Toby Ord
My guest in the latest Development Drums podcast is the moral philosopher Toby Ord.
Toby has made a commitment to give away the majority of his lifetime income to charities working in the poorest countries. He is also the founder of Giving What We Can, a society of people who commit themselves to give away at least 10% of their income to wherever it will do the most to relieve suffering in the developing world.
In the podcast, Toby talks why he thinks it is important to identify and support the most cost effective programmes. The podcast also discusses the moral philosophy which guides Toby’s approach.
One of Toby’s insights which I found interesting was his observation that the cost per year of life saved varied enormously between different development programmes. You can buy an additional year of life for $3-$10 by investing in interventions such as zinc fortification, childhood vaccination and managing tropical diseases, compared to about $500 for antiretroviral therapy. Toby challenges the common assumption that we should spread money around to do a little of everything, or that we are entitled to choose the issue which most interests us. He suggests we have a clear duty to identify the most cost effective approaches and then focus our money on those.
Chart courtesy of Toby Ord
(UPDATE: the green bar in this chart should really be labelled ‘most cost effective interventions’ rather than ‘treatment of parasitic infections’)
In the final part of the podcast we discuss Toby’s decision to establish Giving What We Can, and the choice that Toby has made to give away most of his lifetime earnings.
You can listen to Development Drums directly on the website, download it to your MP3 player, or subscribe free of charge in iTunes.
[This blog post was updated on 27 April 2012 to reflect corrections to the original DCP2 estimates of the cost effectiveness of treatment of Soil Transmitted Helminths, which were found to be incorrect]
This Doonesbury cartoon is causing some American newspapers either not to run the series, or to move them to the op-ed pages.
A younger me arrives at the South African Department of Finance
I first became aware of the problem of ‘odious debt’ when I was seconded from the UK Treasury to work for the government of Nelson Mandela. The apartheid regime in South Africa had borrowed from private banks through the 1980s, most of which went to finance the military and security services and to sustain the repression of the majority of its citizens. As a result, the new democratic government in South Africa inherited about $40 billion of international debt (in today’s prices). The question for my colleagues in the South African Treasury was whether to pay this debt, or to renounce it as odious. In the end they decided to pay, to protect their credit rating and ensure that they would be able to access global financial markets in future. Ministers even opposed a lawsuit seeking reparations from banks that had helped finance the apartheid regime, because “we are talking to those very same companies named in the lawsuits about investing in post-apartheid South Africa.”
All this is bad for two reasons. First, it means that illegitimate governments can be sustained in power by rogue creditors, undermining the effectiveness of sanctions. Second, it means that when a new, legitimate government comes to power, it is saddled with the debts of its predecessors. The ‘rainbow nation’ of Nelson Mandela’s South Africa would have got off to a better start if it had not had to service apartheid-era debts.
In principle donors from creditor nations could choose to write off these debts; but this has an opportunity cost within fixed aid budgets, and it is not politically appealing to use aid to bail out rogue creditors who have been making money lending to illegitimate governments. So in practice the successor government are often left with a huge debt to pay.
There is a disarmingly simple solution to this problem.
The main financial and legal centres of the world should declare that any contracts signed after today by a regime which has been designated illegitimate will be regarded as odious, and will not be enforceable in their jurisdictions.
Take Syria today. The regime of Bashar Al-Assad has been declared illegitimate by the United Nations and the Arab League. The European Union and United States have imposed sanctions, which make it illegal for their citizens to engage in certain kinds of trade with that government. But some Russian companies continue to sell arms, presumably on credit, and Syria is looking for someone to buy their heavy crude oil. Weirdly, those contracts, which would be illegal for European citizens, will be enforceable in British and American courts against any future Syrian government.
As Tim Harford says in the Financial Times this weekend:
This is an elegant idea. By drawing a clear line between existing debt, which is to be respected, and all future debt, which will be regarded as odious, it reassures creditors lending to the governments of poor countries. It frees innocent people from debts not of their making. And, cleverly, it undermines odious regimes by making it hard for them to promise credibly that they will repay their creditors.
The idea was first proposed by Thomas Pogge (here) and was subsequently developed by Michael Kremer and Seema Jayachandran, and it has been developed by a Center for Global Development Working Group which looked in detail at how it could be applied. We have now published an updated two-page policy brief by Kim Elliott and me and a new FAQ.
We have also put together a four-and-a-half minute video explaining how this approach could be applied to Syria today:
Many of us feel a sense of helplessness about events in Syria. The least we can do is call any new contracts with the regime what they are: odious and illegitimate, and promise that when Assad falls, debts incurred by him from today will not be visited upon those who will be working to rebuild the nation
Kim Elliott’s post on the CGD blog has more. If you have questions, comments or suggestions, please add them to the discussion there.
UPDATED 18 March 2012 to add reference to Thomas Pogge’s paper proposing the idea, first published in 2001.
The Guardian development blog is running a series of end of year reflections on development, including one by me. Many of the articles are upbeat about progress in developing countries, but pessimistic about the short term economic prospects for the industrialised world and for global cooperation to tackle shared global problems.
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.
This post first appeared on the CGD Rethinking US Foreign Assistance blog.
Information, not coordination, is the key to aid effectiveness. Some donors such as USAID are becoming interested in a more decentralized ‘Google Maps’ approach to aid coordination, to facilitate well-informed decisions by people on the ground. For this to work, donors need to do two things: publish more detailed project level information, and do so in an open, reusable, internationally consistent data format. Transparency aimed at a domestic audience is not sufficient.
We now know that the development system has met just one of the 13 targets it set in 2005 for making aid more effective. That is not surprising: the problems diagnosed in the Paris Declaration are real and important, but the solutions that have been pursued in its name have not been practical. There are better ways to achieve the aid effectiveness which the Paris Declaration envisages.
Here is an example of the problem, from Indonesia after the 2004 tsunami:
“Last February in Riga [close to Calang in Indonesia], we had a case of measles. The epidemiologists from Banda Aceh gathered, fearing that the measles would spread among displaced people, but the girl was cured in two days. Eventually we discovered that this child had been vaccinated three times by different organizations, each without a vaccination card or any type of control. The symptoms were the result of these measles vaccines”.
Informal translation of an article in El Pais (April 13, 2005)
This is a graphic example of a widespread problem in development and humanitarian aid: a coordination failure leading to a substantial waste of money.
Following Paris, a conventional wisdom has grown up on how this kind of problem should be tackled. The regional health department should call a big meeting of all the donors and NGOs who might be interesting in running an immunization programme. They should share information with each other about their plans: which vaccines they intended to administer, and where. Under the leadership of the ministry, the donors should agree a division of labour to eliminate overlaps and ensure that aid is used efficiently.
Similar committees would have met to plan and coordinate every other kind of intervention to avoid overlap and make the best use of limited resources.
You don’t have to have a degree in Political Science to be able to see why this committee approach does not work. A country director for a large government aid agency recently told me that he spent more than half his time in donor coordination meetings. Most of each meeting is taken up by donors listing what they are doing. (Not surprisingly, he has now quit.)
So what is the alternative?
Once an aid agency has been licensed by the health ministry to provide vaccinations, it could simply publish online, in an accessible format, details of its plans and activities. Another organization planning its own programme could then easily check how they can best fit with what other agencies are doing. With open information sharing, no child would be vaccinated against the same disease twice; and under-reached populations could be easily identified and served.
This is an example of an important general point about improving aid effectiveness. Aid staff on the ground should not be stuck in endless coordination meetings: they should have the information they need to make good decisions about how to have the biggest impact, within a regulatory framework established by government, without being constrained by inappropriate rules and incentives imposed on them from far away.
A Google Maps approach to development?
There is growing interest in a ‘Google Maps’ approach to development coordination. We have seen welcome moves towards mapping of aid projects, for example by the World Bank, USAID, and Canadian CIDA. But as the example of vaccination in Banda Aceh illustrates, the key to making this information useful is that sufficiently detailed data from many different organisations is available in one place.
