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Some few decades ago, it was widely held that the White countries prospered by exploiting the poor countries. It was believed that the sub-Saharan Africa countries were poor because of colonial effects. Proponents of these theories asserted that the colonialists, who were the whites, took much of the resources from their colonies and as a result enhanced their economic growth.
Researchers have demystified these theories as more studies confirm that economic development is not thievery. In the 1960s, it was believed that the Latin America was not prosperous because of the American disregard. Thus, once the Alliance for Progress was initiated the world thought that the Latin America was going to flourish. Several years after the launch of the Alliance for Progress, a number of Latin American countries have not shown signs of prosperity.
Economists now suppose that the explanation that some countries fail to prosper is not because the developed countries exploit them, but because they are crippled by unsupportive cultures. This article compares two macro-level development books. The books chosen are the Bottom Billion by Paul Collier and Why Nations Fail by Acemoglu and James. Through this, three development topics covered in the two books are compared and contrasted.
Why some countries are poor
Collier states that a number of factors that have made some countries poor. These factors include conflict trap, natural resource trap, bad governance, and bordering with conflict-ridden nations (Collier 15). According to him, civil war is the major cause of poverty in developing countries.
Conflict does not only slow down the economic growth of a country, but also lead to declination or stagnation of economy. Civil conflicts are development in reverse. It damages a nation and its neighboring countries. Civil wars are approximated to cost the involved countries up to $65bn each. In addition, in post conflict time chances of reversions are higher. Collier alleges that the more a nation continues to be in at war, the more it needs more resources to avert any possible coup.
Concerning the natural resource trap, Collier asserts that it is a proven fact that nations with huge natural resources are not developed like countries with little or no resources.
He attributes this situation to a number of causes. The first reason is that the presence of huge natural resources in a country increases the chances of a clash over the resources occurring by a great extent. Equally, he asserts that natural resources imply that a government is required not to levy duties on its people. As a result, the people are less likely to claim economic responsibility from the government. Equally, the utilization of precious natural assets can lead to the development of Dutch disease.
In business matters, the Dutch disease is the obvious connection between the augmented utilization of natural resources and a discard of other sectors. A boost in proceeds from natural resources implies that the involved country’s money will become stronger measured up to that of other countries. Thus, its sell overseas will become more costly for other countries. In the end, the country’s agricultural or manufacturing sector will have a reduced amount of competitiveness.
In regards to poor governance, Collier alleges that deprived governance and strategies can obliterate a financial system within a short time. The reason that some countries are poorer compared to others is because of deprived governance and policies.
With respect to landlocked countries sharing borders with conflict countries, Collier points out that these nations are deprived for the reason that they cannot benefit from the global economic development. Collier elucidates that a nation with shoreline can do business with other nations with ease, while interior states only do business with their neighbors. Non-coastal nations with deprived transportation linkages with their neighbors have a restricted market for their merchandise.
Like Collier, Acemoglu and James believe that there are several reasons that make some countries poor compared to other countries. These reasons are culture hypothesis, geographical hypothesis, and ignorance hypothesis (Acemoglu & James 48).
Notably, Acemoglu and James’s reasons are different from the Collier’s reasons because they believe that poverty is caused by failure of institutions. The Geography hypothesis postulated in the Acemoglu and James’ book suggests that some countries are poor because of their geographical position. Most of the deprived nations are situated in the South, while most of the prosperous nations are situated in the North.
As such, the residents in the south are an indolent and lack curiosity. According to his book, this is the major reason why they are poor. He further suggests that lazy people are likely to be ruled by dictators. Another theory postulated by Acemoglu and James is culture hypothesis. Culture hypothesis asserts that some nations such as those in Africa are still poor because of their culture.
As such, a number of people in Sub-Sahara Africa are sill deprived because they believe in retrogressive cultures. Notably, some cultures prevent the adoption of essential values or ethics required for economic growth. The last hypothesis illustrated by Acemoglu and James is ignorance hypothesis. This theory asserts that some countries are poorer compared to other nations because their rulers are naïve and do not know how to lead their countries to prosperity.
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Acemoglu and James assert that an ideal market economy should enable all people to purchase and sell their commodities as they wish. In the absence of this, market failure will be experienced. According to him, poor countries have failed to address issues related to market failure. Thus, based on this, poor countries will continue to be poor if they fail to address market failure issues in the future.
Role of conflict in development
In the two books, the authors agree that conflict plays a huge role in determining the development of a country. Collier asserts that up to 73% of the populations in developing countries have been involved in civil wars in the recent past. He asserts that there is a direct link between civil wars and the country’s level of income. In the book, he states that when a country’s level of income is reduced by a half, the chances of civil war occurring doubles.
