A spoonful of transparency: good but no cure-all

The New York Times ran a story last week about a five-year-old Indian law that reinforces the right—and sets in place the process—for individuals to request government-held information. Ms. Chanchala Devi, for example, applied for a government grant she had heard was available to help poor people like her build their own houses. After four years of fruitless waiting, she used India’s Right-to-Know law to request a list of people who had received the money while she had not. Within days, the story reported, Ms. Devi’s own funding came through. The story continues:

…it has now become clear that India’s 1.2 billion citizens have been newly empowered by the far-reaching law granting them the right to demand almost any information from the government. The law is backed by stiff fines for bureaucrats who withhold information, a penalty that appears to be ensuring speedy compliance.

Great news. But while the law has empowered individuals (over 2 million of them in the first 3 years of the law’s existence) to seek redress for their grievances, the article also cites critics who complain that the law has not had hoped-for system-wide effects on corruption, and that it acts as a “pressure valve” without posing a serious challenge to the system.

Joseph Stiglitz, among others, has convincingly argued that information gathered and produced by government officials rightly belongs to the public; that people need such information to participate meaningfully in democracy; and beyond these arguments, that openness has an intrinsic value. A 2008 JPAL study gives Stiglitz an empirical assist: giving urban poor people access to published “report cards” about local politicians’ performance and spending influenced those voters to elect incumbents based on issues (rather than caste or religion, for example).

Possibly the most-repeated success story told about information disclosure comes from Uganda, where World Bank researchers found in 1995 that only 13 percent of national government transfers to local schools actually reached the schools. After the Ugandan government began publishing in the newspaper how much money was supposed to go to each school, the proportion of funds “leaking” out of the system decreased dramatically. Four years later, 90 percent of that money was reaching the schools, and the newspaper information campaign was given credit for the change.

Like most simple stories in development, this one is actually not so simple. A paper by Paul Hubbard at the Center for Global Development objects that the plummeting proportion of funds going astray has to be put in the context of comprehensive fiscal and education reforms going on in Uganda at the time. Another study found that information disclosure efforts like the famous newspaper campaign were only effective in communities “that were literate and assertive enough to act when abuse was revealed.” Hubbard observes: “transparency by itself is insufficient if there is no opportunity for collective action.”

Which brings us back to India, where the Right-to-Know law is helping Chanchala Devi—and hundreds of thousands like her—to get what she is entitled to from her government. Why should we want it to be a cure-all for India’s corruption ills? What drives us to search for panaceas and silver bullets? Any expectation that this law alone will tackle an entrenched and corrupt bureaucracy is probably way too much for it to bear.

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.

How is the aid industry like a piano recital? A defense of aid

In 1991, India faced a looming balance of payments crisis. India’s leaders responded, making what are now generally agreed to be some very good decisions: they devalued the exchange rate and instituted a systematic set of economic reforms that lowered high trade barriers and eliminated repressive internal regulations, helping to dismantle India’s notorious license-permit Raj. These reforms averted what might have been years of stagnation or slow growth (avoiding the fate of a Mexico or a Brazil in the 1980s). The reforms also paved the way for the next decade and a half of accelerated growth, and helped some 300 million people escape extreme, grinding poverty. Lant Pritchett, Professor at Harvard’s Kennedy School for Government, argues that the aid industry deserves credit for these reforms and the associated huge improvement in human well-being, but not quite in the way you might expect.

It wasn’t that the World Bank and the IMF required India to make those reforms through conditionality. Instead, Pritchett says, it was the existence of a broad, international movement called “Development,” and an industry called “Aid” that created the conditions for Indian leaders to act as they did.

How so? First, many policy makers involved in India’s reforms spent their early careers working abroad for multilaterals, gaining exposure to ideas not prevalent in India at the time, and gaining experience watching these ideas either work or crash and burn in countries around the world.

Second, the aid industry funds the thousands upon thousands of obscure, detailed economics papers and studies that make up the knowledge base of the movement called Development. Without the painstaking work behind those studies, the movement of Development would never have a chance at producing those rare, brilliant insights with the power to transform hundreds of millions of lives.

To produce those fortuitous moments of brilliance, where the right policy meets the right person and the right opportunity, the movement called Development has to have the depth and breadth within it to produce detailed technical knowledge on a million different topics from tariff codes in India, to migrant remittances in Spain, to firm governance in Korea. Here’s where the piano recital part comes in:

I see the aid industry a lot like a piano recital. It’s kind of boring and it’s tedious and most of the people are wasting their time. But every now and again by God we make a difference and when we do make a difference it really transforms economies and lives for a very long time....

Any movement, be it development or classical music, has to maintain its core.  Music has thousands of young aspiring pianists performing bad recitals that no one but their parents want to hear, all for the purpose of producing just one virtuoso Vladimir Horowitz or one innovative Philip Glass. Aid projects that can’t demonstrate impact and economics papers read by an audience of ten are the development movement’s equivalent of a million and one timid and dissonant renditions of Für Elise performed in student piano recitals the world over. But they are the core that allows for the possibility of “transformational excellence” in a movement.

For Pritchett, what aid does best is to “form the base of the pyramid that creates the possibility of the top.” And the power of successes in development—the rare policy insight, or the competent handling of a potentially disastrous crisis—is so great, and has the power to transform so many lives, that those successes justify the existence of the whole flawed movement, many times over.

Agreements or counter-arguments, anyone?

You can watch Lant Pritchett’s full presentation from the 2010 DRI annual conference, in which he argues this case much more skillfully (and employing other entertaining metaphors), in the audio slideshow below. The audio file of the Q&A following the talk is also posted.

Lant Pritchett: The Best of Aid

Lant Pritchett Q&A

[audio:http://aidwatchers.com/wp/wp-content/uploads/2010/03/11-Afternoon-QA-Lant-Pritchett1.mp3|titles=Q&A Lant Pritchett]