Some of the momentum towards greater aid transparency is driven by the need for increased accountability to taxpayers in donor countries. This is a laudable goal, but if data publication is targeted on this purpose alone it misses even bigger potential benefits from transparency. The US Government is making gradual progress on its Foreign Assistance Dashboard and a geographical coding system: but on current plans the data will not contain enough substantive detail. It will record information which is good enough to get a broad sense of where aid is being spent (‘top level administrative region’) but will not record specific locations (‘street corner’). This approach may be enough to meet the needs of a US accountability agenda, but it will miss the opportunity to use robust project level data and geo-coding to track and coordinate aid, to close down the space for corruption and waste, and to link feedback from project beneficiaries to specific aid funders.
It is also important that aid information is published in a reusable open data format, which has been agreed by a large group of donors in the IATI standard. Several donors – including the World Bank, the European Union, DFID, Australia and the Netherlands – are now publishing their data this way. Other donors have plans to do so. While it is welcome that Canada is publishing more detail about its aid projects, as the website makes clear the target audience for this information is “all Canadians”. The information published by CIDA is of almost no use to people in developing countries because it is not published in a form which is compatible with data from other all the other donors. Open data – in the sense of being genuinely accessible and comparable – enables civil society, parliamentarians and citizens of developing countries to be part of the coordination and accountability from which they are presently excluded.
In contrast to Canada, the United States has said it will ‘cross-walk’ its aid data to the IATI standard, which is extremely welcome. But so far they have not done so. While the implementation of a Foreign Assistance Dashboard is an important step towards domestic US accountability, all this data will only be of use internationally to make aid more effective and accountable when it is also published according to the international data standard.
Of course, USAID and State Department have limited resources and should be spending their money as much as possible on aid rather than administration. But as the World Bank has found out with its Mapping for Results project, it is not tremendously complicated or expensive to geo-code aid projects – and it will be even easier if that is done at the outset by front line staff who have detailed knowledge of the projects, rather than retrofitted afterwards in Washington. Nor has it proved difficult or expensive to organize data into the IATI format: I am told it took UNOPS just four weeks to implement IATI, from start to finish. There are many other donors, and organisations such as the Development Gateway, AidData and aidinfo, who have experience in geo-coding projects and publishing information in IATI format, who would be glad to help to design procedures, set up systems, and even to share their computer code. Furthermore, the administrative savings from reducing duplication by publishing open data are estimated rapidly to outpace these modest implementation costs. This is not primarily a question of money, but of leadership, recognition of the value of transparency which serves international as well as domestic audiences, and a willingness to reach out to work with others.
We can – and must – make aid more effective. This means making sure that decisions on the ground are likely to yield the biggest possible impact, and for that we need not more coordination meetings but better information, greater decentralization, simplified systems, fewer perverse incentives and more accountability.
If you have comments please put them on the CGD website.
From the Financial Times comes news that David Cameron and Nick Clegg are planning to employ more political special advisers than the previous government; while the media and public try to work out whether there is anything improper about the Defence Secretary’s working relationship with Adam Werritty. The role of Special Adviser was invented by Harold Wilson to address the need for Ministers to have access to explicitly political advice alongside the civil service.
It is a shame that an increase in the number of special adviser posts is treated as an indicator of either profligacy or politicization of the civil service. Special advisers have played an important role which has helped the civil service and protected it from being drawn into party politics. In my civil service experience over 25 years, I worked with some excellent special advisers. Some of them, such as David Cameron, John Bercow, Ed Miliband and James Purnell, have gone on to other jobs in politics. Others have returned to jobs in business, think-tanks or public relations. I worked with some duds too: that’s when you really came to appreciate the advantages of having good one.
Norman Lamont, then Chancellor, with his Special Adviser
A good special adviser plays an important role in government by helping the civil service to think about the political implications of policy options – which is an essential perspective if policy is to be well-designed and implemented. They work with civil servants to identify the political questions that ministers are likely to ask, and to provide satisfactory answers, helping to smooth the policy-making process. They deal with party political issues – such as writing speeches for party events and dealing with party processes. Without special advisers, civil servants in Ministers’ offices would inevitably end up being drawn into these party issues. Special advisers also play an important role in helping to break down the silos across Whitehall – they often do at least as good a job as the civil service at identifying issues requiring cross-departmental discussion, and helping to broker agreements across government. All this is provided within a reasonably well-regulated structure which helps to avoid accusations of improper influence by outsiders.
The total cost to government of all this is about £7 million a year – in other words, negligible, relative to the institutional benefits of having a transparent arrangement which ensures that Ministers have access to alternative sources of advice from a political perspective. The Institute for Government recently recommended the appointment of additional special advisers to strengthen the functioning of the coalition government.
Michael White asks in today’s Guardian why Liam Fox didn’t make Adam Werrity a Special Adviser. I don’t know the answer, but a possible explanation is that each minister has a quota, in an attempt to keep the numbers down. Gordon Brown, when he was Chancellor, got round this by appointing a “Council of Economic Advisers” instead. It is sad to see a cheap political tail (a fetish about the number of Special Advisers) wag an important institutional dog (having a structured mechanism for Ministers to draw on political advice if they wish).
The political establishment has become absurdly fastidious about the idea of Ministers getting advice from a variety of different sources. There is no principle – nor should there be – which prevents Ministers from listening to the opinions of a wide range of people from outside the ranks of the civil service and special advisers. We should welcome a diversity of opinion, especially from people who are well-informed in an issue, which almost always means they have some sort of interest in it. These interests may be financial, institutional or simply a matter of doing something in which the person believes. There is no requirement that a civil servant must always be present when Ministers meet other people: the civil service is not there to police a Minister’s interaction with the outside world (and nor does the civil service wish to do so, though sometimes they may wish they had). It is up to Ministers to choose which advice they wish to heed, and they are accountable to Parliament for those decisions. The civil service already has privileged access to decision-making: it should not (and in my experience does not) aspire to have a monopoly.
So can we please embrace the role of Special Advisers in government; not impose too tight a cap on their numbers; and ensure that they are properly paid and supported? They play an important role in the strange ecosystem of government.
On Friday the World Bank London office had a meeting on ‘the Future of Aid’. The meeting was, according to the tortuous language of the invitation, “conducted in an informal manner with interested stakeholders from governments, civil society, private sector, media and academia with a view to explore new ideas on how best to explore cooperation between European actors and the World Bank Group in addressing these challenges.”
Annoyingly the meeting was held under The Chatham House Rule which means I am not allowed to report who said what. (Tangential thought: I am considering ignoring this in future if the invitation does not make it clear that this is the basis on which the meeting is being held.) I am allowed to tell you that the group included people from ODI (Simon Maxwell & Andrew Rogerson), a co-author of Philanthrocapitalism (Mike Green), DFID (Paul Healy Healey & Laura Kelly), the EBRD (Erik Berglöf, Gaspard Koenig & Hans Peter Lankes), and representatives from KPMG (John Burton), ActionAid (Lucia Fry), Save the Children UK (Jessica Espey & Kate Dooley) and BOND (Joanna Rey).
It turned out to be an interesting discussion.
First, there was considerable pessimism about the public’s appetite for aid. Opinion polls depend heavily on how you ask the question, but a common theme seems to be that the public’s concern for poverty and development is stable and quite high; while the public’s confidence in government aid is falling rapidly. There are several reasons why these may be diverging, which are not mutually exclusive. Declining support for aid spending may be the effect of the economic downturn; it may reflect a trend towards public distrust of bureaucracies; it may be the long term consequence of aid’s failure to live up to its supporters’ excessively grandiose claims of what it can achieve. There was some debate about whether a greater focus on ‘results’ could reverse this. Hardly anyone seriously argued that declining public support is merely a temporary consequence of the economic downturn which will reverse automatically when incomes start to grow again.
