UK passes bill to honour pledge of 0.7% foreign aid target, and a note on SDGs

The Guardian reports:

The international development bill passed its third reading in the House of Lords on Monday and will now receive royal assent. Britain met the 0.7% target for the first time last year when it spent £11.4bn – or 0.72% of its GNI – on overseas aid.

The 0.7% commitment was established by the UN in 1970. In 2013, only five other countries – Sweden, Norway, Luxembourg, Denmark and the United Arab Emirates – had met or exceeded the 0.7% aid spending target. The Netherlands had consistently met the target, but fell short in 2013.

All well and good.

The question, though, is what proportion of the 0.7% will finance various jobs programs for UK (and other Western) nationals working in the global development industrial complex (or in other sectors that benefit from tied aid) versus actually going to poverty alleviation in the developing world.

Source: Daily Nation

Source: Daily Nation

And speaking of the global development industry, here’s a nice quote from the Economist newspaper on SDGs:

Developing countries seem to think that the more goals there are, the more aid money they will receive. They are wrong. The SDGs are unfeasibly expensive. Meeting them would cost $2 trillion-3 trillion a year of public and private money over 15 years. That is roughly 15% of annual global savings, or 4% of world GDP. At the moment, Western governments promise to provide 0.7% of GDP in aid, and in fact stump up only about a third of that. Planning to spend many times the amount that countries fail to give today is pure fantasy.

The backers of the SDGs concede from the outset that not all countries will meet all the targets—an admission that robs the goals of the power to shame. The MDGs at least identified priorities and chivvied along countries that failed to live up to their promises; a set of 169 commandments means, in practice, no priorities at all.

A set of 169 commandments also means fundraising opportunities for everyones’ pet issue. But it also means extra meetings, workshop, and clueless tied aid expats consultants for developing country Civil Servants to deal with; and little time for the boring things that actually contribute to sustainable improvement of human welfare.

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?

the mdgs

Since everyone is currently talking about the MDGs and how they may or may not be achieved on time here is a nice piece from Bill Easterly.

According to an Oxfam study, eliminating US cotton subsidies would “improve the welfare of over one million West African households – 10 million people – by increasing their incomes from cotton by 8 to 20 per cent”.

I may not always agree with Bill but I think his basic approach to development is spot on. Just like in most human endeavors (politics, economics, sports) systems based on human goodwill are bound to fail while those based on self-interestedness thrive. There is no magic bullet in development, but there is definitely a better approach than is currently being employed. Lets not forget that aid is supposed to eventually lead to self-reliance.

It is already clear that the goals will not be met by their target date of 2015. One can already predict that the ruckus accompanying this failure will be loud about aid, but mostly silent about trade. It will also be loud about the failure of state actions to promote development, but mostly silent about the lost opportunities to allow poor countries’ efficient private business people to lift themselves out of poverty.

Bono has a slightly less realistic more hopeful take on the progress towards achieving the MDGs.