Comments

Terrence – Thanks for another thought-provoking blog. I think most people would agree that problems with bureaucracies in developing countries can’t be reduced entirely to capacity constraints (the huge political economy literature, for example, supports your points about incentive compatibility). At the same time, I think there’s a logical problem with citing evidence that we aren’t good at building capacity as proof that we make too much of the problem. To me, capacity constraints are a problem especially because we aren’t particularly good at addressing them. In my experience, the severity of capacity constraints varies hugely by country and even by institution within countries (as you note) – so blanket conclusions about their relative importance are probably difficult to sustain. While of course never the only problem, I think there’s a lot of evidence (including our recent World Bank Policy Research Working Paper) that capacity constraints are a significant issue in many Pacific countries, given the inherent problem of finding enough people in small populations and small public sectors (in absolute terms) with the specialized skills required to support all of the various technical functions that states are expected to perform (provision of public goods, demonstrated compliance with fiduciary norms in management of public funds, maintenance of a sound macroeconomic and business environment, participation in various international fora, coordination of and reporting to donors). Some of the Pacific Island countries only have one or two qualified accountants in the whole country – this inevitably creates binding capacity constraints to implementing public financial management systems that meet international standards, for example. I’d also add another item to your typology of causes of bureaucratic dysfunction. This is the common donor insistence that developing countries adopt the same institutions that operate in the same ways and do the same things as institutions in developed countries, too-often without consideration of the appropriateness of these institutions given available capacity, political-economy context, affordability, or fit with existing, local institutions. Matt Andrews at the Kennedy school has written a lot about this in relation to PFM, and Rodrik also talks about the dangers of “blueprint” approaches when it comes to both policies and institutions. One approach that might help avoid both capacity problems and some political economy issues is ensuring that bureaucratic reform is informed by what can work to achieve the relevant outcome within constraints, rather then attempting to impose hugely ambitious imported models (accompanied by endless capacity-building programs) regardless of their appropriateness.

The obvious impasse between the stated intention of achieving stated national objectives and the ensuring they are met is the curse of many nations. In Melanesia, the root causes of the problem is well known. Firstly, from a cultural perspective, the imperative to meet deadlines and targets can be fluid and flexible when it comes to enforcement. Responsibility and accountability are nebulous terms that often don't translate. They are culturally disconnected from reality. Secondly, when overseas aid and stated expertise is constantly made available, local incentive to achieve results often is ameliorated to the point where any personal responsibility is dissipated and watered down as to be virtually ineffectual. Lastly, unless there is political will and the power to make it happen, it simply won't. The real problem is that no one is really prepared to face reality.

Thanks Tess. I agree entirely with your comment. Thanks for posting it, I think it's a useful partial counter to my post which could be read as being overly pessimistic. The only caveat I'd add is that identifying and supporting normative champions requires an adroitness and soft touch which, through no fault of their own, is often very hard for govt. aid agencies (and even NGOs). Hard, but not impossible though, and definitely worth doing.

Thanks for this Terence, it is a great piece. In relation to norms, I agree that they cannot easily be imported from outside and neither should they be. However, they can be supported and strengthened. Where normative champions are identified they can be supported as they develop normative communities, normative communities working in different areas of the bureaucracy can be encouraged to form supportive and developmental linkages and partnerships...

This is an interesting post but I'm not sure why Vanuatu is missing from the table as the relevant information appears in the preceding text. I agree that there has been and continues to be tension between donor priorities and actual development needs in the recipient country, and this is not something specific to the health sector. It may well account at least in part to the large proportion of funding in the areas of prevention and public health - my (non-scientific) observations are that this has never been much of a focus for governments unless and until there is an 'aid project' to drive it. As for moving to budgetary support, that is a long and tricky road to navigate - issues of influence, whether in relation to what to do or how to do it, are the key.

I agree that Asia should remain a development assistance priority for Australia but that the continent should be disaggregated in terms of detailed bilateral priorities. India and China have recently 'graduated' as did South Korea and Singapore long ago and Malaysia and Thailand more recently; Vietnam and the Philippines might be next. That would leave countries such Laos, Cambodia, Indonesia, East Timor, Burma, Mongolia, Bangladesh, Sri Lanka, Nepal, the Maldives, Bhutan, Pakistan, Afghanistan and North Korea and several others depending on where the boundaries are drawn and whether the Asian republics are included. In terms of the Asian century, therefore, there are two points to be made: we should look forward to, encourage and even insist upon further graduations as the pace of economic growth picks up - possibly by defining an end of aid timetable with the countries concerned - and focus on the poorest five or six countries and the African continent; and before graduation we should be looking to ways to ensure continuity beyond graduation so that the many human and institutional links fostered in the aid era are sustained into the Asian century. Mostly, this can be done by the institutions, companies and individuals already involved but innovative ways of government support (often by simply getting out of the way). Much is being done already. A quick scan, for example, of ongoing and self funded scientific cooperation between Australian and Asian research and training institutions will find that much of it has its origins in aid programs. Aid graduation or an end to aid might well be a vote winning issue to justify a continuing commitment to development assistance bolstered by a confidence that it will achieve its objectives of self-sustaining prosperity. Finally, in terms of refugees, Stephen seems to have missed my point (and omitted an 'n' in the spelling of my first name). I am less concerned with definitions or even transparency but in seeking to encourage thinking about how development assistance funds might be used imaginatively to help those fleeing their own countries. One way, which is already being explored is to introduce a massive program of investment in public, NGO and private education, especially of girls, in refugee camps. A few hundred million dollars might make a big difference. I think DFID may be leading the way in such an endeavour.

