The Bottom Gap Analysis

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In his book, The Bottom Billion, Collier explores the reasons why poor countries fail to progress despite international aid and support. By his count, there are just fewer than 60 economies whose residents have experienced little, if any, income growth over the 1980s and 1990s. These countries are home to almost 1 billion people, who constitute this ‘Bottom Billion’. He contends that the Bottom Billion countries typically suffer from one or more, what he calls, “development traps” that hinder a country and governments ability to properly develop in unique and specific ways, and the goal of his work is to figure out a way around these traps. One such trap is the Resource Trap. I will examine the scholarship behind the Resource Trap and display …show more content…
He attributes this to a variety of causes including but not limited to: history of regional conflict, geography, politics & governance, and lastly natural resources. The resource trap is by far the most controversial trap to development, mainly because it has the power to be a very beneficial factor if handled under the right circumstances and incredibly harmful if not. Countries that are rich in natural resources it seems are paradoxically usually worse off than countries that are not. With the exception of Botswana, Indonesia, Thailand and Malaysia, between 1970 and 1989, 65 developing countries rich in resources did not achieve over 4% GDP growth (Glyfason). Nigeria is the most commonly cited case that exemplifies this “resource curse”. Despite massive increases in oil revenue since 1965, it has not been able to effectively harness the benefits - actually witnessing rises in poverty during this time (Bevan, Collier and Gunning). Additional examples of cursed countries include Venezuela, Libya, Cot e D’Ivore, Iraq and Bolivia. During the 1970 -1989 period, while resource rich countries were experiencing negative or stagnant growth, resource poor economies such as Taiwan, Hong Kong and Singapore saw extended periods of positive growth (Sachs and Warner). The question now arises, why is it usually that natural resources can cause such hardship for a developing …show more content…
Referencing an occurrence in the Netherlands, where with the discovery of oil, the value of their currency rose in turn creating more expensive exports and less competitiveness in other economic sectors. Describing this phenomenon, Thomas Friedman explains, “The citizens, flush with cash, start importing like crazy, the domestic industrial sector gets wiped out and, presto, you have deindustrialization” (Friedman). While most industrialized countries can avoid this, developing nations such as Venezuela and Nigeria fall victim. What we see is that resource booms can skew employment distribution, leading to a decrease in the capabilities of other sectors. An empirical example of this would be a decline in post-secondary education in pursuit of work in the natural resource sector, which can have long-term negative effects on economic growth and a country’s level of human capital (Sachs and Warner). In all, booming natural resources create a sort of dependency some weaker nations where other vital economic arenas are never properly expanded on leading to long-term

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