Impressions of North America’s aid and development scene: the good, the bad and the ugly

Just got back from a two week immersion in the US & Canada aid and development scene (well, the East Coast version, anyway). Boston, New York,Washington and Ottawa, talking at universities, NGOs, multilaterals and aid agencies and experiencing a wonk version of groundhog day + powerpoint, brought on by giving the same presentation 16 times (I’m getting pretty good at it now).

Overall impressions?  Lots of really smart and committed people caught between what Oxfam America’s Greg Adams calls the ‘high and low politics’ of aid. High politics is about policy – thoughtful discussions of how to make aid better; low politics is fending off the ‘aid doesn’t work/charity begins at home’ counter attack from right wingers and fiscal conservatives.

In Canada, it felt like low politics is in the ascendant – the aid community seems besieged as the government takes the axe to a number of institutions, including ‘merging’ CIDA with the Department of Foreign Affairs and International Trade (feels more like an acquisition than a merger).

The US felt more finely balanced – lots of good reform proposals coming from the Administration, and a really interesting discussion with USAID on how to move from funding relationships to partnerships like its triangular relationship with Brazil, where USAID and Brazil jointly support aid programmes in Lusophone Africa. They’re wondering how to expand that approach as more middle income countries set up their own aid agencies.

For all my admiration for their blogging, I found my day or so at the World Bank pretty depressing in terms of politics and policy. The Bank seems stuck in a ‘technology + private sector = solution to everything’ mindset. I’m not against either, but you have to take politics, power, institutions etc at least as seriously.

A Band for the Bank?

I’ve already covered my exchange with Marcelo Giugnale. At my staff talk, Bank uberblogger Shanta Devarajan stated ‘poverty is a series of government failures’ and came out with examples where ‘governments intervene, but make people worse off.’ Unfortunately his conclusion seemed not to be that the Bank should help strengthen states, but that it should bypass governments/find private sector solutions to everything. An approach that is unlikely to reduce inequality and has little historical foundation, I fear.

As for the evidence debate, Shanta reckoned ‘results always have to be relative to a counterfactual – that’s what they’re about’. So how do you assess things with no counterfactual, like the fall of apartheid, or the invasion of Afghanistan? Or the impact of international conventions on the rights of women?

[update: Shanta says I got him all wrong - see his comment below]

Meanwhile a discussion with the team producing the forthcoming World Development Report on Managing Risk suggested that the Bank still cannot get past its traditional technocratic approach of ‘if a state wants to improve, here are some suggestions’. On fragile states, what if a state isn’t interested in solutions? Reply – private sector + foreign investment. Oh dear. No theory of change for how fragile states turn around, finding nuclei of good governance in otherwise fragile states, building coalitions of civil society, faith-based institutions, media, academia, traditional authorities, shifting norms in the next generation. Nope, just a fairly barren state v private sector dichotomy. Still, these were rushed conversations, and I’d be delighted to be proved wrong.

Other impressions? Great intellectual capacity at the UN, frustrated by the lack of clarity and political constraints of the system. A professor who still remembers her first class with Robert Chambers. Robert had pinned up a map of the world, with the North at the bottom. Then he just sat in a corner as his new students filed in and commented that he’d put the map up upside down. You can imagine the rest. Genius.

And a great suggestion from someone (sorry can’t remember who) – a ‘voices of the activists’ study on lightbulb moments: what were the life-changing experiences that set you on your present course – a meeting with an individual? A personal experience of violence or injustice? A seminar (hey, it happens)? Something you read? That is research I would love to read.

Dogs that didn’t bark? Surprisingly little discussion on the rise of China, depressingly little on climate change. Otherwise, my over-riding impression of the trip is the network of smart, committed people who read this blog, comment, think and argue with passion. Thankyou – you have definitely renewed my commitment to keeping this forum going, even though it can be daunting when (as this morning) I wake up jetlagged, with nothing ready to post. Normal service will be resumed tomorrow.

Update: here’s the video of one version (at Oxfam America) of my ‘what’s hot and what’s not: new thinking in development’ presentation.

Blogging in big bureaucracies round two: the view from the World Bank

Had a useful discussion with the World Bank’s social media team this week, off the back of Tuesday’s post on the struggles that the UN seems to behavingin getting its people blogging (actually, the comments on that post suggest there are lots of UN blogs, but most of them seem to be outside New York).

How, I asked, has the World Bank apparently cracked it, with 300 bloggers on 32 separate blogs?

Jim Rosenberg, head of the team, argued that this all dates back to 2010, and the World Bank’s broader shift to an open access policy – a default position in favour of external publication, which is slowly gaining ground in Oxfam, but seemingly struggling to get much traction in the UN. Jim characterised the basic message as ‘if you’re good enough to talk at a conference, you should be able to write a blog post.’

The team distinguished various kinds of blog – ‘comms blogging’ to broadcast the Bank’s messages; sectoral blogging, targeting particular demographics such as youth, and ‘community of practice’ blogging for peers on themes such as education or governance (where I have a regular slot).

The discussion revealed the ‘blogging culture’ as an emergent phenomenon, unevenly distributed across the Bank. A crucial part in spreading the culture was the success of early adopters such as Shanta Devarajan and Michael Trucano. But there are still ‘dark zones’, often determined by the culture of a particular unit, or the attitude of its boss.

