Targeting Money To Poor Will Bring Money To Rich At the World Economic Forum in Davos, Switzerland, players from the globe's top economies discussed solutions to their economic woes. Economist Paul Collier, author of the book The Bottom Billion, talks to host Jacki Lyden about whether the world's richest can still afford to help the world's poorest.
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Targeting Money To Poor Will Bring Money To Rich

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Targeting Money To Poor Will Bring Money To Rich

Targeting Money To Poor Will Bring Money To Rich

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Some leaders at Davos took a few moments this week to talk about the problems of the world's poorest nations. British Prime Minister Gordon Brown, German Chancellor Angela Merkel, and U.N. Secretary General Ban Ki-moon all said the world cannot forget its commitment to "the bottom billion," the one sixth of the population that lives on less than a dollar a day.

The man who coined that term, "the bottom billion," is economist Paul Collier. He wrote a book with that title, and I spoke to him yesterday at a United Nations office here in Washington, D.C. I asked Paul Collier whether those leaders who have their own economies to worry about are really interested in fixing what's wrong in developing countries.

Professor PAUL COLLIER (Economics, Oxford, University; Director, Centre for the Study of African Econmies; Author, "The Bottom Billion"): It's too early to say whether this will just go back down the pile of things to do next year or whether they'll stick to it.

The truth is that the cost of doing these things is small, and it's actually - the cost has fallen as a result of the global recession because what we need to get out of this recession is to create demand. We need to be able to give money to people who will actually spend it. That's why, within our own societies, we want to skew money towards poor people because they're more likely to spend it.

The poorest of the poorest of the poor are the people in the bottom billion. Targeting money to them, in whatever form, is a sure way of getting it spent quickly, and the only place that dollars can be spent that are to give them to these countries is in America basically.

Dollars - they're going to come back to the rich country's markets, and so scaling up our giving to these countries is not, as it were, money down the drain, it's actually cheaper now than it was before the recession started.

LYDEN: The Davos Conference typically doesn't really look at developing nations, and some would argue that when it comes to the G8, they've never been a priority, should they be?

Prof. COLLIER: Yes. In a good year, it gets on to the edge of Davos. So, I was at Davos last year as one of the light entertainment bits. They were mainly worried about other things, but something about the bottom billion got on to the edge of the conference.

This year, of course, yeah, they worried themselves, and that's understandable, but for all our problems, we're facing hardship in the context of overall prosperity whereas the societies at the bottom billion are facing accentuated hardship, deepened hardship from the base of poverty. And so they're being hit probably harder than we are, and they're not in a position to withstand that.

LYDEN: How is the global crash affecting the bottom billion people in this world?

Prof. COLLIER: Well, it's affecting them hard. They're, in a sense, only peripherally affected by the financial crisis itself because most of these countries weren't borrowing anyway. They're affected partly by the crash in the price of commodities, their exporting commodities, and so that's really cut their revenues, and then other places, one example is Haiti, are really hit because they depend upon remittances - the money that people send back home to their families.

There are a lot of Haitians in America and in Canada. And they're in the front of the queue to lose jobs, and so the first thing they cut back on is money sent back. And so, across Haiti, there's going to be a big crunch of that vital lifeline of money coming in is going to fall.

LYDEN: You just went to Haiti for the United Nations. What are you going to be saying in your report?

Prof. COLLIER: Well, I'm going to be saying that this actually a situation of hope. It's a hard message because Haiti has been pretty well stagnant or in decline for the last 40 years, and so, people have got an overwhelming sense of despondency and failure.

But actually, although Haiti is conventionally grouped with sort of failing states like Afghanistan and Sudan, its opportunities are radically different. This is a society that shouldn't be a failing state, needn't be, and if we do the right things together it won't be. We can actually get transformation here.

LYDEN: You almost always hear in referencing Haiti the line poorest country in the western hemisphere, and why do you think it should not be a failing state, and what can be done?

Prof. COLLIER: Well, one reason, actually, you've just given yourself, right? If you're the poorest country in a rich neighborhood that means the neighborhood is actually pretty favorable. On top of that, Haiti has got a remarkable trade deal with America which was given last year, HOPE II. And so, that is a real opportunity on which to build an export industry, a light industry which could create jobs in Haiti.

And so, our task now is to build on that opportunity, to harness that opportunity and turn it into a reality.

LYDEN: It's been a great pleasure talking to you, Paul Collier. Thank you very much.

Prof. COLLIER: Thanks very much for inviting me.

LYDEN: Paul Collier has a new book out next week. It's called "Wars, Guns and Votes."

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