Politicians, the media, bloggers and other armchair experts on development almost all agree that aid for developing countries should be conditional on reforms by recipient countries, and that aid should be tied to conditions about how the aid is used. But this approach is generally not supported by people who work in development.
I’ve written a paper which looks at the advantages and disadvantages of conditionality. Unlike many critics of conditionality, I am broadly supportive of the policy reforms that donors recommend. But I am not at all convinced that aid conditionality is the right way to get those reforms implemented.
There are three possible arguments for conditionality:
(a) Conditions on aid might increase incentives for policy reform by developing country governments.
(b) Allocating aid to countries with good policy environments might increase the impact of aid spending.
(c) Aid conditions might increase our ability to account for how the money was used and what effects it had.
Alongside these advantages, we should consider the possible disadvantages of aid conditionality.
(a) The conditions increase transactions costs, for both the donor and especially for the recipient.
(b) Conditions may reduce predictability, which in turn reduces the effectiveness with which aid is used.
(c) There is a possibility that some of the policy prescriptions are incorrect, either because they reflect donor interests or because some of the international experts have given poor advice.
(d) The conditions may undermine internal government systems for prioritising, allocating, managing and accounting for public spending.
(e) The imposition of external conditions may contribute to poor accountability of developing country governments to their own citizens.
As set out in detail in the longer note, the arguments for conditionality are not very persuasive; but the possible adverse consequences are alarming. I conclude that aid should take the form of long-term, predictable commitments, focused on countries that are pursuing policies that are likely to benefit the poor. I support aid “selectivity” linked to long-term outcomes, which is a far cry from the current system.
You can read the full note here.
An amazing webcam set up by National Geographic, showing a watering hole in the Mashatu Game Reserve in Botswana. Mashatu is named after trees indigenous to the region, and is in the dry, eastern corner of Botswana.
The picture to the right is a screenshot I took of a jackal (I think) drinking at dawn this morning (it is not a publicity shot).
I find just having the sound in the background – the cicadas at night, the dawn chorus in the morning – very theraputic.
I am beginning to understand what people see in Big Brother …
Peak viewing time is 7am to noon in Botswana (which is 2 hours ahead of GMT and does not have daylight savings time).
H/T: Boing Boing.
Today’s Financial Times reports that the US has rejected a plan to replace food aid with cash.
Under questioning from senators, Rob Portman, the US trade representative, said: "We are not going down that road.
"The kinds of radical changes the EU and others are talking about would not be just harmful to our farmers and ranchers, but also terribly damaging to the developing world," he told the Senate agriculture committee. …
The EU, Switzerland, Canada, Australia, New Zealand, Australia and Thailand are all urging the US to stop providing direct shipments of food to developing countries except in genuine emergencies. They argue that food aid displaces commercial sales, distorts agricultural markets in developing countries and is used primarily to dispose of surplus crops encouraged by high domestic subsidies.
The same day, the New York Times reports that food aid threatens the livelihood of farmers in Niger:
after a season of good rains, Niger’s farmers are producing a bumper crop of millet, the national staple. This should be a cause for rejoicing, yet in one of the twists that mark life in the world’s poorest countries, the aid that was intended to save lives could ruin the harvest for many of Niger’s farmers by driving down prices.
The newly harvested millet and the donated food will reach market stalls at the same time, and with prices depressed, poor farming families may be forced to sell crops normally set aside for their own use and use the money to pay off debts. The effect would be a new cycle of hunger and poverty.
This is not rocket science, and many of us predicted exactly this would happen. On August 2nd, I said:
What is striking about these cases is that food aid – that is, buying surplus production from rich countries and shipping it to the places where people are hungry – may do more harm than good. What the poor people need in these circumstances is buying power, to enable them to buy the food that is already being produced but is not available to them. Food aid may depress local food prices, and thereby cause some harm to food producers and perhaps reduce future production. In these circumstances, it would be better to drop dollar bills out of helicopters than sacks of food.
