Development advocates have to make the case for aid and development policy. They are right to say that development is in the national interest of the donor, but it may be a mistake to put this at the centre of the argument. Most people don’t need to be convinced that development is desirable; they need to be convinced that aid works.
Development is in our national interest
It is increasingly the conventional wisdom that it is in the national interest of industrialised countries to promote development in the rest of the world. US Secretary of State Hillary Clinton made a speech saying so a year ago at the Center for Global Development:
… development was once the province of humanitarians, charities, and governments looking to gain allies in global struggles. Today it is a strategic, economic, and moral imperative – as central to advancing American interests and solving global problems as diplomacy and defense.
The UK Foreign Secretary, William Hague, also argues that development is a key part of Britain’s strategic and security interests (for example, here and here).
We’ve come a long way over the last twenty years. In January 1991 my father, then a British High Commissioner, sent a despatch to the then Foreign Secretary in London to mark the end of his last post in Africa, arguing that it was in the UK’s national interest to pay more attention to Africa’s development. His despatch said:
There is an overwhelming case on financial grounds alone for acting sooner rather than later, collectively, to provide the resources required for removing most of the debt burden from African countries (provided that they are committed to active economic reform), for arresting environmental degradation, and for restoring the physical and human infrastructure sufficiently to permit diversification of economic effort and its re-direction into areas that will eventually become self-financing – as well, incidentally, as making a more positive contribution to world economic activity.
At that time, the foreign policy establishment was very suspicious of any argument based on ethical or moral imperatives: it believed that foreign policy should be based on narrowly-defined national interests. In 1980 the Brandt Report had argued that it was in our “mutual interest” to pay attention to development and inequality, but in the decade that followed Britain’s aid programme, and our attention to developing countries, had declined. Twenty years ago, when my father was making a case for paying more attention to development based on our national interest as well as our values and moral obligations, his view was regarded as so subversive that the foreign office limited the circulation of the despatch. Today it is received wisdom which is regularly the basis of speeches by the US Secretary of State and the British Foreign Secretary.
We should celebrate the fact that there is, belatedly, recognition among policymakers that promoting development is in our national interest, as well as being the right thing to do. But I am concerned that we are letting the pendulum swing too far, by placing this argument at the centre of the public case for aid. We should use every argument at our disposal for doing the right thing, of course; but if we focus too much on aid being in our national interest, we are danger of undermining the effectiveness of aid and of failing to address the real concerns of sceptical citizens.
The nature of public doubts about aid
If I had a nickel for every time someone said to me, “I don’t think we should spend money helping starving people because I don’t give a toss about them,” I wouldn’t have any nickels at all.
The foreign policy establishment may have been sceptical about focusing on the ethical dimension of foreign policy, but the public never was. Neither the British nor the American people lack compassion for their fellow human beings. My father’s prescient efforts to awaken policymakers’ interest in development were made several years after Live Aid, which had showed that the public needs no lessons in generosity.
I readily concede that the public is often sceptical about aid. I have witnessed focus group discussions which anybody who is interested in development would find alarming, anyway at first. In such a discussion, the person who says “charity begins at home” will initially get lots of support. But as the discussion goes deeper, it turns out that they are sceptical not because of any indifference to the plight of others, but because they are not convinced that aid works. In many such groups you’ll hear Bauer’s famous remark that aid is “poor people from rich countries giving money to rich people from poor countries.” Many people are worried that aid ends up in the Swiss bank accounts of despots and dictators, or of corrupt consulting and construction firms. Yet when the same focus groups are given evidence of the benefits of particular aid programmes, their mood changes sharply, and they soon ask: “Why don’t we give more aid like that?”
The idea that “charity begins at home” clearly resonates with many people. In part the phrase expresses the idea that we have stronger social ties and obligations to people who live in our neighbourhood than we do to people on the other side of the world. But few people really believe, on reflection, that we should pay no heed to people dying of hunger or for lack of medical facilities just because they are far away. Perhaps “charity begins at home” resonates for another reason: we can observe at first hand whether the effort we make to help our family and neighbours is actually working, whereas with foreign aid we can’t, and we have a sneaking suspicion that this means that it isn’t.
The most popular critique of aid in recent years, Dead Aid by Dambisa Moyo, does not challenge aid on the grounds that the plight of the poor is not our concern. It is a poorly argued book in many other respects, but it would be wrong to accuse Dr Moyo of callous indifference. Indeed, all the famous aid sceptics, from P. T. Bauer to Bill Easterly, explicitly accept development as the objective: they simply question whether foreign aid is a good way to achieve it.
The dangers of relying on national interest
So perhaps the public does not need to be persuaded that development matters, but needs instead to be convinced that aid makes a difference. Even so, it seems reasonable to say that we should use every argument at our disposal for aid: we should appeal to the public’s self-interest as well as their moral values, and we should at the same time set out the evidence that aid works.
But there are two big risks to this approach which should lead us to think carefully about the balance of how we make the argument.
