Globalization and the Bottom Billion
“...the sad reality is that although globalization has powered the majority of developing countries towards prosperity, it is now making things harder for these latecomers.” (80)
Indeed, how can the growth models of South and East Asia be replicated in the sphere of the Bottom Billion, and specifically, in the poor, landlocked, resource-rich, and poorly governed countries of Sub-Saharan Africa?
Collier continues, “...manufacturers and services offer much better prospects of equitable and rapid development (than the production of primary commodities). They use labor rather than the land. The opportunity to export raises the demand for labor. Since the defining characteristic of developing countries is that they have a lot of unproductive labor, these exports are likely to spread the benefits of development more widely. And because the world market in manufactures and services is huge and was initially dominated by the rich countries, the scope for expansion by developing countries is massive.”
“Economies of agglomeration.” (Krugman and Venables): if other firms are producing in the same area, it brings down the overall costs of production and manufacturing, as well as providing a solid pool of labor and other inputs necessary for manufacturing and services. This is what occurred in Asia, with the manufacturing shift from the US; at first, firms who wanted to relocate needed to “jump” the gap of a lack of agglomeration in return for the value added by low wages; once one company made this jump and was followed by others, it opened up a huge competitive advantage for Asian manufacturing, as a result of this “Economies of Agglomeration.”
Collier notes on this point that, “...in order to break into global markets for manufacturers it is necessary to get over a threshold of cost-competitiveness. If only a country can get over the threshold, it enjoys virtually infinite possibilities of expansion; if the first firm is profitable, so are its imitators.”
And thus, because of a lack of these agglomerations, Africa “missed the boat” in the manufacturing boom of the 1980's. (84). However, “...each year of being free of the gross failures of governance and policy added significantly to the success of export diversification. The countries that stopped shooting themselves in the foot were able to break into new export market” (85).
And finally, Collier concludes, “If there really has been a process of missing the boat, it is pretty depressing...The most depressing reaction is for people to see the society as intrinsically flawed. Their prolonged period of economic failure in Africa and the other countries of the bottom billion has deeply eroded the self-confidence of their societies. The expectation of continued failure reinforces the pressures for the brightest people to leave...the same automatic process that drove Asian development will impede the development of the bottom billion”(86). Anyone who has transited from the African continent, via air, to Asia, can feel the difference in the air, can immediately sense the heightened activity, the energy, the industriousness that often overwhelms in South Asia and Southeast Asia; everyone seems to be doing something, movement is certain, lethargy the exception; a vast contrast to the realities on the street in much of Sub-Saharan Africa and a critical area for analysis, (though it would be hard to quantify a sense of societal energy). I think the key term that Collier references here is expectation. The expectation that the next generation will be better off, that the country is indeed progressing, is an extremely powerful motivational and economic tool for a populace, the effects seen both in the developed and developing world.
In this chapter, “On Missing the Boat,” Collier goes on to mention the effects of the drive-up in global commodity markets (as a result of the Asian manufacturing boom) on world commodity prices, and thus, commodity-producing nations in the bottom billion. And the results are not encouraging; though much of the recent “African Economic Renaissance” can be attributed to increased commodity exports (particularly to China, which is described well in “The Dragon's Gift” a great book by Deborah Brautigam), this economic boom benefits few, as the governance needed to ensure proper development from natural resources is sorely lacking in places such as The DRC, Chad, and even Mozambique, ala, “The Natural Resource Trap.”
