31 July 2009

Why no-one predicted the crisis: a failure of collective imagination or a failure of collective action?

The British Academy is certainly polite. The Queen visited the LSE in November and asked the entirely reasonable question: why had nobody noticed that the credit crunch was on its way? The British Academy answered her in a latter dated July 26. The answer they gave was "a failure of collective imagination". "Everyone seemed to be doing their own job properly on its own merit. And according to standard measures of success, they were often doing it well. The failure was to see how collectively this added up to a series of interconnected imbalances over which no single authority had jurisdiction." But a herd mentality prevailed and most people looked the other way. The full letter is at:


Thomas Palley of Economics for Democratic & Open Societies quickly replied in a letter on his website at: www.thomaspalley.com He says the letter, signed by Tim Besley (an economist) and Peter Hennessey (an historian), makes claims that are "tendentious" and that the real problem is that the economics profession has become too "arrogant, narrow and closed minded".

I am an economist. The claim by Palley about the profession has some truth to it--indeed Dani Rodrik at Harvard repeatedly makes similar points. Palley's claims might have something to do with the "failure of the collective imagination" (which is a neat way of avoiding blaming no-one in particular).

But I think the crisis is not a failure of collective imagination but rather an old fashioned collective action failure--no-one had any individual incentive to protect the collective resource, even though each individual's actions degrade the collective resource. Collective action failure is, of course, a classic example of market failure and as such requires GOVERNANCE.

Simply put, economics needs to be governed better. To the chagrin of other social sciences, economics is the discipline that has the ear of most policymakers. Because of that, it has responsibilities. Big ones. This means checks and balances. The global horizon scanning mechanism proposed by the British Academy is one form of global governance structure and might help serve as a "check" to action, especially if it is multidisciplinary. But "balances" are also needed and one type of balance is for economics and policymakers to actively bring other disciplines into the policymaking process--political science, psychology and anthropology.

There is a Chinese proverb that says "politeness wins the confidence of princes". The British Academy will have to do more than be polite and scan horizons to win the confidence of Her Majesty, it needs to bring together the disciplines to work out how to govern the market for economic advice.

29 July 2009

False Choices in African Agriculture

The Guardian UK reports today on the need for people "on the ground" in Sub-Saharan Africa to have a greater say in determining how the G8's promised on aid to African farming, if it materialises, should be spent. The editorial contrasts this with a government top-down Global Fund approach to disbursement.

This is a classic case of false choices that plague development and African agriculture in particular. Smallholder farming or industrial? Conventional or biotech? High potential or low? Food crops or cash crops? The boring answer to all of these is (a) it depends on the context and evidence and (b) it is the wrong question anyway. These kinds of choices cannot be made at the gut level--they must be based on evidence--African Agriculture is about thousands of ecological niches and there is no one size fits all approach--not even smallholder agriculture. And there need to be portfolios and blends of approaches not eggs in one basket decisions.

On the G8 funding there needs to be rapid disbursement mechanisms which are transparent and accountable, but these also need to reflect preferences and realities on the ground. This potential divide is an age-old challenge in public policy and one we should be innovating to bridge, not lobbying to maintain.

24 July 2009

The Untouchable 0.7%

"Fear of Spending Prompts Radical Thinking" says today's Guardian. But it seems that spending on health and on international development are the only areas that the UK Government and the main opposition party, the Conservatives, can agree will be ring-fenced over the next few years. While I am pleased about this commitment to international development (especially if connected to radical thinking and new efforts to promote greater accountability and impact) I remain puzzled about WHY the committment to achieving the UN target of spending the equivalent of 0.7% of GDP on international development seemingly remains so strong. Are there any votes in it? Is it a reflection of a new found "Moral Sense"? Is it enlightened self-interest in an increasingly interconnected world? And why is the UK public so placid in its acceptance of ring-fenced international development spending? Answers wanted please.