First, if we promote aid principally on the grounds that it supports our security and commercial interests, we should not be surprised when people expect that this is how aid should be used.
In the long term our national interest coincides with our moral urge to promote development and to reduce poverty. But in the short term there is often a trade-off between development and poverty reduction on the one hand, and our commercial, security and strategic interests on the other.
During the Cold War a huge amount of aid was wasted currying favour with despots for geo-strategic reasons and accordingly propping up failing industries and businesses. Even today, less than 40% of aid is spent in the poorest countries. This makes a kind of sense if your aim is to increase your influence in emerging economies and in fragile states like Pakistan and Iraq. There are many poor people in these countries, but all the evidence suggests that these are not the places in which aid is most needed and can do the most good. A significant portion of aid (though none of the UK’s aid) is still tied to firms in donor nations. This makes sense if the aim is to support the donor’s commercial interests but not if the aim is to have the greatest possible impact on the reduction of poverty. It is legitimate and proper for donors to want credit for their aid, to enhance both their international reputation and their image and influence in the recipient country. But this goal leads donors to give too much aid through bilateral aid programmes, on which their national flag can be stamped, and too little through more efficient multilateral institutions and other shared funds, resulting in unnecessary duplication, overheads and transaction costs.
We do not have institutions that can protect our long-term national interest in development and poverty reduction from the pressures to use aid to pursue these short-term strategic, security and commercial interests. In a world of short time horizons, our immediate interests tend to prevail over our longer-term goals. So the more we justify aid chiefly on the grounds of national interest, the greater the danger that our short-term national interest will dictate the way aid is used, with negative consequences for the effectiveness of aid and for our longer-term interest in poverty reduction.
If the public were unsure whether they cared enough about global development to give aid, then it might be worth deploying aid in ways which are most obviously in the national interest, even if that required sacrificing some of its effectiveness. (For many years, the Danish government justified tying aid to Danish suppliers on precisely these grounds.) But if the public is already convinced that development is important, and their doubt is primarily about whether aid is effective, then it makes no sense to use aid in less effective ways in an effort to win greater public approval.
The second reason why we should be cautious about focusing too much on our national interest when justifying aid is that we are in danger of setting ourselves up to fail.
Take an example which is, literally, close to home for me. School enrolment here in Ethiopia has risen from a quarter of all children fifteen years ago to more than four fifths of children today. About a third of Ethiopian children – 8 million boys and girls – are at school as a direct result of foreign aid. My house in Addis Ababa is a few hundred metres from the local primary school, so I see boys and girls going past my window to school every day.
If the British public could see as I do how their aid money is being used, they would, like me, be encouraged and touched by the good that aid does. This is a direct, demonstrable benefit of aid, and one which appeals to the British sense of justice and empathy for our fellow human beings. It would soften the heart of the hardest sceptic.
Kids going to school near my house in Addis Ababa. A third of Ethiopia's education system is financed by aid.
Why then is there such widespread doubt that aid works? In part it is because people at home cannot look out of their window and see it working. But it is also because we have made extravagant claims about what aid will do. Even if it is true that aid leads to faster economic development, and that it thereby reduces the risk of global health contagions, organised crime and drug smuggling, this would be impossible to demonstrate statistically. (It would be like trying to show that the EU has prevented war in Western Europe since 1945: plausible, very probably true, but unprovable.)
People are right to be doubtful about the validity of some of the more grandiose claims for what aid can achieve. Perhaps it seems too modest to say that we pay for millions of children to go to school, and for people to have access to clean water and basic health care. But this is a reality which we can prove beyond any doubt; and for most taxpayers it will seem well worth the modest amount of money we spend on it. And it is probable, even if unprovable, that all this works in favour of our own long-term interests as well.
The public and the politicians who represent them will inevitably devote only a modest amount of time to thinking about development. If we use up scarce bandwidth making an argument with which few disagree – that poverty matters – we waste the opportunity to make the argument of which they are yet to be convinced: that development policy and aid can and do make an important difference to the lives of the poor.
The aid that was used to prop up Mobutu in Zaire during the Cold War may have served a foreign policy interest, but it did little or nothing to reduce poverty and raise living standards in that country. Money used today to buy food aid may be a convenient subsidy for American and European farmers but if we bought the food locally we could feed twice as many people with the same money and at the same time support the growth of sustainable agriculture in developing countries. The more we use aid to support our strategic and commercial interests, the less effective that aid is likely to be in the fight against global poverty, in which we have an important long-term interest.
It is in our national interest to see faster development and the end of global poverty, and we should not be shy about saying so. But we should think twice before using this as the central plank of the case for more effective development policies and more aid. People do not need to be persuaded to care about global poverty: they do need to be convinced that there is something we can do about it. Just reminding them that it is in our national interest to promote development fundamentally misses the point. The more we defend aid mainly on the basis that it is in our national interest, the more likely it is to be bent to our short-term commercial and strategic interests, the more ineffectively it will be used, the harder it will be to demonstrate its benefits, and the greater the justification for public scepticism. Give the public some credit: they don’t need to be persuaded to care about poverty. Aid does work: and the first and most pressing task is to demonstrate to the public with persuasive evidence that this is so.
