Does foreign aid harm political institutions?

Good news for reflective aid business -types who like agonising about what the point of it all is and sometimes wondering whether we’re even making things worse (err... talking about a friend... not me...). Also even good news for developing countries I suppose.

A new paper in the Journal of Development Economics by Sam Jones & Finn Tarp* using new data on aid (from aiddata.org) and institutions (from the Quality of Government Institute) finds no evidence that aid has undermined institutions on average, if anything there seems to be a positive relationship. I’m less confident in the positive findings than reassured that in *none* of their various different approaches is the relationship negative.

Now you’re probably thinking “what about the 2006 CGD review paper by Todd Moss, Gunilla Pettersson & Nicolas Van de Walle, described by Blattman as "the best summary I know of the evidence”, which concluded that aid could have a harmful effect on institutional development”? Well the word “could” is important there - that conclusion was somewhat speculative, and this new evidence from Jones & Tarp fills an important gap in terms of systematic quantitative evidence on this topic, and should probably shift your priors at least a little in that direction.

I wonder what Angus Deaton would say?

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* Thanks to UNU-WIDER the paper is open-access, which is great for what it is, but obviously having public institutions pay private journal owners something greater than the cost of production isn’t an ideal long-run equilibrium, and we really need something that fundamentally shifts the whole publishing industry.

Effective Altruism, RCTs, NGOs, & the Government End-Game

Good Ventures just gave a $25 million unrestricted grant to Give Directly on the advice of Givewell. That’s a lot of good news in one sentence, but it’s not even the best part. Givewell buried the lede when they mention around paragraph 20 that;

"GiveDirectly plans to discuss partnerships with the following types of institutions:

- Donor aid agencies
- Developing country governments (national and local). (For example, several governors in Kenya have already approached GiveDirectly about running cash transfer programs in their counties.)"

That’s what it’s all about. To really get sustainability and scale in social policy you need government involvement - that’s why the best NGOs combine a mixture of immediate direct service delivery in places where government just doesn’t have the capacity to deliver, with support to interested governments to build that capacity for the longer-term, often at the local level where administrators struggle to actually implement well-designed central policy documents, and with innovation in new models of service delivery, that governments might later adopt, of which GiveDirectly is clearly a strong example. Similarly whilst Innovations for Poverty Action and J-PAL may have started off following that recently infamous Kremer-Miguel deworming study by working on service delivery through small NGOs, their focus is on things that can work at scale, and having built a reputation through working with NGOs have been able to transition to working with governments (for example in Ghana and Peru).

As Jessica Brass writes,

"Government and NGOs learn from each other to improve what they do. In particular, many government agencies notice the successes achieved by NGOs and, whether intentionally or not, mimic their actions"

So yes, maybe some of the effective altruists can be accused of being philosophers not development wonks, and potentially even naive about politics, but for every anecdote-backed theoretical case for how aid might undermine the process of building citizen-state accountability, I can come up with an anecdote-backed theoretical case for how aid can support improved governance through innovation in service delivery models, and until we get some quantitative evidence on the issue, I don’t see how else we’re going to resolve the debate.

Did I miss anything?

Development as... a better postal service

Francis from Oregon writes:

"I am a young postcard collector working on a geography project. For this project, I would really love a postcard from Sudan or South Sudan. 

Do you know of anyone who would be happy to send me one? I would be so happy and grateful for your help. 

Of course in return I would be more than happy to send the sender a beautiful postcard (or anything else they might need) from Oregon in the U.S. 

Francis from Oregon http://the-geo-nerd.blogspot.com"

So if anyone in South Sudan wants a penfriend, there you go. All I can offer is some post-related development marginalia.

First, the speed and reliability with which post services deliver letters is a reasonably reliable indicator of state capacity more generally. Countries which are members of the International Postal Union agree to return any misaddressed letters to the sending country within 30 days. So a team of economists sent letters from the US to fictitious addresses in 159 countries (10 letters per country), to see how fast they came back. The results tally pretty well with expectation, Finland and Norway sent them all back, Sudan and Somalia sent back none. And the time it took correlates with other measures of government capacity. They go on to make an important point:

"we used these measures to argue that an important reason for poor government in developing countries is not corruption or patronage, but rather the same basic low productivity that plagues the private sector in these countries as well.   Such low productivity is related to inputs and technology, but also to management.    In some ways, it is not surprising that a measure of the quality of government constructed to be free of political influences in fact correlates with standard determinants of productivity; yet it is still important to recognize that not all bad government is caused by politics."

In addition to furthering our understanding of governance and state capacity, post offices play an important immediate role in providing financial access in many countries, particularly for the poor, the less educated, those not working for a wage, and those living in rural areas.

