Quick random hits

 

1. As usual, great career advice for those in the academy from Chris Blattman.

2. Boring Development asks some interesting questions re RCTs, and questions the internal validity assumption many of them trumpet. Which raises the question, if RCTs are cannot guarantee internal validity can results so obtained be useful for policy development? My general response here is that not all RCTs are useful for policy development. The obvious incentives to publish clearly skew the design and implementation of studies in a way that makes only a fraction of them useful for policymakers (the IRB process notwithstanding). But all things considered, randomistas have probably made the world a better place.

3. An unfolding case in Guinea could drastically change what is permissible in the process of acquiring concessions from dubious governments. Benny Steinmetz of BSGR bought the Simandou concession in late 2008 during the last days of the administration of ailing dictator Lansana Conte (allegedly with the help of Mr. Conte’s fourth wife). According to FT, BSGR spent a mere $160m for the rights to mine in Simandou. Less than two years later, the company sold 51% of its rights to the Brazilian mining giant Vale for $2.5 billion, $500m of which was in cash. Last week a government committee investigating the Conte-BSGR deal found evidence of corruption and recommended that BSGR and Vale be stripped of their rights to Simandou. If the ruling sticks, lots of contracts in several resource rich states in Africa will become open for legal review thereby drastically lowering the costs of renegotiation (even for the dictators who singed them).

No, the West should not have governed South Sudan

In light of the ongoing civil war in South Sudan, Chris Blattman posed the question of whether the West should have governed South Sudan. My simple answer is that neotrusteeship would not have helped much with regard to long-term institutional stability in South Sudan, for the following reasons:

  • Neotrusteeship would still entail the same logic of old-style colonialism, only with a shorter time horizon. Whichever entity was designated as the ruler of Sudan – be it the UN, the State Department or the Foreign Office – would be working on a fixed timeline, with an exit strategy in mind. As Fearon and Laitin (gated) aptly noted: “In sharp contrast to classical imperialists, neotrustees want to withdraw as fast as possible. References to “exit strategy” have led the policy discourse and debate surrounding international and U.S. operations in the Balkans, East Timor, Sierra Leone, Afghanistan, and now Iraq.” Assuming that South Sudanese elite are rational, they would play the game, if forced to, and bid their time until the overlords left and then they would get down to the business of settling their grievances. The building of institutions, unlike learning a language or programing, is not something that you are taught and then left on your own to practice. Institutions only work if they reflect the de facto balance of power, something that trusteeship would necessarily not provide. And what would be the time horizon? How long would it take to build good institutions? As Fearon and Laitin note, “….due to the sources of the civil wars that lead to collapsed states, successful exit from neotrusteeship will be extremely difficult in most cases. We have stressed the need to develop local tax-collecting capability as an incentive to move the country from international welfare toward self-governance and, in some cases, the notion of transfer not to full sovereignty but rather as a state embedded in and monitored by international institutions.” 
  • The proposed exit strategy would probably be elections. Such elections would most likely favor those that played the game well under neotrusteeship, possibly the favored choice of the Western administrators [to pay back Western tax dollars, time and connections, etc with contracts and influence in the post-trusteeship era]. But this is not the way to do it. Electoral democracy would then necessarily be used by disgruntled elites who were not given a seat at the table to correct the ills of the era of neotrusteeship. Depending on the outcomes, failure at the ballot would probably lead to armed conflict.
  • Also, the period 1952-1957 was not a benelovent neotrusteeship but the last mile of British Colonialism in Ghana. I would have liked to hear more discussion of post-1957 Ghana by Pascal Zachary and how it is a good lesson on the virtues of neotrusteeship. Are we to forget what Nkrumah did right after ascending to the Political Kingdom and all that happened in Ghana between 1957 and 1981 when Jerry Rawlings finally brought order to the political process with an iron fist?
  • Lastly, a Western-run neotrusteeship would fly in the face of current IR norms and the structural reality of the present international system. I think the myth of the benevolent disinterested Western institution-builder [known in an earlier time as a civilizer] should be put to rest. China and Russia [and probably the African Union] would oppose such a move and work to make it fail. So even if it were workable in theory, something that I highly doubt, reality would render the point moot.

