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Digesting the difficult decisions of development

Archive for category Development

A Human Thing

Sep 6

Posted by Ranil Dissanayake in Development, Governance, History | 4 Comments

Chris Blattman recently asked if Human Rights might be a morally dubious concept, following Adam Martin’s unearthing of an old interview with the libertarian economist F.A. Hayek. Hayek, who was making the argument that apartheid South Africa should have been left alone to run its own business as a ‘civilisation of a kind’, made the claim that intervention was being encouraged by the recent acceptance of human rights in America, just a few years prior to the video being recorded.

Leaving aside the irony of a libertarian regarding a situation in which 90% of humans had severely restricted liberty as unworthy of intervention, I really have to take issue with another point he makes: that human rights were a recent concept to the US when he was interviewed in the 1970s. Martin quotes:

I’m not sure whether it’s an invention of the present administration or whether it’s of an older date, but I suppose if you told an eighteen year old that human rights is a new discovery he wouldn’t believe it.  He would have thought the United States for 200 years has been committed to human rights, which of course would be absurd.

- An absurd statement itself, considering the contents of the Declaration of Independence. In the comments, Adam defends this statement, arguing that Hayek was referring to a new, modern conception of human rights:

… human rights are claims about how governments should act to produce particular patterns of outcomes

Adam contrasts this with the idea that classical human rights were statements about how individuals should treat each other. I’m dubious; a glance at the history of the ideas underlying statehood and rights suggests that the concept of rights was far more amorphous than this dichotomy would indicate, and spoke directly to the actions of the state as well as individuals. In fact the revolutions of America and France were specifically about the responsibilities of the state.

Human rights emerged as the basis of modern states (including the independent America) more than two centuries ago and their expansion from their original base began almost immediately – first incorporating new people and then new rights. The American and French Revolutions pioneered the ideas of ‘human rights’ as actionable concepts. The Declaration of Independence famously holds certain truths to be self-evident, notably that ‘all men are created equal’. France’s revolution was founded on the principles of liberté, egalité, fraternité – still the central elements of the French identity.

Nor were these the first time that universal rights had been invoked. The intellectual foundations for universal rights were laid by the very first Greek and Roman philosophers, and independently by Asian philosophers. These philosophers attempted to isolate the conditions for happiness, rightness and dignity that apply to all men: and thus laid the foundation for the idea of human rights as conditions that must be protected to allow the pursuit of these. As early as the third century BC, Mencius took these ideas further: he claimed that a ruler who tyrannises his subjects loses his divine right to rule and the people have the right to revolution – thus directly linking rights to the actions of states and leaders. The 1776 and 1789 revolutions made this explicit through the ideas they laid at the foundation of the new states they created.

What was amazing in the 1776 and 1789 revolutions was that they established as part of their basic justification the idea that Government had responsibilities and requirements that gave or denied it legitimacy, and that this was a truth that did not derive from exclusively from divine mandate (as with Kings who were either ‘chosen’ or descendent from Gods or the heavens) nor divine knowledge (i.e. from textual religion) – rather that these concepts were immutable, and derived from the condition of humanity. It was the failure to meet these responsibilities that motivated revolution.

The ideas of basic human rights established in these two revolutions have had an incredible enduring power. It is ahistorical to claim that the Sen-inspired approach to rights-based development is anything new. Rather, it’s a further modernization of a conceptual basis to the state that has existed for a great deal of time. The modification and expansion of rights is also not a new phenomenon. The original ideas were immediately passed into common currency and modified even in the few years following the revolutions. And these ideas have always been controversial and open to debate.

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In which Andrew Mwenda might be getting what he wants… sort of

Aug 30

Posted by Ranil Dissanayake in Africa, Aid, Development | 3 Comments

Much like Ray Stantz, Andrew Mwenda should be careful of what he wishes for

Be careful of what you wish for. You might just get it.

Recently, Andrew Mwenda and five other prominent African intellectuals wrote to the Telegraph suggesting that Africa does not in fact need British development aid. Rather, they would be much happier if Britain contributed to the scrapping of the Common Agricultural Policy as a way of helping Africa.

