0000342 - World Institute for Development Economics...

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Unformatted text preview: World Institute for Development Economics Research United Nations University F r i e d r i c h S t a r k / D a s F o t o a r c h i v . / S t i l l P i c t u r e s A large group of smallish countries totalling about a billion people have sheered off from the rest of mankind. As the world becomes more socially integrated this giant pool of poverty will be both unacceptable and explosive. It is the worlds biggest economic problem and we need to do something about it. To know what to do we need to start with a diagnosis. While the common fate of the bottom billion has been stagnation and poverty there has been no single cause. In my recently published book The Bottom Billion I propose Why the Poorest Countries are Failing and What Can be Done About it by Paul Collier four distinct traps that between them account for the problem, each requiring a distinct remedy. I also argue that globalization, though it has been benign for the majority of the developing world, is not working for the bottom billion and is not likely to do so. On the contrary, it is liable to make them increasingly marginalized. So what are the key policy issues? One is that Africa has failed to develop jobs in export manufactures, the strategy that has been transforming Asia. Bangladesh has generated nearly three million jobs by exporting garments. If Kenya could do the same, it would be transformed. But Asias success has made it harder for Africa to get started. It will help by granting Africa better access to developed country markets. At present most of the G8 countries impose tariffs on imports of garments from Africa. There is one exception: the US. The US allows Kenya to export shirts duty-free into its market. Europe does not. Even the few African countries that are allowed duty-free access into Europe get blocked by absurd technical requirements: Lesotho sells thousands of shirts to America, but they do not satisfy the regulations of the European Union. As a result, over the last fve years Africas garments exports to Europe have declined while increasing sevenfold to the US. The G8 could easily adopt a common set of rules for these African exports that would generate jobs across the region. I proposed this to the G8, but they spent their time posturing over aid commitments. Globalization, though it has been benign for the majority of the developing world, is not working for the bottom billion and is not likely to do so. On the contrary, it is liable to make them increasingly marginalized. A second policy issue is that many of the countries of the bottom billion are now in the throes of revenue booms from oil and other minerals that dwarf any conceivable aid Fows. The last time this happened was thirty years ago and it proved a disaster. The money corrupted the local politics so badly that not only was it wasted, it impoverished, sometimes even leading to civil war. Can the governments of developed countries do anything to reduce the risks of repetition? Well, where do corrupt politicians put No. 2/2007 2...
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This note was uploaded on 02/01/2012 for the course POLS 351 taught by Professor Shaw during the Fall '08 term at Boise State.

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0000342 - World Institute for Development Economics...

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