The Bank has tried to put incentives in place, eg including blogging as a performance objective, but it is uphill work. Many academic disciplines still disapprove. Many Bank staff are still risk averse and reluctant to upset people, especially their bosses. As a result, there are few younger bloggers, and the space is dominated by the senior experts (like Shanta). These celebrity bloggers are great advocates for blogging and very hard to rein in, and so created space for bloggers, but their very status is also inadvertently inhibiting new entrants. ‘No-one under 40 blogs at the Bank’, one staffer told me at another meeting – many of them are on short term contracts and don’t want to endanger their chance of a permanent job. Tricky.

Bloggers described a three tier risk management approach, which is very similar to my own:

-          No go areas: so sensitive that blogging on them will just start a debilitating fight. Not worth it.

-          ‘Professional courtesy’: run drafts past issue leads and experts to correct mistakes and avoid fights

-          Let it flow: low risk areas, just go for it.

As to the comparison with the UN, some reckoned  that, while the Bank has a lot of government staff looking over their shoulders, the UN system is even worse and ‘more political’. They also felt that the Bank bloggers are often recognized experts, who are leading figures in global communities of practice, and that status to some extent insulates them from internal pressures.

One of the key differences is that the Bank has worked hard to sort out its comms governance. Who can start an official twitter account? Who can blog? The system needs to have clear, transparent rules to avoid the UNICEF moment of a comms person who thought (wrongly) that the UN banned blogging by staff.

The team clammed up a bit when I raised some comments on the previous post, which argued that the Bank is doing much worse on twitter than it is on blogging. They seem to use twitter in a more top down way, to ‘amplify’ blog content and corporate messages.

What happens when bloggers screw up? The social media team sees part of its remit as rushing to their defence, and have also won some key test case battles (often, they stress, with support of management), heading off attempts to shut down the more edgy bloggers, even when the result is potentially awkward for the Bank.

The culture feels fairly macho – self-confident experts willing to blog, and shrug off any criticisms. So obvious question – how many of the 300 bloggers are women? And (tut tut) they didn’t know – some room for improvement there, I think. Interesting gender stat on twitter – men are twice as likely to tweet; women are three times more likely to take their tweets down.

There has been lots of interest in the UN post, including a nice follow up post from Ian Thorpe of UNDP. Seems like a lot of people are thinking about the challenges of blogging from within institutions.

But what we didn’t get on to, and which I would love to hear from people on, is what comes next. Is there some successor to blogging in the wings? Or will blogging just become a permanent part of the landscape, alongside more traditional channels. If so, I haven’t seen it. Please enlighten me peeps (and tweeps).

Is power and politics a massive distraction? Crossing swords with the World Bank.

This post is written on the hoof, dashing between presentations, so please pardon the rough edges.

Yesterday I shared a platform with Marcelo Giugale, the World Bank’s Africa Director for Poverty Reduction and Economic Management (right). We were coming from very different places, some might say different planets, which is always stimulating. I did my standard power and politics spiel, focusing on multidimensional poverty, inequality and complex systems and their implications for aid agencies (more on that to follow).

Marcelo responded by saying that this was all a massive distraction, and that we should keep our eyes on the prize of ending poverty. And on this he was relentlessly upbeat, optimistic and pretty apolitical. ‘We can end poverty without blasting the system… we have the technology’ he said.

Marcelo argued that six key developments have made this possible:

• We will know the poor by name, individually. Thanks to a combination of technology and the widespread introduction of cash transfers, governments are increasingly registering all their poor citizens (the mega example being India’s biometric identity card programme – below, left). This allows them to scale up transfers rapidly in the event of shocks.
• We can determine impact, not just outcome. He defined impact as ‘that subset of outcomes that would not have happened without the intervention’ and pointed out that many of them are negative. Eg aid agencies give aid for education, so the education budget is redirected to something less worthwhile.
• ‘The time has come to link people with their natural resources.’ The World Bank seems to be getting behind the ‘doing an Alaska’ proposal to distribute natural resource revenues straight into the hands of poor people. Interestingly their power analysis suggests that the most likely way to overcome domestic political barriers (politicians not wanting to give up their slush funds) is by persuading ‘desperate oppositions’ who do not expect to win to adopt it as a last throw of the dice. Something a bit similar led to the introduction of India’s renowned Rural Employment Guarantee scheme. They think early adopters will ease the political logjam and increase pressure on neighbouring countries to follow suit.
• Equity not Equality: the way to steer a course through the politically polarized terrain of inequality is to focus on children. Hence the Bank’s new Human Opportunity Index, which asks ‘how important are a child’s  personal circumstances  over which he/she has no control or responsibility (e.g., gender, family income, skin colour, birthplace, etc), to his/her probability to access the services without which he/she can’t succeed in life (things like completing 6^th grade on time or having potable water in the first two years of life)?’ I’m not sure about this – is it a way to get at the real causes of inequality, breaking the transmission between generations that has grown so much more rigid in recent years. Or is it a convenient way of dodging politically contentious issues of distribution and redistribution, kicking the can down the road with a new version of the kind of ‘equality of opportunity’ approach (aka the American Dream), which I thought we had left behind?
• Focus on non-cognitive skills, such as punctuality, respect and dedication to understand the reasons for success. Why? Because they are important and becoming more measurable.
• A proliferating set of ‘standards’ for public expenditure will help governments to introduce results-based payments and budgeting.

