Waylaid Dialectic

May 6, 2014

Democracy and Economic Development

Does democratic governance deliver economic dividends? Even if it didn’t we might still have cause to think democracy was worth it. After all, it seems fair to let people have a say in shaping the rules that govern their lives, and there is some evidence to suggest that democracy delivers important non-economic benefits. Nevertheless, the question of democracy’s impact on economic growth is an important one; at least up to a point wealth is an important component of welfare. And until recently the most influential studies in economics suggested that democratic governance has not been growth enhancing. In particular, sophisticated econometric work by conservative economist Robert Barro showed, or appeared to show, democracy having a small average negative effect on growth, everything else being equal. Barro’s work wasn’t the final word on the matter. Empirical work by political scientist John Gerring and co-authors found that in the long run democracy was probably growth enhancing, and at least one, more recent, econometric study suggests democratisation improves subsequent economic performance. Yet, for the most part, empirical work post-Barro has failed to find a positive causal relationship between democracy and growth. And this, coupled with the recent spectacular economic performance of China, has been enough to suggest to many observers that, however nice it may be, democracy is no better, and maybe even worse, than autocracy in generating growth.

All this might be about to change though…click here to read the rest of this post on Devpolicy.

March 25, 2014

The Eagle Has Landed…

Filed under: Development Theory,Economic Development,Governance — terence @ 6:42 am

While there is a lot to be said for democracy, generally the consensus is that there has, to date, been little robust evidence to prove it generates – on average – higher levels of economic development. Given the names attached to this new NBER working paper this situation may be about to change…

Democracy Does Cause Growth
Daron Acemoglu, Suresh Naidu, Pascual Restrepo, James A. Robinson

NBER Working Paper No. 20004
Issued in March 2014
NBER Program(s): DEV EFG POL

We provide evidence that democracy has a significant and robust positive effect on GDP. Our empirical strategy relies on a dichotomous measure of democracy coded from several sources to reduce measurement error and controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy on economic growth. Our baseline results use a linear model for GDP dynamics estimated using either a standard within estimator or various different Generalized Method of Moments estimators, and show that democratizations increase GDP per capita by about 20% in the long run. These results are confirmed when we use a semiparametric propensity score matching estimator to control for GDP dynamics. We also obtain similar results using regional waves of democratizations and reversals to instrument for country democracy. Our results suggest that democracy increases future GDP by encouraging investment, increasing schooling, inducing economic reforms, improving public good provision, and reducing social unrest. We find little support for the view that democracy is a constraint on economic growth for less developed economies.

July 20, 2013

Krugman, Acemoglu and China

Filed under: Development Theory,Economic Development,Governance — terence @ 11:32 am
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To look on the bright side, if Paul Krugman is right, at least Daron Acemoglu and James Robinson won’t have to deal with ‘what about China?‘ type objections so much in coming years.

Setting aside the suffering, and the potential impact on a depressed global economy, the interesting development related question is how will China’s political and social institutions fare through the political stresses caused by a slow down?

Indeed, Rodrik et al’s growth accelerations paper suggested (to me at least) that growth spurts can happen in poorly governed countries but sustained development, which means dealing with the wobbles on the road, is much harder to maintain. What’s more, Rodrik provided pretty convincing evidence in One Economics that democracies weather economic shocks considerably better  than autocracies, which doesn’t bode well for slow down in China.

An optimist might hope (I certainly do) that the Chinese government responds to the pressures generated by economic downturn through democratic opening and redistributive transfers to the poor.

But a pessimist will remind you that there are many, many other potential outcomes.

We’ll see.

 

May 14, 2013

Everyone knows the UN’s a Hopeless Failure Right?

Filed under: Governance — terence @ 8:46 am
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Forthcoming in the American Journal of Political Science:

United Nations Peacekeeping and Civilian Protection in Civil War Lisa Hultman, Jacob Kathman, Megan Shannon

Does United Nations peacekeeping protect civilians in civil war? Civilian protection is a primary purpose of UN peacekeeping, yet there is little systematic evidence for whether peacekeeping prevents civilian deaths. We propose that UN peacekeeping can protect civilians if missions are adequately composed of military troops and police in large numbers. Using unique monthly data on the number and type of UN personnel contributed to peacekeeping operations, along with monthly data on civilian deaths from 1991 to 2008 in armed conflicts in Africa, we find that as the UN commits more military and police forces to a peacekeeping mission, fewer civilians are targeted with violence. The effect is substantial—the analyses show that, on average, deploying several thousand troops and several hundred police dramatically reduces civilian killings. We conclude that although the UN is often criticized for its failures, UN peacekeeping is an effective mechanism of civilian protection.

The UN has many faults, but when you consider the magnitude of the faults of almost all the states that it is built from, I think it’s actually possible to claim it as a remarkable success. A work in progress, of course, but then again so are all the nation states that I’ve ever lived in.

April 12, 2013

Chavez de Novo

Filed under: Governance — terence @ 7:21 pm

Presumably because they’re liberals and the rules of the game mean that Amercian liberals are prohibited from saying too many nice things about Chavez the New Yorker (famed fact-checkers and all) f*ucks up its reportage on Chavez. Crooked Timber has the tale although, because it’s Chavez and because this is the internet after all, the comment thread there descends into fisticuffs and tears. Oh well.

