The series so far includes:

• Duncan Green from Oxfam, who contrasts progress in developing countries over the last year with the gloom of the ‘formerly rich’ countries of the G-8.
• Calestous Juma from Harvard, who identifies regional integration and better links with the diaspora as key drivers of Africa’s growth.
• Shanta Devarajan from the World Bank, who is cautiously optimistic, especially in the light  of increased demand by Africans for their governments to be accountable.
• Linda Raftree from Plan, who also emphasizes progress towards more inclusive and open societies.
• Kevin Watkins from Brookings and UNESCO, calling for “a properly financed global fund for education like those that have delivered such striking results in the health sector“.
• Jonathan Glennie from ODI and the Guardian, who is pessimistic about the prospects for international cooperation in the face of rising protectionism and nationalism as a result of poor economic prospects in the US and Europe.
• and my contribution, reproduced below, which gives a positive account of progress in many countries in Africa over the past year, and emphasizes the importance for developing countries of better global decision-making.

Economic growth has made the developing world less dependent on aid

A new generation of leaders, business friendly policies, technology, the spread of peace, and strong demand for natural resources have helped Africa to withstand the global downturn.

The Mercato, the commercial hub of the Ethiopian capital, Addis Ababa. Ethiopia's economy grew by 7.5% in 2011.

I celebrated New Year’s Day 2011 in Ethiopia, where we lived for three years. Ethiopia is humming with the optimism and energy of a fast-growing country, creating more jobs, sending more children to school, expanding healthcare, and providing electricity, clean water, sanitation and roads.

Ethiopia’s economy grew by 7.5% this year, and it is not the only country in Africa to boast a high growth rate. Africa has been the fastest growing continent of the past decade. The emergence of a new generation of leaders, the end of the continent’s debt crisis, business-friendly policies, new technologies, the spread of peace, and strong demand for natural resources have helped Africa withstand the global downturn.

Steve Radelet, a former senior fellow at the Centre for Global Development, has documented the emergence of 17 African countries in which total income is growing by more than 5% a year – increasing average incomes by 50% in 13 years. That growth is attracting businesses and investors from Africa and abroad, and the continent’s middle class is expanding. By 2015, about 100m African households will have incomes greater than £2,000 a year, roughly as many as India today.

And as they grow, developing countries are becoming less dependent on aid.

At the start of 2011, we did not expect a year in which so many people would be able to claim their rights and freedom. The Arab spring has moved many of us, but should not have surprised us. Better government has spread across Africa and the Middle East, defying outdated assumptions in the west. Thirteen African countries held national elections in 2011, four leading to a change of government; there will be 13 more in 2012. South Sudan gained its independence after a largely peaceful referendum.

When the year began, we did not know the rains in east Africa would fail. But in contrast to the 1980s, in today’s Ethiopia drought no longer means famine. Unlike its neighbour Somalia, there has been no repeat of the TV images of starving people in Ethiopia. That’s because, with the help of foreign donors, it has put in place early warning, food reserves and distribution systems, and a safety net that supports the poorest families in their own communities.

As developing countries have become more integrated into the world economy, and less dependent on aid, so their interests have changed. The most important international events for developing countries this year were the repeated failures of European leaders to put in place a credible plan to save the euro, the G20′s decision to put the world trade talks out of their misery, and modest progress at the Durban talks on climate change. These will all have more impact on developing countries than gatherings of the “development set” at World Bank meetings, the UN general assembly or the Busan forum on aid effectiveness.

But while progress has been good, it is not yet fast enough. Hundreds of thousands of people in the Horn of Africa will have spent Christmas in refugee camps, and about a billion people will go to bed hungry on New Year’s Eve.

In the years ahead, the Centre for Global Development in Europe will be working with policymakers, researchers and academics to find evidence-based, politically savvy ways for rich countries and powerful institutions to help developing countries lift themselves out of poverty. Our focus is on the world’s efforts to promote shared growth, protect our environment, reinvent our financial system, clamp down on international corruption, encourage and share innovation, reduce inequality and entrench peace.

For affluent and developing countries alike, these are the aspirations for 2012.

This year the UK Conservative party gave up their party political broadcast which usually coincides with the part conference, and used it instead to appeal the British public to give money for the East African famine.

The government is committed to protecting the aid budget. Frances Cairncross asks whether a more relaxed policy on economic migration might help the developing world more.

I was interviewed for the programme, and there were three points I wanted to make, which I didn’t entirely get across. So here they are:

a. It is too narrow to think of the benefits of migration mainly in terms of remittances.  The benefits are much broader than that.  Michael Clemens used an excellent analogy in a CGD podcast: it is as if we were determined to talk about the impact of the increase in women’s participation in the workforce by the money that they contribute to the housekeeping.

b.  We should think about the impact of migration more in terms of the impact on people and less in terms of the impact on countries. In particular, there is a substantial benefit to the migrants themselves which should be at the front of our minds. (I sort of managed to make this point in the clip they used of me in the programme); and

c. there is not a trade-off between providing aid and supporting people from developing countries who want to live and work abroad: we can do both.

The programme will be broadcast again on Radio 4 on Sunday night at 21h30.  You can also download the programme from the BBC website. (Mirrored here.)  Here is the transcript.

It is at times like this that we get a lot of half-baked commentary about famine. We are told that the problem is drought, or over-population, or global warming. Special interest groups call for more money to be spent on agriculture. Commentators complain that we’ve given aid for decades and nothing gets any better.

So here are two things to keep in mind.

First, famine is not caused by drought or overpopulation or insufficient food production. As Amartya Sen explained in Poverty and Famines, people go hungry when they cannot access food, because they are too poor or because markets and governments fail.  Drought is neither necessary nor sufficient for famine.

Ed Carr says that this insight holds in the current crisis:

The long and short of it is that food insecurity is rarely about absolute supplies of food – mostly it is about access and entitlements to existing food supplies.  The HoA [Horn of Africa] situation does actually invoke outright scarcity, but that scarcity can be traced not just to weather – it is also about access to local and regional markets (weak at best) and politics/the state (Somalia lacks a sovereign state, and the patchy, ad hoc governance provided by al Shabaab does little to ensure either access or entitlement to food and livelihoods for the population).  For those who doubt this, look at the FEWS NET maps I put in previous posts (here and here).  Famine stops at the Somali border.  I assure you this is not a political manipulation of the data – it is the data we have.  Basically, the people without a functional state and collapsing markets are being hit much harder than their counterparts in Ethiopia and Kenya, even though everyone is affected by the same bad rains, and the livelihoods of those in Somalia are not all that different than those across the borders in Ethiopia and Kenya.

Map of the Horn of Africa by the Famine Early Warning System Network (FEWS-NET)

If you are interested in learning more, read Ed Carr’s book Delivering Development, and his blog. My colleague Charles Kenny makes a similar point in Foreign Policy.

Second, development aid works. Though there is considerable suffering, famine has been avoided in Ethiopia this time so far, and that is because of the safety net programme and disaster management system which has been set up by the Ethiopian government, with help from foreign aid. Remember 1984, and people leaving their land to make their way to feeding centres in Ethiopia?  Not happening this time. Why not?  Here’s what the BBC says:

BBC Africa analyst Martin Plaut says many people at the heart of the current disaster – in Ethiopia – have emerged relatively unscathed.  This is because the government in Addis Ababa has such an extensive safety net in place, he says.  Pre-positioned supplies mean the Ethiopian authorities could respond rapidly once the extent of the drought became clear.  The first food distributions began in February and have continued to the worst effected communities across a vast area. Communities are suffering, but the famine that has hit neighbouring Somalia has so far been avoided in Ethiopia and overall the disaster management system, built up since the 1980s, has worked.

Martin Plaut is no starry-eyed apologist for the aid system or the Ethiopian government.  But like me, he was in Ethiopia in 1984 so he knows what famine looks like; and he can see the difference in Ethiopia this time. As he points out, the investments that have been made over the past two decades have transformed Ethiopia’s ability to deal with bad rains. Ethiopia has suffered drought and famine about every ten years.  But now a determined government, backed by foreign aid, has put in place systems which have made Ethiopia more resilient and prevented a repetition this time of past tragedies.  If you are one of the Ethiopians who has put this in place, one of the hard-pressed development workers who has patiently assisted, or if you have contributed to aid, through taxes or donations, you should pat yourself on the back: bad as things are in the Horn of Africa today, the crisis would have been a lot worse without you.

Please spare a thought, and a few quid (or a few dollars) if you can afford it, for the 11 million people affected by hunger in East Africa today; and for the many aid agency staff working round the clock, often in difficult and dangerous conditions, to try to help them.

Update: Duck of Minerva thinks that Ed Carr and I are understating the role of physical factors.  Brian Kahn, on the other hand, agrees that “ The current famine in the Horn of Africa isn’t caused by drought. Rather, a complex mix of societal and political factors created a dangerous situation“.