A second interesting theme was the tension between more effective aid, and aid which donors are willing to provide. It is possible that as the system shifts towards greater recipient country control of how aid is used (as envisaged under the Paris Declaration), so support for aid in donor countries declines. If you can’t use aid to promote your economic, commercial, security and strategic interests, then you might not want to give it at all. Bertin Martens memorably pointed out that the end of structural adjustment programmes in the 1980s (under which donors attempted to impose various policies on recipient countries) was followed by sharp decline in aid in the early 1990s. If you see the aid relationship as an equilibrium between the interests of the donors and the interests of the recipients, and if the Paris Declaration is an effort to move away from this equilibrium by reducing the power of donors and increasing the power of recipient countries, then perhaps declining aid budgets today are a consequence these modest moves away from the equilibrium. There is almost no public support for budget support (a form of aid which embodies many of the Paris principles) and budget support may now in retreat – so perhaps the aid system was temporarily pulled from its equilibrium by Paris, and may now be heading back to it again. In other words, there may be a choice between an abundance of somewhat ineffective aid which balances the interests of recipients and donors, and aid which is less conducive to the interests of donors, more effective at reducing poverty, but much less abundant. Aid agencies have a stronger internal interest in abundance than in effectiveness, and so will tend to support a return to the equilibrium in which aid is popular and plentiful, but not tremendously effective.
The third theme was the most interesting. Mike Green recalled an idea from Empire, a ghastly book published in 2000 by Antonio Negri and Michael Hardt, which suggested that activists may organize themselves as a ” post-modern posse”. Mike suggested that, in the absence of effective mechanisms for global governance to provide public goods in a rules-based system, we are left tackling these problems in temporary coalitions, or posses, which come together outside formal structures and without formal legitimacy. Examples range from the coalitions of the willing which come together to support military intervention, to the vertical funds which have proliferated in the aid industry. (Mike was not suggesting that this was desirable, but pointing out that this may be what happens in a second-best world without effective global institutions). This idea clearly resonated with the group, which recognised the applicability of the metaphor as a description of today’s development system. (Update: more on the ‘posse’ idea from Mike Green and Matt Bishop here.)
My own view, for what it is worth, is that:
- we should consciously reposition aid as support to those who are most marginalised to provide them with access to key services such as food, water, health and education, and move away from the idea that the purpose of aid is to accelerate economic development;
- that’s not because economic development isn’t an important objective; but it may not be the best use of aid;
- the main things that industrialised countries can do to promote economic development in the developing world may be changes in other policies ‘beyond aid’ such as trade, climate change, migration, climate change, cooperation on tax, tackling corruption and illicit financial flows; and arms sales;
- some organisations which profess to be interested in development are too heavily focused on aid and not enough on how we can improve these other policies.
Michael Woolcock sent me this excellent quote from Thomas Paine:
When it shall be said in any country in the world, ‘My poor are happy; neither ignorance nor distress is to be found among them; my jails are empty of prisoners, my streets of beggars; the aged are not in want, the taxes are not oppressive’—when these things can be said, then may that country boast of its constitution and its government.
Thomas Paine, The Rights of Man
A new edition of the Development Drums podcast is now available online. Malini Mehra from the Center for Social Markets and Alex Evans from the Center on International Cooperation at NYU take a step back and look at the broad sweep of the big development challenges of the 21st century.
Malini Mehra and Alex Evans discuss the big development challenges of the 21st Century in Development Drums 25
Alex Evans and I recently took part in a discussion of the big development issues with a committee of Members of Parliament in the British House of Commons. Alex kicked off that meeting with a magisterial and somewhat pessimistic presentation which set out ten key issues for development, and we took his presentation as our agenda for this discussion on Development Drums.
Malina and Alex are interesting and knowledgeable on a dauntingly wide range of issues, and the podcast covers a lot of ground: the changing distribution of global poverty; demographic change; the financial crisis; oil prices; food prices; feeding the 9 billion; climate change; trade; the changing face of conflict; the global governance deficit; and the implications for UK development policy. Each of these issues really needs an entire episode of Development Drums to be discussed properly, but I thought it was interesting to bring them all together to draw out common issues and ideas.
The following thoughts struck me from the discussion:
First – the importance of resilience which cropped up again and again in the discussion. I think this is possibly the Next Big Thing in development thinking (as if we need more Big Things). The idea is that we should be helping to develop the institutions and assets that ensures that people are resilient to shocks, of which there seem to be likely to be more.
Second – treating shocks as opportunities as well as risks. As Alex points out in the podcast, there was a narrow window after the collapse of Lehman Brothers during which we could have remade the global financial system: but nobody had a plan ready to go. There are going to be more shocks: will the progressive development community be ready to seize the opportunities these represent?
Third – the almost complete failure of global governance. All the issues we discuss relate in some way to the failure to put in place effective global processes and institutions to solve collective action problems such as on trade, climate change, or food supply. As Malini says, we are living in an era not of the G-8 but of G-0. Alex provides an interesting analysis of the problems in the podcast: on the face of it, to my mind, the problems don’t sound insurmountable.
Fourth – the optimism and energy coming from emerging countries such as India and China. Malina both describes and embodies this. But it’s also clear that on many issues – notably trade and climate change – the interests of these increasingly powerful countries are now diverging from those of the less developed countries, and we need to think hard about ensure the interests of the poorest countries are not left behind a grand bargain between the old and new rich countries.
Fifth – development policy isn’t mainly about aid. In a discussion which surveys the big development challenges confronting us, aid hardly gets a mention. Yet most of the development agencies in the world spend most of their time thinking about aid.
How to listen to development drums
You can listen to Development Drums on your computer straight from the website (http://developmentdrums.org) or download any episode (from here) to your MP3 player or computer. Alternatively, you can subscribe to Development Drums on iTunes free of charge (search for “Development Drums” in the iTunes store).
As is the Development Drums custom, the podcast plays out with a slightly relevant song. See if you can guess before you get to the end what it’s going to be (there’s a clue hidden in the title of the podcast, Episode 25: Global Development Challenges).
Other development podcasts
I find podcasts a convenient way to keep up to date, especially when I’ve got long plane flights or trips by road; and lots of people listen to them when running on the treadmill in the gym or during their commute.
If you enjoy Development Drums, you may also enjoy the Center for Global Development’s Global Prosperity Wonkcasts, which are a bit shorter than Development Drums. As with Development Drums, you can listen online, subscribe to the feed or subscribe free on iTunes.
The Guardian has also recently started a monthly development podcast. The most recent editions are about “securitisation of aid” (that is, greater focus of aid on fragile states) and on so-called “Land Grabs“. Again, you can subscribe to the feed directly, or get it free on iTunes.
Here’s a complete list of development podcasts:
- Development Drums
- The Center for Global Development Prosperity Wonkcast
- The Guardian Focus Podcast
- Think Before You Give
- BBC Africa Today
- Peterson Perspectives
- PRI: Global Health and Development
- The World Bank Podcasts
- Philanthropy This Week
- PRI: The Changing World
Other economics podcasts
Tim Harford (author, and FT leader writer) has just compiled a list of the best economics podcasts.
During the mass migration between the middle of the nineteenth century and the outbreak of the first world war, about a third of Europeans migrated from their country of birth, mainly to America. Today levels of migration are proportionately lower, because nation states have imposed much tighter restrictions on the movement of people than at any time in human history.
Earlier this year, Lant Pritchett and Michael Clemens laid down a challenge to development policy thinking:
Development is about people, not places; the development benefits of labor mobility are enormous; and the costs of greater labor mobility, sorely feared, are often exaggerated. The next step for global development policy might be to take labor mobility seriously as a powerful weapon in the fight to give all people on earth the same opportunities that most readers of this chapter now enjoy.
The benefits of migration for development
We know that migration can make a hugely important contribution to development. It benefits the migrants themselves, enabling them to increase their own incomes and lift themselves and their families out of poverty. It also benefits the countries from which migrants come, as Ireland and Norway found in the nineteenth century. Remittances to less developed countries are now about $325 billion per year, much more than $120 billion a year of official aid. These remittances, for the most part, go directly into the hands of low-income people and they rise faster than aid after natural disasters. Migration is also an important driver of technology transfer and knowledge sharing which contributes to long term economic growth. It can improve leadership and governance: two thirds of developing-country heads of state or heads of government studied and lived abroad before they returned to lead. Of the 21 cabinet ministers of Singapore, 20 have an advanced degree from outside Asia and almost all have extensive work experience outside Asia.
