Development Experts and Their Biases

It is perhaps uncontroversial to suggest that World Bank staff have a different worldview from others. World Bank staff are highly educated and relatively wealthier than a large proportion of the world. However, it is interesting to note that while the goal of development is to end poverty, development professionals are not always good at predicting how poverty shapes mindsets. For example, although 42 percent of Bank staff predicted that most poor people in Nairobi, Kenya, would agree with the statement that “vaccines are risky because they can cause sterilization,” only 11 percent of the poor people sampled in Nairobi actually agreed with that statement. Overall, immunization coverage rates in Kenya are over 80 percent. There were also no significant differences in the responses of Bank staff in country offices and those in headquarters or in responses of staff working directly on poverty relative to staff working on other issues. This finding suggests the presence of a shared mental model, not tempered by direct exposure to poverty [emphasis added].

That is an excerpt from the World Development Report 2015, the section on the biases of development professionals.

One hopes that the problem highlighted by the last line is not crowded out of President Kim’s agenda at the Bank by the ongoing cost-cutting. And in case you were wondering, I don’t think flying coach and no breakfast will cut it since airports and the Mamba Points of this world are beyond the reach of most poor people. Speaking from experience, the development “expert” bubble is real, and enduring. We definitely need to do more to burst the bubble.

If field country offices are mere extensions of DC, then many development projects will continue to be variants of the proverbial solar cookers decried by Jim Ferguson in the Anti-Politics Machine. And everyone will continue to run around in circles.

Pockets of California amid sub-Saharan Africa?

Rant and rave alert. 

As an undergrad at Yale I took several classes in which professors, TAs and fellow students would casually say things that insinuated that all of Africa (read sub-Saharan Africa) was a cross between a hospice, a giant slum and a war zone. Let’s just say that it all made me a little bit uncomfortable, and sometimes forced me to over-compensate in discussions and with papers and homework. I was particularly disappointed in my professors for not knowing any better. It probably also played a big role in my choice to pursue a career as an academic in the social sciences. 

The quote below reminded me of those episodes:

Despite considerable economic growth and increasing self-confidence as a major global player, modern India is a disaster zone in which millions of lives are wrecked by hunger and by pitiable investment in health and education services. Pockets of California amid sub-Saharan Africa, sum up Sen and Drèze.

It’s one thing when an ignoramus who imagines Kenya to be a town in South Africa that does a mean giraffe barbecue says something nasty about an entire region and its people. But it’s quite another when it comes from a college professor or from people that you expect to know better. 

For instance, when we say California, are we talking Palo Alto or East Palo Alto? I must add here that because it is Sen (my beloved author of The Idea of Justice), may be he meant the “median Californian experience” vs the “median African experience” as opposed to simply comparing Palo Alto with Kibera. May be.

I admire Prof. Sen. Very much.  But I would like to register my disappointment over this offending line. The full article in the Guardian is actually quite illuminating regarding inequality in India. 

If you ever teach a class or write a book or newspaper article or give a talk, please know that it is not kosher to use the word Africa as short hand for everything that you imagine to be wrong with this world. Always remember that part of your audience might include real flesh and blood Africans. Spare us the awkwardness. Please. 

Rational Impatience and marshmallows (and development)

Back in 1972 Stanford psychologist Walter Mischel conducted experiments in which he claimed to show a correlation between patience and later success in life – in the experiment kids who could wait for 15 minutes before getting two marshmallows, instead of eating one immediately, were likely to be more successful and self-controlled later in life. Michel attributed patience and self-control to some of the kids’ innate capacities.

It turns out that that might not be the case after all. Researchers in Rochester revisited the experiment and show that kids’ choices over whether to wait or not are “moderated by beliefs about environmental reliability,” in other words, kids react rationally to the proposed deal based on prior experience.

According to Celeste Kidd (more on this here), a University of Rochester grad student and lead author on the study:

“Being able to delay gratification — in this case to wait 15 difficult minutes to earn a second marshmallow — not only reflects a child’s capacity for self-control, it also reflects their belief about the practicality of waiting,”

Adding that:

“Delaying gratification is only the rational choice if the child believes a second marshmallow is likely to be delivered after a reasonably short delay.”

This reminded me of the interesting works in economic history (gated, sorry) that try to tackle issues of culture and socialization and their role in economic development. The punchline from these works is that group-specific socio-cultural values have long-lasting effects on attitudes towards investment, saving, entrepreneurship and ultimately economic development (Think of the fabled frugality and self-discipline of Weber’s protestants). Putting some of the critiques of these works aside for a moment, they are a reminder of just how COMPLEX development is.