Unfortunately, it seems like the Conservative-Liberal coalition Government might be giving them half of what they want – and not the good part. Yet another DfID-related leak has revealed that the British aid budget will from now on be allocated with a much stronger emphasis on UK security; in effect, moving aid away from being a stand-alone policy area and into a branch of a foreign policy drive aimed at ensuring the safety of the British public. Cynics will say this is nothing new, but it is surely more explicit and more closely felt than at any time since DfID’s formation.

Just to be clear: the leaked document does not suggest that Britain stop funding schools, or healthcare or even economic growth per se. DfID could continue to be a paragon of virtue in international development circles. What it does mean is that whenever DfID want to spend on these things, it will need to justify them on UK national security grounds. Since UK national security is best served by stable, prosperous, well-educated countries existing around the world this isn’t necessarily a recipe for disaster.

However, it’s another indication that the new Government want to make DfID, hitherto one of the best aid agencies to work with from a developing country point of view, more of a tool for an overall UK Government strategy founded in ideology and realpolitik. This is a real worry. Like the news from a few weeks back that DfID was dropping a number of commitments previously agreed, allegedly including the Paris Declaration, it is an indication that the Government wants to free up DfID to respond to its own priorities first and foremost.

Up til now, one of the reasons why DfID has developed such a good reputation was because it had a fairly high degree of operational independence from the rest of Government. This gave it the flexibility to pursue better aid allocations in the context of wider donor and Government spending, sometimes by taking on risk through budget support and other times by improving resource allocation procedures (budgeting, Parliamentary oversight and the like).

Giving DfID a requirement to justify what they do based on UK national security introduces an important restraint to them: it means that they cannot simply respond to country needs given the allocation of other resources, but needs to ensure it’s own resources pass a fitness test at home. What’s more, this all but rules out general budget support (from the recipient point of view, the best way of getting aid, if you care about building the ability of Government to allocate and account for funds), since there can be no guarantee on where this money will be spent.

All in all, this is a worrying sign though not a guarantee of catastrophe.

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The migrant’s dilemma

Aug 23

Posted by Matt in Development, Political Economy, Research | 3 Comments

Where would people end up if there were no barriers to movement?

The folks at Gallup, who recently produced some interesting figures on the large number of people from developing countries who  would like to permanently emigrate, have followed up with new data on where people would like to move to.

Using their survey data to predict the proportion of the population who would move if all barriers were dropped, they constructed net migration indices, basically showing the increase/decrease in adult population which would result if everyone got their wish. For example, below we have the top gainers (in percentage terms):

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We’ll always have Paris…

Aug 17

Posted by Ranil Dissanayake in Aid, Development, Governance, Worst practices | 2 Comments

Of all the Declarations, in all the world...

News from this weekend suggests that DfID will be reversing its hitherto strong backing to the Paris Declaration on Aid Effectiveness. My initial reactions were of shock and disappointment. Shock because DfID has been an ardent supporter of the Paris Declaration and Accra Agenda for Action. Disappointment because it was so unexpected: it has a strong, highly competent aid effectiveness department and has also used the Declaration to push Government reform.

I’ve noted after viewing the original leaked memo that the original advice was in favour of maintaining the Paris Declaration as a commitment by DfID. Most of the other commitments dropped simply serve to cut the amount of ringfencing of DfID’s budget and therefore increase its flexibility to meet the needs of different developing countries.

The decision to rescind their commitment to the PD is a much more problematic one, however. The issues essentially break down as follows:

What has DfID Reversed?

The Paris Declaration on Aid Effectiveness (PD) is an agreement signed by donor agencies and Governments and aid-recipient Governments in 2005. The Declaration establishes a number of best practices in aid management that all parties promise to adhere to, and twelve targets which all parties are to be assessed on. These targets and commitments were strengthened by the Accra Agenda for Action (AAA) in 2008.

The idea behind the PD and AAA is to make it easier for Governments to manage, use and report on aid by simplifying the way aid is contracted, disbursed and evaluated. It also seeks to maximise the benefit to the developing country by untying aid and ensuring that aid be channelled through the working local process of the aid-recipient Government. Thus aid is promised to be channelled through the local budget process, use the local accounting and audit procedures and be evaluated according to local processes. It further stressed the need to make aid as flexible as possible by using fungible General and Sector Budget Support.

Recipient Governments also made pledges to improve their own systems: of audit, budgeting and so on, and to be assessed independently on them.

