Waylaid Dialectic

October 20, 2010

Personally I blame the MDGS…(infrastructure edition)

Filed under: Aid — terence @ 8:09 am
Tags: ,

Jonathan Glennie writes:

So this shift is long overdue. According to World Bank figures, in the first half of the 1990s the share of aid to Africa spent on infrastructure and economically productive projects (in sectors such as agriculture, industry and services) was 53%. Ten years later (in the period 2000–04) the proportion of aid spent in these areas had dwindled dramatically, to only 31%. Meanwhile, spending on social sectors (such as health and education) had risen as a proportion of aid to Africa from 33% to 60%.

But the real question donors should answer is this: why does infrastructure spending have to come back? Where did it go in the first place? There are thousands of papers on development written every year, calling for all kinds of strange things. But try as I might, I am yet to find one suggesting that a reduction in spending on infrastructure is a sensible way forward for any country, rich or poor. What then explains the reduction?

It appears likely the answer lies with the MDGs, or at least MDG-style thinking. I am a big fan of the MDGs, but I also accept they have sometimes skewed spending priorities. If you are set on reaching particular social development targets by certain dates, there is a strong temptation to focus spending on addressing them directly, at the cost of building and maintaining the infrastructure required for long-term growth.

Two points:

First, beware of percentages, if you look at page 12 of the report Glennie links to you’ll find that in absolute dollar terms aid devoted to infrastructure has increased. It’s just because total aid has grown that infrastructure spending has become lower in percentage terms. So it’s not really fair to suggest that infrastructure spending went anywhere “in the first place”.

Second, blame the MDGs if you want, but I’d suggest that infrastructure went out of fashion for a different reason: it’s difficult. When governance is poor in a country it’s very hard to manage the adverse impacts of infrastructure spending. With big projects there are always winners and losers, and in an ideal world you compensate the losers, but in the less than ideal world of developing countries, this can be very hard to do (The film Drowned Out showed this well). Also, when governance isn’t good, and local buy-in not great, infrastructure projects often run down quickly. So, if you’re an aid agency, there’s quite a good chance that dam you built will end up a white elephant that’s only covered in the media at all because of the environmental damage it did and the indigenous people it displaced. Quite rightly, aid agencies became kind-of reluctant to get involved in this sort of work and devoted the lion’s share of their increasing budgets elsewhere.

None of which is to say that aid shouldn’t go to infrastructure. It’s an integral part of development. But if ever there was an area where aid needed to be given carefully this is it. Let’s hope that if infrastructure really is coming back (in percentage terms) we’ve learnt the lessons those white elephants ought to have taught us, and that we don’t repeat the same old mistakes.

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