US food aid policies create 561 jobs in Kansas, risk millions of lives around the world

I read recently the First Law of Policy Economics: Every inefficiency is someone’s income. US food aid policy is definitely no exception, and it is riddled with inefficiencies.

Exhibit A: This invitation from a coalition of big US shipping interests to an event in Washington today. At this event, USA Maritime will have tried to convince lawmakers and their staff that ancient and outdated US food aid legislation, which requires virtually all US food aid to be bought in-kind from the US, processed and bagged in the US, and shipped on US-flag ships to even the most far-flung destinations, should not be altered.

Let us leave aside for a moment that the report recommending favorable policies for the US shipping industry was bought and paid for by the US shipping industry and may not be the most objective or trustworthy source on the subject.

The main thrust of the shipping industry’s argument is that handling, processing and shipping food aid creates US jobs—13,127 of them to be exact—and boosts US industry, leading to this actual headline: “Food For Peace Program Produces More Than 870 Iowa Jobs.” If these policies were removed, they argue, it would be less profitable to operate a ship under the US flag, the US-flag fleet would shrink, and American jobs would be lost.

“Did you know,” reads the invitation, “that these programs have positive economic consequences for our economy at home?” The report tries to quantify one benefit of current US food aid policies, but (obviously) does not discuss the considerable costs of these policies to US tax payers, to the US’s reputation and credibility abroad, and most importantly to programs’ intended recipients—the millions of hungry and malnourished people fed by the world’s largest food aid donor every year.

The shipping industry’s arguments don’t hold water for many reasons. Here are two of the big ones:

First, assuming that you did want to subsidize the US Maritime industry, US food aid policies that create an overpriced, uncompetitive oligopoly are NOT a good way to do it. There are much cleaner, simpler and more effective ways to support US Maritime, such as direct payments to vessel owners. There is no reason to bundle shipping subsidies in with humanitarian aid other than the deeply cynical logic that it’s easier to rally public and Congressional support around money for starving children than around padding to the bottom line of multinational shipping conglomerates.

Second, current US food aid policies are NOT an effective or efficient way for the US to achieve what should rightly be the primary objective for food aid. According to the government’s own accountability office, buying food locally in sub-Saharan Africa (which is where the majority of US food aid goes) costs 34 percent less than shipping it from the US, AND gets there on average more than 100 days more quickly, AND is more likely to be the kind of food people are used to eating. I am not arguing that cash aid is ALWAYS better than food aid, only that any reasonable food aid policy would allow aid agencies the flexibility to determine what kind of assistance works best in each situation.

Despite resistance from all three sides of the iron triangle holding this legislation in place, innovators have managed to break loose about $400 million for pilot and supplemental programs over the last two years to buy food locally or regionally. This is still a small sum compared to the roughly $2 billion that the US spends annually, but it is progress.

With today’s lame report, the big shipping companies behind USA Maritime are asking us to value a few thousand American jobs in a declining and uncompetitive industry over America's humanitarian reputation abroad AND the lives of the millions more people around the world who would benefit from reform to US food aid policy.

Do we even have to say it? This is NOT a fair trade.

Response to Dani Rodrik on Washington Consensus

Dani gives a response to some “counter-arguments” against his post favoring Import-substituting Industrialization (ISI) over Washington Consensus (WC) that had mysteriously “resuscitated” themselves after they “had long been laid to rest.” I appreciate Dani’s courtesy in not identifying the culprits in this misguided resuscitation of long-dead counterarguments, but it does make it a little difficult to carry on a precise debate. It’s possible that my post about skill vs. luck, and the comments that followed, may have been one of the culprits (fitting the theme of that post, this can only be a probability rather than a certainty). Anyway, assuming that my post and ensuing comments was partly to blame (and thanks to Chris Blattman for a more favorable review), Dani does not have time in his short post to get to the crucial arguments. His original post was too vague about the timing and identification of just who had ISI and who had WC and when, and so what growth experiences to attribute to each, and whether to control for the overall fall in average growth of ALL countries in the world from the ISI to the WC period. And in Dani’s new post, we also have the third category of policy regime “unorthodox but well-targeted reforms” (UBWTR?) for Asian countries. And to test a hypothesis that growth under one regime is higher than under another, you have to calculate standard errors reflecting noise in the growth rate (affectionately called “luck,” which standard errors I and others have shown are large), you cannot dismiss standard errors with a quip about “the check is in the mail.” Most attempts to sort all that out have not been very successful or conclusive, which is why economists started saying things like:

the experience of the last two decades has frustrated the expectations …{that} we had a good fix on the policies that promote growth.

I will acknowledge from whom I think I absorbed this valuable cautionary statement. I am pretty sure it was from a 2005 article by a certain D. Rodrik (ungated version here, official version here).

The World Bank’s “horizontal” approach to health falls horizontal?

The history of foreign aid for global health has seen a cycling back and forth between two alternative approaches. The “vertical” approach focuses on fighting one disease at a time, and in Africa has been very effective in targeting smallpox, Guinea worm, measles, and river blindness, to name a few examples. After large initial successes though, diminishing returns to vertical programs set in. The “horizontal” approach instead invests sector-wide to make health systems work to administer prevention and treatment for all diseases. (For more on the history and pros and cons of these approaches, see Can the West Save Africa, pp 57-60). Since the late 1990s, the Bank and other donors have shifted resources to back the idea that “it’s the health system, stupid.” (According to the Institute for Health Metrics and Evaluation, health sector support shot up from $2 million in 1998 to $937 million in 2007, and surpassed specific funding for TB and malaria for the first time in 2006.)

