Award-winning Ugandan journalist Andrew Mwenda was eloquent on this point at our recent conference:
Andrew Mwenda on Taxation and Accountability in International Aid from LF on Vimeo.
Some recent research supports his view — aid is associated with less democracy, and of course less democracy means less accountability to your own people:
Simeon Djankov & Jose Montalvo & Marta Reynal-Querol, 2008. “The Curse of Aid,” Journal of Economic Growth, Springer, vol. 13(3), pages 169-194. Link to abstract here.
Perhaps a distantly related issue — Some are also wondering if it really helps to make Sudan’s leader accountable to outsiders, in this case the International Criminal Court. The always perceptive Alex de Waal is not so sure.
8 Comments
(1) Aid is associated with low income and low income with low democracy, so the association of aid with low democracy is not necessarily meaningful. And in time series terms both aid and democracy (measured by the policy IV indicator) have increased in sub-Saharan Africa since 2000, the cut-off point of the study you link to, so I’m not sure their point really holds.
(2) If democracy in the aid-recipient countries is good then presumably the electorate is able to hold the government to account for its expenditure, whether the money comes from aid or from taxation. But if democracy is poor then maybe some accountability to outside donors isn’t such a bad thing.
(3) I’m not clear what you and Mwenda are proposing. Cutting off aid and hiking up taxes on Africans? Or improving the transparency and accountability with which aid funds are spent?
To Jim:
I think their point is to make governments more dependent on a national middle class for taxes than on aid. Hence, the government will have an incentive to “help” entrepreneurial people who aspire to join this middle class, and it reduces the incentive to create the governments own middle class of bureaucrats – since there is no money to pay those bureaucrats.
But you state some important and valid points. This is obviously not simple. And, besides, how do you exactly make aid transparent, if government have all the icnentives in the world to hide it? And what if you cut the countries out, how many people will flee from deteriorating conditions?
Hmm,
Is this the sequel to the previous ‘assessing aid’ debate?
Thanks very much for this fascinating post.
Personally, I believe that aid agencies can have a tremendous impact on the individual level – a mother doesn’t die in childbirth, an infant doesn’t die of malnutrition, a child learns to read. At our best, we can sometimes (sometimes) have a long-term impact on an entire community.
Yet where we fail – again and again – is in any attempt to address underlying, structural causes of poverty or conflict.
The main reason we fail certainly isn’t for lack of trying – governance programs, anyone? It’s also not for lack of rhetoric – or, as the CARE slogan used to read: “Where the end of poverty begins”.
Personally, I think it comes down to a fundamental disconnect between means and ends. Worldwide, the largest donors in the world spent roughly $102 billion dollars on humanitarian and development programs in 2006.
Which seems like a great deal of money, until it’s divided between the dozens and dozens of countries which receive such aid.
That money is enough to keep millions of people alive during acute and protracted emergencies.
It’s even enough to create the occasional longer-term progress.
It’s also enough, as people like Neha Erasmus and Dambisa Moyo argue, to create crippling dependencies.
Yet it’s not enough – by itself – to address the myriad of causes that actually lead to poverty and conflict.
So, do aid agencies make things worse – maybe, probably, sometimes. At the least, ain’t no easy answers.
(For more, see: http://humanitarianrelief.change.org/blog/view/provocation_do_aid_agencies_make_things_worse)
Sir,
I apologise for the redundant comment above (two up). In general I certainly welcome someone asking ‘that aid benefit the poor’.
While your headline is more or less self-evident, my point was that these sort of simple debates (far too many of your posts to be honest) are awfully tiring and to me seem nothing short of inappropriate in the face the complexity of the world in which we live and the atrocious living conditions of so many people.
In 1998, the Bank’s so-called milestone report Assessing Aid, Burnside and Dollar came to the conclusion that aid only works under conditions of good governance. Shortly after, Dalgaard and Hansen pointed out that the prior conclusion was critically dependent on omitting four factors from their data set and showed that by re-including the factors and omitting a few others the exact opposite conclusion could be reached. Now I’m little surprised that it’s possible to reach the conclusion that aid is negatively correlated with ‘development’. We all wait in excitement for someone to link an article that proves the opposite.
I was surprised to learn that people apparently still discusses what the exact critical factor of the ‘Asian Miracle’ was. How about that a whole lot of them played a critical role both pro and con, and interconnected? Mr. Steiro has tried to draw attention to incentives for a while now. I would certainly welcome that as long as we’re not talking desert-based, economic man. Perhaps we could even get to the point were we would be better able to understand how incentives are shaped and changes.
Best wishes for the future, but pull up your socks. There’s more out there than ‘what works best on average according to your standard function’.
Dear Sceptical Secondo,
I agree with you that many of the blog posts make simple points. Since the aim here is to make aid agencies more accountable, why not start with simple stuff on which virtuallly everyone agrees and yet inexplicably the aid agencies fail to follow such simple principles? The main aim here is not to totally explain development or even the functioning of aid, it is just to hold aid accountable.
All the best, Bill Easterly
Sir,
Thanks for commenting. I’m all with you on the ‘holding aid accountable’ and I’m (hesitantly) willing to acknowledge the misplacement of my own proposal in the blogosphere. But while we’re at it, why not too hold development research accountable to reality?
For example, I’m not so sure virtually everyone agree that the ‘gemeinschaft/gesellschaft equals less/more growth’ is such a simple linear function as implied on March 4. Similarly, the democracy/growth relationship has been debated both prior and after Huntington’s 1968 book.
As for the critical issue of taxation, here’s a point that I would agree that we can virtually all accept. However, isn’t the central problem (ignoring corruption for just a second) that many ‘third world’ states are in a catch 22, where the characteristics/state of the economic systems -forming the basis for effective tax collection- seriously impede the possibilities for creating the tax revenue needed to create the foundations (health, education, infra-structure) for that same economic system?
I see little purpose in holding aid agencies accountable by pointing to ‘causal chains’ that are little less crude in their reasoning than the ones we’re criticising. It’s far too easy to dismiss.
I would argue that the problem for economists and planners is that we’ve grown used to the language of mathematical certainties. As pointed out by Ilya Prigogine in his ‘The end of certainty: Time, Chaos and the New Laws of Nature’; because of the possible, infinite interference of variables, single trajectories may be of little relevance to the average and vice versa. For instance, how would the ‘individual autonomy-growth’ graph have looked with time series of individual countries rather than the present cross-country regression?
Perhaps a first step would be to genuinely acknowledge that statistical significance etc. are expressions of probabilities rather than white noise or omitted variables.
Well, I better get back to my master thesis. It too, does not seem to emerge by quick interventions.
/Sincerely
(Btw: If anyone is already attracted to Prigogine’s Complexity but sceptical about its relevance to empirical research in the social sciences; try have a look on Alexander Bogdanov’s Tektology. I believe it provides a flexible framework, which could allow us to analyse social and economic change according to a more agile perception of societies and there constituents – not least resources. Or so I hope – if not, my thesis will become one formidable belly-flop.)
I’m a big fan of the video posts. Keep them coming!