Interview with Gelber Prize winner Paul Collier

from the Globe and Mail

DOUG SAUNDERS

LONDON — "I think that economists have a responsibility to write in such a way to be read by ordinary people and by political leaders," the bearded and bespectacled Oxford professor says, in a quiet and careful tone, from his home in France. "So I wrote a book that's very readable."

That may not sound like a humble claim, but then Paul Collier has very clearly been read by a lot of people lately. His book, The Bottom Billion, argues plainly and often rudely that a dramatic change is needed in the way we deal with the world's poorest nations. It stands out from the pile of angry manifestos written by former aid-agency gurus during the past year for one important reason: It has become part of our language.

In January, United Nations Secretary-General Ban Ki-moon declared that 2008 should be "the year of the bottom billion," citing Mr. Collier's ideas, and then invited him to spend a day lecturing to the members of the UN Security Council. In the weeks that followed, he was invited by the cabinets of Britain, Norway, the Netherlands and Japan to deliver seminars in foreign aid.

On Tuesday in Toronto, Mr. Collier will be presented with the $60,000 Lionel Gelber Prize, the top honour in non-fiction book writing. While this prize has often gone to books that are elegantly written (Eric Hobsbawm's Age of Extremes) or meticulously researched (Steve Coll's Ghost Wars), in this case the judges have plainly gone for sheer clout: Wherever you find yourself these days, somebody seems to be citing Paul Collier.

He is part of a new class of expert: The embittered veteran of the foreign-aid industry bent on denouncing his former colleagues. As a former head of the World Bank's development-research arm, he developed a reputation for putting noses out of joint. It was he who showed, with his characteristic statistical zeal, that 38 per cent of Africa's earnings were stored in overseas bank accounts, and that 40 per cent of military expenditures in Africa were paid from foreign aid.

Most contentiously, he argued that a majority of aid money from countries such as Canada was going not to the very poor, who needed the help, but to the middle-income countries such as India and Brazil, which very much didn't.

Thus the title of this much-read book. The billion poorest people in the world — 70 per cent of whom live in Africa — are a completely different group from the four billion who are merely very poor, he argues. In "places such as Haiti, Bolivia, the Central Asian countries, Laos, Cambodia, Yemen, Burma and North Korea," the 58 least-wealthy countries, life expectancy is only 50 years, compared with 67 for merely poor countries; among the poorest, one in seven children dies by the age of 5, compared with one in 50.

Most alarming is that while the world's poor countries have seen a massive escape from poverty during the past 40 years, the 58 poorest have seen just the opposite. For the four billion merely poor people, half of whom live in India and China, the past generation has been one of dramatic improvement in every area — health, nutrition, incomes, longevity, living standards, purchasing power, housing, employment. But while these countries have been growing by 4 per cent every year, the countries of the "bottom billion" have seen actual declines every year since 1980, leaving them poorer than they were in 1970.

Almost a decade ago, Mr. Collier began arguing that countries such as Canada should shift all of their aid, trade and development efforts to these poorest countries. He won that argument, for the most part. His goal now is to convince governments that it's still worth making some sacrifices to bail out these dire countries, that doing so is not impossible, even after a dozen Marshall Plans of money have been dumped into their economies since the Second World War with no effect.

"My argument is that this is a moment where both altruism and enlightened self-interest are aligned, in the long-term sense: If we don't get serious about getting the bottom billion to catch up, if they continue to diverge, then we're building a social nightmare for our children. Let's stop making symbolic gestures and do something that works, that's effective."

This is where the controversy begins. Mr. Collier pitched his book, in part deliberately, against one that also came out last year by former World Bank colleague William Easterly. That book, The White Man's Burden, argues that decades of foreign aid have not only done nothing, but have actually hurt countries and kept them in poverty.

There's a lot of truth to this: When tides of foreign money wash into a poor country, the effect is basically the same as an oil windfall: It drives up the currency, swamps the productive economy and can leave the whole country poorer.

On this basis, Mr. Easterly argued for an end to virtually all foreign aid. He found himself at odds with another development veteran, economist and UN adviser Jeffrey Sachs, whose The End of Poverty argued that African poverty could be alleviated immediately with a shock program of large-scale aid combined with trade reforms.

Mr. Collier avoids the excesses of both those figures. A protégé of his former boss, Joseph Stiglitz, he is among a group of economic liberals who are able to see the damage done by globalization and misguided aid policies, while realizing that the solutions nevertheless lie in global trade, open economies, intelligent aid and foreign intervention.

He shows very clearly that foreign aid, if spent wisely (especially on infrastructure and skills), can help: Not only does aid reverse capital-fight outflows in poor countries, but to a dramatic degree it attracts foreign investment and creates economic growth — in that sense, it is the precise opposite of oil.

But most interesting are his proposals for trade. For these poorest African countries, he advocates not a complete free-trade liberalization (which worked wonders for India and China, but damaged economies and hurt livelihoods in Africa), nor a return to protectionism, state ownership and tariffs (which has proved devastating in the poorest countries), but instead a program of "protection from Asia": Western countries would give preferential treatment to exports from Africa, making them duty-free, while placing tariffs on Asian imports. The United States has done this with garment exports, and just this limited policy caused Africa's garment industry to expand sevenfold.

"I'm much more optimistic about the prospects now than when I finished the book two years ago," Mr. Collier says while packing for a trip to speak with Al Gore in Oxford before his trip to Toronto. "I think these poorest governments, these societies, have learned from failure, and people are understanding that good approaches are possible. And in the West, we're building up a critical mass of voters who've read my book, and politicians will have to listen to them."