The Paris Declaration has two very big positive points. The first is that it seeks to increase the ability of local actors to respond to their own problems flexibly and not be dictated to by a multitude of individual donors. It thus helps reduce the coordination problem of aid and encourages local solutions and visions of development.

The second major benefit, related to the first, is that it moves the lines of accountability of aid. Instead of aid money being handled by the donors, in which case the donors are accountable to their own taxpayers and no-one else, it creates dual accountability. First the donor gives money to the recipient Government to use. That Government is thus accountable to the donor, and must show that the money was used appropriately. But far more important than this, because aid money is now on budget and managed by local Governments a second line of accountability is created: of the recipient Government spending the money to the local electorate. Through the budget debates in Parliament, these people have the chance to contest the use of aid through their elected representatives; they also have the ability to vote a Government out of power if it doesn’t use aid money well. The Government now has to justify aid money in the same way it does tax money.

Additionally, the PD addresses lots of smaller, niggling issues that seriously hamper the capacity of Governments, for example setting a target for the reduction of cumbersome and time consuming donor missions by combining them.

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A Massive Blow

Aug 16

Posted by Ranil Dissanayake in Aid, Development, Worst practices | 3 Comments

DfID have gone all Anderson Silva on the fight for more effective aid management.

A leaked memo reveals that DfID will be dropping its commitment to the Paris Declaration on Aid Effectiveness.

This is a massive blow. The PD (as it’s known)  is very imperfect, and even the refinements we made in Accra in 2008 left plenty to be desired. But it’s the only real commitment the international community has made to improving donor systems for the management of aid – to making it easier to use, receive, negotiate. What’s worse, it’s one of the few places where recipient Governments are tied down to improvements in the way they themselves manage aid and their domestic resources.

DfID have been one of the biggest motors behind improving the PD and getting the simplification of access to and usage of aid money improved. This is not insignificant. Anyone who has spent time in a developing country Government can see how much of the recipient Government’s time is spent on managing, applying for and reporting on aid – not to mention following up on problems in its access, flow and predictability, all of which are covered by the PD. A conservative estimate for a heavily aid dependent country like Malawi is about 60% of Ministry of Finance time. Probably as much in the most aid dependent sectors, too. (To clarify – dropping the PD does not mean that DfID are abandoning the fight for better aid – but they are dropping their biggest weapon in the fight for better aid management.)

Dropping the PD means DfID have just lost a massive amount of moral authority in the fight to improve the way aid is used, and equally in the fight to improve the way Governments manage their own resources.

I’ll collect my thoughts for a more detailed post.

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Questionable parentage

Aug 9

Posted by Matt in Development, Research | 4 Comments

Gabriel Demombynes over at the World Bank blog has s0me more interesting things to say about the Multidimensional Poverty Index (MPI). There’s one claim he makes a claim which I find particularly interesting:

The MPI is a descendant of the earlier Human Development Index and is similar to the various Unsatisfied Basic Needs indices long used in many countries.

Several others, including Duncan Green, have also stated that the MPI is a natural follow-on from the Human Development Index (HDI), which I’m not sure is correct, as the two have a very different conceptual basis.

As its name implies, the MPI falls into a class of indices known as poverty measures. While they can get quite complex and opaque, the more basic of these have a similar approach: First we have to pick a welfare measure. This could really be anything that is measurable, but is most commonly income, consumption or asset wealth. Then comes the surprisingly contentious task of choosing a threshold, under which people will be classified as being poor if they do not meet it. These poverty lines can be absolute or relative, the latter indicating a greater concern for inequality than absolute deprivation. Counting the poor gives us a final tally of those living below the poverty line.

The MPI is an extension of this approach, instead using a range of indicators wrangled together a multidimensional poverty line. While single-dimension poverty lines make very precise statements about people along one dimension (Person i can only be not-poor if their income Xi exceeds the poverty threshold P (Xi >P), multidimensional lines can classify two households as being poor even when they face vastly different circumstances. For example: two people might be equally unhealthy, but one has enough asset wealth to be classified as “not-poor”. The MPI also tries to include information on the severity of poverty, for those that face many different deprivations all at once, a conceptually similar approach to the poverty gap and squared poverty gap indices.

The MPI, like the other poverty measures that came before it, focuses on a particular segment of the population, discarding all information about the non-poor. Because it is derived by counting individuals whole fall into a pre-specified condition, it is best thought of as a way to describe the state of this sub-population, rather than as a comprehensive indicator.

