Comments

Robin, Many thanks for this comment. We did in an earlier draft of the brief have a comparison with the recent (http://www.oecd.org/dataoecd/45/25/50056866.pdf) OECD projections using country programmable aid (CPA) but in the end decided to omit it for reasons of length and complexity. Perhaps that was a mistake. The OECD analysis is much more optimistic than ours. It projects an increase in bilateral CPA in 2012 of some 3% in real terms. By contrast, we estimate cuts in ODA for 2012 of 2.3% before inflation and 4.7% after inflation. Perhaps bilaterals will respond to their own aid cuts, as we suggest, by heavily cutting multilateral contributions, but even then it seems hard to believe that bilateral aid will rise in 2012. It is not clear why these two exercises give such different results. I don’t know when the survey on which the OECD analysis is based was undertaken, but my hunch would be that it might have been overtaken by events. The recent round of budget cuts to aid have come as a surprise. As to whether analysis should be undertaken in terms of ODA, CPA (a subset of ODA for bilateral donors, plus multilateral concessional aid), or, as you suggest, by also looking at other non-concessional official financing, these are surely all relevant. But aid (ODA) is a reasonably well-defined and important aggregate to track. And there has been an aid boom over the last decade. Last year (2011) saw positive nominal growth in aid, but not enough to keep up with inflation. Our finding that aid (ODA) in 2012 is actually going to fall in nominal terms is important enough to justify the analysis. It shows that not only has the aid boom come to an end, but that aid is now on the decline.

Many bilateral aid programs are fragmented and are used as a way of getting business for national firms. They have not done well in international evaluations, so maybe these cutbacks will not have as great an impact as feared.

Kathryn and Stephen, This is an intricate and interesting piece of crystal-ball gazing. It is, of course, not the only attempt to predict global aid aggregates for 2012 and beyond. Reporting and forecasting aid flows is core business for the OECD Development Cooperation Directorate, whose statistics division has been thinking about the best way to do this, and conducting surveys of donors' forward spending plans, for some time. With that in mind, I make the following four comments. First, some aid cuts matter less than others. For this reason, the OECD has, over time, developed the unhappily-named concept of "country programmable aid", which is an attempt to weed out flows that are considered generally not to deliver significant direct benefits to developing countries, such as aid administration costs, eligible spending on refugees in donor countries and debt cancellation. The concept is meant to get at what is "core" aid, or perhaps "available" aid from a developing country perspective. Your policy brief does remove some categories of flow for the purposes of cross-donor comparison – accounting, you indicate, for about 17 per cent of Official Development Assistance (ODA). However, it still includes much that is excluded by the concept of country programmable aid, which excludes on average half of total ODA. Consequently, the actual impact on developing countries of the decline you predict may be less than is implied. Second, what donors spend is less important than what developing countries receive. Even if, contrary to the first point above, all ODA lost was equally mourned, ODA is essentially a measure of donor effort (outflows from donor coffers, either to developing countries or to multilateral organisations) rather than a measure of developing country aid receipts. This might seem an overly subtle point but the money that goes into multilateral organisations, particularly as contributions to replenishments of the multilateral development banks’ concessional financing arms, can take a good while to come out – hence the use by the OECD of another opaquely-named concept – “Official Development Finance” – as a measure of the development financing that is actually received by developing countries in a given year (see, for example, Table B.4 in the OECD's 2011 Development Cooperation Report). Hence, also, the decision to use concessional outflows from multilateral organisations, rather than ODA inflows to them, in calculating country programmable aid. The latter is not merely ODA more narrowly defined; it is more like aid viewed from the receiving end. Third, ODA, private investment and remittances aren’t quite the whole story. Less-concessional official development finance (which is included in the official development finance measure just mentioned) has been small or negative in net terms for much of the last decade, but increased in importance as the multilateral development banks scaled up lending in the post-crisis period. While this category of flow is not relevant to low-income countries, it is relevant to the growing group of middle-income countries that contain the majority of the world’s poor. Trends in less-concessional official development finance matter, along with trends in private investment and remittances. Fourth, the outlook for aid might look very different depending on whether it is viewed from the giving or the receiving end. Putting together the first and second of the points above, what seems to be of most interest is how much country programmable aid might actually be received by developing countries in 2012, and how that might compare to the same figure in 2011. And in fact the OECD has, a month ago, released preliminary findings on exactly this, drawing on early results from a donor survey of spending intentions for the period 2012 to 2015 (final results are due out in June 2012). That survey finds that while country programmable aid declined by 2.4 per cent in real terms from 2010 to 2011, it looks likely to recover in 2012, with about a six per cent real increase. However, this is almost entirely a result of anticipated increases in concessional lending by the multilateral development banks, flowing from recent replenishments (exemplifying the lag mentioned in the second point above). After 2012, it is expected that country programmable aid will remain flat or slightly decline. In short, the stated spending intentions of bilateral donors might be a reasonable basis for predicting what 2012's global ODA aggregate will look like, but ODA doesn't include all financing for development and not all ODA is necessarily experienced as financing for development by developing countries. It would seem desirable to adopt something like the concept of country programmable aid, which removes less relevant flows and takes account of outflows from multilateral organisations, and also to track what is happening with less-concessional official development financing as well as private investment and remittances, if we are to get a better fix on the real implications of falls, or for that matter rises, in ODA budgets.

