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]

Best in Aid: The Grand Prize

As long as there are disasters, there will always be people who want to help by whatever means first strikes their fancy. There will be those who insist on giving shoes (including such high profile experts as Jessica Simpson and Kim Kardashian). Still others offer used yoga mats, or baby formula. Ports and roads clogged up with shoes and yoga mats cannot deliver essential medicines, food and supplies. Then there are those who swoop in to adopt children before their extended families have had time to locate them; or just show up to ‘help’ as unskilled volunteers, adding to the confusion and occupying jobs that could go to locals. And there will always be organizations around to capitalize on those uninformed good intentions.

But now there is a small but growing chorus of voices dedicated to equipping individual donors with information on how to help effectively in a crisis. This movement has the power to harness the generosity of individuals, change ingrained giving practices, and create positive pressure on NGOs and aid agencies to demonstrate the impact of their work.

That’s why the award for Best in Aid goes to…the Smart Giving movement, nominated by Saundra Schimmelpfennig of the blog Good Intentions are Not Enough.

This year, a week after the Haiti quake, Stephanie Strom of the New York Times wrote a story on the “unprecedented effort” to teach Americans to resist the impulse to send the wrong goods to Haiti.  Many advocated just sending something very much needed and which has a low transport cost to value ratio: cash. The advice to send cash “appears to be reaching a tipping point,” wrote Strom. Some Americans saw first-hand the piles of unneeded clothing donations in the aftermath of Katrina, or heard about aid distribution problems after the Asian tsunami. Now, people are hearing the message from politicians and policy makers spreading the word on Smart Giving to Haiti in real time, in time to prevent mistakes that cause unnecessary suffering and tragedy.

Contrast Strom’s story with the high profile stories that have appeared consistently since the current surge in interest in global poverty started earlier this decade, like this NYT headline:

Coverage of both global poverty and disasters always stressed the same thing: how much was needed in TOTAL donations. It was never about the danger of the WRONG donations. Today it is.

Saundra Schimmelpfennig herself appeared in the NYT article, and many other news sources (among them CNN, NPR, USA Today, Canada’s CBC radio, WNYC, The Daily Beast, The San Francisco Chronicle, and the Christian news magazine World) sought her advice on everything from the dangers of adoption in the immediate aftermath of a disaster, to how to evaluate disaster relief volunteer opportunities. Here on Aid Watch, guest blogger Alanna Shaikh’s post on how not to help in Haiti, called Nobody wants your old shoes, became the blog’s second most popular and most-widely circulated piece ever (the first was a satire, which we’re no longer allowed to talk about).

The campaign against relying on overhead ratio as a measure of charity effectiveness is also part of the good giving message. In collaboration with six other nonprofits, Tim Ogden of Philanthropy Action launched a campaign last December to convince donors to dump the overhead ratio - the measure of how much money goes to programs versus administrative costs - as a primary means of evaluating the effectiveness of a charity. “We’re finally at a point where people do have an alternative,” said Ogden. In the last few years, organizations like GiveWell, Philanthropedia and Great Nonprofits have emerged to give people more useful information about charities, and to pressure charities to devote the resources to collecting that information and making it public.

Finally, the intensity of the debate on evaluation with randomized controlled trials in the academic world, and new organizations like 3IE (the International Initiative for Impact Evaluation) and DIME (the Development Impact Evaluation initiative at the World Bank), are other facets of the same movement. Behind the heated debate on what methods of evaluation to use, we see a much larger point – many more donors now insist on serious EVALUATION and ACCOUNTABILITY than used to do so.

As we’ve said on this blog before, accountability is not something that anyone accepts voluntarily. It is forced on political actors, aid agencies, and NGOs by sheer political power from below, from well-informed advocates for the poor and listening to poor people themselves. All of this may still be in its early stages, but since aid really CANNOT work without serious accountability, the Smart Giving movement is the best news to come along in aid in quite a while.

UPDATE: (3/20, 8:21am) the Center for Global Development reacts to our inclusion of 3IE, which was their brainchild.