23 July 2009

Power and Katine

I don't know how many of you follow the Katine Chronicles Blog over at the Guardian website. Ben Jones has been blogging about multiple accountabilities. Who is Amref, the international NGO running many of the interventions in Katine in Uganda, really accountable to? On the face of it all of the following--the communities they intend to serve, local government, Amref management and the funders of the project. But as Ben Jones rightly points out, the most powerful tend to get their accountability needs met first, often to the exclusion of others. Accountability is development's Achilles Heel--those intended to benefit typically cannot change the way those who design and deliver aid actually behave. IDS is working with Keystone Accountability and the Bill and Melinda Gates Foundation to innovate around something we refer to as 360 degree Monitoring and Evaluation. Such a perspective recognises that different stakeholders have different definitions of success when it comes to development projects and have different levels of power to make their definition prevail in a reporting sense. Funders preferences usually win out. Our pilot project is geared towards developing mechanisms that allow farmers and communities to advocate directly on their own behalf with funders like the Gates Foundation. If a project is not meeting their needs, there exists a very public way of expressing their opinion. The Gates Foundation is unusual in that it clearly holds a lot of power but is willing to use that power to build up other sources of accountability and learning power within the agriculture system. I will keep you posted as this pilot--called ALINe--progresses.

You can find out more at http://www.ids.ac.uk/go/news/improving-impact-planning-and-learning-in-agricultural-programmes

19 July 2009

Making Seasonality Season-Proof

For most of the readers of this blog, seasonality means holidays, digging out different clothes and buying different fruits. For most of the world's 2 billion poor people seasonality means a serious adaptation to the rhythms of rainfall, temperature, wages and prices. These adaptations are costly in terms of livelihoods, wellbeing and lives.


IDS just held a conference on Seasonality (see link above) which asked "why has seasonality dropped off the poverty agenda?". Many answers were proposed--policymakers' own ability to season proof their lives, the perception that urbanisation means seasonality is less important (it is not), and the relentless faddishness of international development.

One thing was not in doubt however, and that is the cost of unchecked seasonality. This was illustrated by most of the papers at the conference, but the one that stood out for me was by Michael Lokshin and Sergiy Radjyakin. They analysed the nutrition status of Indian infants by the month of birth. The direction of results was not shocking--children born in the monsooon months have worse malnutrition status--but the magnitude was. Children born in these months were around 50% worse off than their drier season counterparts, even controlling for other factors using econometric modelling The authors suggest that the rains generate a greater infection burden, exacerbated by poor sanitation and less parental care during a busy agricultural season which ramps up the infection-poor diet cycle that generates malnutrition. They suggest a few public policy measures to try to counter these rhythms such as better timing of immunisations.

It is ironic that just as we have come to terms with the importance of spatial diversity in development (think "growth diagnostics") we neglect temporal diversity. We must do better at season-proofing seasonality by embedding it better in policy processes and development education. We will be attempting to do this at IDS.

17 July 2009

Good Development Governance??

Hamish McRae reports on the latest UNCTAD report on Least Developed Countries published yesterday. The report calls for rebooting development. One of the elements of rebooting is moving from good governance to good development governance. The idea being that China and India may not do brilliantly on Western concepts of governance, but they get development going--they have cracked "good development governance" and the rest of us have a lot to learn from them.

I agree with much of this, but with a few big exceptions. First, India is not exactly a good example of "good development governance". It is, I suppose if you define development as GDP per capita growth. In this case India is an economic superstar. But in terms of a more people centered development outcome--malnutrition--India is a weakling. Malnutrition rates have hardly moved in the past 15 years and the country continues to have malnutrition rates twice that of many African countries. See the IDS homepage (www.ids.ac.uk) for a new report on India's failure to "Lift the Curse" of Malnutrition and what it needs to do to make faster progress in this area.