Meanwhile, Gallup’s been asking Venezuelans what they think.

On Leadership

Views of Chavez’s Leadership: In 2012, the last full year of Chavez’s presidency, the leader enjoyed a 57% approval rating, among the highest Gallup found during his last six years in office.

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My thought: plenty of OECD leaders would be over the moon with those ratings.

On corruption in business

Venezuelans Perceive More Corruption in Business: During Chavez’s tenure, he nationalized more than 1,000 companies, but this does not appear to have positively influenced Venezuelans’ views of their country’s businesses.

In 2012, nearly three-quarters (73%) of Venezuelans said corruption was widespread in businesses, up from 56% in 2007. This upward trend also stands in stark contrast to other Latin American countries run by more market-friendly governments such as Brazil and Mexico, where the percentage of residents judging businesses as corrupt has steadily declined over the same time period.

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My thought – having a look at the time series here this has trended up (beyond error bars) over the years since 2006 that surveys were conducted. What is this actually telling us about Chavez though? It might tell us more about his opponents in the private sector than about anything Chavez did.

On corruption more generally

Venezuelans Saw Chavez Government as Corrupt: Chavez’s critics in Venezuela depicted him as a near-tyrant with a record of cronyism. In fact, the government became much larger and more powerful during Chavez’s rule, and large majorities of Venezuelans saw it as corrupt in his final six years. In 2012, 63% of Venezuelans believed there was corruption in government, similar to the 68% who said so in 2011. This would seem to support the opposition’s narrative that Chavez ran a corrupt, unaccountable government. Chavez also made combatting corruption a major plank of his platform in his original campaign for office, indicating much of the country believes his government failed to deliver on this objective. However, this failure does not seem to have had much impact on Chavez’s overall popularity.

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My thoughts…yes but there’s no real evidence here to suggest corruption increased under his tenure.

On poverty

Majority Satisfied With Chavez’s Efforts to Deal With Poverty: Six in 10 Venezuelans in 2012 said they were satisfied with the country’s efforts to deal with the poor, an objective of Chavez and his administration.

On democratic freedoms

Venezuelans’ Faith in Elections and Media Intact: If Chavez was granting himself an excessive amount of authority over the election system — as his opponents claim — many Venezuelans did not seem to notice. In 2012, 59% of the country believed in the honesty of elections, a record high, and a propitious number for a country about to embark on a new set of elections. And, 66% said the media has a lot of freedom — equal to the median for Latin American and Caribbean countries. The 66% saying the media has a lot of freedom in Venezuela also represents an increase from 2011, when 58% of Venezuelans said the same.

My thoughts…tyranny! not.

On safety

Safety Still Significant Issue: Both candidates have pledged to take on Venezuela’s crime problems for clear reasons. Compared with the rest of the region, Venezuela is unique in the relatively high percentage of residents who do not feel safe walking alone at night. In 2012, 74% of adults said they felt unsafe walking alone at night, far higher than in any other Latin American country — a region where residents feel less safe than in any other regions of the world — and one of the highest measurements in all of the 160 countries where Gallup surveys. Moreover, this figure has remained remarkably high over the past six years, suggesting a failure by the Chavez government and the need for whomever his replacement is to address this important issue.

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My thoughts…I checked on World View, these numbers make Venezuela the least safe country by surveyed perception on Earth. Safety is, I think, the biggest failing that can fairly reasonably be laid at his feet.

March 9, 2013

What are we to make of Hugo Chavez?

Filed under: Governance — terence @ 12:28 pm
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I guess the fact that the stakes were so high — revolutionary socialism brought back from the dead! — explains why so few people ever seemed able to do anything other than take sides on the phenomenon that was Hugo Chavez. Beyond a point somewhere to the left of mainstream US liberalism Chavez was a saint. If you sat anywhere to the right of the point he became something you scared you children citizens with when they wouldn’t eat their greens.

Here’s Greg Grandin doing the Chavez as saint thing. And here’s a pretty good piss-take of how Chavez gets portrayed in the mainstream media.

Me, being the good dithering left-liberal that I am, always wondered whether it wasn’t a bit more complicated than all that, and wanted for some sort of split the difference type analysis.

Here, free for a short time only, is what I thought to be a reasonable academic analysis, albeit one that I read as containing something of a anti-Chavez bias in owing to the fact that it made little mention of the anti-democratic impulse amongst Chavez’s opponents in the Venezuelan elite. And here if you scroll down, is some quite good critique of the same article.

Here, is Human Rights Watch taking Chavez to task.

And here is CEPR doing a very good job of showing Chavez’s positive socio-economic legacy.

Here’s Lula. And here, while still on the subject of people who I respect, is Rory Carroll offering a nuanced but fairly critical take in Mother Jones.

Here (via comment’s at CT) is an interesting looking (haven’t finished reading it) left wing political economy type analysis of what Chavez meant. And here’s my old, blog sized, investigation of Chavez’s achievements (or not) on inequality.

One charge levelled at Chavez is that he has presided over a dramatic rise in crime in Venezuela. I’ve just done some data digging on this too. With the chart below coming from this UNODC database. Data used are homicide rates (generally good for cross-country comparison of crime because there are fewer reporting issues.)

