The Education Commission & RISE

This post first appeared on the RISE blog

The recently launched report by the Education Commission has confirmed that a "business as usual" expansion of inputs is not going to fix the global learning crisis.

The recently launched report by the Education Commission, led by Commission Chair Gordon Brown, a star-studded cast of global leaders (including Center for Global Development affiliates Larry Summers and Ngozi Okonjo-Iweala), and guided by Commission Directors Justin Van Fleet and Liesbet Steer, has brought fresh data and support to the research agenda at RISE. There is a global learning crisis on a massive scale and a “business as usual” expansion of inputs isn’t going to fix it.

First, we’re very happy to see the high frequency of the word “learning”. Although educationists highlighted learning deficits of those in school (eg the 1990 Jomtien Declaration’s opening paragraphs stressed: “...millions more satisfy the attendance requirements but do not acquire essential knowledge and skills”), the UN Millennium Development Goals distorted the agenda onto an exclusive focus on enrolment and primary completion. Learning is, of course, harder than enrolment to reduce to the thin measures that are easy for states to “see,” but that is a weak excuse.

We knew already that the majority of children who can’t read are now *in* school (eg Spaull and Taylor for Southern Africa, the Global Monitoring Report), but the Commission report draws out the implications of current trends for 2030. Their calculations suggest that if current trends continue, 69% of school-aged children in low income countries will not have learnt basic primary level skills by 2030 - despite high enrolment rates. Even in middle income countries, half of children will attain primary level skills only. Millions of children are going to sit through hours of school day after day, and still not acquire the skills they need to prepare them for the complex and rapidly changing world they will face.

Second, what can we do about the global learning crisis? The Commission report leads with a discussion of the need for reform to systems which are coherent around learning performance. They provide new evidence that simply spending more money alone cannot be the answer. For example, Vietnam spends less money on education than Tunisia, yet scores much better in terms of learning outcomes (one of the reasons RISE picked Vietnam as a focus country). The same pattern is observed across cities in Pakistan, where Khanewal spends a fraction of other cities and yet achieves better results.

Even more shocking are the results from Africa. The Commission digs into an important new paper by Tessa Bold and co-authors (the draft presented at the RISE Conference) looking at the World Bank’s Service Delivery Indicators survey in seven countries. Analysis by the Commission reveals that less than half of spending on salaries and materials is actually used in teaching.

It is clearly possible to use existing resources more efficiently, and do more with less. RISE aims to understand the efficiency of schools in creating learning through a systems based approach. The best measure that is currently available for measuring features of systems, such as policies on teachers or student assessments, is the World Bank Systems Approach for Better Education Results (SABER) initiative. Each of our RISE Country Research Teams will carry out a baseline assessment of the system they are studying, based on SABER instruments. Analysis by the Commission report highlights the importance of systems in explaining performance - countries with stronger system features, as measured by the SABER surveys, score better on learning assessments.

The Education Commission report strengthens the case for research into how to reach high performing education systems to accelerate learning progress. It would be a tragedy if their “business as usual” projection becomes the sad reality, and when the end of the UN Sustainable Development Goals is reached in 2030, the majority of children emerge from school unprepared for the challenges they will face.

For more analysis listen to CGD Senior Fellows Bill Savedoff and Justin Sandefur discuss the report on the CGD podcast with Rajesh Mirchandani.

Innovative education financing modalities from 1862

Apparently payment by results isn’t quite so new.

"The reference here is to England’s Payment by Results school reform of 1862. According to the Revised code of the Department of Education in Britain in 1862, capitation grants to schools were reduced and payments were made to school on the basis of students passing on-site examinations given by inspectors in reading, writing and arithmetic. There has been much debate among historians about what the payment for results reform really accomplished. Mitch (2010) looks at educational performance across British counties over the 30 years of the policy and shows that during this time, inequalities across counties declined. But in the absence of data on trends prior to the reform, it is hard to establish whether this was a consequence of the reforms. In contrast, the quote here paraphrases Matthew Arnold, a poet and school inspector who returns from a trip to France and notes: “I find in English schools…..a deadness, a slackness and a discouragement….This change is certainly to be attributed to the `Payment by Results’ school legislation of 1862.”(Great Britain Privy Council 1868, Page 290)."

From a new paper by Andrabi, Das, & Khwaja

The IMF and Ebola

The debate rumbles on at the Monkey Cage, as Blattman responds to the response by the authors of the Lancet article to his response to their article. I find the debate mostly quite infuriating. To massively oversimplify, what tends to happen when IMF intervention is required is that;

1. Poor country governments spend more than their income for too long

2. They can't find enough people to keep lending them money

3. The IMF comes in as the lender of last resort, quite reasonably tells the government "look, we aren't a commercial lender, we're only lending because we have to, you're going to have to stop spending more than you're bringing in, because that is completely unsustainable"

4. Western academics criticise the IMF for forcing poor countries to cut their spending.

It's a bit like blaming firefighters for causing fires because they are always at the scene of the fire. The IMF isn't some kind of magic money tree. It only gets involved when countries have got themselves into a crisis. 

