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The coming collapse of the aid system?

There are signs of coming collapse all around us.  The complexity of the system is accelerating, despite the good intentions of the Paris and Accra declarations, as the system struggles to cope with change.  Here is a graph showing the number of individual aid projects recorded in the AidData database:

This comes from the blog of Owen Barder. His apocalyptic musings were inspired by NYU professor Clay Shirky blogging about Joseph Tainter’s book, The Collapse of Complex Societies, which describes how advanced societies (the Romans, the Mayans) become inflexible and collapse rather than adapt in the face of stress.

Owen sees evidence for impending implosion of the aid system in the proliferation of aid projects (pictured above), the popularity of anti-aid views from figures like Dambisa Moyo and Andrew Mwenda, and emerging actors like China and the Gates Foundation that work to some degree outside the existing aid system.

The post is full of great examples illustrating the development bureaucracy truism that it is perversely much easier to make something more complex than it is to make it simpler. The most succinct: “Senegal has 82 individual aid coordination forums.” He also describes a recent donor meeting in Ethiopia intended to simplify and streamline the aid landscape in which each donor came prepared only to make the case for their essential involvement in every single sector.

Why should this be so? Owen observes that “the bureaucratic and political need to be involved in many sectors in every country is a far more powerful force than the intangible development benefits of simplification.” A new paper presented at the recent Aid Data launch conference argues that bilateral donors fractionalize their aid into smaller and smaller projects order to increase their control over aid expenditure.  Once again, it’s all about control and what makes good politics for the donor, not about what’s most effective for the recipient.

These examples and new research make it easy to follow the argument that the sector is doomed to become more and more complex. But what the apocalypse will look it – or if it will happen – is very unclear.

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16 Comments

  1. Joe wrote:

    Having sat through many a meeting with donors, it seems that institutional ego always trumps collaborative working, except in cases where collaborative working boosts institutional ego, which are needless to say, few and far between.

    Posted April 8, 2010 at 3:44 am | Permalink
  2. teekay wrote:

    ‘There are signs of coming collapse all around us’…because 3 books and 5 bloggers write about it?! The capillary system of aid is strong and powerful, keeping many bureaucrats, aid workers, academics etc in business-both in the ‘North’ and ‘South’. I’m playing devil’s advocat here, but I don’t care about Senegal’s aid coordination forums. I haven’t seen demonstrations in Senegal or, say, the UK protesting against jobs in the development industry or consultancies to advise for more aid coordination efficiency. Charities are thriving, tax payers’ money is flowing, academic courses around ‘development’ are growing and the expat lifestyle has never been more popular. Add gap year students, a few celebrities and ‘development’ has truly arrived in the cultural mainstream. Some of these dynamics may be changing with the rise of the BRIC countries-but then again I have been hearing this for years and their domestic problems may become more important than a few billions they spend on foreign aid. And Gates and Google have yet to show how they do things differently…Don’t get me wrong: I am academic in the development field and I know about the debates and problems and that’s why I challenge the assumption that ‘the system’ is showing signs of collapse. I really don’t like the word…yes, there will be changes etc, but what would collapse mean? UN closing down? Oxfam being bankrupt? I find the original Shirky post quite uninspiring-typical expert blahspeak to appear provocative and get invited to more talks…the end of Mayan culture and the ‘end of television’ (should it ever happen) are not quite the same…
    ‘Development’ has become an established cultural, political and economic system and if we think this system is on the verge of collapse, what must people in the 60s and 70s have thought about the world they were living in??

    Posted April 8, 2010 at 3:48 am | Permalink
  3. Laura,

    Your link led to Shirky’s review of Tainter’s book The Collapse of Complex Societies and the first thought that came to my mind was Dani Rodrik, subject of the previous post. I am critical of Rodrik’s influential advocacy of neoactivist sectoral policy. Economic activism, especially in industrial policy, inevitably increases the bureaucratic forms of complexity, and so, also inevitably, it decays and produces crises/collapse for the reasons described by Tainter (and for other reasons discussed in my book on capitalism).