Chavez and Crime

Three things stand out:

1. Crime has gotten *a lot* worse. There is no denying this.2. Chavez was elected in early 1999 so the upward trend was born before his time. And therefore unlikely his fault. At the same time he has done very little to get on top of crime, except…
3. Things have started trending for the better since 2009.

So, what are we to say about Chavez?

My best guess as a conclusion is that:

1. There is some radical democracy in his participatory schemes but there is also patronage too.
2. His achievements in tackling poverty and under-development were impressive, although they arguably could have been better still given his oil revenues.
3. Some aspects of the state, such as policing, remained terrible under Chavez.
4. Even as he strengthened new democratic mechanisms he weakened the classic checks and balances. Even so, his regime was still a democracy, albeit an imperfect one.

Or, in other words, he was a net force for good, but also a deeply flawed one. And yet, in a country such as Venezuela with such high political inequality, and a state apparatus that was already corrupted by clientelism, what did we expect? Perfection certainly wasn’t happening. So least worst alternative doesn’t seem that bad.

And, ultimately, more important still is not assessing Chavez as a man, but rather figuring out those aspects of his political programme that we can learn from while at the same time abandoning the autocratic bits along with the bundle that didn’t work.

[Update: Acemoglu and Robinson discuss Chavez here, doing a nice job of making clear something that Mainwaring basically missed, that Venezuela was a very politically unequal society pre-Chavez. Formally a democracy but with a vast gulf existing between the ability of elites to influence policy and the ability of the masses to do so. At the same time I think A&R would be more use still if they didn’t just focus on Chavez’s formal democracy restricting reforms at the national level, and had a close look at what his supporters claim are successful participatory political initiatives at other levels. Also, the mere fact that his movement has mobilised the Venezuelan poor as never before, seems with noting. If they become an ongoing political countervailing force, and if they are freed from the shackles of patronage politics, then everything changes in Venezuela — but it’s a big if though.]

March 3, 2013

The paradoxes of nepotism

Filed under: Aid,Development Theory,Governance — terence @ 11:31 am

It’s not what you know, it’s who you know. It’s the prime minister who uses government funds to send his son to Oxford. It’s the minister who gives key jobs in his ministry to unqualified relatives. It’s the MP who spends his constituency grant on his family. It’s the chief who makes sure the village development fund goes to his clan and not the rest of the community…it’s nepotism, something that impedes good governance in most developing countries. Political economists, aid agency staff and even most residents of developing countries will tell you that the world would be a better place without it. And yet for something that is so unambiguously bad there are strange ambiguities – paradoxes – that run through nepotism.

The first being that while it is bad for society as a whole, and while it is almost universally condemned as morally wrong when people think about its impacts of the efficacy of government, nepotism is born of emotions and instincts that we usually consider good at another level: people’s love and concern for the welfare of their own family and friends. Familial love, it turns out, aggregates upward not to a lovely society but to a corrupt one.

The second paradox of nepotism is that it is born of the world’s oldest social safety net: family and friends. And yet it impedes the proper development of the most effective social safety net our planet has developed to date — the welfare state.

The third paradox of nepotism, in aid work at least, is that we (aid workers) all agree it’s wrong, but most of us still make use of it ourselves. Got a legal problem with a contract which needs fixing quick. Who are you going to call? That unfriendly contracts manager? Or the staff member who you befriended at work drinks the other week? Want a reference for a new job? Are you really going to call your most recent boss? (The one who was cold and clinical.) Or are you going to get in touch with the manager prior to that, who you used to go surfing with? And are you really going to wait in the official queue to get advice on the governance project, when you could just ‘run into’ the governance advisor and have a friendly chat?

[Update: The fourth paradox of nepotism is that if you are a good aid worker you will actually strive hard to increase the short term quantity of something akin to nepotism in the country where you are working. You’ve got the chequebook and the big white land cruiser, but you actually have surprisingly little power (power to do good at least). So much depends on your local interlocutors and their desire to help. This may come because they support what you are trying to do, but don’t count on it. And if they don’t, they are armed with all the ‘weapons of the weak’ they need to turn your log frame into a log jam. And, in a second best world, getting counterparts to like you, and wanting to help you owing to personal affinity, usually helps. I’m no expert but it seems to me that, it is for this very reason that good aid workers get more done because they are likeable, respectful, and don’t come across as arrogant.]

[Update two: my wife thinks the fourth paradox comes across as way to harsh on local staff. So, to be clear — many aid programme staff are incredible people who want to do good and who we can safely assume are even more committed to development than we are (no big pay cheque for them). However, this is not always the case (particularly say if you’re working with a government department). And even if local staff do support the cause, it still helps, if they like you and want to help you personally. This nothing particular to developing countries: it is true everywhere on Earth).]

None of this means that we shouldn’t seek to diminish the scourge of nepotism. But we should also accept that it never completely goes away — the various actors in development are far too human for that to ever happen. And we should also be very humble about our ability to tackle nepotism. Capacity building is hardly going to stop someone from wanting to do good for their family.

[note: I’m pretty sure I read that first paradox on someone else’s blog recently. If it was yours: sorry, let me know, and I’ll link].