Like Chris Blattman, I’ve just been ‘interviewed’ by email by a journalist writing a series of articles about poverty. She wanted, by return, some answers to some pretty preposterous questions. My answers are below. I’m sure readers of this blog would have interesting answers, so please put them in the comments below.
1. It is realistic to think that poverty can one day end?
It depends what you mean by “poverty”. I certainly believe that it is feasible in the near future for everyone to have enough to eat; to have access to clean water; to have access to basic healthcare which prevents them from dying from easily preventable and treatable diseases; to have shelter and sanitation; for every child to go to school and for mothers to face low risks of dying in childbirth.
But poverty is also a relative idea; there will always be people who need help. We should plan to have permanent, well governed mechanisms of global solidarity so that those who are fortunate, wherever they may be in the world, can support those who are less fortunate, whoever they may be. We may hope that particular individuals will need help only temporarily, but we need permanent systems to ensure that they get it.
2. What are the best global solutions?
The countries of the rich world could do much more to create the conditions for poor countries to accelerate development. For example they could, at very little cost to themselves (indeed, with some benefit) improve trade policies and reduce agricultural subsidies to enable poor countries to trade their way out of poverty; permit greater migration from developing countries, so that the benefits of globalisation are more widely shared; adjust government-created intellectual property rights to enable poor countries to share the benefits of new technologies; close tax havens and clamp down on corruption, tax evasion and tax avoidance by multinational companies; open up detailed information about financial flows including aid, payments for extractive industries, defence spending, and climate change, so that citizens of developing countries can ensure that those resources are not squandered; create markets for environmental assets, especially by setting global carbon emissions ceilings and agreeing to equal per capita allocations, so that the rich world pays a fair price for their use of more than their fair share of the world’s natural resources; and reduce exports of small and large arms to the developing word.
As industrialised countries help create the conditions for developing countries to make faster progress, it will be for the people of the developing world to use their own ingenuity and hard work to develop social, economic and political institutions that enable them to make progress in their own way; but it is hard to imagine success that does not involve much greater investment in the rights and status of women.
3. How urgent is it to act?
Twenty five thousand people die each day of preventable and treatable diseases. If those people were citizens of Europe or America, we would have declared a state of emergency.
4. Do you believe there is hope for the future?
Of course: hope for the future is amply justified by the extraordinary progress which developing countries are making. The last fifty years has seen the fastest progress in human history on reducing poverty and improving living standards, from reducing malnutrition to providing access to clean water.
On the Oxfam blog, Max Lawson has an excellent guest post telling the story of how Malawi has used an extensive programme of fertilizer subsidies to generate seven years of economic growth, reduductions in poverty and child deaths.
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.
Here is part of my piece on the Guardian website today welcoming moves from the US and Europe towards a global standard for publishing aid information:
Go to the website of any aid agency and you’ll find a cornucopia of information about the good work that it is doing. The problem is that it doesn’t publish this information in a usable form. Visibility is not the same as transparency.
Members of the US Congress rightly complain that they cannot get a complete picture of US foreign assistance, which is delivered by 26 government agencies. As Congress has discovered, to get a complete picture of what the US is doing you need up-to-date, comprehensive data from each aid agency in a common format that enables it all to be added up, reconciled and compared. It is very welcome that the US government is putting a system in place to do this.
Now put yourself in the shoes of ministers or parliamentarians in a developing country. They face the same problem as members of Congress, writ large. Aid to their country is channelled through bilateral aid agencies, multilateral organisations and thousands of NGOs. Aid goes from one organisation to another – minus a “haircut” at each stage – before any services are provided to anyone. How can officials or MPs get useful, up-to-date, comprehensive information about all this spending and all these activities? Certainly not by trawling through thousands of separate donor websites.
A perennial question in development economics is whether economic growth, by itself, is enough to reduce poverty.
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.
Andy Sumner has published a new paper which argues that the global poverty problem has changed because the countries in which most of the world’s poor liver are no longer classified as low-income countries (LICs). In 1990, about 93 per cent of the world’s poor people lived in LICs. Today, there are still about 1.3 billion poor people, but about three-quarters of them live in what are now classified as middle-income countries.
This shift has profound implications for development policy. It highlights the importance of ensuring that growth reduces poverty. It raises questions for the allocation of traditional aid, and about the legitimacy and effectiveness of intervention by outsiders to influence the distribution of income within other countries.
In a new episode of Development Drums, I discuss these issues with Andy Sumner and Claire Melamed (Head of the Growth and Equity Programme at ODI). We discuss what the new data tell us, and what it means for aid and development policy.
You can listen to Development Drums on your computer at the website (http://developmentdrums.org) or download it (from here) to your MP3 player. Alternatively, you can subscribe to Development Drums on iTunes free of charge (search for “Development Drums” in the iTunes store).
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.
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.
