What is on the global development agenda—and why

Lant Pritchett

Kennedy Center, BYU

June 16, 2005

Outline of the presentation

• What is the “development” agenda?

• What it takes to be on the agenda

• Four issues, three debated, one off…– poverty or MDGs versus growth– Big Push versus selectivity– “community” versus market or state– Labor mobility versus goods/capital

The global development agenda is about addressing the gaps between rich and poor countries

Poorest 10th in USARichest 90th in Rural India

Child mortality of the richest 20% of Indians is 9 times the OECD average

OECD average=6

The Development Agenda is a public policy and international issue

• Not a “charity” issue--don’t confuse rich country “poverty” as an individual pathology with “poverty” as a systemic economic and social pathology

• Intrinsically political and politicized—public policy is politics

Successful agenda items need to reconcile three distinct elements

Technically correct

AdministrativelyFeasiblePolitically

Supportable

To remain on the global developmentAgenda issues must haveall three elements

Development agenda can change with “lessons” or fundamentals

• Technically correct—proposed actions be seen to work and responsive to lessons of experience [Tanzania story]

• Administratively feasible—desired outcomes must be responsive to actions that organizations can undertake

• Politically supportable—the “development” agenda requires a confluence of rich and middle/low income countries

First debate: “Economic Growth solves all ills” vs. contenders: Poverty, Millennium Development

Goals, Inequality

• “Poverty” focuses either on “absolute” or “relative”—but only on income growth for the bottom X percent, not aggregate.

• MDGs are a collection of targets in poverty, education, health, hunger, environment, gender.

• “Inequality” focuses on the “quality” of growth and the level and changes in inequality within countries

Weakness of the “reform” agenda--even though the (near) worst country had better policies than

the best in the 1980s—growth did not accelerate in Latin America

Chile with best policy in 1985

10th percentile country in 1999

Growth in the region was as low in 2001 and mid-1980s

The transition was deep, long, and variable

Great depression in USA

Attacking the “reform for growth” development agenda

• One can doubt its “technical correctness”—backlash from over promising

• One can doubt its “feasibility”—can agencies really help promote reform?

• One can doubt its “supportability”—backlash in LAC, FSU, and Africa and loss of confidence/mixed emotions

Appeal of the contenders…

• Can’t beat something with nothing• Apparent attractiveness:

– The range of interventions to promote these seem clearer than accelerating growth (TC)

– The interventions appear more directly under control (e.g. schooling, health) (AF)

– More rich country “warm glow” (PF)

• But not “we have had too much growth with too little progress”—in fact the opposite

But “poverty” and “inequality” need to be kept in a global context—by the USA standard of poverty everyone in poor

Gap between USA poor and India “rich”

Gap between India “rich” and “poor”

Second Debate: “Big Push” versus “selectivity”

• Assessing Aid (World Bank, Dollar and Pritchett) argued that aid could only be effective in a sufficiently high quality environment (not perfect)

• Reinforce success (selectivity) rather than throw good money after bad (defensive lending) or buy promises (conditionality)

• Intellectual foundation behind:– No appeal for massive more aid– Millennium Challenge Account—largest increase in

US foreign assistance in decades– World Bank’s approach to HIPC (selective debt relief)

“Big push” counter-attack

• UN (with Jeff Sachs as cheerleader) argues for massive increases in aid (doubling current volumes)

• Why?– No empirical evidence at all (not TC)– Administrative feasibility—the agencies resist

the selectivity story– Selectivity is unpopular with those countries

selected out (and their patrons)

Debate about the location of the “weak links” in the chain from action to outcome—not about who

emotes the most

• Filmer, Hammer and Pritchett show that the advocates claim interventions can avert a child death for $10 to $100

• The aggregate evidence suggests $100,000 to infinity [Hammer story]

• Why?– Advocates just wrong about efficacy– Money spent creates no effective supply– Effective supply displaces existing efforts

On average public sector doctors in India are not present during facility operating

hours roughly half the time…

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Third Debate: “Community” versus state or market

The project level aspects of aid were founded on an “engineering” approach (Woolcock and Pritchett 2004)

– People have needs – Needs can be met by “stuff” (clinics, roads, toilets, schools)– “Stuff” is best produced in a technologically low cost (and hence

uniform) manner– “If you build it they will come”—since one is meeting “needs”

then “demand” or “willingness to pay” are irrelevant– The nation-state is the agent/agency best equipped to build the

stuff to meet the needs

Backlash from the “needs” model from left and right

• Left backlash: James Scott “Seeing like a state”—the state is incapable of providing differentiated responses at the local level—move to “community” responsibility

• Right backlash: the state has taken on too much relative to capability—move to “market” responsibility

Micro-credit, for example

• “Directed credit” through public sector banks was all the rage in 1970s and into 1980s—massive set asides for “rural” projects, “small scale” etc.

