This year’s big party is over so how are Pres. Jim Kim’s reforms going in view of the fact that the staff are up in arms? At a mass meeting last week Kim discovered that by talking to the staff he could learn a lot about what he was doing (!) (Who would have thought it?) After my nearly 30 years of observation inside and outside the World Bank one factor remains critical to the possibility of meaningful reforms. I am referring to the way the Bank’s Presidents are chosen. For those who don’t know, they are chosen by the President of the US, under an old agreement with the shareholder nations, and since the foundation in 1944 they have all been US nationals. Many have taken the job as part of a career at the top of the Washington political establishment and their next hoped-for appointment might require approval of a US Congress that views the Bank with skepticism. So to please congress they are obliged to don the mantle of persons-of-action, whether they want to or not, by making visible, sweeping changes, supported by new sound bytes about ending poverty etc, after which it is time to declare victory - all within the short, five years before they are reappointed or move on. All in all, they have to be quick change artists. Well folks, this may sound excessively cynical but the fact is that the solutions to the Bank’s problems are not short term. No amount of noise, moving the boxes around and cutting the alleged fat (which is what Jim Kim is doing) will per se do what is needed, and past experience suggests it will simply disrupt activities, decrease, not increase, effectiveness. What can be achieved by replacing ‘global networks’ (old ) with ‘global practices’ (new)? Nothing much. Trust me – the solution is long term – it involves a broad re-thinking of what the Bank should be doing in the 21st Century and a broad reorganization to perform that role (akin to the change of direction made by McNamara). That’s a big deal - and it almost certainly means changing the focus to ’global public goods’ - climate, environment, health, pests and nutrition, economic stability, and a lot of large scale infrastructure (which is what the Bank mainly did when it was founded). It means specializing, and dropping its current practice of rushing into every country and sector to be the ‘lead agency’ regardless of its competence, and it also means abandoning a lot of country-centered work (changing its sovereign lending model). That’s definitely long term stuff. But if as a result of it most of the people working in the Bank actively believe in the importance and effectiveness of its role then the organizational boxes will find their right place on their own. If they don’t then no amount of reshuffling will make any meaningful difference. Please read my book “Reforming the World Bank – 20 years of Trial — and Error” (Cambridge University Press).
In April 2014 was held the first ‘high level meeting of the ‘Global Partnership for Effective Development Cooperation’, in Mexico City. This was a follow-up to the last high level meeting which was on ‘Aid Effectiveness’ held in 2011 in Busan, S, Korea which followed the previous high level meeting of the same name in Ghana in 2008 which followed the previous high level meeting of the same name in Paris in 2005 which followed the previous one in Rome in 2003 which followed what I suppose was the original one in 2002 at which the international donors came up with the ’Monterrey Consensus’. That adds up I think to 12 years talking about the renewal of development aid. Each meeting has produced an agenda for action and each follow-up meeting (seriously) has reflected on the lessons learned about why the last agenda for action was not seriously achieved.
The Mexico City conference at a cost of many million of dollars focused on how the private sector can be brought into the aid process – not new of course – this has been going on for many years. Still, I am trying to remember why it is that the private sector in general might be interested in a process that reduces its return on investment (forgetting Bill Gates and the philanthropists who are non-Government rather than private). Or perhaps it has found a mechanism through aid to increase its return on investment? Either way seems problematic – so is this fundamentally a viable or value-adding partnership? How far could this really be fundamentally about seeking ways to increase growth in poor countries (which as everyone knows has been only weakly if at all connected with aid) and how far is it really just part of the ongoing effort to re-assert the relevance of the enormous official and non-official aid establishment, while giving large private firms another way to market their products? These are of course seriously existential questions – not relevant nor convenient to this moment or other ‘moments’. The problem is that these existential questions tend to rear their heads rather often and the future of aid needs to be (seriously) addressed by people outside the establishment whose personal livelihoods will not be affected by serious decisions about reorganizing it or even seriously cutting it back to something that really adds value.
