How have a series of global shocks changed the way we think about development?

This piece appears in today’s Ottawa Citizen

The past five years has been a period of extraordinary global turbulence.

The turmoil has struck as three “shocks” — the financial crisis, a breakdown in the world food system, and the Arab Spring — combined with a slow motion train wreck in the form of the seemingly inexorable onset of chaotic climate change. Together, these are having a profound impact on our understanding of how the world works.

Just how much has changed was one of the overriding impressions from updating my book From Poverty to Power: How Active Citizens and Effective States Can Change the World, first published in 2008.

The global financial crisis was a watershed event. It triggered historic geopolitical change in the rise of the emerging powers such as China and India. It also drew attention to the risks of an excessively “financialized” global economy; but it failed to lead to a reining in of the excessive size and volatility of “hot money,” condemning us to future financial crises, possibly starting with Europe in the coming months.

Simultaneous with the financial crisis, the world witnessed a food price spike. In many countries this traumatized the lives of poor people to a much greater extent than the shenanigans on Wall Street, and reversed decades of low and falling prices, threatening long-term progress on hunger and nutrition. That has led to renewed attention to the basic issues of food and hunger, and some unfortunate side effects such as “land grabs” across the developing world by investors from rich countries.

The Arab Spring confirmed the importance of active citizens in driving social and political change, and made us think much harder about the role of women (who were very active) in majority-Muslim societies.

Taken together, these events have made us much more aware of the impact of volatility, risk and vulnerability on the lives of poor people. That leads both to a focus on trying to prevent shocks from occurring in the first place and to dampen their impacts when they occur. “Shock absorbers,” from social protection to food reserves, to help for poor farmers to adapt to climate change, have become a much more central part of development thinking.

Inequality and redistribution have become mainstream debates, with even the International Monetary Fund weighing in on how high levels of inequality imperil both growth and stability. And the levels are breathtaking. I recently calculated that the amount the world’s richest 100 people added to their wealth in 2012 ($240 billion) would be enough to end extreme poverty for the 1.4 billion people living below the international $1.25 a day poverty line ($66 billion according to the Brookings Institution), four times over! With that focus has come renewed interest in how tax systems and reforms can reduce or exacerbate inequality, both at the national level, and through the international system of tax havens.

Finally, these changes are feeding into a deeper questioning of the nature of poverty itself. As the World Bank’s path-breaking and unsurpassed “Voices of the Poor” study in the 1990s showed, to be poor is as much about anxiety, vulnerability and shame as about income levels. And that anxiety has only been heightened by the turmoil of recent years.

In response, governments around the world increasingly acknowledge the limitations of income or GDP per capita as a measure of well-being, and are developing much more sophisticated metrics — aid agencies are rather lagging behind national governments in this regard.

This more subjective, people-based understanding of well and ill-being may be one explanation for a greatly increased focus on issues of power and agency in development, often linked to issues of the basic rights that are (or are not) enjoyed by poor people. The spread of “rights thinking” on areas such as gender, disability, ethnicity and sexuality appears to be a global phenomenon, bringing significant changes in national legislation and practice in many countries. The challenge for aid agencies is to ensure that their plans and methods, including the pressure to demonstrate “results” and “value for money” reflect this more human understanding of the nature of poverty and power. As the title of my book makes clear, we need to move “from poverty to power” in both our thinking and our practice.

Are we successfully completing an “age of development” or seeing the prize slip from humanity’s hands in an economic and climatic meltdown? It is hard to recall a period when developmental optimism and pessimism co-existed to such a high degree.

The stakes could not be higher. The coming decades will show whether poverty enters the history books, joining slavery and the fight for women’s suffrage, or whether an age of chaos and scarcity starts to reverse the wonderful progress of the last 70 years.

Duncan Green is the author of the book From Poverty to Power and Oxfam GB’s senior strategic adviser. He is launching his book and giving a public lecture at the University of Ottawa on Friday May 10. The event is sold-out, but a recording of the event will be made available soon on YouTube at http://www.youtube.com/user/CCICable.

Is it time for a rethink on the definition of aid?

Crushed by my humiliation at the hands of Claire Melamed, it would just make matters worse to come back for another round of post-2015 jousting, so let’s move on.

I actually quite like blogging about meetings held under Chatham House rules, as they allow me to write about the discussion without worrying about who said what. And to take the credit for anything clever, of course.

So last week, I found myself in a heated debate on the future of aid, with a bunch of NGOs and aid boffins. The topic was ‘is it time for a re-think?’ Why? Because the aid world is changing:

-          New donors, such as foundations, philanthropists and emerging economies such as China and India are starting their own aid programmes, often outside the traditional donor club of the OECD DAC

-          Increasing diversity of sources of ‘financing for development’, from domestic taxation to remittances to private investment

-          Austerity driving many traditional donors to cut aid, either overtly or sneakily, by trying to count lots of non-aid flows as aid, or both (see FT letter here). A reminder that in terms of its increasing aid budget, the UK is really an outlier these days – ‘we are talking in the vicarage, here’.

-          The post-2015 discussions raising lots of questions about sustainable development goals and collective action on everything from climate change to tax havens, which have been traditionally fenced off from the aid discussion.

Underlying all this was a sense that the definition of aid corresponds to an old order (rich northern countries give cash for big push in the South to get public services functioning and the economy humming). That world has little to do with many of the preoccupations of modern development – fragile states and conflict, climate change, leaky financial systems, migration etc etc.

But does that mean aid needs to be overhauled? All were agreed that the current levels of aid, running globally at around $130bn a year, are a precious achievement, the only flow of resources aimed specifically at helping poor people, with a reasonably tight definition, making it easier to defend from dilution. Lots of talk of not throwing babies out with bathwater. (And tanks on lawns, heads in sand – mixed metaphors threatened to get seriously out of control.)