First, a word about the report.  This is not a study by the World Bank, or a group of donors.   It is a study by Uwezo, an East African initiative hosted by three NGO networks: TEN/MET in Tanzania, WERK in Kenya and UNNGOF in Uganda, with overall quality assurance and management support from Twaweza.  They conducted their own survey (standardized across the countries) to test the literacy and numeracy of more than 100,000 children, the largest ever survey of its kind in the region.  When citizens themselves are telling us about whether their public services work, we should be paying attention.

There has been a remarkable increase in the number of children in school in East Africa since Uganda reintroduced free primary education in 1997 (followed a few years later by Tanzania and Kenya).   Over the ten years from 1999 to 2009 net primary school enrolment has risen in Kenya from 62% to 83%, and in Tanzania from 49% to 96%.

But the Uwezo report finds that the quality of education that those children receive is ‘very poor’.  According to the Uwezo tests, most of the children in Standard 3 had not reached the Standard 2 levels of literacy and numeracy.  Only by the time they reach Standard 7 are most children able to read and write at the levels expected in Standard 2.

Kenya’s pupils did best, followed by Tanzania and then Uganda, and there are large variations within as well as between countries.  The report has interesting things to say about the apparent reasons for the differences:

an important finding given the enormous resources invested in recent years in improving school infrastructure, was that school quality was weakly associated with literacy and numeracy levels. Children in areas with better school infrastructure did not perform better than in lower quality schools or more crowded classrooms.

The report finds grounds for optimism in the variations within countries;  the fact that some places do better than others suggests that improvements are possible within those contexts. The report speculates that quality is driven by non-observed factors such as the quality of teaching, practical accountability and teacher motivation.

The poor quality of education, despite considerable investment in school infrastructure, may perhaps be the result of what Lant Pritchett, Michael Woolcock and Matt Andrews call “isomporphic mimicry”.  The idea is borrowed from sociologists of organisations, and it describes the way in which organisations can sustain their legitimacy by the adoption of the forms of effective organisations in a way which camouflages a persistent lack of functionality.   This behavour may be partly a consequence of the way that donors work to increase service delivery in developing countries.  Pritchett et al observe:

Development agencies, both multi-lateral and bi-lateral, have very strong tendencies towards promoting isomorphic mimicry— encouraging governments to adopt the right policies and organization charts and to pursue best practice reforms—without actually creating the conditions in which true novelty can emerge, be evaluated, and scaled.

What can be done to improve education in Kenya, Tanzania and Uganda? The Uwezo report says:

Differences in performance among districts within each of the three countries, and between public and private schools, suggest that certain schools have ‘figured out’ how to achieve better results within existing constraints. Investigating why certain districts, and within districts certain schools, do so much better than others could provide important clues about what matters most for improved learning.

The report also suggests that Cash on Delivery aid may be a good way to create the incentives to improve quality:

One such approach, which is still untested but whose design has been informed by careful review of the evidence of what works, is called Cash on Delivery. The core idea here is that instead of funding inputs, a mechanism is created by which payments are made against the achievement of a specified and independently verified outcome, such as $50 per student who completes Standard 2 with 80% literacy and numeracy competencies. This approach has been original designed for improving the effectiveness of aid given to national governments, but the approach may be even more useful for how national governments create incentives to improve performance at district and school levels.

(By the way, I’m on the board of Twaweza, though I can claim no credit for this report.)

You can listen to Development Drums on the website, or you can download it from the website or subscribe (free of charge) in iTunes.

The latest edition of the Development Drums podcast is now online. It was the last one I recorded before leaving Ethiopia.

Deborah Brautigam, a scholar renowned for her work on China-Africa relations, discusses her book, The Dragon’s Gift: The Real Story of China in Africa.

There has been a lot of nervousness about China’s growing engagement in Africa, especially among traditional donors; this discussion may make you think differently.

You can listen to Development Drums on your computer at the website or download it to your MP3 player. You can also subscribe free of charge to Development Drums on iTunes.

If you enjoy Development Drums, you may also enjoy the Center for Global Development’s Global Prosperity Wonkcasts, which are shorter and snappier than Development Drums.  You can listen online, subscribe to the feed or subscribe free on iTunes.  The Guardian newspaper also has development podcasts (feed & iTunes).

Max cites a forthcoming paper by Andrew Dorward and Ephraim Chirwa (ungated version here).  Dorward and Chirwa argue that:

Malawi’s agricultural input subsidy programme addresses a low maize productivity trap that leads to food insecurity and poverty, and constrains economic growth and, paradoxically, diversification out of maize and agriculture. This low productivity trap arises as a result of severe seasonal credit constraints affecting very large numbers of poor, food deficit farming families, together with thin and high risk, high margin input and maize markets. The key successes of Malawi’s subsidy programme arise where it relieves both affordability and profitability constraints to increased staple crop productivity from increased input use, and in doing this both raises land and labour productivity and improves food security for large numbers of poor households through some combination of increased real wages and reduced food prices.

The only part of Max’s post that I disagree with is his remark that  ”we should leave our economic theory at the door and instead focus on what works empirically.”  As Jonathan points out in the comments, economic theory tells us that government intervention may be an appropriate response to market failures.  While recognising the success of the programme so far, we should not stop asking whether the same results could be achieved more cheaply and more sustainably with some other, even better approach.

A more relevant challenge is: why did some donors oppose this programme, and what have we (and they) learned from that error?

Dr Bingu wa Mutharika fought and won the 2004 election on a platform of guaranteeing food security. HIs proposals for a targeted subsidy was overturned by the Malawi Parliament in favour of a universal subsidy, which was introduced in 2005.

Election Poster for Bingu wa Mutharika

Donors are – on paper – committed to respecting government ownership and supporting the governments’ development programme.  Yet despite clear national commitment, endorsed in a democratic election, donors generally opposed the introduction of fertilizer subsidies, consistent with the World Bank’s position throughout the 1980s and 1990s. The donors argued against the government’s proposed scheme because they thought it would be too expensive; it was insufficiently targeted on the poor; it would undermine private sector development; and because they doubted the capacity of the government to implement it.

When Malawi introduced its programme in 2005, the IMF and the US Government opposed it outright, on the grounds that it would damage the private sector. The World Bank, EU and UK Department for International Development adopted a more nuanced position: they argued that instead of a universal programme there should be “smart subsidies” which should be tightly targeted to reduce the costs, and that the programme should include an explicit exit strategy.  DFID eventually supported the programme after extracting an agreement from the government that it would use private fertilizer suppliers.  Some of the Scandinavian donors and UN agencies supported the programme from the outset, partly influenced by the apparent success of a local Millennium Villages Project.

The apparent success of the Malawi fertilizer subsidies is primarily a story about the Malawi government, not donors; though the scheme could not have been afforded, especially through the 2008 price hike, without donor funding.  But it does give rise to two questions about donor policy and behaviour.

First, are donors still labouring under too simplistic a view of the role of government in the economy? Donors continue to be sceptical of agricultural subsidy programmes (which is rank hypocrisy, given the subsidies they provide their own farmers).  This seems to be partly because we have an insufficiently rich analysis of the nature of the market failures and how they are best addressed; and partly because donors still suffer from the sustainability delusion, which requires them to oppose perfectly sensible government policies and programmes for which there is no identifiable exit.  If the UK government were only allowed to implement inherently time-limited policies there would be no National Health Service.

Second, how should donors reconcile their own views of a policy with their commitment to respect country ownership? Donors are committed to support developing countries’ own development strategies.   But what happens if they disagree either with the thrust of those policies, or with particular details?  Should they refuse to finance them? Should they act as “critical friends”, identifying the shortcomings of the policies and seeking to get them changed?  Should such opposition be private or public? How is that consistent with respecting country ownership? If they do try to change the policy how are they held to account when – as was apparently the case in Malawi – they are wrong?

I’d like to suggest two ways in which donors can better respect country ownership. First, where they have an opinion about a policy, they should produce publicly their analysis and evidence, to allow this view to be discussed as part of the public debate, rather than exert political and economic power behind closed doors.  Second, there should be a version of the Salisbury Convention in aid: if a government is pursuing a policy for which it has an explicit mandate in a reasonably democratic election, the donors should not try to undermine it.

UPDATE: Smart commenters below ask two questions.  First, is it premature to say this has been a success, until we have a year of bad rains?  Second, were the donors as hostile as my blog post suggests?  If you have insight into either question, please leave it in the comments below.

The question came up in the most recent edition of Development Drums. Claire Melamed argued that the fact that so many of the world’s poor now live in middle income countries (which, by definition, have experienced a reasonable amount of economic growth) suggests that growth by itself is not enough to reduce poverty. Andy Sumner, in the same programme, said that there is some evidence that economic growth tends to increase inequality in societies that are already unequal, whereas the benefits will be more broad based in societies in which the starting point is more equal.

This graph by Maxim Pinkovskiy and Xavier Sala-i-Martin is very interesting. It shows the growth rate and the number of people living on less than a dollar a day in sub-Saharan Africa. The data are notoriously incomplete, but on the basis of these estimates, as the authors say (apologies for the econ-speak): “Poverty seems to co-move with GDP almost perfectly.”

