The DFID plot thickens….

A couple of weeks ago I criticised the Guardian for over-hyping some re-thinking of old commitments by the new DFID Minister. The writer either misunderstood what was going on, or was just pushing a partisan anti-tory line. Which is disappointing if it means that the paper which is supposed to represent British progressive internationalist opinion is letting party politics come before analysis, and misses the actually important question of where the detailed alternative proposals are.

Well on Sunday we got a bit more information on the direction we are headed in:

The government is to introduce a wholesale change to Britain's overseas aid budget by demanding that projects in the developing world must make the "maximum possible contribution" to British national security, according to a leaked Whitehall paper.

This is a terrible terrible idea. The last time there was a new Conservative government it abolished DFID altogether and moved it back into the foreign office. This time they promised not to do that because it might look nasty, but this move has the potential to have much the same effect.

And this is all the more depressing when we have a supposedly progressive and internationalist party in the coalition.

Given Vince Cable’s bold and admirable public defence of open immigration,

"It's no great secret that in my department and me personally, we want to see an open economy, and as liberal an immigration policy as it's possible to have."

it is pretty disappointing that the Lib Dems have shown no interest in defending DFID.

Gettin’ by in Lagos

The BBC documentary, Welcome to Lagos, now on YouTube. This is really really good.

HT: Marginal Revolution

Is Khartoum deliberately weakening the Southern economy?

The Central Bank of Sudan has stopped sending oil revenues in hard currency to Juba again. Instead, the revenues which GoSS are entitled to are being sent in local currency, causing a major shortage of foreign currency in the South. This is a problem for importers, who now can’t pay for their imports.

The Minister of Finance in the South has publicly stated that “It is an attempt by the National Congress Party to stifle the southern Sudanese economy” (AFP).

Whilst I wouldn’t rule this out completely, it’s probably something altogether less Machiavellian.

The Sudanese Pound began weakening against the US dollar in 2008. This increased the cost of importing goods. At some point the elites in Khartoum got sick of the rising cost of their imported goods.

In July 2009 the Central Bank of Sudan began using its foreign currency reserves to buy Sudanese Pounds – bidding up the value of the Pound, and making imports cheaper again.

You can see this on the chart, where the Bank was clearly targeting an exchange rate of around $0.45 to the Sudanese Pound. Assuming that the Pound would otherwise have continued to weaken, this quickly must have turned into an expensive operation. The Bank would have had to keep on spending all of its foreign reserves on buying up Sudanese Pounds.

Eventually, sometime around May 2010, Khartoum ran out of foreign currency, and let the Pound fall in value a bit.

Chances are then that Khartoum has stopped sending dollars to Juba simply because it has so few left itself that it wants to build up a reserve again. None of this takes away though from the economic damage being inflicted upon the South. Good luck Juba.

How America can save the peace in Sudan

Note: Image from the LSE report Southern Sudan at Odds with Itself

I am optimistic about the chances for peace in Sudan. Khartoum and Juba are interdependent. Both rely heavily on the shared oil revenues (Khartoum about 50% reliant, Juba about 100%), and both could choose to stop production, violently or otherwise.

There is lots of room for a mutually beneficial deal to be done.

But this doesn’t necessarily mean that cool heads will necessarily prevail. Both sides have strong incentives to arm as heavily as possible, just in case a deal doesn’t work out (see Elbadawi on the game between Juba and Khartoum).

The Sudan Tribune recently reported allegations that the SPLA is buying military aircraft (denied by the SPLA).

Well it would make sense for the SPLA to want to buy military aircraft. Khartoum has planes and Juba does not, making the South incredibly vulnerable in any kind of conventional war.

As a result of the logic of the incentives facing Juba, the SPLA gets about 33% of the GoSS Budget, money that could otherwise go on essential infrastructure and social services.


What does any of this have to do with America? How about a no-fly zone for Southern Sudan? A security guarantee – allowing both sides to step down from the brink and focus on working out a deal, and investing in the country?

The Animal Kingdom

How about that for a new name for Southern Sudan?