Goldin on Global Governance

Almost as scary is his insider’s view of international organisations’ lack of readiness to deal with such threats. He questions the future effectiveness of the UN, and the legitimacy of the International Monetary Fund and World Bank, created at the 1944 Bretton Woods conference. “The picture of global governance today is one of duplication, ambiguity, overlap and confusion,” he concludes. Tax-free salaries and comfortable career paths encourage entrenched views and organisations out of step with modern working practices. 

Pretty damning, from the FT review of Ian Goldin's new book.

Doing governance is hard #163826353

First the good news: a new evaluation report from a community driven reconstruction programme in Eastern Congo (HT: Sarah Bailey) shows yet again that it is possible to evaluate messy hard-to-measure governance interventions using rigorous quantitative methods. IPA and JPAL have an evaluation of a similar programme in Sierra Leone.

Now the bad news: this kind of design only works with interventions at the local level because you need a large sample size of units - in this case villages. National-level interventions give you a sample size of one, not very conducive for quantitative analysis.

And the worse news: these local level governance interventions don't seem to work. Both this Congo study and the Sierra Leone study find no improvement in local governance.

Now for some better news: we actually already know what a lot of the national-level governance interventions that need to be done are. They are boring. Things like audits of government accounts. South Sudan has finally just published the audit of the 2007 accounts, to apparent astonishment and outrage by parliamentarians. It's pretty grim reading. Though I'm not sure how anyone is actually honestly surprised. Still, it's probably not totally outlandish to think that audits done a bit quicker than 5 years after the fact might improve budget governance.

And now for the worst news of all: much of this easy, boring, national-level governance stuff is around accountability - which means the national leadership intentionally putting in place limits on its own power. Binding its own hands. You have to be an incredibly enlightened leader to purposely reduce your own power. The whole point of the politics game is increasing your own power. Which means that you need people to demand accountability and force leaders into action. And despite all the talk about governance from the international community, we aren't really interested or able to be the ones doing the demanding.

Good aid meets bad governance: The case of bednets in Masisi

So apparently the donors and the Government of DRC agreed to split 50:50 the cost of providing insecticide treated bednets for every family in the Masisi district. There are now 100,000 donor funded nets sitting in the hospital in Masisi town, waiting there for months to be distributed by government staff, and taking up scarce space in the hospital. And there is no sign of those government funded nets.

Governance conditionality in South Sudan

Howard French makes the case in the Atlantic for governance conditionality in South Sudan.

In South Sudan, in fact, the major complaint is that the West failed to impose conditions on the country's fledgling leadership when it clearly had the power to do so. These conditions might have included strong press and freedom of speech laws, a powerful independent audit agency, signature of EITI, guarantees for political opposition, a limitation on presidential mandates, etc. 

All of which sound like pretty sensible ideas to me. 

He quotes Nhial Bol, editor of Juba-based newspaper the Citizen

"Why can't the West learn from its previous mistakes? Why have they supported us and imposed no conditions?"

Actually the West has learnt from its previous mistakes. It has just learnt the wrong lesson. Giving aid with conditions attached is pretty thoroughly out of fashion these days, following the widespread backlash to structural adjustment programmes in the 1980s and 90s.

But that nasty 80s conditionality was all about which particular policies to pursue. Governance conditionality isn't about imposing particular policies, but demanding democratic government.

As Paul Collier put it a few years ago (here and here):

"The essence of governance conditionality is that aid is being used to increase accountability not to donors, but to citizens." 

And the final word to Michela Wrong:

If you cut all aid to Kenya, people are going to die. So I don’t think that’s a solution. But I will say that aid donors have to look very closely at what they do. If you have a government whose ministers are setting out to steal the equivalent amount of money that they receive in aid, then you have to wonder why western donors are continuing with that relationship. I don’t think the answer is to cut them off, but the answer lies very much in doing what Edward Clay, the British high commissioner of the day, was doing. Which is to be very confrontational, to humiliate these people in public, to call them to account, to deny them visas. The aid relationship needs to be less automatic, less lazy, less complacent, and much more abrasive.

Does aid improve governance?

Jennifer Brass makes the case in the "Governance" journal [gated] that international NGOs operating in Kenya have contributed to improved democratic governance and accountability. This contrasts with the Bauer/Easterly/Moyo-ish lines that external aid undermines governance, but resonates with my recent limited experience looking at NGO programmes in Kenya which comes across as pretty positive interaction with government, and also with something Paul Collier has hypothesised, that the difference between aid and oil (and thus the explanation for better outcomes on average from aid than oil) is the added value of the technical assistance.