Economists have estimated that a relaxation of rich countries’ restrictions on temporary labour mobility of about 3% of their labour forces would raise developing country welfare by an amount roughly equal to total annual global aid flows (see here and here). The British government already knows this: the papers were co-authored by Alan Winters, now Chief Economist at DFID. Unlike aid, a small increase in labour mobility would cost rich countries nothing: on the contrary, it would cause their own economies to grow.
Why so little reaction to changes in UK policy?
Yet supporters of international development have been reluctant to take up the cause of increasing immigration, perhaps because it is politically unpopular in rich countries. (Michael Clemens at the Center for Global Development, and Sarah Mulley at IPPR stand tall as honourable exceptions to this generalisation.)
Fear of championing a politically unpopular cause might be why there has been little reaction in development circles to last week’s announcement of changes to UK immigration policy.
The new British stance is likely to have significant adverse effects on people in developing countries. Because free movement of people within the EU is guaranteed by treaty, the UK government can cut total migration only by clamping down on migration from countries outside the EU. Under the previous policy, people from developing countries faced implicit discrimination because of the “previous salary” provisions; now Tier 1 General immigration has been almost completely abolished, closing off one one possible route for immigrants from developing countries. The government has announced that it will sharply reduce the number of students coming from abroad. Students make up almost two thirds of the non-EU migrants entering the UK each year. More than 40% of the student visas are for study below degree level, which the government plans to end altogether. I have not been able to find a breakdown of the country of origin of these students, but it is a fair bet that the majority are from developing countries. The government also plans to end completely the link between temporary migration (eg for students) and the ability to settle permanently, and it is consulting about stopping post-study visas. All this is a very big deal for developing countries, both because it will reduce immigration from developing countries and because it will limit access to education and skills transfer.
I was struck that that the possible impact on development and poverty was not mentioned by any member of Parliament in the debate. Do MPs not know that this will have a significant impact on developing countries, or do they not care?
As well as being bad news for developing countries, the policy of reducing the number of students from abroad is also bad news for Britain – not just for educational institutions whose markets will shrink, but for the loss of lifelong connections that former students in Britain take away with them, with adverse effects for our reputation, influence and commerce abroad.
The impact on rich countries of immigration
Immigration remains a hugely sensitive political issue in the UK. Some people are concerned about the economic effects: on jobs and incomes, and increased demand for public services such as education, housing and welfare. These economic worries don’t stand up to scrutiny. The suggested impact on jobs relies on the mistaken idea that ‘there is only so much work to be done’ and that a job given to an immigrant is one fewer for someone else. Immigrants increase demand in the economy as well as the labour supply, so immigration will not, on its own, lead to an increase in unemployment. Nor does immigration reduce wages for native-born workers – on the contrary, the evidence is that immigration leads to a small but positive increase in wages resulting from increased demand. There may be some negative effects on the wages of low-paid workers, especially on the wages of previous immigrants; but given that the overall effect is positive, these distributional effects can easily be offset with appropriate tax and spending policies. On balance, immigrants make a huge contribution to the economy. Nor is immigration a drain on the public finances. A UK Home Office study estimated that immigrants paid in 10% more in taxes than they received in public services and benefits, compared to only a 5% ‘surplus’ for the UK-born population. A subsequent study by IPPR found that in times of deficit, immigrants made a small contribution to the deficit, albeit smaller than UK-born citizens. Either way, the effect on public finances is small. It suggests, however, that the government should be more agile about ensuring that spending on public services responds quickly to changing population patterns so that public services in particular communities do not come under pressure when there is a rise in the number of immigrants there.
Other people are concerned about the social effect of increasing diversity of distinctive cultures in our society. Providing reassurance about that is beyond my competence as an economist; but speaking personally I value living in a diverse society and dislike intolerance of difference.
I don’t want to be dismissive of the fears and concerns of the population about greater immigration, though the evidence suggests that the overall economic effects are positive. But even if there were negative effects, that would have to be weighed against the hugely positive impact for both the immigrants themselves, and for developing countries as a whole. We have obligations to other people, including those who did not have the good fortune to be born in the UK; and almost any other way of discharging those obligations will be more expensive to us than permitting greater migration, which is likely to be on balance to our advantage.
Recognising the impact on global poverty
I’m an optimist, but I’m not delusional: I know that concern about global poverty is not going to convince politicians to open the country’s borders in the face of domestic political concerns about immigration. But that does not mean that development advocates should surrender. If the government is determined to have a tighter immigration policy, let’s make sure that the details of the policy are development friendly. The business lobby has managed to persuade the government to relax restrictions on transfers within firms. If overall immigration is capped, and powerful lobbyists secure a relaxation of the kinds of immigration they favour, the burden of the reductions will fall on those who have little voice and nobody willing to speak for them.
The absence of any apparent interest in the development impact of this new immigration policy has convinced me that there should be a requirement on the government to publish a quantified poverty impact assessment of any policy proposals which are likely to have a significant effect on the people of the developing world, including immigration, trade, intellectual property, climate change, and arms sales. I don’t imagine that this would change policies overnight, but a requirement to produce and publish such an analysis might concentrate the minds of policy-makers and and their advisers on whether there are ways to adjust the details of the policy in a way which does less harm, and perhaps some good, for development.
Under the International Development (Reporting and Transparency) Act 2006, the UK Secretary of State for International Development is required to publish an annual report containing “such general or specific observations as he thinks appropriate on the effects of policies and programmes pursued by Government departments on (a) the promotion of sustainable development in countries outside the United Kingdom, (b) the reduction of poverty in such countries.” I hope that the Secretary of State, who has a strong personal commitment to transparency, will consider it appropriate to include in the next report observations about the effect on development and poverty of these changes to immigration policy.
Finally, Gideon Rachman of the Financial Times notes in his blog that the government’s new immigration policy won’t tackle the underlying problems that has made this a political issue. He concludes:
So, unable effectively to tackle the kind of immigration that actually upsets people, the British government is taking aim at the one group of migrants that are largely uncontroversial and that unambiguously contribute to the country’s well-being. What idiocy.
Tim Harford had an interesting article in the FT in August arguing that we are better off in most walks of life if there is experimentation and a multiplicity of approaches.
But how do we value diversity in the aid business, when the prevailing consensus, embodied in the Paris Declaration, is that proliferation of aid agencies is a growing problem which is making aid less effective?
The aid system could in principle benefit from the emergence of new kinds of donors (specialised multilaterals such as GAVI, new donors such as China and Brazil, philanthropic foundations such as Gates, private non-profits such as Marie Stopes) working alongside conventional bilateral and multilateral aid. Different kinds of organisations could bring particular strengths which complement each other’s work.
However, in practice these different types of organisation do not seem to be playing to their strengths. Like kids playing football, everybody follows the ball instead of holding their position on the pitch.
Proliferation is a significant problem
We will come to the benefits of diversity among donors. But first let’s acknowledge that proliferation is causing real problems on the ground. Developing countries are having to deal with a large and growing number of partners, each with separate agendas, priorities, and requirements. Meetings, reports, milestones and systems multiply. Skilled staff are hired away to serve in local agency offices or NGOs. Funding is fragmented and unpredictable, which means that developing countries are often unable to bring together the scale of long-term, predictable finance needed to undertake significant institutional reform and service delivery. Donors lose influence, because they undermine each other; and yet developing countries are not able to keep track of, let alone exercise sufficient ownership and control over, an increasingly fragmented system of aid delivery. Public accountability is impossible, since nobody has a clear view of what resources are being used, by whom, or for what purpose. Donors face rising administrative costs when agencies proliferate, and the costs of coordination and harmonization rise exponentially with the number of aid agencies.