Which brought us to the political context – the march of the Austerians means that any decision to open up discussions on the definition of aid (which governments such as Netherlands and Germany are already doing) is much more likely to lead to a watering down/dilution of aid, with lots of other stuff being included – I pointed out that, in contrast to Pandora’s Box, the nasties will fly in when this one is opened.

Broadly, aid donors will want ‘what allows you to reach your aid target without spending any more money’, while aid recipients will want to keep everything separate, so additional cash for things like climate finance is not counted as aid. One old hand said ‘and the donors will win.’

Which made me line up on the ‘conservative’ side of the table – the risks are largely downside, so try and resist efforts to redefine aid and defend what you’ve got. Others felt that the debate was already happening, and we had no option but to engage.

Everyone was for improved data and transparency (who isn’t?) on non-aid flows, so that donors, governments and others could see what is already happening before allocating their cash (lots of praise for the new DFI/Oxfam Government Spending Watch database of how much poor countries are spending on the MDGs, with seasoned aid officials saying they had spent years trying to get this data out, without success). Another piece of good news is that Development Initiatives are working on an annual report on Investments to End Poverty, which documents all resources available for poverty eradication – watch out for it in September and see some of the material here.

you sure about this?

Lots of discussion on the 0.7 target, with the technocrats seeing it as arbitrary and weird, and the advocates seeing its use in driving government action, even in countries that haven’t endorsed it, like the US. Interesting suggestions that 1% of government spending (a penny in the pound) might make a more sensible and communicable target than 0.7% of Gross National Income.

As for the new southern aid donors, the wonks reckoned that they are not interested in targets, but are interested in what counts as aid – one cited Turkey which, when obliged to count it, found it was giving much more aid than it had realised, partly because it had assumed a narrower.

Other interesting discussions on ‘fair shares’ – how you could modify the 0.7 target to take account of a country’s stage of development, perhaps using the UN formula for assessing members’ contributions to its budget. Anyone done that?

Overall, I did feel that there is an institutional problem here – at some point the aid discussion needs to be taken out of the OECD, even though it’s been doing a pretty good job so far. Otherwise, it risks being seen as a project of the declining North, with minimal buy in from others. But would the UN (the obvious alternative) do a better job?

My conclusion? At this political moment, I think there is a real danger in trying to stretch the debate on aid to include everything that contributes to development (we wonks always like to do this – look at post-2015). Right now the test of any proposal should be ‘what is most likely to increase rather than reduce funds going from rich countries to poor countries for good purposes?’ For example, stretching ‘aid’ to include most peacekeeping fails that test badly  -   irrespective of all the good sense about security and development reinforcing each other. Better to try and keep the aid definition (and debates) tight and work on the rest in other fora – Government Spending Watch, tax havens, climate change etc. We won’t win them all – for example there is clearly substantial overlap between climate finance and aid, so insisting on ‘additionality’ is very unlikely to succeed, but I see little benefit in helping others prize open the Pandora’s Box of aid.

Anyone fancy a post-2015 wonkwar? Me v Claire Melamed on the biggest development circus in town

I’ve been good friends with Claire Melamed for ages, but recently we’ve found ourselves on opposite sides of the post-2015 debate. As ODI’s growth and inequality supremo, Claire is deeply immersed in the ever-proliferating discussions, whereas I decided early on that I had massive reservations about the whole process. So for your amusement (and who knows, perhaps enlightenment), we’ve decided to air our differences in public. I’ll kick off,

Claire responds, and we hope that will produce a load of comments and a life and death struggle for the last word (which I shall of course win, because it’s my blog).

What’s my beef? The post-2015 discussion typifies the kind of ‘magical thinking’ that abounds in aid circles, in which well-intentioned developmentistas debate how the world should be improved. These discussions and the mountains of policy papers, blogs etc that accompany them, are often based on what I call ‘If I ruled the World’ (IRW) thinking. IRW, then I would do X, Y, Z – Rights for (disenfranchised group of your choice)! More Infrastructure! Better Data! Jobs!

The high/low point of this for me came last year, when I had to MC an interaction between 250 civil society lobbyists and the High Level Panel on post-2015 – we managed to squeeze about 80 interventions into the allotted hour of consultation, which produced a Christmas Tree (Claire’s term, much copied) of issues that had no chance of making it onto the final post-2015 agenda.

But in any case, so what if they do? Because what is missing from this is any consideration of power and politics. What, after all, is the point of the post-2015 process, beyond creating (another) international forum for debating development? The MDGs were primarily about improving the quantity and quality of aid, and arguably they were quite successful in this. What is much less certain is the extent to which they influenced government policy (as in, persuaded governments to do things they wouldn’t have done otherwise). Rich country governments have systematically ignored MDG8 (the one on global partnership), while the evidence of ‘traction’ on developing country governments is really rather flimsy (more on that here).

Who exactly is 'we'? And what if 'we' don't agree?

In particular, I was astonished to find that there is no rigorous research comparing the traction exerted on national decision-making by the various different kinds of international instrument (laws, conventions, regional league tables, norms, academic exchanges). So the post-2015 circus is busily debating what ‘should’ happen without first establishing whether/how its conclusions will affect national decision-making. And this blind spot is massive – you can go entire days in the bubble of post-2015 discussions without ever hearing anyone mention any other international instrument on development or rights.

When I raised this at a recent OECD post-2015 conference, Claire wearily replied ‘There isn’t an answer – there is no single thing that we can say ‘if you do it like that, it will have traction’. It is very hard to predict beforehand which mechanisms for any given agreement will get traction.’ So that’s a relief then, can we just ignore these annoying questions about actual impact and get back to decorating the Christmas Tree?

