A few years ago, Paul Collier used the term the bottom billion, to describe those living in poor, mostly African countries which had dim prospects for future growth. Thanks to the successful of the titular book, the term became ubiquitous in the development lingo, although it eventually morphed into a descriptor for the poorest billion in the world, regardless of location.
What’s the difference? Using Collier’s definition, if you live in Malawi, you’re one of the bottom billion, whether or not you are actually poor yourself. If you earn less than $1.25 a day (the latest poverty line), but live in the US, then you’re poor, but are not actually part of the bottom billion.
If every country in the world had zero income inequality, then all of the poorest people would, by definition, live in the countries that comprise the bottom billion. This obviously isn’t that case, and so there is room to determine how divergent these two classifications are:
Last month Andy Sumner, from the IDS, released a paper claiming that 75% of the world’s poor (using that $1.25 definition) actually live in middle-income countries (roughly, those with an average daily income between $2.7 and $33). Sumner uses this as a springboard: if we only care about helping the poor (and not where they happen to be living), then we need to focus more on, and perhaps provide more aid to middle-income countries. Lee Crawfurd and Lawrence Haddad made similar points recently while the UK and India were considering the end of their aid relationship.
Sumner made his case directly to Collier last week in an short discussion hosted by IDS (you can listen to it here). Collier’s counter-argument is as follows: if we focus solely on chasing static poverty (who is poor right now), then we are going to end up directing aid towards people who are equally poor, but might face different probabilities of escaping poverty.
For example, a Chinese and Malawian farmer might both have incomes below the $1.25 threshold and so will be classified as poor, but the Chinese farmer lives in a country with a higher growth rate, so might be more likely to escape in the future. The Malawian farmer lives in a country with more dire prospects, so we might expect him to remain poor for longer, barring an intervention. Since the average income in Malawi is lower than that of China, Malawi can’t eliminate its poverty purely through direct distribution (China could, even if that might not be the best way to do it).
Collier argues that we (the donors, the international community, etc) should focus more on getting these countries growing and, as Duncan Greene puts it “abandon 75% of the worldâ€™s poor to their domestic political processes.”
Which `side’ you take depends on how optimistic you feel about different outcomes. Collier is assuming that the 3/4 of the poor that live in middle-income countries will be lifted out of poverty by economic growth (either directly, or through redistributive policies), but that the poor in the countries which comprise the bottom billion are stuck where they are. Both Sumner and Greene are, I think, quite doubtful of this assertion.
I am more sympathetic to Collier’s view – although I am not entirely convinced that the bottom billion’s future lies in the hands of the West. Still, I agree that we should make sure that the `war on poverty’ is forward looking and avoid playing a glorified game of whac-a-mole, trying to address poverty wherever we see it.