Owen abroad

Archive for September, 2006

G and I are going trekking in North Africa for a couple of weeks.  (Note to American readers: In Europe we have these arrangements called "holidays" during which we stop work for a few weeks and enjoy ourselves instead.  You should try it.) 

We will be offline so there will be no blogging or emails.  This will be our longest period away from email and the internet since our cycling holiday in Ethiopia.  

See you all in a few weeks. 

Nick Kristof has a review in the current New York Review of Books of recent books by Jeff Sachs, Bill Easterly, Ruth Levine, Robert Calderisi, David Leonard & Scott Straus about the effectiveness of aid.

Coincidentally, G and I went to a presentation by Bill Easterly this morning, here in London to promote his new book.

I agree with Easterly that:

• we need a range of entrepreneurial, small-scale activities to innovate and test new ideas;
• we need more thorough and independent evaluation of aid; (see here for an analysis of the evaluation gap)
• aid should be more accountable to the people it is intended to help;
• we should stop interventions which do not work;
• and we should scale up interventions which do.

But I also fundamentally disagree with Easterly:

•  there is abundant evidence that more aid is positively correlated with growth in developing countries; Easterly cites a misleading sample of technically inadequate papers to the contrary;
• we need planners as well as searchers: once good ideas have been developed and tested, they should be scaled up and this requires coordinated plans;
• the country-led approach which Easterly derides has not yet been fully tested, but early indications are positive.  The forty years of failure which he criticizes were years in which donors pursued aid interventions much more like those he advocates than the policies they pursue now.

Finally, none of the books that Kristof reviews does justice to the role of the private sector in development.  We need to understand better the range of policies and interventions that would help to foster private sector development, and not stifle it.

Sebastian Mallaby writes in the Washington Post highlighting the possible gains to developing countries of a relaxation in the migration policies of rich countries.

In ” Let Their People Come ,” a new book published by the Center for Global Development, Lant Pritchett reports that if rich countries permitted extra immigration equivalent to 3 percent of their labor force, the citizens of poor countries would gain about $300 billion a year. That’s three times more than the direct gains from abolishing all remaining trade barriers, four times more than the foreign aid given by governments and 100 times more than the value of debt relief.

Quite so.  Development assistance is only a small part of what developed nations can, and should, do to reduce global poverty.

Hat tip: Pienso. More from Arnold Kling.

Alex Singleton at the Globalisation Institute writes:

Over the past couple of years there has been a growing consensus that conditionality does not work.  … It has failed because imposing good policies on countries that don’t want to do them just results in countries taking the cash and then not doing the agreed policies. … Instead of conditionality, the approach should be to set minimum levels of governance and anti-corruption that countries must attain before receiving budgetary support – those countries are likely to absorb the money well and pursue good policies, thereby not needing the conditionality.

This is exactly right. (It is also what I argued in a presentation I gave in a meeting at the Africa Centre in December 2001, what the British Government set out in its policy paper of March 2005, and which I described at greater length here in December 2005.)

Alex goes on: 

DFID currently pays lip-service to governance, but in practice just writes the cheque. In countries where money is likely to be misspent by government, that is a mistake. Instead money should be spent through local, domestic NGOs, and through other bottom-up mechanisms like aid vouchers.

I don't agree at all that DFID only pays lip-service to governance.  DFID has just published an entire White Paper about Making Governance Work for the Poor.   It has recently reallocated its aid in both Uganda and Ethiopia in response to concerns about governance.  That is why DFID refuses to give budget support in countries such as Kenya and Zimbabwe. 

A new study has found that aid channeled into vaccination has had a significant effect on improving childhood vaccination rates in the poorest countries.

Researchers at the Harvard School of Public Health, writing in the current edition of The Lancet (pdf), have analyzed how funding provided by aid donors through the Global Alliance for Vaccines and Immunization has raised the percentage of children receiving the combined diphtheria, tetanus and pertussis vaccine between 1995 and 2004.

This independent assessment of the effect of GAVI on DTP3 coverage shows that GAVI has contributed to increased DTP3 coverage in countries with baseline DTP3 coverage of 65% or less at their first approval for GAVI funding. We estimate the cost to GAVI to be about $8·40–20 per additional child immunised. This estimate is close to the proposed cost to GAVI of $20 per additional immunised child.