Graph by Maxim Pinkovskiy and Xavier Sala-i-Martin

This graph implies pretty strongly that if you want to reduce poverty in Africa, you should concentrate on economic growth.

The entire article is well worth reading for its upbeat assessment about both growth and poverty reduction over the last fifteen years.  They say:

The sustained African growth of the last 15 years has engendered a steady decline in poverty that puts Africa on track to meet the Goals by 2017. If peace is established in the Democratic Republic of Congo, and it returns to the African trend (which is what happened to other African nations that were formerly at war), Africa will halve its $1/day income poverty rate by 2013, two years ahead of the 2015 target.

Moreover, African poverty reduction has been extremely general. Poverty fell for both landlocked and coastal countries, for mineral-rich and mineral-poor countries, for countries with favourable and unfavourable agriculture, for countries with different colonisers, and for countries with varying degrees of exposure to the African slave trade. The benefits of growth were so widely distributed that African inequality actually fell substantially.

Shanta Devarajan asks if we have found Development 3.0

Shanta Devarajan, the World Bank Chief Economist for Africa, describes in an important new blog post the evolution of development policy in terms of changing ideas about market failures and government failures.   In the 1950s and 1960s, he says, development was about addressing market failures by providing public goods, addressing externalities, and redistributing income to poor people. Starting in the 1970s, attention shifted to government failures such as weak capacity, rent-seeking, political patronage and corruption.    Today, he says, many of the most egregious failures have been addressed, but the remaining failures directly hurt poor people.

On Shanta’s view, these failures arise from two kinds of imperfection in the public sector: that governments have difficulty monitoring and enforcing performance (leading to absentee teachers, clinics without drugs, etc) and imperfections in the political system which prevent it from serving the poor.

Shanta says that changes in technology and the rise of civil society can change all this:

Our understanding of government failure has coincided with two other developments.  One is the rise of civil society’s voice in public discourse.  The second is the technology revolution in poor countries.  There’s a message here.  Can we use technology and the voice of civil society to address these government failures?  Rather than imposing conditions, we can empower poor people to monitor service providers.  With some 80 percent of Africans having access to a cell phone, it is not difficult to have parents (or the students themselves) send an SMS message if the teacher is not in school, or there are no drugs in the clinic or the purported road maintenance program is not happening.  This could do more for helping governments and donors get value for money than all the fiduciary controls we put in place.  While we are at it, why don’t donors (including the World Bank) use technology to have the beneficiaries monitor and supervise development projects?

Can this work? Is social accountability a new model for development?

There is increasingly good evidence that transparency and accountability make a significant difference, in some cases surprisingly transformational.  There is an increasingly impressive collection of individual case studies, rigorously evaluated, which demonstrate the effectiveness of this approach.  For example, Jacob Svensson and Martina Björkman conducted a randomized field experiment in Uganda to test the effect of increasing community-based monitoring. They found that when communities more extensively monitored providers, both the quality and quantity of health services improved, including reducing infant mortality by a third.

There have, however, been no significant comparative studies bringing this evidence together.  Until now.  Rosemary McGee and John Gaventa have just published an extensive review of literature and experience across the field.  There is a lot of material to digest, but here is the core of what they find:

…there are a number of micro level studies, especially in the service delivery and budget transparency fields. These begin to suggest that in some conditions, the initiatives can contribute to a range of positive outcomes including, for instance,

• increased state or institutional responsiveness
• lowering of corruption
• building new democratic spaces for citizen engagement
• empowering local voices
• better budget utilization and better delivery of services.

Reading the study, my conclusion is that we know rather more about the impact of greater accountability than we know about what we can do to bring that accountability about.

I currently work on transparency, because I think makes an important contribution to the ability of citizens to hold governments and donors to account and so improve service delivery and accelerate poverty reduction. There have been some good examples of how this can work in practice, which are summarised in Appendix 1 of this cost benefit analysis for the International Aid Transparency Initiative (page 23 of this pdf; disclosure: I’m a co-author).  The most famous example is this study of the impact of information on funds flowing to schools in Uganda which found a strong relationship between transparency and funds flowing to schools, though the evidence was subsequently challenged.   So while there is increasingly good evidence to confirm the intuition that transparency plays an important role, we need to understand a lot better how, and in what circumstances, transparency works, and particularly to understand better what else needs to be in place.

One issue on which Shanta is clearly right is that role that technology can play in supporting greater accountability. We know that technology does not end poverty, but we are seeing more and more examples of how technology – especially mobile telephony and text – has enabled and supported changes from mobile banking to wholesale agriculture markets. Just as technology underpins changes in markets (think of newspapers, or bookselling), so it can underpin changes in political economy and social accountability.

So is this, as Shanta says, Development 3.0?

Development is a long, slow, uncertain process and the road is bumpy and winding.  Transparency and accountability are not a one bound and we are free solution, any more than the ‘big push’ or the Washington consensus which Shanta labels Development 1.0 and 2.0 respectively.  But this time there is an important difference.  The ‘big push’ and the Washington consensus were blueprints for a better world. Social accountability, by contrast, does not start with a preconceived idea of how resources should be used or services should be delivered: it seeks to change the dynamics of the system to make it more responsive and more likely to converge by itself on solutions which better serve poor people in developing countries.

A big challenge will be whether development agencies themselves are able to adapt.  Their models for project cycle management are based on a top-down view: you specify the world you are trying to create (the “goal”) and then you articulate a series of outputs and activities which you expect will bring this about.  It will be a big change – intellectually, organisationally and culturally – to modify their systems, incentives and procedures to a world in which donors work instead to help the citizens of developing countries to determine their goals and priorities and build their own systems to achieve them.

If what Shanta is calling Development 3.0 means that instead of offering a one-size fits all solution we should work to close the broken feedback loop so that communities themselves can find the answer, then I think this may indeed be a change of perspective on development worthy of a major version number.

Here’s the video:

I especially enjoyed the suggestions that we should start by airdropping press releases all over them, and that celebrities should have a big awareness-raising dinner in transparent tents so that the people of Darfur can stand on the perimeter, look in and see all the hard work that people are doing.

(H/T Good intents)

According to a blog post yesterday by Malaka Gharib at ONE, Daniel Yohannes, the CEO of the U.S. government’s Millennium Challenge Corporation, believes this:

If Africa captured captured only a small percentage of global trade, it would make a big difference. In fact, in 2008, 1 percent of global trade was worth $195 billion, more than five times the development assistance sub-Saharan Africa received that same year.

And Ali Hewson and her husband Bono use a similar statistic in this short video (which Chris Blattman posted yesterday):

I support the basic point that is being made: trade is good for developing countries.  I can’t recall ever meeting anyone from Africa who would not prefer more trade to aid.   I agree with Bill Easterly’s argument in the FT that rich countries should be more focused on reducing trade barriers.

But the video and remarks by Mr Yohannes grossly overstate the benefits of exports.

Before we get on to the economics, let’s try to get the numbers right.

The total value of world trade is about $16,000 billion a year (measured as the total value of exports of goods and services).   Exports from sub-Saharan Africa are about $380 billion a year, so they constitute a bit more than 2 percent of world trade, as Ms Hewson rightly says.  And aid to sub-Saharan Africa from OECD countries is about $40 billion a year, roughly as Mr Yohannes implies.

So that means:

• If Africa’s share of world trade grew by one percentage point, its export earnings would grow by about $160 billion a year.  So the figures quoted by Ms Hewson’s $(70 billion) and Mr Yohannes ($195 billion) are in the right ballpark.  (They may get different numbers because they are using different years for their estimates of world trade.)
• One percent of the value of world trade ($160 billion) is about four times aid to sub Saharan Africa ($40 billion).  On this, Mr Yohannes is roughly right (he says five times, but he is using older figures).
• If exports from sub-Saharan Africa increased by 1%, as Bono puts it in the video, the increase in Africa’s export earnings would be about $4 billion a year. This is only about a tenth of aid to Africa.  For Africa to secure a one percentage point increase in world trade would require a 40% increase in Africa’s exports.

So it’s true that if sub-Saharan Africa could increase its share of world trade by 1 percentage point, its export earnings would grow by about $160 billion a year, and that’s about four times what it gets in aid.

But the net benefit to Africa of increasing its exports is not the same as the increase in its export earnings.  That is the same mistake as equating a firm’s turnover with its profit.

Put another way, Mr and Ms Hewson and Mr Yohannes are all making the fundamental error of mercantilism, which is the idea that the prosperity of a nation is increased by the accumulation of bullion obtained from overseas.

They seem to have forgotten that exports have a cost.  You have to put labour, land, energy and other inputs into making the thing you are going to export – inputs which could be used for something else.  You have to grow tea, dig diamonds out of the ground, or make the shoes or silicon chips.   You may have to transport the goods. There may be workers on the factory line, and the firm will need administrative staff, drivers and security guards.  You may have to make or buy machines, tractors or lorries.  All this is a cost.  Even oil has costs of exploration, extraction, refining, transportation and damage to the environment.

These may well be costs worth bearing.  When you export those goods and services, you get foreign currency in return. This foreign currency enables you to buy more imports.  (That’s the point of exports.) But they are costs nonetheless.