Here are three real life examples of the problems that are caused by the proliferation of aid agencies:
- In Vietnam, it took 18 months and the involvement of 150 government workers to purchase five vehicles for a donor-funded project, because of differences in procurement policies among aid agencies. (source: Knack/World Bank)
- In 2007 alone the EU countries launched 22,000 new aid projects inn developing countries, with an average budget of €0.7-1 million. The total costs of preparing new projects by EU donors (not the money needed to fund them, just the administrative cost of putting them in place) is estimated at between €2-3 billion per year. (source: EU)
- In the aftermath of the tsunami disaster a local doctor in Banda Aceh, one of the most affected areas, wrote: “In February, in Riga (close to Calang) we had a case of measles, a little girl. Immediately, all epidemiologists of Banda Aceh came in, because they were afraid of a propagation of measles among displaced people, but the little girl recovered very fast. Then, we realized that this was not a normal case of measles and we discovered that this girl has received the same vaccine three times, from three different organizations. The measles symptoms were a result of the three vaccines she received.” (source: Djankov et al)
(For more examples of proliferation badness, take a look at ‘The Governance of the aid system and the role of the EU’ by Owen Barder, Simon Maxwell, Mikaela Gavas and Deborah Johnson.)
Different types of agency could make different contributions
These problems are caused by a growing number of aid agencies doing broadly the same thing. That proliferation imposes substantial costs on donors and on recipient countries and this makes aid much less effective. The question is whether there are also benefits to having this large number of agencies, compared to delivering the same amount of money through fewer channels.
In principle a greater variety of different types of donor, if they focused on their specialisms, could strengthen the aid system, because they can make different kinds of contribution which could complement both existing donors and each other.
Here are some ways in which different types of donor can make different contributions:
- Philanthropic foundations, such as Gates, Ford, Hewlett and Rockefeller, are still tiny in comparison to government aid agencies, but they are increasingly important in particular sectors, notably health. In their recent book, Philanthrocapitalism, Matt Bishop and Mike Green argue that the growth of philanthropic giving should be welcomed, because these foundations bring a “businesslike approach to solving society’s problems”. According to this view, philanthropic donors bring new attitudes and ways of working. Foundations are frequently founded by successful entrepreneurs, so they may be more inclined to operate along business principles, such as making decisions based on evidence, tightly controlling overheads, adopting new technologies, and focusing more sharply on results. They may be willing to take more risks and accept more failures in return for bigger success than risk averse governments. Foundations may be more able and inclined to work closely with the private sector, which plays a key role in development, which official agencies have not found easy to do. Because foundations do not depend on public support for future funding, they may be willing to support unpopular causes, or investments which do not easily capture the public imagination (e.g. supporting statistical systems in developing countries).
- New government donors such as China and Brazil are playing an increasingly important role (though the Economist was wrong to suggest that Brazil’s aid budget is comparable to that of Canada and Sweden). This has caused concern among traditional donors, who worry that their implicit cartel is undermined by donors that are less concerned about governance and human rights, and that are prepared to be more open about its desire for access to raw materials and minerals. These new donors do not feel constrained to follow the DAC development model, and in many ways developing countries prefer the approach which tends to respect the sovereignty and ownership of developing countries. These donors rarely poach skilled staff; and they do not overstretch developing country governments with meetings, reports and workshops. They are also willing to invest in sectors that the DAC donors have moved away from, such as infrastructure, irrigation and university scholarships.
- The number of private charities is also growing, funded both by institutional donors and by private giving. Here in Ethiopia there are about 3,500 NGOs, spending about $1.5 billion a year (compared to the Ethiopian government budget which is about $4 billion a year). Private aid through charities tends to focus on supporting communities and individuals rather than governments. It tends to be more opportunistic and closer to the ground. These organisations can bring about results more directly although it is harder to bring about systemic change this way.
- Specialised multilateral global organizations – such as the Global Fund against AIDS, TB and Malaria (GFATM) – continue to grow in number. In principle, they can bring apply specialist skills and expertise, they can learn more systematically and spread knowledge more quickly, they can bring together a number of different donors, the public and the private sector to work in a more joined-up way on a particular issue, and they can raise money from the public because they can be more specific about what they do.
This changing landscape could benefit the aid system …
In an ideal world, if these different development actors played to their strengths, and stuck to their specialities, this growing diversity could strengthen the international aid system as a whole. Foundations could act like venture capitalists: taking bigger risks, and backing it up with rigorous evaluation and evidence, but leaving long-term financing of scaled up successes to official aid donors. Official aid agencies could focus on long term funding and resource transfer, and they could provide sustained support for institutional change and capacity. Private aid could focus on achieving community and individual level results. Specialised global organizations could provide particular expertise not available through generalist support. The growing number of official donors could build up expertise in particular countries or topics, and specialise in these, and they could respond to evidence generated by foundations and NGOs about what works, by taking those activities to scale.
If these actors could all focus on their strengths, and if the aid system enabled them to work together well, these changes in the development landscape might substantially improve the effectiveness of development assistance.
… but in practice it does not work like that
That’s all very well in theory, but most people working in the aid business will tell you that back on planet earth, it doesn’t work like that.
Rather than differentiate, development organisations have strong incentives to converge. So instead of specialisation we get duplication. The philanthropic foundations say that they have a more entrepreneurial, risk-taking approach; anecdotal experience suggests that in many cases they prefer the implicit validation of being part of a multi-donor group. (This may be a form of political correctness: agencies seem to think that the Paris Declaration on Aid Effectiveness requires that they be part of a shared funding arrangement rather than doing anything alone.)
For example, consider the bandwagon on restoring funding of health systems. Increasing the funding of health systems is something of which all right-thinking people should approve. The arrival of the big global health initiatives, particularly GFATM and GAVI, coincided with a collapse in funding for health systems which led to many unnecessary deaths in developing countries. Donors are now seeing that the shift away from health systems to vertical funds was an error (one which was predictable and predicted), and the pendulum is swinging back to funding health systems. The institution with the mandate and greatest capacity for supporting developing countries to strengthen their health systems is the World Bank. So why are the Global Fund and GAVI being allowed on the health systems bandwagon? The logic of establishing these specialised multilateral agencies was that they would bring particular depth and expertise to specific activities which would be available from more generalised aid agencies. If we offer competition to World Bank concessional loans in the form of grant finance through GAVI and and the Global Fund, most developing countries will look to these institutions instead. As a result of the proliferation of health funds offering grant finance for health systems, the core role and capacity of the World Bank is eroded, and we put at risk the benefits of specialisation by GFATM and GAVI. Similarly, the International Finance Facility for Immunisation (IFFIm) was set up to enable donors to secure the benefits of front loading spending on vaccination, for which there is a clear economic rationale. Now it is proposed that it should also finance health systems: if there is an economic rationale for using IFFIm on health systems, I’d like to hear about it.
What’s missing?
The growing number and diversity of development organisations could be a source of strength in the aid system, if different organisations could stick to their specialities and if they worked in an aid environment which enabled them to work together effectively.
In competitive markets, firms tend to focus on their strengths, because this is how they make the biggest profits. Firms that diversify into another line of business either need to make a success of that new work, or they will start to make losses and eventually decide to withdraw or they will go bust. So appropriate specialisation is the consequence of individual decisions by profit-maximising firms, and not a result of a collective compromise.
Unfortunately, the political economy of aid encourages the opposite behaviour. The “operating system” which supports the work of aid agencies creates pressures against specialisation. For example:
- Organisations which work collaboratively and holistically across a wide range of activities are likely to attract more donor funding than organisations which are effective in a particular niche. One reason for this is that many donors either don’t have, or don’t systematically use , information about impact and cost effectiveness when they make resource allocation decisions – so there are rewards for aid organisations getting involved in as many activities as possible, and no penalty if this mission creep makes them less effective.
- Lack of transparency and access to information about who is doing what means that organisations cannot make sensible individual decisions about how they can increase their own impact with finite resources and avoid duplication.
- There are no mechanisms by which innovative ideas can be pioneered by foundations or NGOs and, if they are successful, taken up and taken to scale by official donors and multilateral funders. There too little venture capital to support innovation; too little rigorous analysis of what actually works; and the mechanisms for taking successful programmes to scale are too unpredictable and capricious.