See also Head Heeb
John Bolton, the recently appointed US ambassador to the United Nations, has been criticized for the amendments that he has proposed to the draft communique for the forthcoming UN Summit. I’ve spent an interesting couple of hours reading through Mr Bolton’s proposed changes, which can be read in full here (large PDF file). They provide an interesting insight into Mr Bolton’s approach; and they are not all bad.
Many of the changes are just tightening of the language, adjusting some of the UN-speak into plainer English; reducing repetition and superfluous words (such as deleting "hereby"). I welcome a simpler text, though I do not think that it is worth disrupting international consensus to achieve this.
Another group of changes are aimed at eliminating favourable references to existing multilateral agreements. Some of these changes remove mention of agreements that the US does not support (such as the Kyoto Protocol and the International Criminal Court). More worryingly, other changes would remove references to agreements which the US has ratified. For example, the amendments would remove the references to the commitments by nuclear nations in the Non Proliferation Treaty (which the US has ratified) to take steps towards nuclear disarmament; and would take out the reference to the Convention on Biological Diversity. It is not clear whether this reflects a desire on the part of the US to step aside from these international commitments: if so, they should defend their new position openly, rather than try to back out of agreements by stealth.
The proposed changes relating to international poverty are the most interesting. The amendments would remove nearly all the references to the Millennium Development Goals. Until now, the official US position has been that it accepts the first seven UN goals, as set out in the Millennium Declaration of the General Assembly, but does not consider itself bound by the quantitative MDG targets that were subsequently defined as a way to measure progress towards the agreement in the Millennium Declaration; the US has also consistently opposed the eighth Millennium Development Goal (which is the one about developing a partnership for global development).
Many of the proposed US amendments have the effect of removing a bold attempt by the UN system to put itself in the role of coordinating international development policy, instead of the World Bank and IMF. For example, the amendments would remove this:
We further reaffirm the need for the United nations to play a more decisive and central role in international development policy and in ensuring coherence, coordination and implementation of the development goals and actions agreed by the international community …
On this, I think Mr Bolton’s amendments are right. I recognize that there is a case to be made for the UN to play a more central role in promoting development: it is possible to argue that the UN has more legitimacy (because countries are represented on a more equal basis); and some people feel that the World Bank and IMF promote a particular ideological view of economic policy, where the UN bodies would accept a more diverse range of opinion about the best way to achieve poverty reduction. But whatever the theoretical merits, the UN system is too dysfunctional to take on responsibility for coordinating development policy; and the World Bank actually does rather a good job at the moment. I also agree with the basic tenets of the so called Washington Consensus; and I don’t believe it is in developing countries’ interests to weaken our resolve to base poverty reduction on a common set of broad policy goals which include macroeconomic stability, free and open markets, political accountability and investment in the health and skills of people. Effective international development policy is too important to allow people to play politics with it; until the UN system is reformed and shows itself capable of taking on this role, the US is right not to endorse a shift of power and responsibility to the UN. (The appointment of Kemal Dervis as the Administrator of UNDP is a good first step towards the UN becoming more effective.)
But while I agree with blocking language which attempts to shift power from the World Bank to the UN, the other changes to the draft conclusions on development seem to me to be much more sinister.
Recall that in 2000, world leaders (including the President of the United States) signed up to a Millennium Declaration which said:
We will spare no effort to free our fellow men, women and children from the abject and dehumanizing conditions of extreme poverty, to which more than a billion of them are currently subjected. We are committed to making the right to development a reality for everyone and to freeing the entire human race from want.
The process of drafting by committee has done much to obscure the really important issue of the September UN summit: are we willing to accept, now in 2005, that we are not going to meet the lofty objectives we set for ourseves in the Millennium Declaration? Or are we going to do something about our failure to act, which will require more resources and greater efforts on the part of rich countries? This conference could have been the moment at which the world is shamed by its failure to act to meet the objectives it set for itself, and galvanized into action. If we do not do so now, it will be impossible to meet the 2015 objectives. By removing references to the Millennium Development Goals, and the likelihood that they will not be met, the US approach would ensure that we do not face up to what is arguably the world’s most important challenge.