Nations benefit from trade in other ways too, in addition to the extra imports that they can buy.  Trading nations tend learn from abroad; their firms are forced to be more competitive and so more productive; and the imports can be of machines or technologies that help the economy to be more productive.   So being an open, trading nation may help a country to grow faster.

So if the value of increasing exports is not the increase in export earnings, what is it?

The value to a firm of a new contract is not the price on the contract, its the profit it will make meeting it.  In the same way, the value to Africa of exports is the difference between the cost  of making what it has exported, and the value of what it can import as a result.

Of course, we don’t really know what those exports cost, or what the imports are really worth, so we don’t know the true net benefit to Africa of increased exports.  But the value added is more likely to be about 10% of the turnover than 100% of it.  If that’s a reasonable estimate, an increase in Africa’s share of world trade by one percentage point would be worth $16 billion a year.  This is, as it happens, less than half of what it currently receives each year in aid.

And remember that increasing Africa’s share of world trade by one percentage point would be no mean feat – it would require a 40 percent increase in Africa’s exports.

It is true that nations benefit from exports (or, to be more precise, they benefit from the imports that exports enable them to buy).  But you can’t measure the benefit to a nation of exports by the value of its export earnings, any more than you can measure the profitability of a firm by its turnover.  Getting this right is important because, as Paul Krugman pointed out in Peddling Prosperity, if you lose sight of the fundamental economics you get drawn into stupid policy prescriptions such as export subsidies or import tariffs.  For example, if you make it a policy goal to increase export earnings, you may subsidise exports, and so start to export goods that cost the nation more to make than someone abroad is willing to pay for them.  Though export earnings have gone up, the nation is worse off, not better off, because the exports have cost the nation more than it earns from them.

Exports are good for development. There are almost no examples of successful development that have not been built on export-led growth.  We should support reductions in trade barriers; and we should support investments that help developing countries to be more productive and so export more at lower cost to themselves.  Developing nations would rather have trade than aid, and most taxpayers in donor nations would agree.

But let’s not overstate the case by claiming that the net benefit of exports is the same as the value of turnover.  Even if Africa could increase its exports by 40%, which is a lot, and so achieve the (more modest-sounding) increase of 1 percentage point of world trade that Mr and Mrs Hewson, Mr Yohannes, and indeed all right-thinking people would like to see, the benefit to the continent could still be quite a bit less than it presently receives each year in aid.

A misty morning in Dessie

Sharing marsoup with friends in Dessie

There is always a lot going on early in the morning in Ethiopia.  The air is cool in the highlands as the mist burns off, and in the towns people are busy walking to work or school, delivering goods, or going about their business before it gets warm.

At 7am this morning we were sitting at a table outside the Aytegib Cafe in Dessie watching the bustle of the town and having breakfast before setting off for Weldiya.  The streets are shared by pedestrians, donkeys, cars and a few lorries. We had checked out of our motel where our own vehicle had been right at home among the half dozen white Land Cruisers parked in the courtyard labelled with the various brands of local NGOs and aid agencies.  Now at the cafe on the main road, we had ordered ‘marsoup’ – a local breakfast speciality which is a kind of thin omelette served with local honey – and machiato coffee, the ubiquitous availability of which is one of the welcome legacies of Italy’s brief and unwelcome stay in the country.

As our coffees were arriving, the night watchman from our motel appeared at our table.  Had we, by any chance, left this rather fancy smartphone in our room?  Indeed we had.

It is characteristic of Ethiopians that the staff in the motel had not pocketed an expensive phone, worth two to three times the average annual salary in Ethiopia, but had instead immediately set out, at some inconvenience to themselves, to return it to its owners.  The watchman bustled back to work without expecting a tip or reward, and before we were able to give him one.  It is also characteristic of Ethiopia that the hotel staff somehow knew where to find us, even though we had not told anyone that we were stopping in town for breakfast.

Building works in Dessie

The overwhelming feeling in Dessie is that it is friendly and laid back.  The town is roughly half orthodox Christian and half Muslim.  The two communities live closely together – including marrying between religions – and many families are partly Muslim and partly Christian (you’ll notice this from people’s full names, which are often partly Christian and partly Muslim).

All across Ethiopia, Christians and Muslims have generally had very good relations, dating back to 615AD when followers of the Mohammed (including his wife and cousin) were given refuge by the Aksumite King, Negus Armah or Aṣḥama ibn Abjar.  Ethiopians say that, as a result of the respect that was shown for his followers,  Mohammed gave instructions that Ethiopians were not to be harmed, and that this is why the communities have lived together peacefully ever since.

I had not been to Dessie for eight years.  It was then, and is now a big, bustling, university town in the highlands, famed within Ethiopia for the beauty of its women.  It is recognisable still, but it has grown substantially: there are a lot of new buildings, roads, churches, mosques and shops.  But it retains the same laid back friendliness, and feeling of people getting along, that it has always had.

The developing world may seem far away (I’m in a very modern hotel in Madrid at the moment) so I was glad to be reminded that people all over the world have much more in common than our differences – we all share very similar worries, loves, interests and excitement.

The Robin Hood tax appears at first sight to be a way to kill three fairly succulent birds with one stone.  It offers an attractive combination of:

1. Higher taxes on the wealthy, so reducing inequality
2. A curb on speculation and financial market excesses
3. More money for global public goods and aid.

All these are worthy objectives, but Robin Hood tax is not a good way to achieve any of them.

Branding a financial transaction tax as a “Robin Hood tax” which takes from the rich and gives to the poor is a brilliant piece of communications.  (Imagine if it had been called a “Class War tax” – this says more or less the same thing but somehow seems less appealing.)  A Robin Hood tax lures many people who care about social justice, and want to spend more on international development, into opportunistically supporting the introduction of a tax on financial market transactions.  But before we are seduced we should take a hard look at whether it will achieve what we want.

Stand and Deliver!

The campaign would like us to believe that this tax will be paid by speculators.  That isn’t true, of course.  It is like thinking that beer duty is paid personally by the barman in the pub, or that Richard Branson personally forks out for your airline passenger duty.  The people on whom a tax is levied generally pass it on to someone else: their customers, employees, suppliers or shareholders.  We don’t know who will end up bearing a financial transactions tax, but it is likely to be all of us who meet the costs, as customers of firms that use financial markets, or savers whose money is invested in financial assets.  You should not assume that it will mean less champagne for people who work in the City: they may be in-bred aristocrats but they are probably smart enough to figure out quite quickly that they should pass on the cost to someone else.

If we want to tax the rich more, there are much more effective ways to do it than to tax financial transactions – ways which might actually fall on the rich, and catch a much bigger spread of rich people than a transactions tax.  For example, you could raise much more money from the rich by extending National Insurance charges to all capital income (eg interest, capital gains, dividends and rent) rather than imposing it only on labour income.  You could also abolish the upper earnings limit on National Insurance.  You could close loopholes for non-domiciles and people who use trusts to avoid inheritance tax; or simply raise the top rate of income tax.  You could treat all inheritance as income in the hands of the beneficiary, and tax it accordingly.  Any of these would be a more targeted and fairer way of increasing taxes on the rich than a financial transaction tax.

Reducing volatility

Financial markets play an important role in the real world by channelling our savings to investments with higher returns and enabling us to share risks.  In well-functioning markets, allocating money to businesses that meet the needs of their customers and so make a good return tends to benefit all of us – whether we are investors, customers or employees of these firms.  For this allocation of resources to happen well, the prices of financial assets had better reflect their true underlying value, at least most of the time, and we are all worse off if financial asset values deviate for long periods from what the underlying businesses are really worth.  But there are plenty of structural problems in the financial services industry that make it likely that financial assets may in fact be mispriced some of the time.  These include the incentives created by bonuses (for example, linking bonuses to the value of a deal as predicted by firms’ financial models rather than the value that is eventually realised) and the rise of institutions that are “too big to fail” and therefore enjoy the implicit subsidy of a public guarantee.

However, it is hard to see how the existence of speculators, arbitrage and – most of all – liquid and highly traded markets make financial markets less effective.  In most cases, we would expect markets with lots of buyers and sellers to do a better job of identifying the underlying value of assets than markets with relatively few transactions.  Speculators generally make money when they correctly assess that a market price does not reflect the real value of the asset. George Soros made money from Black Wednesday when he judged that the value of the pound in the Exchange Rate Mechanism did not reflect what it was really worth (because the government was trying to sustain a higher value for the pound).   By betting on that judgement, Soros helped to bring about the change in price that he was predicting, and so accelerated the alignment of the asset price with its true underlying worth.

A small turnover tax is likely to deter the small-scale arbitrage that helps to reduce the short-term discrepancies between prices, making markets marginally less transparent and  slightly less efficient.  It probably won’t make any difference to the big misalignments, such as asset price bubbles. The short term gains to traders from buying in a rising market will far exceed the cost of any turnover tax, so they’ll continue to get behind bull markets. Their behaviour is only likely to be moderated if they can be made to bear some of the costs of the future correction, instead of just getting the rewards when the bubble inflates.  It is theoretically possible that a reduction in turnover will make a market more stable and less volatile (this was James Tobin’s point about “throwing sand in the wheels”), but it is the less likely outcome; more likely the opposite is true.