Most of this is taken from his (freely downloadable) 2010 book The Day After Tomorrow.

Several things struck me about his presentation. Firstly, the overwhelming can-do optimism is very seductive. And the emphasis on technology neatly avoids any difficult political decisions. This is a happy technocratic world of win-wins. In contrast my presentation was all about difficult politics – I’m not sure I had the best tunes.

But in the end, I didn’t buy a lot of it – by invoking the use of ‘we’, as in ‘we can end poverty, by fixing X or Y’, he reminded me of Pierre Jacquet’s great question – who is we? And why assume that ‘we’ have a common agenda?

Marcelo has a remarkably outsiderish view of the ‘we’ – in a follow-up email he defined them as “All those that care about ending poverty, not just 19^th Street, but NGOs, advocacy groups,  faith-based organizations, the college kid that spends a year in a developing country giving a  hand, etc”.

In contrast, I would argue that these are all bit players: the key ‘we’ is within developing countries – political actors, civil society organizations, faith leaders and the rest. There, assumptions of a common agenda are likely to prove unfounded. That’s why we need to go back to school on power and politics. Which all reminded me of Matt Andrews’ critique of the World Bank’s efforts to ‘roll out best practice’ on institutional reform, including the institutions needed to introduce these new technologies.

Today I’m launching the book at the World Bank at 12.30, so expect the debates to continue……

Does the World Bank speak with forked tongue on Land Grabs?

Rob Nash, Oxfam’s Private Sector policy adviser, finds a deep contradiction in the way the World Bank talks (and acts) about land

Last week I was at the World Bank’s Land and Poverty Conference in Washington DC, sitting in one of the most luxuriously appointed office buildings I have ever seen, (and I used to work for Lehman Brothers), as we discussed the land issues that so critically affect many of the poorest people on our planet.

This week, this fine setting will play host to the annual Spring Meetings of the World Bank Group, where land issues will also be a big focus for many of the assembled policymakers, academics, NGOs and private sector investors.

Land is a big deal for Oxfam. Last year at around this time, we published Risky Business, looking at the explosion in channelling development finance to private sector businesses indirectly, using so-called Financial Intermediaries (FIs) like banks and private equity funds. In the paper we identified some worrying characteristics of this arms-length financing – opacity, complexity, focus on financial returns over development impact, focus on financial risk over environmental and social risk, lack of oversight or ability to influence the business practices of investee companies, remoteness from the projects ultimately financed and the impacts they have on poor people. We worried that such poorly governed financing was fuelling land grabs.

Since then a lot has happened. Oxfam has been asking the World Bank to freeze its large agriculture investments until it puts in place measures to tackle the threat of land grabs. Pressure on the World Bank and IFC has increased as civil society organisations around the world have drawn attention to the plight of poor rural communities whose lives are turned upside-down by deals that infringe their rights and take away their land, many of which are backed by Development Finance Institutions (DFIs) like the IFC.

And it isn’t just Oxfam and the NGO community raising concerns. An audit report from the CAO (the watchdog for the IFC) of IFC’s financial sector investments was made public in early 2013. It was measured in tone but quite devastating in its implications for IFC and for FI lending.

The report found that IFC is unable to track whether or not these investments are causing harm to poor people and the environment, let alone measure whether they bring development benefits. It found serious irregularities and compliance issues within the existing policies used by IFC, with many projects persistently failing to comply with the IFC’s standards. It found inadequate transparency, with at times a near-total absence of public access to information, which can make it impossible for communities to find out if the IFC is even involved in a project, much less know that they could access grievance and redress mechanisms through the CAO.

The response by the IFC to the audit failed to acknowledge the gravity of the issues raised or to commit to properly addressing them. As a result, a large number of CSOs have written to the leadership of the World Bank Group calling for it to put its financial house in order.

Which is particularly striking given that, back at the Land and Poverty Conference, the transparency and accountability of land deals has been a major theme of presentations and discussions. Speaker after speaker stressed (to general agreement) that land acquisition deals must be subject to the consultation and consent of communities affected, must be based on a good understanding of the local context in terms of food security and existing use of resources like water and land, and must actively seek business models that contribute to improving the livelihoods of local communities and create opportunities and incentives for shared prosperity.

This welcome recognition is backed by the statement just released by World Bank President Jim Kim, acknowledging that land grabbing is a serious risk, that the World Bank has a vital role to play in tackling land grabs, and that it could look at its own practices and safeguards as well as committing to support the Voluntary Guidelines on the Governance of Tenure (VGs) and new principles for responsible agriculture investment, which are essential to protect communities’ rights. For more background see this post from Oxfam’s Hannah Stoddart.

But the conference discussions often overlooked the use of FI lending. And although the World Bank statement makes some broad remarks about transparency and due diligence for FI lending, it ignores the very serious issues raised by the CAO audit.

Washington, we have a problem. Looks like we have two very different World Banks on land grabs. So who do we believe, Dr Jekyll or Mr Hyde?  Interms of hard cash, the IFC increasingly dominates. There has been a surge in the channelling of development finance to the private sector through FIs in recent years, from IFC and other DFIs. In 2011, 40% of IFC’s portfolio was made up of lending through FIs. That proportion continues to grow as IFC itself takes up an ever-bigger share of the World Bank Group funding pie (annual reports indicate IFC matches the IBRD at around $20 billion of commitments made in 2012).