What complicates this narrative a little is the difference between austerity at home and austerity in poor countries, which are not the same thing. The UK can very happily carry on spending more than its income quite indefinitely, because commercial lenders continue to be very happy to lend enormous amounts at very low interest rates to the UK government, unlike the governments of very small, very poor, fragile states. It is ok and entirely consistent to rail against austerity in the West, and simultaneously support fiscal discipline (not spending more than your income) in poor countries. At least, it is odd to blame the IMF for not letting poor countries spend more than their income indefinitely, when money grows on trees for neither poor country governments nor the IMF.

What will it cost to eliminate poverty?

Development Initiatives have a new report out today with, complete with some good-looking charts, reviewing the global picture of financing for development.

A couple of charts really stand out.

First this one, showing the depth of poverty. Ending "extreme" poverty - the 1.2 billion below $1.25 a day is feasible by 2030, but there are 5.2 billion living on less than $10 a day, which is roughly the poverty line in most rich countries. 

Second, this one, showing the level of per capita government spending. 82% of the world's poor live in countries with annual spending below $1,000 per person. I'm not so sure what to make of this. For those in countries with spending below $500, which looks like around half of the global poor, this puts paid to the notion that the poor all now live in middle income countries that should be funding their own social programmes without aid.

For those closer to the $1,000 mark, this is still really a pittance, but it's also more than enough to bring individuals above the poverty line with a direct cash transfer. How does it feel to live on less than $1.25 a day in a country where the government spends twice that much for you on public services?

Rapid increase in financial access in Rwanda

Impressive results from the 2012 Finscope survey for Rwanda. Since 2008, access to commercial banks has increased by 60%, access to other non-bank formal financial services (e.g. Savings And Credit Co-operatives (SACCOs)) increased by 275%, and total financial exclusion has fallen by almost half. Someone is doing something right.

New OPM research

1. An evaluation of Oxfam's Emergency Food Security and Livelihoods Urban Programme.

2. How to making agricultural financing work in Rwanda (it's about post-harvest storage & marketing, not inputs)

3. How savings banks can provide better services for the poor

4. Assessing value for money of donor support to the financial sector in Kenya

Why do Kenyans save?

0.089% of them apparently answered "When I receive money in ransom" to this question, from the 2009 Financial Access survey. Ahem.

War! Huh (What is it good for) (Apparently PFM reform)

Or that was one of the more colourful* claims made by Stephen Peterson in a seminar a couple of weeks ago on his work over 12 years with the Ministry of Finance in Ethiopia. Apparently the war with Eritrea meant all the other international advisers left, leaving him alone to work with the government without the distraction of competing missions from different donors.** He was the only expat in the Ministry of Finance, compared to something like 282 at one point in Kenya.

Ethiopia now has the third best PFM system in Africa, after South Africa and Mauritius.

*Damn you America, for making me have to pause and think about the correct spelling of common words like this
**Just to be clear, I'm really not trying to imply that war is in any way a good thing. War is still bad yeah?

International Thief Thief

Global Witness drop some UK development-policy-beyond-aid wisdom.

British banks have accepted millions of pounds from corrupt Nigerian politicians, raising serious questions about their commitment to tackling financial crime.

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Without access to the international financial system it would be much harder for corrupt politicians from the developing world to loot their national treasuries or accept bribes. By taking money from such customers, British banks are fuelling corruption, entrenching poverty and undermining international development assistance.

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The UK regulator, the Financial Services Authority (FSA) needs to do much more to prevent banks from facilitating corruption. As yet no British bank has been publically fined, or even named, by the regulator for taking corrupt funds, whether willingly or through negligence. This is in stark contrast to the U.S., where banks have been fined hundreds of millions of dollars for handling dirty money.

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The UK’s aid to poor countries has been ring fenced against budget cuts. Meanwhile, banks - themselves propped up by taxpayer’s money - are getting away with practices that fundamentally undermine the effect of aid. This is not just illogical, it is immoral

Microfinance Impact & Innovation Conference 2010

I’m attending the Microfinance Impact & Innovation Conference 2010, on the 40th floor of the Moody’s building in New York. This is the view from the window. Quote of the day so far goes to Abhijit Banerjee: “This is the fanciest room in which I’ve ever spoken about the poor.” For more, check out the IPA blog.