So fine, after about 42 different people have sent me the link to the Animal City plan story in Southern Sudan, I feel duty-bound, as probably the best economics blog (previously) in Southern Sudan, to comment.

I think I may have actually seen this poster ages ago, or one very much like it, in the office of the Undersecretary for Transport, but not really registered it because I was running around frantically getting stuff signed or getting revisions to budgets or something, and simply dismissed this as yet another bizarre oddity, not really to be questioned.

Anyway I have sympathy for Peter Martell’s view:

Those 'wacky Africans', eh?

The world giggles at those ‘crazy Sudanese’, as though criticizing them for believing a better future is possible.

The key point, that southerners dare to dream of planning their own nation, of providing decent services and housing for the people to replace the towns left in ruins by decades of war against a regime that brutalized this land, is lost behind the patronising international sniggers of the safari shapes.

But what gets me the most though, is those words in the blank spaces around the Giraffe.

Protected Areas.

As if Southern Sudan, probably one of the least densely populated and least urbanised areas on the planet, is in any danger whatsoever of serious environmental degradation through overpopulation, and needs to maintain some kind of green belt around its cities.

Now this is pure speculation, but I think that the warped vision of urbanisation and economic geography held by the Sudanese government is a reflection of the warped vision of urbanisation and economic geography held by the international development community.

Ideas, memes, spread like viruses. Being a new state, a place like Southern Sudan looks outwards to the rest of the world, to its friends and partners who stood with it during the war, to learn.

And by god we have a responsibility not to give them shit ideas.

Rural idylls are generally not idyllic. People generally move to towns and cities because they are better. This is not a bad thing. Spontaneous, slightly anarchic, urban development is not a bad thing. For a good summary go and read the 2009 World Development Report, an annual “state of the profession” report which the profession hasn’t quite caught up with yet.

Brain Drain and Brain Gain: Quantified

John Gibson (Waikato) and David McKenzie (World Bank, and IPA Research Affiliate) attempt to directly compare some of the different benefits and costs from migration, using their own data collected in which they “painstakingly – tracked these individuals down to wherever they are in the world today.”

The bottom-line: By far the biggest impact is upon the migrants themselves.

See VoxEU for the full article.

The future of development economics is random

This first posted on the IPA blog.

Chris Blattman notes that this Summer’s edition of the Journal of Economic Perspectives is focused on development economics. What he doesn’t note is that the articles are heavily focused upon the role of randomized controlled trials within development economics, taking perspectives that are both positive and constructively critical.

Banerjee and Duflo make the case that it is advances in empirical testing that have revolutionized the entire field.

After a period of relative marginalization, development economics has now reemerged into the mainstream of most economics departments, attracting some of the brightest talents  in  the field … We believe that one of the reasons for the field’s vitality is the opportunity it offers to integrate theoretical thinking and empirical testing, and the rich dialogue that  can  potentially  take  place  between  the  two … In the last few years, field experiments have emerged as an attractive new tool in this effort to elaborate our understanding of economic  issues  relevant  to poor countries and poor people … Much of this paper illustrates the power of this interplay between experimental and  theoretical  thinking.

Angus Deaton, one of the elder statesmen of micro-econometrics, and randomista-critic, argues that experimental and quasi-experimental methods answer the what question but not the how or the why.

Instrumental variables and randomized trials can play a role in uncovering the mechanisms of development. Randomized trials have a powerful ability to isolate one mechanism from another; in particular, an experiment will often allow us to short circuit the often difficult process of developing theoretical mechanisms  to  the  point  where  they  can  be  convincingly  tested  on nonexperimental data. At the same time, the routine use of instrumental variable methods and of randomized controlled trials for project evaluation is often uninformative about why the results are what they are, and in such cases, nothing is learned about mechanisms that can be applied elsewhere.

Daron Acemoglu raises an important concern for scale-up, which is the question of how the effects of a project tested on a small scale, may have different impacts on a larger scale. He advocates the careful use of economic theory to help alleviate these concerns.

