Is Aid Fungible?

No this has nothing to do with mushrooms.

“Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution.”

In the world of aid, this refers to the question of whether or not donors are able to successfully ring-fence their additional funds. If a rich donor gives £50m to the Ministry of Health in a poor country, can and will the poor country just cut its own MoH funding by £50m, freeing up that cash to spend on whatever it wants?

A new CSAE working paper by Nicolas Van de Sijpe suggests that aid fungibility is not so important. He uses a new datatset to test cross-country correlations between the sectoral distribution of government spending and donor spending.

The lack of fungibility of technical cooperation may be a consequence of effective donor conditionality. If donors are able to monitor the recipient government’s spending, they may be able to credibly enforce the condition that the government does not cut back its planned expenditure after receiving technical cooperation. An additional reason to explain the low degree of fungibility found, that applies specifically to technical cooperation and less to the other aid types, is the observation made by Gramlich (1977) that heterogeneity in government expenditure might contribute to reduced fungibility. To the extent that governments in developing countries spend few of their resources on the type of goods and services that are provided by technical cooperation, it becomes impossible to reduce this class of expenditure by much, as it quickly hits a lower bound of zero. If, in addition, the substitutability between different types of expenditure in the recipient government’s utility function is limited, low fungibility for technical cooperation may ensue. Finally, a lack of information on the recipient government’s part may also reduce the degree of fungibility.

Rachman: UK Immigration Policy is “idiocy”

The problem is that the government has promised to cut the number of migrants coming into the country. But it is fiendishly hard to tackle the kind of migration that actually worries the great British public [Semi-skilled workers from Europe, Asylum Seekers, and Muslims].

So, unable effectively to tackle the kind of immigration that actually upsets people, the British government is taking aim at the one group of migrants that are largely uncontroversial and that unambiguously contribute to the country’s well-being. What idiocy.

Rachmanblog, HT: TH

This is not a warzone

“The risk assessments are done by some wanker who’s just come from Kabul who is under the impression that we’re all about to be blown up,” Mr Woodward sighs. “The real ones that I have a problem with are the Americans who tell you within the first minute that ‘I’ve been to Pakistan and Haiti and Afghanistan’ as if this is really fucking dangerous. This is not in that circle. This is not a warzone. People are not trying to kill us. This is not anything like Iraq, Afghanistan or Somalia.

“I think the world’s got a very incorrect perception of South Sudan, and I think the world also confuses Darfur with South Sudan, which is an entirely different matter,” he says. “Americans have definitely got the wrong idea, and George fucking Clooney parading around town is not in anybody’s best interests.”

Michael Woodward of Terrain Services (another quote from the excellent-but-unfortunately-titled This is Africa magazine produced by the FT).

R-E-S-P-E-C-T

Across the vast majority of countries, Africans perceive respect to be asymmetric. In other words, they believe they respect Americans and the Chinese but they don’t believe these two groups of foreigners respect them.

That’s from Gallup survey data. It’s such a shame all of Gallup’s fascinating data is private. Perhaps this is an area for more international public funding.

When Gallup asked Africans about the presence of foreigners in their respective countries, an average of 44 percent said there are “too many” Chinese and 16 percent said there are “too many” Americans. These figures hardly tell the whole story. Strong majorities in many of China’s trading partners perceive the Chinese presence to be overwhelming. For example, 93 percent of Botswanans, 89 percent of Angolans, 69 percent of South Africans and 68 percent of Zambians say there are “too many” Chinese in their countries.

Africans’ perceptions that Americans are too numerous are far less widespread. It’s highest in Djibouti as 51 percent of residents said there are “too many” Americans in their country and lowest in Benin (7 percent) and Zimbabwe (3 percent). However, relatively significant proportions of Angolans (37 percent), Sierra Leonans (30 percent) and Liberians (29 percent), among others, told Gallup there are “too many” Americans in their countries.

In praise of slums

"As the fastest urbanising continent in the world, Africa is not only confronted with the challenge of improving the lives of slum dwellers but also the challenge of preventing the formation of new slums," said Joan Clos, executive director of UN-Habitat.

Really Joan? What's your counterfactual? An imaginary nice clean yuppie living in a nice clean neighbourhood? An imaginary happy-clappy rural farmer?

Slums are created when people leave their rural village to go in search of a better life/more money in the city. Slums aren't some kind of alien cancerous growth, they are the result of natural economic forces (*cough* WDR 2009 *cough*), of people becoming more productive when they are closer together, and can more easily exchange their ideas, their labour and their services. Africa may be the fastest urbanising continent in the world but that's probably because it was the least urbanised to begin with. Urbanisation is a good thing.

The breakneck transformation of a rural population into a predominantly urban one is neither good nor bad on its own, says UN-Habitat. 

But

They are already inundated with slums and a tripling of urban populations could spell disaster, unless urgent action is initiated today. This situation threatens stability and also entire nations," it said.

Enough with the alarmist nonsense please. For a look at some of the life and vitality and optimism of urban Africa, check out the BBC documentary Welcome to Lagos.

Quote of the Day: On Comparative Advantage and Specialization in Aid

"Like kids playing football, everybody follows the ball instead of holding their position on the pitch."

Owen Barder.

More on Poverty in America

Why do I feel more guilty about poverty in the US than in Sudan? Not that I think it is a bigger problem - people generally don't starve to death in the US. I'm generally quite cynical about "relative poverty". But the visceral emotional reaction seems stronger here.

Matt suggested this was about empathy and the veil of ignorance, which I hadn't thought of, but seems plausible. My instinct rather was that the problem seems so much more easily solvable here [the broad here - the developed world - whatever]. Inequality, poverty amidst plenty, is ugly. I  had my instincts somewhat reaffirmed by a friend who is Indian, lived in Sudan, and was similarly surprised by homelessness upon returning to Oxford. It's just unnecessary. Just give them cash?