In contrast, the Human Development Index was intended to be used to make statements about the overall progress of a country’s development. While all of its components are aggregated from individual or household information, or from counting those in a certain condition (i.e. those that are literate, or who have died this year), they do not give the same type of insight. The education component is similar (we are just counting those who are in the state of literacy or who are enrolled in school), but with GNI and life expectancy, we aren’t really counting anything, we’re expressing moments and expectations from interesting country-wide distributions. We cannot say “X number of people have an HDI of Y.”

The HDI was initially introduced as an alternative to just relying on income as a measure of human welfare. This way of looking at the world, which became very popular following Sen’s work on the capabilities approach, also motivates the MPI as an alternative to only considering poverty in income. The weakness in both the indices is in their method with dealing with multidimensionality – by using ad hoc methods of averaging different dimensions together to come up with a single number.

So, when describing the MPI to someone new, one might refer to it as “an extension of traditional income-based poverty measures, taking into account the multidimensional nature of poverty, much as the Human Development Index considers the multidimensional nature of development. Both consider just measuring income, or consumption, to be insufficient,” rather than as a natural follow on from the HDI.

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Keeping it in the Family

Aug 7

Posted by Ranil Dissanayake in Development, Economics, History, Political Economy | No Comments

Michael Corleone condemns his brother to death.

'Never take sides with anyone against the Family again. Ever.'

One of the enduring questions of historical debate is why Western Europe and North America so outperformed the rest of the world economically in the 1800s. Though some (notably Andre Gunder Frank) have argued that the ‘advance of the West’ was really an illusion created by the decline of the rest, it is generally agreed that Western Europe and America had or developed a number of advantages that took their growth forward and retarded the growth of other regions – sometimes through luck, sometimes through natural endowment and often through a combination of the two.

One aspect of these advantages has interested me recently: financial services and the organization of business. It’s now widely accepted that better financial services was part of the reason why Western European companies in particular prospered in this period. The Dutch pioneered the Joint Stock Company to mitigate the risks of long mercantile voyages, and the Dutch East India Company was an early example of the separation of ownership and management. In Britain and then in the rest of Western Europe, regional banks came to prominence and provided the means by which firms could raise capital for expansion. This was generally accompanied by a changing of the structure of firm.

Businesses had till this point been, by-and-large, enterprises that were run by families. The emergence of new forms of financing and capital made it easier to raise money and also made it easier to share risk, as the legal code governing how liability should be assigned to the ownership of a firm changed as different forms of financing became available and different types of company evolved to take advantage of financing which enabled them to exploit risky opportunities overseas.

At the time the East India Company was demonstrating the sheer size that could be achieved through the use of these new firm structures and through exploitation of financing (as well as war-like methods that were part of the ‘trading’ world at the time), almost all the successful Chinese companies were still keeping resources within the family. They were unable to access credit and unwilling to experiment with the new firm structures that expanded ownership and dispersed fiduciary risk to individual owners. Many historians now argue that the innovations in financing allowed the West to expand faster, while the changes in the structure of the firm and the accompanying legal code gave their private enterprises a massive advantage in expansion into new markets.

What I find particularly interesting about this is that the family-ownership pattern has persisted in much of Asia and Africa right to the present day, despite the massive expansion in financial services available. I’m not just talking about the small stalls and dukas which are run by families but major businesses, particularly in India, which are often owned by a patriarchal character, with senior posts in management distributed to sons, sons-in-law and other favoured family members. In South Asia and Africa family networks and even more broadly, ethnic or similar networks remain incredibly important for business. Go almost anywhere where there is an Asian business community – more often than not, you’ll find that there is a network of family run firms, and where they have links to each other, it’s common that they are from the same region or area.

Why has this structure of the firm persisted so long, despite legal and financial advances that should be encouraging larger, less risk-averse firms? The standard answer is ‘trust’. When family or strong ethnic ties bind the decision-makers in an enterprise, the argument goes, it is easier to persuade owners to part with new capital for the expansion of the firm, there are less likely to be financial disputes, theft, and liability can be enforced as it falls within a small circle – no shirking of responsibility is possible. Yet this doesn’t convince entirely. As the infrastructure surrounding firms improves, these issues are less and less binding. Financial institutions now provide far more opportunities for those with collateral, while insurance, commercial courts and dispute resolution all mitigate the risks that using family trust as a basis for commercial enterprises is supposed to leaven.