In terms of public policy, we’re starting to see a lot of good progress in acknowledging the key issues of transparency and accountability and remedy, so the contradictory shift towards FI lending is a big issue for those concerned about land grabs. But it goes deeper than that, touching on the way in which publicly-backed development finance institutions like the IFC perform their role. Is it sufficient for the World Bank and IFC to pursue a narrow agenda of growth (economic growth generally or growth in private sector investment) under the assumption that benefits will trickle down to the poorest or, should they instead pay attention to the quality of that growth and investment? That means acting in part like a public body, actively seeking to ensure its intended beneficiaries are not in fact harmed, that it supports projects and influences policy in a way that upholds peoples’ fundamental rights (including to food, land and water), and targets scarce resources to investments in projects where there will be a clear and shared benefit to local communities (especially marginalised groups and women) and national development priorities as well as financial returns for the recipients of finance.

Ultimately, when it lends public money to FIs, is the IFC just a bank, or is it a development finance institution?

After all, from where I am sitting, as a former banker myself – if it looks like a bank, walks like a bank, and talks like a bank, the chances are… it’s just a bank.

Development optimism from Justin Lin: review of ‘The Quest for Prosperity’

‘Every developing country has the opportunity to grow at over 8% a year for 20-40 years, and to get rid of poverty within a generation.’ There’s something very refreshing about listening to East Asian development economists, in this case the prolific Justin Lin, a former World Bank chief economist, launching his new book The Quest for Prosperity, at ODI just before Christmas. The contrast between his can-do optimism and the dark clouds of Eurogloom and Afropessimism could not have been greater. But is he right?

While others in development wonkland are increasingly scathing about blueprints and best practice guidelines, Justin is unabashedly a man with a plan. The book takes his paper on ‘Growth identification and facilitation’, (see my earlier review, and Justin’s reply), and boils his thinking down into what he calls a ‘six point recipe’ for developing country governments.

1. ‘Choose the right target’:  find a country that looks like you in terms of ‘endowments’ – geography, natural resources, markets etc, but that is doing much better, with a per capita income that is, say, double yours. Then imitate it. This is a straight lift from Asian ‘flying geese’ story.
2. ‘Remove binding constraints’: identify which of your own industries look like those in the target countries and find out what’s holding them back (infrastructure, credit, red tape etc). Sort those things out first. Justin draws heavily on Dani Rodrik and Ricardo Hausmann’s work on growth diagnostics.
3. ‘Seduce and attract Global Investors’: Justin goes for Washington Consensus-style openness to FDI, along lines of Bangladesh or Singapore rather than the more protectionist route followed by South Korea and others
4. ‘Scale up self-discoveries’: But he also thinks governments need an active industrial policy to spot and support local innovation and technological upgrading (eg Indian IT or cut flowers in Ethiopia)
5. ‘Recognize the Power and Magic of Industrial Parks’: he won’t make many friends among the trade unions on this one, but (drawing on China and Vietnam), he sees export-processing zones as the best way to overcome dilapidated infrastructure and get exporting quickly
6. ‘Provide limited resources to the right industries’:  a tentative support for an activist industrial policy

What this amounts to is an attempt to mash together elements of the structuralism of the 1950s, the East Asian experience, new thinking from people like Rodrik and Hausmann, and the Washington Consensus of the 1980s, not so much splitting the difference as combining the best bits of all of them. It’s politically cautious, trying to play to both sides of the aisle (for example, he says his recipe is ‘consistent with The East Asian Miracle’, the World Bank’s notorious and largely discredited attempt to rewrite the East Asian tigers as a neoliberal success story).

The ensuing discussion at ODI was pretty critical, although Justin defended his recipe with passion. ODI’s Dirk van de Velde argued that it’s no good having a good recipe if you don’t have any cooks. Justin is much stronger on the economics than the politics, and ‘assumes a tin opener’ in the shape of an effective state both willing and able to implement his recipe. That’s a big assumption. When challenged he is pretty naive on the politics, arguing that leaders will be motivated to do the right thing because they want ‘a good name in history’. Yeah, right.

Kunal Sen from Manchester argued that the political economy of growth accelerations is very different from growth maintenance. Lots of political regimes produce growth spurts followed by busts, very few can keep it going for Justin’s ‘20-40 years’ and we need to understand better why that is.

Sheila Page stressed the limits to imitation: as the technological product cycle grows ever shorter, it is becoming less viable to rely simply on imitation, because the technology will already have moved on by the time you have absorbed the knowledge. No good arriving ten years late with a really cheap fax machine.

What about finance? I wasn’t clear from Justin’s presentation what role he sees for financial integration, given that financial markets are sources of huge volatility, put pressure on economic policy-makers to follow a more free market route, and often don’t lend to the right people (eg small and medium enterprises).

Is this a genuine recipe, or does it always rely on hindsight? I asked Justin if he would have predicted in the 1960s that South Korea had a ‘latent comparative advantage’ in iron and steel. He said yes, but I have my doubts.

Beyond these concerns, I applaud the intention, but worry that the attempt is flawed on two fronts. Firstly, I share the general scepticism on blueprints, and secondly, I’m not sure it’s actually possible to mix and match such opposing schools of thought in this way.

As for the book, it’s very sweetly written, and dotted with great quotes. My favourite is from Einstein, ‘Theory is when you know everything but nothing works. Practice is when everything works, but nobody knows why. We have put together theory and practice: nothing is working, and nobody knows why.’