If we want our financial markets to work better, we should be looking at the causes of the volatility and misalignments.  It is not the number of speculators, or the number of transactions in which they engage, but rather the incentives they face. Asymmetric bonuses which reward gains but do not punish losses encourage risk taking and short-termism.  Institutions that are too big to fail will take bigger risks than they would without the implicit guarantee of a bail out. Insufficient competition between financial firms allows rent-seeking by monopolists.   The privatisation of gains but socialisation of losses creates perverse incentives.  If we want to tackle financial instability and misallocation of resources we need to address the root causes, not reach for a tax on transactions which is likely to hinder, rather than help, the ability of markets to correct themselves.

Raising money for good causes

So by now you think I’m being prissy.  So what if a new tax does not redistribute money from the rich or make financial markets work better?  It will raise a shed-load of money by taxing transactions in a way that nobody will notice, and we can use that to do good things on poverty and climate change. If taxation is the art of plucking the goose with the minimum of hissing, surely this is a sure fire way to get some money out of the system to spend on development which is woefully underfunded?

Well, not really.  Good taxes are not just taxes that nobody notices, but taxes that tend to discourage people from doing bad things and encourage people to do good things; which add to rather than subtract from economic efficiency.   There are lots of taxes that citizens don’t pay directly – such as corporation tax and employer national insurance contributions – which nonetheless add to the burden on ordinary taxpayers and the size of which is a matter of political debate.  Adding a new tax is not going to make citizens more willing to see an increase in the overall tax burden.

Aid spending is pitifully small relative to need.  As a nation we are spending much less than we should if we want to live up to our commitment to spare no effort to ensure that poverty is reduced, that mothers do not die while pregnant, that children go to school and that everyone has access to the water and health care that they need.

The amounts in question are tiny relative to total government revenues. Aid is a small fraction of overall spending and could easily be increased without any new taxes.   The limit to aid is not lack of available money, but the lack of agreement that this is a priority for spending more of the nation’s money.  Too many people believe – wrongly, in my view – that aid is not effective; that it transfers money from poor people in rich countries to rich people in poor countries; that much of it is lost in corruption or waste; and that it does as much to hinder as to help countries to grow and lift themselves out of poverty.  Those attitudes are not going to change because we have introduced a new tax.

The development industry is right to say we should spend more on aid, but we are losing the argument.  Instead of addressing the criticisms by demonstrating how aid is effective (and taking steps to make it more effective where it isn’t) we are turning to a Robin Hood tax apparently in the hope of bypassing public opinion.   Because the chattering classes (which clearly includes me) have failed to persuade enough men and women that it is a good idea to spend more money on aid as well as on the National Health Service and schools, we are apparently hoping to go over their heads, by setting up a source of funding over which ordinary people will have no control

But that is not how the system works, nor should it be.  The nation’s willingness to give money for development will be decided by whether we demonstrate the results, and whether we can really convince people that their money is being properly used.  Introducing a new tax dedicated to what we think are good causes may give aid a temporary boost, but if people are not convinced that they want their money to go on aid they will quickly demand that budgets elsewhere are reduced accordingly.   In the long run, this will have the opposite effect: a tax part of which is dedicated automatically to development will engender even more complacency in the development industry about the need to demonstrate to taxpayers how their money is being used.

Building support for development is not merely a communications challenge, as is often implied by the hand-wringing of the big aid agencies: it is a reality challenge.  Not only do we have to show people how their aid is used, we actually have to make aid more effective, more transparent and more accountable, so that we drive up performance.

Dambisa Moyo is right that bad aid does not work; but she is wrong to claim that all aid is bad aid.  She is wrong to claim that aid does more harm than good. There is a lot of hugely effective aid which transforms people’s lives every day.  But the aid industry lacks sufficient mechanisms to drive bad aid out of the system, to spend more money well, and to be able to demonstrate conclusively its results.  This, rather than a Robin Hood tax, should be the agenda for genuine progressives who want to see more money being spent on international development.

I have explained here before another reason why a Tobin Tax is a bad way of raising money for aid.  Financial markets tend to be highly cyclical – there is a lot of turnover in rising markets in economic booms, and the markets tend to go quiet in recessions.  So the revenues of such a tax would be highly cyclical – more money for development in global economic booms, less in global downturns.  Yet aid should be the opposite. It is needed most of all to protect the weak and vulnerable from economic downturns.  Aid is already too cyclical, exacerbating the impact of global economic fluctuations on developing countries, reinforcing the effects of changes in revenues from commodities, investment and remittances.  The last thing developing countries need is for aid to become even more cyclical than it is today.

Conclusion

The backers of the Robin Hood tax are on the side of good and there is no denying their commitment to social justice, nor their genius for communications and popular engagement.  We certainly need what the tax seems to offer: more redistributive taxation, a curb on financial market excesses, and more money for aid.

My reservation is not that the Robin Hood tax is too ambitious or that it cannot be negotiated. It is that it is the wrong way to address these problems.   Each of the three objectives is better addressed directly than through the blunt instrument of a tax on financial transactions.  We need to build a consensus that there are minimum standards of living below which no person anywhere in the world should be allowed to fall, and that those of us who are fortunate to live comfortably should all make a modest contribution to that.  This should be part of the social contract in a democratic society, and it should be part of the mainstream system of taxing and spending.   Robin Hood stole from the rich and gave to the poor at a time when we lacked institutions to tackle poverty and redistribute income.   A Robin Hood tax is no more a lasting solution to financing poverty reduction than was the approach of Robin Hood himself.

Update:  Duncan Green from Oxfam has responded here.  We agree that this is not a good way to curb the excesses of the financial services industry.  Duncan reckons “the banks” will pay a good part of the tax: presumably he means the shareholders.  If so, why not just levy an additional profit tax on banks?  I think his strongest argument is that in a world of second best, this is the best available option for raising more money.   I think that is a mistake. We can and should make the case for aid to be financed properly; and I do not believe that raising money this way will add additional funding to development in anything but the very short tem unless we address rather than try to sidestep people’s concerns.

At a conference at Wilton Park this week a number of people gathered together to review progress since the Africa Commission and Gleneagles Summit in 2005, and to discuss the prospects for a transformation in Africa over the coming years.  One participant (one of the authors of the Africa Commission report) argued that the Commission set out a comprehensive action plan which, if implemented across the range of its recommendations, could address these traps and lead to real progress.

I am not so sure. I think there is a fifth trap facing Africa which is more chronic and pervasive than any of the four traps identified by Paul Collier. It is the “unfair rules” trap, and I think it makes it very hard for Africa to make much progress on the other four.

Development and an improved standard of living for people in developing countries will come not from aid but from industrialisation and economic growth.  We do not know exactly how to ensure that these economic transformations occur, though there is much we can do to create the conditions in which it is more likely.  (Aid can help create the conditions for growth, and can help people to live better lives while the process is under way).  But as the world economy becomes more integrated and more globalised, many (though by no means all) of the determinants of a country’s opportunities for economic development are determined by international institutions, systems, rules and agreements.

The “unfair rules” trap is that the rules of the game are determined by the rich for the rich.  And the consequence for the poorest countries is that they are having to fight uphill to create conditions for their development; so they continue to fall behind the rest of the world economically.  Their relative lack of economic power reinforces their lack of political influence internationally and so makes it harder for them to influence the institutions and rules which contribute to their continued economic marginalisation.

This “unfair rules” trap takes many forms.  There is a myriad of complicated rules and institutions that affect a huge swathe of economic and political life.  These international agreements range from highly political – such as the global allocation of the right to emit greenhouse gases under the post Kyoto framework for climate change – to the deeply technical such as phyto-sanitary standards which unnecessarily limit exports of groundnuts from Africa to Europe.

On BBC World this weekend there is a debate among a group of African leaders in which Linah Mohohlo, the Central Bank Governor of Botswana, points out that new global rules are currently being devised to promote financial stability – an issue that affects every country in the world – without any participation by Africans.

Consider our attitude to property rights.  Rich countries have attached considerable importance to the establishment and global enforcement of intellectual property rights, which enable their firms to secure revenues from the use of their intellectual property. They have, for example, pursued this through the WTO.  Whatever you think about intellectual property rights, there is no doubt that they can be expensive for developing countries, both because of the huge revenues that flow from Soweto to Seattle and because of the restrictions imposed on access to vital knowledge rich products such as pharmaceuticals, software and business practices.    But consider a parallel property right: the right to emit greenhouse gases.  Like intellectual property rights, emission rights are an institutional construct designed to bring about an improvement in economic efficiency (by rewarding innovation in the case of IPRs, and by taxing polluters in the case of emissions rights).   Emissions rights, if properly designed, fairly allocated and enforced around the world, would entail a reallocation of wealth from rich countries to poor countries.  But while the rich world is happy to insist on the importance of intellectual property rights (of which it is a seller) it is unwilling to consider the establishment of property rights over assets for which it would be a buyer.  In the run-up to the summit in Copenhagen, there was no serious discussion of the idea that every citizen should be entitled to an equal share of the atmosphere, and that anyone wanting to occupy more than their fair share should pay compensation to those who are using less. The discourse is limited to the realpolitik of what rich countries are likely to accept.