Because material conditions both shape and are a result of prevailing cultural norms and practices (both Marx and Weber were right!) it becomes difficult to change one thing while ignoring the other (And this is even before you open the pandora’s box, viz: POLITICS). To put it simply, you cannot increase the investment rate in a society simply by throwing money at people. They will spend it on a new shrine for their god or marry a third wife.

This is not to say that it is impossible to transform entire societies in a short while, just that it is not easy, and that we should be humble enough to accept this fact when thinking about how to promote economic development in the bottom billion societies of the world.

Re-assessing Africa’s Resource Wealth

Over at African Arguments Bright Simons tries to debunk the accepted paradox of African poverty in the middle of a natural resource glut. The post is definitely worth reading, and raises some salient questions regarding resource use and development policy in Africa – and by extension, the economic viability of some African states (thinking of Chad, Central African Republic and Niger….)

Of those few minerals that Africa is believed to hold globally significant or dominant reserves, nearly all of them are concentrated in 4 countries: South Africa, Angola, Democratic Republic of Congo and Guinea. When one computes the level of inequality of mineral distribution across different continental regions, Africa pulls up strongly, showing a far higher than average level of distribution ‘imbalance’ per capita or square mile. In very simple terms, it means that mineral wealth is more concentrated in a few countries in Africa compared to other continents. 

Adding that…..

with the exception of bauxite and petroleum, these minerals are not as widely used in industry (or in the same considerable volumes) as a number other minerals, such as tin, copper, nickel, zinc, iron, coal, and lead, that Africa does not produce in sufficient quantities. Indeed, of the top 5 metallic minerals which constitute 62 percent of the total value of global production, Africa is only a significant producer of one of them: gold. Africa has 8 percent of the world’s copper, 4 percent of aluminium, 3 percent of its iron ore, 2 percent of lead, less than 1 percent of zinc, and virtually no tin or nickel. To put these figures into perspective, recall that Africa has about 14.5 percent of the world’s population.

….. Africa’s low production of the ‘hard minerals’ minerals most intensely used in industry compared to the less widely used ‘soft minerals’ reduces its total take from the global mineral trade. But it also makes a nonsense of fashionable policy prescriptions that emphasise import-substitution strategies based on value addition to minerals, rather than export competitiveness through smart trade strategy and the deepening of the financial system to support entrepreneurs.

More on this here.

H/T Africa in Transition.

Persistence of Culture (and Institutions)

“How persistent are cultural traits? Using data on anti-Semitism in Germany, we find local continuity over 600 years. Jews were often blamed when the Black Death killed at least a third of Europe’s population during 1348–50. We use plague-era pogroms as an indicator for medieval anti-Semitism. They reliably predict violence against Jews in the 1920s, votes for the Nazi Party, deportations after 1933, attacks on synagogues, and letters to Der Sturmer. We also identify areas where persistence was lower: cities withhigh levels of trade or immigration. Finally, we show that our results are not driven by political extremism or by different attitudes toward violence.”

That is Voigtlander and Voth writing in the Quarterly Journal of Economics.

Their paper speaks to my previous post on the challenges of institutional engineering given the stickiness of institutions (and by extension the cultures that create and then reinforce them). Of course culture is a dicey subject that is often misused to explain economic and social outcomes. Instead of using the amorphous term “culture” I prefer to hear more about the reward systems that make it beneficial for individuals and communities to engage in certain cultural practices.

On a more positive note, the paper provides some evidence of the power of economic opportunities to dis-incentivize engagement in hateful cultural practices:

“Instead of reinforcing persistence, we argue that economic factors had the potential to undermine it…… Our results also lend qualified support to Montesquieu’s famous dictum that trade encourages ‘‘civility.’’

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.

Big vs. Small Development

The Economist raises an interesting question regarding approaches to “development,” claiming that the recent race for the World Bank presidency represented a contest between two broad approaches:

Michael Woolcock, a World Bank staffer, suggests that two rather different models of development have been pitted against one another in the contest for president. On the one hand is what he calls Big Development, whose aim is the transformation of entire countries through investments in national education, justice and public health. Governments are essential to Big Development because they are responsible for the overall policy. And the World Bank is pre-eminently a Big Development institution.

On the other hand is Small Development. “Inspired less by transformational visions of entire countries,” Mr Woolcock argues, “and more by the immediate plight of particular demographic groups (AIDS orphans, child soldiers, ‘the poor’) living in particular geographic places (disaster zones, refugee camps, urban slums), Small Development advocates focus not on building systems in the medium run but on compensating for the failure of systems in the short run. ‘Development’ thus becomes an exercise in advocacy, in accurate targeting, in identifying particular ‘tools’ that ‘work’”.

