This may be the most important book on the development of very poor countries that has ever been written – as long as the people who work in the field read it and understand the arguments. Paul Collier shows how a range of inter-connected factors cause dire poverty amongst the billion poorest people in the world (who are mainly in Africa) and how a range of related policies may help lead to greater prosperity. It is not a book solely about aid, though I will start with the aid debate. 

Collier does not accept the free-market view (which he irritatingly describes as ‘right wing’ – would he have described the free-market view of migration as ‘right wing’?) that foreign aid is useless at best and generally harmful. However, he rejects the Keynesian view that we can analyse foreign aid as if it were received by benign governments in a Keynesian economic framework where prices are sticky. Furthermore, noting that aid does not work in many circumstances, he analyses the problem of the ‘bottom billion’ in the context of a range of political and economic obstacles that poor people face. Well thought-out development aid might have a place, he argues, although, unless it is combined with other beneficial policies, aid could do more harm than good. After all, two-fifths of armed conflicts in Africa are financed by redirected aid. Even if combined with other policies, aid is risky and might well not work.

Collier argues strongly that aid should be used in circumstances where there are high risks of failure. If aid agencies are living within their comfort zone by using aid money to finance ‘safe’ projects with an obvious payoff, perhaps they are doing things that need not be done by aid agencies. Collier gets across pure economic arguments very effectively too. He notes that aid raises the real exchange rate, thus making life difficult for exporters, unless aid is spent on imports. Do we really want to send aid to Uganda and find that it employs 10,000 extra Ugandan teachers yet causes the unemployment of 10,000 people who used to make cloth? Making interconnections in his typically masterly way, Collier concludes that trade liberalisation is important if the exchange-rate consequences of aid are to be minimised. 

Collier then, of course, links trade liberalisation to corruption. As a knowledgeable amateur in this field, I am often invited to debate with the professionals who work for organisations such as Christian Aid. These organisations simultaneously campaign for greater trade regulation and greater aid. It is impossible not to conclude, after studying the theory and evidence, much of which is presented in this book, that such a policy could not be better designed to keep the very poorest very poor. 

Having mentioned Christian Aid, before I move on to other topics, it might be worth pointing out the groups for which this book is probably most valuable. It is a book for the intellectuals and opinion formers – not for the specialist academics in the field; the latter will read Collier’s original research. Those who campaigned to ‘Make Poverty History’ promoting a particular formula of aid and trade re-regulation have a particular duty to read this book and test their views against it. If they do not change their minds, then fine. But if they do not consider Collier’s ideas they should have it on their consciences that they have omitted to inform themselves about the evidence that is crucial in understanding the debate in which they are participating. I will not spoil the fun, nor the sales figures, by saying anything about Collier’s analysis of Christian Aid’s anti-trade campaign. Pages 157-159 are worth £16.99 alone. And, if you are a church-goer, when you have read these pages explain them to your minister or priest. 

To some extent, I have dealt with the periphery so far. The reasons why the ‘bottom billion’ are so poor are explained in Part 2 of the book. They are: continual armed conflict; problems caused by natural resource wealth; being landlocked; being surrounded by bad neighbours; and bad governance. Collier has important things to say about how the West can help to reduce the chances of armed conflict and how supra-national institutions can help to reduce the problems caused by being landlocked and having a high level of natural resource wealth. His proposed solutions do not necessarily fall into the usual economic or political divisions of ‘free market’ versus ‘socialist’ or ‘pacifist’ versus ‘interventionist’. Any politically-minded person who reads this book should not feel the need to disagree with it simply because of the author’s general political philosophy (which is impossible to discern from the book, in any case). 

Does the book have any shortcomings? I would point to two possibilities, though the first is probably a deliberate style developed to ensure that those who read the book have a clear ‘plan of action’. As one reads Collier’s prescriptions in the field of aid, trade reform, conflict manage-ment, natural resource wealth management and so on, one feels that he has put together a package of policies that might well work – yet as he freely admits, they are not guaranteed to work. This is a start because nothing else has worked for these people so far. But the risk of failure does seem huge given that so many different policies have to work at the same time. If the pay-off from eight different policies working is, say, 100, one gets the impression that the pay-off from seven of the policies working might be, say, 10. We do, of course know from other policy areas (for example, school choice) that policy interdependence is important. But the question remains unanswered – is it worth politicians doing (say) half of what Collier suggests? 

The second point is marginal to his overall argument, but Collier does repeat it several times throughout the book. He believes that the economies of agglomerations are very important. As such, he thinks that Africa may miss the globalisation boat as it will not be able to develop the scale necessary to ‘compete’ with Asia. He surely overplays this point. Agglomerations may help an area to become richer than it otherwise would because of higher efficiency. However, the absence of the potential for agglomerations should not prevent Africa from exploiting its comparative advantage and growing at a respectable rate. 

These points are nitpicking. If you ever get involved in debates about foreign aid, you should read this book. Any participants in that debate, certainly from the ‘left’, who have not considered the evidence in The Bottom Billion risk participating in a self-indulgent sideshow whilst the poor starve. Collier would also argue that economists on what he calls the 'right' would have much to learn too - at least about the politics of helping the Bottom Billion, but also about the role of aid as a complement to other policies.