Strangely enough, whether this resource shift has actually improved health has never really been tested.

A new report funded by the Bill and Melinda Gates Foundation found that sector-wide approaches (aka SWAps—the development industry never misses the chance to make a silly acronym) “are not yet being implemented in a way that has led to improvements in health outcomes in effective, efficient, measurable, or sustainable ways.” In other words… SWAps don’t work.

Written by Richard Skolnik, Paul Jensen and Robert Johnson of ACTION (Advocacy to Control TB Internationally), the report looks especially at whether the Bank’s sector-wide programs are associated with success in TB detection and treatment, and concludes with a number of alarming or surprising findings. (We don’t know if the authors have a predisposition towards the vertical approach given their affiliation with advocacy on one disease, but they do seem to ask the right questions.)

First, the authors find little evidence of the impact of SWAps on health outcomes, and what little there is, is mixed at best. The World Bank’s own evaluation picks up on a “general lack of attention to results,” “insufficient attention to ensuring that SWAps are technically sound,” “a general failure to monitor country expenditures,” and “very weak monitoring and evaluation of the health programs that SWAps are supporting.” In the history of SWAps, there has been only one rigorous, independent evaluation, in Tanzania.

Second, only three of the 15 Bank SWAp projects in sub-Saharan Africa from 2001-2008 even included indicators for detection of TB cases and successful treatment of TB. And in only one country (Tanzania), a SWAp “might” be linked to an actual health outcome: higher rates of TB treatment success.

Third, the aid workers and health experts interviewed for the evaluation said that SWAps focus on the process of coordinating aid delivery, which has become an end in itself, obscuring the need to actually increase successful treatment and decrease deaths. NONE of them questioned the need to work through SWAps BUT they almost all agreed there is “little evidence” that SWAps are associated with improved health outcomes.

This suggests to us that it's not only about correctly choosing the right mix of horizontal and vertical but whether ANY approach will work unless it has feedback and accountability. Is this why SWAps were a good idea in theory but a disaster in practice?

What to do? The authors have some suggestions, which are a little hard to believe aren’t already being done as a matter of course: Create incentives to focus on results not the process, drastically increase transparency of project information and evaluation, and do independent program evaluation.

Come to think of it, the donors’ behavior reminds us of Aid Watch’s analogy from Monday. Here, the Bank sends truckloads of money down the same SWAps road, ignoring increasingly obvious and urgent signs that the Bank should change course. But still it hurtles along, unfazed by even its own evaluators shouting from the side of the road that what it’s doing isn’t working.

Why the World Bank supports tyrants: the Gerund Defense

World Bank Ethiopia country director Ken Ohashi has a letter in the New York Review of Books responding to Helen Epstein’s charge that the Bank is supporting tyranny (which we also blogged). Ken’s letter defends World Bank aid to Ethiopia:

There are concerns about the overall governance of the country, efficiency and fairness of resource use, the risk of dependence on aid, and protection of basic human rights, as Ms. Epstein points out. We recognize these concerns, and development partners in Ethiopia take them seriously.

We start, however, with a belief that in every country people want to be self-reliant and prosperous, and to develop a transparent, accountable, effective, and efficient governance system. Ethiopia is no exception. Our task, as an external development partner, is to support that innate tendency.

However, building institutions, public and private, that assure every citizen’s right to and effective delivery of public services takes a long time; indeed, it never ends, as we can see even in the most industrialized countries. Changes are incremental, and at times they may suffer serious setbacks. It is, therefore, crucial that development partners work with the long-term process of change, always in support of it, not in control of it (which is impossible in any case).

Fascinating defense, Ken! You are saying the World Bank sees all countries with an “innate tendency” towards better governance (nicely conflating citizens’ aspirations and the frequently opposite tendencies of those in power). You can then use an all-powerful Gerund like “building institutions” to suggest that you and the autocrat of Ethiopia are benevolently working together on that “innate tendency.” The Gerund  Defense implies that any horrible tyrant can be supported under the assumption that this tyrant is merely a temporary stage in a country “in transition to democracy,” part of an “innate tendency” towards “building institutions.”

The alternative to the disingenuous Gerund Defense is to take a look at the current regime’s political, economic and human rights track record. Two weeks ago, Prime Minister Meles Zenawi’s party and its allies swept the elections, winning over 99 percent of parliamentary seats. Election observers from the EU found that the electoral process "fell short of certain international commitments, notably regarding the transparency of the process and the lack of a level playing field for all contesting parties."

A report from Human Rights Watch criticized the ruling party’s “total control of local and district administration” which they have used to “monitor and intimidate individuals at a household level, punish and undermine the livelihoods of citizens who do not abide by the ruling party, and create a climate of fear that suppresses freedom of expression and opinion.”

The government’s centralized control of land ownership, banks, the internet and even the mobile telecom industry has stymied enterprise and depressed economic growth, while the regime is accused of using the food aid upon which 1/6^th of the population depend as a political tool to reward supporters and punish those who dare to join opposition parties.

The US State Department went even further, citing reports of “unlawful killings, torture, beating, abuse and mistreatment of detainees and opposition supporters by security forces, often acting with evident impunity,” in their Human Rights report published last year.

At least you are being consistent. After Meles and his security forces perpetrated election fraud, jailed opposition leaders, and killed over 200 student demonstrators in 2005, the World Bank continued to provide aid.  We have it from a reliable source that your predecessor as Ethiopia Country Director won an award for keeping the lending going despite all the hardship Bank staff inconveniently had to endure.