The World Bank’s new chief economist on redistribution, taxation, economists, climate change and, errm, multi-player sudoku

The World Bank’s new chief economist, Kaushik Basu (right), came through London last week and had a good initial exchange of views with some NGO wonks. I went to a similar exercise with his predecessor, Justin Lin (blogpost here), and the comparison was interesting. Whereas Justin focussed on industrial policy and structural upgrading, Kaushik talked a lot about governance, inequality, taxation and growth. Justin focussed more on the economics; Kaushik on the politics – how to get governments (and his World Bank colleagues) to do the right thing. That probably reflects their different backgrounds (China v India; Kaushik just crossing over from a period in the Indian Ministry of Finance where he learned to understand ‘the hierarchy of government’) more than any great change in public debate in the last four years.

Kaushik suggested a change of tone was needed among the Bank’s economists and researchers – paying as much attention to policy-makers’ need for narratives and big ideas as to demonstrating your mastery of whizzy maths. Damnit, not only have they nicked our killer facts techniques, but now they’re going to start telling good stories too! Throughout, he stressed the importance of the battle of ideas, ‘consciousness’ and ‘raising awareness’. Gramsci on 18^th Street? He was also keen to push climate change and environmentalism, which he thinks is probably still insufficiently prominent at the Bank.

He received some good, pointed questions from the wonks. Peter Chowla from the Bretton Woods Project (the premier Bank watchdog in the UK, maybe anywhere) pushed him on the role of the Bank’s researchers in ‘paradigm maintenance’ – Peter argued that the Bank has a good varied set of research outputs (it probably allows a freer exchange of ideas than the UN, or for that matter, most NGOs and Kaushik is determined to protect that), but there’s some kind of institutional filter in place which squeezes out the heterodox fringe, and amplifies the neoclassical core, especially as ideas start to reach Bank country programmes. Everyone got a kick in on the Bank’s notorious Doing Business report, which Kaushik defended (he says it, along with the World Development Indicators, were the two documents he found most useful in government). He did however acknowledge that there might be some ideological ‘Trojan horse agendas’ being introduced.

Kaushik acknowledged that ‘if you begin in neoclassical economics and you don’t have enough imagination, you get locked into things like rational expectations’, but argued that lots of economists have quite sufficient imagination to think outside these reductionist stereotypes.

Where I started to get worried was on his apparent acceptance of the ‘race to the bottom’ on corporate taxation. This reflects his experience in his home state, West Bengal, where despite a Communist government committed to poverty eradication, the demands on industry were so severe that industry fled the state and poverty and unemployment remained high. But surely a key role for the Bank is to take up these kind of collective action problems?

However he does support redistribution. ‘I am not a trickle down believer, you need direct action on inequality’. He thinks that while we have to be mindful of the risk of capital and skill flight, there is scope for more efficient and redistributive forms of tax. There ought to be some inheritance tax, he believes, because to allow people to be born poor and destined to poverty as happens in today’s world is akin to a caste system. He reckons that with current levels of wealth ‘basic food should now be a fundamental right and access to healthcare is close to that.’

I think he could prove to be an interesting and innovative voice at the Bank, introducing an Indian sensibility on rights, human development and governance – he recently suggested an approach on bribery rather similar to decriminalizing cannabis: make it legal to pay bribes, but not to receive them, so that people forced to pay bribes would no longer be deterred from denouncing graft. You can follow him on twitter at @kaushikcbasu

One final revelation from the meeting – a diligent wonk had uncovered Kaushik’s true claim to fame, as inventor of a multiplayer version of Sudoku, clunkily named Duidoku (left). If that catches on, he may end up explaining to the Bank why he has single-handedly destroyed decades of global progress on productivity…….

Why the World Bank is wrong (so far) on large land deals

You’re getting a lot of guest posts this week, not least because I’m in India – expect a spate of India posts next week. Here’s Hannah Stoddart, Oxfam’s Head of Economic Justice Policy, responding to the World Bank’s response to Oxfam’s call for a freeze on large land deals.

Oxfam’s land grabs campaign, launched on 4^th October, highlights the alarming increase in the speed and scale of large land deals in the past decade. It calls on the World Bank – as an investor in land deals, as a global standard setter and as an adviser to developing countries on their land policies – to freeze those of its agricultural investments that involve large land deals for 6 months while it reviews its policies and practices to ensure land grabs are prevented.

The World Bank has responded through official statements, blogs and interventions on panels. Here’s Oxfam’s response to some of the Bank’s main counter-arguments:

• Extent of World Bank involvement in land-grabbing

Some at the World Bank have suggested that it is not the right target – it is only involved in a ‘few cases’ that could potentially constitute land grabs and at any rate it is not as bad as most other investors. Oxfam stands by its focus on the Bank for a number of reasons. First, given the Bank’s mandate for poverty alleviation, even one land-grab case is a case too many.

Secondly, in reality we know that there are very likely more than a few controversial cases relating to land. 21 cases involving land disputes have been brought by communities since 2008 (Oxfam is involved as a complainant in a number of them). We also know that between 2000 – 2012, 56% of the complaints to the Compliance Adviser Ombudsman (CAO) have been in relation to land. The CAO also confirms that in the past 4 years there has been a growing number of complaints in relation to agri-business.