The Onion says that “the majority of people in Darfur are still unaware of how many people in America are raising awareness of the genocide there.”
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)
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.
I don’t think it is possible to determine statistically whether aid makes a lot of difference to how quickly a country develops. But there is a very good case for aid on different grounds: that it enables people to live better lives in the meantime.
Though the effects of aid on development are uncertain, there is a huge amount that industrialised countries can do – or not do – which affects how quickly countries develop. The policies of rich countries on trade, investment, migration, the environment, security and technology can make a huge impact on how quickly poor countries are able to develop.
Yet we tend to judge industrialized countries too much according to how much aid they give, and too little to how they behave in all these other ways.
The Center for Global Development provides an essential service by ranking the rich each year so we can see how we are doing. They use a series of quantitative measures on all these dimensions to create a composite picture of how a country’s policies affect development. The 2010 results are now in.
The overall rankings in the 2010 Commitment to Development Index
For people in the UK who feel smug about the UK’s approach to development, the Commitment to Development Index makes pretty sobering reading. The UK is in 16th place, out of 22 countries in the index.
The UK has fallen ten places since 2005, when it was in joint fifth place, after only Denmark, Sweden, Netherlands and Norway.
The UK is one of only three countries to have got worse rather than better since the index began in 2003. (The other two are Denmark – which started at the very top, and Switzerland.) And this isn’t a point about the change of government: Britain was 16th last year too.
Given that the UK has a relatively generous and effective aid programme, why does it come so far down the league of overall impact on development?
In short: arms exports.
The Commitment to Development Index uses three measures of a country’s security policy. It tallies the financial and personnel contributions to internationally mandated peacekeeping operations and humanitarian interventions. It rewards countries that base naval fleets where they can secure sea lanes vital to international trade. And it penalizes arms exports to undemocratic nations, on the grounds that putting weapons in the hands of despots can increase repression at home and the temptation to launch military adventures abroad.
The UK is by far the worst of the the 22 nations in the index on selling arms to poor and undemocratic governments. UK arms exports, weighted for undemocratic and unaccountable states, are four times worse, as a share of GDP, than the next worst arms exporter, the United States.
The bars shows the scores from 2003 to 2010in each of the 7 dimensions
As well as being stand-out bottom of the pack on arms exports, the UK does badly on migration policy, because it takes too few unskilled immigrants and students for its size; and technology policy both because Government R&D spending is unduly focused on defence, and because the UK tends to pursue intellectual property rights policies that are not in the interests of poor countries, such as allowing patents on plant varieties, and pushing to incorporate into bilateral free trade agreements “TRIPS-Plus” measures that restrict the flow of innovations to developing countries.
Critics of aid often argue that we should focus more on helping countries to develop, rather than what they call ”handouts’ to poor countries. In that context, they usually mention the need for more open trade with developing countries. That is certainly important. The Commitment to Development Index suggests that they should also be advocating changes in UK policy to: reduce arms sales to undemocratic countries, accept more unskilled immigrants, increase the number of foreign students, remove patents on plant varieties and stop arguing for TRIPS-plus.
The UK gets credit for its environmental policies, mainly because it has done relatively well on limiting carbon emissions and because of high petrol taxes. Global warming has a disproportionately negative impact on developing countries, so these measures have an important impact on developing countries.
Many British people are proud of the UK’s commitment to reducing poverty in developing nations, and Britain’s model of an independent development agency within Government led by a separate Cabinet Minister is widely admired. But is it working? Judging by the scores in the 2010 Commitment to Development Index, the UK is doing a better job at securing and spending a rising aid budget than it is at getting the rest of government to pursue development-friendly policies.
A Robin Hood is superficially attractive because it seems to offer:
- higher taxes on the wealthy
- a curb on speculation and market volatility
- more money for aid and global public goods.
But as I explained in February the Robin Hood tax isn’t a very good way to achieve any of these perfectly reasonable objectives. They would be much better pursued separately.
This analysis was confirmed by this new research published today by Neil McCulloch at the Institute for Development Studies. He finds that:
- a significant proportion of a foreign exchange tax would be passed on to consumers (so it would not be not a tax on the wealthy);
- most empirical evidence shows that higher transactions costs are associated with more, rather than less, volatility.
He also finds that a financial transaction tax is feasible and that a tax on foreign exchange transactions could raise £7.7 billion in the UK, or $26 billion if implemented worldwide.
Unexpectedly, he then concludes that the UK Government should implement a currency transaction tax.
If the Robin Hood tax is not a tax predominantly borne by the wealthy, nor will it reduce market volatility, what’s the case for it?
If we want to increase our spending on aid and global public goods – which I support – we should do so by way of making the case in the public spending process. Development activists should not try to bypass the systems of democratic control of spending priorities, nor should they advocate taxes which do not make good tax policy on either distributional or microeconomic grounds.
Suppose you had $1 million to spend on tackling climate change. How would you spend it to get the best bang for your million bucks?