That really isn’t good enough. It is certainly possible to know much more than we do about attribution through more rigorous qualitative research. For example, in-depth interviews with policymakers could investigate the traction exerted by a range of external and domestic forces on their decisions. I have yet to locate such research. (And rocking up and asking developing country ministers leading questions like ‘how have the MDGs affected your decision-making?’ most definitely does not constitute rigorous research.)

So if it can’t generate national traction, what could the post-2015 process achieve?

-       Aid still matters, albeit to a diminishing group of countries, and post-2015 could bolster the case for aid (under siege from the Austerians), and continue to improve its quality

-       Intellectual hegemony matters, so general debates on development are always good (hey, they’re my bread and butter)

-       It may help break the logjam on collective action on everything from climate change to migration (but don’t hold your breath)

But by ignoring the primacy of national politics and avoiding serious political economy questions on traction, it feels like the post-2015 process hasperhaps inadvertently relegated itself to the sidelines – a bit player in a drama that is increasingly national and beyond the reach of the aid industry.

Over to you Claire (and for the sake of my peace of mind, and a natural urge to run away and joint the post-2015 circus, this is one argument I would really like to lose).

Merit, Privilege or Slumdog Millionaires? Income Inequality and Social Mobility

In memory of Sebastian Levine, who liked to read these posts.

This post is written by Ricardo Fuentes-Nieva, Oxfam’s Head of Research (twitter @rivefuentes)

In Danny Boyle’s movie Slumdog Millionaire, the young character wins a large pot of money against all odds. The movie is a fantasy tale for all practical purposes. The hero knows the responses posed to him in a quiz show through a number of coincidences and lucky breaks. It was his only chance to become wealthy.

What type of societies give better, more just chances to everyone? What is the connection between opportunity and socio-economic disparities? There are, at the risk of being simplistic, two broad sources of inequality: inequality resulting from individual entrepreneurship and effort (I’ll call it merit inequality) and the inequality that reproduces privilege and elite capture (I’ll call it privilege inequality).

A simple way to discover whether inequality is actually a result of merit is to think how far effort and hard work can take us. I recently heard Kaushik Basu, the new Chief Economist at the World Bank, detail an anecdote about this during a meeting with civil society people in London.  When Basu visits his home city of Kolkata he goes for long walks and sometimes he wanders around a privileged district that stands in sharp contrast with the nearby slums. The close proximity of the two vastly different lifestyles ensures that slum dwellers also visit this district. Then Basu said, to the best of my recollection: “it is not fair to tell a kid in the slum that by working hard he will be able to achieve the wealth needed to live in that neighbourhood.”

It is a candid story that got the attention of all people present in the meeting. It makes a powerful point. What Basu was pointing at is that perfect social mobility does not exist. Basu focused on the immorality of a development narrative that promotes aspirations that cannot be attained – the slum kid that will not become a rich mogul. I want to focus on the existing rigid class structures and how they limit opportunity.

Equality of opportunity is a central tenet of modern societies, but it implies that family characteristics should not have a strong influence on the opportunities someone faces throughout life. Empirical evidence shows that is not the case. There is a strong correlation between children’s chances and their parents socio-economic status. A book aptly titled “Persistence, Privilege, and Parenting” put it like this: “The abundant evidence in the economic, demographic, and sociological literature of the association between parents’ and children’s social positions makes it very clear that children’s chances for a good life are highly dependent on their social origins or socioeconomic status”

Social mobility is far from perfect – where you’re born will have some influence on where you end up. But what is the actual correlation between inequality and social mobility? It turns out it’s rather high. Several academic papers (look here, here and here) show this. Take, for instance, recent research by Miles Corak. In this graph, Corak plotted the Gini coefficient (a standard measure of inequality) against “intergenerational elasticity between fathers’ and sons’ earnings” (or how much someone’s income is determined by their parents’). In Denmark, for instance, a country with a low Gini, only 15 percent the a young adult’s income today is explained by their parents’; in Peru, where the Gini is amongst the highest in the world, two-thirds of what someone earns today is related to what their parents earned in the past. Alan Kruger, a former senior official in Obama’s administration and professor at Princeton, dubbed this relationship “The Great Gatsby Curve” (a movie with Leonardo Di Caprio is coming if you don’t feel like reading the book). The rich are different from you and me. And so their offspring are too.

Figure: Like father like son? Parents’ earnings influence income of offspring, and more so in countries with high inequality.

Note: Income inequality in the horizontal axis, persistence of income across generations in the vertical one.

Source: M Corak (2012) Inequality from generation to generation: the United States in Comparison.

A recent debate on The Economist site shed more light on the issue. In a blog post, Francisco Ferreira from the World Bank showed the relationship between opportunity and mobility. Here’s the graph.

You can only climb the social ladder if you have opportunities

Note: persistence of income across generations in the horizontal axis, inequality of economic opportunity in the vertical one.

Source: Brunori, Paolo; Ferreira, Francisco H. G.; Peragine, Vito. (2013) Inequality of opportunity, income inequality and economic mobility : some international comparisons

Countries where economic opportunity is low also present low levels of mobility – Norway is a mobile society where there is low inequality of opportunity, while Brazil, for all its progress, still shows a rigid society with higher levels of inequality of opportunity. The indicator Ferreira and co-authors use in their research (inequality of economic opportunity index) is not without flaws but it’s a solid attempt to capture how much someone’s ability to participate in the economy is determined by circumstances outside their control – characteristics you cannot change easily (race, parent’s education, sex and the like). Ferreira and his co-authors conclude: “The evidence reviewed suggests that an important portion of income inequality observed in the world today cannot be attributed to differences in individual efforts or responsibility. On the contrary, it can be directly ascribed to exogenous factors such as family background, gender, race, place of birth, etc.” Their evidence indicates that privilege inequality trumps merit inequality.