Dear Mr. Pollard, You are so right, poverty is so invisible. I have come back to implement a carbon credit poverty alleviation project in the Philippines after 35 years in the U.S. I am surprised to find so much denial at all levels on how bad the situation is, whether from the recipients household or the altruistic urban dweller. Poverty in the idyllic island environment is picture perfect, no trash, smiles from "indolent" people. coral sand beaches, blue skies. Why rock the boat? Every now and then, there will be a calamity but "we are not dying in huge numbers..." But in the Philippines, about half of our population are subsistence households who remain alive to eke out a living just to remain alive. Is this really better than starving to death or dying of disease or war. Is this not also misery, but in small bearable daily dosages? What surprises me, though this is not research based, is that the status quo seems to be acceptable, even agreeable to many. As an ex-pat, I understand your view from the "outside," and am having culture shock on understanding the view from the "inside."

Many thanks for the comments. Interestingly I got very similar comments on the PiPP facebook site where we also posted the blog and also to me personally so clearly there are many who think the emperor may be rather scantily clad. I think Robert has it correct when he says that there are too many "objectives". I think you all touch on this issue about being clear about what we intend to achieve and then focusing on just that. I think one problem has been that it is all too easy to criticize aid. Why are we helping starving Ethiopians when if we had solved the water problem ..... the problem with this type of argument is then you end up by designing "all inclusive" plans that are "holistic" and "sustainable". These are words to win the argument but lose the debate as ultimately nothing is ever sustainable or holistic. We (in the aid industry) should try and avoid the easy route - we are not going to "heal the world" a-la Michael Jackson. We are going to identify a problem on the ground and try and fix it. Donors should try and avoid the easy explanation of what they do - we will not eradicate poverty, we will help people in need where we can identify what their need is and have the resources to help them. This sort of covers the point raised above about simply asking people what they want. On the facebook site I mention that had I not written this piece I would have written a mock blog about what would have happened in 1960 if JFK had told the donors he wanted to go to the moon? I suspect a team of consultants would have come to first define what he meant by "go to" and "moon". More consultants would have come to devise a medium term strategic plan that would have eradicated communism, hunger and taken us to the moon in a holistic and sustainable way for the whole world (forget swap this is glop - global policy !!) - this would have taken three years to complete due to arguments - then we would have to design a medium term fiscal framework which would take another three years. The project would then be reviewed and the priorities changed to going to mars. We would fill in project completion forms about the impact of the work on HIV, gender and disability. An audit would be done which would take another year, exhaust everybody's patience and in the end find we accidentally bought red paint. Since we have a zero tolerance policy for commies the whole program would have been outsourced to GRM etc etc etc and we would never have got the moon and I would not be able to use the internet. Finally, whoever said the problem is more acute in the Pacific is kind of correct - it occurs everywhere but it is more visible and has more impact in our tiny region. Anybody want to help me write the mock blog? I think it needs to be written.