Lastly, while the World Bank may not the worst culprit when it comes to land-grabbing, it IS the only global bank with a mandate for poverty alleviation and it is a crucial institution for setting the bar high in this area. In other words, we believe that if Oxfam can’t convince the World Bank to raise its standards, we have no hope of getting other financing institutions to do so. If the Bank takes leadership, we hope we can leverage change in other institutions as a result, from regional development banks to private investors.

• World Bank’s role in agriculture

In reaction to our call for an investment freeze, the World Bank contends that it has increased its agricultural investments precisely in response to calls from organizations such as Oxfam for it to focus on a sector that has been neglected for too long. It argues that to suspend its agricultural investments – which overwhelmingly benefit smallholders – will only end up harming the very people that Oxfam seeks to support.

In response, we have never argued – and never will – that the World Bank should not be investing in agriculture. We welcome increased investment in agriculture by the Bank that genuinely benefits smallholders. This is why we are not arguing that the Bank should get out of agriculture altogether. And this is also why we are not calling for a freeze of all agricultural investments, but for a temporary 6 month freeze on agricultural investments that involve large-scale land acquisition – which the Bank acknowledges is not the majority of its investment portfolio. To put it another way, we’re invoking the precautionary principle – something the Bank has done itself in the past when it froze lending to the palm oil sector as a result of a controversial case in Indonesia.

As the World Bank’s investment in agriculture has increased from $2.5 billion in 2002 to $6-8 billion in 2012, the risk of some of these investments involving problematic land acquisition is heightened (for the record, this figure was misquoted by some media as being up to $8 billion in land investments, Oxfam has always been clear that the overall figure is for agriculture more broadly, some of which will involve land acquisition).

We welcome models of agricultural investment – both large-scale and small – that benefit communities and genuinely lead to shared benefits based on consultation and consent. We have recently published a paper outlining models of positive agricultural investment, and Oxfam GB CEO Barbara Stocking reiterated this message recently in the Financial Times. What we oppose is a model of agricultural investment that involves the mass transfer of land rights away from poor farmers and communities, a model that  frequently leads to conflict and for which there is very little evidence of pro-poor outcomes.

• Transparency

The Bank has suggested that it is a leader in the area of transparency. While Oxfam agrees that it has made great advances over the years, we feel that there are still some real areas of concern. First, we can’t even tell the full extent of the Bank’s investment in this area: there is no clarity on the overall size of its land portfolio. For an institution that rightly prides itself on the huge advances it has made in making  its data accessible, this is disappointing.

Second, 17 of the 21 complaints involving land raise issues relating to inadequate transparency. Third, over 50% of lending through the International Finance Corporation (the private sector lending arm of the World Bank) is channeled through financial intermediaries: these investments are far more opaque, and these bodies are also not subject to the same standards as the World Bank. And it makes it almost impossible for Oxfam to judge whether the Bank’s claim is true that ‘only 2% of IFC agribusiness loans in the past financial year involved land acquisition’. Furthermore, the trend towards new lending instruments and technical assistance makes it far more difficult to hold the World Bank accountable for cases where it might not have directly funded a project that results in controversy, but has provided the advice that made it possible.

So if the Bank wants to know #whatwillittake to end poverty, Oxfam thinks taking leadership on stopping land grabs is a great place to start.

Hannah Stoddart is Head of Economic Justice Policy at Oxfam GB

Tackling the jobs crisis: new thinking from the World Bank and UNESCO

Oxfam’s head of research, Ricardo Fuentes (right) reviews two big reports on jobs from the World Bank and UNESCO

Youth unemployment is making headlines everywhere – and with good reason. One in eight people between 15 and 24 are unemployed and the problem affects rich and poor countries alike. In Spain, almost half of young adults are unemployed; in the Middle East and North Africa is around one in four. The younger generation in many countries feel cheated: the past was truly a better time. Their perception, at least in some places, is that they will struggle to live as well as their parents.

Two recent flagship publications from large international organizations shed light on the problem of youth unemployment and propose solutions to policy makers. The Education for All Global Monitoring Report from UNESCO (full disclosure, I recently joined their Advisory Panel but didn’t participate in the preparation of this year’s EFA-GMR) and the World Development Report 2013 from the World Bank both tackle employment and employability. They are timely both for short term needs – the protracted global economic downturn has hit the young hard – and long term reasons – as UNESCO points out, the demographic pressures are here to stay since “young people are more numerous than ever; and their numbers are increasing rapidly in some parts of the world. In developing countries alone the population aged 15 to 24 reached over 1 billion in 2010.”

The GMR focuses on how to create useful skills for the young. It is a brave and comprehensive effort, especially because the GMR gives particular attention to the skills required by marginalized groups. The problems start with access to training: “All too often, access to skills is unequal, perpetuating and exacerbating the disadvantage that attends being poor, female or a member of a marginalized social group”. To back this argument, UNESCO recently launched a very comprehensive database on inequality on education that shows the extent of the disparities.