August 28, 2012

2.975 Cheers for Owen

Filed under: Aid,Governance — terence @ 3:04 pm

Obviously, if you are a small development blog the way to grow (to develop!) is to follow the tried and true blogging path of beating your chest and nosily throwing stones at larger bloggers. That is precisely what I am not going to do with respect to this blog post of Owen Barder’s. Damn it is good.

If I was going to quibble I’d say that a focus on governance and institutions was never really in the original Washington Consensus (it arrived in the first iteration of the post-Washington-consenus-where-did-we-go-wrong-and-who-else-can-we-blame attempts at consensus). And I’d say that Owen ought to at least allow possibility that industrial policy might be an important aspect of economic development. And I’d say that I’m not convinced we really need complexity theory to dig fruitfully into issues of governance. I’d say that, first and foremost, we simply need political scientists and sociologists to have a look with the old fashioned tools of their trades. That hasn’t happened enough, and I suspect could pay decent dividends on its own.

Anyhow, I’m not going to quibble though – rather I’m going to bow, tip my hat and generally do all those other things English culture would have me do as a way of saying I’m impressed.

July 29, 2012

Why Voting in Solomons is Unlikely to Simply be Driven by Clan Identity

Filed under: Governance — terence @ 5:16 pm
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This post is an appendix of sorts, something that I’m linking to from a Development Policy Centre blog post.

Solomon Islands presents a puzzle – despite operating a first past the post electoral system candidate and party numbers are high, and there is – contra Duverger’s Law – no trend towards consolidation.

One obvious explanation for this lies in the country’s heterogeneity. It is one of the most linguistically diverse countries on Earth with over 80 languages spoken there, language groups are further fragmented into clans, which are even more numerous.

So possibly there is a simple tale to be told: perhaps driven by some sort of primordial identity politics, people won’t vote for candidates from other clans, and so – because there are many clans there are many candidates.

And yet, this explanation is at odds with my election data. Like all other demographic phenomenon clan populations change gradually, and yet electoral results data change a lot within constituencies over time.

Example 1:

A scatter plot of candidate numbers. Each data point is a constituency plotted by the number of candidates that stood in the constituency in 2001, X axis and in 2010, Y axis. The line in the chart is not a best fit line, it simply maps the one to one relationship. In a simple world of one clan one candidate you would expect data points to cluster around this line. Clearly they don’t. The relationship is even weaker if I plot Effective Number of Candidates.

Example 2:

Same phenomenon, but shown across time within one constituency – Central Guadalcanal

Example 3:

Results by polling station for the 2006 elections in East Kwaio and for the 2010 elections in the same constituency.  Each line is a polling station, each colour a candidate. Either a lot of Stanley Sofu’s relatives did not vote for him in 2006, or a lot of people who weren’t related to him did vote for him in 2010.

I’ll offer some thoughts about what is actually going on in my posts on the Development Policy Centre’s blog. When that gets published I’ll link to it from here.

January 26, 2012

From the department of what the…

George Monbiot writes about child welfare:

Texas is a largely-Christian state that appears to believe in neither forgiveness nor redemption. Last week the Guardian revealed the extent to which it has criminalised its children(1). Police now patrol the schools, arresting and charging pupils as young as six for breaches of discipline.

Among the villainies for which they have been apprehended are throwing paper aeroplanes, using perfume in class, cheeking the teacher, wearing the wrong clothes and arriving late for school. A 12 year-old boy with attention deficit disorder was imprisoned for turning over a desk; six years later, he’s still inside. Children convicted of these enormities – 300,000 such tickets were issued by Texas police in 2010 – acquire a criminal record. This makes them ineligible for federal aid at university and for much subsequent employment.

Yet most of them have committed no recognised crime. As one of the judges who hears their cases explained to the Guardian, “if any adult did it it’s not going to be a violation.”(2)

Above and beyond how abhorrent this is, it also points neatly to a paradox at the heart of US conservatism over (at least) the last decade. Loudly and violently (if only ostensibly) in favour of promoting freedom in the rest of the world; brutally and effectively in favour of curtailing freedom in the United States.

January 21, 2012

Violence in Venezuela

Filed under: Governance,Inequality,Social Justice — terence @ 10:09 am
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I’ve blogged before about what I call the Hugo Chavez Polarity Inversion Level (the Hug-PIL!)- that is, the strange, differentiated effect Chavez has on almost everyone’s thinking. To the right of a line that falls somewhere amongst left liberals and in a portion of the political sphere that includes most liberals (in the American sense of the term) and definitely all conservatives, Chavez is a Really Bad Dude, a despot in disguise who is ransacking his country’s economy and who can not possibly be doing anything good. Nothing. To the left of the line, amongst lefter left-liberals, socialists and the like, Chavez is a Very Good Guy, the future of anti-capitalism, a model for us all, and a man who can do no wrong.

This frustrates me – by inclination I suspect that not all of what he does is great, and not all of what he does is bad. And it would be very helpful to separate the good from the bad, and the successful from the unsuccessful. And then, who knows, maybe we might learn a bit. It wouldn’t be as exciting as re-staging the cold war, but it would be useful from a development perspective.

And so: if you know of any impartial and intelligent writing on Chavez which attempts to do this please do let me know.