Why? Because privilege persists across generations through difference in access to education, health and social and professional networks and it starts very early in life. This is the connection between income inequality, inequality of opportunity and social mobility. In countries with high income inequality, you only have opportunities if your parents had them too. Ferreira explains “as the rungs of the ladder grow further apart, it gets harder for people to climb up (or move down). Conversely, countries with institutions that promote a level playing field, and redistribute income or opportunity, may also promote mobility”.

The evidence that income inequality limits our control over our destiny is strong. We know something about the dynamics of the class divide. There are some examples of increased mobility throughout history in Britain and the US. As The Economist puts it “…in both America and Britain the effect of high (or low) incomes in one generation lasts for at least two more. Yet [Long and Ferrie’s] study also suggests it is possible to break patterns of immobility. Although American and British mobility rates had converged by the middle of the 20th century, America’s social order was considerably more fluid than Britain’s in the 19th century. The past has a tight grip on the present. But in the right circumstances, it can apparently be loosened. “. So it is possible  to change the level of mobility in society.

We need to understand better how to loosen those circumstances to make societies more fluid but we know that inequality hampers it.  The higher the inequality level in societies, the farther we are from that ideal that with hard work we can achieve what we set our minds. Then, like in Slumdog Millionaire, only an implausible array of coincidences allows people to move up the ladder. How can we support the narrative that says hard work and effort will really improve poor people’s relative position in society when we know that with growing inequalities it becomes much harder?

Tomorrow, I wonder what the aid biz might actually do differently as a result of all this renewed focus on inequality

Government Spending Watch – a new initiative you really need to know about

I’m consistently astonished by how little we know about the important stuff in development. Take the Millennium Development Goals – the basis forinnumerable aid debates, campaigns, and negotiations. A large chunk of the MDG agenda concerns the size and quality of public spending – on health, education, water, sanitation etc. So obviously, the first thing we need is to know how much governments are spending on these things, right?

Well no actually, because we don’t have those numbers. Until now. Oxfam has teamed up with an influential and well-connected NGO, Development Finance International, which advises developing country governments around the world. Working with a network of government officials, DFI has pulled together and analysed the budgets of 52 low and middle income countries (With another 34 to follow). The result is a new database, called Government Spending Watch, (summary of overall project here) and a report ‘Progress at Risk’, previewed in Washington last Friday in a joint DFI/Oxfam America event to coincide with the IMF and World Bank Spring meetings. The full report won’t be ready ‘til May, but an initial draft exec sum is available, and here’s what it says.

The data cover seven sectors (agriculture/food, education, environment and climate change, gender, health, social protection and water/sanitation), from 2008 to 2015 (including medium-term forecasts). They examine planned and actual spending, disaggregated by types (recurrent and capital), and sources of funds (government revenue or donor funding). There are some major gaps (see map), so the first call is for donors (who are often the worst culprits) and governments to collect and publish more and better data.

The report looks separately at countries with and without IMF programmes (although attributing the differences to the IMF is tricky, and the report avoids doing so). Headline findings are:

• Most countries have been increasing revenue and spending as a % of GDP, but this is now going into reverse
• The sources of government finances have shifted from grants to loans, including more expensive domestic borrowing, raising fears about growing debt burdens (although no new debt crisis is imminent)
• Countries with IMF programmes have raised less revenue, are cutting deficits faster and have seen less positive trends in MDG spending. Agriculture and health spending are now much higher as a percentage of GDP, and education and social protection spending are rising faster in non-IMF countries. Other MDG sector spending is stagnating compared with GDP or total spending.
• For all MDGs, the vast majority of developing countries are spending much less than they have promised or than international organisations have estimated is needed. Only one third of countries are meeting any education or health goals, and less than 30 per cent are meeting agriculture and WASH goals. Trends have been even less positive for gender and sustainable development.
• Some of the spending has been funded by rapidly growing aid – especially in education, health, WASH and agriculture. Progress in these areas is threatened as OECD aid flows are now declining in real terms, and are increasingly moving away from MDG sectors to infrastructure and growth.
• In most countries, actual spending is substantially less than the amounts announced in budgets (see table). This is particularly true in the health, agriculture and WASH sectors, reflecting delays in donor funding, and absorptive capacity problems in sector ministries and decentralised government agencies.
• Types of spending show two worrying patterns. Some sectors (WASH and agriculture) are dominated by investment, raising the need to increase recurrent spending dramatically to maintain buildings and equipment. Others (education, health and social protection) are dominated by recurrent spending on wages and supplies. Especially if donors reduce budget support, which funds much recurrent spending in many countries, governments will need to make even greater revenue efforts to maintain recurrent spending and keep delivering progress.

If the excitement around last week’s prelaunch is anything to go by, this is going to be a really important initiative. According to report author and DFI boss Matthew Martin:

“We had conversations with officials from about 20 IDA countries about their relative performance in terms of spending and transparency and all of them were anxious to see the full data and report, and to improve their performance. Senior donor government officials were also energised about being able to use these data to see country spending inputs for the MDGs and for the post-2015 framework.

Major global campaigns on education and health were anxious to see and use the data. The DC development research community (Brookings, CGD, IMF, World Bank) as well as USAID, MCC and the African Development Bank  were very excited by the data and want to organise further seminars after the full report is published and consider using the data for their own research and policymaking.

We also had great conversations about potential partnerships with the International Budget Partnership (who run analysis and campaigns on budget transparency and accountability), and the BOOST team in the World Bank (who help countries produce much more detailed geocoded data and would like to code it for the MDGs).

All in all, an amazing week: it has felt like standing on a snowball which is rolling faster and getting bigger every day – we start again with the New York academic and UN community next (i.e. this) week.”

Looking ahead, citizens and social movements in poor countries will now be able both to see what their governments are promising and delivering, and to compare that with other countries in the neighbourhood. International bodies will be able to track the extent to which warm words translate into cash on the ministerial table. Internationally, Oxfam will certainly be using the database as a vital new tool to help local citizens and civil society actors ensure their governments actually deliver the goods.

