Owen abroad

Archive for October, 2006

In principle, it should be possible to sustain gravitas while still conveying passion.

I'm here at Wilton Park discussing the scaling up agenda with some world class minds. I find passion easier than gravitas. 

Very interesting debate in this month's Prospect between Hilary Benn (Britain's Cabinet Minister with responsibility for International Development) and Bill Easterly, a critic of government aid.

For me, the money quote from Hilary Benn is this: 

All functioning governments have essential features in common: a capacity to do things, good financial and information management, clear lines of accountability and freedom from corruption, to name just a few. We owe it to the world’s poor to help their governments to develop these capacities. Strong economic growth and fair trade are simply the fastest and most effective ways to get people out of poverty, and both of these require governments to work properly.

Very interesting paper by James Harrigan and Geoffrey Barrows at NBER which quantifies the benefit to the United States of ending the Multi Fiber Agreement (which had regulated the global textile trade), and which was ended as part of the Uruguay Round.

The paper finds that this change in trade policy was worth approximately $12 billion a year to American consumers.

That is in addition to the benefits to many people in China, India, Pakistan and Bangladesh, who are now better able to earn a living producing and exporting goods to to the United States. (The paper does not seek to quantify these benefits).

Via Trade Diversion 

Here in Manila, I have had BBC World on the TV in the background. They have just had a story about the apparent breakdown in relations between Paul McCartney and Heather Mills.

I cannot see any conceivable public interest in this story.  There is no reason for anybody apart from the people themselves to know the details of their marriage.  Of course, the public may be pruriently interested, but that is a different thing altogether.

As a public service broadcaster, the BBC has no business broadcasting this rubbish. 

At the Asia Regional Forum on Aid Effectiveness in Manila.

Shocking fact – Afghanistan received 1,657 donor missions last year. That’s more than 4 a day, 365 days a year. How is a government supposed to govern properly if it has its face pointing towards the donors and its rear end facing its own citizens?

There is increasing interest in development circles on measures to promote foreign direct investment in developing countres.   Thierry Mayer at the OECD has published a new study (pdf) of the interactions between aid, trade and investment policies to inform donor decisions about how to maximise foreign direct investment and its broader benefits.

The study draws some unexpected and disconcerting conclusions: 

• The relationship between FDI and economic growth is not as strong as was previously claimed – indeed, while there is a correlation between inward FDI and growth, it is not possible statistically to invalidate the hypothesis that those two outcomes are results of a common cause – namely the pursuit of sound economic policies.
• The benefits to the local economy of FDI are limited – and indeed FDI can have a negative effect on local industries.
• There is no statistically significant relationship between bilateral aid and the amount of FDI (once you control for country characteristics).

The paper concludes that for FDI to have a beneficial impact, it is important to increase absorption capacity, by increasing human capital accumulation, increasing and improving transport infrastructure, improving market access for poor countries to increase trading opportunities, and facilitating trade between developing countries.  Mayer also calls for more detailed examination of the impact of investments in infrastructure and in education and the interaction with the benefits from FDI.

It is true that this paper looks only at middle income countries (because of data constraints in least developed countries).   Nonetheless, it should challenge to the development industry to consider carefully what we know about the impact of foreign direct investment on development, and to reappraise the policies we pursue both to promote FDI and to increase its beneficial impact.

Muhammad Yunus and the Grameen Bank have been awarded the 2006 Nobel Peace Prize. 

This is a powerful statement by the committee (which is appointed by the Norwegian parliament) of the role of poverty reduction in promoting peace.

As the Grameen Bank has shown, access to financial services such as credit can make a huge contribution to improving the lives of the poor. 

Microfinance has become a very popular cause in international development, especially among the large private foundations of North America.  Supporting microfinance appeals to the notion that we should give the poor a hand up, not a hand out.  It appeals to our sense that we should find ways to unleash the entrepreneurial spirits of those who are unfortunate enough to have been born in poor countries. 

But there remain important questions about microfinance.  There remains very little systematic empirical evidence of the impact of microfinance on the incomes and well-being of the poor.  Grameen's main measure of its success – its repayment rate – is impressive but tells us little about what impact microfinance has actually had.

In my view, it is impossible to argue with the view that the poor benefit, probably substantially, from access to affordable financial services, including credit, savings, insurance and remittances.   But as I argued here in November last year, it does not follow at all that it is a good idea for donors and foundations to subsidize microfinance.  After all, the Grameen Bank was developed without donor assistance.