Also, if you’re a Chavez fan, have a crack at explaining the following:

Venezuela’s homicide rates are among the highest in the hemisphere — twice those of Colombia and three times those of Mexico — despite largely escaping the world’s attention. Rates were rising even before Hugo Chávez assumed power. But under his 12 years they have skyrocketed, from 4,550 in 1998 to 17,600 last year. The victims are predominantly poor young men — killed for as little as a mobile phone, caught in gunfire between gangs, or even subject to extrajudicial killings by security forces. (from here)

How can this be commensurate with the rise of socialist utopia? And how can criminal violence be rising amidst social progress and falling inequality?

If there is a good explanation I am genuinely interested in hearing it.

December 29, 2011

Africa

Filed under: Governance — terence @ 7:16 am
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On the Guardian’s blog Owen celebrates a new era in Africa. One of increased economic performance, decreased dependence on aid, decreased vulnerability to disasters (in most countries) and increased democracy.

He attributes this to:

The emergence of a new generation of leaders, the end of the continent’s debt crisis, business-friendly policies, new technologies, the spread of peace, and strong demand for natural resources…

Not knowing a lot about Africa I have the following questions.

1. How pro-poor has this growth actually been?
2. What’s the within continent variation?
3. What’s the actual evidence that business-friendly policies and new technologies have actually played a major role in the changes as opposed to rising resource consumption in China?
and
4. Are the good new leaders (who?) achieving change on their own or are they doing so because the institutions that they preside over are changing in a sustainable way.

To me questions 3 and 4 are the crucial ones. Because Africa has been here before, or at least parts of it have been: inspiring looking leaders and reasonable economic performance, only for things to end up imploding. And unless something fundamental has changed it is hard to see why this won’t happen again. Demand in China drops (for whatever reason), the economies of many African countries stagnate and, freed from the tailwind of economic improvement, older zero-sum problems of political economy re-emerge. And things start to look grim.

This mightn’t happen. I hope it doesn’t happen. But, for what it’s worth, I think it’s too soon to be making too much noise about a new dawn in Africa. Or, at least, it’s too soon to be doing this without good evidence of structural change.

[Update: Great review of the Radelet book that informed Owen’s column here by Edward Miguel.]

December 7, 2011

I wanna hold your hand…

Filed under: Development Theory,Governance — terence @ 7:03 am
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I’m no homophobe, but I would find it very hard to hold the hand of another man. I don’t think men holding hands is wrong and I believe gay people, everywhere on Earth, deserve the same rights to relationships as everyone else. And yet if you asked me to walk down the street holding the hand of my best friend I would feel distinctly uncomfortable. Holding my wife’s hand, on the other hand, feels every bit as normal and natural as holding a man’s hand feels wrong.

Why is this the case? One possible answer is biology — holding hands is part of the spectrum of romantic interaction that culminates in reproduction (he says, trying to find suitably prude words for the internet). So it feels natural to hold the hand of your mate (i.e. lover) but wrong to hold the hand of your mate (i.e. Australian word for friend). This being for the simple reason that you don’t want to mate with your mate (reproduce with your friend).

That sounds plausible but as five minutes walking the streets of Honiara will show you it can not be the case. Following the norms of social behaviour here, heterosexual couples never hold hands or engage in public displays of affection. On the other hand you see many men (and to a lesser extent women) walking down the street talking and holding hands. These aren’t people in same sex relationships (alas Solomon Islands society is not gay friendly) they’re simply friends. For whom it is completely normal to engage in some physical conduct.

So what is going on here?

In a word: norms. A lot, but not all, of our social behaviour reflects our instinctive desire to conform to the informal rules (norms) of the social group that we are situated amongst.

This makes sense evolutionarily – we are communal animals so it stands to reason that mechanisms will have evolved within us to make collective action possible by leaving us inclined to behave in predictable, and not entirely self-centred, ways. Absent this we could have never lived in groups.

And in the case of hand-holding, our instinct to group conformity means that those of us raised in societies where friends don’t hold hands, don’t hold our friend’s hands, while those of who were raised in societies where lovers don’t hold each other’s hands don’t do that.

From a development perspective the importance of norms matters for a lot more than hand holding. The role of informal institutions (social rules or norms) in determining development outcomes has been on the rise since the work of Douglas North and other economists revitalised the area of study and it’s hard not to spend time in a developing country and not end up concluding that this aspect of human interaction might be a key piece currently missing in our understanding of development and under-development.

Why are bureaucracies in many developing countries dysfunctional maybe (not definitely, just maybe) this has to do with the absence of norms necessary to instil commitment to the outcomes of an entity to which employees are only professionally linked to. Want to understand why nepotism is rampant in many developing countries, possibly this has to do with very strong norms of familial obligation? Want to understand how markets actually work in the developing world? Then maybe you need to understand the normative rules that shape them? Want to understand the persistence of clientelist politics? Then possibly you need to understand norms of leadership within communities. Want to understand how ideas and practices propagate within NGOs and aid agencies? Have a think about norms, too. Norms are everywhere and while they aren’t everything in development they are almost certainly an important component of it.

An intellectually appealing aspect of norms is that there is an apparent logic or rationality to their functioning too. They aren’t completely random and can be modelled into intellectually pliable frameworks such as rational choice. This is a good thing and leads to much fruitful thinking such as that in the work of Akerlof and Kranton, discussed by Tom Slee here (HT Luis in comments a while back – thanks!) Lots of irrational behaviour becomes rationally explainable if you allow that we have a natural (and itself reasonable) preference for conforming to group norms.