Brass writes

"Governance is no longer the purview of only public government actors; it is increasingly seen as a shared or networked process among several types of organizations. 

Government and NGOs learn from each other to improve what they do. In particular, many government agencies notice the successes achieved by NGOs and, whether intentionally or not, mimic their actions, recalling DiMaggio and Powell’s (1983) mimetic isomorphism. This is most obvious in their attempts at participatory approaches, in which opinions from the village to the city are solicited (if not always actually listened to). As a result, governance in Kenya has slowly begun to more democratic, moving away from its hierarchical, authoritarian past."

She also reports broad individual support for NGOs in Uganda and Kenya (perhaps not a surprising result that people report to surveyors that they like people who give out free stuff);

"in a survey of NGOs in Uganda, 90% of organizations reported involving host communities in the delivery of services, and nearly 60% of beneficiaries of these NGOs agreed that the NGOs seek community participation (Barr, Fafchamps, and Owens 2005). While NGOs claimed more participatory involvement than the respective communities saw, 60% participation rates are significant. Relative to the Kenyan government and its public administration over the past 40 years, NGOs unquestionably try to be more participatory and accountable. 

Kenyan citizens agree, viewing NGOs as looking after the interests of the common man. When asked, “To what extent do you think NGOs have the interests of the people in mind?” in a survey, the author conducted on service provision and service providers with 501 Kenyans, 70% of respondents answered positively, and only 20% responded negatively."

Finally, a separate paper finds that NGOs on average choose to locate themselves where need is great, but also in convenient locations (close to roads and towns - which isn't necessarily the worst thing for cost effectiveness), and best of all not due to political factors.

BRASS, J. N. (2012), Blurring Boundaries: The Integration of NGOs into Governance in Kenya. Governance, 25: 209-235. doi: 10.1111/j.1468-0491.2011.01553.x

Governance in Rwanda

Some interesting comments about Rwanda on my last post. I'm not going to touch this particular poverty vs human rights debacle with a barge-pole. In any case, I don't buy the argument at all that autocracy is in general in any way good for development (the data just doesn't support it). But I think you can make a reasonable case that you need to look at the change in governance as much as its absolute level in order to understand its impact upon the economy.

This chart shows trends in Rwandan governance, as measured by the Polity IV project. Positive on the scale is democratic and negative is autocratic. Above 6 gets you full democracy status and minus 6 full autocracy. Kagame came to power around 2000 (update: officially 2000, but effectively 1994?).   

Which countries are most vulnerable to the resource curse?

A new report by my colleague Dan Haglund suggests it is;

Non-fuel, mineral-dependent countries:

Bolivia, Burkino Faso, the DRC, Ghana, Guyana, Laos, Mali, Mauritania, Mongolia, Papua New Guinea, Tanzania and Zambia.

Fuel-dependent countries: Algeria, Angola, Azerbaijan, Cameroon, Chad, Cote d’Ivoire, Iran, Iraq, Nigeria, Sudan, Timor-Leste and Yemen.

See the full report here or coverage in the FT here.

Blessing or curse? The rise of mineral dependence among low- and middle-income countries 

Evidence for the Tony Blair "leadership matters" theory of governance and development

Is State Capacity a Political Choice? Two recent papers from IDS colleagues suggest that the answer to this question is “yes”. The paper by Santhosh Mathew and Mick Moore (2011) examines the weak capacity of the State of Bihar in India over the 1990-2005 period, and a paper by soon to be IDS Fellow Stephen Peterson (2011) on Public Financial Management in Ethiopia over the 1996-2010 examines the drivers of successful financial reform. The authors argue, In both cases, that deliberate and calculated political choices drove weak capacity in Bihar and strong capacity in Ethiopia --- Lawrence Haddad

Progress on Governance in South Sudan

1. The Public Financial Management Bill, a key piece of foundational legislation governing government expenditure, which has sat in draft form for several years has finally almost been passed by the Legislative Assembly (this is very good news).

2. The government accounts for 2005 and 2006 have finally been audited and presented to the Legislative Assembly, again, really great news (although there is some pretty nasty stuff in the details of the audit, it is important that people are hearing about it).

3. The Minister for Public Service Reform has resigned due to opposition from the rest of the cabinet on her reforms. There is no doubt reform is needed, but perhaps her ambitions for hiring only those with higher qualifications was unrealistic.

Two steps forward and one step back? Altogether, there was a kind of sense before the referendum that the independence was the absolute priority, and everything else would have to wait. A kind of reluctance to rock the boat or present any division for Khartoum to try and exploit. But that after independence things might change. I really hope so. 