In addition to scaled up advocacy and campaigns, the plan now is for GSW to expand the database to cover more countries and years, and to publish regular updates. But to do that we will need to find funders and advocacy partners. Please form an orderly queue……

Are international conferences getting any better? A bit – thanks to some sparky new tech

For a ‘club of rich countries’, the OECD spends a lot of time thinking about development. It’s Development Cooperation Directorate does the number crunching on aid; the OECD Development Centre publishes annual Economic Outlooks on Africa, Latin America and Southeast Asia, or Latin American revenue statistics.

Last week I spent a couple of chilly days at its Paris HQ at the 5^th Global Forum on Development discussing the inevitable topic – post2015 and what comes after the MDGs (background papers here). I’m trying to resist the post2015 bandwagon, but it’s generating a hell of a slipstream.

But why did they even invite me? After all, my main reaction to the last OECD conference I attended was to write a post on the awfulness of such international events (a series of soporific panels in a lightless room), and whether they can be salvaged.

So was this one any better? Yes in a few important ways. OK, it was still 300 people in an underground bunker flicking through their emails and half-listening to panels that over-ran and ate up question time, but the organizers had added some nice IT spice to the mix.

The first was a twitterwall – tweets with the conference hashtag appeared on the same screen as the speakers (and on the monitors that the speakers used to see their own powerpoints). The sense of realtime connectedness increased further when speakers wove responses to tweets into their presentations.

This really alters the dynamic of a conference, not least because people (whether inside the room or watching online) feel much freer to be critical on twitter than in Q&A. The tweets are anonymous, but interestingly, a staffer told me many of the most critical ones were from junior OECD staff who would normally defer to the big cheeses on stage – a real democratising influence, even within the host institution.

In me at least, especially if everyone’s agreeing with each other, the twitterwall also induces a kamikaze urge to be rude and see it come up on the screen. The adrenalin certainly keeps sleep at bay.

The second innovation was asking people to sign up to an app (wisembly.com) on their smartphones (it even worked on my blackberry). This allowed the 200 people who did so to vote on questions and issues as they emerged during the seminar, including to ‘like’ the various tweets: the most popular were then passed to the panel for responses.

But ‘death by panel’ remained, an apparently immovable object in the international conference format. The standard story is that ‘it’s all about the networking in the coffee breaks’, but then why are the coffee breaks so brief, even before they are further shortened by panel over-run? There must be a reason for this particular way of renewing epistemic communities, but I honestly can’t explain it. Given the huge investment in these events, and their inefficiency in terms of debate and knowledge-sharing, they must fulfil some other deeper function, but what is it? I ended up suggesting to the hosts that the OECD invites an anthropologist to observe their next conference to try and work out what is actually going on.

As for my role in all this, I got lucky, moderating a panel on social cohesion with great speakers. Shirin Chaudhury, Bangladesh’s Minister of Women and Children’s Affairs, gave an inspirational account of her country’s affirmative action policies and efforts to mainstream gender analysis into everything from macroeconomic policy-making to stipends for schoolgirls  and ‘info ladies’ going door to door to tell women about the various government services. Pierre Jacquet of the Global Development Network was music to my ears as he called for an end to ‘useless normative statements on post2015 that start with ‘we should’’ and stressed the need to influence national political processes. Alan Hirsch from the University of Cape Town gave a balanced overview of what has/hasn’t been achieved since the end of apartheid and wondered why ‘reconciliation has not led to social cohesion’. Trinh Cong Khang of Vietnam’s Ethnic Minority Policy Department described how the government is trying to build social cohesion with previously excluded groups. All top stuff, and I may try and generate some blog fodder from them.

At a more meta level, my main takeaway from this and other panels was that people always stress the need for national ownership (eg of any post2015 goals), which usually involves adapting  whatever is globally agreed to meet national circumstances. But they then deny any trade-offs with global goals. But is that credible? If every country adapts a global instrument differently, they just become part of national political processes (and a good thing too), but lose international comparability.

At the same time, the list of global public goods/collective action problems keeps growing (finance, climate change, drugs trade, trade, tax havens etc etc). At some point, maybe there is need for a parting of the ways, with global processes focussed on collective action problems, while leaving the rest to national politics, backed where necessary by aid. Not that collective action problems are any easier to solve, of course, but it’s just that they won’t be solved anywhere else.

My other gig was an odd one – after dinner speaker with the intimidating brief to a) not repeat anything said in the conference b) be provocative and c) keep people awake. Here’s my talking points (keep clicking til they come up). I couldn’t hear any snoring at the end, so I guess I achieved at least one of my goals.

What is the point of the European Report on Development 2013?

The 2013 European Report on Development was published yesterday, with the title Post 2015: Global Action for an Inclusive and Sustainable Future.I’ve been rude about previous ERDs, and I’m afraid I’m going to be rude about this one, but a conversation at last week’s OECD gabfest (more on that tomorrow) at least made me think differently about the ERD’s purpose and value.

If you read the ERD as a thinktank document, it is pretty underwhelming. The 20 page exec sum (which is all they sent me in advance) contains no killer facts, no big new ideas and not much new reseach. When I asked one of the report’s authors for his 30 second elevator pitch on what was new, he couldn’t answer. So far, so bad (and they really need to get some media people involved on that elevator pitch).

Instead what you get is a decent overview of progressive thinking on inequality, migration, trade, domestic resource mobilization and the role of aid. And a lot of developmental platitudes: the ‘key conclusions’ include ‘a transformative agenda is vital’, ‘national ownership is key’, ‘the children are our future!’ (OK, I made that last one up).

But weirdly, no mention of the Eurozone crisis, and its likely impact on aid, trade and every other aspect of Europe’s relationship with the rest of the world.