Sorry, Ken, it’s hard to drown out these realities even with your clever use of the classic Gerund Defense.

If an evaluation is released on the internet and no one comments, does it make a sound?

The release of the Millennium Villages Project mid-point evaluation has so far been met with no discernable public response. Strange, since the release is billed as the “first major scientific report on progress after three years of MVP activity.” Doubly strange, since the MVP is an ambitious project that reaches into nearly all areas of its 500,000 recipients’ lives, and proposes, in scaled-up version, to completely change the architecture and delivery of aid to Africa.

So why the silence? Two possible reasons come to mind. Perhaps:

1. The evaluation doesn’t contain much that is unexpected or useful, and/or
2. No one really cares about evaluation.

We knew that the report would give the mid-point results of a longitudinal study comparing data from 300 Millennium Village families collected when the project began and again three, and five years later. (Although this is no longer the midpoint of anything, as the project has since expanded from 5 to 10 years.)

The new data give a picture of encouraging results across all sectors compared to the baseline. In Mwandama, Malawi, for example, bednet use for children under five increased from 14 percent to 60 percent and malaria prevalence for all age groups fell from 19 percent to 15 percent. Maize yields increased dramatically from .8 tons per hectare to 4.5 tons per hectare.

Such short-term results are positive in the sense that they describe real, immediate changes in the lives of thousands of very poor people. But they are not surprising given what we know about the level of resources and intensive technical expertise invested in these villages: the project doubles the size of the local economy—it is roughly equivalent to a 100 percent increase of per capita income per year (see here for calculations from Michael Clemens).

Unfortunately the results are also not that useful: Three years is too short a period to know how to interpret this dramatic increase in maize yields, for example. Is this consistent with normal variation in crop yields? Was 2006 an unusually good or bad year for maize? We don’t know.

The results also don’t help us determine whether current and future resources should be shifted away from other existing or even yet-to-be invented approaches, towards the MVP template. Will those short-term gains last beyond the timeline of the project? Can the project become self-sustaining?

Again, we don’t know, in part because not enough time has passed. Consider this anecdote from a New York Times blog series by Jeff Marlow on the Millennium Village of  Koraro, Ethiopia:

In 2005, all fertilizer was given away, leading to a significant increase in food production. Fertilizer subsidies were then progressively rolled back; by last year, only 50% of the cost was covered. For the 2009 growing season, the project tried something new: farmers were given loans for fertilizer, but they are expected to pay back the full cost plus interest when the harvest comes.

For many Koraro farmers, this is a daunting challenge. “The project used to help us with fertilizer,” says Brhana Syum…“But now it’s very expensive, and there’s no way to pay for it all.” Many farmers facing similar constraints have chosen to scale back their farms, thereby requiring less fertilizer, rather than face enormous debts…

So this particular push towards sustainability has come up against some obstacles. It may yet succeed, or it may fail. We don’t know the end of the story.

Supporters of the project argue that the individual interventions have already been proven: for example, we know that using better seeds and adding fertilizer will increase crop yield. But what the MVP says it is proving with this evaluation is the “value and feasibility of integrated community-based investments”—that is, the whole package of interventions, as well as the management systems used to deliver them. And this is precisely what the MVP does not have the data to demonstrate.

This evaluation repeats the call to scale up the project within existing project countries and expand to new ones, as quickly as possible. But the MVP as a whole remains an untested and unproven intervention, while the lives of Millennium Villagers—their habits, beliefs, livelihoods, and sources of authority—are  inevitably being changed in profound ways. This evaluation does nothing to change the argument of my previous post that the MVP should live up to their promise to be a ‘proof of concept:’ to be seriously and independently evaluated, and proven to work—beyond immediate short-term effects—before it is scaled up.

If you were sick and someone offered you a drug that hadn’t been tested, would you take it? And even if you would, would you want hundreds of millions of people whose lives depended on it to forego other types of treatment and take that drug too?

The Counter-Revolution of Development Economics: Hayek vs. Duflo

This post is by Adam Martin, a post-doctoral fellow at DRI. F.A. Hayek, well known as a critic of central planning, also criticized what he called “scientism,” a blind commitment to the methods of the physical sciences beyond their realm of applicability. In The Counter-Revolution of Science, Hayek opposed to “scientism” the genuine spirit of scientific inquiry.

Esther Duflo’s emphasis on small-scale experimentation has affinity with Hayek’s critique of grand schemes of central planning. As Duflo said in an interview with Philanthropy Action: “I think another untested and potentially wrong idea is that you have to do everything at the same time or else. This is a pretty convenient untested belief because if you live in that world, it is almost impossible to evaluate what you do.”

But Hayek’s concerns about “scientism” might yet apply to Duflo. She continues in the same interview:

Whereas if you say, I am going to press on this button and see whether it provides this result, you might find there are many things that do work surprisingly well with surprising consistency. So it is not that the world is so incredibly complex that every place needs a unique combination of five factors just to produce anything. I don’t know that we would have been able to say the same thing five years ago, but now we are starting to be in the position to say that a number of things, if well designed, just work pretty well in a lot of contexts.