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Best laid plans

Aug 3

Posted by Matt in Aid, Development, Political Economy | 15 Comments

No one else could possibly think of the same thing

There is a wonderful moment in the 1979 film “Life of Brian,” where the People’s Front of Judea, an anti-Roman revolutionary group, embarks on a mission to kidnap the wife of Pontius Pilate to force him to make political concessions. As they sneak through the palace, the group bumps into the Campaign for a Free Galilee, another separatist movement which is also planning to capture Pilate’s wife. The two groups argue over who gets to do this and end up killing each other before Pilate’s guards even get a chance to intervene. You can watch the scene here (fast-forward to 5:00).

Monty Python’s comical vision of a fracture resistance, comprising dozens of similarly-named groups with redundant objectives, is strikingly familiar in the world of aid. While the NGO community suffers from these problems the most, it is official donor fragmentation and duplication which is particularly disheartening as its relative size (a few dozen approaching 100 donors versus hundreds of international NGOs) means coordination and communication ought to be easier.

It is in this muddled context that USAID, has just announced its own “plan” for achieving the 2015 targets for the Millennium Development Goals, soon to be followed by USAID’s overall strategy for development assistance, all ahead of next month’s UN summit on the MDGs.

Let’s simplify things for a minute: Imagine a world where the US was the only donor. In this context, an individual strategy seems quite sensible – the solo donor just needs to decide on what its objective function is (i.e poverty reduction, growth, reaching the MDGs) and allocate aid flows accordingly to best achieve those objectives.

Now let’s move to a world where there are two donors and make the rather strict assumption that they have the same objective (perhaps achieving the MDGs). If each of those donors continues to operate as if they are in a vacuum, without knowledge of or concern over each other’s movements, they will both tend to spend money on the same programmes in the same places. This results in “donor darlings,” countries and programmes that have too many donors and probably receive too much aid money.

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Workers

Aug 2

Posted by Ranil Dissanayake in Development, History, Political Economy | 5 Comments

Emilio and Charlie knew something about work...

In a recent post I argued that development work paid too little attention to the prospects of unionism as a method of protecting the poor and mitigating inequality in a rapidly growing economy. I mentioned that there have been a number of successful union movements historically that have served this specific purpose. In the comments, Lee (of Roving Bandit fame) made the very valid point that a unionism movement may actually harm some of the poor if it blocks out ‘Outsiders’ to the movement and prevents them from accessing the benefits of organization. These outsiders are, of course, likely to be the unemployed seeking work.

This is of course possible. But a union can function in a number of ways. The most common in the developed world is as a set of insiders seeking to protect their material conditions by collectively bargaining with employers and preventing outsiders from undercutting their position. This is the kind of unionism, relying as it does on an insider-outsider distinction and the coercive ability of the union to exclude outsiders from even entering the realms of discourse, which Lee worries about.

In the developing world, a different kind of unionism can be seen. In many cases the politically loaded term ‘Union’ may not even be the best descriptor for what is observed. We could rather call them ‘workers cooperatives’. Their aims are different: not only to create a better division of an industries surplus between capitalists and labour, but to protect basic rights which are poorly understood and poorly protected. This kind of unionism isn’t as widely required among the workers in the developed west because the state takes this role for all citizens through legislation on health and safety and so on (the obvious exception being for illegal migrant labour, who are denied access to the state’s protection or are operating under the radar and hence opt not to appeal to it).

What these unions or cooperatives exist for has less to do with bargaining and more to do with ensuring that legal frameworks are provided and that workers understand what their rights are vis-à-vis employers. One relatively well known historical example concerned migrant labour which entered South Africa for mining work. Many workers were under the misapprehension that their presence in South Africa was illegal and therefore accepted conditions well below the statutory minimum until a movement built up to ensure that all workers were aware of their statutory status.