Would you spend it on stopping the slash-and-burn of forests? Perhaps on switching to nuclear energy? More energy-efficient buildings? Building cleaner power stations?
According to a recent paper by David Wheeler and Dan Hammer, climate change experts at the Center for Global Development, the answer is (drum roll): you would do much, much better to spend your money on a combination of family planning and girls’ education in developing countries.
This table, based on data in their paper, shows how many tonnes of CO2 would be abated for your $1m:
| Intervention | Tonnes of CO2 saved |
| Family planning & girls’ education combined | 250,000 |
| Family planning alone | 222,222 |
| Girls education alone | 100,000 |
| Reduce slash and burn of forests | 66,667 |
| Pasture management | 50,000 |
| Geothermal energy | 50,000 |
| Energy efficient buildings | 50,000 |
| Pastureland afforestation | 40,000 |
| Nuclear energy | 40,000 |
| Reforestation of degraded forests | 40,000 |
| Plug-in hybrid cars | 33,333 |
| Solar | 33,333 |
| Power plant biomass co-firing | 28,571 |
| Carbon Capture and Storage (new) | 28,571 |
| Carbon Capture and Storage (retrofit) | 26,316 |
The logic, of course, is that if there are fewer people on the planet, then we will generate fewer greenhouse gas emissions. Population policies are important because there are many people in developing countries who want smaller families, but don’t have access to the family planning services they need to achieve this. Education is important because educated girls want (and are more able to insist on) smaller families. That’s why these interventions are important and cost effective, both individually and especially when done together.
Win – win
This approach is particularly attractive because, in addition to helping to slow global warming, there are other, very significant benefits for the citizens of developing countries of access to family planning and to education for girls.
The other day I reported here that if donors invested about $180 million a year to provide modern contraception to every Ethiopian woman who wants it, this could set off a virtuous circle of rising income per capita, lower desired family size, greater use of contraception, lower numbers of children, and so rising income per capita. My back of an envelope calculation found that a decade of access to modern family planning would have roughly the same effect on incomes in Ethiopia as the entire international aid programme in Ethiopia does today.
As well as environmental and economic benefits, there are important social and health benefits for women and their families, which strengthen the case for these investments over and above the cost-effectiveness figures shown above.
Making choices
Of course in an ideal world we would do all of these things. But although it is inconvenient to acknowledge it when you are busy trying to save the world, resources for averting climate change are limited. We should make informed choices to reduce carbon emissions in the most cost-effective and sustainable way we can with the resources available, to secure the biggest and broadest benefits. These figures from the Center for Global Development imply that investment in family planning and girls’ education would be a far better investment than the UN Reducing Emissions from Deforestation and Forest Degradation (REDD), which aims to spend $30 billion a year on incentives for developing countries to reduce deforestation and forest degradation.
We would get three or four times as much bang for our buck – in terms of climate change benefits – from population policies and girls’ education as we would from even the most cost-effective investments in forestry (stopping slash-and-burn), and in addition we’d get the broader economic and social benefits for the people of developing countries.
So why isn’t this, in fact, where we are spending the climate change money? Something to do with the power of industry in the environmental lobby? (Update: See Eliot’s comment below)
(The figures in the table above are calculated from Table 2 and and Table 5 of The Economics of Population Policy for Carbon Emissions Reduction in Developing Countries, David Wheeler and Dan Hammer, Center for Global Development Working Paper 229)
It has entered our collective consciousness that a large part – perhaps as much as 95 per cent – of the aid given to Ethiopia during the 1980s famine was diverted for military use. This misapprehension was caused by a misleading programme on 4th March, compounded by the BBC’s publicity for the programme on television and radio and online.
As Mark Twain remarked, “a lie will fly around the whole world while the truth is getting its boots on”.
Today the BBC has apologised. The apology is abject, and rightly so:
… the programme gave the impression that large amounts of Band Aid and live Aid money had been diverted. The BBC wishes to apologise unreservedly to the Band Aid Trust for this misleading and unfair impression. The BBC also wishes to apologise unreservedly to the Band Aid Trust for a number of reports on television, radio and online which went further than the programme itself in stating that millions of pounds raised by Band Aid and Live Aid had been diverted to buy arms. The BBC had no evidence for these statements, and they shouldn’t have been broadcast. [my emphasis]
On the World Service and BBC Radio 4 this morning the director of the BBC World Service, Peter Horrocks, made matters worse by trying to limit the scope of the BBC’s apology. The BBC “had no evidence” that money from Band Aid had been diverted, he said, and he apologised for the fact that the report implied otherwise, but he said that the BBC stands by the rest of the report. Yet the impression that the programme gave – that a substantial part of the aid given to Ethiopia in the 1980s was diverted to rebels – is false.
It isn’t just Band Aid to whom the BBC owes an apology, but to the British Government, other donors, a vast number of charities, and the public who gave so generously. There is no evidence that any of the aid effort in the government-held areas of Ethiopia – the vast majority of the aid to Ethiopia – was diverted. The BBC programme was about a completely distinct, and very much smaller, relief effort in rebel-held areas. Either deliberately or accidentally the BBC sexed up their report in a way that smeared an extremely successful effort to save lives and an operation of which those involved are rightly proud.