• Failure of this led to either:– Privatization of financial sector– Group based micro-credit

(or both)

“Community driven development” for another example

• Traditional development projects fail (perhaps weak governance)

• Replaced by channeling resources directly to “communities”– Small scale infrastructure– Social services– Economic projects

Diagnosis of weakness in services is poor “accountability”

Key debate: Can it “scale up” to be part of a development agenda?

• Grameen Bank total outstanding loans were on the order of 200 million dollars…

• “Community” projects facing same O&M problems…

• The service delivery agencies remain the real action—until they are controlled the “community” action remains at the margins….

ProviderClient

Collective action

Public goods

Private goods

voice compact

client power

Central

Local

compact

Historically “collective action” solutions have been a response to weakness and been brought into

mainstream as part of “modernization”

Fourth debate: Why not labor mobility?

• Post WWII experience is not globalization—– it is disintegration with a proliferation of

sovereigns– Modest liberalization of good markets– Modest liberalization of capital markets– Some (not much) cross-border coordination

via international agencies (UN, WB, IMF)

Integrated countries have large differences in population growth across regions, the world has small differences but

large differences in growth…

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R e e v e s

R e fu g i o

R o b e rt s

R o b e rt so n

R o c kw a l l

R u n n e l s

R u sk

S a b i n e

S a nA u g u st i n e

S a nJ a c i n to

S a n P a tr i c i o

S a n S a b a

S c h l e i c h e r

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S h e l b y

S h e rm a n

S m i thS o m e rv e l l

S t a rr

S t e p h e n s

S t e rl i n g

S t o n e w a l l

S u t to n

S w i sh e r

T a rra n t

T a y l o r

T e rre l l

T e rry

T h ro c km o rt o n

T i tu s

T o mG re e n

T ra v i s

T ri n i ty

T y l e r

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U v a l d e

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W a l ke r

W a l l e r

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W a sh i n g to n

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W h a rto n

W h e e l e r

W i c h i ta

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W i l l a c y

W i l l i a m so n

W i l so n

W i n k l e r

W i se

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Blu e= C o u n ty D ec lin ed ; P er c en tag e D ec lin e g r ea ter th an 1 0 0P u r p le= C o u n ty D ec lin ed ; P er c en tag e D ec lin e b e tw een 5 0 an d 1 0 0R ed = C o u n ty D ec lin ed ; P er c en tag e D ec lin e les s th an 5 0

Is the Sahel really so much nicer than Kansas?

There are regions of the USA the size of Sahelian countries whose population has declined by more than 25% since 1930

The population of regions of the USA is one third as high as it would have been without outward migration.

Niger has 10 million people.

Why is this graph facetious?

0

20

40

60

80

100

120

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All remaining goodsliberalization

3% increase in hostcountry labor force

Full Liberalization oflabor markets

Is “foreign assistance” a sideshow?

Table 3.6: There is widespread expression of support for “economic aid” and “effort for poverty”…in the same countries were immigration is opposed.

Fraction “in favor” of aid Fraction saying “too little” effort for poverty in less developed countries

Fraction “let anyone come”

W. Germany 83.0 65.2 13.8

Spain 85.1 64.9 14.6

USA 55.5 62.4 5.1

Japan 90.4 42.8 4.2

Australia 74.7 63.5 4.6

Norway 81.6 51.6 4.9

Sweden 83.9 51.6 8.4

Source: World Values Survey, third wave (1995-1997). Column I, “Some people favor, and others are against, having this country provide economic aid to poorer countries. Are you personally…” options are “very much for” “for to some extent” “somewhat against” very much against” and reported is either “very much” or “to some extent” for. Column II, “In some economically less developed countries, many people are living in poverty. Do you think that what the other countries of the world are doing to help them is about right, too much or too little?” and reported is “too little.” Column III “How about people from other countries coming here to work? Which of the following do you think the government should do?” reported is “Let anyone come who wants to.”

Conclusion: Personal reflections

• Personal obligation to charity—just do it.• Students—get skills, of all kinds, as compassion

alone doesn’t help [India and the “donors”]• Charity alone will make no dent in the aggregate

global poverty—national and international policies matter for development

• Even for the poorest spiritual, personal, salvation is more important than material well-being