Once again, immunization has been shown to be one of the most cost-effective interventions in development. 

The UK Government is today hosting a conference on the proposed Arms Trade Treaty. The treaty is being promoted by  Argentina, Australia, Costa Rica, Japan, Kenya and the UK and it would create a framework to regulate the arms trade so that all countries adopt similar standards.While the treaty is not perfect, it would be a significant step forward in the control of the proliferation of weapons.  Ambassadors from more than 50 nations will meet to discuss the proposal, which the UK aims to take to the UN General Assembly later this year.

Alex Singleton at the Globalisation Institute reports that all is not well, in at least some fair trade cooperatives

Sadly, for too many farmers in poor countries today, they are trapped in not terribly voluntary co-operatives. Out in rural Kenya last week, I found that there was some scepticism towards the traditional view the co-operatives are always forces for good. In fact, in Kenya, the coffee co-operatives have suffered from significant mismanagement, with individual farmers often exploited by the leaders of the co-operatives. In fairness, Kenya has been trying to help rebalance the situation, for example introducing six year term limits on co-operative leaders. I do worry that spokespeople for the Fairtrade movement suffer from a myopic romantic vision of the coffee farmer in a co-operative, which the truth such an existence is backbreaking and mired in exploitation.

It would be a cruel irony if the fairtrade movement itself became a new form of expoitation.  The principle of fair trade – that people should be able to spend more buying products that they know to have been produced without exploitation – is a good one.  But the recent articles in the FT and Alex's report from Kenya suggest that more needs to be done to ensure that the fair trade certificate means what it says.

See also today's FT leader. 

Update: the Fair Trade Foundation replies here. 

The Gates Foundation and Rockefeller Foundation joined forces yesterday to fund the development of a green revolution in Africa (see washingtonpost.com)

The Africa program will begin with a relatively small Gates contribution of $100 million over five years, plus $50 million from Rockefeller, to fund development of more robust disease- and drought-resistant seeds for primary African foodstuffs, enhanced distribution networks for seed and fertilizer, and university-level training for African crop scientists.

The green revolution in Asia in the 1960s and 1970s – building on research started in the 1940s – transformed food production, incomes and kick started the industrialization of Asian economies.  That too was the result of an investment by the Rockefeller Foundation, who commissioned Norman Borlaug to work on developing new wheat varieties and managing education campaigns to get the new varieties to farmers.  Since 1970, wheat yields in India and Pakistan have grown ten-fold. 

If the Rockefeller Foundation and Gates Foundation can repeat that success, it could make a very significant contribution to Africa’s future economic development and industrialisation.

Via: Pienso. More via the Gates
and Rockefeller
foundations

I'm grateful to my Dad for pointing out the article in today's Guardian by Brendan Barber, General Secretary of the TUC, calling for free movement of people.  

We live in an increasingly globalised world. Our best response is not to yield to little England, but recognise that the best way of avoiding a rush to the bottom is to fully embrace Europe; and that means accepting the free movement of labour as well as capital and goods.

This is a progressive and economically literate position; and it is a pleasant surprise to hear it put so clearly by a senior union figure.

Lant Pritchett, a non-resident fellow at the Center for Global Development, has just published a new book, Let Their People Come. He proposes changes to migration policies in rich countries which are intended to support development while also being politically acceptable.  But if the politics are moving towards greater acceptance of free movement of labour in the union movement, then it may be politically feasible to make faster progress towards more liberal migration policies.

A new paper by  Jorg Faust at the German Development Institute looks at whether rich countries that have more accountable and democratic institutions have more development-oriented foreign policy:

… the results do support the main hypothesis presented here, namely that the level of democratic voice and accountability in OECD countries is one crucial factor explaining the variance of the overall quality of development promotion in those countries.  Beyond, these finding also suggest that  a rising level of democratic voice and accountability increases the overall coherency of these countries' foreign policies with regard to development promotion. … Rich countries with stronger democratic institutions produce foreign policies which are at the same time more compatible with the concompassing interests of the rich countries' society while at the same time more adequate to promote development in poorer countires.  