This was, I suspect, a cock-up rather than a conspiracy. The BBC took a dull, already well-known story about a small, distinct aid programme in Eritrea and Tigray, and sexed it up into something more interesting, but completely false, about aid to Ethiopia as a whole. It is understandable that BBC is trying to limit the damage today by apologising only to the Band Aid Trust – to whom they have to apologise as it was they who made the complaint – but the BBC should now accept that the entire report was misleading.
This is a presentation which I gave recently asking what development policy can learn from evolution.
The main conclusion is that as would-be change-makers, we should not try to design a better world: we should concentrate on building better feedback loops.
You can view and listen to the presentation by clicking the image below. This narrated presentation lasts 18 minutes (beware: as soon as you click you’ll hear my voice, so don’t do this if you are in a meeting!).
Alternatively, you can download the presentation as a pdf file here. But this won’t make as much sense, as there are a couple of videos in the presentation.
If you like this presentation, you may also like my previous narrated presentation about aid effectiveness after Paris.
Please let me know what you think in the comments below. Am I right that we should focus more on feedback loops?
Some people, especially working on the front-line of delivering aid programmes, are uncomfortable with the idea that aid should be more strongly linked to results. Some point out that there is no evidence that government officials and aid workers will respond to incentives (see this article by Ngaire Woods and Paolo de Renzio); indeed, the very idea seems to impugn the character of development professionals. Others are concerned that an increased focus on results will add to the bureaucratic burden of form filling and reporting which plagues the life of front-line staff (see this essay by Andrew Natsios, former USAID Administrator.) On his blog yesterday, Simon Maxwell lists four further concerns which he says give rise to uncomfortable “seat shifting” about results : that the evidence won’t really be used; that linking aid to results relies on a simplistic, deterministic view of development; that it risks focusing too much on results which can be measured, rather than deeper but less observable changes; and that a results-based approach fails to take account of the complexity of how aid transactions actually feed through into activities.
These are serious and important concerns. In particular, if measuring results is simply bolted on to the existing systems for the allocation and management of aid, the danger is that we add to bureaucracy with little real benefit. But if better measurement of results is used instead by aid agencies to simplify the way they manage aid programmes, rather than just adding new reporting, then the results agenda creates the opportunity to reduce bureaucracy, decentralise decision-making, increase country ownership, increase the focus on outcomes that really matter, step away from linear, deterministic thinking about how results are achieved, focus more on relationships and institutions, and really liberate development workers to work on what really motivates them – delivering change on the ground – and less on managing the bureaucracy at home.
This post sets out how a focus on results might unlock changes in the way aid is managed, which could lead to significant improvements in aid effectiveness.
The UK coalition government yesterday announced its spending plans for the next four financial years (to 2014-15). These spending plans are subject to scrutiny and approval by Parliament, though the tradition in Britain is that the spending plans are usually approved without significant amendment.
Overall, this spending review is a seismic political event, which will be talked about for many years to come. It will reduce planned spending by £81 billion ($130 billion) a year, and remove about half a million public sector workers from the government payroll.
In that context, the coalition government’s decision to increase international development spending is remarkable. Here is the Chancellor of the Exchequer, George Osborne:
I can also confirm that this Coalition Government will be the first British government in history, and the first major country in the world, to honour the United Nations commitment on international aid. The Department for International Development’s budget will rise to £11.5 billion over the next four years. Overseas development will reach 0.7% of national income in 2013.
This will halve the number of deaths caused by malaria. It will save the lives of 50,000 women in pregnancy and 250,000 newborn babies. Whether working behind the counter of a charity shop, or volunteering abroad, or contributing taxes to our aid budget, Britons can hold their heads up high and say – even in these difficult times, we will honour the promise we make to the very poorest in our world.
The chart below, which shows aid as a share of national income since 1960, shows that this really is historic. Britain will, for the first time, meet the international aid target of 0.7% of national income, joining Denmark, the Netherlands, Norway and Sweden.
UK ODA as share of GNI since 1960
In cash terms, Britain’s official development assistance (ODA) will increase by 50% over the four years to 2014. Most of this will continue, as now, to be channelled through the UK Department for International Development (DFID), whose budget will increase by 47% in cash terms (37% after taking account of inflation).
The increase will occur mainly in 2013, when British aid will increase by a third from £9.1bn to £12.0 bn.
| 2010 | 2011 | 2012 | 2013 | 2014 | |
| Total UK ODA* (£bn) | 8.4 | 8.7 | 9.1 | 12.0 | 12.6 |
| ODA/GNI (%) | 0.56 | 0.56 | 0.56 | 0.70 | 0.70 |
To get a sense of the political priority that development has been given in this spending review, consider that the National Health Service will increase by just 1.3% in real terms over the same four years; and many government departments face reductions of 20% to 30%.
