been amazingly cheap. I can think of no other way in which peace could have been restored and maintained in Sierra Leone.

I proposed a charter for post-conflict governance. International actors have had huge power in post-conflict situations and have usually been embarrassed to use it because of accusations of infringing upon sovereignty. The international community has so much at stake in these situations that it has to learn to learn to be comfortable with infringing upon sovereignty. But it is far more acceptable for international actors to impose a previously defined international norm than to invent fresh demands on the hoof as a particular situation deteriorates.

Inevitably, when exposed to external competition these unviable activities curl up and die. I am not, however, an enthusiast for ?big bang? trade liberalization: where there is some hope that firms can become globally competitive it may be better to draw their feet gradually closer to the fire than to push them into sudden death.

On average, as far as we can tell, aid has no direct effect on the risk of civil war, though it has indirect effects (which I will come to shortly). This does not mean that it never has direct effects: people expert in particular situations can give you stories on each side, of aid inciting war or averting it. Any of these may well be right, but they do not add up to a systematic relationship. With coups it is a different matter: big aid indeed makes a coup more likely.

Resource revenues to the bottom billion are bigger than aid, and far more poorly used. If we could raise the effectiveness of resource revenues even to the present level of aid effectiveness, the impact would be enormous.

Technical assistance packages during reform could usefully be really big ? typically up to around $250 million a year could be spent on providing technical expertise before additional money became useless.

The expected time before a failing state achieves decisive change is fifty-nine years. The normal condition for a failing state is to be stuck, as bad policies and governance are highly persistent.

After Iraq it is difficult to arouse much support for military intervention. For me this chapter is the toughest in the book because I want to persuade you that external military intervention has an important place in helping the societies of the bottom billion, and that these countries? own military forces are more often part of the problem than a substitute for external forces.

Capital movements, like trade, normally generate mutual gains. Since political contests are usually presented as zero-sum games ? your gain is my loss ? the people who are most politically engaged have the hardest time believing in mutual gains. Hence, perhaps, the exaggerated suspicions of globalization.

I was once brought in to talk to a depressingly large group of finance ministers from post-conflict countries, and I put to them this argument that high military spending is likely to be dysfunctional. Despite the fact that military spending is often a taboo subject, there was an enthusiastic chorus of approval led by the finance minister of Mozambique, Luisa Diogo. Now prime minister, Diogo gave us the example of her own country. Completely bucking the usual trend, her government has radically cut military spending to virtually nothing, and the peace had endured. It turned out that, far from favoring big military budgets, finance ministers wanted evidence to defend their spending priorities against the demands of the powerful military lobby. The key implication is that in post-conflict situations risks are high. Governments recognize these risks. Eventually, if they run the economy well, this will bring the risk down, but it is going to take around a decade. There is no magic political fix, and so there has to be some military force to keep the peace during this dangerous period. But if the force is domestic, it exacerbates the problem. In the typical post-conflict situation external military force is needed for a long time.

International trade has taken place for several thousand years. However, the most dramatic transformation of the size and composition of trade has been during the past twenty-five years. For the first time in history, developing countries have broken into global markets for goods and services other than just primary commodities. Until around 1980 developing countries? role was to export raw materials. Now, 80 percent of developing countries? exports are manufactures, and service exports are also mushrooming.

One aspect of post-conflict policy is noticeable by its absence from the above suggestions: that relating to elections? Elections during the post-conflict decade seem to shift the risk. In the year before an election the risk of renewed conflict goes sharply down, perhaps because the various groups direct their energies to the electoral contest. In the year after an election the risk goes equally sharply up: presumably whoever has lost the election does not like the result and is inclined to explore other options. So elections may be desirable for all sorts of reasons, but they do not seem to make the society safer. Perhaps as solutions they have been a little overplayed.

Sachs? work suggested that being landlocked clipped around half a percentage point off the growth rate. The standard slick response to Jeff?s concerns was to point to Switzerland, Austria, or Luxembourg ? or, in Africa, to Botswana, for a long time the fastest-growing country in the world. It is true that being landlocked does not necessarily condemn a country either to poverty or to slow growth, but 38 percent of the people living in bottom-billion societies are in countries that are landlocked ? and, as you will see, it is overwhelmingly an African problem.

That is what modern armies are for: to supply the global public good of peace in territories that otherwise have the potential for nightmare.

The fair trade campaign attempts to get higher prices for some of the bottom billion?s current exports, such as coffee. The price premium in fair trade products is a form of charitable transfer, and there is evidently no harm in that. But the problem with it, as compared with just giving people the aid in other ways, is that it encourages recipients to stay doing what they are doing ? producing coffee.

Aid agencies should become increasingly concentrated in the most difficult environments. That means that they will need to accept more risk, and so a higher rate of failure. They should compensate by increasing their project supervision, which means higher administrative overheads. They should become swift-footed, seizing reform opportunities at an early stage. They should intervene strategically, financing big-push strategies for export diversification. They should introduce governance conditionality. At present the powerful force of popular opinion is driving agencies in precisely the opposite direction. They cannot afford failure. They have to be learn with low administrative expenses. They have to prioritize long-term social opportunities for reform and growth. They have to give unconditional debt relief. This is the fault of ordinary citizens who support vociferous lobbies without bothering to get informed. No aspect of domestic policy is run this badly. The aid agencies are not run by fools; they are full of intelligent people severely constrained by what public opinion permits.

Change in the societies at the very bottom must come predominantly from within; we cannot impose it on them.

If a country has a lot of natural resources, it is in all likelihood going to be uncompetitive in other exports ? the theory of Dutch disease.

It is not just banks. Until very recently, if a French company bribed a public official in a bottom-billion society, the payment was tax-deductible.

Only around 20 percent of the money that the [Ugandan] Ministry of Finance released for primary schools, others than for teachers? salaries, actually reached the schools.

Seventy-three percent of people in the societies of the bottom billion have recently been through a civil war or are still in one.

The 1990s began well for military intervention ? the expulsion of the Iraqi invasion of Kuwait was a triumph of the new internationalism. Kuwait was a pretty clear-cut case for international intervention: expelling an aggressor. But there are three other important roles for external military intervention: restoration of order, maintaining post-conflict peace, and preventing coups.)

The first link we found was between risk of war and initial level of income. Civil war is much more likely to break out in low-income countries: halve the starting income of the country and you double the risk of civil war. One might ask whether we got the causality mixed up ? is it just that war makes a country poor, rather than that poverty makes a country prone to war?

Aid does tend to speed up the growth process. A reasonable estimate is that over the last thirty years it has added around one percentage point to the annual growth rate of the bottom billion. This does not sound like a whole lot, but then the growth rate of the bottom billion over this period has been much less than 1 percent per year ? in fact, it has been zero. So adding 1 percent has made the difference between stagnation and severe cumulative decline. Without aid, cumulatively the countries of the bottom billion would have become much poorer than they are today. Aid has been a holding operation preventing things from falling apart. In July 2005 at Gleneagles, the G8 summit committed to doubling to Africa.

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Professor of Economics and Public Policy at the Blavatnik School of Government, Director for the Centre for the Study of African Economies at the University of Oxford, Director of the Development Research Group of the World Bank