    In Shirk’s words, strain/collapse may come “when society’s elite members add one layer of bureaucracy too many”. Bureaucracy is relatively impervious or at least resistant to markets or democracy, and in bureaucracies “it’s easier to make a process more complex than to make it simpler”. Good point.

    I can see the relevance of this insight to the internal thermodynamics of the aid industry, but it may be even more applicable to the neoactivist advice offered to developing countries by proliferating players in the global aid industry. If there is to be aid, at least let it take the form of good advice rather than bad advice. I wouldn’t care how big the aid industry got if it was giving good advice.

    Posted April 8, 2010 at 4:07 am | Permalink
  4. geckonomist wrote:

    if there are more aid projects, it looks to me that the sector is doing better than ever before, with bigger budgets, employing ever more people and these are lobbying more effectively every day.

    Posted April 8, 2010 at 5:25 am | Permalink
  5. Donna wrote:

    Geckonomist, the problem with that rosy view of the future is that eventually, the *energy* (oil) that powers this whole elegant system is going to run out. Or rather, become too expensive to extract. Civilization will collapse out from under the network of aid organizations. “Collapse” is too scary a word, so instead consider the process (already begun) of people beginning to “drop out” of the system. Already, the college students who supposedly feed these aid organizations are beginning to question the higher education system, for example. 82 organizations for Senegal is a trailing indicator, not a leading one.

    Posted April 8, 2010 at 8:23 am | Permalink
  6. David wrote:

    Amen to Teekay and Donna’s points. If the aid system “collapses” it will be due to the overall “collapse” of the economic system it is rooted in. We should be worshipping oil as it indeed is responsible for all our comforts and the world as we know it.

    Also – while the complexity-bureaucracy point seems correct – it applies to ALL bureaucracies and I don’t see the Ministry of XYZ collapsing in any country. In fact, the French (who gave us the lovely word) and others have been complaining about bureaucracy dynamics since the 1700s! None of our insights are that original – so it’s nice to know our anti-bureau musings fall in line with a long tradition.

    Interesting to check out the Wikipedia entry on bureaucracy (we all know what it means, but it’s interesting to actually read the definitions). Here are some fun excerpts:

    “Letter of July 15, 1765 Baron Grimm wrote also, “The real spirit of the laws in France is that bureaucracy of which the late Monsieur de Gournay used to complain so greatly; here the offices, clerks, secretaries, inspectors and intendants are not appointed to benefit the public interest, indeed the public interest appears to have been established so that offices might exist.”[3]

    This quote refers to a traditional controversy about bureaucracy, namely the perversion of means and ends so that means become ends in themselves, and the greater good is lost sight of; as a corollary, the substitution of sectional interests for the general interest. The suggestion here is that, left uncontrolled, the bureaucracy will become increasingly self-serving and corrupt, rather than serving society.

    Indeed, the cynical Parkinson’s Law suggests that bureaucracies grow independent of their function.”

    Traditional criticisms of bureaucracy nicely summarize most of the issues we all tend to bang on about on this blog.
    Says the All-knowing Wiki:

    “Even a non-degenerated bureaucracy can be affected by common problems:

    -Overspecialization, making individual officials not aware of larger consequences of their actions
    -Rigidity and inertia of procedures, making decision-making slow or even impossible when facing some unusual case, and similarly delaying change, evolution and adaptation of old procedures to new circumstances;
    -A phenomenon of group thinking – zealotry, loyalty and lack of critical thinking regarding the organisation which is perfect and always correct by definition, making the organisation unable to change and realise its own mistakes and limitations;
    -Disregard for dissenting opinions, even when such views suit the available data better than the opinion of the majority;
    A phenomenon of Catch-22 (named after a famous book by Joseph Heller) – as bureaucracy creates more and more rules and procedures, their complexity rises and coordination diminishes, facilitating creation of contradictory and recursive rules, as described by the saying “the bureaucracy is expanding to meet the needs of the expanding bureaucracy”.
    -Not allowing people to use common sense, as everything must be as is written by the law.”