There is one exception to the ‘nothing new’ critique – Chapter Two contains four case studies on Nepal, Peru, Cote d’Ivoire and Rwanda, exploring their experience with the MDGs. At first sight, these might go some of the way to filling the evidential vacuum on how international instruments do/don’t gain traction on national policy, so I may well come back to that chapter.

But when I raised these criticisms with the OECD’s Dirk Dijkerman, he told me I was looking at it all wrong. Although the report insists that it ‘does not reflect the official opinion of the European Union or of its Member States’, in fact it has the hands (and logos and funding) of the European Commission all over it. EC staff were involved in negotiating the final text (pretty intensively on some issues). So the ERD is somewhere between an EU White Paper and an arm’s length World Development Report. The positive content on migration, policy coherence etc has a status with the European Union that an independent report (however well-written) will never have . And sure enough, the discussion at the OECD meeting was all about what the ERD means for European policy.

But if that is the case, I’m not sure the report really makes the most of its unique position. A while ago, I raised some issues where an ERD might have particular relevance, but this report largely ignores them in favour of a global development narrative. Might be better if the authors based the report more overtly on the EU’s sphere of influence, both geographically and thematically (and you’d think the Eurozone crisis would be pretty high on any Eurocrat’s agenda).

Anyway, the ERD authors should feel free to reply, and here’s an edited down version of the report’s main message:

Main message 1: A new global development framework is needed.

The MDGs have been instrumental in mobilising global support for development, while the vision behind the Millennium Declaration remains highly relevant. A new development framework should build on these efforts.

Main message 2: The framework should promote inclusive and sustainable development.

Poverty eradication remains a central objective, but its achievement and protection will require development strategies that are both inclusive and sustainable, as long-term poverty cannot be eradicated simply through social provisions. Economic growth is key but it needs to be socially inclusive and environmentally sustainable.

Main message 3: The framework must build on an updated understanding of poverty.

A post-2015 framework will have to tackle absolute poverty and deprivation both from an income and a non-income perspective, which incorporate aspects of social inclusion and inequality.

Main message 4: A transformational development agenda is essential for this vision.

A stronger emphasis on promoting structural transformation and particularly job creation will be crucial.

Main message 5: The global framework should support country policy choices and development paths

The policy space of governments should be respected both in determining national development priorities and in other areas such as development finance, trade and investment and migration.

Main message 6: The deployment of a broad range of policies ‘beyond aid’ is essential.

Policies in areas such as trade and investment, international finance and migration have significant effects on development outcomes and need to be designed accordingly and in a coherent manner. ODA will continue to be important, but more as leverage for other finance.

Main message 7: A range of development finance sources will be required.

Domestic resources are the main source of finance for development, not least because they provide the best policy space. Levels of ODA should be maintained and increased, and ODA should be allocated in ways that maximise its impact.

Main message 8: More extensive global collective action is urgently needed.

Achieving the vision of the Millennium Declaration will require considerably greater international collective action to tackle global issues that directly affect the ability of individual countries to achieve development outcomes (eg. development finance, trade, investment and migration).

Main message 9: Processes to address global challenges need to be mutually reinforcing.

Several international processes are probably required to respond to multiple global challenges and support inclusive and sustainable development. A post-2015 agreement may best be conceived as a framework that brings together a series of interlocking and mutually reinforcing agendas.

Main message 10: Over and above its ODA effort, the EU’s contribution post 2015 should also be assessed on its ability to promote PCD and promote conducive international regimes.

The EU’s most valuable contribution to a new global framework for development will be in a range of policies beyond development cooperation (e.g. in trade, migration, PCD, knowledge sharing, climate change, promoting global collective action, and contributing to the establishment of development friendly international regimes) while still maintaining and improving its development cooperation. In particular the EU will need to adopt internal policies that support inclusive and sustainable development at the global level.

And here’s a rather leaden 4m summary video

What can DFID learn from Chinese and Brazilian aid programmes?

IDS researcher Henry Tugendhat (right) wonders whether UK aid is following in the path of China and Brazil

Two weeks ago at the London Stock Exchange, Justine Greening announced her new policy of supporting UK businesses to invest in developing economies for the mutual benefit of both sides. According to the UK’s Secretary of State for International Development: “This is good for investors, who earn a financial return… [and] good for the poorest, who receive jobs and support”.

New as it may sound in UK development circles, this strategy sounds an awful lot like the “win-win” sound-bites we’re increasingly used to hearing from China among the other BRICS countries, who are meeting in Durban, South Africa this week. China and Brazil have both made efforts to leverage private sector investments as part of their aid/South-South Cooperation agendas, but problems have already arisen which the UK could usefully learn from.

Alignment of aid and investment efforts is a particular challenge. Business seeks profit, while aid is traditionally geared to humanitarian objectives, and they don’t always match up.

One example is the disconnect between the promotion of food security in Africa, and the agricultural interests of investors. The Chinese state has pushed for a serious engagement with food security issues affecting African countries. This is seen in everything from meetings in the Forum on China-Africa Cooperation, to Agricultural Technology Demonstration Centres. Equally Brazil has committed to supporting agricultural mechanisation and technical support in a number of countries.

All such efforts are envisaged to link to private sector activity: to provide tractors, take over farms, or offer technical support. However, Chinese and Brazilian investors in Africa have predominantly invested in cash crops and large-scale farming, and even when smallholders are targeted, in many cases they have been those that are better off and already more commercially oriented.

New evidence from the Future Agricultures Consortium generated by research in Ghana, Ethiopia, Mozambique and Zimbabwe, shows that when Chinese companies do invest in local agriculture, it is predominantly in crops such as cotton and tobacco. Otherwise, additional investment has focused on surrounding infrastructure such as irrigation schemes and roads. Brazilian investments have predominantly focused on sugar-cane and ethanol production. However, when private sector investment has targeted food staples necessary for food security, there has been either little success, as in the Xai-Xai project in Mozambique; or only small-scale investments, as in the small farms in Ethiopia that supply local Chinese restaurants.

not the right model for Africa?