How to Spend It (Paul Collier on Budget Support)

I managed to miss this a couple of months ago*; Paul Collier proposed at an ODI meeting that Budget Support should be given according to a simple decision rule, based upon an independent assessment of country public financial management (PFM).

Mick Foster's response is very interesting, arguing that "It is about managing an aid relationship, not certifying PFM and turning on auto-pilot ... Aid donors are the right people to do this - not agents who don’t have to live with the consequences of their verdicts."

I do like the principal that decisions be made objectively according to a transparent rule, but it is easy to imagine problems. A donor could easily be embarrassed by a democratically elected recipient government with good PFM systems deciding to make spending decisions which look somewhat inappropriate to a British taxpayer. But then that is the whole point of budget support - ceding control over spending decisions to a recipient government which is accountable to local people. Which could get tricky if local people hold values which might be different to the donors' (e.g., "The British government says it will cut aid to African countries that persecute LGBT people").

Foster argues that the economic case for budget support is clear, providing "the most cost effective way to deliver services, including allowing for leakages," which contrasts with the perspective of politicians who are "absolutists, not a penny can be stolen, clearly unrealistic." The trouble is, our politicians are also democratically accountable. To an electorate which is also pretty absolutist about corruption. And kind of understandably so. Being stolen from generates an emotional response.**  

Imagine you want to give £100 to a Kenyan family. Would you rather spend £25 of that on legitimate administration expenses and have £75 go to the family, or have £80 get through to the family, only £10 spent on administration, and £10 stolen by a politician and spent on his new Mercedes Benz? We know from a large literature on psychological experimental games that individuals often value procedural "fairness" above  monetary gain. People can choose inferior outcomes when they think that they are getting stiffed. Does this extrapolate to aid? I can certainly understand both a rational economic acknowledgement that corruption often isn't the main issue, alongside a kind of emotional moral revulsion which makes me want to absolutist.

If the economic case really is so strong compared to the political constraints, how can supporters of budget support make it more effectively? 

Read the ODI meeting summary here, and Mick Foster's response slides here.

*Thanks for the reference to Stephen Peterson at a recent Oxford Seminar.
**And as an aside, it's interesting that proponents of budget support argue that the economic case needs to trump the political one in this case, when they are often the kind of folks who criticise economists for focusing only on the economic case with scant regard to political constraints.

"You've gotta prioritise"

Some more governance advice from TB on Development Drums:

"I always say to the leaders that I interact with, if you show me a priority list with 50 things I promise you, you will do nothing. If you show me a list with 5 things, you can do it. And you've got to decide which of those things are really important." (at 19 minutes)

Which leads me to the new priorities for government and donors in South Sudan made by a coalition of NGOs;

1. Continue support for humanitarian needs;
2. Seek to prevent conflict;
3. Support community and civil society participation;
4. Ensure equitable development across the country;
5. Prioritize vulnerable populations;
6. Promote sustainable livelihoods;
7. Strengthen government capacity;
8. Enable an appropriate transition to government authorities;
9. Provide timely and predictable funding;
10. Engage in multi-sectoral integrated programming.

Easy peasy. 

Tony Blair to advise Ouattara?

In his interview on Development Drums Tony Blair mentioned that his Africa Governance Initiative is looking to expand into new countries, but he wouldn't be drawn on which ones whilst discussions are still underway.

His website is advertising jobs for this new project development, with a particular interest in French speakers to scope projects in Francophone Africa.

So I'm guessing Cote D'Ivoire. Or maybe Burundi. Any other bets?

Tony Blair on improving African Governance

People often say to me “you’ve got to train the civil service of the country in order to be able to do the things they need to do.” I personally think you can spend literally hundreds of millions of dollars doing that and nothing much come out of it (Barder: and we do). What we do is different in 3 crucial respects, the first is we combine a political interaction … the second is we prioritize, this is about delivering programs … people have this view that if you train up the civil service then they can deliver the programs. My view is that if you work on delivering  specific prioritised programs, you will get out of that the capacity that you require and can work on for delivering other things, and that its in the practical prioritization and doing things that makes the difference. The third thing is that our teams live in the country, they work alongside their counterparts in the country, there is a very strong interaction.

[Roughly transcribed] From the essential Development Drums. An interesting hypothesis forcefully made. And the Sierra Leone health service case study provides pretty compelling evidence of success.

Tony Blair. I remember walking to school in the sun on May 2 1997, for the first time in my life in a country with a left-wing government. It was mildly euphoric. And by and large you didn’t disappoint. Except for Iraq. Just one blemish. But oh what a blemish. I still don’t understand it and it still saddens me deeply. I felt almost personally betrayed for having placed so much faith in a politician. Oh Tony. I’m just not sure it is forgivable.