So far, so good. The report is thorough and detailed and describes the types of skills young people need (basic skills such as literacy and numeracy; problem solving and communication abilities and technical know-how). The evidence presented is solid. The element missing in the picture is a thorough discussion on “soft skills” that cannot necessarily be learned in the formal system. These include issues around confidence, self-esteem, and aspirations. This is an important omission; evidence suggests that prejudices and social expectations have an important role in educational and cognitive outcomes. One of the most notable examples is the change in problem-solving results of children reminded of their caste in Uttar Pradesh – two otherwise identical exercises showed different outcomes when personal information of the participants (including caste) was announced at the beginning of the test – children from marginalised backgrounds did worse when their situation was made public as part of the experiment. The point is that providing technical skills to marginalized young people may not be enough to break entrenched patterns of external and self-imposed social exclusion.

In addition, economies around the world are struggling to create the jobs required to keep up with population growth and more young people. This is where the WDR 2013 contributes. The Report tackles that issue of job creation. The team working on the WDR went to great lengths to make explicit that the document is about jobs and development, not labour markets. Even more, in their analysis, jobs are an important element for personal achievement and better social interaction, not only as sources of income.

The Report poses some challenges to readers. I got frustrated during my first two readings of the WDR’s Overview. I couldn’t see heads or tails in the construction of the argument. It wasn’t until the third reading that I realized, to my surprise, that the Report is not following a formal economic model. Forget one size fits all recommendations, where typically, labour markets should be made more flexible and wages reflect labour supply and demand. The WDR 2013 instead suggests a taxonomy for policy makers: depending on the structure of the economy, different policies could create jobs that promote development. They even provide examples of countries that, in their view, have succeeded in the challenges.

After I got over my initial frustration, I welcomed this innovation in the WDR. The authors decided to focus on the policy relevance of its recommendations and not on the internal consistency of whatever model. This is where the World Bank can put to use its vast knowledge and create room for policy debate – in suggesting different policies for different settings based on the latest evidence. The Report, however, falls short in failing to clarify what the Bank actually means by ‘development’ – a glaring omission given that they repeat  that jobs are ‘at the center of development’ again and again. Probably I am reading too much in this, but there are paragraphs in the WDR 2013 where the authors move away from the idea that economic growth is the best proxy for development (see, for instance, their box on “Growth Strategies or jobs strategies?”). They should make explicit the alternatives.

Both reports share something that is not quite evident in the first read: with different approaches, they both are concerned about social exclusion and their recommendations aim to change the structures that keep people out of jobs – either because they lack skills or because the economy does not create enough good jobs. The practical angle as well as the myriad of examples that both reports give will make a good initial step for policy makers when solving the youth employment conundrum. Now it’s the policy maker’s turn to do something.

More commentaries on the WDR by Martin Rama and Brendan Martin. Brendan and I both think it’s improved a lot since the first discussions – kudos to the Bank and WDR team on that.

Why the World Bank should declare a freeze on big land deals

‘Buy land. They’re not making it any more.’ Around the world, a lot of investors are taking Mark Twain’s advice to heart, and the resulting

land rush is doing an awful lot of damage. A hard-hitting, killer fact-tastic Oxfam briefing written by my colleague Kate Geary published today summarizes the stats (as far as we know them).

• In the past decade, an area eight times the size of the UK (203m hectares) has been sold off or leased out globally.
• The land acquired between 2000 and 2010 has the potential to feed a billion people, equivalent to the number of people who currently go to bed hungry each night (Oxfam calculation, all explained in footnotes).
• Two-thirds of agricultural land deals by foreign investors are in countries with a serious hunger problem.
• Two-thirds of foreign land investors in developing countries intend to export everything they produce on the land.
• According to the IMF, most of the land being sold off is in the poorest countries with the weakest protection of people’s land rights.

Once the land has been given away, it becomes a much harder and potentially nastier battle to take it back. The danger is that when the dust settles on this property rights freezing frenzy, millions of people will have l2ost access to land, countries will be saddled with bad deals, and investors will face a resentful population and a legal quagmire. So Oxfam is arguing that we need a freeze on investments involving large-scale land deals while we sort out the mess.

The organization we want to lead this is the World Bank, whose role its new president Jim Kim is currently reviewing. The Bank is the preeminent global development institution, and is ideally placed to send a big signal to governments and investors.

According to its critics, the Bank is also part of the land deal problem. Its private sector lending arm, the International Finance Corporation (IFC), has an official complaints mechanism known as the Compliance Advisor/Ombudsman (CAO). This has seen its case-load triple in the past two years, while in the decade to 2010 over 60 per cent of cases that it assessed related to land conflicts. Oxfam is a co-signatory to three formal land-related complaints to the Bank, one in Indonesia and two in Uganda – here and here.

Moreover, through its advisory services, the IFC encourages governments to streamline and consolidate investment-related policies and activities – in essence to create a ‘one-stop shop’ for investors. Recently, the Bank’s Investment Climate Advisory Services helped to create or support investment promotion agencies (IPAs) in Sierra Leone, Cape Verde, Senegal, Zambia and Tanzania, among others. In

Tanzania’s case, its IPA is mandated to identify and provide ‘available’ land to investors and to set up a ‘land bank’ of some 2.5 million hectares considered suitable for investment. That might all make sense in a well-governed land market, but is not helping if it smoothes the path of the current land rush.

But whatever the views on ‘Bank as problem’, it can most definitely be part of the solution. Its influence is huge, not just through its own actions, but its role in setting standards for other donors and investors. So Oxfam is asking it to declare a 6 month freeze, a time out during which it should review the World Bank Group’s investments, publicly support and help implement the catchily-titled ‘Voluntary Guidelines on the Responsible Governance of Land Tenure’ and lobby other investors to follow suit, overhaul its investment procedures and revise the kinds of advice it is giving to developing country governments.