In my view the talk about neotrusteeship as the solution to weak state institutions is an attempt to avoid the ugly face of the state-building process. No one likes paying taxes to another dude who uses it to buy a private jet. Throughout human history states have been imposed on people against their will, most of the time with force. The challenge in South Sudan is not that the leaders had not learned how to govern efficiently, and therefore all we need to do is train them for a few years, but rather that Kir did not have the capacity and full control over the army to credibly deter Machar and his allies from attempting to take power by force.

Put differently, state-building is not value-neutral because it requires the threat or actual use of force, which implies the taking of sides. The logics of local insatiability and time inconsistent preferences dictate that chaps will always want to reorganize existing institutional arrangements. The only thing that prevents them from doing so – from Denmark to CAR – is the difference in the costs of doing so. Even in democracies, people are restricted on how often they can throw out their elected leaders, with a credible threat of the use of force in place to make sure that people obey and accept the outcome of elections [PLEASE read Terry Moe on power and political institutions]. Democratic state-building (the means most preferred on account of our 21st century sensibilities) in the context of weak or severely truncated coercive capacity is very hard.

Seen this way, neotrusteeship can only be useful in the short-term to prevent mass atrocities, the creation of safe heavens for transnational terror networks, and provide an environment for a less violent process of institutional development. But it certainly cannot generate the state institutions required for long-term political stability.

I definitely appreciate the need for international assistance in the process of building institutions in young states. But with regard to strategies of long-term state-building I tend to lean more toward Jeremy Weinstein’s idea of “autonomous recovery” which stresses the need to identity and understand

 “internal processes of change that give rise to successful state-building, the conditions under which these internal mechanisms are likely to work, and the lessons international actors can draw from autonomous recovery for efforts to bring conflict to an end. Although it may be difficult to accept, one of the key lessons is that sometimes it makes sense not to intervene, or to intervene actively on behalf of one side.

To echo Weinstein:

……….. The durable resolution of the world’s civil wars will depend to a large degree on how  quickly international actors incorporate the lessons of history into current strategies. To reconstitute states with governments capable of projecting power, the international community must be prepared to identify and recognize legitimate and effective governance (in whatever form it takes). And if the political change that war produces is to survive the end of the fighting, international actors must develop new approaches to both support and constrain the winners as they consolidate power in the aftermath of conflict.

More on direct cash transfers

As Chris Blattman put it, the Cashonistas are rejoicing. And with very good reason.

There is mounting evidence that giving money directly to poor people does a much better job of improving their welfare than traditional channels of institutional(ized) aid-giving. On a related note, this evidence lends credence to claims by proponents of oil-to-cash programs. Oil to cash enthusiasts advocate for direct payments to citizens of revenues from extractive sectors (and especially oil) so as to avoid what is commonly known as the resource curse (more on oil-to-cash here). I am not one to argue against evidence, so I am intrigued by the success of Give Directly, and look forward to further impact assessments to ascertain the stickiness of the observed welfare gains.

However, I agree with Brett Keller that we shouldn’t allow the present evidence to distract us from thinking about things like schools, hospitals, business-promoting state institutions, etc.

Despite the within-community evidence of positive effects of direct cash transfers, we shouldn’t forget that these communities do not exist in a vacuum but within political economies of various states. For instance, given what we know about ethnicity and attendant barriers against collective action, what would be the effect of giving all the money to the people and then requiring them to comply with tax regimes and other collective action endeavors?

Furthermore, giving poor people money is often based on an implicit premise that the poor ought to become entrepreneurs and lift themselves out of poverty (People respond to incentives, and we know what would happen if say we guaranteed them direct cash transfers in perpetuity. So the scheme only works if poor people can use the money to start businesses). But entrepreneurship is hard. Even for people with trust funds and super-charged business incubation resources. So is it really fair to require that the objectively most risk averse among us lift themselves out of poverty by starting businesses? Isn’t this the role of the middle and upper middle classes who can tolerate the risk? I am not saying that entrepreneurship is limited to particular classes (lots of people from humble backgrounds have created wildly successful businesses the world over). What I am saying is that as a matter of policy we shouldn’t unnecessarily burden the most vulnerable among us.