(See more on this at Talking Points Memo and at Liberals Against Terrorism, which has a defense of John Bolton by Nadezhda.)
If you are interested in development economics, you should be reading The Private Sector Development Blog (PSD Blog), which gathers together news, resources and ideas about the role of private enterprise in fighting poverty.
The site’s objective is:
- To provide intelligent comment on private sector development issues in the news.
- To highlight new Web sites, articles and books that development practitioners might find useful.
- To provide a link between the detailed resources on the World Bank Group’s Rapid Response Web site, and the ever changing world of the blogosphere.
The PSD Blog is already proving itself an invaluable resource, with lots of interesting information and links. It is maintained by the World Bank Group’s Rapid Response knowledge service, which specializes in policy advice on business environment reform and privatization policy in developing countries.The blog has two impressive authors:
Tim Harford is an economist at the International Finance Corporation (IFC). Before joining the IFC, he was the first Peter Martin Fellow at the Financial Times, where he was a leader writer in 2003. His book of popular economics, The Undercover Economist will be published in late 2005. He is also the author, with Michael Klein, of The Market for Aid, published in June 2005. Rather implausibly, he writes a problem-page column for the Financial Times called Dear Economist.
Pablo Halkyard is a private sector development associate in the joint World Bank-IFC Private Sector Development Vice-Presidency. Prior to joining the World Bank, he worked at an international strategy consultancy specializing on project risk analysis. Born in Brazil, he was raised in the Himalayas, grew up in Washington, studied in Lima, has a British passport, though claims to be Chilean. Unlike Tim, he is still working on his first book.
Michael Dell says he would license Unix-based OS X from Apple for Dell computers, if Apple were interested. (Apple has announced that it is moving over to Intel chips.) If I were Microsoft, I would be quite alarmed by this prospect.
I’ve had two wisdom teeth taken out today. The good news is that it was very straightforward. A couple of injections near each tooth, and then less than 15 minutes each. But despite the anaesthesia, there is something unspeakably uncomfortable about having a tooth extracted. You can feel the instruments being put into your mouth, and clamped around the tooth, and then the tooth is wiggled (I assume to break the roots, or whatever it is that holds them in.). Eventually the tooth is loose enough to be levered out. If the anaesthetic works (as it did for me) then there is no pain; but you can feel the threads breaking as the tooth is worked free and removed. I wonder if the discomfort is caused, in part, by Hollywood’s portrayal of sadistic dentists, for example in Marathon Man (and Little Shop of Horrors). I couldn’t quite get out of my head the feeling that I was being tortured. Even though I could feel no pain, I felt very vulnerable as my dentist used a pair of medical pliars to work my teeth lose and remove them. My grandmother had all her teeth removed when she was quite young. I think that is what they used to do before the second world war, to avoid tooth decay.
New York Times Editorial today (free registration required) about Ghana’s success, against enormous odds, in making progress towards democracy and economic growth.
Ghanaians like to brag that they have passed the point of no return in making their humid patch of West Africa a functioning democracy with all the perks that brings: a free and vibrant press, steady though slow economic growth, tourism. There is even a shopping mall with a multiplex cinema going up in Accra. With such obvious payoffs for adopting good governance, many Ghanaians say it is inconceivable that the country will turn back to the failed-state practices that have taken so many other African countries down the drain. … Almost half of Ghana’s national budget comes from foreign aid; Britain is its largest single-country donor. But the size of the country’s budget, a scant $3 billion, supporting some 20 million people, is testament to just how far Ghana still has to go, and just how much more it still needs to climb out of poverty. British Prime Minister Tony Blair’s proposal for rich countries to drastically increase their aid to Africa in a Marshall Plan approach would be a huge step toward helping to bring the continent back into the folds of the rest of the world. Ghana shows what a tough road this is going to be. But it also shows that bringing Africa back is eminently doable.
Some rights reserved