- Donors, NGOs and foundations are all under pressure from well-meaning activists to be engaged in everything everywhere. For example, last year the Lancet criticized the Gates Foundation saying that it should “do more to invest in health systems and research capacity in low-income countries, leaving a sustainable footprint”. DFID is criticised for a perceived lack of investment in agricultural research. In a sane world it would be perfectly sensible for the Gates Foundation, which has very little in-country presence, to fund technological research in health and agriculture, but not to invest in health systems in developing countries; and for DFID, which has an extremely professional presence on the ground in developing countries, to invest in developing country systems but not to spend money on research, in which it has no discernible comparative advantage. We could have the same total spending on both research and systems, managed by organisations specializing in those activities and reducing coordination and transaction costs. But development activists and politics apparently make such a division of labour impossible for both organisations.
- The Paris Declaration on Aid Effectiveness and Accra Agenda for Action are being implemented in ways which create strong peer pressure on donors to collaborate and harmonise, to engage in pooled funding and joint activities, rather than to diversify and specialise. Where there are efforts towards a better division of labour (e.g. this EU initiative), the approach is based simply on getting down the numbers by committee, rather than creating incentives which push development agencies towards focusing on the areas in which they have a comparative advantage.
What should we do?
The proliferation of development organisations, which could be a great strength, is instead becoming a growing handicap for the aid system, because the system is not well adapted to taking advantage of that diversity and encouraging appropriate specialisation.
Some possible measures that might address this are:
- a step change increase in transparency about aid. The International Aid Transparency Initiative offers the promise of this, as it will provide up-to-date, detailed information about aid projects in an accessible form.
- agreement to an international standardized system for describing and measuring outputs and unit costs, to facilitate cost-effectiveness comparisons across development organisations;
- explicit use of unit costs and cost-effectiveness in aid allocation decisions, in a way that penalises organisations which are engaged in activities in which they are relatively ineffective
- the development of a mechanism for “venture capital” funding with an associated process for scaling up success;
- self-restraint by development activists who do more harm than good by trying to push every development organisation to be involved in everything.
As ever, I’d welcome further suggestions in the comments section.
Regular readers will have noticed that things have been quiet around here for a while. I’ll be back to blogging properly in a while.
In the meantime, I am dead impressed by this collection of very accessible briefs from the House of Commons Library (of all places). The briefs are easy to understand, and they will be useful for people who are trying to write good analysis as well as for people who want to understand the statistics that they are reading.
Here are links to the briefs (all of which are pdf files):
- What is a billion? And other units
- How to understand and calculate Percentages
- Index numbers
- Rounding and significant places
- Measures of average and spread
- How to read charts
- How to spot spin and inappropriate use of statistics
- A basic outline of samples and sampling
- Confidence intervals and statistical significance
- A basic outline of regression analysis
- Uncertainty and risk
- How to adjust for inflation
- Chart format guide
Hat tip: Flowing Data and Lone Gunman
There was an interesting article in last week’s Economist about the use of prizes to promote innovation. It was supportive of the idea in general, but it seemed to gloss over the economic arguments. I think it is a shame that the Economist did not take the opportunity to explain the economics of rewarding innovation, and in particular to explain in economic terms why our current arrangements do not do a good job of creating incentives for innovation that benefits developing countries.
You can think of patents as a kind of prize. When you invent a new product, the government gives you the right to operate a temporary monopoly. This enables you to charge more than the marginal cost, and the premium is your “prize”. This arrangement has the huge advantage that it links your reward to the amount people are willing to pay for your invention, so it encourages innovations that people actually value.
This kind of prize as a reward for innovation may be fine for a new kind of vacuum cleaner, or for Lady Gaga’s latest album. But it has two big disadvantages which are especially relevant for people who live in developing countries.
First, the use of patents prevents some people from benefiting from the new technology if they are unable to pay the higher price. If a company develops a drug for heart disease, or a more efficient form of solar panel, the patent will enable them to charge much more than marginal cost for their product. That’s how the inventor gets paid. But the result is that millions of people will not be able to afford that product – though they might be able to afford it at marginal cost. The temporary monopoly results in fewer people benefiting from new technologies than ought to benefit, in the sense that those people would be willing and able to pay the marginal cost. This is potentially a big welfare cost to society as a whole. It means, for example, that people may die of heart disease because they can’t afford the high price of the drugs, even though they could buy the drug if it were sold at marginal cost; or they can’t use new fertilizers or seed technologies, even though the benefits to them of doing so exceed the cost.
Second, if we reward inventors by granting them temporary monopolies, we only create incentives to develop products for which there are likely to be enough consumers wealthy enough to pay a monopoly price. Nobody will invent a vaccine against malaria, or a cassava plant that resists mosaic virus, based on the possible rewards they will get from charging high prices to its consumers. So the patent system is a prize for people who invent cures for baldness, but not a prize for people who invent ways to prevent the spread of malaria.
For these reasons, other incentives, such as prizes, Advance Market Commitments, and similar mechanisms, may be effective either as alternatives or complements to the patent prize of a temporary monopoly, especially for technologies that would have benefits in developing countries.
The Economist quotes Tachi Yamada, the president of Global Health at the Gates Foundation, as suggesting that Advance Market Commitments or prizes may not work well for drugs that require a long time to develop:
Tachi Yamada of the Gates Foundation is a big believer in giving incentive prizes, but gives warning that it can take 15 years or more to bring a new drug to market, and that even AMC’s carrot of $1.5 billion for new vaccines may not be a big enough incentive. No prize could match the $20 billion or so a new blockbuster drug can earn in its lifetime. So, in some cases, says Dr Yamada, “market success is the real prize.”
This seems to reflect the suggestion that is sometimes made that Advance Market Commitments may not be appropriate for for early stage drugs, but the economics of this argument is faulty.
It is clearly true that the reward for bringing to market an early stage medicine, such as an AIDS or malaria vaccine, would need to be higher, both because of the greater uncertainty and risk of failure, and because the rewards are further in the future. So an AMC for an early stage product would probably need to be larger than for a late stage product that just needs some tweaking for use in developing countries and some investment in bigger production facilities. But let’s not overstate this. The median total market size for new chemical entities that pharmaceutical companies actually bring to market is about $3-$4 billion. Most medicines are not $20 billion blockbusters. So $3-$4 billion is roughly the market size that the private sector considers sufficient reward to develop new medicines. We don’t need to match the blockbusters. An AMC of $4 billion might well be enough to incentivize the development of a malaria vaccine: and let’s not forget that if it turns out not to be enough, it won’t have cost the funders anything.
Furthermore, just as the firms discount the prize by the risk of failure, the funders should similarly discount the cost. If there is a 25% chance that no vaccine will be developed (because the technology is uncertain) then firms will discount the “prize” – that is, the value of the committed market – when they make their investment decisions. But in this case, the expected cost to the funders of a $4 billion pledge is $3 billion, and this is what they should include in their value for money calculation. That means that even though the nominal amount that has to be promised for an early stage product needs to be higher for a given impact on R&D, to take account of the probability of failure, the expected cost to funders is not higher.
The same point can be put another way. A high probability of failure makes all investment in R&D less attractive, but it does not make AMCs relatively less attractive than other forms of funding. When the probability of failure is high, the expected return from each dollar spent encouraging innovation is lower. This is true if that dollar is spent up-front in the form of research grants of the kinds normally given by aid agencies and foundations (since the higher probability of failure reduces the expected benefits of the grant), or in the form of a prize or promised market (since the higher probability of failure reduces the expected benefit to firms, and so reduces the incentive for them to invest in R&D). The effect is the same either way. Higher probability of failure is clearly bad, but it does not make AMCs relatively less efficient as a way to pay for research for early stage products.