Through this, he notes that arguments on whether the levels of income causes fuels conflict, or conflict fuels low levels of income have attracted heated debates. He asserts that both arguments hold simultaneously. Collier believes that conflict is a major cause of slow growth in developing countries. War scares away investors and depletes the money and resources meant for development. The other direct cost of war is loss of productive human life.
Despite the negative impacts of war, Collier believes that war can be useful to the development of a country. He noted that the revolutionary wars that were engaged at one time or another in the US in the 19th century, in Russia during the 20th century, and in Britain during the 17th century illustrated that wars can be useful. After these revolutions, the economic developments in the subject countries were significantly enhanced.
Like Collier, Acemoglu and James believe that there is a relationship between conflict and development. He asserts that the ongoing Arab Spring Revolution is fueled by escalating poverty in the affected countries. For instance, in Egypt a household earns 12% of what a US earns. Peaceful demonstrators in Egypt asserted that they were demonstrating because of increased income inequalities in their country.
Corruption had denied them equal chances and had limited their opportunities. Based on these, it can be argued that the current conflicts in the Arab countries are fueled by low levels of income. Because of these conflicts, the affected countries’ developments have been affected significantly. Rebels and the affected government loyalists have destroyed several properties, maimed several individuals, and killed a number of individuals.
Similarly, during these conflicts the investors have avoided these countries. In addition, the tourism sector in the affected countries has been grounded. The above illustrations illustrate that conflict can have negative effects on the development of a country. Equally, like Collier, Acemoglu and James assert that at times conflict may spur development. He states that conflict can lead to positive changes in governments and institutions. These changes can encourage economic development.
What poor countries should do to prosper?
Collier argues that despite the challenges faced by poor nations are serious; they can be fixed with the right interventions. Transformation ought to originate from within, however external features can utilize a variety of strategy tools to promote steps towards transformation.
Acemoglu and James recommend that poorer nations should be given aid, require military intervention, adopt appropriate laws and charters, and implement appropriate trade policies to escape from poverty traps. As such, aid should be perceived as an element of the answer and not an element of the difficulty. Thus, aid ought to be more intensified in the worst affected areas.
The aid organizations ought to acknowledge more risk and increased rates of collapse. These organizations should invest in appropriate plans for sell overseas diversification, and initiate power conditionality. Collier asserts that to ensure that growth strategy is rational; a whole of government approach should be implemented. Another intervention postulated by Collier is military intervention.
He alleges that with suitable military intervention the developing countries can be helped experiencing coups and an escalation of conflicts. Equally, Collier asserts that all countries should implement international agreements with respect to their natural assets, social equality, budget intelligibility, post-conflict circumstances, and savings. Moreover, Collier advises poor countries to implement appropriate trade policies. He argues that if poor countries expand their exports they can enhance their development.
Like Collier, Acemoglu and James believe that aid and enhanced governance would help the poor nations in a number of ways. He asserts that aid donors should demand responsibility from the beneficiary governments. Equally, he suggests that many transformations should be undertaken to ensure that the beneficiary countries to take donor aids seriously. Currently, deficient incentives are in place to make certain that the money is paid to competitive developments with negligible expenses.
He notes that there is nonexistence of harmonization among donors to make certain sanction not in favor of governments or agencies suspected of malpractice. Additionally, he asserts that there is a modest effort to keep an eye on actual development delivery after money has been paid. He urges the donors to put in place measures to ensure that aids are spent in the right projects and to ensure that the beneficiaries are accountable.
The major difference between the two authors’ recommendations is that Acemoglu and James interventions are focused on transforming the institutions. On the other hand, Collier’s interventions are focused on transforming the society. Acemoglu and James illustrate how failure in institutions has made the developing countries poorer.
According to him, the developing countries can escape from the traps of poverty if they come up and implement appropriate policies in their institutions. The above differences in the authors’ recommendations originate from the two authors differences in the cause of poverty in the poor countries. Collier believes that poor countries are poor because of their societies, while Acemoglu and James believe that developing countries are poor because of failure in their institutions.
In conclusion, it should be noted that a number of interrelated factors have made some countries poor. According to Collier, these factors include conflict trap, natural resource trap, bad governance, and bordering with conflict-ridden nations.
On the other hand, Acemoglu and James believe that culture hypothesis, geographical hypothesis, and ignorance hypothesis are the major cause of poverty in developing nations. In the two books, the authors agree that conflict plays a huge role in determining the development of a country. Collier asserts that up to 73% of the populations in developing countries have been involved in civil wars in the recent past. Acemoglu and James believe that conflicts are the major leading cause of underdevelopment in poor countries.
Acemoglu, Daron, and James A. Robinson. Why nations fail: the origins of power, prosperity, and poverty. New York: Crown Publishers, 2012. Print.
Collier, Paul. The bottom billion: why the poorest countries are failing and what can be done about it. Oxford: Oxford University Press, 2007. Print.