Hayek, in contrast, argues that sheer, context-independent experimentation is not a viable path to development:

An experiment can tell us only whether any innovation does or does not fit into a given framework. But to hope that we can build a coherent order by random experimentation with particular solutions of individual problems and without following guiding principles is an illusion. Experience tells us much about the effectiveness of different social and economic systems as a whole. But an order of the complexity of modern society can be designed neither as a whole, nor by shaping each part separately without regard to the rest, but only by consistently adhering to certain principles throughout a process of evolution. (Law, Legislation, and Liberty Vol. I, p. 60)

Experimentation, for Hayek as well as Duflo, is the chief instrument of social change. Making experimentation work for development requires institutional feedback mechanisms which can fit together newly-discovered ways of doing things in mutually reinforcing ways. What Hayek defends as "liberal" principles are the ways of coordinating individual experiments in a way that enhances human welfare. Ad hoc, "pragmatic" approaches might solve some local problem, but without coordination with other projects the progress will not be reinforcing and self-sustaining.

Promoting progress is like playing leap-frog in the dark. Big leaps into the unknown can easily end in disaster. Experiments are small leaps. Only when we combine those small leaps together according to some rules do we leap-frog in a definite direction and reinforce each other's progress, rather than ambling about and running into each other. Without systematic feedback mechanisms that are effective at coordinating different projects, randomized trials are like those small leaps. They might be able to solve particular problems--especially in mitigating the ill effects of poverty--but they would not lead to the self-reinforcing process of wealth generation necessary to eliminate poverty.

Of mangos and plastic crates

Sometimes the things that keep people in poverty seem so small and so insignificant, and the remedies seem so simple, that it’s hard for people from rich countries to understand why they remain impoverished.

Jelen, a Haitian farmer living on about $2 a day, can’t get enough water to her mango trees, even though there is a river just beside her property. She needs a simple canal dug from the river to irrigate her trees. But this investment remains out of reach for her.

Many small Haitian mango farmers, including Jelen, could increase their income if their fruit didn’t get bruised and damaged on the way to market. If the farmers would just protect their fruit by storing and transporting it in basic plastic milk crates, then one of Haiti’s biggest mango exporters says he could sell twice as many mangoes to picky American consumers.

This is the story told in a segment of this week’s This American Life. I’ve always loved this National Public Radio program for the way it tackles big, complex issues by weaving together the stories of ordinary people, and I’d always hoped they would take on foreign aid.

In this particular segment, produced by Planet Money, we meet the mango exporter, named Jean-Maurice, who first tries simply driving out to the farmers and giving them the plastic crates. This fails completely, as the crates get broken, or used as chairs or in schools as bookshelves. The farmers probably don’t know where their fruit ends up, and can’t easily imagine the American consumers for whom it would be so important that their mangoes arrive unblemished.

The business man Jean-Maurice overcomes his distrust of NGOs to partner with an organization that will train farmers how to clean and store their fruit using the crates. The NGO’s job will be to explain why they should change the way they harvest and store their mangos, connect that to a future increase in profits, and distribute the crates.

But once the NGO is involved, Jean-Maurice—known to friends as “the Mango Man” – and the Haitian farmers are plunged into an unfamiliar world of paperwork and regulations. The USAID-funded NGO requires a piece of land from which to distribute the crates, and this piece of land has to be donated by agreement from the group of 60 farmers that owns it. They also need the deed, which was never transferred from its original owners, and resides in an expatriate Haitian’s New York basement. The partners finally complete these Herculean tasks and are ready to start…a few weeks before the earthquake hits.

After the devastation of the earthquake, of course, comes the international outpouring of concern, attention and money, and the arrival of development experts from all over the world. The correspondent asks:

But what if now there’s an opportunity to take all the attention, all the money, and work together like never before? What if this is the shot? Instead of solving one small problem at a time, to address all the country’s problems, all at once?

I won’t ruin the ending by divulging whether the correspondent’s optimism remains in place by the time the story is over. But don’t miss her conversation with USAID’s Deputy Director in Haiti, towards the end of the segment.

The whole episode is a fascinating look into the aid world and Haiti. You can listen or download it here.

(photo credit)

Lant Pritchett and the hot Indian shower

A great story from Lant Pritchett, writing in the comments section of David Roodman’s blog, about how the development industry sets goals and targets. The way we articulate our goals affects how we set about achieving them.

I was living in India and discussing arrangements for household water supply with some development colleagues of mine. After about half an hour of pretty fruitless discussion I said, “Let’s step back. Tell me your long-run vision of the household water sector in India.”

They said “Our vision is that India meets the target that every household lives within half a kilometer of an improved water source capable of providing 40 liters of safe per person per day.”

I said, “I see the problem. My vision of success is that every Indian can take a hot shower inside their own home.”  The difference is that one can imagine meeting the first goal “programmatically” or with a series of “interventions” while the latter clearly requires endogenously functional systems.

No one I know wants to have to go to a group meeting to take a hot shower. They want to turn the tap and it works.

Their whole discussion, on whether microfinance is an example of “aid building a thriving, disruptive industry that enriches the institutional fabric of nations” or “an unfortunate work-around for the failures of mainstream financial systems to serve the poor,” is worth reading.

The “Stuff We Don’t Want” flowchart

UPDATE: Scott has taken some of your suggestions to improve the chart--Version 2.0 is below. I doubt we need to point out that if you’re about to embark on an aid project to help Africa with no actual knowledge of aid or Africa, the ire of a certain blogging development economist may not be your greatest preoccupation. And we probably also don’t need to mention that developing a simple set of standards (perhaps in the form of a basic decision tree) won’t solve all the many well-documented problems with gifts-in-kind aid.

