If donors are the ones creating the incentives for effective institutions, who knows if they will stick?

In a really interesting post, MJ over at Bottom Up Thinking discusses the connections between evolution and institutional development in aid-dependent countries, comparing the tendency for recipient governments to adopt the semblance of good institutions and practices with the concept of Batesian mimicry. Just as natural selection will favour insects that look like other, more dangerous insects, the external incentives that aid recipients face will push them to look far more effective than they actually are.

Lant Pritchett first posited this connection with evolution in a recent CGD podcast and an accompanying working paper with Michael Woolcock and Matt Andrews defined the practice as `isomorphic mimicry’: “the adoption of the forms of other functional states and organizations which camouflages a persistent lack of function.” Anyone who has walked into a government office with a sign proclaiming “this is a corruption-free zone” will understand this concept immediately.

I would argue that such behaviour is generated mostly by external incentives: in aid-dependent countries, donors carry some of the biggest sticks and carrots, and so create an enormous amount of pressure for governments to look effective. This is partially a result of a historical tendency to focus on monitoring inputs and best practices rather than paying attention to outputs.

Aha, you might be thinking: this is where we should be moving to a results-based model. Somewhere in the distance I can hear the horns of cash-on-delivery aid being blown. This is a reasonable response, and if we are resigned to having a system where donors call so many of the shots, I have little quarrel with a framework that focuses more on actual outputs.

Yet we should be extremely cautious in assuming we can, through greater external pressure, generate institutions that persist beyond the presence of that pressure. Moving back to the evolution analogy: historically, capable governments are generated endogenously, just like organisms through natural selection, adapting to survive in an ever-changing environment.  In such societies, the selection pressure is being generated internally, by either a robust civil society, a discerning electorate or a group of elites whose goals are more focused on transformational change than zero-sum patronage.

That governments evolve to serve their citizens should be a fairly uncontroversial statement, but consider the ramifications of a results-based model that lets the selective pressure emanate from donors rather than citizens. It is likely that such pressures will generate the sort of behaviours we see as good: governments that care about achieving palpable gains in health, education, etc for their citizens, but rather than building these behaviours naturally, we are generating them artificially through external incentives.

This is akin to creating organisms in a laboratory by creating our own selection mechanisms – while through tweaking the parameters we are likely to get similar results to what we see out in the ecosystem, this doesn’t guarantee the organisms we grow will be able to survive in such an ecosystem, which will have selection pressures which are more complex than what we can manage in a laboratory (or in an aid mechanism).

Proponents of results-based aid like those at the CGD are not unaware of these issues, and there has been some talk already about using the framework of COD aid to enhance civil society’s involvement in the process, through inclusion in the target-setting and in monitoring. This is a promising start, although historically honors also have a tendency to resort to mimicry when it comes to difficult, vague objectives like enhancing civil society. Making sure that effective institutions and good practices can `graduate’ from externally-driven incentives to internally-driven ones will be one of the biggest challenges of the future – it is a shame that problems like these are so often ignored.