Whether an AMC for an early stage product is good value for money depends ultimately on the value of the product. If donors were to spend $4 billion buying a malaria vaccine for use in developing countries, it would be a hugely good investment, saving millions of lives a year at a fraction of the price of many other interventions. It would result in huge savings on trying to prevent malaria in other ways, or treat to treat malaria; and the resulting reduction in the burden of malaria would have huge economic benefits for developing countries. Given that there is no question that donors would want to spend at least $4 billion paying for a malaria vaccine to be used across the developing world, it is inefficient for them not to say so right away, and thereby create incentives for private sector investment in accelerating its development. The risk of poor value for money in aid spending comes not from making the commitment, but from failing to do so.
When Dr Yamada says that “market success is the real prize”, he seems to be missing the point that market success is not a good way of rewarding innovation for developing countries. If we rely on market success, in the form of a temporary monopoly, to reward innovation then we will exclude half the world’s population from being able to access technologies developed with rich markets in mind, such as drugs against cancer and heart disease, clean energy, new agricultural technologies, or new software. And “market success” creates no incentive to develop technologies which primarily benefit the world’s poor such as a vaccine against malaria or a variety of cassava that resists the mosaic virus, because inventors know that the people in poor countries cannot afford the monopoly prices that would enable inventors to recover their costs.
Welcome to my world:
Fortunately my partner has reality-based beliefs.
Ravi Kanbur has written an interesting paper (pdf) about how he feels as someone who makes a good living from analysing and writing about poverty. Here is an extract, but it is worth reading the whole, thoughtful piece:
What is striking about the class of poverty professionals (of whom I am one) is that the good living (granted, not at the billionaire or millionaire level, but pretty good nevertheless) is made through the very process of analyzing, writing, recommending on poverty. To me, at least, this is discomforting and disconcerting. I feel slightly ashamed within myself when I turn up to a poverty conference (perhaps even one where I am the keynote speaker), having flown business class, staying in an expensive hotel and (sometimes) being paid handsomely for attending. I recall many years ago, when I was in my twenties, telling the anthropologist Mary Douglas about how I was starting to do consulting for the World Bank on poverty issues, and how important it was to do this work. “And it’s not too bad for one’s own poverty either, is it?” came her worldly, knowing, reply. The seeds of discomfort sown by that comment have germinated and taken root, and now won’t let go.
Ravi suggests that everyone working in development should reconnect with poverty through a poverty immersion:
each poverty professional should engage in an “exposure” to poverty (also known as “immersions”) every 12 to 18 months. I do not mean by this rural sector missions for aid agency officials, nor the running of training workshops by NGO staff. What I mean is well captured by Eyben (2004); these are exercises that “are designed for visitors to stay for a period of several days, living with their hosts as participants, as well as observers, in their daily lives. They are distinct from project monitoring or highly structured ‘red carpet’ trips when officials make brief visits to a village or an urban slum….”
A friend of mine from DFID did this recently and came back saying how valuable it was. I am in favour of immersions, though I don’t think it gets close to addressing the problem that Ravi is grappling with.
This reminds me that in March 2008, the Conservative development spokesman (and, since yesterday, the UK Secretary of State for International Development) announced that all DFID staff would be required to undertake a week-long immersion living in a poorer community. Andrew Mitchell said:
These immersions will serve as a valuable ‘reality check’ from the usual round of meetings, paperwork and spreadsheets. It will help keep everyone at DfID focused on their core mission: serving and helping poor people to work their way, sustainably, out of poverty.
I hope that they will implement this proposal now that they are in Government, and I hope DFID’s new Ministers will consider doing an immersion themselves, perhaps during the summer recess.
(via Suvojit)
Tonight’s UK election debate between the party leaders focuses on foreign policy. I expect there will be at least one question about international development. If I were in the audience, I would ask this:
We understand that all the main parties are committed to increasing aid to 0.7% of GDP, with some relatively minor differences about how that would be used. But if we are serious about development, we need to look beyond aid to address the circumstances in which developing countries are trying to establish economic growth and political stability. Our other policies – for example, on trade, climate change or immigration – make a huge difference to how quickly poor countries can develop. Will you, as Prime Minister, be willing to make changes to UK policies which are against the immediate interests of a group of UK citizens – for example, arms exporters or pharmaceutical firms – but which support our collective longer term interest in seeing a fairer, safer and more prosperous world? If so, what concessions would you make?
The development policy discussion in the UK has focused too much on aid. As I’ve argued here today, aid is important, because it helps to improve people’s lives while their countries are developing. But I don’t think aid is the most important factor in accelerating development – for that it is much more important whether we adopt fair global polices on climate change, trade, agriculture, immigration, intellectual property, conflict, corruption and international governance.
The manifestos are largely quiet on how the political parties would address these issues, and they have not yet been pushed to address it. I think this is because so many people who work in development are dependent for their income on aid, so they tend to judge parties’ policies by their willingness to increase it. A worthy and notable exception is Alison Evans at ODI, who is always smart, who picks this up in her recent blog post on development in the election:
.. a crucial question is whether there is any a wider read-across from the manifestos to the international development agenda? Development is not only about aid and there is a danger that the allure of the 0.7 debate can and will detract from a much wider set of policy concerns that impact on the prospects for growth and prosperity in developing countries. Each of the manifestos cover growth, trade, immigration, security and climate change – all areas in which the debate about international development policy and global poverty reduction is increasingly engaged – but none of them spell out in any detail what this means for the way their governments would work on these agendas or how the funding would work. Where is the coherence between policies and between policies and implementation?
This is exactly the right question to ask (it is a pity that the post is entitled: “main parties pledge 0.7% for aid but how will it be spent?”). We have been assured that the three largest parties are committed to retaining DFID as a separate government department, with its own Cabinet Minister, and with a budget that rises to meet the UK’s commitment to increase aid to 0.7% of GDP. But if they are serious about development then DFID will also need to have an important role right across the government, ensuring that the UK’s interests in development are taken into account when the government considers other policies from immigration to climate change. That does not mean that the development interests should always trump the UK’s other national interests, but they should be considered and there will often be ways to adjust the details of the policy in a way that costs us little but has a huge impact on the developing world.
If we want to help to accelerate development, then some of the time we will need to put the UK’s broad, long-term interest in building a safer, more equal and prosperous world ahead of the UK’s narrower and short-term commercial or political interests. The most important international development question for the UK election should be: which of the political parties is willing to do that?
The UK General Election campaign could start as soon as next week, and it is already clear that one of the battlegrounds will be the relationship between the citizen and society. Both parties are keen to demonstrate that they don’t agree with Margaret Thatcher’s adage that “There is no such thing as society”. Yesterday, the Conservative Party set out their “Big Society” ideas, including a new “neighbourhood army” of 5,000 professional community organisers.
As Labour puts the finishing touches to its election manifesto, sources familiar with the process say that a new big idea is taking shape. The proposal is to extend the concept of “earned autonomy” in public services down to individuals. Labour plans to put every citizen who has completed full-time education into prison. Citizens will then be able to earn their way out, by getting a job and using their spare time for voluntary service to the community. When they demonstrate that they are not terrorists, and when they can prove that they do not have any kind of mental illness that predisposes them towards a crime, they will move first to an open prison from which they can get a job, and eventually to their own homes. People close to Ministers say that they have been impressed with how well this approach has worked with asylum seekers, who start off imprisoned until they can demonstrate their value to society, and think that this approach would be popular in seats where Labour is alarmed by the rising popularity of the British National Party.
Speaking on condition of anonymity, a minister familiar with the details of the manifesto said:
Hard working families will welcome these steps. Honest, law abiding citizens have nothing to fear. Where individuals demonstrate the capacity and capability to do more we want to work with them to test how greater individual control can deliver more effectively and more efficiently. We want a new relationship between the citizen and government, one based on a partnership approach to delivery. It is not sufficient to say that citizens should have more control and freedom; this is a partnership and citizens need to be clear as to what they are asking us for, and how changes will benefit everyone. We are ready to cede control where individuals can demonstrate that they will use those freedoms effectively, but greater control must be balanced with responsibility and accountability.