But who knows, it might help to weed out a few misguided and potentially harmful projects, so…thanks to Scott Gilmore at Peace Dividend Trust for drawing up this handy flowchart:

Scott instructs:

Print it, laminate it, keep it in your wallet, and rest easy knowing you won’t inadvertently attract the bloodthirsty wrath concerned interest of the aid critics.

Refinements or additions, anyone?

On a related but more serious note, Saundra Schimmelpfennig recently reminded us of an earlier blog post, How to determine if an aid project is a good idea, which is basically a lesson in empathy (“…ask yourself…is this is the type of aid you would want or would something else be more helpful? Would that aid project help solve the real problem or just address a side effect of the real problem? How would that same problem best be solved in your state/neighborhood?”) to help potential individual donors make good funding decisions.

A warning from Tajikistan

The following post was written by Alanna Shaikh. Alanna is a global health professional who blogs at UN Dispatch and Blood and Milk. A polio outbreak is underway in Tajikistan. 12 people have died of the diseases since March. 32 cases of polio have been confirmed, and 171 cases of acute flaccid paralysis (a signal of possible polio) have been identified. That’s a full-fledged outbreak in a country with an 82% vaccination rate. Until this January, there hadn’t been a polio case in Tajikistan for 13 years; Tajikistan was certified polio-free in 2002.

Tajikistan should simply not be seeing a polio outbreak – an 82% vaccination rate is enough to achieve herd immunity and protect even the unvaccinated. And we know this is not one of the rare vaccine-caused outbreaks because the WHO has done genetic analysis on the polio strain – it is wild polio.

Something has gone wrong in the health sector in Tajikistan. There are several ways that the health system could fail on vaccination. Vaccine records could be inaccurate, causing unvaccinated children to be missed by the system. Or the cold chain is not being maintained and the vaccines are losing effectiveness – the oral polio vaccine is especially vulnerable to warm temperatures. Whatever happened, it’s a sign of health system weakness and the Ministry of Health of Tajikistan will need support to improve it.

This outbreak calls into question the disease eradication approach to public health. Tajikistan has shown genuine commitment to polio eradication and that commitment has not been enough. Without a health sector strong enough to ensure effective vaccination coverage, a single-disease focus just doesn’t work. That idea is slowly being accepted. Eradication proponent Bill Gates called the eradication approach into question in his annual letter, mentioning slow progress to date in Nigeria.

If disease eradication is not the key to promoting global health, what is? Successful immunization against dangerous childhood diseases requires the same basic health sector resources as fighting HIV, protecting maternal health, and preventing chronic illnesses: a sufficient number of trained staff, useful data and the ability to act of it, health infrastructure, and effective financing methods. Support for those resources therefore strengthens a nation’s health as a whole.

Moving to a health systems approach for supporting global health will maximize the impact of global health spending. Every dollar spent will battle more than one disease. A broad systems approach also directly supports the goals of disease eradication by making sure that health staff are available, and trained, to provide vaccinations, and that the logistical system is in place to keep vaccines cold.

A systems approach will also support the structures needed to maintain disease elimination. Even after polio has been eliminated from a region, vaccination for the disease needs to continue as long as it still exists in human patients anywhere. And surveillance is necessary to watch and prepare for new outbreaks of the disease, like the one we are seeing in Tajikistan.

Tajikistan’s polio outbreak is a warning sign. You can’t eliminate a disease without also building a health system that ensures the disease stays eliminated.

Some of us are getting a little too excited about Presidential Study Directive #7

Professor Philip Auerswald published a spirited rebuttal to my post on the US government process reforming policy towards global development. In all the heated excitement on this subject, a few points may have been overlooked: (1) my post was signed "Laura Freschi", (2) my name is not "Laura Freschi", (3) there is a very gifted writer on the Aid Watch blog whose name is "Laura Freschi." I do confess I have had trouble getting consumed with thrills about the whole PSD 7 exercise. I actually got an earlier leak on the process a while ago, in which there was an attempt to get consensus from all the US government experts on development. One of the consensus conclusions was that higher productivity was an important deteminant of development. I really have to agree with that one, since the definition of productivity was GDP per worker and the definition of development was GDP per worker. At least we finally have agreed that if you increase GDP per worker, it is likely to increase GDP per worker.

Professor Auerswald was consulted during the PSD 7 process and he asked me if I was. I vaguely remember that I was invited to a meeting with a US government big shot on development whose name I've forgotten, to take place in Washington. I failed to do my patriotic duty, using the lame excuse that the meeting was two days before Christmas, and I unreasonably treat the days around Christmas as belonging to Family Zone.

Professor Auerswald (sorry for my teasing you in this post), you do seem to have a theory of social change in which promises about government intentions to someday change priorities are a major force. My experience of many years of observing such statements is that they are more like New Year's resolutions that are repeated every year.

I do heartily believe development change is possible and indeed is already happening, but I still  have these nagging doubts that PSD #7 will go down in history as the major turning point.

Are aid donors now running Haiti?

This post is written by Daniel Altman Who will determine Haiti’s future?  Probably not the Haitians.  With aid groups enlarging their presence on the ground and foreign governments exercising control through their wallets, Haiti’s future may be out of the hands of the Haitians for years to come.

Nowhere is this clearer than in the recently convened Interim Committee for the Reconstruction of Haiti (CIRH), which will set the nation’s priorities during an 18-month state of emergency.  The committee has more seats for foreigners than for Haitians, and voting power is determined in part by amounts of aid money committed.  Donors offering more than $100 million have their own votes; those offering less must share one vote.  Non-governmental organizations operating in Haiti share one seat on the committee but don't have any voting power.