Why is Yale so small?

Or rather the town of New Haven, which you probably haven't heard of, in which Yale sits.

Sam* got me thinking about this with this article he sent me recently, on repopulating urban america.

Now bear with me, but I can half-remember a talk by an LSE economic geographer (Henry Overman?), arguing that Oxford and Cambridge (UK) are underpopulated. Agglomerations matter. In the 19th Century industrial age Manchester grew rapidly as the centre of manufacturing. In the modern information economy, universities are the drivers of growth, and these places should naturally be expanding. In the UK this natural growth is restricted by green belts (I believe they call it zoning in the US).

So what's going on in Yale?


* Ooh snazzy new website, check you out. Nice tagline.

Khartoum Bombing the South?

last Friday’s aerial attacks by the Sudan army in Kiir Adeem, about 80 kilometres from Gok Machar in Aweil North County.

During the attack the Sudan army’s Antonov plane lobbed several bombs that resulted into the wounding of  17 civilians, most of whom are Baggara Arab.

…

A South Sudan People’s Liberation Army (SPLA) military police Deng Kur told Gurtong in Aweil Town that the Antonov plane was again spotted in the area twice yesterday but did not release any bombs.

A member of the Southern Sudan Referendum Committee at Gok Machar Angelo Ker confirmed the incident

From a rather sober article in Gurtong discussing the reasons for low registration turnout. What on earth is going on?! Is this real? How on earth is this not a huge fucking issue? This can’t be true can it?

Weird sentences

The decision of the British in 1956 to attach southern Sudan to the ethnically distinct north rather than to allow it to form part of a west African union was an important factor behind the problems that have troubled the area ever since.

That is Ed Pilkington, the Guardian's New York correspondent.

West Africa?

Minimal evidence supporting the paternalistic view in this context…

I’m just going to take this moment to offer a quick “I told you so” and do a little victory dance in the face of my paternalistic friends.

If I had my way huge chunks of aid budgets would be going straight into the hands of poor people.

“But they’ll blow it on booze and fags” they say.

Well.

This paper uses a randomized controlled trial of a governmental food assistance program to test whether this form of paternalism is necessary, comparing precisely measured consumption and health outcomes under both in-kind food and cash transfers. Importantly, households do not indulge in the consumption of vices when handed cash. Furthermore, there is little evidence that the in-kind food transfer induced more food to be consumed than did an equal-valued cash transfer.

…

Finally, there were few differences in child nutritional intakes, and no differences in child height, weight, sickness, or anemia prevalence. While other justifications for in-kind transfers may certainly apply, there is minimal evidence
supporting the paternalistic one in this context.

That’s in Mexico.

What about England you say?

What happens when you give £800 to someone who has been homeless for over 4 years?

Of the 13 people who engaged with the scheme, 11 have moved off the streets. The outlay averaged £794 ($1,277) per person (on top of the project’s staff costs). None wanted their money spent on drink, drugs or bets. Several said they co-operated because they were offered control over their lives rather than being “bullied” into hostels. Howard Sinclair of Broadway explains: “We just said, ‘It’s your life and up to you to do what you want with it, but we are here to help if you want.’”

…

Some estimates suggest the state spends £26,000 annually on each homeless person in health, police and prison bills.

Well who’d a thunk it?

Poverty in America

Driving through my neighbourhood in Juba, an American once asked if I felt guilty living in the midst of such poverty. I didn't. At least no more than I had done living in England, being equally aware of the existence of such poverty. Physical proximity shouldn't really have much to do with it.

I do though feel guilty about the guy who sleeps in the bus shelter in my New Haven neighbourhood. What is that?

On guest worker programs

International migration  is probably  the most  effective mechanism we know  to  rapidly  increase the  incomes  of  poor  people  (Clemens  et  al.,  2008).  However,  it  is  also  one  of  the  most controversial, with migrant-receiving countries worried about  the costs of assimilating workers and  their  families. Temporary or circular migration programs are seen as a way of overcoming such concerns and enabling poorer, less-skilled workers to benefit from the higher incomes to be earned abroad as part of a “triple-win”, whereby migrants, the sending country, and the receiving country all benefit.

Which all sounds great in theory. So David McKenzie and John Gibson evaluated New Zealand’s new (2007) seasonal worker program (using matched difference-in-differences), finding it 

among the most effective development policies evaluated to date. The policy was designed as a best practice example based on lessons  elsewhere,  and  now  should  serve as a model  for other countries  to follow.

Which is great and all, but as I’ve mentioned before, the impacts of migration are pretty clearly positive to me – the challenge and the interesting question is how you change attitudes in rich countries to migration. I worry that the enforceability of temporary migration is a hard sell. I’d like to see how New Zealanders are responding to this program.

The Final Countdown

After much coaxing, my friend Maggie Fick finally has her own website. Essential Southern Sudan reportage. This photo of hers is of the new (presently inaccurate) electronic referendum countdown clock in Juba.

2010 Commitment to Development Index

The 2010 Commitment to Development Index is out, put together by David Roodman at CGD. Lots of fancy graphics and charts to play with.

The key messages:

• Rich-country policies matter.
• Development is about more than aid.
• Aid is about more than money.
• Coherence matters.
• Partnerships are powerful.
• No one is perfect.

The UK scores pretty poorly, coming in at 16th out of 22 countries. We do particularly badly on migration policy (no surprises), security policy – my guess due to all those weapons sold to undemocratic regimes – and on technology policy – due to either low R&D spending or overly-restrictive intellectual property rights.

Sigh.

Disabled Skateboard Soccer in Accra

And now for something completely different. These guys were amazing. Perhaps unsurprisingly the team in England shirts took a beating.