    Anyway, sorry to have given you all the old cut-n-paste, but I found it actually quite interesting to get a glimpse of all the great stuff that’s been written about Bureaucracy over the decades (centuries!). It makes the pitfalls of Aid make more sense.

    Check out also the 1964 Michael Crozier discussion.

    Posted April 8, 2010 at 10:53 am | Permalink
  7. David wrote:
    Posted April 8, 2010 at 11:18 am | Permalink
  8. Peter K wrote:

    Ha! Thanks David. It’s interesting to see that the story is so similar in across sectors.

    I liked this on “The Effects of Bureaucracy on Customers and Employees”
    http://www.busting-bureaucracy.com/excerpts/effects.html

    • Each department has its own agenda; departments don’t cooperate to help other departments get the job done.

    • The head of a department feels responsible first for protecting the department, its people and its budget, even before helping to achieve the organization’s mission.

    • There is political in-fighting, with executives striving for personal advancement and power.

    • Ideas can be killed because they come from the “wrong” person. Ideas will be supported because the are advanced by the “right” person.

    • People in their own department spend much of their time protecting their department’s “turf.”

    • People in other departments spend so much time protecting their “turf” that they don’t have time to do the work they are responsible to do.

    Promotions are more likely to be made on the basis of politics, rather than actual achievements on the job.

    • Top managers are dangerously ill-informed and insulated from what is happening on the front lines or in “the field.”

    • Information is hoarded or kept secret and used as the basis for power.

    • Data is used selectively, or distorted to make performance look better than it really is.

    • Internal communications to employees are distorted to reflect what the organization would like to be, rather than what it really is.

    • Mistakes and failures are denied, covered up or ignored.

    • Responsibility for mistakes and failure tends to be denied, and where possible, blame is shifted to others.

    • Decisions are made by larger and larger groups, so no one can be held accountable.

    • Decisions are made based on the perceived desires of superiors, rather than concern for mission achievement.

    • Policies, practices and procedures tend to grow endlessly and to be followed more and more rigidly.

    Posted April 8, 2010 at 11:25 am | Permalink
  9. Stephen McGaughey wrote:

    My concern is that much aid these days is not really aid as one would like it, but used for military and diplomatic purposes, and only incidentally is organized to facilitate local or national development purpose or to have a long-term impact. Haiti will be a glowing test of the ability of aid institutions to do their job. Also, multilaterals are quite good at moving money quickly through policy or sector lending that is not anything more than a easy transfer of money to governments when they need it urgently. Such loans are notoriously ineffective and ex post analysis of these fast disbursing loans (as they are called by the bureaucrats) is not that encouraging. These quick disbursing method is an outlet for increasing fragmented lending. Thanks for bring this information to our attention.

    Posted April 8, 2010 at 11:29 am | Permalink
  10. piolon wrote:

    piolon wrote:

    I think it is not collapsing it is evolving, as the international monetary system is. Evolving as the Monetary Systems are or will eventually evolve in each particular country (eg: unemployment vs inflation?).

    The main problems of the Aid System, in my humble opinion, which may plausibly make some believe that it is collapsing are:

    1. Since the beginning, when it was created formally, Not all “Developed” countries have delivered their promises.
    See link —-> http://bit.ly/bn1dAb .
    How can results be claimed w/o the promised money?

    2. It’s Rhetorical and Theoretical purpose often goes in contrary to some of its policies, agendas and projects. A problem of Politics and Vested Interests. As always, it boils down to politics.

    3. (somewhat related to #2) Solutions not always should come from DC or from HQ if you will, solutions ought to be local and not imposed, of course taking into account best practices; local should also be considered. In this regard Aid System often strikes as a system of “deforming orthopedics of loans and the draining of wealth that results from foreign investment” . quotes extracted from an Economic History book that details eloquently the reasons of underdevelopment in Latin America. –> http://bit.ly/dCI615

    Yet if the world collapses in 2012, it will indeed obviously collapse.