Constraints to medium-sized firm growth

The World Bank’s “Doing Business” reports assess the ease of doing business in different countries, by comparing policies and regulation. It is a fascinating exercise, but one which is based upon an implicit assumption that these rules matter, and that they are binding.

A new NBER working paper by Mary Hallward-Driemeier, Gita Khun-Jush, and Lant Pritchett argues that in Africa, policies and regulations are typically not very well implemented, meaning that deals are more important to firms than rules.

We argue that often firms in Africa do not cope with policy rules, rather they face deals; firm-specific policy actions that can be influenced by firm actions (e.g. bribes) and characteristics (e.g. political connections).  Using Enterprise Survey data we demonstrate huge variability in reported policy actions across firms notionally facing the same policy.   The within-country dispersion in firm-specific policy actions is larger than the cross-national differences in average policy … Finally, we show that the de jure measures such as Doing Business indicators are virtually uncorrelated with ex-post firm-level responses, further evidence that deals rather than rules prevail in Africa.

The constraints reported by 3317 firms in 13 countries are shown in the Figure below. The point being made is that policy uncertainty is much more important than licences or customs clearance, but I am also pretty stunned by the reported importance of electricity.

The “missing middle”

The failure of microfinance to have a large impact on firm creation and firm growth (Banerjee et al. 2009; Karlan and Zinman 2009; a summary by FT) may be due to its targeting of poor people and small-scale firms. It is medium to large scaled firms that are missing in less developed countries (LDCs) if the firm size distribution is compared to the one from developed countries (Hsieh and Klenow 2009), and that type of firms is probably the driver of economic growth. Governments in LDCs and development assistance agencies, however, have ignored these medium and large scaled firms.

That is Abhijit Banerjee talking at the Annual Bank Conference on Development Economics.

I suppose medium scaled firms just aren’t as sexy as a single female entrepreneur. Perhaps we need a catchy name for support to mid-sized firms. “Middle-finance”? “Medium-finance?” “Meso-finance?” Melody Atil is trying to plug this gap in Southern Sudan by recruiting investors for slightly larger firms.

Then again financing might not even be the main constraint to firm growth…

Gettin’ by in Bangladesh

Meet Hamid. He is a “reserve driver” for a motorised rickshaw in Dhaka, Bangladesh. This job earns him about $70 per month, with which he supports his wife Khadeja and their son. This works out at about $0.78 per person per day. Yet despite this low income, the family have an impressively wide range of financial activity.

And what about purchasing power parity (because a dollar goes much further in Bangladesh were things are cheap)?  That multiplies family income by 3:

Multiplying the $0.78 per person per day by 2.88, gives a PPP amount of $2.08 per person per day.

All of this is from the freely downloadable first chapter of The Portfolios of the Poor. Yes I’m a bit slow to this, but I live in a country that doesn’t have any book shops yet, so leave me alone.

Beyond Aid - Going after corruption

Owen Barder has written a great post on the difference between aid and development policy - between providing temporary alleviation from the worst effects of poverty, and supporting structural transformation.

Aid is best-suited to poverty alleviation, and other “beyond aid” policies such as trade, security and migration are more suited to transformational development.

Hilary Myers mentioned one of these “beyond-aid” issues on this blog: cracking down on tax havens, improving transparency and tackling corruption - particularly by making it harder for western banks and financial institutions to facilitate that corruption.

How important are these illicit financial flows out of developing countries? Derrill Watson draws my attention to these figures from the Global Financial Integrity Programme of the Center for International Policy.

Quite important.

Shleifer and Vishny on the Financial Crisis

Nicola Gennaioli, Andrei Shleifer, and Robert Vishny have added a little “mathematical masturbation” to Hyman Minsky’s theory of financial innovation and financial fragility.

Minsky was from a strange breed, somewhere between Keynes and Marx, but he had a theory that fits the recent crisis rather well. The demands of capitalism for profit lead to increasing financial innovation, and as the good times continue, overconfidence, and a move towards more risky investments, increasing systemic financial fragility. Which is pretty much what has just happened, and what GSV describe in their paper.

Still though, when ideas get written in maths, they get taken seriously by modern economists. Krugman pretty much got the Nobel Prize for writing old ideas in maths. And not necessarily without reason - when ideas are written in maths they are written with clarity. With no scope for fuzzy thinking or rhetorical flourishes, the logic has to be sound.

Its just a shame Minsky doesn’t even get a reference. So here it is:

Hyman P. Minsky, Stabilizing an Unstable Economy (1986).

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(I learnt about Minsky through Jan Toporowski’s wonderful banking and finance lectures and his Theories of Financial Disturbance (2005). Jan’s lectures somehow managed to double as a history of the sex lives of the great economists).