Worst in Aid: The Grand Prize

Hillary Clinton recently declared: “We are working to elevate development and integrate it more closely with defense and diplomacy in the field…The three Ds must be mutually reinforcing.” Clinton says that the 3D approach will elevate development to the level of diplomacy and defense. Unfortunately, it could instead lower development further to an instrument employed to achieve military or political priorities. Clinton foresaw these objections: “There is a concern that integrating development means diluting it or politicizing it – giving up our long-term development goals to achieve short-term objectives.” She said reassuringly, “[t]hat is not what we mean, nor what we will do.”

But it’s too late. Sacrificing long term development aims for short term military and diplomatic objectives is what the US already does, and the 3Ds is making it worse. That’s why the Grand Prize for the Worst in Aid goes to…the 3D approach, nominated by an anonymous reader.

References to the "3D approach,"… have become so pervasive in foreign policy, development, and national security circles that they have taken on the status of self-evident, common wisdom. - J. Brian Atwood, former USAID administrator, February 2010

The frequent contradiction between defense and development is the most obvious instance of 3D dissonance. A coalition of eight NGOs in Afghanistan lamented that “[d]evelopment projects implemented with military money or through military-dominated structres aim to achieve fast results but are often poorly executed, inappropriate, and do not have sufficient community involvement to make them sustainable.” Nonetheless, increasing amounts of aid get channeled through the military, “while efforts to address the underlying causes of poverty and repair the destruction wrought by three decades of conflict and disorder are being sidelined.”

An Oxfam case study on programs to reform the security sector in “frontline” states like Iraq illustrated another way in which narrow military goals (to train and equip soldiers and police) are not entirely compatible with development goals. The report found that an increasing reliance on military contractors rather than civilians “has strongly reinforced the focus on operational capacity over accountability to civilian authority and respect for human rights.”

In the battle of the Ds, enervated development loses to pumped-up defense, and not just in Afghanistan and Iraq. The trend goes two ways: USAID is compelled to spend more and more of its budget on states that are strategically and militarily important (The 2011 foreign aid budget allocates 20 percent of State and USAID money for “securing frontline states.”) A development priority like India (with a huge chunk of the world’s poor) loses out. At the same time, a growing proportion of what the US calls Official Development Assistance flows through the Pentagon rather than USAID.

Frequent readers of the blog will already be familiar with our final example. On Christmas Eve in Madagascar, President Obama bowed to the exigencies of diplomacy when he punished the nondemocratic government of Madagascar by taking away trade access to U.S. markets. But this same action was disastrous for development.  Already, tens of thousands of jobs created textile exports to the United States under the African Growth and Opportunity Act (AGOA) have been lost. Factories are closing, increased competition among street workers is pushing down wages, and the effects are spilling over into neighboring countries that made inputs to Madagascar’s factories. Any claim that the Madagascar AGOA delisting was part of a high-return Diplomatic initiative to promote Democracy became a wee bit more tenuous when we saw Angola, Cameroon, and Ethiopia named on Christmas Eve as still eligible for AGOA.

[We could go on -- This week brought another collision of development and defense/diplomatic goals in Somalia.]

The lie that underlies the 3D framework is that development, diplomacy, and defense are complementary (or totally “mutually reinforcing”); that there are no difficult choices to be made. Alas, politicians are fond of denying the existence of tradeoffs (we are not trying to pick on Hillary in particular; many politicians are guilty of this).

The only 3D strategy that makes sense for development is one that acknowledges the frequent conflicts between these three very different goals as natural outcomes of their different agendas.  Then we can hold our politicians accountable when they sacrifice Development big-time to achieve small-time (or sometimes illusory) Diplomatic or Defense goals.

Readers’ Submissions: Honorable Mentions in Best and Worst of Aid

The Aid Watch request for reader submissions for Best and Worst of Aid was our experimental attempt to use informal social networks to collect and spread stories about good and bad aid projects. In retrospect, it was only a partial success: we got a lot of submissions that couldn’t be totally verified, and many that did not explain why their submission deserved to be the best or the worst, problems for us to think about for the next time we try to run a contest, even an informal one like this. Our request for submissions, which we posted here on the blog and emailed to aid practitioner, academic, journalist and blogging contacts, netted double the nominations for Best of Aid than for Worst of Aid. We’re not sure whether to take this as a good sign (people are excited about some of the projects that they’re seeing make a positive difference in aid) or a bad sign (people still don’t want to talk about what’s not working, even when given the cover of anonymity; or alternatively, it’s harder to find well-documented examples of what’s not working).

