How Big Plans in foreign aid yield Little Results.
Jun 5, 2006, Vol. 11, No. 36 • By VANCE SERCHUK
The White Man's Burden
LAST JANUARY, REPRESENTATIVES of more than fifty countries and nearly a dozen international organizations gathered in London for a conference on the future of Afghanistan. In addition to speeches by global leaders like Kofi Annan, and newspaper headlines about the billions of aid dollars pledged, the summit produced an ambitious, five-year plan for Afghanistan--a collective declaration that promises the disbandment of militias, sharp cuts in opium production, improvements in educational access for the disabled, and a 20 percent reduction in the number of chronically poor female-headed households, among many, many other goals.
Reading the Afghanistan Compact, it's hard not to be taken in by its breadth of vision. As one of the poorest places on earth--ranked 173rd out of 177 countries in the U.N. Human Development Index, alongside the likes of Guinea-Bissau and Burundi--not to mention a frontline state in the war on terror, Afghanistan cries out for international assistance to tackle its countless problems. And what better way to help that unfortunate country than with a big, multilateral, Western-financed plan?
Not so fast, warns William Easterly, professor of economics at New York University and fellow at the Center for Global Development, who has produced a provocative, fascinating book, arguing that the single greatest mistake in foreign aid over the past five decades has been its obsession with "Big Plans" that attempt to solve all of a poor country's problems in one fell swoop.
Easterly is an intellectual in the tradition of Edmund Burke, Friedrich von Hayek, and Michael Oakeshott, respectful of the complexity of societies and profoundly skeptical of elaborate, top-down schemes to make them anew. Government works well, he observes, when there is accountability, which in turn requires a clear and observable relationship between efforts and results. But because poverty in any given developing country is a tangle of myriad political, economic, social, and historical factors, the link between what an individual aid agency is doing and its goal of spurring growth is intrinsically vague. In other words, by trying to take responsibility for everything, big plans end up ensuring that they are responsible for nothing.
In the absence of good metrics by which to grade themselves, aid agencies (like bureaucracies everywhere) tend to latch onto bad ones. Witness, for instance, the proliferation of glitzy, media-friendly summits and the emphasis on the volume of aid being spent rather than its real world impact. "Aid agencies," Easterly writes, "skew their efforts toward visible outcomes, even when those outcomes have a lower payoff than less visible interventions."
Big plans are also inimical to the bottom-up feedback that good governance depends on. Aid agencies, after all, answer to the governments of the developed countries that fund them, rather than the poor people they are intended to help. Thus, it should come as no surprise that "aid agencies are rewarded for setting goals rather than reaching them, since goals are observable to the rich-country public while results are not."
But just because economic development depends on the "bottom-up emergence of complex institutions and social norms that are difficult for outsiders to understand, much less change," that's not to say Easterly is in favor of doing away with foreign aid. On the contrary, the challenge, he argues, is to shift its emphasis away from millenarian schemes and toward "modest interventions that make people's lives better." As The White Man's Burden insists, the task is "not to abandon aid to the poor, but to make sure it reaches them."
In practice, this means that development agencies should "focus on narrow, solvable problems" in areas where the relationship between inputs and outcomes is more straightforward, such as health, electrification, water, and piecemeal policy reforms. Easterly also offers a handful of provocative ideas geared toward improving accountability and feedback, such as an escrow account that would fund independent evaluations of aid projects, and development vouchers for communities of the extremely poor, which could be redeemed for services from NGOs and aid agencies. "The most important suggestion is to search for small improvements, then brutally scrutinize and test whether the poor got what they wanted and were better off, and then repeat the process."