8 Responses

  1. Vinny Nagaraj
    Vinny Nagaraj August 4, 2016 at 2:13 pm

    Hi Jo and Terence,

    Thanks for the interesting response. There are obviously a bunch of things for me to think about, and I will try my best to make some time to do that quickly.

    Again, some (strictly) personal thoughts that in no way reflect the views of my employer. These comments are purposely terse and technical for any avoidance of doubt that this isn’t an official plain-English response 🙂

    1. The process of appropriating, allocating, expending and evaluating aid well requires optimization across multiple dimensions and constraints. These include a number of complex political economy considerations. This means that the solution set of “approaches” to how to deliver aid is vast, non-linear, and not entirely dependent on any one of those dimensions or constraints.

    2. In other words, if lower volatility was the only thing worth caring about, aid could take the form of a pre-committed agreement to simply “transfer” resources across to aid partners (whether they were governments, organizations or multilateral institutions).

    3. I have to think about this some more, but I am in the formative stages of wanting to say that volatile aid can still be predictable if there is sufficient up-front clarity about the nature of that volatility, and strong, continuous early communication of any changes. In other words, volatility might create first-order predictability problems, but managing that volatility might offer predictability.

    4. This is important because the change from red to blue was accompanied by a structural shift that involved a move within the solution space of aid approaches. That move may have coincided with a political adjustment, but ultimately involved a large tradeoff between being close to the “just make a transfer” set of solutions and somewhere else within that set which may lead to either (a) a temporary; or (b) a permanent increase in volatility. It may be temporary because this new approach involved a learning curve and fixed costs that required time for us to “settle in”. It may be permanent because the types of investments are naturally bulky, discrete, and involve large degrees of decision-making under uncertainty. My suspicion is that it may be both.

    5. Given that structural shift, forcibly smoothing volatility (e.g. by “washing-up” as described in my official response), may be sub-optimal in the short-medium term. Instead, it is more important to communicate this change of approach well and manage the volatility as described in my third point.

    6. If aid investments are more discrete and lumpy in this new approach, and if those discrete and lumpy investments are occuring in a challenging, uncertain, and unpredictable environment, then it might well be that we encounter deviations that appear “large” even over a shorter planning horizon.

    7. It also means that the 3-year horizon becomes a more relevant base to measure spending predictability.

    8. Also there is an important policy question that is missing from your commentary: while the structural shift caused increased volatility, there was a (large) levels shift which meant more aid was flowing overall to the country. How should a recipient country assess the overall impact of those two opposing forces?

    I’m sure there is an easy, pithy, 50-word way to say all this, but who doesn’t enjoy a verbose and inefficiently long-form comment? It’s so much more fun.

    Again, all unofficial, formative thoughts. But I will continue to have a think with my official hat on.

    Vinny

  2. Gerard Prinsen
    Gerard Prinsen August 3, 2016 at 7:01 pm

    This is really cool to read at two levels.

    First, for the content by Jo/Terence and by Vinny reply, and the reply to that from the people-who-cant-dance. Insightful, and I enjoy trying to get my head around this.

    Second, so great to see constructive engagement. Almost a text book example of what dialogue can do for the *public* policy-making process. No, not almost. it actually is a textbook example. I can say that because I’m going to use this back-and-forth in the teaching of 41 postgraduate Development Studies students.

    Thanks!

  3. Pauline McKay
    Pauline McKay August 1, 2016 at 10:30 am

    Very good analysis and response to Vinny’s blog. Twenty million is definitely not small change.

    We put a link to Vinnys blog in the July edition of our e-newsletter Update. The August edition could include your reply.

  4. john mckinnon
    john mckinnon August 1, 2016 at 9:44 am

    A sensible, balanced follow up. Excellent work.

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