The Daily Express opposes foreign aid
This is a considerable act of political bravery on the part of the Conservative-Liberal coalition. Today’s Daily Express (see right) is among the British newspapers demanding that, in the context of a spending review in which many public services face declining budgets, aid should be cut too.
The government has defended aid on the grounds that it is both morally right, and in Britain’s interest. They have also said that they will step up efforts to ensure that the aid budget is both transparent and effective. Chancellor George Osborne said that the aid budget is “protected from cuts but not from scrutiny.” The announcements included:
- A significant reduction in the admin budget. Running costs (a definition of back-office costs used by the OECD DAC) will be reduced to 2% of total spending by 2015, half the global donor average of 4%.
- A new Independent Commission for Aid Impact will assess all ODA spending to ensure best value for money and effectiveness.
- DFID will end bilateral aid to China and Russia.
Andrew Mitchell, the Secretary of State for International Development, is quoted as saying:
We are proud of the fact that we are keeping our promise to spend 0.7% of GNI on aid. However, in the current financial climate, we have a particular duty to show that we are achieving value for money. Results, transparency and accountability will be our watchwords and will define everything we do.”
Of course, the development experts have quibbles and concerns, such as whether aid will be spent disproportionately in support of Britain’s security priorities, and how DFID will manage a fast rising aid budget while staff numbers are being reduced. These are, in my view, reasonable questions to ask; and I will be among those continuing to ask questions about whether and how aid spending can be used most effectively; but it seems churlish today to focus on these issues rather than the big picture of a substantial demonstration of political and financial commitment to overseas aid.
The coalition government should be congratulated for their commitment to the UK’s overseas aid programme, and for their efforts to improve the transparency, accountability and effectiveness of aid to have the maximum possible impact improving the lives of people in developing countries.
For more commentary, see
- Lawrence Haddad from IDS
- Claire Melamed from ODI
- Julian Borger in the Guardian on the implications for foreign policy
Peter Gill's new book, Famine and Foreigners
Peter Gill talks on the latest Development Drums podcast about his new book, Famine and Foreigners: Ethiopia Since Live Aid.
The Ethiopian famine of 25 years ago killed more than 600,000 people. Peter Gill was the first journalist to reach the epicenter of the famine in 1984 and he returned at the time of Live Aid to research the definitive account of the disaster, A Year in the Death of Africa .
Twenty five years later, Peter Gill has returned to Ethiopia to tell the story of what has happened since then in Ethiopia. His book draws on interviews with leading Ethiopians and with foreign aid officials. He interviewed Prime Minister Meles Zenawi and the leading development economists, Joseph E. Stiglitz and Jeffrey Sachs. Most important of all, Gill has traveled throughout the country and interviewed many of Ethiopia’s citizens.
In this edition of Development Drums, I ask Peter to recall what happened in the famine of 1984, and how Ethiopia has changed in the quarter of a century that followed.
You can listen to Development Drums on your computer at the website (http://developmentdrums.org) or download it (from here) to your MP3 player. You can subscribe to Development Drums on iTunes free of charge (search for “Development Drums” in the iTunes store).
Today is World Food Day. That means there are plenty of articles and statements today by the agricultural lobby calling for more investment in food production and agriculture. People who work in agricultural research call for – surprise surprise – more investment in agricultural research. EU and US farmers who grow more food than they can sell demand that aid budgets are used to ship their surplus as food aid (even though, according to MSF, it is “nutritionally substandard”). A lot of words will be written about the need for more food production to tackle hunger.
On this World Food Day, I urge you to take a little time to read instead Amartya Sen’s classic book, Poverty and Famines : An Essay on Entitlement and Deprivation, written 30 years ago and for which he was awarded the Nobel Prize in economics. Rarely has a book got to the nub of an issue so clearly in its first two sentences:
Starvation is the characteristic of some people not having enough food to eat. It is not the characteristic of there being not enough food to eat.
This is a fundamental insight. People are hungry not because not enough food is produced but because they are too poor to buy it. In Sen’s language, the poor do not have enough entitlements to enable them to eat. Sen argued that, in most circumstances, instead of giving food to the poor we should give them cash to enable them to buy the food they needed. This would both give people access to food, and strengthen local markets and improve the livelihoods of local food producers.
Official Nobel Prize portrait of Amartya Sen
In a subsequent book, Sen argued that famine is a political issue more than a problem of food production. ‘It is not surprising that no famine has ever taken place in the history of the world in a functioning democracy,’ he wrote in Development as Freedom.
Yet we still talk about hunger as if it were, at heart, a problem of food production. (For example, see these remarks yesterday by the Director General of the UN Food and Agriculture Organisation, calling for a 70% increase in food production). When we understand that hunger is a problem of poverty, the policy options look quite different.
But how do we tackle poverty?
Three quarters of the world’s poor live in rural areas, and most depend on agriculture for their livelihoods.
