28 October 2009

The Challenge of Reforming Budgetary Institutions in Developing Countries

By Richard Allen (via the IMF PFM blog)
  • Would-be reformers greatly underestimate the time taken to implement PFM reforms in LICs. 
  • The experience of now-developed countries suggests that the process of establishing credible and robust budgetary institutions can take many decades, or longer. There is no reason to expect LICs to be different. 
  • Many developing countries -- and their advisors -- are turning their backs on basic systems which are needed before moving on to more advanced reforms. 
  • Because the necessary basics are not in place, many reforms are likely to fail. 
  • While a few countries have made progress, in general, the evidence suggests that weak budgetary institutions tend to be the norm in many LICs. Some countries that were "shining stars" in the 1990s have stagnated or fallen back. 
  • Donors and the international consultants they hire are often part of the problem rather than part of the solution. 
  • Reform action plans tend to be much too complex (e.g., the "platform approach"), and the time periods for completion much too short. Donors compete for a share of the TA pie. Such plans are unlikely to be successful. 
  • Much more attention needs to be given to the political economy constraints to reform since changing budgetary institutions is not at root a technocratic issue. 
  • Not enough attention is given to monitoring and evaluating the results of reform programs, creating the right incentives for reform, and holding officials to account for success and failure. 
  • The presentation gives examples of PFM reforms that should be given priority, and others that should not generally be attempted before basic systems are in place.
    Update: Great discussion by Ranil at AidThoughts on this issue

    Rare praise for the UN

    I think this is brilliant:
    UN to deliver food aid by text message 
    In a test project targeting 1,000 Iraqi refugee families, the United Nations agency will send a 22-dollar (15-euro) voucher every two months by SMS to each family, who will be provided with a special SIM card. 
    The beneficiary can then exchange the electronic voucher for rice, wheat flour, lentils, chickpeas, oil, canned fish, cheese and eggs at selected shops. 
    Addressing concerns about mobile phone ownership among the refugee population, WFP spokeswoman Emilia Casella said all the 130,000 Iraqi refugees currently receiving food aid from the agency in Syria have mobile phones.


    I told my housemate yesterday that he couldn't borrow my beard-trimmer because we need to grow "budget beards" as an austerity measure. There will barely be time for sleeping, so no shaving until the 2010 Budget is passed.

    But later I had a better idea. It's almost Movember!

    So readers what do you think - Budget Beards or Movember Moustaches?

    Also - in the event of Movember Moustaches, we need a charity to donate some money to.

    Current suggestions include:

    1. Tyler Cowen's idea - give money to random individuals who look like they are working hard rather than asking for money.

    2. Start an advocacy campaign and spend lots of money on flyers. I'm not particularly convinced by this one, especially as we don't know what we would be advocating for.

    25 October 2009

    Sunday Links

    1. John Ashworth on Making Sense of Darfur - Not Peace, Not Comprehensive, Not an Agreement?

    2. Flash Me - MTC in Sudan says that there 130 million missed calls every day, and 355 million actual calls

    3. NERICA Comes to Northern Uganda. If it works there it should also work in Equatoria, Southern Sudan. Sounds interesting.

    4. Migration-Watch-Watch: Another article by Sir Andrew Green, titled "The real threat of immigration", in which he mentions not one reason for why immigration is actually bad, besides it creating a larger population (which is not a reason!!!!! Why is bigger inherently bad?! Does this guy hate British people and want there to be fewer of us??).

    Development Wishlist

    Rachel Strohm asks for "Development Wishlists".

    Here is mine. Take migration for development seriously.

    Imagine what this chart would look like with liberalised migration policies for unskilled workers from poor countries to move to rich countries.

    23 October 2009

    Is UK Aid failing?

    Via David Roodman -

    The 2009 Commitment to Development Index from the Center for Global Development (CGD) is out.

    It doesn't make pretty reading from a UK perspective, falling from a rank of 6th (out of 22 rich countries) last year to 12th this year. Overtaken by Spain, Austria, Finland and Canada. Are you listening Gordon Brown? The Africa Commission and "Make Poverty History" were great and everything, but Austria now has better development policies than the UK.

    The Index can be disaggregated into 7 components: aid, trade, investment, migration, environment, security and technology.

    The reason for the UK's drop in the rankings is a big decrease in the aid score. Perhaps some punishment for that horrible new logo?

    More substantively, the UK is roughly around average for most of the scores, except for one. Can you guess which it is? Migration. Only Japan and South Korea have less development-friendly migration-policies than the UK.


    In other Migration News (seems to be the only thing I'm talking about at the moment), Michael Clemens, also of CGD, has a great FP "think again" article rebutting migration-skeptics who worry about "brain drain."

    - Migration is not "stealing" human capital. It is an individual choice.

    - Poor countries don't waste money training eventual migrants. They normally train themselves.

    - Many skilled migrants eventually go back home with more skills and capital.

    - Doctors in Africa don't live in the rural areas where they are most needed anyway, but concentrate in urban areas where they can get a better life.