Owen Barder
1 April, 2010
On January 13th, a leader in The Times and Kevin Watkins in The Guardian attacked the development policies of the UK Conservative Party, from opposite sides of the political spectrum. The Times Leader says that the Conservatives are wrong to commit themselves to increase aid to 0.7% of GNI; and Kevin Watkins says that the Conservatives are wrong to want to reform the way aid is given. Both attacks appear to be bone-headed efforts to make political mischief by undermining not just Conservative party policies but the mainstream consensus on development. Neither attack does credit to its perpetrator.
The Times criticizes the Conservative Party for their commitment to maintain the planned increases in development spending. The leader recycles discredited assertions about the negative effects of aid rather than offering solid analysis. There isn’t a single reputable econometric study showing that aid causes harm through exchange rate appreciations, corruption or slowing progress to democracy. Peter Bauer, whom the leader article quotes, was criticising Cold War foreign assistance programmes which bear little resemblance to aid programmes today. Aid today is increasingly practical, targeted and measurable, just as The Times says it should be, and it works.
Britain was one of 147 countries which pledged we would “spare no effort” to meet the Millennium Development Goals. As The Times implies, we should not be judged on what we spend but on what we achieve. On this basis we are not yet doing enough to achieve the goals to which we are committed. That is why it is important that Britain should continue to increase its world-class development programme, and press other nations to increase their spending too. To resist this on the grounds that 0.7% is an arbitrary figure is a clever-sounding point for a debating society, not a reasoned argument against the commitment of all the main political parties to meet Britain’s international promises, and to press other countries to do the same.
From the other end of the political spectrum, Kevin Watkins in The Guardian seems to be determined to use development to score party political points – and to do so he has had to put himself in the strange position of arguing against the country-led approach to development which is supported by all main UK political parties.
Under the Labour Government Britain has helped build an international consensus that aid works best in support of a country’s own development strategy; that policies imposed from outside rarely work; and that governments should be accountable to their own citizens for their policies and actions. Kevin Watkins rightly supports these points in other contexts. Yet he apparently won’t entertain the idea that other countries may have different views from his (and mine) about the best way to organise and fund public services.
I’ve read the Conservative Green Paper and it does not call for state services to be rolled back in developing countries. It says that governments should guarantee access to education for all their people; and that donors should fund that guarantee and support and encourage governments to choose whatever path enables them to expand education provision fast and effectively. It does not propose or advocate market-based solutions in education: it says explicitly that the Conservatives would work with the public, not-for-profit and private sectors.
Kevin Watkins quotes the Green Paper saying “We bring a natural scepticism about government schemes“; this is the entire basis of his claim that “the Conservatives will use aid to roll back the state in key services“. But it is clear when you read this sentence in context that the Conservatives are questioning the role of the government in aid, not planning to tell other countries how they should manage their public services.
There is now a valuable cross-party consensus on the need to use aid money to support countries’ own development priorities and programmes. The challenge today is how to bring public sector reform to the aid business – including the possibility of some market-like disciplines to make aid more effective and accountable. There are proposals in both the Government White Paper and the Conservative Green Paper to make aid more transparent and accountable and to link it more closely to results. Kevin Watkins might have used his space to tell us what he thinks about these ideas instead of trying to score party political points on development.
(By the way, I admire Kevin Watkins, but I’m not comfortable with the fact that a UNESCO official, paid from public funds, is using his position to make highly partisan and inaccurate attacks in the newspapers on the main UK opposition party. )
I’ve got no party political axe to grind: my interest is in supporting the best possible policies to accelerate development, so that the world is a fairer, happier and safer place for everyone. It seems odd that the Conservatives should be attacked from both left and right for articulating development policies which seem to me squarely in the mainstream of development thinking.
The cross-party consensus that the UK’s development budget should continue to increase, and that British development policy is amongst the most effective in the world but nonetheless there is room for improvement, should be a matter of shared national pride, not scorn and sniping from whichever direction. Let’s sustain that consensus, and not allow development policy to be used as a political football even in the heat of an election campaign.
Update: see Kevin’s reply in the comments.
When Google decided to set up a censored version of its search engine in China in 2006, I was among those who criticised the company for its decision (here and here).
As well thiking it was the wrong decision in principle, I worried that a company that says one thing (“Don’t Be Evil”) and does another will eventually suffer from the contradiction between their values and their actions.
So I applaud their announcement today that they are taking a new approach in China and their threat to pull out of the market.
(Ironically, Google’s own blog is censored here in Ethiopia. You cannot access blogspot blogs.)
Google is standing up to dictatorship and speaking out for free speech, and putting this ahead of their immediate commercial interests.
It is hard to imagine other companies standing up for their – and our – values in this way. (Can you imagine Microsoft withdrawing their Bing search engine instead of producing sanitized results?)
Bloggers are quick to criticise when companies do the wrong thing. So let’s be equally unstinting in our praise when they do things right.
Good on yer, Google.
I am grateful to Oxfam’s Duncan Green for his fair and thoughtful review of my paper about improving aid, Beyond Planning: Markets and Networks for Better Aid.
I’m glad that Duncan and Chris, his Oxfam colleague, endorse a key argument of the paper, which is that the development industry will improve through evolutionary change rather than grand design; and that a driver of this change will be better mechanisms feedback from the citizens of developing countries about what is working. The paper points out that this kind of evolutionary change comes from variation and selection – and that the aid business does not have enough of either to ensure evolution towards more effective aid.
Duncan and Chris have reservations about the word “beneficiary” to describe the people in developing countries whom aid is intended to support. I think that is a good point, and I’d be happy to use a different word if we can find a suitable alternative (I don’t think that “primary stakeholder” or “rights holder” takes the trick, since neither is sufficiently specific about who we mean).
I don’t want to put words in Duncan’s mouth, but I detect from his review that he is more sceptical than me about the value of markets. He dismisses without much fanfare the the idea of giving more choice to the, er, “intended beneficiaries” (aka primary stakeholders and rights-holders):
Where I think he is wrong is a largely market based philosophy for creating incentives based on New Public Management theories of expanding choice more than voice. … This in turn requires some quite fundamental organisational change with in aid agencies, as well as establishing more citizen to citizen links possibly using new social media.’
That is an unfair characterisation of my view: I am in favour of choice AND voice. A large part of the paper, especially when talking about networks, is precisely about how citizens can have more voice, and I talk explicitly about citizens links through new social media. But there are huge problems to overcome in achieving this, because the “intended beneficiaries” are geographically and politically remote from decision-makers in aid agencies, which means their voice is dimly heard, if at all.
While I agree with Duncan on the need to ensure that people have voice, I find it surprising that he (in common with many people who regard themselves as progressive) is so reluctant to give choice where possible as well. Duncan’s (excellent) book is called From Poverty To Power – and I believe that giving people direct control of resources and allowing them to choose what services they want, and from whom, can be one of the most important ways of empowering people. Duncan calls this a “technocratic/new labour enthusiasm for using market mechanisms” – but the idea of giving the poor more direct control of resources goes back long before New Labour: Oxfam’s honorary President, Amartya Sen, got a Nobel prize for his 1982 book, Poverty and Famines: An Essay on Entitlement and Deprivation, which argued that it would be better to give people money than food in a famine.
I have not swallowed the New Public Management story hook, line and sinker, but I do believe that there have been positive experiences (for example, from the publication of league tables, and the distinction between purchaser and provider). While I think we should learn from new public management, my paper describes in some detail the shortcomings of a market-only approach, especially as it relates to foreign assistance. I hoped my paper would be an elegant synthesis of some of the best (and proven) tools of this school of thought with lessons from other approaches, especially the use of complementary mechanisms of networks, voice, regulation and planning.
The aid industry has almost entirely evaded the reform of public services over the last decade. There is no measurement of results; no distinction between purchaser and provider; no customer choice. Presumably the lack of reform is partly because the shortcomings of the industry are felt by people with no political power or voice in the political systems of donor countries. The incumbent service providers are politically powerful, well organised, and deeply conservative about any change that affects their interests. The aid system has, over time, drawn to it people who are sceptical about the value of markets and choice, saddling developing countries instead with five year plans and long coordination meetings. No politician in a donor country is enthusiastic to take on these vested interests, in order to improve services for people they will never meet and who have no vote in the election.
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