KARL HOFMANN: In your book, “The Bottom Billion,” you cite conflict and civil war as the main poverty-promoting trap that poor countries fall into. Does that mean you think that donor money should be spent exclusively on conflict prevention?
PAUL COLLIER: No, I think conflict prevention is often quite tricky because so many countries are potentially vulnerable. It doesn’t mean that conflict is very easy to spot. I think post conflict is a priority because post-conflict countries have had such a poor record of lapsing back into conflict.. Of course these situations don’t just need money. The message of “The Bottom Billion” is let’s try to focus on the poorest and use a wider range of instruments than just money.
KH: Like you, I am convinced that a lot of the problems that befall these countries are due to governance and leadership or lack of it. And those are problems that aren’t susceptible to money, are they?
PC: What lies in the heart of it is what I would call economic governance, the ability to spend money with integrity and effectiveness. The model that I advocate for really difficult environments, I call public service agencies. The idea is to harness the organizational capabilities of nongovernmental organizations, of churches, of whatever works on the ground and to use public money to fund that. The problem with just using charitable donations to fund NGOs is that they don’t get enough funding to aspire to anything beyond boutique operations. What NGOs really bring potentially is organizational competence and integrity and these are the key scarce resources in these environments. Where an NGO can provide organizational competence and integrity in basic service delivery there should be no shortage of public money to scale the whole thing up. The idea of public service agencies as a piece of institutional architecture is to get governments and donors to cooperate in financing NGOs and the private sector to meet social needs rather than rely on the 1950s European model, which tries to do everything through the state. In a lot of African environments that just doesn’t work.
KH: So many of the least-resourced governments have the strongest case for trusteeship or some sort of international action that ends up that impinging on sovereignty. How do you get around the problem that it is a very high burden in Africa to breech that sovereignty wall?
PC: I think the answer is that this doesn’t have to be an infringement of sovereignty. After all, the ultimate infringement on sovereignty is when there is a total bypass of state with NGOs doing their own thing and being funded internationally by private donations. When I’ve talked with African governments about this, many find it rather an attractive idea. If the international money is channeled through a public agency with international participation then that gets a degree of control and coordination by the public authority over the NGO sector and that is sometimes very important. Working on Haiti recently, 90 percent of social provision is basically nongovernment, so they have already got a massive undermining of sovereignty. The public service agency approach can be reasonably presented as a re-empowering of government than a loss of government power.
KH: What about the private sector? What is your view of social marketing and social franchising?
PC: I think it’s great. I’m very positive about it. The franchising model I do think is the right way to go. It harnesses local enterprise whilst at the same time introducing a set of common standards. And I think especially in health that’s very important because there’s a huge gap of information between the sick people and the people who are there to make them better. Sick people just don’t have the medical knowledge in order to be able to judge quality of service. One function of franchising is to try to certify and quantify quality and effectiveness. When you go in McDonalds you know the kind of hamburger you’re going to get. So, by developing a brand that is associated with a quality of product, that is a very useful way of harnessing local entrepreneurial energies without producing the sort of quack treatment which otherwise proliferates precisely because sick people aren’t able to judge quality very well.
KH: That has been our experience precisely. Brands and branding are such potent drivers of behavior in all sorts of ways, sometimes positive and negative, but when harnessed for social benefits they can be tremendously powerful.
PC: It is ironic that branding has been much more in evidence in areas that don’t much matter. It’s been neglected in areas where information gaps between users and providers are widest. Not only in health, but also in education, by its nature there is a big information gap for where branding is most useful.
KH: Your more recent book is “The Plundered Planet.” Can you talk about some of the positive formulas: the “nature + technology + regulation” that yields prosperity?
PC: Nature is the huge opportunity for the poorest countries; it’s their biggest asset. So much of natural assets have been hidden, lying undiscovered underneath the soil. And over the next decade it’ll get discovered and that’s the big opportunity for these countries. Why nature plus technology plus regulation? It’s the technology that will find the stuff and the regulation that will prevent the mismanagement of nature in these societies and the plunder and the destruction of the assets. Without decent governance, nature just produces plunder, which mean benefits for the few rather than the many, benefits for the present at the expense of the future. It’s the regulation which makes these benefits spread widely both in present societies and between the present and the future societies. It is a big opportunity for the poorest countries, the challenge is not letting history repeat itself and we won’t do that by preaching environmental abstinence. Nature will be exploited in the next few years; the challenge is to make a better job of it.
KH: In the American public policy context, good governance overlaps significantly, almost exclusively, with democracy. Not always the case in the European context, they can be quite separate. Do you have a take on that? Is good governance overlapping with democracy or not?
PC: No, it isn’t. It overlaps and under laps. You can get democracy without good economic governance. What we are talking about as necessary for prosperity is good economic governance. It is economic decisions that have to go right. Money has to be captured by the society rather than individuals. It then has to be well spent and benefit society in the future rather than the present. There is a chain of economic decisions that have to go right. Democracy is not necessarily a help, it may merely empower people who don’t have the adequate incentive to scrutinize those decisions. It might be that the society turns populist and pressures politicians to plunder the future. So, while it is true that democracy tends to improve economic decisions, it is only a tendency rather than an iron law. Similarly, you can certainly point to cases where you have good economic governance despite a lack of democracy because you have leaders who are ambitious for their society, ambitious to change the future of their societies. So, it is the economic governance that is center stage. Some societies will achieve good economic governance through the democratic route, and we will all stand by and cheer. While others take the democratic route but make a mess of it, and while still others achieve economic governance by means wholly different than the Western model.