That’s great intellectually, models of reasoning agents are infinitely easier to use than those positing more complex or unpredictable actors, and yet we need to be careful. Not only would I find it very hard to hold the hand of a friend on a busy street. (Which you can explain via reason and calculation – he knows that by doing this he will break a group norm and so, through fear of consequences, calculates that the utility maximising strategy is to resist the urge to hold). But, I would find it equally hard to hold hands with a friend on a deserted island. No group to catch us there – no rational calculation involving norms. Just an instinctive aversion.

In many instances norms aren’t reasoned at all, they are instinctual. And while that doesn’t totally negate the merits reason based modelling exercises it does mean that norms are likely to be sticky (persist even when all actors involved can see that they are harmful) and that they are likely to change in strange, erratic ways.

And what does all of that mean?

Development is complicated. And aid is complicated.

Development happens and aid can work – but both are a lot less predictable and understandable than we usually admit.

September 25, 2011

Seeing like an Anthropolgist

Filed under: Governance — terence @ 8:15 am

Ok so this isn’t a post on how I’ve just read “The Art of Not Being Governed: An Anarchist History of Upland Southeast Asia”, James C Scott’s latest, and how I have considered criticisms of it. This is actually just an explanation of why I doubt I’ll ever read it.

No doubt it’s my own fault for judging a book by its internet reviews, but I can’t quite see what it contains to be interested in.

I mean – it seems that the central argument of relevance to political theory in the book is that: when states are despotic people often try and evade them. And that, compared to the risk of expropriation and the loss of liberty that come with despotism, it’s preferable to be small (in terms of social structures) poor and hidden in the periphery.

Fine. I agree.

However, the central story of the state over the last two centuries is that some states have shed their despotism and become *relatively* benign. Not perfect, but good enough to have presided over increased freedom, greater opportunities, and improved welfare for substantial majorities of their populations. Other states haven’t, of course.

But it seems to me that the real question then is not, whether some people some time in the past were in a sense anarchists, but rather what makes states work for their people and how this can be promoted.

April 25, 2011

Aid and Corruption

Filed under: Aid,Governance — terence @ 9:24 am
Tags: , ,

A couple of posts ago I wrote:

In the case of government donors additional problems include:

1. The fact that aid takes place overseas, which provides politicians plenty of leeway to do things such as give aid in a way that benefits powerful constituents of their own.

Over at the Guardian’s Poverty Matters blog, a must read post by Mark Weisbrot, highlights the fact that it’s not just politicians who take advantage of this leeway.

[L]ast December…Lewis Lucke, a long-time US Agency for International Development (USAID) official turned influence-peddler, sued a consortium of firms operating in Haiti for $492,000, for breach of contract. As Lucke would have it (sorry!), he was promised $30,000 a month, plus incentives, to use his influence to secure contracts for these nice fellas. He got them $20m worth of contracts, but they cut him off after two months. The defendants in the case are Ashbritt, a US contractor with a questionable track record, and the GB Group, one of the largest Haitian conglomerates. Together, they formed the Haiti Recovery Group, which they incorporated in the Cayman Islands, to bid on reconstruction contracts.

Lucke was well-positioned for the job, having formerly been in charge of the multibillion dollar reconstruction effort in Haiti for the US government. (He was also previously the USAID Iraq mission director; we know how that reconstruction turned out.)

Politicians here are quick to blame the Haitians for the lack of progress since the earthquake, and corruption is often assumed to be exclusively a Haitian problem. But it is clear that some of it comes from outside. Maybe a lot.

For example, influence-peddling might help to explain why not a single US government contract for Haiti’s reconstruction in the last five months has gone to a Haitian company. In fact, out of $194m awarded since the earthquake, just $4.8m, or 2.5% of the total, has gone to Haitian companies. USAID has given out $33.5m, none of which has gone to a Haitian company; some 92% of USAID’s contracts have gone to Beltway (Washington, DC, Maryland and Virginia) contractors. Now, isn’t that a geographical oddity? About 15.5% of contracts in January 2010 were “no bid”, which presumably could be justified because of the urgency; however, this proportion has increased to 42.5% over the last five months.

Since writing my previous post I’ve been pondering structure and agency in the world of aid. In that post I argued that a lot of aid’s problems were structural issues, and had nothing to do with the moral failings of Irish pop stars or NGO staffers. I argued, for example, that ‘poverty porn’ exists because it works (increases donations) and that it works because of the limited extent to which most people who donate to NGOs think about or understand development. I also argued that corrupt aid giving by government donors takes place because the impacts of aid are felt in other countries, and aren’t well understood, which affords actors in donor countries space to behave unethically.

I still stand by these points, but it is worth noting that not all NGOs resort to ‘poverty porn’ and not all former USAID staffers become aid brokers. Structure matters: the structural problems of US politics go a long way to explaining why US Aid is worse than Swedish aid, for example. But even within these structures people and entities do get to make choices, up to a point.

Which is another way of saying my previous post was all about trying to understand the hurdles that prevent us from giving better aid. It definitely wasn’t about exculpating people like Mr Lucke.