    22 October 2009

    Gary Becker in controversial "extend markets to unfamiliar areas" shocker

    Gary Becker thinks the US should charge immigrants $50,000 for entry (HT: Trade Diversion).

    Makes sense to me. Poor people want to move to rich countries. Rich people don't want them to (except maybe the liberal elites).

    And that is because the price of immigration is set artificially at zero. Presumably there is a positive price at which there is positive (i.e. larger than at present) immigration and in which there is a clear pareto improvement for everyone.

    Most of the HUGE gains from immigration go to the poor, so why not allow them to choose to pay a bit of those potential gains in order to gain passage? So long as this is enough to compensate any labour-market losses of natives.

    This of course assumes some kind of functioning credit market. And some way of allocating those entry fees to those most disadvantaged by the increased immigration (i.e. those with a similar skills profile to the immigrants).

    Simple no?


    HT: White African for the link (which I've lost) to the info-graphic

    Thursday Links

    1. Great post by Duncan Green: the new HDR is all about the development impacts of migration, but it ignores the politics. For that, you need to read Fanjul and Pritchett.

    2. The Marginal Manifesto?

    3. Great news as M-pesa comes to the UK. Competition in the remittances sector can only be good for poor people.

    4. I can't watch this but it sounds good.

    21 October 2009

    Wednesday Links

    1. When I say pub, you say ... AK-47! (HT:TH)

    2. A bit of inspirational liberal rhetoric from Owen Barder

    3. I see some familiarity in this discussion of MTEFs in Ghana. Is it time developing countries just gave up on them?

    4. The BBCs Africa Analyst thinks that 2 data points are enough to say "recent evidence of the [Mo Ibrahim] prize's effectiveness across Africa is not encouraging"

    err... TWO DATA POINTS?!

    5. Air tickets, Nairobi-style

    18 October 2009

    Very talented young multi-lingual Human Rights expert available for hire in Juba

    I read somewhere that blogging is good for your career. Hopefully it will also be good for my girlfriend's career.

    Drop me an email if you have any ideas or are interested:


    16 October 2009

    Warming increases risk of civil war in Africa


    Ed Miguel is red-hot. Climate change and civil war in ONE PAPER?! Can anything stop this man!!

    10 October 2009

    Blogging and Academia

    I've just been reading the latest draft of a paper by Miguel, Saiegh and Satyanath which measures the correlation between violence on the football (soccer) field in European leagues (yellow/red cards) and violence in a player's home country (civil war). Blattman blogged about an earlier draft a while ago.

    Great paper, but what caught my eye were the acknowledgements:
    "We are grateful to Dan Altman, Ray Fisman, Matias Iaryczower, Abdul Nouri, Dani Rodrik, seminar participants at Stanford, UCSD, UCLA, IPES, and at the 4th Annual HiCN Workshop at Yale, and a host of anonymous bloggers for useful comments, and Dan Hartley, Teferi Mergo, Melanie Wasserman and Tom Zeitzoff for excellent research assistance. All errors remain our own."
    Proper academic acknowledgement of bloggers! Is this a first?

    09 October 2009

    What does corruption have to do with development?

    A commentator suggests that a "tolerable administration of justice" needs to incorporate "zero-tolerance of corruption." I agree about the importance of predictability, but corruption is a pretty broad concept, and is it always the most binding constraint?

    Mushtaq Khan at SOAS has some great work skewering the cross-country approach to corruption and growth which dominates the literature. This chart in particular articulates that old favourite: Correlation does not necessarily mean causation.


    Update: Mushtaq Khan and Daniel Kaufmann are on the next Development Drums, send your questions to Owen Barder

    Test Drive Google SMS Services (Uganda)

    This is cool. Health and agriculture tips, and a "marketplace" all via SMS. I hope it takes off.

    08 October 2009

    The Challenges of Budgeting in Oil-dependent Economies

    Does the Guardian care about Development?

    I generally applaud the Guardian's Katine project for the attention it brings to development. But I am exasperated by the lack of clarity on issues this important.
    Does the Tory party care about aid
    In a recent green paper on international development, the Conservative party sought to establish its commitment to aid.
    Aid is not the same thing as development. They cannot be used interchangeably. They are not synonyms.

    Development happens when governments have strong leadership pointing in the right direction. External assistance can help, and it can take many forms, of which aid is one.

    Treating aid and development as if they are interchangeable narrows our thought and blocks off discussion of all the other ways that rich countries can help poor people enjoy better lives.

    On a different note, I want to meet the 7% of Guardian readers who vote conservative. And the 14% of Torygraph readers who vote labour. Who are these people?

    06 October 2009

    Monday Links (On Tuesday)

    My job is getting in the way of blogging. That and whoever forgot to pay the internet bill (again).

    1. I'd like to second Matt's call for 'economic crimes against humanity'

    2. Duncan Green explains the importance of economic growth. Redistribution within poor countries can't get rid poverty. (Obviously. But I'm still glad that someone has run the numbers).

    3. The best productivity blog ever (HT: Marginal Revolution)