In this scheme of things Mrs Okonjo-Iweala, the former finance minister, represented Big Development; Dr Kim, a public-health advocate, Small. Dr Kim was almost certainly picked because of his passport. But if his background is any guide, his tenure as chief is likely to shift the bank more towards Small Development. Whether that is a good thing on balance remains to be seen.

I take the side of Big Development (if such a dichotomy actually exists) because of my beef with “pro-poor development” as it is currently practiced  (more on this here).

Development is a giant coordination game with a million moving parts. This makes it much harder to coordinate on “scalable” “tools that work” at the micro-level. Indeed, no one has any idea what these tools really do. In addition, focus on “tools” casts the problem of underdevelopment as a technical one that can be fixed by “experts.”

This approach misses the point by miles.

This and this (highly recommended, a cogent critique of Big Development) and this are some of the reasons wby.

Talking real development

It is an upper-middle-class, industrialized-country fiction to romanticize life on a small farm. Economic development and food security lie in industrialized agriculture, and this is why I continue being interested in agricultural value chains. My thinking on this has also been reinforced by my recent reading of Jane Jacobs’ The Economy of Cities, in which she posits that agricultural development came as a consequence of urbanization, and not the other way around.

That is Marc on his blog here.

Reading Marc’s post reminded me of my beef with anti-poverty development as it is currently practiced. For instance, the humanitarian instincts behind giving poor slum dwellers loans to start businesses may be noble, but the impact of these projects are ambiguous (Not forgetting the recent trends in Venture Capital firms making money from high interest rates on the poor).

Such projects, for the most part, serve little more than giving the poor comfort in their poverty. Yes, there are a few success stories, but for the vast majority life remains precariously close to abject destitution. Self-employment is a risk that should not be forced on those at the very bottom of the economic ladder in developing countries.

Such palliative measures should never distract from the main task of long-term job creation.

The growing disillusionment with the long-term developmental effects of micro-finance should force development experts to think of creative alternatives.

What could be an alternative?

Well, for starters it might be more beneficial to boost the capacity of banks to give loans to mid-size businesses that have the technical and managerial capacity to scale up their operations and thus create more jobs. Corporate finance in most of the developing world has no “middle class.” Nearly all the players are big firms. Mid-size firms simply cannot keep up with the high interest rates and collateral requirements. Yet these are the firms that have the potential to grow and create more jobs.

This move smells of trickle down economics, but it is not. Poverty alleviation requires massive amounts of job creation. Making the poor self-employed distracts from the bigger problems of non-industrialization and lack of formal-sector jobs.

It is also bad for political development because it provides Hirschman’s exit option for millions of economically disaffected citizens of the developing world.

Check out Blattman’s blog on a related post on NGO activism in the developing world.

double standards

The Times has a nice story on Obiang’s Equatorial Guinea that is worth reading:

Officially and unofficially, Americans do business with one of the undisputed human rights global bad boys, Equatorial Guinea, Africa’s fourth biggest oil exporter. Its widely criticized record on basic freedoms has offered little barrier to broad engagement by the United States, commercially or diplomatically.

American oil companies have billions of dollars invested here. One American diplomat, using language that makes human rights advocates fume, praised the “mellowing, benign leadership” of the dictator in power for more than 30 years, Teodoro Obiang Nguema Mbasogo, in 2009 cables released by WikiLeaks. And a leading American military contractor with strong Pentagon ties has a multimillion-dollar contract to protect his shores and help train his forces.

You may recall that Obiang’s son was recently reported to have ordered a $380M luxury yacht. The Obiang’s and their backers continue to run the central African country like a personal possession.

According to the Guardian:

President Obiang, who has ruled since seizing power in 1979, has decreed that the management of his country’s $3bn a year in oil revenues is a state secret. That is why it is difficult to say for sure exactly how he comes to have about $700m in US bank accounts. But the president’s son gave an insight into his salary in an affidavit filed with the Cape high court in South Africa in August, as part of a lawsuit against him over a commercial debt.

On paper Equatorial Guinea is richer than most middle income countries. In reality, however, most of the 676,000 Equatorial Guineans live in poverty. The story of Equatorial Guinea is almost personal. Every time I post on Obiang’s inept rule I can’t stop wondering: How hard can it be to run a country of only 676,000 with over 3 billion in annual revenue?

Like the Times article points out, outsiders like the US government and foreign oil companies deserve to be called out over the goings on in Equatorial Guinea.

That said, the lion’s share of the blame is on Obiang’ and his backers. As far as I know none of the foreigners involved in the country held a gun to his head and asked him to siphon off billions of his country’s revenue to foreign bank accounts.

More on the Times story here.