The World Bank will dole out the donors’ money at the instruction of the CIRH, but it is not alone in holding the purse strings.  Haiti has also accepted a loan of over $100 million from the International Monetary Fund, which includes lengthy conditions and benchmarks for Haiti’s economic policy.  Meanwhile, the United Nations Development Program is poised to become the country’s biggest employer through its Cash-for-Work project, and UNICEF is moving forward with a long-term plan to build a national education system.

How did this happen?  After the earthquake, with its people in desperate need, Haiti’s government was ripe for coercion.  Donors could set their own terms, and the government was not in a position to negotiate, even if it wanted to.  Three months later, this continues to be true.  Haiti’s president, René Preval, can in theory veto the CIRH’s decisions, but doing so might mean the freezing or loss of hundreds of millions of dollars.  And now his backers in the Haitian senate want to extend the 18-month state of emergency – and thus the CIRH’s mandate – to solidify their own grip on what’s left of political power.

“I believe everybody agrees this conference is a unique occasion to try to rebuild the Haitian economy,” said Dominique Strauss-Kahn, managing director of the International Monetary Fund, at the international donors conference for Haiti last month.  You could be forgiven for thinking that Strauss-Kahn considered the earthquake a blessing.  Yet he may have been echoing the views of many people in the aid community; finally, he seemed to say, we can go into this country with a free hand and do the things that we've wanted to do for a long, long time.

Daniel Altman is president of North Yard Economics, a not-for-profit consulting firm serving developing countries.  He is the author of three books, most recently Power in Numbers: UNITAID, Innovative Financing, and the Quest for Massive Good (with Philippe Douste-Blazy), and teaches as an adjunct at the Stern School of Business.

Nobody wants your old T-shirts

UPDATE 4/28 10:45 am answering the "be a man" video: see end of this post I guess our great Alanna Shaikh post "Nobody wants your old shoes" (2nd most popular post of all time) did not quite reach everybody. Or maybe the parallels between old T-shirts and old shoes were not widely appreciated (HT @texasinafrica)

A new clothing-themed charitable campaign from the guys behind lucrative social media marketing exercise I Wear Your Shirt is looking to get unwanted T-shirts out of your closet and onto the backs of a million people across Kenya, Uganda, DRC, Ghana, Liberia, Mozambique, Nigeria, Ethiopia, Sudan, Swaziland and South Africa.

The 1MillionShirts project, launched this month, is asking for used (but decent) T-shirts to be sent in with a one dollar bill to help with container costs. The shirts will then be shipped to Africa to help clothe folks in need.

The guy in the video also asks for $  from each of us because it is very expensive to send containers full of bulky low-value T-shirts all the way over to all those places somewhere in Africa. Test question: why might this fact help explain why this is "one of the worst advocacy ideas of the year" (in @texasinafrica's words).

UPDATE 4/27 10:45 am: @iwearyourshirt posts an angry video attacking me and other "Internet trolls" for daring to criticize him, challenging us to come out from behind our computers to call him on the phone directly and "be a man."

Laura has put up a constructive alternative suggestion to #1millionshirts in response to the, um, "be a man" challenge.

I of course completely agree with Laura.

As far as how to have the debate on 1 Million Shirts, it's perfectly legitimate to have a public debate on Twitter or any other forum on a very public advocacy idea that is out there. That the only acceptable alternative for @iwearyourshirt is to get a personal phone call is to suggest that public debate is not legitimate and that the design of aid projects should be negotiated in private.

Sorry, pal, that's not how democratic debate  and accountability works.  I'm sorry if you feel blind-sided by this debate, but the burden of proof was on you to check out your idea before you made it so public to a large audience.  To me, that's what it means to "be a man", oops I mean, "be a human."

Wax and Gold: Meles Zenawi’s Double Dealings with Aid Donors

Helen Epstein, author of The Invisible Cure: Why We Are Losing The Fight Against AIDS in Africa, has a stunning piece on aid to Ethiopia published in this month’s New York Review of Books. Epstein argues that the main cause of fertile southern Ethiopia’s chronic food shortages—the so-called “green famine” —is Ethiopia’s toxic and repressive political system, presided over since 1991 by Meles Zenawi. While Meles placates donors and Western governments with speeches about fighting poverty and terrorism, he has committed gross human rights violations at home, rigged elections, killed political opponents, and imprisoned journalists and human rights activists. Epstein on Meles' doublespeak:

There is a type of Ethiopian poetry known as “Wax and Gold” because it has two meanings: a superficial “wax” meaning, and a hidden “golden” one. During the 1960s, the anthropologist Donald Levine described how the popularity of “Wax and Gold” poetry provided insights into some of the northern Ethiopian societies from which Prime Minister Meles would later emerge…. “Wax and Gold”–style communication might give Ethiopians like Meles an advantage in dealing with Westerners, especially when the Westerners were aid officials offering vast sums of money to follow a course of development based on liberal democracy and human rights, with which they disagree.

Several Western donors responded to Meles’ more blatant repression by channeling aid directly to local authorities, cutting out the central government. We have argued before that this strategy doesn't work when there is evidence—which Epstein provides more of—that local government officials are instrumental in election-fixing and using aid to award political supporters and punish dissidents. Now, donors can no longer even support Ethiopian civil society to oppose these human rights violations, since Meles' government recently passed a law that makes it illegal for civil society organizations to accept foreign funds.