April 8, 2011

Sem Medo de Ser Feliz

Filed under: Governance,Social Justice — terence @ 11:06 am
Tags: , ,

It’s a looonnnggg essay but Perry Anderson’s examination of the presidential career of Lula da Silva is a must read if you are at all interested in Brazilian Politics, or the fate of the left in Latin America.

Like a lot of people on the left I was: jubilant when Lula won; despondent from about a year into his rule when he ended up being both economically orthodox and politically compromised; re-enthused when his social programmes started to kick in; and cheered by his eventual ongoing political triumph.

Looking back now I think it would have been next to impossible for Lula to have governed as a radical. He was president of Brazil but most definitely not the sole source of power. Foreign investors had the economy’s fate in their hands, local capital was in an easy position to play spoiler (as it so often had for PT municipal governments), and the PT were nowhere near a majority force in the house or senate. Above and beyond that, I’m now not sure whether there was anything to be gained by deviating too far from economic orthodoxy. Plenty of previous Brazilian presidents had done so in the past and only ended up with inflation as a reward.

And so, Lula did what he could. Innovative social programmes mainly and sound economic governance. And he got lucky, the global economy ended up very kind to the Brazilian economy. The combined effect being that the pie got bigger and the poor’s slice of the pie also grew substantially. The PT’s political fortunes went well too. Given the dilemmas he faced, this definitely counts as a win.

And yet, it also falls far short of a transformation. Or if it is to be a transformation, it will be a long slow and qualified one, much like the post war achievements of Social Democracy in Western Europe.

Final verdict: the pragmatist in me is awed by what Lula was able to achieve, even as the idealist in me still feels slightly let down.

February 15, 2011

Aid Can Work, and it Can Fail

Filed under: Aid,Conflict,Governance — terence @ 7:52 am
Tags:

Having defended aid a lot recently, I should also emphasise that I also think aid can fail. There are some tasks that are simply beyond it, and others that are beyond it in some circumstances. And if it’s given poorly, it will almost certainly not help.

I’m no expert on Afghanistan but this must read piece by Nir Rosen and Marika Theros in OpenDemocracy gives what seems to be a good example of (some) aid making things worse rather than better. Admittedly in an incredibly difficult environment. But I think that it’s likely that the way much aid in Afghanistan has been given, and the overreach in terms of objectives for it, has hindered rather than helped things there (with the caveat again that I’m most definitely not an expert on the place and so could be wrong in my assessment). From the article:

First, the international community must recognize that the money it is pumping into Afghanistan is a primary source of corruption and conflict.  Despite their very real needs, most Afghans consulted call for a reduction in aid to levels within the absorptive capacity of the country, because wasted aid assistance fuels corruption and predation.  Equally important, the international community must ensure that aid produces tangible results on the ground and not simply be measured by the metrics of money spent within the fiscal year and units of production.  The number of school rooms built is much less important than the number of children who complete the school year.

January 12, 2011

One of these things is not like the other – really

Filed under: Aid,Governance — terence @ 12:35 pm
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Chris Blattman excerpts the following snippit from James C Scott’s new book:

While the rhetoric of high imperialism could speak unselfconsciously of “civilizing” and “Christianizing” the nomadic heathen, such terms strike the modern ear as outdated and provincial, or as euphemisms for all manner of brutalities. And yet if one substitutes the nouns development, progress, and modernization, it is apparent that the project, under a new flag, is very much alive and well.

It’s probably misplaced to respond to a quote from a book you haven’t read but:

1. The sentiment that the quote appears to contain is really quite prevalent in some parts of the anti-development left (whether it’s Scott’s or not).

and

2. Hey, this is a blog. What did you expect.

Which means my point here isn’t really directed at Scott, who may have mustered tonnes of evidence, or may have qualified the quote, or limited it to certain circumstances. Instead, I’m simply here to say that the general claim that appears to be encapsulated in the quote is wrong.

Why? First, because development isn’t actually often a cover for imperialism. If it was, you wouldn’t see the positive long term human development trends that we do see in the vast majority of countries in recent decades.

Two, when states want to control peoples, the rhetoric they use, the rhetoric which appears most effective with their constituents is rhetoric of an external threat. Specifically ‘terrorist threat’.  That’s what Mugabe calls his opponents, for example.

~

On the subject of states and minorities the issue as I see it is this: once the unit of governance gets large (i.e. a state as opposed to a tribe or what have you) the potential for violent coercion of minority groups increases. On the other hand, larger units of governance bring with them dramatic benefits, if they behave, they facilitate trade, labour mobility, and social insurance. They also benefit from economies of scale in providing public goods and services.

Which means that development depends to a degree on forming reasonably large units of governments. Ones large enough to tyrannise minorities. What’s the solution?

Surely not returning to anarcho-tribal collectivism? Rather, I’d say that the best, or at least, least worst, solution is the one we’ve already got: governance systems with checks and balances — democracies and constitutional protections.

January 10, 2011

South Sudan Votes!

Filed under: Governance,Human Rights — terence @ 7:00 pm
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Here in Canberra too. A sign for the ANU polling centre. Set up so South Sudanese refugees can vote in the independence referendum. I can’t claim any expertise on the Sudanese conflicts, or offer any predictions about the new nation’s future (should that be what’s decided on) but it was hard not to watch the voting today and feel on the edge of something, watching the old colonial borders tremble. And it was impossible not to wholeheartedly hope that if a new nation is born its fate is a happy one. Good luck!