AusAID and the Minister for Foreign Affairs were going so well improving transparency, but then comes the leak of the effective $375 million cut to the program and the unexplained delay in releasing the Annual Review of Aid Effectiveness ...

I want to respond to these comments (for which many thanks) with two points. Satish argues that it could never be right to claim costs on asylum seekers as aid. I disagree. The aim of aid should be to reduce poverty, and resettling asylum seekers achieves that aim. The problem in Australia is that we don't know what the money is being spent on. All we have is Senator Carr's statement that the cost relate to "basic subsistence for refugees waiting to have their claims heard in Australia" and that "This will cover food, shelter and other essential items." We need more information on what costs are being counted as aid, and what costs will be in the future. But we should avoid a blanket rejection of counting asylum seeker costs as aid, just as we should avoid the argument that some have made (not Satish) that aid should not be spent in Australia. In fact quite a lot of aid is spent in Australia - think of scholarships for example. But even if the decision to count these costs as aid is legitimate it doesn't imply (as Dennis Blight argues in his comments) that the decision is fine. The way in which the decision was made is surely problematic. Cutting AusAID's budget half way through the year by almost 10% cannot be good for aid effectiveness. Robin Davies and I have revisited the asylum seeker issue in our blog on aid challenges in 2013. We included this issue as the third of five key aid challenges for 2013. Here's what we say: "The third [challenge] is to articulate and release a policy in relation to the use of aid for asylum seekers, explaining the basis for determining which costs are counted as aid, in line with OECD guidelines, and which are not. Most OECD countries charge some of their asylum seeker and/or refugee costs to their aid budgets. If aid is about helping poor people overcome poverty, and if that is the purpose for which these costs are incurred, that seems fair enough. But Australia’s decision to increase, massively and abruptly, this charge to the aid program creates a very large contingent liability for the aid budget. How much of Australia’s very large asylum seeker bill will the aid budget be expected to pay? Was last year just a toe in the water? Clarity around this issue is urgently required." Our full post is available <a href="https://devpolicy.org/2013-a-year-of-aid-uncertainty-20130108/" rel="nofollow">here</a>.

Thanks to Stephen and Robin for getting this year's blog off to a great start. There will be a whole lot more to say on this topic as the year progresses without doubt. Another area I think will prove interesting and possibly troublesome for Australian aid is the need to acknowledge and accommodate a range of new donors. In the Asian context this includes countries who continue to be recipients of Australian aid - it is possible that their priorities for aid are not aligned with those of Australia. As for the discussion in the lead up to the Australian election, it would be nice to think that it will be the focus of policy debate but it seems unlikely as it seems to me that it does not feature as a vote-winning issue - but we shall see!

Thanks Joel, Roger never replied - his comment appears to have been nothing more than a drive by shouting. Which is a pity, if there is more evidence I would love to know about it. Given the authors of the study I cited found almost nothing my guess is that there is almost nothing by means of proper impact evaluations on child sponsorship. According to a commenter on my personal blog cite (link below) and on the basis of the paper it seems that the program studied really was literally child sponsorship in the traditional sense. Augmented with a bit of community development. As you say most agencies these days, as I understand it, even when they market work as child sponsorship tend to implement it as community development. And, I agree with you, this is likely a much more sensible approach. Although, I guess in the absence of readily available impact evaluations of this approach we're left running on our intuitions rather than evidence. (With the caveat that there may be good evidence out there that I'm not aware of.) Thanks again for your comment. Link mentioned above is: http://waylaiddialectic.wordpress.com/2012/03/30/child-sponsorship/#comment-798 Terence

This article, although clearly articulating the issues does not go all the way in outlining the cause of them. Bart pulls the punches when discussing the current leadership and the lack of integrity of the leaders. He also, ignores the requirement for an independent assessment of the public works, education and health industries in PNG. Although there is a drive by the current PM to push education by making it fee free he does not address the issues outlined by Bart in the lack of infrastructure and the movement of teachers away from the rural areas to the cities. This movement is not just limited to the professionals which results in the rascal issue due to the lack of employment opportunities for the lower educated people. In the first 10 years of independence PNG was trumpeted as a reasonable success in the transfer of leadership from a colonial master to the reasonably law abiding, development orientated government. However, the seeds of the downfall of the country were being laid even then by decreasing expenditure on education, health and infrastructure and the transferral of these funds to the select few. PNG is a very rich country in terms of minerals and agriculture but it has not learnt to use this wealth for the good of the people rather using it for the good of the few.

Hi Nic, I remember reading that exchange when I did the research for my blog a couple months back. All the more reason we need to ensure that there is more scrutiny on where the funds are going. I'm sure there will be accounting tricks and we need to keep asking the right questions. It is obviously hard to compare what happens against counter-factuals but we can compare against per capita spend in comparable countries or against the spending between 2007 and 2012 (ie. the non-Pacific Solution era). Whoever thought that aid was moving out of the shadow of foreign policy and national interests must feel a bit sheepish now (including me...). Cheers, Joel