Adding to this disconnect between Chinese and Brazilian government statements and the behaviour of their companies, even Chinese state-owned enterprises at times flex their independence from state interests, as Lucy Corkin describes for Angola. But of course, Chinese companies in particular may be subject to more pressure than UK companies to invest in areas aligned with state interests abroad, as they are often supported by state policy and finance. Which begs the question: when financial returns are less obvious, what makes Justine Greening more able to leverage investment for development interests, where China and Brazil have failed?

The second issue is that many investments in Africa have led to harmful practices over the years, whatever the nationality of the investor. Even if investors are introduced based on the principle of “development assistance”, profits are still paramount. This can lead to unintended consequences. For example, Chinese and Brazilian companies have got mired in controversy in recent years, including accusations of ‘land grabbing’, even when such claims have been refuted.

One of the currently most contentious investments is the vast ProSavana project spearheaded by Brazil in a triangular agreement with Japan and

Mozambique. The aim is to bring about agricultural development in Mozambique’s Nacala corridor, transforming it into a bread-basket on the scale of Brazil’s Cerrado savannah region, the site of a “green revolution” transformation which began in the 1970s. Brazilian private investors are already, as well as Japan, and a ‘Nacala Fund’ expected to mobilise US$2 billion has been set up. Already described as an example of ‘Brazil’s neo-colonialism in Africa’ in the Mozambican press, the project has come under heavy fire from local civil society groups that criticise the secrecy surrounding the project and the risk of evictions of local smallholder farmers.

So will ‘land grabbing’ become an issue that UK businesses face if they follow Justine Greening’s recommendations? In her speech, she recognised this challenge, arguing that there is a need for transparency on investments, so as to expose “those who acquire land unfairly”.

As a final thought, we should also question whether this new policy could be a subtle re-introduction of tied aid practices, despite Justine Greening’s

strong assertions to the contrary. The political reality is that this would no doubt be an appealing means of defending the aid budget against current cuts, so it must be properly scrutinised to avoid to a return to inefficient aid practices.

Ultimately, overseas investment by private sector actors is open to many challenges and problems. As the UK adds this new facet to its aid programme,
lessons from Brazilian and Chinese experiences in Africa should definitely be heeded.

Brazil v South Africa: what can the BRICS tell us about overcoming inequality?

The blog’s inequality week here in South Africa continues with some thoughts on inequality and the BRICS. An edited version of this post appeared earlier this week on the FT’s Beyond BRICS blog

The acronym may have been cooked up in far-off New York, but the BRICS grouping of countries is starting to generate some interesting life of its own. Last week, I was in Durban, chairing a discussion between academics and activists from South Africa and Brazil ahead of the BRICS summit later this month. The topic? ‘Tackling inequality across BRICS’.

The starting point was Brazilian exceptionalism. Long held up as exhibit A in Latin America’s gross distortions of wealth, Brazil is now the only BRIC where inequality is falling (and fast – see chart). In the wider G20 group of leading economies, only 4 can boast falling inequality levels; three of them – Brazil, Argentina and Mexico – are Latin American.

The stats, captured in a new Oxfam briefing, published in conjunction with Rio’s BRICS Policy Center, are striking. Over the last decade, the incomes of the poorest Brazilians have risen more than five times faster than those of the richest (but both are rising – no zero sum games here). In the words of Brazilian poverty guru Ricardo Paes de Barros, “the incomes of individuals in the lowest decile of the income distribution is growing at Chinese rates, while the income of the richest decile grows at German rates”.

Even though GDP growth is sluggish, two weeks ago President Dilma Rousseff was able to announce the end of ‘registered extreme poverty’ – note her careful choice of words. Some Brazilian academics put this historic turnaround on a par with the New Deal in the US, or Britain’s post war creation of its welfare state.

The fine grain is just as encouraging: women’s incomes are rising faster than men’s; black people’s faster than whites’; the impoverished North-east faster than the rich South-east. Hunger is ‘largely dealt with’ according to Oxfam’s country director Simon Ticehurst, speaking in Durban, although food insecurity continues to plague communities in the northeast of Brazil. Near full employment is transforming lives, as people move from a day to day scrabble for survival into the better paid, more stable world of the formal economy. Brazil’s middle classes complain bitterly about having to pay more for maids, and even give them days off, as labour markets tighten.

Not that Brazil has become some kind of development nirvana: the quality of state education remains poor, large scale agriculture sucks up state subsidies on a far greater scale than those going to poor farmers; and despite the progress, the country is still in the world’s top 15 most unequal countries, twice as unequal as the OECD average.

Caveats aside, how did Brazil pull this off? Ticehurst and Adriana Erthal Abdenur of the BRICS Policy Center both stressed that such a transformation is complex and multi-tiered, involving all parts of state and society. This is most definitely not a magic bullet story of Brazil’s famous ‘Bolsa Familia’ social protection system, a programme of cash transfers to women in return for getting their kids vaccinated and keeping them in school, which has won admirers and imitators as far afield as New York City. UNDP estimates that such spending programmes account for under a fifth of the fall in inequality. Ticehurst argued that other critical factors include:

-          The transition from military rule to democracy, which bequeathed a constitution and political process attuned to the importance of basic rights, such as the right to food

-          The election of a centre-left government, led by Lula, committed to tackling poverty and inequality

-          Major increases in the minimum wage, the introduction of a universal pension (particularly important in deprived rural households)

-          An integrated and more effective public administration, working tightly across ministries and between the different levels of a federal, decentralized political system.

-          A high level of public participation, for example in holding 19 different ministries to account on Brazil’s ‘zero hunger’ effort to achieve universal access to food, through a virtuous circle of linking poor family farms to government procurement for school feeding programmes that in turn feed poor children.