So many congratulations to Muhammad Yunus for his well deserved award, and to the Nobel Peace Prize committee for recognizing the power of economic growth in poor countries to promote peace.  But let's think carefully before we all climb on to the microfinance bandwagon. It is not clear that subsidizing microfinance is a high priority for helping the developing world to grow its way to prosperity.

More at Pienso, Marginal Revolution and NextBillion. Update: Also Mark Thoma, Audemus

I will shortly be returning to life as a senior civil servant, and I am looking forward to it. I'm fortunate that the Department for International Development is a very successful department, recognised as one of the most effective development organisations in the world.  But like every part of the public service, we could do better.

In that context, I have been thinking about how I can be a better leader and manager. At the risk of sounding like Martin Lukes, here is my personal manifesto.  These are my goals as a manger.  I would welcome feedback – both from my own staff (positive and negative feedback welcomed) and from others.

1.  It is amazing what you can achieve if you don't care who gets the credit.  
If something goes right, I'll make sure the credit goes to the people who did the work.  If something goes wrong, then the buck stops with me.  It is my responsibility to ensure that the team has the right resources, leadership and remit to succeed; if they do not, then I have failed to ensure that they have what they need. 

2.  Help others to become stars. 
There are some very smart people in my team. I want them to succeed and become stars, but I know this is very demanding.  This is not entirely selfless: I want more great people to want to join the team to join the talent we already have. We will achieve more together if they have everything they need to succeed. It is my job to see to it that they do.

3.  If everything is a priority, nothing is.
If we want to keep things ticking over as they are and take no risks, then we should do a little bit of everything. But if we want to change the world, we need to identify a small number of important and ahievable tasks and focus our resources on achieving them.  

4.  Build a shared vision, then empower others to deliver it
As a leader, my priority is to build common understanding about what the team can achieve together. With that in place, I will trust the team to get on to deliver it to the best of their ability.  In my view, the managerialist approach – micromanaging staff with rafts of performance targets – is a fall-back for those who cannot lead.  Command and control is both a cause and a consequence of failure.

5 .  Say what you mean, mean what you say
I will never have a hidden agenda: I will always be open, honest and direct.  If my team feels that they have to interpret what I say for hidden meaning then I am not building their trust and not communicating openly enough.   In general, colleagues want more communication rather than less.

6.  We have a responsibility to take risks and face the consequences
One of our responsibilities in DFID is to dream big and to take risks.  We will let down the poor if we care more about protecting our own backs from the risk of failure than we do about seizing every realistic chance we can for change. We should ask ourselves: "what is the worst that can happen?"  This is not a rhetorical question: we have to identify what could go wrong, and then decide how to mitigate those risks.  It is important to realize that the risks are rarely very serious.  We will keep a sense of proportion.

7. Build a diverse team and listen well
One of the most common causes of bad decisions and poor implementation is group-think. Every time we put a bunch of similar people in a room – with the same background, the same training, the same attitudes and the same experiences – they will reinforce each other's faults and prejudices. Instead, I will nurture a diverse team, so that we have a variety of ideas, disciplines and discourses in every conversation.  I will listen well, especially to people who challenge my assumptions. Together we will demonstrate the 'wisdom of the crowd'.  

8.  Be patient. 
Nothing really important happens quickly.  If we can reach out to others, to build understanding and trust, and open ourselves to learning, we can build a long-lasting shared vision for change.  If we try to take short-cuts we will end up with clever language that means different things to different people and which never leads to sustained and serious change.

9. I will not take myself too seriously.
The long term drivers of change are not the actions of individuals, but the collective effect of social trends, of evolution of institutions and incentives, changes in attitudes, incremental changes in technology, and incremental changes in systems.  None of us is indispensible.  I will do my best to contribute positively, but I ultimately I am not that important.

**

I would welcome thoughts (in the comments below) about this agenda for management. 

G and I are back from two weeks in Morocco.

We went into the desert on camels and slept in tents, and hiked for days in the glorious Atlas mountains. 

The weather was hot, despite which every adult we met was observing Ramadan.

I start work at DFID next week, with a trip to Tokyo to discuss how we can work better with the Japanese government to improve international aid, and a meeting in Manila on aid effectiveness.