Of course, it was ever thus.  Nobody should be surprised to hear that the rich and powerful set the rules, and that these are not always to the benefit of the poor.  But within nation states this dilemma is partly addressed through the political process.  Universal suffrage has made it impossible for national institutions, laws and regulations completely to ignore the interests of the poor; though of course there is still a long way to go before the interests of the poor are given the attention they deserve.

But the international system does not benefit from the equal representation implied by universal suffrage within nations.  In some international institutions, power is formally one-dollar-one-vote.  In many others  this is not the formal position, but it is true in practice.  The global political system does not rebalance economic power between nations in the way that political processes can within nations.

To address Paul Collier’s four traps will require concerted international action – for example, to take steps to prevent the corruption and patronage that is associated with extraction of natural resources, to limit the sale of arms which fuel conflict, or change trade rules in ways that improve Africa’s prospects of trading with the rest of the world.  That is why the trap of “unfair rules” is so profound: for as long as Africa remains politically weak in the international system, it is hard to envisage how the international cooperation is required will be brought about.

I find it hard to see how a transformation can be brought about unless we find a way to address the problem “unfair rules”.  For as long as Africa remains economically disadvantaged, it is marginalised in the setting of rules and governance of global institutions.   This in turn profoundly affects its ability to escape Collier’s four traps, and so limits its prospects for development, and thus locks in the growing divergence from the rest of the world.   Africa seems to be likely to be caught in the jaws of this trap for as long as there is no political process that allows African countries to obtain more power and influence within these international institutions than their relative economic weaknesses entails.

As the project’s first five years wind down, its ultimate goals remain elusive, and the five-year initiative has swelled to 10. The extension, naturally, will require more spending: The financial injections to date—over $5 million per year in a mix of cash and non-cash contributions—have not abolished poverty. Improvements in the five sectors targeted by the MVP are readily apparent, but their sustainability is still up in the air.

There are many people in the development set who are sceptical about the utility of the Millennium Village Project, for good reasons and for bad.  Village-level interventions have had a chequered past, and the conventional wisdom today is that development assistance should help to build capable and accountable states which can deliver services, from agriculture and education to security and health, and not provide these separately from the systems that are being established.

I don’t know as much about Koraro as Jeff, but G and I did visit the town, unannounced, one day when we happened to be driving past.  We struck up a conversation with a local shopkeeper which went like this:

O&G:                 What is it like being a Millennium Village?

Shopkeeper:    Very good. We have lots of things.

O&G:                 Does everything work well?

Shopkeeper:    No, not all of it.  But we are much better off now.

O&G:                 Who decides what to change? Do you have a village council, or is there an Elder who decides?

Shopkeeper:   It is all decided by a Professor in New York.

O&G:                 Really? Do you know his name?

Shopkeeper:   No. But he is a very famous man

I don’t have the same ideological objections to Potemkin Villages the Millennium Villages Project as some other people. As both Jeff Sachs and Nick Stern have arged, it seems plausible that there may be significant complementarities between interventions which mean that programmes work better if there are other successful programmes at the same time.  For example, there may be little value in increasing agricultural productivity to generate surpluses if there is no way to get those surpluses to market, which requires infrastructure.  That suggests that each community may need a big heave:  ensuring that all these things come in together may be more effective than a series of uncoordinated interventions spread thinly.

For me the most disappointing aspect of the Millennium Villages Project has been the steadfast refusal to subject it to rigorous evaluation.  (Their evaluation programme is described here.)  The most detailed study so far has been conducted by the Overseas Develoment Institute.  The problem is lack of a proper basis of comparison.  Ethiopia is changing quite rapidly, and Korkora would have changed with or without the Millennium Village Project. For example, there has been a 51 percent reduction in malaria cases in Koraro, Ethiopia. This has been touted as a success by the supporters of the project; and it sounds impressive until you find out that malaria cases have been more than halved across the whole country, not just in Koraro.  The improvement in the Millennium Village is apparently no greater than anywhere else in the country.

To evaluate the project, Millennium Villages need to be compared with some suitable control group, ideally through randomised controlled trials.   Ideally, the individual components of the project would also be randomised to test the hypothesis that the effects of interventions are complementary.  (It follows that I don’t agree with Chris Blattman’s view that it would be too hard.)

It would, as Chris says, be pretty surprising if the Millennium Villages Project does not make a difference. After all, it is spending money roughly equivalent to 100% of the villagers’ income. Furthermore, it has benefited from close personal attention from the Prime Minister, other ministers and officials, researchers and academics (and, of course, a famous Professor from New York).  A rigorous evaluation would help us to know how big that improvement is, and and what cost.  It might also give us insights into whether any particular parts of the progamme are particularly important.

The 6" Kindle, with a Bishoftu lake in the background, January 2010

I’ve had a Kindle here in Ethiopia for a few weeks now, and I’m lovin’ it.

I bought the international edition, with a 6 inch display (the Kindle DX with the larger 9.7 inch display is expected to be available in an international edition some time in 2010).

Update (6th January): coincidentally, the international edition of the DX has just been announced, and it will be shipping from 19 January.

Because it is an international edition, it works wirelessly in the UK and many other countries, using the mobile phone network.  There is no additional charge for this.  It means, for example, that you can subscribe to the Financial Times or the New York Times, and the latest edition is automatically delivered to your Kindle each day.  You can also browse for books and periodicals on your Kindle, and there is limited web browsing.

In Ethiopia the wireless does not work (presumably Amazon does not have an agreement with the Ethiopian mobile phone company, ETC).  So periodicals do not arrive automatically, and you cannot browse for new books on the Kindle itself.  But it is very easy and quick to download the latest edition of a newspaper or to get a new book from Amazon on a computer connected to the internet (it takes about 30 seconds to download today’s edition of the FT) and then to transfer it via USB cable to the Kindle.

I was able to update my Kindle to the latest version of the software by downloading it to my computer and installing it over a USB cable.  That worked fine. (If it were in an area with wireless coverage, the software would update automatically.)  The new software allows the Kindle to display .PDF files natively (i.e. without converting them to Kindle format) and apparently improves the battery life when wireless is turned on (I’ve not tested this last point, because my wireless is turned off.)

The 6″ version is a very good size for carrying around, especially when on the road or for plane journeys. It can store a thousand books, so you can be sure you won’t run out of reading material.  The screen only uses power when the page changes (it doesn’t use power simply to display) so power consumption is low – a couple of weeks with the wireless turned off.

I find the screen easy to read, even for long periods. It works well in bright sunlight.  The font size is adjustable (which is apparently one reason for very high sales among older people, some of whom like being able to increase the size of the text).  The slight drawback is that there is not very much on a single page, so you have to change the page often (especially if you read quite quickly).  Some people have commented unfavourably on the screen flicker as the page changes; I don’t find it a problem.

When the Kindle DX has an international edition, I think I may buy that as well.  (I had a chance to look at the US version of the Kindle DX when Chris Blattman was visiting Addis Ababa but I failed to take a side-by-side photograph).   Why would I want both?  The larger screen looks good for reading PDFs of academic journal articles and especially for newspapers.  But the smaller format is very good for having your books with you in your shoulder bag and when travelling.   I gather you can put the same content on both machines provided they are both registered to the same account.

So I think the advantages of a Kindle for people who work internationally, even in places where the wireless doesn’t work, are:

• Being able to carry a good collection of reading material with you while travelling – so you can travel light and you still won’t run out of things to read when stuck in an airport or at the border on a bus
• Getting today’s newspaper (e.g. New York Times, FT, Economist) delivered electronically (via a PC)
• Being able to buy the latest books without having to rely on the post (especially useful if you are in a book club!)

I’ve not tried the Sony eReader, and of course Apple may yet produce a tablet that blows the Kindle out of the water.

Bono made two very good points in the New York Times on Monday:

An Equal Right to Pollute (and the Polluter-Pays Principle)
In the recent climate talks in Copenhagen, it was no surprise that developing countries objected to taking their feet off the pedal of their own carbon-paced growth; after all, they played little part in building the congested eight-lane highway of a problem that the world faces now. One smart suggestion I’ve heard, sort of a riff on cap-and-trade, is that each person has an equal right to pollute and that there might somehow be a way to monetize this. By this accounting, your average Ethiopian can sell her underpolluting ways (people in Ethiopia emit about 0.1 ton of carbon a year) to the average American (about 20 tons a year) and use the proceeds to deal with the effects of climate change (like drought), educate her kids and send them to university. (Trust in capitalism — we’ll find a way.) As a mild green, I like the idea, though it’s controversial in militant, khaki-green quarters. …

People Power and the Upside-Down Pyramid
A lot of us have seen or lived the organizational chart of the last century, in which power and influence (whether possessed by church, state or corporation) are concentrated in the uppermost point of the pyramid and pressure is exerted downward. But in this new century, and especially in some parts of the developing world, the pyramid is being inverted. Much has been written about the profits to be made at the bottom of the pyramid; less has been said about the political power there. Increasingly, the masses are sitting at the top, and their weight, via cellphones, the Web and the civil society and democracy these technologies can promote, is being felt by those who have traditionally held power. Today, the weight bears down harder when the few are corrupt or fail to deliver on the promises that earned them authority in the first place. The world is taking notice of this change. On her most recent trip to Africa, Secretary of State Hillary Rodham Clinton bypassed officials and met instead with representatives of independent, nongovernmental groups, which are quickly becoming more organized and more interconnected. For example, Twaweza, a citizen’s organization, is spreading across East Africa, helping people hold local officials accountable for managing budgets and delivering services. (Twaweza is Swahili for “we can make it happen.”)

