Monday, April 11, 2011


Here's a video of Paul Collier discussing a few steps toward reversing the downward trend for the bottom billion. Note the importance of governance and the perils of "instant democracy". These have obvious implications for transitions currently underway in north Africa and the middle east. He also discusses the resource curse, and mentions "verified auctions" as a potential way to prevent backroom deals for extraction rights. The idea is that anyone interested in being a buyer or seller of the commodity must be backed by an objective third party (hence verified as a legitimate participant). The third party would presumably be an international agency.


  1. I have to plead ignorance on this one, but what was going on in Portugal in the 1980s? He mentioned it as a cutoff point for governance, but I wasn’t sure how to interpret that statement. Was that meant to refer to something I (should) know about Portugal in the 80s, or is there no special significance other than being the cutoff point?

  2. I truly believe one of the greatest points he made is that compassion is needed. There are so many people in the developed world that are unaware of these problems and just uneducated about world issues. There are also so many people who choose to be ignorant or just don't care. I am amazed all the time at how much Americans and people from the developed world take things for granted (including myself). The individualistic attitude of "if it doesn't affect me then why should I care?" needs to change. The world needs to be seen as one community and that could be helped through education. I think our education system in America (and around the world) needs to focus more on these issues. If our society focused half as much on lessening poverty and social injustice as it does on profit making and becoming rich we might witness drastic changes in the level of interest shown in bettering the world.

  3. Great point Laura, education is the key. Collier sites natural resource rents as one of the most effective tools for a developing country to grow sustainably. He mentions that Angola’s oil revenues topped 50 billion per year, whereas the total amount of aid sent to all countries in the bottom billion was 34 billion. Obviously, natural resource revenues can provide a much larger cash flow to a developing country than an influx of foreign aid that often comes with ties.
    We have all studied the downsides of natural resource discoveries and their revenue flows, so the question remains: What must a developing nation do to avoid falling victim to any component of the natural resource trap? My opinion- EDUCATION. The more educated a population is (and specifically women), the less likely that country is to making the same policy/governance mistakes that others had in the past. In addition, the more educated population can also pull from the political successes of the past when formulating their own system of revenue management.
    South Africa is a perfect example of this idea. Their constitution is frequently referred to as one of the most advanced and progressive in the world. Where did they come up with it? They sent some of the brightest minds in their country to study other constitutions at Oxford. Only after examining the successes and failures throughout history did they construct their constitution which is still in place today.
    The bottom line, education gives you knowledge. Whether it’s knowledge of history or of economic theories (like Collier’s traps), and increase in knowledge leads to better decision making over time. Even if a dictator is funneling all resource revenues in to his pocket, over the long run, an educated population will rise up against the regime and change the broken system.