-          Political and economic stability throughout the period of reforms.

In terms of economy and politics, Brazil is probably closer to South Africa than the other BRICS (commodity producer, democracy, transition from autocracy, centre left government) and the discussion inevitably centred on why South Africa has failed to emulate such successes. While there has been substantial progress since the end of Apartheid on access to health, education and housing, inequality remains obstinately high and rising.

The two elements of Brazil’s success that South Africa seems to be missing (by a mile) are full employment and more competent administration. Patronage and corruption exist in both countries, but their extent in South Africa is undermining the state’s ability to implement policies, however well designed. Brazil, with its more diversified economy and public investments, seems able to generate jobs in a way that remains a distant dream in South Africa, which remains dependent on agribusiness and mining, neither of which generate the employment the country needs. Substantial land redistribution seems essential to tackling the jobs crisis, yet has been systematically postponed by the government in the interests of stability. Even those who manage to navigate the dilapidated education system and emerge with a degree still find it difficult to find jobs. Alarm bells are ringing, with observers warning of anything from a slow meltdown of the ANC government to an Arab Spring style uprising led by educated, jobless youth.

While all sides stressed that merely trying to transfer policies from one country to another seldom works, this kind of South-South exchange holds huge potential for helping the BRICS develop their own solutions to some of the problems such as inequality that continue to plague the old guard of the G8.

And here’s a 25m video summary of the Durban event

Aid and the private sector: a love story

Oxfam private sector adviser Erinch Sahan (right) summarizes a critical new review of the growing interlinkages between aid and the private sector

Donors have a new love: business. And it will end poverty. Aid chiefs across the world have concluded that if we need growth to end poverty and the private sector drives growth, isn’t aid most effective where it focuses on the private sector?

Well, no. At least not usually. And a new report from Canada sheds light on why.

The Canadian Council for International Co-operation and the think-tank the North South Institute have assessed the policies of donors towards promoting growth and the private sector. They break down (very adeptly) what the OECD donors are doing, how they’re thinking about the private sector and where they are falling short. It’s not only a sorely needed assessment of the rise and rise of private sector-focused aid, it also reminds us that aid is increasingly promoting a very specific economic model (thy name is neo-liberal capitalism) with some questionable assumptions that should attract serious scrutiny.

You can read the report here but here are some highlights, along with a few thoughts from me.

Just feed the growth machine

Donors are focused on plain old growth. They don’t have a meaningful approach to improving the distribution or pro-poor impacts and too often merely pay lip-service to issues to do with the quality of growth. They’re not linking possible interventions; such as support to government capacity to protect labour rights, effectively collect taxes and redistribute the benefits of growth; with their private sector programmes. In addressing gender, too often they simply focus on getting women into markets, ignoring the social and political drivers of gender inequality. And direct support to the poorest and most marginalised is falling out of favour.

OJ or kool-aid?

While the donors may differ on their rhetoric (some are good at sprinkling in buzz words like “inclusive” and “sustainable” when discussing growth), their private sector work ends up looking eerily similar. French and Belgian aid goes furthest in prioritising equality and accompanying growth with social services. However, for most donors, private sector programmes are effectively stand-alone growth feeders. The report reminds us that sustained growth in many developing countries (particularly in Africa) has failed to put a dent in unemployment. Growth driven by extractives is one such example that’s cited. So just feeding the growth machine doesn’t automatically mean the poor will benefit.

Can aid really drive growth?

The report finds that donors focus on interventions at the macro (e.g. business enabling environment and international CSR support) and meso (e.g. PPPs and financing investments) levels. However, it’s the micro-level programmes (e.g. training women farmers) that “have a much larger redistributive impact for poor and marginalized populations”. But can aid money really be a (meaningful) driver of growth? Why not focus on helping the most marginalised, rather than obsess over catalysing broader economic growth?

Win-win-win-win… always

Public-private partnerships (PPPs) are the new black. For OECD DAC members, PPP spending has risen from US$234m in 2007 to US$903m in 2010. Donor strategies suggest they represent wins for everyone: recipient governments, business, donors and NGOs. But donors seem to ignore the complexity of interests and agendas among those involved in PPPs. The pitfalls and inefficiencies of PPPs are scarcely mentioned and the politics of the PPP negotiating process is swept under the rug. This, I suspect, comes from an ideological underpinning to private sector strategies, which holds that business interests are aligned with development interests. Donors need to be reminded that this is only sometimes the case.

Crony capitalism?

Donors are also looking to include their national firms in their private sector strategies. For example, Australia’s Mining for Developmentprogramme (AU$127m) partners with Australia’s mining giants on a range of projects in developing countries. Denmark’s Business Partnerships programme and the UK’s Food Industry Retail Challenge Fund are only open to national firms. This all seems dangerously like a veiled attempt to subsidise the foreign investment and CSR strategies of national companies – as long as some development story can come about. And isn’t this neo-tied-aid?  In the report’s own words “Donors sometimes favour their own commercial interests to the detriment of developing countries’ domestic policies for development.” Without more transparency around decision-making and a clear results framework for private sector partnerships (the report finds this is sorely lacking), we are left to interpret decisions and priorities as cynically as we’d like (I bags the cynical view).

The report makes a plethora of sensible recommendations, including the need to support democratic ownership of the growth agenda and ensure additionality in private sector development programmes (ie; that an investment, CSR approach or any job-creation wouldn’t have happened even without the programme). But what comes flying off the page is the need to question fundamental assumptions about growth and aid. Some questions that I’m left with are:

• What type of growth should donors be promoting?
• Can aid really drive growth?
• Are aid bureaucrats equipped to do business with business (e.g. through partnerships and PPPs)?
• Why doesn’t aid focus on building the rights and power of the most marginalised?

What do you think?