    Posted April 8, 2010 at 11:47 am | Permalink
  11. Kim wrote:

    Not sure what would get this world of development complexity under control (given that all actors, except presumably the poor, seem to benefit from the status quo)or what this pending “collapse” would look like? What goes away? Donor organizations, the whole aid framework/way of doing business? Too many intrenched interests are the problem making the system stable not unstable. Just because a system is complex, unwieldy or overly bureaucratic doesn’t necessarily mean it’s unstable – clever articles in Foreign Affairs notwithstanding.

    The irony is that if the problem is the proliferation of redundant and inefficient bilateral efforts, the solution would presumably be a centralization of these efforts through the UN or some other top down effort – and idea greatly shunned and discredited by most commenters on this site. Hard to see a solution.

    Posted April 8, 2010 at 1:00 pm | Permalink
  12. Dan Kyba wrote:

    The aid industry is not a system heading towards collapse, it is an expanding and maturing market.

    To understand that market, go to your neighbourhood sporting goods store, look at the sneaker wall and consider why the lowly old CCM sneaker market has evolved/fragmented into so many niches. The running shoe market fragmented as it expanded and matured and the players, rather than all competing directly against each other, sought to segment and capture portions of it through specialisation.

    Donors and aid groups, in their competition for a share of the aid market are also seeking to segment that market and capture a niche that will ensure them a living.

    Regarding the exhibit, what I would love to see is a chart showing the pattern of proliferation of projects within the market against the pattern of growth of that market.

    Posted April 8, 2010 at 1:02 pm | Permalink
  13. The aid industry may be a great many things – big and inefficient and all that -, but I don’t think it’ll collapse anytime soon. Not as long as it’s sustained by money from governments and private donations. If the systems that sustain the aid industry collapse, then it’ll fall apart, but otherwise, no. Mwenda and Moyo keep getting heartily villified by the aid industry, and the Gates Foundation still fits into the system.

    Posted April 8, 2010 at 2:51 pm | Permalink
  14. Sam Gardner wrote:

    I think specialization and results could be also an incentive for donors. However, the peer pressure to conform with the mold (thus not specializing) is great.
    The Aid bureaucracies abhor overlap, and thus create evermore coordination structures. The private sector needs overlap, because competition leads to results.
    Perhaps an efficient system would coordinate a bit less, compete a bit more and select for efficiency instead of spreading amongst all actors.

    Posted April 9, 2010 at 11:13 am | Permalink
  15. Robert Tulip wrote:

    Jared Diamond’s book Collapse analyses human cultural evolution against Darwinian ecology. Aid can be analysed through this framework. Complexity evolves in isolated systems and is highly vulnerable to simple external onslaught. For example, in New Zealand, birds of great complexity evolved in isolation, but went extinct when mammalian predators (eg stoats) were introduced that hunted by smell. It was very simple for stoats to kill ground dwelling parrots.

    Similarly, aid is vulnerable to collapse through a simple critique of the assumptions of the charity project paradigm, and the rejection of that paradigm by taxpayers in donor countries. Aid will continue to grow while charities can spin stories about project success, but will collapse if the absence of project outcomes (lack of impact on economic growth) becomes too obvious to justify the waste of further funds. The problem is whether the constituency for aid is donors or recipients. Aid targeted to massaging donor prejudices (and thereby extracting donations) is not sustainable.

    Posted April 10, 2010 at 3:36 am | Permalink
  16. Raphael wrote:

    Ironic that the aid industry has what many developing countries lack: a developed professional bureaucracy and civil service. If only those in aid actually worked for developing country govts. Now that’s an interesting thought.

    Posted April 10, 2010 at 8:04 am | Permalink

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    This post was mentioned on Twitter by uspoliticsnow: The coming collapse of the aid system?: The coming collapse of the aid system? By Laura Freschi | Published April … http://bit.ly/a5pMkG

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  • About Aid Watch

    The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

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