General equilibrium and political economy issues often create challenges for this type of external validity…General equilibrium and political economy considerations are important because partial equilibrium estimates that ignore responses from both sources will not give the appropriate answer to counterfactual exercises.

How do we  convince others  and ourselves  that our  estimates have  external validity and can be used  for policy analysis or  for  testing  theories? This is where economic theory becomes particularly useful.

And finally Dani Rodrik makes the case for his particular brand of theory; the diagnostic approach, as a tool to be used in conjunction with randomized experiments for helping to overcome the problem of external validity and deciding which interventions are likely to be most powerful in which contexts.

Ideally, diagnostics and randomized experiments should be complementary; in particular, diagnostics should guide the choice of which random experiments are worth undertaking.  Any developmental failure has hundreds of potential causes. If the intervention that is evaluated is not a candidate for remedying the most important of these causes, it does not pass a simple test of relevance. Yet the tools of diagnostics remain surprisingly underresearched. 

The Ground Zero Mosque…

… isn’t actually the ground zero mosque at all. It is TWO BLOCKS from the World Trade Center site.

HT: Scott Berkun

Fear-mongering by The Guardian is bad for aid

DFID is looking into dropping Labour’s commitments on inputs so that it can refocus its monitoring and targets onto outputs, within the context of a ring-fenced total aid budget.

This could work, or it could not. It is an experiment, based on pretty sound logic. Experiments are good.

Fear-mongering by The Guardian doesn’t help anyone.

Beyond Liberalism

Dawkins et al are like bored historical re-enactment societies, spicing up their weekends by play-fighting battles that were already long-since won …

Liberalism hasn’t won, goes this argument: it’s under attack again. Once more unto the breach, we must fight off the enemies of freedom.

Jules Evans at Global Dashboard

A plea for help

“I have something I want to tell you now,” he said.

“Everyone who is here now is here because of America. It was your president, Bush, who forced the north to sign the peace.

“You educate our people. Our top leaders were educated in America, my son too. You are our deepest friends. Even our young children know this about America.

“Even these oil companies, we want them to leave, and American companies to come back.

“I appeal to you, bend down your ear to hear us.

“We are going to our referendum. We want to leave. We want independence. But the Arabs don’t want this. We need your help. The Arabs do not want to let us go.

“America, please, reach down your hand to us.

“Please take back my message.”

Alan Boswell speaking to the paramount chief of the Dok Nuer in Unity State, Southern Sudan.

How India Sees the World

Forbes India, (HT: Suvojit)

3 Problems with Constituency Development Funds

I was introduced to Constituency Development Funds in Southern Sudan. I had an instinctive dislike for the idea but never really put my finger on why.

A new International Budget Project paper helps out.

This list includes Ghana, Kenya, Liberia, Malawi, Namibia, Nigeria, Rwanda, Southern Sudan, Tanzania, Uganda, Zambia, and Zimbabwe. CDFs are funding arrangements that channel money from central government directly to electoral constituencies for local infrastructure projects. Decisions about how these funds are allocated and spent are heavily influenced by members of parliament (MPs).

So what is the problem?

1. CDFs breach the principle of the separation of powers by conferring parts of the executive function of budget execution on the legislature.
2. CDFs contribute to clientelism
3. the executive tends to support the introduction of CDFs because such schemes could help to shift the responsibility for capital investment away from them and onto MPs

But what caused what? Do CDFs really encourage clientelism or are they merely a natural outcome of an already clientelistic politics?

And how are CDFs related to the donor-led drive for decentralisation and community participation? Are CDFs a perversion of the latest fad for “Community-Driven Development”?

Sadly this is probably the kind of scheme that would be somewhat difficult to evaluate through randomisation…

Songs about leaving Africa

Barcelona or hell’ - is the sentence every kid in Dakar grows up with: leave or die trying. Life is tough for many people in Africa, especially in the ever-expanding mega-cities like Dakar, Lagos and Nairobi where work is shared between millions and life is a hundred times more expensive than it was in the village. Getting to the west and the promise of a life with well-paid work is what is occupying everyone’s mind. With visas virtually impossible for the ordinary person to get and the internet and TV showing the life in Europe and the US, the image of Western life presses hard on the African mind. Paradise is just a canoe journey across the Atlantic away or a mad trek across the Sahara. Many thousands have died along the way, but thousands more have followed, even more determined to make it. Some have never been to school, don’t speak English, can’t swim, and do not know anyone where they are going. The thing that unites them is their determination: “Yes we can”, we can make it, get out, and live the life we have always dreamed of.

