27 September 2018

The best thing about cash benchmarking is it highlights just how small most aid is

The best take on the new cash benchmarking study from Rwanda was this one by Michael Kevane:
"the main takeaway is that neither intervention (when evaluated at the low Gikuriro cost of $141 per household) improved child outcomes." Yikes. I guess though if household size = 7 that is only $20 per person.
Should we really be surprised that giving someone $20 doesn't improve any measurable outcomes? Maybe Kevane's maths is wrong and household size is smaller, but $20 is so small we could double it and still not expect to see anything.

That's one big advantage of cold hard individual cash transfers, they make explicit what the actual amount per person is, which is not so obvious when its one big community project costing loadsamoney and affecting loadsapeople. John Quiggin made this point years ago.

Last year, DFID gave £2.6 BILLION pounds to countries in Africa. That's so much money! How are they still so poor when we give them BILLIONS of pounds every year? Well, hold on, there are 1.2 billion PEOPLE in Africa. So that works out at just over £2 each for the whole YEAR. Of course it doesn't go to everyone, let's say the money is perfectly targeted on the poorest 10% of people. So they get £20 each.

Somehow there is a lot of magical thinking that by pooling money together it somehow automatically has totally outsized impacts. Of course its possible that smart investment in research or better governance can have truly outsized impact if it can nudge a country toward a slightly higher growth rate, but that isn't what most aid is even trying to do, and even when it is they stuff is wicked hard and we can expect most attempts to fail.

Aid is great but less hubris please. And less ridiculous implicit expectations from what aid could plausibly achieve from the sceptics too.

Don't Buy Local

This summer I finally got around to doing my first Park Run, joining the now millions of people around the world who turn up on Saturday mornings for a free 5km timed run around their local park (I managed a not too shabby 27 minute time, roughly average for my age). 

I also work on global development, so was pretty disappointed to receive an email announcing a new clothing line from the founder of Park Run that will be manufactured exclusively in Europe. Paul Sinton-Hewitt CBE was concerned with the “horrendously exploitative … factories in the Far East employing questionable practices, paying the lowest wages and exposing their workers to dangerous conditions”. 

Paul is right to be concerned about the wellbeing of East Asian factory workers, but moving those jobs to Europe is not the solution. Moving manufacturing jobs from places where jobs are scarce, to Europe where jobs are not scarce, is not a good thing. 

My point is not a new one; Paul Krugman, the nobel-prize winning left-wing economist wrote more than ten years ago in praise of sweatshops. But the point still stands, and is still apparently missed. The factories in which most of our sports gear are made have poor working conditions compared with jobs in rich countries, but they are usually preferable to the actual alternatives facing people unfortunate enough to be stuck in poor countries.

In 1980, before it became the workshop of the world, extreme poverty in China was close to 90 per cent. Today it is less than 1 per cent. That change would not have been possible without the manufacturing industry. It’s hard to think of anything else that has had a bigger positive impact on human wellbeing that the transformation of China’s economy. 

And it’s not just China that has benefited. Now that wages are starting to rise in China, manufacturers are moving on to other lower-income countries, such as neighbouring Vietnam and Cambodia, but also further afield, to Ethiopia and Nigeria. 

Researchers Rachel Heath and Mushfiq Mobarak looked at what happened in Bangladesh when garment factories started opening. As factories rewarded basic literacy and numeracy, girls who lived in villages near to new factories chose to stay in school longer. The effect on education was bigger than a government social programme explicitly designed to increase schooling. In Ethiopia, Chris Blattman and Stefan Dercon found that people use factory jobs as a safety net. Pay and conditions may be poor in the new factory jobs, but they are always there, even when other informal means of getting by fall through. 

So what is a concerned Park Runner to do? Ultimately pay and conditions in poor countries will only improve when workers get better outside options. Thanks to the hard work of poor Chinese in the 1980s and 1990s, China’s economy has grown, wages have risen, and Chinese workers today can afford to ask for more and turn down the worst offers. The best way to encourage that trend is to continue to buy things made in poor countries. Other ways to give poor people more options are to just give them cash directly (you can do literally that at givedirectly.org), to go on holiday to poor countries and spend money on services from poor people, or if you’re a citizen of a rich country to encourage your government to make it easier for people from poor countries to come and work in your country. 

I have nothing but admiration for Paul Sinton-Hewitt’s founding of Park Run, and of his desire to create an inclusive and ethical line of sportswear. I just hope he reconsiders his decision not to support jobs where they are needed most.

20 September 2018

Probably the best new research in global education economics

A couple of months ago the Centre for Education Economics asked me to edit their Annual Research Digest - a series of essays by leading thinkers on their favourite research paper from the past year.

The Digest is out today and I'm really pleased with how its come out, a fantastic set of blogs summarising a fascinating set of papers.

Here's the summary, and you can download the full report here.