Thank you to everyone who took the time to send us their ideas. Here are the entries we’ve chosen for honorable mention, according to admittedly non-rigorous and non-scientific criteria, from our readers’ submissions of the best and worst of aid.

(Honorable Mention) BEST new aid finance mechanism: Advance Market Commitment (AMC) for pneumococcal vaccines, nominated by Andrew Steer, Director General for Policy and Research, DFID What: In June 2009, a group of bilateral and multilateral donors launched an open offer to subsidize, at $1.5 billion, the purchase of more effective pneumococcal vaccines to fight meningitis and pneumonia in the developing world. Impact: According to the WHO, pneumonia is the single cause of death in children worldwide, killing 1.8 million kids every year. GAVI has estimated that the pneumococcal AMC will save 900,000 lives by 2015 and over 7 million lives by 2030. More generally, wrote Andrew, “the AMC could represent a radically new and better way to fund technology development and production.” Who is responsible: The AMC idea gained momentum in 2005 with the publication of a report, Making Markets for Vaccines: Ideas to Action by a working group organized by the Center for Global Development, lead authors Owen Barder, Michael Kremer, Ruth Levine, though many others have contributed to the development of this idea over time. Countries, organizations and agencies that have put up funding also deserve credit: Italy, the UK, Canada, Russia, Norway, the Bill & Melinda Gates Foundation, and GAVI Alliance partners World Bank, UNICEF and the WHO.

(Honorable Mention) BEST aid agency success story: Aid untying in Canada, nominated by Parker Mitchell, co-CEO of Engineers Without Borders, Canada What: In spring of 2008, Canada announced that it was untying all of its food aid, meaning that Canadian contributions to multilaterals like the World Food Program would no longer have to be in the form of food purchased in Canada. A few months later, Canada announced a plan to fully untie development aid by 2012-2013. These decisions represent recognition of a growing consensus among donors, and growing pressure from NGOs and watch dog groups, that tied aid undermines fair competition and the ability of developing countries to produce competitive goods and services. Impact: In 2008, half of Canada’s food aid and more than one-third of its non-food aid were tied to the purchase of goods and services in Canada. The OECD has calculated that aid can be made 15 to 30 percent more effective by untying it. As more donors untie their aid, pressure will increase on the outliers (including the US) to change their behavior. Who is responsible: CIDA, for carrying out these reforms, as well as the Canadian organization Engineers without Borders and other NGOs that lobbied for the change for over 4 years, and are still watching CIDA closely to make sure that they are on track to fulfill their pledge and are being transparent in how they share information about aid untying.

(Honorable Mention) BEST uses of new technology to transform people’s lives: Mobile-plus, nominated by Diane Coyle, economist and author What: “The technologies and applications that are increasing the capability of poor people to affect and gain control over their lives - summed up as mobile-plus.” Impact: There is still much work to be done in understanding the impact that mobile technologies will have on the social and economic lives of people who use them. M-PESA, a mobile phone-based money transfer service which originated in Kenya, is now three years old and has more then 7 million customers transferring some $1.96 million per day; detailed research studies on its effects are beginning to emerge. More generally, Diane cited reductions in transaction costs, information gains created by access to communication, and the creation of an infrastructure that can be used to deliver other needed services like finance, as clear benefits of these technologies. Who is responsible: Innovators like the founders and funders of M-PESA in Kenya; its younger sibling M-PAISA in Afghanistan; Kiwanja.net’s Frontline SMS, and Ushahidi, a platform which has been used to monitor post-election violence in Kenya and to coordinate disaster relief in Haiti, among other applications.