Also, to borrow from Huntington, we are well advised to keep in mind that even though economic success leads to stabilization, the process of development can be destabilizing. With this in mind, for most development initiatives to succeed, they need political cover (broadly defined as the ability to shape or influence government policy). Interventions to accelerate growth must never lose sight of this fact. Those who make and/or can influence policy matter a great deal.

This might sound very 20th century, but I think that the best anti-poverty measure out there is still mass job creation by BIG business (and agree with Chris Blattman here). It beats all the pro-poverty pro-poor interventions I can think of. So may be instead of raining cash on the poor it might be better to think of smart ways of jumpstarting the growth of SMEs in the developing world into mass employers. This is not a trickle down economics argument. It is an argument for the continued emphasis on macro reforms in the political economy to provide an enabling environment for mass job creation.

We can’t continue to insist that institutions matter but then turn around and do our best to device anti-poverty interventions that skirt the very same institutions that we insist are the fundamental cause of long-run growth.

Direct cash transfers might prove to be a key part of the shortcut to Denmark (and I hope the successes stick). But like with most shortcuts, the potential for disappointment is a little higher than most of us would like to admit.

Does Chris Blattman hate state capacity?

The simple answer is NO. The long answer is below.

Blattman’s latest post decries Bill Gates’ (and much of the development community’s) focus on data gathering, and may I add, strengthening of statistics departments. He writes:

I would like to see better GDP numbers–who wouldn’t?–but it’s hard for me to see the constraint on development this revelation would relieve, and why it’s anywhere close to the top ten constraints poor countries face.

The problem with those of us in the development complex, be we academics or Presidents or foundations or NGOs, is we want the world nicely ordered with levers to pull and a dashboard to monitor. And so we put a lot of energies into levers and dashboards and monitors.

I think of poverty and political powerlessness in terms of constraints and frictions–the limitless host of things, little and big, that made it more difficult to run a business profitably or turn a profit or invent a new product or get your kid educated or select the leader who serves your interests. States and institutions and norms and technology and organizations reduce these frictions and relieve these constraints. That is the fundamental driver of development. This is the basic logic behind almost every theory of development in your textbooks, from growth models to poverty traps to everything in between.

Blattman is right that improving the capacity of statistics departments will not do much to alleviate poverty now (although as I write this in the basement of a government library in Nairobi I can’t stop thinking that stats departments need to do more). At the same time however, I would be wary of an outright dismissal of the need for better data gathering by governments, for two reasons.

Firstly, at the core of state capacity is the ability to make legible (depite Scott’s observations) the terrain over which the state claims to have dominion. Strong states are those that know your home address, the number of children you have and how much money you made last year. When governments have the capacity to get better GDP data, they will also know how many kids died or were not immunized last year, etc etc. And perhaps more importantly, they will be able to know how much you made last year and how they can get a bigger share of it. As Besley and Persson have argued, there is a strong case to be made for the centrality of public finance to development. Poor countries have small tax bases yes, but tax evasion in these countries still denies national treasuries lots of cash. And it is not just a question political will. Low capacity plays a role. Imagine trying to implement an income tax in a country of about 20 million adults but where under 4 million are in formal employment and can have their taxes withheld.

Secondly, Blattman seems to be making an argument for the private sector as a key part of greasing frictions that stifle development (which is true). But the private sector initiatives he cites can only flourish when there is strong state monitoring (with reliable data) in the background. Credit bureaus need a strong and enforceable regulatory framework. Otherwise no one will believe their credit reports. Freedom of (government) information laws are cool, but such information must first exist, and in reliable format. In other words stats departments must do their job well.

Lastly, good data also make for more informed politics. Kenya, for instance, could do with more disaggregated GDP data – by counties or lower – as it attempts to implement a devolved system of government and revenue allocation.