Hi Wesley. Some good suggestions. I'd maybe add the need to hold people, firms and donors accountable for development programmes or initiatives, and the requirement to revise ideas if things go wrong. The problem is that donors could pay lip-service to these proposals without any practical change. Somehow these need to be programmed into the approach via institutions and even theory. I actually don't think adherents to the Washington Consensus paid any attention to context. John Williamson, who coined the phrase in a 1989 article, called it 'akin to proof the earth is not flat', listing 10 policy points (inflation targeting, privatisation, current-account liberalisation, etc.) which he thought would always lead to development. There's been a bit of softening with the so-called 'post-WC' over the last decade, but it's still univeralist and largely context-insensitive. There's no need to resort to extreme relativism, where we end up with analytical paralysis. We're nowhere near that end of the spectrum at the moment. In my book Reflexivity and Development Economics (sorry for the plug) I discuss at length the need to strive for a position between full postmodern 'anything goes' approaches and the kind of mechanical one-size-fits-all universalism of the Washington Consensus. There's lots of room between these two extremes. Matthew, you're right that there can be different levels of context-sensitivity. Not everything requires deep-rooted attention to context and consultation, otherwise not much would get done. It's good that the discussions happening at all; that the debate has switched toward the importance of context, because we've just come out of three decades of one-fits-fits-all policymaking which had limited success. I do think that more attention needs to be paid to the whole underlying methodology of conventional economics, which very strongly influences development policy. The global crisis has prompted a rethink. This is happening at the Institute for New Economic Thinking, for example. Some of the more prominent economists are beginning to revise their views, and previously peripheralised economists are being heard (like Steve Keen). Cheers, Dan

One area which is often overlooked is what Australia can do to help reduce the trauma and economic impacts of road crashes associated with the increased motorisation in developing countries. This time last year Australia supported the launch of the UN Decade of Action on Road Safety, a program aimed at saving at least 5 million lives from road crashes by 2020. Richard Marles on behalf of Kevin Rudd announced an increase in Australia’s commitment to the the World Bank Global Road Safety fund to $2m pa over 3 years. see http://www.acrs.org.au/decadeofaction/ Australia has a good record in saving lives from reducing crashes and protecting those who crash from death and injury. 90,000 Australians are alive today because the rising road toll trend was reversed in the 70′s. So we have comparative advantage in road safety management, a key focus promoted by Andrew Leigh and also Simon McKeon ; but we don’t tell enough people about it. The Government’s action last year was a good small step in the right direction. Many simple, low cost solutions are available. On May 11 the Australian College of Road Safety together with others will host a rountable at Old Parliament House to review the first year's progress in the UN Decade of Action. On Friday May 11 there will be a Canberra-based roundtable jointly organised by Australasian College of Road Safety and the Australian Road Research Board (ARRB), which will bring together key agencies and individuals who are making a difference to road safety in the international, national and local spheres, with a particular emphasis on relating achievements throughout the first year of the Decade of Action & NRSS. Speakers will include the Hon. Catherine King, Parliamentary Secretary for Infrastructure and Transport and Dr Soames Job, Executive Director of the National Road Safety Council. There is no charge for participation and details are available from Claire Howe at the College. (claire.howe@acrs.org.au) Lauchlan McIntosh

The research should not have been publicised in the public domain if it is preliminary. In any case current is more valid and should be published in public domain for the information of the public especially development agencies. The danger here is that such publicity give wrong informaiton to people who don't know the realities of Western Province. Lydia