(Disclosure: I am a member of the board of Twaweza, so it is not surprising that I agree with Bono that their work is good.)

Update: You should also read Alex Evans’s excellent piece at Global Dashboard on the importance of Bono’s support for contract and converge.

… This is a work of self-flagellating simplicity, totally devoid of any thinking by leading African research centres or scholars, making the book often read like a Harvard Masters syllabus or a World Bank report. Moyo reveals her ignorance by incredibly charging that “scarcely does one see Africa’s … officials … offer an opinion on what should be done”. …

Moyo employs crude stereotypes of “tribal conflict” to depict African wars, and recklessly suggests that aid is “an underlying cause of social unrest, and possibly civil war”. Such an absurd link would, of course, involve a huge leap of logic, and the author’s ignorant blaming of Somalia’s civil war on competition for food aid completely ignores the decade-long homicidal campaign of US-backed autocrat, Siad Barre, which eventually led to rebellion in 1991.

Read the rest here.

My own review is here (pdf) – also critical, but less vituperative.

More reviews (including some which are less negative) of Dead Aid here.

My sister was sent this card. I thought it was funny.

Please do send a goat to Africa this Christmas. It will change somebody’s life, and it will make you feel all warm and fuzzy inside.

Or you can send cow.

I promise you that either will add more happiness to the world than a High School Musical Dance Mat.

Some supporters of aid have made what seem to me to be extravagant claims that aid should aim to bring about economic and social transformation of developing countries, so accelerating economic growth and industrialisation.  But this is a very high bar to set.  Aid may well help to increase the probability of economic take-off but there are lots of other conditions that need to be in place for the transition to an industrialised market economy to happen, and aid is not a sufficient condition (nor, probably, a necessary condition) for it to occur.   Even if aid does play an important contributory role, it would be statistically very hard to demonstrate a link between aid and economic growth.

Although the effect of aid on economic growth is uncertain, there can be no doubt that aid makes a huge difference to people’s lives.  Aid provides food, health care, education, clean water, financial services, and modest incomes which transform the lives of the people who receive them.   You can see this both in individual families – like the girl I met in northern Amhara, pictured here, who has health care and education because of aid – and in the overall statistics, which show that there has been a vast improvement in the quality of life on almost every measure other than income.

Aid may not always transform societies, but it does enable people to live much better lives while those transformations are taking place.  And that represents a huge increase in the sum of human welfare.

I believe aid could and should work much better.  Living in a developing country, I see all kinds of waste and inefficiency in the aid system that makes me angry. But it makes me angry because I also see how much difference aid makes when it is used well.  I would like to see aid becoming much more transparent and accountable, so that it becomes subject to evolutionary pressures to improve.

This means, by the way, that I do not subscribe to the view that the aid system should be regarded as temporary.  In the UK we hope that people will be on unemployment benefit temporarily before they are able to get back to work, but we don’t expect the system as a whole to come to an end.  So I think that we should expect that at least for our lifetimes, it will be right and necessary that we transfer income from the richest people in the world to the poorest people in the world.  I do not know which countries will be rich, on average, in fifty years time, and which will be poor; but I expect that the world will still need, and I hope it will still have, a permanent system to help those temporarily in need wherever they happen to be.

Aid would work better in future if we accept that we will need a permanent system to provide temporary help to those who need it, and set about designing a better system to do that.

Read the full article here.

Related reading:

• Phil Vernon at openDemocracy (to which my article was a reply)
• Roger Riddell at openDemocracy
• Ranil at AidThoughts
• Chris Blattman – Could Aid Slow Growth

Though 35 per cent of Ethiopian children are malnourished, and 40 per cent are stunted when they start school, the number who die below the age of 5 is down 40 per cent on what it was 15 years ago. A shocking 381,000 children died from preventable causes last year but there is clear progress. Cases of malaria have been reduced by two-third since 2006, with the number of deaths halved thanks to the government spraying a million houses and the Global Fund and the Gates Foundation distributing a massive 20 million bednets.

“Who says aid doesn’t work,” spluttered Geldof as he leaves the clinic.

we are all in this together.

This is a powerful message.

When 15 million people  face starvation in East Africa this Christmas, let us say:

we are all in this together.

When twenty thousand children die tomorrow from easily preventable and treatable diseases, purely because they don’t have enough money to buy drugs that cost cents to produce but for which we charge rich world prices, let us say:

we are all in this together.

When the developing world demands proper compensation for their part of the atmosphere, which we have filled up with carbon emissions far beyond our share, resulting in the risk of destruction to entire nations, let us say:

we are all in this together.

When the people of the Niger Delta demand a share of the wealth lying beneath their ground, and an end to the environmental destruction caused by our oil companies so that we can drive our cars and cool our houses, let us say:

we are all in this together.

When we complain about corruption in the developing world, forgetting that all the money that pays for those bribes comes from us, and then choose not to prosecute our own companies that pay the bribes, let us say:

we are all in this together.

When we continue to be one of the largest manufacturers and exporters of arms in the world, fuelling conflict all around the world, but are more concerned about a hundred jobs on the Isle of Wight, let us say:

we are all in this together.

When people are forced to leave their homes, their family and their country because they lack freedom or face persecution, or because they cannot find work that pays them enough to support their family, and they look for a new beginning in rich countries, and we decide how we will treat asylum seekers and immigrants, let us say:

we are all in this together.

When the world’s poor demand fair payment for their coffee, cocoa, and minerals, and for their labour which provides us with the cheap clothes and electronics which we take for granted, let us say:

we are all in this together.

When the world economy recovers, companies of the rich world begin to prosper, when bankers get their bonuses again and the rich start to become richer, and we decide how to share the proceeds of that growth within and between nations, let us say:

we are all in this together.

The video is about the way that a civil society organisation in Kenya, MUHURI, has enabled a local community in Mombassa to hold their government to account.

(Disclosure: I work on aidinfo – a small research team which promotes the adoption of open standards for the publication of detailed information about foreign aid, to enable people in developing countries to hold governments and donors to account.)

To reinforce the message, and to make sure that farmers know exactly what they are looking for, they have been using posters with huge images of the tsetse fly itself.*

This has, however, not had the intended effect.

Two farmers were overheard talking to each other in a local dialect in the south, having come in to town on market day and seeing the new poster:

“Thank God we don’t have huge flies like that here.”

* I don’t have a photo of the actual poster – if anyone does, I’d love to have a copy of it.

You can buy the poster here.

Here is our list, intended for visitors to Ethiopia.

So apparently zip off safari shorts/trousers make you look stupid. I guess I don’t care – I think they are quite a good way to travel light in a country that is hot during the day but cool at night and there are mosquitoes in the evening.

Thanks to the Freedom of Information Act, he has been able to obtain a copy of this despatch, and he has published it online. At the time, it was regarded as controversial and radical.  Circulation within the Foreign Office was limited.

Perhaps my judgement is clouded by filial loyalty, but today it strikes me as forward-looking and far sighted.  He wrote:

Such grotesque disparities in the human condition are an inevitable source of conflict and instability. It is a century since British people ceased to be willing to tolerate massive inequality of wealth and income within their own society.  The time has surely come when we should tackle an even more offensive situation in the global village.

My father made a compelling case in 1991 for doing more to ensure that Africa shares in the benefits of globalisation and rising prosperity. As he predicted, the need has become greater the longer we have neglected the challenge.

I’m proud to follow in his footsteps in demanding change; but dismayed that I have to do so. If only they had listened then we might not have to be making the same case today.

Worldwide, there are 19 million unsafe abortions a year, and they kill 70,000 women (accounting for 13 percent of maternal deaths), mostly in poor countries like Tanzania where abortion is illegal, according to the World Health Organization. More than two million women a year suffer serious complications. …

Here in Ethiopia around a third of maternal deaths are the result of unsafe abortions.

Well done to the New York Times for addressing this. Too often this problem is swept under the carpet.

To focus on the five-year aid-reduction example that my book offered as an illustration of an exit strategy deliberately misses the point, which is that Africa desperately needs to wean off aid. Obviously, a blanket five-year plan imposed on countries with different challenges and different circumstances would be ridiculous!