All this to say that when states have a handle on how much is produced, they will know how and where to get their share. And the more they demand a bigger share, the more the people will demand some of it to be returned as public goods (and these can also include reliable information that would be accessed via freedom of information laws). Yes, GDP data was invented post-WWII when some countries were already winning against poverty for decades. But even before that the more successful states were the ones that were better at information gathering. Flying blind is simply not an option for states.

 

Nominate the best blogs of 2012

A View From the Cave blogger Tom Murphy is holding the annual Aid Best Blogger Awards (ABBA). I don’t consider my blog to be an “aid blog” per se but I think I fit into the general category that Tom intended to include in his awards.

If I may toot my own horn a little, I even once got a shout out from one of the better know aid bloggers out there, Chris Blattman (Blogger of the Year last year).

So if you like what you read on this blog please go ahead and nominate the blog for this year’s awards here.

Some of my better posts in recent months have been on the topics of the upcoming elections in Kenya and the conflict in eastern DRC.

Did European Colonialism Benefit Africans?

“We find it difficult to bring the available evidence together with plausible counter-factuals to argue that there is any country today in Sub-Saharan Africa which is more developed because it was colonized by Europeans. Quite the contrary.”

That is Leander Heldring and James Robinson writing in a new paper on the negative impact of colonialism on Africa’s economic prospects.

Source: Wikipedia

Source: Wikipedia

Interesting attempt at positive analysis of a difficult subject (esp. with regard to counter-factuals), although normative undertones drive most of the analytical narrative.

The negative legacies of colonialism – despotism, negative ethnicity, aid dependence, and general underdevelopment, etc – certainly do persist.

But for those unwilling to submit to the gods of path dependence, the question remains of how long incompetent African leaders will continue to blame outsiders for their own ineptitude. After half a century of independence, many Africans are wary of being the only ones left in the “bottom billion” once the East and South Asians climb up.

To paraphrase Achebe, the trouble with Africa is simply and squarely a failure of leadership. There is nothing basically wrong with the African character. There is nothing wrong with the African land or climate or water or air or anything else. Even external conquest and subsequent colonialism was not unique to Africa.

H/T Chris Blattman.

There is no way around the basics: Development will take time

I just read Chris Blattman’s response to the UK Prime Minister’s op-ed in the Journal. It reminded me of a lot of the things that I have been reading lately in preparation for my fieldwork (My dissertation will tackle the subject of legislative (under)development in Africa, with a focus on the Kenyan and Zambian legislatures).

Cameron’s sentiments in the op-ed are emblematic of the problems of development assistance. Like in all kinds of foreign intervention, developed states often try to externalize their institutions (and more generally, ways of doing things). These attempts often ignore the lived realities of the countries being assisted.

Forgetting the history of his own country (think autocratic monarchs, monopolies, limited suffrage), Cameron thinks that democracy, human rights and free markets (all great things) will magically create jobs in the developing states of the world. They don’t. In fact, they often lag the job creation process. For development assistance to be effective it must eschew these feel-good approaches to the problem of underdevelopment.

Blattman is spot on on a number of points:

  1. Unchecked leaders are bad for economic development (this is why I am so much into PARLIAMENTS!!!): Also, democracy is NOT synonymous with limited government. Heads of state like Queen Victoria or Hu Jintao or Bismarck or even Seretse Khama were in no measure democrats. However, they reined under systems with strong (sometimes extra-constitutional) checks to their power. That made a difference.
  2. Institutions rule, yes, but the right kinds of institutions: 1688 moments do not drop out of the sky. They are often preceded by decades if not centuries of civil strife, economic change and plain old learning. Institutional development takes time. Plus each society requires its own unique and appropriate mix of institutional arrangements to meet unique economic and social needs. A procrustean approach to institutional development (embodied in global capacity building) will inevitably fail. Institutional development must never be allowed to be captured by those who think that we can transform Chad simply by having them adopt Swedish institutions.
  3. Growth will require creation of jobs, i.e. industrial development: The poor countries of the world need real jobs for high school-leavers and other less educated people. The present focus on the “sexy” entrepreneural sectors – whether they are small businesses for the poor or tech hubs for the very highly educated – as the engines for growth in the developing world is misguided. I reiterate, starting a business is a very risky venture that should be left to the wealthy and the occasional dare devil. The poor in the global south need stable 9-5 jobs. Lots of them.

