Waiting for growth


Is there nothing to be done?

A few days ago, over a dinner at the AidData conference, a colleague made an interesting comment over how the aid effectiveness debate is framed. While aid critics and proponents constantly argue over the industry’s ability to generate large, transformational changes in recipient countries (such as through economic growth), he suggested that if we assessed aid by a more modest metric – how well it alleviates suffering in societies that are awaiting these big changes – we might be more optimistic about aid’s effectiveness. Because development is partially random (in the sense that we, as outsiders, cannot easily predict or explain it), he argued that we should perhaps just focus on the smaller problem of improving welfare, while we wait for countries to feel their own way to growth.

The idea that foreign assistance might not be very useful for fostering development would be a difficult, troubling thought for many in the aid industry. While (I think) those working in the NGO and charity sector believe more in aid-as-relief than in aid-as-change, there are many top-down practitioners in the official aid business who ultimately see it as being transformational. Projects such as the UN’s Millennium Villages are a natural extension of this belief that recipient countries cannot achieve development without significant external assistance.

I think I would feel more comfortable in a world where aid only exists to avert suffering and death while recipient countries strive for major change. That would drastically simplify the discussion on aid effectiveness: gone would be the grand ambitions of  revamping societies, to be replaced by worrying over tracking resources and evaluating interventions. We would be unconcerned about long term impacts and macro concepts like growth – they would be outside of our mandate.

This is a vision of aid that we should consider, but not one without pitfalls. Those that have spent time working in heavily aid-dependent countries are privy to signs that large amounts of foreign assistance might actually hurt a country’s chances of making the big adjustments needed for development. Several years ago I worked as a civil servant for the Malawian government, which has a budget financed nearly half by foreign donors. Aside from the usual political absurdities which haunt any civil service, I saw a government forever obsessed with aid. This is rational – whether or not you are concerned about delivering public resources or rent-seeking, foreign aid is too tempting to pass up. The result is that governments spend a very, very large amount of time trying to please donors, sometimes more so than their own populations.

We really should be more worried about how much foreign aid might be crowding out domestic accountability process, which itself might be necessary for long-term development. Sometimes this trade-off is obvious: As it was revealed in Michela Wrong’s excellent book, It’s Our Turn to Eat, donors in Kenya were more concerned with protecting their aid projects than supporting John Githongo’s crusade to improve accountability in the Kimbaki’s government.

There are other factors that may also violate the unspoken creed of ‘do no harm’. If aid is to be forever focused on the small picture, should we not be worried when donors and NGOs routinely steal smart, capable people from government and the private sector, those that are the most likely to lead their countries towards big changes? Even when those people remain in government, the foreign aid sector has dominated the policy discourse for so long that many governments have had little experience developing and debating policies on their own. When, after years of being chained to the IMF PRSP framework,  Malawi finally got the chance to write their own national development strategy, the resulting document looked and read like a distillation of every donor strategy ever produced.

Dambisa Moyo’s infamous and poorly-argued Dead Aid revealed a growing dissent in sub-Saharan Africa over decades and decades of foreign aid that hasn’t delivered massive change for the better. Perhaps a major (downward) revision of expectations are in order. However, while we sit around waiting for growth, we should be careful not be the biggest impediment  to it.

3 thoughts on “Waiting for growth

  1. Ranil Dissanayake

    March 30, 2010 at 9:42pm

    Hmm. I actually agree completely that the key for development is a transformation which must be domestically driven, and that aid’s first priority should be to get out of the way of this. However, it can support transformation as well, or at least help reduce the cost of it – most transformations are very unequal and painful processes, so aid should seek to support it; but alleviate the worst aspects too. That this is very difficult is true, but it’s not unachievable.

    The Marshall Plan is often cited as aid that was transformational. I’m not a full-scale adherent to this view, but it at least shows that aid can be different and can aspire to it.

  2. MzunguMrefu

    March 31, 2010 at 4:56pm

    This just reminded me of a very recent – and admittedly slightly boozy – discussion I had in Addis with a DED worker here. After a few beers, I gave my usual rant why aid can be very harmful for development due to its potentially retarding effect with regard to said transition, using examples in agriculture and rural development (some of which have also been stated in similar ways in this excellent blog). After I had finished, she solemly nodded and agreed that this was very convincing, reasonable and all. And then she came up with her only ‘counterargument’ in the form of a question: “ok, ok, but what role does this leave for development aid?”

    Clearly …. and without even noticing herself …. she ultimately was more concerned about the future of aid, rather than development itself!

  3. David Ellerman

    April 4, 2010 at 6:00pm

    Indeed, for a long time it has been clear that many aid debates revolve around different framings of the purpose of aid: development or simply poverty relief. Due to the great difficulty in aid actually having much positive impact on development, many aid agencies have quietly shifted to de facto poverty relief while, of course, maintaining the developmental rhetoric (often associated with their private or public funding). For instance, does anyone still think that microfinance has anything to do with development rather than just being a more dignified form of poverty relief? Some critics of development aid call for a general reduction in the big aid agencies (Dichter and myself) while other critics (perhaps Easterly) call for a more overt shift to poverty relief since that is perhaps something the aid agencies might actually do (in spite of the negative effects that you outline).

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