Wesley/Dan Yes, context is important. I think even the most hardened Washington Consensus ideologue would agree, or at least pay lip service, to such a statement. That said, I think we need to be careful with how far we take the argument. At its extreme, we end up with what Brian Levy calls “analytical defeatism” (see this excellent <a href="http://blogs.worldbank.org/governance/getting-beyond-the-every-country-is-unique-mantra" rel="nofollow">blog of his</a>). That is, the idea that theory is completely useless in development because every context is different. I think a more useful approach is one that recognises that context is important, but that its importance differs according to context (!). So for example, context is likely to be very important for land administration in Vanuatu. It will be less important for determining the appropriate electricity tariff charged by UNELCO, where the best approach will closely resemble that used in other countries. Lastly, I couldn’t agree more about the problems of high turnover among donors and its adverse implications for aid in the region. Wesley’s four points are spot on.

I was initially moved to comment on this research because of media coverage that lacked the many caveats and qualifications provided by Mark in his response. I’d like to thank Mark for acknowledging the preliminary nature of his research and carefully elucidating the range of issues that will need to be addressed to arrive at a better HDI measure. It is certainly unfortunate that findings that “will undoubtedly be revised heavily before being used for further analysis” have received so much media attention. In addition to the coverage in the Australian media, the <a href="http://www.deakin.edu.au/news/2012/23042012PNGMarkIndexresults.php " rel="nofollow">press release</a> that was issued by Deakin University has been reprinted in both of the national newspapers in Papua New Guinea and has aroused significant comment in the press and online forums. The reporting has focused on the apparent low levels of development in Western Province. As such I think it’s entirely appropriate to discuss other studies that have used similar data and have found far higher levels of development in Western Province. Notwithstanding the technical differences between the indices that were correctly identified by Mark, I maintain that it is of interest that the low level of access to National Roads in Western Province appears to be one of the main factors causing its low HDI score. In due course new data and improved methodologies should help to give a far clearer picture of the progress in human development across PNG. In the meantime, I would politely suggest that Mark McGillivray can’t have his cake and eat it. If, as he says, “it is premature to compare the HDI scores presented at the conference with the work of the NEFC in 2004 or for that matter any other indicators of development levels in PNG”, then surely it is also premature to compare the preliminary HDI scores he computed with the values published for other countries by the UNDP? I would like to end my comment by echoing the thanks from Matt. This is an important topic and the debate and public interest in measuring development that Mark has stimulated is very timely.

I'm in furious agreement with your sentiment Dan - 'Why not just ask people what they want?' Context is so important! Yet it often seems that importing the latest prescriptions for development and economic growth (as developed elsewhere) is easier than a 'ground-up' approach that builds on the social, cultural, economic and geographic circumstances of Pacific island countries themselves. This seems an inevitable outcome of the claims to unversality made by some brands of economic theory... Who needs to listen to people, or even take into account obvious geographic factors like massive oceans and small land masses, when you can listen to development economists (who have universal answers)? I think you're right that donors need to listen if they are to 'get back in touch with reality'. But (importantly) they need to be capable of listening. I imagine this requires change at an institutional level. I guess we could draw some recommendations out of this discussion: - Employ more locals in positions of responsibility - Encourage open, and collaborative, policy discussions - Focus on building 'institutional memory' (including by listening to sour old spanner monkeys) - Admit mistakes (and learn from them) Any others?

Thank Mark, You have stimulated an interesting debate and obviously there are methodological issues. But isn't the key issue that your conclusions drawn on Western Province's level of development are misleading because they are based on old data? I think what David is trying to show using more recent data, albeit not with directly comparable methodologies, is that the situation in Western Province may not be as bad as the headlines from your report. The solution is to a) note that the headlines on Western Provinces relative level of development are based on old and perhaps weak data, b) look at more recent data to see if HDI is likely to have got better in the last decade, and c) to get NSO (and their donors) to publish better data to enable more rigorous analysis. Matt