The third poverty trap in Paul Collier’s The Bottom Billion is the “Landlocked With Bad Neighbors Trap.”
The overwhelming majority of the world’s population lives in nations with access to the oceans. Yet Collier reports that 38% of the bottom billion live in landlocked countries and all but 1% of these folks are in Africa. Africa has an unusually high number of such nations.
Being landlocked is not always destructive. There are landlocked countries around the globe that have succeeded. There is Switzerland and Austria in Europe. They have benefited from existing in partnership with good neighbors. Botswana in Africa has performed better than most African states through the successful exportation of a variety of natural resources. However, landlocked nations with few natural resources and bad neighbors are severely hampered. Why?
Collier writes, “If you are costal, you serve the world; if you are landlocked, you serve your neighbors.” (57) Bad neighbors make international trade problematic for landlocked nations. If neighbors are without adequate infrastructure, embroiled in chaos, or governed by corrupt leaders, then landlocked nations are isolated from the global economy. Healthy regional trade is paramount for landlocked nations, yet Collier notes that most of these nations are either inward-looking or focused on world trade. Only through regional development can landlocked nations hope to become part of the global economy.
Collier lists the following nine strategies to address the problems faced by landlocked nations:
- Increase Neighborhood Growth Spillovers. (This means, in part, greasing the wheels of trade within the landlocked nation, hoping it will spillover into neighboring countries.)
- Improve Neighbor’s Economic Polices.
- Improve Costal Access.
- Become a safe haven. (Creating a strong and stable government can make a landlocked nation a preferable location for activities like finance.)
- Don’t be Air-Locked or E-Locked.
- Encourage Remittances. (Make it easy for emigrants to remit incomes earned elsewhere back to the landlocked nation.)
- Create a transparent and investor-friendly environment for resource prospecting.
- Rural development. (Landlocked countries are at a competitive disadvantage for rapid industrialization so agriculture development is relatively more important.)
- Try to attract aid. (Even with best efforts, such countries are at a significant disadvantage and will require aid.
With all that said, Collier paints a rather grim picture. He notes that landlocked Uganda and Burkina Faso have had good growth rates over the past decade but that is partly because the have risen from such horrible circumstances. He writes, “But I can find no example of a landlocked, resource-scarce country with bad neighbors that has made it to middle-income status.