One can only interpret the fact that my detractors took the five-year example at face value as wilful blindness or a complete unwillingness to see Africa in any other light than a basket case. An aid exit might take 10 years, it might take 15, but after 60 years of the aid-regime (with no concomitant job creation) surely it is better to start the conversation (and the strategy) of aid exits than not.

Indeed, cutting off aid in five years would be ridiculous.  On that we are agreed.  I don’t know anybody involved in aid who does not fervently wish for the day when countries are rich enough to do without aid, and who wants to give aid in ways that bring that day forward.  If Dambisa Moyo is simply saying that we should all work towards removing the need for aid, then I am not sure why there is such a fuss.

So what made us think that Dr Moyo was advocating a five year plan to reduce aid? Perhaps it was remarks like these in just about every known newspaper:

In the book I actually prescribe that they should, with immediate effect or in the very near foreseeable future, implement a five-year plan where they systematically reduce aid to these countries.

Or perhaps it is because she says this in Dead Aid (p144):

What if, one by one, African countries each received a phone call (agreed upon by all their major aid donors – the World Bank, Western countries etc), telling them that in exactly five years the aid taps would be shut off, permanently? Although exceptions would be made for isolated emergency relief such as famine and natural disasters, aid would no longer attempt to address Africa’s generic economic plight.

You can see why some people got the impression that Dr Moyo was proposing that aid should be shut off after 5 years.  But it is reassuring to know that this was not her position, or at any rate it is no longer her position.

Even with her new cuddlier policy of turning off the taps more gently, there is still a lot of wild and unsubstantiated garbage in her book – for example, this:

The problem is that aid is not benign – it’s malignant. No longer part of the potential solution, it’s part of the problem – in fact, aid is the problem.

Here is my review of Dead Aid. Here are some other reviews.  Andrew Pickering at Global Dashboard has a good summary of the debate so far.

Today G and I were running down a dirt track through a small village and a small girl, about 4 years old, saw us running past.   She shouted,

China! China!

I heard the other day that there were two old men sitting on a hillside in north Wello, watching the Chinese labourers building a new road.   They were old-timers, who had fought against the Italians in 1935, and then watched the Italians build the first roads across the Blue Nile gorge and up to Eritrea. (“What have the Romans ever done for us?”)  As these men watched the Chinese roll out the tarmac, one of them said to the other:

The Italians are back. Only now they have narrower eyes.

… I lost my young sister. She died of HIV-related complications. She should still be alive today since she was on ARVs.

But ARVs go hand in hand with good nutrition. My sister could not afford proper daily meals since she was looking after a large extended family. Besides her three children, she was looking after six double orphans that our elder brother left behind.

Her story is commonplace in Zambia. The HIV and AIDS pandemic can be mitigated by people having proper access to medicines and food. Both have become bigger problems in the current world economic crisis.

It is such situations that prompt those of us in civil society to redouble our efforts to do more advocacy work, asking our governments, in Africa, not only to be accountable to the people, but to prioritise issues of poverty and unemployment in their economic policy frameworks.

Our governments, though, are also limited in their capacity to cope with the severe effects of the global economic crisis. This is where the rich countries come in. They should remain committed to their aid promises.

Dambisa Moyo’s controversial book, Dead Aid, has given us an accurate evaluation of the aid culture today. The cycle of aid and poverty is durable: as long as poor nations are focused on receiving aid they will not work to improve their economies. Some of Ms Moyo’s prescriptions, such as ending all aid within five years, are aggressive. But I always thought this was the discussion we should be having: when to end aid and how best to end it.

… Often, aid has left recipient populations unstable, distracted and more dependent; as Ashraf Ghani, the former finance minister of Afghanistan, has pointed out, it can even sever the relationship between democratically elected leadership and the populace.

It seems to me that Dambisa Moyo has set up a false dichotomy between aid and entrepreneurship. Many of the things Moyo would like to see – better access to financial services, a better business environment, lower tariffs – can be (and are) supported by aid. We can and should use aid to support the growth of an entrepreneurial society; and we can and should use aid to support people in developing countries to enable them live better lives while the benefits of that economic growth are coming through.

My review of Dead Aid is here.

Kagame’s position is more nuanced than Moyo’s argument. He seems to be calling for a different kind of support from outside:

We appreciate support from the outside, but it should be support for what we intend to achieve ourselves. No one should pretend that they care about our nations more than we do; or assume that they know what is good for us better than we do ourselves. They should, in fact, respect us for wanting to decide our own fate.

… While this is encouraging, we know the road to prosperity is a long one. We will travel it with the help of a new school of development thinkers and entrepreneurs, with those who demonstrate they have not just a heart, but also a mind for the poor.

This is striking stuff from the President of one of the most aid dependent countries in the world, in which foreign aid is about $55 per person per year, or more than 25% of GDP.

It’s never hard to find your way there – all you need to do is follow the American music which is old enough to feel stale without being old enough to feel hip and look for a chalkboard sign advertising a European football match.

It is pretty funny (take no notice the censorious commenters who say that it is too cynical). I find it all too easy to recognise (and laugh at) myself:

1. The Overpaid Aid Worker

You can easily pick out this character by the imported beer on his table and the way he litters his speech with acronyms: USAID, NGO, MFI, MPP.

If it’s a weekday night, he might nurse his beer while tapping away on his MacBook, shooting off emails to his friends in D.C., or maybe to the alumni listserve of a bastion of East Coast higher education.

This year he’s empowering women in Latin America, but two years ago he was working on democracy promotion in Bangladesh, and next year it’s off to Thailand to oversee microfinance development.

Is there any world problem this whiz can’t solve on a two-year contract, armed only with his cushy salary, company car, and housing stipend?

Before you get a chance to answer that, though, he will: there’s “real progress” being made at the “grass roots level” with his current initiative. Another European microbrew, please!

Hat tip: @bloodandmilk on Twitter

This is how Janice Pratt begins addressing her peers. She’s a slight girl with a strong voice that says to anyone willing to listen: I’m going to be someone.

I am always struck whenever I travel in developing countries how similar people all around the world are in their ambitions and dreams.

The last ten years has been a remarkable experiment in using official development assistance (ODA) as a motor for development in Africa (and other developing countries too). It has been a bonanza for the aid industry and especially the favoured elements such as HIV/AIDS, which have often found themselves in the remarkable situation in which resource availability is not a binding constraint.

… But, aid seems to displace the other parts of the development debate. Of the other pillars, only debt relief has seen any significant progress in the last ten years. Trade reform and economic governance are much harder, and far less progress has been made.

Aid donors and recipients alike have good reason for preferring to focus on aid rather than trade or governance.

I see two things wrong with this argument.

First, it has not been a bonanza for aid. We have just about recovered aid volumes to the level they were before they collapsed at the end of the cold war.  We are still talking about 20 cents per person in poverty per week in Africa.  It is hardly a lot of money.

Second, I understand the argument that aid may have been a displacement activity for rich countries unable or unwilling to make progress on issues such as trade, reducing conflict, a fair deal on climate change, or extending migration opportunities.  I agree that these issues are important – and that they are potentially more important than aid.  But I am much less clear that there really is a trade-off between aid and making progress on these issues.  How do we know? 

Alex is making a bold claim that aid has delayed progress on these issues.  Given the enormous good that aid does, the people who call for governments to pay less attention to aid had better be sure that this really will unblock progress on the other policy issues that will compensate for the loss of aid that will result.  I am not so sure that they are right.

The past decade of U.S. Africa policy has made some wish most for policies that would “first, do no harm.” A Hippocratic test could be useful for President Obama’s new Africa team at the NSC and the State Department, as they reflect on the harm that has punctuated their predecessors’ policies towards many African countries.

I’m more in favour of a hippocratic policy than a hypocritical one. But though “first, do no harm” it is often cited as a valuable guiding principle, when you think about it is not a very good rule of thumb.  (In many respects there are parallels with the so-called “precautionary principle”, which also strikes me as heavily overrated as a guiding light.)

Suppose someone had argued as follows in 1994:  “Intervention to stop the genocide in Rwanda might do harm.  We don’t fully understand Rwandan politics, and we don’t know how to disengage from a military intervention.  Our rule is: first, do no harm. Therefore we will not intervene to prevent the genocide.”  Interesting argument, wrong answer.

Actually, Anthony Lake (President Clinton’s National Security Adviser) did say something a bit like that. He said on May 5 1994:

We have to ask the hard questions about where and when we can
intervene. And the reality is that we cannot often solve other people’s
problems; we can never build their nations for them …”

The literal application of the hippocratic rule prevents policy-makers from taking risks where there is a possibility of doing harm but where the good could massively outweigh it.  If we adopt a policy of never doing harm, we will limit the amount of good we can do.

The following seem to me good principles:

• think about the wider and long term consequences of your decisions
• only do things were the good is likely to outweigh the harm
• where possible limit the harm you do

That said, I agree with Ms Herskovits that the US has made policy mistakes in Nigeria, Kenya and Somalia.  The answer is not the Hippocratic Oath but more often choosing values and long-term interest in democracy and peace over short term strategic considerations.

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