gates.ly/1mTCrEw the Gates foundation latest annual letter reads inspiringly, but unfortunately a lot of it is really not plausible. It sets up a straw man - a quasi-ignorant opponent of foreign aid who lumps together and attacks all types of aid and cannot see how the poor world is getting richer. It says that many countries that used to be poor are now doing well, including in Africa, if only the doubters and naysayers would open their eyes. The basic problem with this assertion is that it involves a huge non-sequitur. Anyone who knows what’s going on would agree that many of even the poorest countries have been getting richer (at least up until 2009). But the whole point is that the countries that have done the best over time are simply not the countries that got a lot of development aid ! Take Morocco, Brazil, Mexico, Chile, Costa Rica , Peru, Thailand, Mauritius, Singapore, Malaysia – all these countries that are specifically named in the Gates letter as doing well have none of them received significant development aid in relation to the size of their economies (which is the relevant measure). As for other countries often held up as aid success stories, South Korea had a lot of aid but this was during the war of the early 1950s. The economy did not move for another 20 years so where was the connection? In fact the origin of South Korea’s industrial growth was probably the long term result of return migration of Koreans from Japan. Take Botswana – this is not a story about development aid at all. It is a story about diamonds and sensible governance. Take China - enormous growth but its aid to GDP ratio has never exceeded one half of one percent, a hardly noticeable proportion even of its annual GDP growth. Take India – now growing but its aid to GDP ratio has been less than one percent. These two countries account for a third of the World population so what has happened to them is significant. Sorry Melinda, the countries that have suffered from high dependence on aid (over 10% of GDP for a long period of time) are clearly those that have done worst - a few in Asia, Latin America and the Pacific, but mostly in Africa, and it is Africa where the problem is now. Over the first decade of the millennium African countries at last started to do much better. But there is no evidence that this was to do with development aid and plenty that it was to do with booming Global economic conditions.
But please note – I speak of development aid. This is in any case not exactly the business of the Gates Foundation. The Gates Foundation is rather about global health, global nutrition, and global humanitarian aid. These are different thing because they involve global emergencies, not national development strategies. So Melinda please stick to global health and global nutrition – you are probably right about it. Meanwhile the only way most poor countries can become wealthy in the end is through developing over time their own governance, institutions, capabilities, motivations and capital, with development aid as a limited help on technical issues if it can be done right.
Bill Easterly complains of fatigue in discussing whether aid works with Jeffery Sachs. I agree. Sachs’ ‘Millennium villages Project’ for example was something that could only have been conceived by someone who had little sense of the history of the failure of these types of projects. Look back to the ‘development villages’ of the 1960s in Africa. Economic Development comes from people’s capacities, motivations and energy. It simply cannot be done through outside (charitable) cash assistance, and the larger the number of assistance providers the more dysfunctional it becomes. The recent history of Africa shows at last some increase in indigenous capacity and motivation, and the diaspora is investing – eg in Somalia expatriate Somalis are way ahead of the aid agencies in trying to put the economy on the road to recovery. Diasporans at least have the cultural affinity with the beneficiaries, the motivation to succeed and to the take greater investment risks than aid agencies, (or general foreign investors).
This blog is about how to change development aid. It starts off from the discussion that is contained in my new book, shown here. The book analyzes the practice of development assistance in which I have worked most of my career.
I want to examine what are the possibilities of development without aid, development with less aid, or development with aid reorganized to achieve the objectives it is supposed to achieve. My hope is to encourage a dialogue on how these goals could be fulfilled. At the same time I believe that in many poor countries the diaspora is a force for change that could effectively replace development aid in many areas. Here is a summary of the message: http://blogs.worldbank.org/peoplemove/decline-development-aid-and-rise-diaspora
Here is the twitter address: bit.ly/18zhFUY
The key question is: how far could poor countries assert or re-assert sovereignty over their own development process through a disengagement from foreign aid?
This blog serves also as a platform for discussing how, if at all, donors can really help poor countries develop, rather than simply flying the flag or gaining commercial and strategic advantage.
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