An album compiled by Rose Skelton, via ScarlettLion.com

What You Can Do to End World Poverty

Don’t be in such a hurry. Learn a little bit more about a specific country or culture, a specific sector, the complexities of global poverty and long run economic development. At the very least, make sure you are sound on just plain economics before deciding how you personally can contribute. Be willing to accept that your role will be specialized and small relative to the scope of the problem. Aside from all this, you probably already know better what you can do than I do.

But I do salute you again, and I do believe when there are enough people like you, you will cumulatively make a difference.

Bill Easterly

“I-spy” Scotland

1 hour in Edinburgh and already I have spotted:

• Man in Kilt:                  Check
• Junkie:                           Check
• Edinburgh Castle:      Check
• Can of Irn Bru:            Check

What to make of Chavez huh?

Hugo Chavez, Venezuela’s President, has plenty of critics, who often focus on his style (not least his interminable unscripted chat show, Alo Presidente), and in many ways he does fit into the tradition of the Latin American caudillo (the ’strong man on horseback’). But Venezuela certainly seems to be getting something right on inequality. According to the highly reputable UN Economic Commission for Latin America and the Caribbean, it now has the most equal distribution of income in the region, and has improved rapidly since 1990.

That is Duncan Green.

Meanwhile, Ed Miguel, Hsieh, Ortega and Rodriguez, find that:

In 2004, the Chávez regime in Venezuela distributed the list of several million voters whom had attempted to remove him from office throughout the government bureaucracy, allegedly to identify and punish these voters.  We match the list of petition signers distributed by the government to household survey respondents to measure the economic effects of being identified as a Chávez political opponent.  We find that voters who were identified as Chávez opponents experienced a 5 percent drop in earnings and a 1.3 percentage point drop in employment rates after the voter list was released.

It seems like opinions on this guy are so politicised it is difficult to get any kind of objective economic read.

What are the odds of my “New Sudan Driving Permit” being accepted in the UK or US?

  

Note: “New Sudan” was the name used by the SPLM to refer to  the “liberated areas” in the South prior to the 2005 Comprehensive Peace Agreement. Before the creation of the “Government of Southern Sudan”, there was a “Civil Administration for New Sudan”.

Factory work. Nearly as good as marriage.

Hera is a 45-year-old woman living in a village in Manikganj District, about an hour and a half by road from Dhaka.

This is her life history, as told to IFPRI researchers. (HT: @davidroodman)

Re-design

So I’ve been playing with the new blog templates from Blogger. What do you think?

Reintegrating rebels

Via the Monkey Cage, a clever new paper assesses the impact of a World Bank reintegration program for ex-combatants in Burundi. The paper uses a quasi-experimental design, exploiting the unplanned random execution of the project (at the individual level) resulting from a contract delay with one of the implementing partners.

The results found that the economic assistance targeted at these individuals did improve their economic position, it did little to affect their political and social reintegration.

I’m looking forward to seeing the results of Chris Blattman’s project with IPA doing a full-on randomisation of a reintegration project in Liberia.

HT: TH

The Impact of Evaluation

Note: This was first posted on the IPA blog.

Alanna Sheikh started a bit of a debate last week on the limitations of impact evaluations. She cites Andrew Natsios (a former USAID administrator)

USAID has begun to favor health programs over democracy strengthening or governance programs because health programs can be more easily measured for impact. Rule of law efforts, on the other hand, are vital to development but hard to measure and therefore get less funding.