Epstein concludes powerfully:

In 2007, Meles called for an “Ethiopian renaissance” to bring the country out of medieval poverty, but the Renaissance he’s thinking of seems very different from ours. The Western Renaissance was partly fostered by the openness to new ideas created by improved transport and trade networks, mail services, printing technology, and communications—precisely those things Meles is attempting to restrict and control.

The Western Renaissance helped to democratize “the word” so that all of us could speak of our own individual struggles, and this added new meaning and urgency to the alleviation of the suffering of others. The problem with foreign aid in Ethiopia is that both the Ethiopian government and its donors see the people of this country not as individuals with distinct needs, talents, and rights but as an undifferentiated mass, to be mobilized, decentralized, vaccinated, given primary education and pit latrines, and freed from the legacy of feudalism, imperialism, and backwardness. It is this rigid focus on the “backward masses,” rather than the unique human person, that typically justifies appalling cruelty in the name of social progress.

Read the article in full here.

Yes, Cash is Best. Now when will USAID follow its own advice?

These two posters are finalists in a student contest to create public service announcements that tell Americans why giving cash in emergencies is better than giving goods like food, bottled water, or used clothes. (Hat tip to Saundra Schimmelpfennig).

The contest guidelines, provided by the Center for International Disaster Information (CIDI), are very clear on why they require entrants to focus on the simple message that giving money is the best way to help. They give three reasons, with which many Aid Watch readers are already familiar:

1) Financial contributions are easily convertible to meet the international disaster victims' specific and immediate needs;

2) Cash donations are more efficient, allowing purchases to be made at a bulk discount, at a lower transportation cost…

3) Cash donations go directly to the disaster site, allowing for exact purchases of what is needed most urgently and stimulating local economies. Other donations, such as products/goods, take time and money to transport, rarely meet victims' urgent needs, often interfere with professional relief efforts and frequently clash with cultural norms.

The videos and posters from the student finalists are here. The winners, announced tomorrow, get a cash prize and will have their work featured in CIDI’s national public education campaign. Now in its fifth year focusing on the very same message, the contest is funded by USAID, a fact which should also be obvious from the USAID logo on every entry.

The US is globally one of the worst offenders of aid tying, whereby US aid is “tied” to the purchase of American goods and services (a useful primer is here). While the percentage of aid that the US reports as tied is now falling thanks to improvements in reporting procedures as well as increases in implicitly untied programming through the Millennium Challenge Corporation and PEPFAR, the US still ranked a sad 19th out of 23 rich country donors in 2008, losing to even Italy, and edging out only Spain, Greece, Korea and Portugal.

In particular, American legislation requires that most US food aid be bought in the US, processed and packed by US firms, and shipped on US-registered vessels. As a result, only about 40 percent of the money that the US spends on food aid actually goes to buying food, and that food is often tragically slow to arrive. When proposals to change these archaic laws have come before the US Congress, they have largely been shouted down or diluted. Canada successfully shifted to a cash-only system in 2008; the US could and should do the same.

As the smart giving movement gains steam among individual donors, aren't we ready to end these wasteful practices institutionalized in US law and carried out by the world's largest bilateral aid agency? Only then would USAID finally be able to follow its own good advice: Cash is best.

Can the West learn from China in Africa?

Deborah Brautigam, Associate Professor in American University’s International Development Program, is author of the book The Dragon’s Gift: The Real Story of China in Africa (see our review here), and a new blog which digs into current China in Africa issues reported in the press. She recently spoke at NYU and answered a few of our questions. Q:  It’s my reading of your book that you think Western donors could learn something from the way China behaves in Africa. What are the strengths of the Chinese way? Are there specific strategies or programs that the West should pay attention to?

A: As a donor, China's way has several advantages. Take the way they operate. They rarely "poach" skilled staff from African ministries to work in their own offices. The focus on turnkey infrastructure projects is far simpler and doesn't overstretch the weak capacity of many African governments faced with multiple meetings, quarterly reports, workshops, and so on. Their experts don't cost much. In addition, their emphasis on local ownership is genuine, even if it leads to projects like a new government office building, a sports stadium, or a conference center. They understand something very fundamental about state-building -- something that Pierre L'Enfant understood in 1791 when he teamed up with George Washington in newly independent America:  new states need to build buildings and dignity, not simply strive to end poverty.

But the Chinese also funded university scholarships, roads, bridges, mini-hydropower, and irrigation, for decades -- when other donors had moved away from most of these sectors. And like Japan, they see nothing wrong with using subsidies to help foster investment by their own companies; this is seen as beneficial to both sides. From the 1970s to the early 1990s, Southeast Asia's "miracle" was underwritten not only by good policies, but by Japanese investment, and Japanese aid was a partner in this. These investments boosted manufacturing prowess, attracting Japanese firms to go offshore. China's engagement in Africa could have similar results in at least a handful of countries with receptive leadership. The Chinese avoid local embezzlement and corruption by very rarely transferring any cash to African governments. There is almost no budget support, no adjustment or policy loans. Aid is disbursed directly to Chinese companies who do the projects. The resource-backed infrastructure loans work the same way. Of course those companies themselves might give kickbacks, as we've seen in Namibia.

Q: How about vice versa? Does China need to learn from the West?

A: Beijing's stubborn refusal to be transparent about official aid and other flows of development finance has created headaches for the Chinese that could have been avoided, in some cases simply by publishing information already being collected in China. The OECD members could teach China something here. The West and Japan are also far more sensitive to social and cultural differences and power relations -- resettlement issues, land tenure rights, women's role in production. In general, the Chinese -- like the World Bank decades ago -- simply depend on local governments to sort these things out. That's one of the downsides of genuine local ownership. China also needs a Foreign Corrupt Practices Act to provide a framework for moving against corruption and kickbacks overseas.