This is an important finding.  It is consitent with the view that policies pursued by rich countries which damage development – such as restrictions on trade, limits on migration, constraints on technology transfer, corruption or arms sales – reflect the power in those countries of special interest groups to protect and promote their causes at the expense of economic development in poor countries.   As the rich countries become more democratic and accountable, so the voice of our collective interests in global peace and security and in global equity are more overcome those interest groups.

Ruth Levine at the Global Health Policy Blog rightly points out that the emergence of Extreme Drug Resistant TB is a further example of the way that our interests, in rich countries, are increasingly intertwined with the interests of poor countries.

Recent reports about the emergence of Extreme Drug-Resistant TB in South Africa are disquieting reminders of fundamental concerns in international public health: fragile health systems in developing countries, stretched to the breaking point as they struggle to respond to health needs today, have the potential to incubate infectious diseases that are tomorrow's global threat. While the new strains of TB that are untreatable with any of current medications affect only small numbers at the moment, the insurgent microbes cannot be ignored.

As George Bush said in another context, we have to fight it over there so we don't have to fight it over here.

See also Christine Gorman at the Time Global Health blog

The FT reports that fair trade coffee from Peru is being produced by workers who are not treated as Fair Trade consumers would wish:

The FT visited five Peruvian smallholdings, all of which have Fairtrade certification.

Each farm hires 12-20 casual coffee pickers during the harvest season. All house and feed their workers, which allows them to deduct 30 per cent from their wages.

After that reduction from the legal daily minimum wage for casual agricultural workers of 16 soles ($5),farm owners are still obliged to pay at least 11.20 soles a day. In four of the five farms visited by the FT, pickers received 10 soles aday, while the other farm paid workers 12 soles a day.

The Fair Trade brand depends completely on the credibility of the certification process; and it has always been somewhat haphazard and untransparent.  The fair trade labelling organization, FLO, needs to define clearer standards for the fair trade brand internationally, and to enforce them.

After two wonderful years in Berkeley, working for the Center for Global Development, I am returning to the UK civil service to the Department for International Development.  I shall be Director of Global Development Effectiveness, responsible for leading the teams that work with other donors and institutions to improve the international system for development, tackling corruption, improving financial accountability, trade policy, coordinating our involvement in the G8 and other international agreements, financing and scaling up aid, and managing for results.

This is likely to mean that I'll have to change how I blog; but I'm hoping to go on blogging about development in some form.

So that is why it has been quiet around here – we've been busy making arrangements to move back to London.  I'll miss CGD and Berkeley but I'm looking forward to being back in London and at DFID. 

The annual World Bank report, Doing Business, reports an improvement in the business environment in two thirds of countries in sub-Saharan Africa.  Tanzania and Ghana are in the top-ten improving countries this year. Other countries that have simplified regulations or improved property rights include Benin, Burkina Faso, Cameroon, Gambia, Madagascar, Malawi, Mali, Mozambique, Niger, Nigeria and Zambia.  The report includes a useful summary of improvements in African business regulation.

This matters because the exit strategy from high poverty and dependence on aid is economic growth, and that growth must come from the private sector.  As I as I reported last year, there is a strong correlation between a poor business environment and high levels of poverty. 

It is heartening to see from this report that good Africa is making progress.  South Africa, Mauritius, Namibia and Botswana now rank among the best 50 countries in the world.  But sub-Saharan Africa accounts for 27 out of 35 of the least business-friendly countries, and it is not surprising that these are among the poorest countries in the world.

There is also a an optimistic report in this week's Economist. It quotes Michael Klein, who is the vice-president for private-sector development at the World Bank and Chief Economist at the IFC, as saying that if  governments in Africa continue to reform, GDP growth could reach 9% a year over the next decade.  That would be very good news indeed, as growth rates of that scale are needed to achieve the internationally agreed goal of halving the proportion of people living in poverty by 2015.

Reforms which improve the environment for business are frequently not very expensive, though they can be made difficult by the need to challenge vested interests.  African governments should be commended for the progress they have made, and be supported in going much further to create an environment in which private businesses can prosper.  As well as investing in health and education, creating an environment for faster economic growth is an essential component for economic development. 

• PSD Blog
• Report in the FT
• Business in Africa survey in this week's Economist
• Pienso
• Truck and Barter
• Greg Mankiw
• New Economist