25 January 2017

How to spend aid in fragile countries

The classic dilemma in figuring out how to spend aid money is the trade-off between:

     a) achieving scale and sustainability by supporting national government systems (but losing control), and
     b) keeping more direct control by working through NGOs, but sacrificing scale and sustainability.

This trade-off is less acute when the recipient government is an effective service provider and respects human rights. Often however the countries that most need external assistance do so in large part precisely because they aren’t blessed with well qualified governments.

One possible solution to this dilemma is providing mass cash transfers - a route to supporting poor individuals whilst side-stepping their government. Another (neglected?) route is supporting local service providers directly. An example of this is the Girl’s Education South Sudan provision of ‘capitation' grants to schools (full disclosure, I was hired to do some analysis). This pipe provides both government and donor (currently DFID) finance direct to the school bank account (held by the school’s governing/managing committee).

Here is a ring-fenced pipe, separate from the main government treasury, at scale, that can send money direct to every school (whether public or private) in a country, with receipts, full government engagement in delivery, in-person monthly reporting, and disaggregated real-time data. All of which potentially an exciting opportunity for donors if they want to fund education in emergencies.

What does the money do? Overall measured enrolment has been trending upwards over the last few years. My analysis suggests that at least some of this aggregate enrolment growth can be attributed to the grants. First, looking at the individual school level, schools tend to report higher levels of enrolment and attendance the year after receiving a grant, after allowing for school fixed effects by conditioning on past attendance or attendance. Second, I exploit a natural experiment whereby the government-financed component of the grants (not the donor-financed component) was arbitrarily held up by state governments for a set of (~control) schools that had gone through all the same hoops as some other (~treatment) schools that did receive the grants. The estimated effect of receiving grants on enrolment and attendance levels remains similar. Similar gains are found for schools that qualified to receive cash transfers for girls. The results are robust to measuring enrolment using the national remote SMS reporting system (sssams.org), or the smaller in-person sample survey.

What about learning outcomes? The focus of the cutting edge in global education research is rightly on what kids actually learn at school rather than just getting bums on seats. But there are still a few countries, including South Sudan, where access and enrolment in school is still a major issue. You should probably take most statistics on South Sudan with a grain of salt, but one estimate of the Net primary enrolment rate is just 43%, which is really pretty low.

However, one of things that does seem to really matter for student learning outcomes is how teachers are motivated and held accountable. Private schools tend to get more effort out of their teachers, largely because they are paid directly by the school and not by a remote government office. For example in Uganda, teachers in private schools spend more time in the classroom teaching than their counterparts in public schools. But this isn’t an inherent feature of the ownership and management of public versus private schools. In principle all public teachers could be hired and paid directly by schools, financed by a single central government school grant, rather than all teachers being put directly onto a single national payroll. This might inadvertently be happening in South Sudan anyway, as recent rapid inflation is reducing the value of local currency denominated teacher salaries, whilst the donor (hard currency) -financed school grants maintain more of their absolute value (and increase in value relative to teacher central payroll salaries). Shifting more funding directly to schools and allowing the list of eligible schools to include non-state providers could open the door to quality-focused international NGO chains such as Peas.

It’s very easy to just be incredibly depressed by news coming out of South Sudan, including warnings of a potential new genocide, but as ever, sanity lies in the stoic serenity prayer - we should focus on what we can change (and on the evidence needed to enable the distinction be made between what we can and can’t change).

24 January 2017

You don’t need to be a cosmopolitan to support more migration

New from Dani Rodrik:

"how strong a preference must we have for our fellow citizens relative to foreigners to justify the existing level of barriers on international labor mobility? More concretely, let φ stand for the weight in our social welfare function on the utility of domestic citizens relative to the utility of foreigners.

When φ=1, we are perfect cosmopolitans and we see no difference between a citizen and a foreigner. When φ→∞, foreigners might starve to death and we wouldn’t care.

For the policy in question [allowing the movement of 60 million workers from poor to rich nations] to reduce social welfare in the rich countries, it turns out that φ must be larger than 4.5. Is a welfare premium of 450 percent for fellow citizens excessive? Is it reasonable to think that a foreigner is worth less than 22 percent a citizen?"

17 January 2017

How the UK can lead the world on trade for development

Prime Minister Theresa May has said that the UK will be a "global leader on free trade”.  How can the UK use that opportunity to give the biggest possible boost to global development?  If the UK wanted to be the world leader on trade-for-development, what would the policies look like? 

There are options to consider not only on tariffs, quotas, and preferences, but also on improvements in UK systems and aid for trade as well as taxation.

I suggest some answers in a blog and paper with Ian Mitchell and Michael Anderson at CGD.

10 January 2017

Experimental Conversations

When I was studying for my undergraduate degree, probably the most enjoyable book I read I think I happened to stumble across in the library (back in the day when you had to actually go to the library to find book chapters and physical copies of journals to read), called ‘Conversations with Leading Economists’. The conversational style, discussing in conversational language how ideas came about and how theorists interacted with each others' ideas and with data, was an amazing breath of fresh air, and a world away from the weirdness of the textbooks which often appear to pass down strange and seemingly grossly unrealistic theories and models of the world as if they were some kind of natural law. The list of interviewees includes Milton Friedman, Robert Lucas, Gregory Mankiw, Franco Modigliani, Paul Romer, Robert Solow.

That conversational style can probably be slightly more commonly found these days in the post-blogging social media world, but there are still plenty of important thinkers who don’t very frequently blog or write op-eds (they’re busy being important thinkers), so Timothy Ogden has provided the wonderful service of writing up a series of interviews with some of the leading voices in both academia and policy on the use of randomized evaluations and field experiments in development economics.

You can buy the book 'Experimental Conversations’ here.

Read the chapter with Angus Deaton for free here

And subscribe to Tim’s weekly newsletter here.