Q:  Is Chinese aid more effective than Western aid? Do we have enough information to answer this question?

A: More effective at what? To answer this question we really have to know: what is the real purpose of aid?  If we simply "follow the money" from the US, for example, we can see that national security (including resource security) and diplomacy appear to be far more important than reducing poverty or fostering growth. That said, our understanding of the impact of Chinese aid on development is very, very weak and highly anecdotal. There simply is no data. Until recently, Chinese aid was quite modest and had only local impact. It's still not very extensive. I suspect, as with Western aid, that it will be more effective in conditions/countries with more developmental elites: Mauritius as opposed to Mauritania, for example. On the other hand, Chinese business engagement is already having a tremendous impact. Huawei and ZTE are transforming the cellular telephone landscape across Africa, for example. But this is not aid.

Q:  China has been heavily criticized for its close relationship to the government in Sudan. Do you think the Western perception of Chinese motives in Sudan is accurate? What kind of role do you see China playing in Sudan?

A: Al-Bashir is widely (and correctly) reviled for his role in trying to crush a rebellion in Darfur using extremely brutal force. Chinese aid to Sudan is relatively small, but their engagement (in a joint venture with Sudan) in oil provides the bulk of the revenues that allow al-Bashir to finance the war, and they have plenty of business. As the New York Times recently reported, in the north, Sudan's economy is booming. The Chinese have also blocked and/or watered down Security Council resolutions on Darfur, allowing their focus on sovereignty (and their concern about oil supplies) to trump the newer norm of the "responsibility to protect". Chinese arms continue to flow into the country (probably legally: Sudan is under a UN arms embargo, but it is a limited one). Sudan also has its own arms factories (built by the Chinese) which makes it hard to tell where arms actually originate. All of these provide ample fodder for the critique of China's role.

But several things are not widely reported.

• First, China's role in Sudan has changed over the past several years. They were crucial in getting Khartoum to accept a joint UN/African Union peacekeeping force (one, by the way, authorized by the UN, but not funded as generously as originally pledged). They allowed al-Bashir's case to be sent to the International Criminal Court for prosecution for war crimes (as Security Council members, they could have vetoed this). And as noted both by President Bush's special envoy, Andrew Natsios, and President Obama's special envoy, Scott Gration, Beijing is now working together with the US government and other major powers in developing joint strategies to bring the Sudanese government and the rebels to the negotiating table. As China-watcher Erica Downs put it, the West and China are now coordinating their "good cop" and "bad cop" roles in trying to end the crisis.
• Second, there is no doubt that Beijing could have moved much sooner, and much more effectively, to become part of the solution. But they never held all the keys to solving the Darfur tragedy. In making a tactical decision to focus on China as the lynch pin to solving Darfur's crisis, and using the 2008 Olympics as the pressure point, activists let the other major powers off the hook. To end the violence, Darfur needs a peace agreement, and that requires all the parties to participate in negotiations. The West has not yet been able to get all the major rebel groups to show up to start talking.

Never-before-seen video of a peacekeeping intervention to end war

Short clip:

From Twitter: @undispatch:

@bill_easterly instead of trying to be funny, can you actually explain your beef with peacekeeping?

Well, @undispatch, if you click on the category, "aid goes military" at the bottom of this post, you will get more than you probably want to hear from this blog on this topic. You are also welcome to check out my New York Review of Books article Aid goes military!

For the video, HT James Rauch at UCSD. Would anyone like to nominate someone most likely to be the real life counterpart to Robur in this video?

The magical 0.7 percent

The blog of Laurence Haddad, director of the UK-based Institute of Development Studies, pointed us towards the just-released manifestos of Britain’s Conservative and Labour parties. Both manifestos declare their intention to codify into law the development target of 0.7 percent of national income allocated to aid. From the Tories:

A new Conservative government will be fully committed to achieving, by 2013, the UN target of spending 0.7 per cent of national income as aid…We will legislate in the first session of a new Parliament to lock in this level of spending for every year from 2013.

The Labour Party:

We remain committed to spending 0.7 per cent of national income on aid from 2013, and we will enshrine this commitment in law early in the next Parliament.

While such a bipartisan commitment to ensure consistency of development funding is something the US could only aspire to, perhaps it is time for a word of caution on the origins and relevance of that target for our friends across the Atlantic, courtesy of Michael Clemens and Todd Moss:

First, the 0.7% target was calculated using a series of assumptions that are no longer true, and justified by a model that is no longer considered credible…. Second, we document the fact that, despite frequent misinterpretation of UN documents, no government ever agreed in a UN forum to actually reach 0.7%—though many pledged to move toward it. Third, we argue that aid as a fraction of rich country income does not constitute a meaningful metric for the adequacy of aid flows. It would be far better to estimate aid needs by starting on the recipient side with a meaningful model of how aid affects development.

The 2007 paper, Ghost of 0.7%: Origins and Relevance of the International Aid Target (ungated version here), gives a fascinating historical look into the machinery of global development cooperation, showing how the target came to be, and how promoting such a nonsensical target could be harmful. Their summary concludes:

The 0.7% target began life as a lobbying tool, and stretching it to become a functional target for real aid budgets across all donors is to exalt it beyond reason. That no longer makes any sense, if it ever did.