Second, China really seems to have cracked it. Not only have they posted astounding GDP numbers, but the poverty numbers have plummeted too. Inequality and sustainability questions remain, but development has much to learn from China--not all of it will be useful or appropriate, but much will be. However, learning is easier said than done. Our China in Development Group at IDS www.ids.ac.uk/go/browse-by-subject/china is working on bridging the often disparate worlds of China public policy and international development policy. Bridging is not easy because not many development specialists understand China public policy sufficiently well and China public policy experts have little incentive to engage with the international development world. As China becomes a bigger player in international development (it already is a big investor in Africa, it will become a bigger player in global governance and probably will become a major aid donor) this will change, but investments will need to be made to promote the kinds of knowledge systems the UNCTAD report is talking about.

14 July 2009

Dominic Lawson's evidence free world

"It's certainly true that, judging by results, those in charge of our aid budgets have been consistently and phenomenally stupid for the past half century and more. Internationally, more than $1trn has been sent to Africa over the last 50 years, during which time the sub-Saharan countries in receipt of the bulk of those funds have seen their poverty increase sharply relative to those developing countries which have received least aid." says he.

I'm certainly no blind defender of aid. Aid is neither necessary nor sufficient for development. It can undermine recipient government credibility and legitimacy. It is only one of several development policy levers of which security, trade and climate may be more important. It is sometimes spent unwisely--like every other source of income, private or public.

But aid can and has been useful in spurring development. The kind of effectiveness test Mr Lawson subjects aid spending to can never be conclusive since we don't know if the aid recipients would have been even worse off without it. Like Mr Lawson's column, Dambisa Moyo's book, to which it refers, is an evidence free zone. The evidence is out there--but the aid industry has been complacent about using it to learn and in communicating it, partly because it does not offer easy soundbites about whether aid works--rather a whole series of "it depends" (see Roger Riddell's excellent book on this topic from 2007). The development community need to do better to be able to counter lazy but potentially damaging articles such as Mr Lawson's.

13 July 2009

Building our Common Future: a comment on the new DFID White Paper

by Lawrence Haddad, 13 July 2009

The Department for International Development’s (DFID) new White Paper presents the case for development spending well. But a change in focus and increasing need to demonstrate impact must not be allowed to stifle creativity, innovation and risk taking.

The DFID White Paper on International Development released on 6 July is admirable in many ways. It reaffirms the UK's 0.7 per cent commitment to spending on international development, with plenty of sensible ideas on how to allocate it. The report does well to balance the moral cause for development spending with the common causes around prosperity, security and the environment. It presents the case for development spending as well as any similar document has done. But it contains three fundamental tensions.

First, more money is going to be spent on a smaller number of countries – the poorest and the most fragile. This means that DFID spending will become relatively more important in financing the government and civil society of those countries. Issues of ownership, alignment, absorption and predictability will become more and more important in these contexts. It will place a magnifying glass over DFID’s actions, potentially making them more risk averse.

Second, this risk-averse behaviour might well frustrate DFID's creativity when trying to generate an impact in increasingly fragile and unfamiliar contexts. Generating and demonstrating an impact has always been an imperative for DFID but on the eve of a UK general election it is ever more so – note the ukaid logo – but without creativity and innovation, fuelled by calculated risk taking, this will be difficult.

Third, the focus on strengthening international institutions will help leverage an increased aid spend in the poorest and most fragile countries by bringing a wider range of policy options to bear. But DFID must make every attempt to lead the reform of the international institutions so that their efforts have a bigger positive impact on the poorest people.

Focus makes sense, but it must be accompanied by critical self reflection from DFID on what they should and should not do. Making a difference in fragile states does not mean playing it safe – it means using greater imagination, coordination and calculation. And all of this national investment needs to be part of a web of policies and initiatives from reformed international institutions that are more enabling than ever.

The election in 2010 may reduce the lifespan of this White Paper. But the legacy it leaves behind should be of focus married to critical self-reflection, responsibility harnessed to creative and calculated risk taking, and leverage in tandem with reform.