The agricultural lobby sees a way to restate their case. Perhaps they can accept that hunger is a problem of poverty, not food production. But the fact that the majority of the world’s poor work in agriculture means, they say, that the best way to improve the incomes of the poor, and so reduce hunger, is to increase agricultural productivity. More adventurously they claim that more effective agriculture can drive the whole process of development, by increasing farm incomes, leading to rising savings and investment and so kick-starting industrialisation.
This is a plausible story, but it is not as persuasive as the alternative interpretation of the high correlation between poverty and agriculture: the fact that most poor people work in agriculture suggests that the best way to escape poverty is to get out of agriculture.
When people leave farms and get jobs in manufacturing their incomes are both higher and more secure. Demand for food in the cities grows; the number of people working in agriculture falls; food prices rise; and the remaining farmers get higher incomes. Rising incomes enable farmers to invest more in irrigation, fertilizer, machinery and seeds. Agricultural productivity rises, not as a consequence of direct efforts to improve agriculture but as the indirect consequence of industrialisation. On this view, industrialisation will drive improvements in agriculture, rather than the other way round.
If this second view is right, if you want to tackle hunger, reduce poverty, and improve food production you should focus your investment on more rapid industrialisation and job creation, not better farming.
I am not against investing in agriculture. Better access to existing technologies, and the development of some new technologies, could make a big difference to the lives of farmers in developing countries. But I am against promoting the romantic idea of happy peasant farmers. Farming in developing countries is an unremitting, unrewarding life and it is likely to stay that way for many generations until industrialisation pushes up farm incomes. And we should not accept uncritically the claim that agricultural productivity is an especially important driver of poverty reduction and industrialisation.
So on World Food Day let us remember Sen’s insight that hunger is not a problem of food production but of poverty. The fact that most poor people work in agriculture suggests that a good way to escape poverty is to get out of agriculture. So the best way to reduce hunger and help people out of poverty may be to focus not on improving agriculture, but rather on helping people who want to leave agriculture into more rewarding work.
Pharmaceutical companies do not have many fans among development workers.
This is a shame, because the development of effective pharmaceuticals has been one of the most transformative new technologies of the last century, increasing life expectancy and the quality of life in industrialised countries and developing countries.
One reason that pharmaceutical companies get a bad rap is that there are some diseases in tropical countries which have been “neglected” – in the sense that there is not much investment in research and development in these diseases, partly because the people who suffer from these conditions are very poor, so there is unlikely to be a commercial return to finding new drugs.
We spend ten times as much looking for cures for baldness as we do looking for cures for malaria.
I can see why this pursuit of profit leaves a bad taste in the mouths of some activists. Personally I don’t blame drugs companies for this. They are responding to the economic incentives we set for them. Indeed, they have a legal duty not to waste their shareholders’ money. If we don’t like the priorities that emerge from these incentives, we should set them different incentives rather than gripe about it.
So here is some good news. The World Health Organisation today published a new report on neglected diseases, Working to overcome the global impact of neglected tropical diseases, which covers 17 neglected tropical diseases.
Some of the diseases you will have heard about (such as sleeping sickness and guinea worm). Some, I guess, you may never have come across: but the burden of suffering they cause across the developing world is immense.
And what is really cool is that drugs companies today announced some important new commitments to provide drugs for these diseases free of charge:
- Novartis renewed its commitment to donate an unlimited supply of multidrug therapy and loose clofazimine for leprosy and its complications.
- GlaxoSmithKline announced a new five year commitment to expand their donation of albendazole through WHO beyond lymphatic filariasis to treat school-age children for soil transmitted helminthiases in Africa. The commitment includes 400 million doses per year for this purpose.
- Sanofi-aventis has agreed to renew its support for the WHO programme against sleeping sickness for the next five years.
- Bayer has started discussions with WHO on how to expand their current commitment to fight sleeping sickness and Chagas disease.
- EISAI has committed to work towards the global elimination of lymphatic filariasis by providing diethylcarbamazine (DEC) and
- Johnson&Johnson has recently also announced expanding its donation of mebendazole to supply up to 200 million treatments per year for treatment of intestinal worms in children.
This is a big deal. Though this WHO statement is wrapped up in medical language, it means, for example, that GSK have just announced they will give away drugs which prevent intestinal worms in children. This is one of the most cost effective development interventions we know of. Worms infect more than one third of the world’s population, especially children and the poor. These worms do not normally cause acute illness, but rather a long term, chronic malaise which damages almost all aspects of a child’s development, including health, nutrition, learning and access to education. A few years ago Miguel and Kremer showed that deworming is a very cost-effective way to increase school participation. Deworming all the world’s children will make a huge difference to their life chances and their well-being.
There are no magic bullets in development. Free drugs does not mean that they will reach the poor. There will need to be investment in health systems and logistics to make sure these drugs reach people. For example, the UK Department for International Development has given £25 million to the Schistosomiasis Control Initiative. As a result of today’s announcement by drugs companies, SCI will not have to buy drugs, so all that money can be used to ensure that drugs reach people who need them.
Hats off to the drugs companies. Credit where it is due.
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