(Honorable Mention) WORST half-baked idea for which we have almost no information: “Camcorders for the Congo,” nominated by Laura Seay, Professor at Morehouse College What: On Hilary Clinton’s tour through seven African countries last August, she announced a $17 million plan to fight sexual violence in Congo during her stop in Goma. According to the NYT’s coverage of the speech, the plan included “supply[ing] rape victims with video cameras to document violence.” Impact: Unclear, and that’s the point. Unfortunately the USAID does not give further details of the program on their website. We’d need a lot more information to understand exactly who is supposed to benefit from these video cameras, and in what way, especially given that much of the sexual violence occurs in remote areas in which people do not have reliable or affordable access to electricity. For a more-fleshed out description of the potential absurdity of this project, see Laura’s blog, TexasInAfrica, and the Wronging Rights blog. Who’s responsible: USAID…we think.

(Honorable Mention) WORST unsustainable health practice with Cold War-era origins: Project HOPE’s use of pharmaceutical company-donated, brand-name medicines, nominated by an anonymous reader What: Project HOPE was founded in 1958, with funds and donated drugs from pharmaceutical companies and the gift of US Navy floating hospital ship the SS HOPE. The ship’s goodwill missions abroad combined public diplomacy with aid. A study drawing on archival documents cites Project HOPE as an example of the pharmaceutical industry's Cold War era strategy to defend itself against a congressional investigation into US drug pricing practices. Today, the bulk of Project HOPE’s programming and budget goes towards shipping and distributing brand-name drugs and medical supplies donated by pharmaceutical companies to developing countries. Impact: Project HOPE does not publish evaluations on their website, and even looking at their external ratings, tax forms, and annual reports, it is difficult to gauge the impact of their overall work, which also includes health education. Our nominator voiced concerns about the unsustainable use of branded drug donations in developing countries with weak health infrastructure, where the demand for drugs and supplies needed locally likely does not match the supply available from rich-country pharmaceutical companies, and raised questions about the benefits to pharmaceutical companies who are seeking to increase their market share in the developing world and who might gain from the perception that certain brand-name drugs are preferable to generics. While there are cases where branded drug donations may be helpful, Project HOPE’s publicly-available materials don’t provide enough information to know whether theirs are. Who’s responsible: Project HOPE, pharmaceutical company donors

Stay tuned later this week for Best and Worst winners.

Live Tweeting from Our "Best and Worst of Aid" Conference

1. indabamf Excitedly listening to opening session, Development Research Institute, NYU: Aid & Development Today
2. indabamf @bill_easterly notes that lack of transparency & specialization are 2 factors that have made AID less effective than it could be
3. indabamf There has been a upward trend to providing AID to corrupt countries
4. altmandaniel @bill_easterly gives award for Worst of Aid to Defense/Diplomacy/Development approach of US, UK, Canada
5. indabamf Worst of AID Oscar goes to the 3Ds approach in development: integrating development w defense and diplomacy.
6. indabamf "Rather than face the trade-offs, deny they exist, & so disguise that developmnt is being traded off 4 defense & diplomacy" -
7. indabamf @bill_easterly gives kudos to mobile-based tech: M-PESA @Ushahidi @FrontlineSMS in his presentation
8. indabamf The AID Oscar for Best of AID: the Giving Well movement
9. hotdamnation http://twitpic.com/16qwsg - Development conference w @bill_easterly ... No one wants your old shoes!
10. kristentitus Best of Aid Award goes to... the new movement to give well rather than to just give.
11. indabamf Thanks @bill_easterly & Development Research Inst, NYU for a great conference 2day. Varied perspectives. Brain sufficiently overstimulated!

Live T only from opening session, except for last. Conference (see agenda here)  finished at 2pm. Further news coming on this blog from material presented at conference by speakers Yaw Nyarko, Bill Easterly, Clare Lockhart, Isabel Guerrero, Andrew Mwenda, and Lant Pritchett.

This Friday: “Best and Worst of Aid” Conference

For aid watchers in New York, this post is a reminder of Development Research Institute’s upcoming conference this Friday, from 9 am to 2 pm, in NYU’s Kimmel Center. Called “The Best and Worst of Aid: Incentives, Accountability and Effectiveness,” speakers and participants will present new findings and discuss and debate the best and worst of what happened in aid this year.