And lastly, where do strong institutions come from? There is no easy answer to this question. What we know is:

  1. History matters: Present countries with a long history of stateness have a better track record of building strong institutions for development. Yes, they may not always be democratic, but countries with a long history of centralized rule have strong states (and institutions) that deliver for their people (for more on this see Englebert and Gennaioli and Rainer).
  2. Democracy does not always create strong institutions: Since 1945 many have chosen to forget the fact that universal suffrage is a pretty recent phenomenon in the political history of the world. For the longest time world polities were ruled by power barons who held de facto power (as opposed to the procedural de jure power in democracies). When democracy came along after the Enlightenment the resulting structures of rule often reflected these de facto configurations of power. Over time institutions in these countries were cemented enough to allow for complete outsiders like say the current president of the United States to be elected without upsetting the balance of power (in another era he would have had to have mounted a coup). This is the challenge of the democratization in the new post-WWII states. How do you make democracy serve the interests of the people, rather that purely that of the elite? How do you use democracy to create strong institutions? Is this even possible? And if not, what other options do we have?

On Industrial Policy (In which I concur with Blattman 1001%)

I have made the case before here, here and here.

For more here’s Blattman, commenting on Industrial policy:

“You can’t pick winners” is the knee-jerk retort to the mention of anything that even rhymes with industrial policy. I would call it the triumph of ideology over evidence, except that even “ideology” feels like a generous term. Lazy thinking might be a more accurate description. Some have given the question a great deal of thought, but most have not.

I’m not suggesting that the paper above has the right answer (odds are, like most papers, it does not). I’m also not suggesting that governments can pick winners (probably they can’t). Nor am I forgetting that industrial policy is easily politicized and distorted (as surely it is). So what am I talking about?

More on this here.

development in southern sudan

Blattman stresses the importance of security, stability and predictability over other forms of intervention.

States, like people, have attention problems, only more extreme. The new government may only accomplish one or two big things in their first five years. If, fifty years hence, we want the poor of South Sudan to prosper, paradoxically the last thing we need to do is push for the Millennium Development Goals today.

give every incentive for elites, especially the ones apt to war, to invest in fixed assets whose value depends on stability and growth. Make them entrepreneurs. Oil rigs don’t count. Property in Juba does. So do plantations and small factories, even if they need subsidies to operate at first. This is hard, and will require attention and dedication.

With these accomplished, I’d next aim for economic growth. Which may or may not involve pro-poor transfers. Given the choice between three big resource firms and 1000 microenterprises, I’d choose the firms. (And remember: I work on fostering post-conflict microenterprises for a living.)

My two cents on this:

This is absolutely right. But with the caveat that the security hawks should be watched. They tend to overstay their welcome. Rwanda, Uganda and Ethiopia needed security more than a decade ago. Now their saviors, Kagame, Museveni and Zenawi, respectively, are quickly turning into latter day Bokassas.

Some quick thoughts

Grinding poverty and the lack of innovative thinking among their home governments continue to force most Africans to buy second hand-clothing. The few textile industries on the Continent (with a few exceptions in West Africa) are small operations geared mainly for exports – mostly under AGOA to the US. Special interests (second-hand clothes importers), poor economic policies (many countries killed their own nascent textile sectors) and dumping of textiles from the east are to blame.

The result is the indignity of having to buy used underwear or live in a parallel universe in which the Steelers won Super Bowl XLV.

A post on the related topic of the politics of appropriate aid-giving  is here.

In other news, Blattman makes the observation that younger leaders in Africa, because of their different upbringing, will be different from the independence leaders. I beg to differ. Spatial distribution based on ethnicity and malapportionment against urban centres, mixed with the toxicity of ethnic politics will continue to perpetuate rural, ethnic-based tyranny in most of Africa. The fact that University of Nairobi student council elections invariably go tribal says it all.

The current changes in the Arab world should be a wake-up call for most of Africa. Soon enough the set of examples of poor governance and general mediocrity will shrink from Africa, the Middle East and South Asia to just Africa.