Alongside this kind of unionism is another kind – the representation of a ‘captured’ population. The classic case here is of plantation labour descendent from migrants: these are workers who have historically formed a labour pool that is almost bonded, even after being freed. Bonded plantation labour of slave plantations were established across the globe: Zanzibar’s economy was in large part built on slave plantations, and Sri Lanka’s on bonded plantation labour. The case of Sri Lanka is particularly illuminating. Though the plantations were captured labour and virtually bonded through the lack of education and social mobility imposed on them, a number of union movements emerged, including the Ceylon Worker’s Congress. Under its original leadership, the CWC made enormous gains for all plantation workers – improved education, housing, healthcare and wages without apparently operating any penalizing system to punish either those who defected from the union or those who were members of other unions. Similar success stories are apparent in Southern India in particular.

Both of these models could be profitably applied to the African context. Such is the excess of unemployed (more accurately, underemployed) in Africa, that individuals are deeply reluctant to assert their rights to employers. Employers also use strategies to minimize the risk of this, particularly in rural areas, where employers often employ a calculated strategy of using day-workers, changing the individuals picked up regularly. Often, they target female heads of household, who are even less likely agitate, given their precarious financial situation. These areas need movements to educate individuals about their rights and the laws, but also need organizations to represent their voice collectively and therefore reduce the risk associated with individual agitation.

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How does the MPI measure up?

Jul 28

Posted by Matt in Development, Research | 3 Comments

Duncan Green introduces us to the new Multi-Dimensional Poverty Index (MPI), developed by the Oxford Poverty and Human Development Initiative (OPHI):

The MPI brings together 10 indicators of health (child mortality and nutrition), education (years of schooling and child enrolment) and standard of living (access to electricity, drinking water, sanitation, flooring, cooking fuel and basic assets like a radio or bicycle). It’s thus a logical extension of its predecessor, UNDP’s pioneering Human Development Index, launched in the first Human Development Report back in 1990, which combined life expectancy, education (literacy + enrolment rates) and GDP per capita.

The measure, like the HDI, is part of an attempt to get a “better measure” of poverty, by including many non-income indicators. While I think most would agree that policymakers and researchers should always consider non-income indicators of welfare, does it make sense to average them out into a single index?

What precisely are we measuring when the HDI for a given country increases by .01? These questions always seem to lead back to the original indicators: “A advanced in rank because of education improvements” or  “B is lower than C despite being richer, because life expectancy in B is much lower.” Given that we need to unpack these indices to figure out what’s going on, why do we bother to pack them in the first place?

Duncan, always open for a healthy debate, has already posted a criticism of the MPI by Martin Ravallion of the World Bank, which questions the implicit values placed on different indicators when they are weighted:

The index is essentially adding up “apples and oranges” without knowing their relative price. When one measures aggregate consumption from household-survey data for the purpose of measuring poverty, as in the World Bank’s “$1 a day” measures, one relies on economic theory, which says that (under certain conditions) market prices provide the correct weights for aggregation. We have no such theory for an index like the MPI. A decision has to be taken, and no consensus exists on how the multiple dimensions should be weighted to form the composite index.

On closer scrutiny, the embedded trade-offs (stemming from the weights chosen by the analyst) can be questioned, and may be unacceptable to many people.  In the context of the HDI, I pointed out 15 years ago that by aggregating GDP per capita with life expectancy the HDI implicitly put a value on an extra year of life, and I showed that this value rises from a very low level in poor countries to a remarkably high level in rich ones (4-5 times GDP per capita).   If it was made clearer to users, I expect that they would question this trade-off embedded in the HDI.

The MPI index faces the same problem. How can one contend (as the MPI does implicitly) that the death of a child is equivalent to having a dirt floor, cooking with wood, and not having a radio, TV, telephone, bike or car?  Or that attaining these material conditions is equivalent to an extra year of schooling (such that someone has at least 5 years) or to not having any malnourished family member?  These are highly questionable value judgments. Sometimes such judgments are needed in policy making at country level, but we would not want to have them buried in some aggregate index.  Rather, they should be brought out explicitly in the specific country and policy context, which will determine what trade off is considered appropriate; any given dimension of poverty will have higher priority in some countries and for some policy problems than others.

One could continue to argue about the weights – but Ravallion’s argument will still stand. I fail to see why these indices amount to anything more than intellectual exercises – while the HDI has got us all thinking about other things than income, has it really been useful as a method of actually measuring development? Is the MPI likely to do any better with poverty?

Oxford Poverty and Human Development Initiative (OPHI)

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