Lots of things are vital for development, but something being vital doesn’t mean that aid funding is necessarily an effective way of supplying it. Not only that, but something being difficult to measure does not make it impossible. And sure enough, JPAL and IPA have conducted a number of evaluations of governance projects, such as working with the police in Rajasthan, on peace education and ex-combatant reintegration projects in Liberia, and evaluating anti-corruption strategies in Indonesia.

Randomised impact evaluations give the strongest evidence available on a project’s effectiveness. If USAID is beginning to favor projects with evidence of impact that is a good thing. The challenge for governance and rule of law advocates is to prove their impact.

Dennis Whittle of Globalgiving.org adds another limitation:

Formal evaluations, including the gold standard of randomized controlled trials, are not scalable.  We simply do not have the time and resources to do centralized, in-depth evaluations of everything.

This argument is like not bothering with lifeboats if they can’t fit everyone in. Evaluations are crucial if we are going to learn whether or not we are wasting our money. And who knows, we might not be able to evaluate every single project, but if we keep coming up with compelling theories of change and keep replicating our findings in different settings, we could certainly try to evaluate every single intervention.

MPI

Yet more on the multi-dimensional poverty index (bored yet?):

1. The Economist is a fan (“the MPI is a step forward”)

2. Gabriel Demombynes at the World Bank answers Stefan Dercon’s question (what are you for, MPI?). The MPI is a marketing tool.

The general effect of launching a composite measure, such as the Corruption Perception Index or the Commitment to Development Index, is to focus attention on the subject matter. We’ll probably hear more people talking about multidimensional poverty in the next few months as a consequence of the MPI.

That is certainly true. Nice seeing you last week in Nairobi Gabriel!

Bias

Brooks discusses the Well-Plannned Life vs. the Summoned Life.

Could this be a good excuse for those of us who never plan more than 5 minutes ahead?

Is it possible I like Searchers because of my personality type?

That is Easterly on why he isn’t a planner. That’s ok Bill. Half of the reason I like randomised trials so much is because it’s a bit like gambling…

Links

1. An Economist leader on Conditional Cash Transfers: “The programmes have spread because they work. They cut poverty. They improve income distribution. And they do so cheaply.”

2. The School that Valentino and Dave built in Marial Bai.

3. Richard Dowden on Gordon Brown’s speech to the AU in Addis.

4. Suggestions from CGD for improving AGOA.

5. The financial returns to attractiveness are roughly similar for prostitution and the rest of the economy.

Stefan Dercon on the MPI

From a presentation at the OPHI (the creators of the index).

What is the Multidimensional Poverty Index for? A beauty contest?

HT: Abhijeet

Learning to Randomise

So yesterday was the last day of this year’s training week for JPAL and IPA staff based in Africa. I’m going to be starting in September as the IPA Communications Coordinator (professional blogger?!) based in New Haven, so this was a great opportunity for me to meet a bunch of the field and head office staff, and learn a bit more about how JPAL and IPA actually conduct an evaluation.

Things I have learned:

1. The phrase for “gamble” in Liberian English is to “put it in the hole.” Which apparently makes for some entertaining interviews with youths about their appetite for risk.
2. Limuru, Kenya, is COLD!
3. People can go to great lengths to get a drink. (but this is OK).
4. IPA staff are awesome. Everyone is fun, clever, and motivated, and are all total data-geeks. My kind of people.
5. Oh yeah, and how to conduct a randomised evaluation.

Here is my ultra-condensed summary.

Day 1: Why randomise anyway? (Because if you care about measuring the impact of your project – this is by far the best way)

Day 2: How to use STATA. (just spend a few hundred hours learning to code)

Day 3: How to design an evaluation, and how to manage data collection in the field. (what are you randomising and why? how do you manage the logistics in the field)

Day 4: Data entry and project management.

Day 5: Ethical and privacy issues, dealing with research problems, and budgeting (I totally rocked the budgeting session)

Day 6: Bringing it all together: presenting a complete project design from start to beginning.

If you are interested, all of the training materials are available on the MIT website, including videos, lecture notes, case studies and exercises.

The only thing not included is the trip to Lake Naivasha to walk amongst the zebra and giraffe. For that, you might just have to go and sign up…