Over to you Jim Kim

P.S. If you’re in Oxford this evening with nothing better to do, come to Blackwells for 7pm, grab a glass of cheap wine and help me launch the second edition of From Poverty to Power. Details here.

August wonkwar 3: Martin Ravallion v Ricardo Fuentes on inequality

August was wonkwar month here on the blog, with an epic exchange on private v public provision of education, featuring Kevin Watkins v Justin Sandefur. Then I got all cranky about a new paper on NGOs and development. And now a third, and final, exchange (much the most polite) as World Bank poverty guru Martin Ravallion (right) responds to Ricardo Fuentes’ recent post on inequality (and Ricardo responds to his response). First, Martin’s piece:

Equity and development: Oxfam versus the World Bank? Maybe not
I was pleased to read that Ricardo Fuentes, the new head of research at Oxfam, views equity as important for better development outcomes. Ricardo contrasts his views with those of the World Bank, and singles me out as a key protagonist. But Ricardo over-simplifies and even misrepresents my views, and the debate more broadly.

Ricardo characterizes what he sees as the old view that inequality is unimportant. He rejects the view that “income inequality is not relevant as long as the poor benefit.” My own work on pro-poor growth is cited as an example of this view.

It is true that I think that concerns about poverty–broadly defined–trump inequality as a characterization of overall development goals. But that does not mean that inequality is unimportant. As I have said often, along with other researchers, how much growth reduces poverty–how pro-poor it is–depends crucially on the initial inequality and what happens to inequality during the growth process. See, for example, this paper of mine from 12 years ago. As I wrote in the title of one paper, “Inequality is Bad for the Poor” (paraphrasing the title of a paper that Ricardo refers to, “Growth is Good for the Poor,” by colleagues in the Bank’s research department; believe it or not, debate is commonplace within the World Bank). In fact this idea goes back to my research in the 1990s.

To say, as Ricardo does, that “one of the major drawbacks of the early-2000s pro-poor growth approach of the World Bank was that they completely neglected the issue of fairness” is simply ludicrous. Since the 1990s it has been recognized that inequality– “fairness” if you wish–is highly relevant to progress against poverty.

Ricardo sees a change in attitudes to equity since 2000 or so, toward an emphasis on equity. According to him, “Even the World Bank, with its World Development Report 2006: Equity and Development, dramatically changed its position.” This is begrudging praise of sorts. But wait: the WDR was also making an instrumental case for equity, as a means of promoting better development outcomes, including more inclusive growth and (hence) poverty reduction. So the WDR might equally well be represented as saying that inequality is only relevant if it is good for development. Maybe Ricardo’s praise is unwarranted.

I readily grant that, prior to the 2006 WDR, the Bank (along with virtually the entire community of development economists) had not given nearly enough emphasis to the costs of inequality. Actually, that is still true. The 2006 WDR marked an important change, based on prior research, though there is more work to do. But it remains true that the WDR was also about the instrumental value of equity.

More recent evidence has re-affirmed that certain kinds of inequality are particularly harmful to pro-poor growth–both in generating less growth and in making that growth less poverty-reducing. My paper “Why Don’t we See Poverty Convergence?” argues that poverty itself may well be the key aspect of initial inequality that impedes poverty reduction. Thus we are now starting to understand how poverty can self-perpetuate, even with seemingly sound economic policies. 

In the end, I really don’t think there is that much disagreement. Maybe we should move the discussion toward how we can actually attain our shared goals of a world free of poverty. Sustainably promoting relevant dimensions of equity will be crucial, as will efficiency-enhancing reforms. More on both please from Oxfam’s well-intentioned new head of research.

Response from Ricardo Fuentes (left)
I am very pleased to read Martin Ravallion’s response to my blog post on inequality. Martin has of course been a key player in many intellectual debates on poverty, growth inequality and numerous other issues.

But his work, important as it is, is not the focus of my post. True, I cited his (and S Chen’s) definition of pro-poor growth [“By definition, “pro-poor growth” is growth that reduces poverty (Ravallion and Chen, 2003)”], because it has been very influential within and outside the World Bank. But the point I was making in citing their definition is the following: between 2009 and 2010 the richest 1 % in the US captured 93% of additional income. Let’s assume that the other 7 % was evenly distributed among the rest of the population (so that the poor also experienced a small increase in incomes and income poverty falls). This situation would be considered pro-poor under the above definition – but it also seems clearly unfair. This is where the definition is lacking. This dynamic is becoming unacceptable – as we can see from the Occupy movement and other public demonstrations as well as from higher echelons of power (for instance, in some of President Obama’s speeches.)

I agree that our disagreement is not major. If I should point to one difference, it is that I think that issues related to inequality are important in themselves, not only for their impact on poverty reduction. That’s where fairness comes in – we need more research on the direct effects of inequality on well being. Moreover, contrary to what Martin implies, I think that the WDR 2006 and the recent work of the World Bank on inequality of opportunity indeed deserve unqualified praise. It is true that the WDR 2006 didn’t develop the arguments about the intrinsic value of equity but they clearly raised them in page 7 of the Overview.

The World Bank will be an important voice when we try to answer the question “inequality of what?” It is great to see the World Bank working more on these topics. We shall doubtless engage in more discussions about this in the future.