(According to some rumors, the irrepressible light-hearted side of DRI will give Oscar-style Best of Aid Awards – and of course, Worst of Aid Awards – in several important categories).

9:00 am: Welcome and Introduction Yaw Nyarko, Professor of Economics and Co-Director of DRI

9:10 am: Aid and Development Today: The Best of Times, The Worst of Times William Easterly, Professor of Economics and Co-Director of DRI

10:00 am: The Best and the Worst of International Effort on Failed States Clare Lockhart, CEO, Institute for State Effectiveness

10:50 am: Coffee Break

11:05 am: Keynote: What Works and What Does Not Work in Aid and the Transformative Challenges Ahead Isabel Guerrero, Vice President, South Asia Region, World Bank

11:50 am: Thoughts on Aid from a Ugandan Perspective Andrew Mwenda, Founder & Owner, The Independent, Uganda

12:30 pm: Lunch Served

12:45 pm: Lunch Keynote: Historical Lessons: What Did Development Aid Do Best? What Did It Do Worst? Lant Pritchett, Harvard Kennedy School

The event is free and open to the public, but registration is required. (More details here. Register here.)

The best and worst in aid from the past year is…what our readers say it is

Dear Aid Watchers, A year ago this month we launched this blog as one small contribution to the effort to make aid more accountable. Our ambition: to add to the growing chorus of voices demanding that our development assistance money be spent according to what we know about best practices in aid so that it might actually reach the poor. And to provide a forum for aid professionals, academics, students, and citizens to talk openly and frankly about what is working and what isn’t.

With our first birthday around the corner, now is a good time to declare from our lofty academic perch what was the best and worst in aid over the past year. And we proclaim that it was…well, we’re waiting to hear that from you. With this post, we declare our totally unscientific, user-driven, open-ended, end-of-year competition for the best and worst in aid open to your submissions.

You tell us: what was the best thing to happen to aid in the last year? Was it an idea that will someday revolutionize how medicines are delivered? A randomized trial that finally allowed us to generalize to what works?  A brilliant article, or a piece of legislation, or a new technology? A change in practitioner behavior? Share with us your account of an aid success story. Of course, being Aid Watch, we also want to hear the worst: in any of the above categories, or others you can dream up, we want to hear about the horror stories, the delays, the waste, the opportunities squandered, the outright theft, and the pointless failures.

Lest this contest be seen as a veiled opportunity for more snark, or to promote or refute certain narrow positions, we plan to take as seriously as possible the “Best of” part of the competition. For those of you who think Aid Watch can be too dismissive of aid’s real accomplishments, here’s your chance to convince us how much good work was achieved in aid this year. Go ahead and make the case for your favorite NGO, a great project, an overlooked innovation—we’re ready to be persuaded.

A few more points to guide your submissions:

1) Even if you want to remain anonymous on the blog, you still have to reveal yourselves to us. We will protect your anonymity to the public (or to your boss) but we need to know who you are so that we can, to the degree possible, independently verify your submission. Note also that anonymity is fine as long as it doesn’t make your submission so generic that it loses all interest (“In an aid agency we can’t name, working in a country we can’t mention, on a project that we’ll call….” Snooze.)

2) No submitting Aid Watch. We’re disqualifying ourselves from the running to make it clear that we’re not asking anyone to nominate us for the best thing to happen to aid last year (or then again is it to ensure you don’t say we’re the worst….?)

3) We will of course need you to provide evidence to back up your nomination, in whatever form you believe will be most convincing, be it an RCT, a case study, or a well-documented anecdote. In this initial submission, though, it’s okay to send in a short description and simply identify what evidence you have at your disposal. You may be contacted and asked for more details later.

4) Email your submissions to aidwatch@nyu.edu. The submissions will be reviewed, corroborating evidence requested, and the results announced at our annual conference (more details on that to come). Criteria for selection will include general interest to the aid community, and the strength of evidence and documentation provided.

5) A final note: we mean this to be a serious contest but we would not be true to ourselves if we did not allow some entertainment value to creep in…

May the best (and worst) win!