musings on travel, international living, development aid, politics, turkey (the country more than the meat) and anything else that comes to mind...

Saturday, November 3, 2012

The Irony of Aid Dependency

By continually addressing symptoms of poverty we have allowed entire nations to become dependent on the generosity of others, thus ironically disincentivizing private sector growth and self-sufficiency that is arguably a long-term key to poverty alleviation. Despite the cost to our beloved heart strings, the global development community needs to start addressing root causes of poverty in a significant way, even if it comes at the expense of more traditional humanitarian aid.

A recent op-ed by UK PM David Cameron has sparked quite the kerfuffle in the blogosphere (the 'mainstream' media is too focused on trying to figure out whether blogger Nate Silver's models have an inherent liberal bias). Among others, Justin Sandefur and Todd Moss weighed in from the CGD while Chris Blattman chimed in with the type of constructive criticism that we've come to expect from him. I guess now it's my turn.

Cameron promotes his ‘golden thread’ idea whereby multiple strands (rule of law, lack of corruption, property rights protection, etc.) must come together to create the hallowed development ‘thread’. Blattman responds by pointing out (among other things) that ‘industry’ is not even mentioned. “Why is industry so unfashionable among aid elites? I honestly don’t know,” he laments.

I suspect, as he goes on to offer some possible scenarios (environmentalism, heart strings, etc.), that Blattman is aware that ‘sexiness’ (not the Victoria’s Secret or David Beckham type) matters to the world of development as much as it matters in the battle between the iPhone 5 and the Galaxy S III. The aid community – and the governments, politicians, foundations and individuals that fund it – rely on stories of life-saving food supplies delivered to Mogadishu under a hail of gunfire and of small-holder Indonesian farmers getting up-to-date crop prices via text message. Admit it, the image of a malnourished child with flies on her face causes you to reach for your wallet a lot quicker than someone telling you to donate your hard-earned money to a 'private-sector growth' or 'government capacity building' program.

However, as sexy as they may be to taxpayers, many of these genuinely well-meaning initiatives (several of which I’ve worked on myself) attack poverty in a reactive way; they treat the symptom rather than the cause. And in the long-term, they very well may be doing more harm than good. (PhD topic anyone?)

In my temporary home in rural South Sudan, NGOs have long run health care facilities, flying in medicine and supplies from places where, unlike here, asphalt is not an unthinkable luxury. Yet private clinics still exist, operating mainly at times when logistical problems or weather limit the availability of NGO-provided free medicine. In other words, people find a way to pay for treatment when it’s not free. No villager in his or her right mind would admit to this to the NGO of course; why pay for something when someone else will provide it for free? To be fair, it’s likely that quality of care and medicine is higher at the clinic supervised by trained clinicians employed by NGOs. But, by undermining the growth of the private clinic industry with our free goods, we may never know whether the market would eventually correct this lack of quality were it to be demanded (and paid for) by consumers.

Only one small example of many I've noted, it is nonetheless another reason why I feel that, if we are to achieve development in the long-run, sustainable economic growth must be a focus at the policy level. Our policy makers need to start ideologically phasing out such handouts, shifting focus to the promotion of private sector growth and the environment needed to support it (like property rights, government accountability, etc.).

Should humanitarian aid and handouts stop altogether, immediately? Absolutely not. Doing so would be disastrous to countless lives fully dependent on the generosity of others, not to mention wholly counterproductive from a less emotional perspective. It’s hard to build on something that doesn't exist at all.

Instead, this must start with a gradual shift in mentality. One that must start from David Cameron and his peers at the highest levels of government in the 'developed' and 'developing' world. One that involves a tough transition from reactive humanitarian aid to economic growth and stability-encouraging initiatives. One that may take a generation (or more) to fully realize. One that will be unpopular with inherently protectionist constituents justifiably worried about their own domestic economies and jobs. One that nonetheless just might allow us to eventually shift from ‘helping developing countries’ to ‘dealing with trading partners’.

After decades of international assistance and countless billions spent trying to alleviate severe poverty that still exists in shocking numbers, it is a shift in mentality that is long overdue.

I don’t pretend that such a refocus on ‘industrialization’ or ‘private sector growth’ is the panacea. In Blattman’s dissection of Cameron’s op-ed, he identifies several other valid ‘blind spots’ in the strategy that should all be 'strands' if there is to be a magical ‘golden thread’. Nor do I fool myself into thinking this will be easy. Defeating poverty is a massive industry in itself (visit South Sudan if you don't believe me), with many people smarter than I constantly coming up with ideas, solutions, and RCTs. However, based largely on my own experiences in the field, I do believe that facilitating private sector growth should be at the heart of combating aid dependency and, to a subsequent and larger degree, global poverty. To grossly over-simplify this concept is to say that 1. markets adjust to demand and 2. people will buy what they need to survive if they have money.

Mr. Cameron does an admirable job of presenting several relevant, inter-dependent themes for development in a way that I've yet to see American politicians do. But I've found few who openly discuss the political will and policies necessary to (ideologically and tangibly) move huge swaths of the developing world away from their dependency on others. In fact, ‘dependency’ rarely comes up in policy discussions, usually hidden within broader, more nebulous discussions of ‘sustainability’. No one wants to think of his or her generosity as having negative repercussions.

It’s time to call it what it is folks. More importantly, it’s time to do something about it.

I’m looking right at you, Mr. Cameron.