November 30, 2010

Aiding or Abetting, should we give aid to dictatorships?

Filed under: Aid,Governance — terence @ 5:21 am

If the purpose of polemic is to stimulate thinking and debate then William Easterly can register a success with his latest swipe at the Aid Industry (this time in the New York Review of Books and on the topic of aid flowing to dictatorships). He certainly got me thinking.

It’s just a pity that Easterly can’t balance polemic with any degree of nuance. And so, instead of getting any real distinction between aid that flows solely to dictatorships for reasons of geo-strategy (and which is deplorable), and aid with flows to dictatorships as a product of a dilemma (if we withdraw it we may achieve nothing but harming the poor) Easterly offers a treatise which portrays aid workers as fundamentally opposed to democracy owing to the (I kid you not) pernicious influence of the work of Gunnar Myrdal.

Anyhow, I’ve tried a more substantive discussion of the real issues up on the DevPolicy blog.

I also wrote the following letter (destined to be unpublished, I imagine) to the New York Review.

And, I’ve been updating my post on the development benefits of democracy.

William Easterly is absolutely correct to see democracy as central to development. Yet he undermines his own arguments by writing an article [‘Foreign Aid for Scoundrels’, NYR, November 25, 2010] that both misleads and ultimately mischaracterises the issue of aid given to dictatorships.

Easterly misleads, for example, by lamenting the low proportion of aid granted to countries classified as ‘Free’ by Freedom House, while failing to note that 80 per cent of these countries are already Upper-Middle or High Income and, as such, unlikely to be in need of development assistance. (I’m all for keeping New Zealand democratic, but doubt that aid is required for the task.)

Similarly, he offers anecdotes to suggest that aid has changed little since the end of the Cold War, yet ignores recent academic work that provides systematic evidence of the opposite. Evidence which shows that since the end of the Cold War aid has tended to promote political reform, while increasingly bypassing the governments of poorly governed countries.

Most importantly though, he skirts around the key dilemmas and challenges at the heart of the issue. The first of these being that historical cases, such as the cessation of Soviet Aid to Cuba, provide us with little cause to believe that ending aid will trigger democratisation. And if the withdrawal of aid doesn’t bring democratic reform, then its only likely consequence will be to harm the people who depend on aid the most — the poor. I would put it to Professor Easterly that it is this dilemma, rather than the influence of long dead Swedish Economists, or the desire of aid agency country managers to protect their budgets, that explains much of the aid that continues to be given to countries ruled by dictators.

It is true that some aid still flows to dictatorships solely as a result of the geo-strategic and/or economic interests of donor countries. Yet even here Easterly misses the real issue. In focusing his ire on aid agencies he forgets that such agencies ultimately work at the behest of governments (this is less true of multi-lateral agencies, although politics still plays a significant role in their governance as is attested by Paul Wolfowitz’s tenure at the World Bank). If we wish to see the end of this type of aid (and we most certainly should) what really needs to change is the domestic politics of international development. Politicians need to be held to account by voters for their inattention to the plight of poor people in developing countries. If this were to occur, then in a whole range of areas — from climate change to arms exports — the development pay-offs would be dramatic. Unfortunately, bringing about such change is far from easy.  Perhaps Professor Easterly might consider focusing his considerable persuasive talents to help with this cause in the future, rather than simply attacking bureaucrats?

Terence

November 19, 2010

The Long Run Impacts of Democracy on Growth

Filed under: Governance — terence @ 10:48 am
Tags: ,

An interesting looking paper…

Democracy and Growth: A Historical Perspective

Gerring, John; Bond, Phillip J.; Barndt, William T.; Moreno, Carola.

World Politics, Volume 57, Number 3, April 2005, pp. 323-364 (Article)

The predominant finding of recent empirical work is that democracy has either a negative effect on growth or no overall effect. In this essay, we disagree. Existing work assumes that the causal effect of democracy on growth should be immediate. But if democracy matters to growth it is more reasonable to assume that this effect is registered over a period of years, rather than instantaneously. Indeed, many of the arguments for democracy as an engine of growth are more plausible when applied to established democracies than when applied to transitional democracies. If we do not take this into account we risk losing the main causal effect of democracy on growth. Therefore we choose to operationalize democracy as a “stock,” rather than a “level,” variable. That is, we measure democracy as the number of years a country has been democratic, in addition to the degree of democracy experienced at any given time. We use regression analysis of time-series cross-sectional data (all countries in the world, 1950-2000) to test the hypothesis that that democracy – understood as a stock variable – is good for economic growth. We find that democracy has a robust, positive impact on growth during this time period.

Gated version here. Possibly un-gated conference paper here.

September 21, 2010

William Easterly: Libertarians all talk

Filed under: Aid,Governance,Institutions,Social Justice — terence @ 1:06 pm
Tags: ,

Meanwhile, in a helpful post at AidWatch, libertarian aid blogger William Easterly outlines in a diagramme one of the main shortcomings of modern libertarianism: when it comes to issues such as human rights and dictatorship in developing countries, libertarians are all talk and no action.

Of course, there are times when there is no better option than not to act, but it seems to me that to declare from the outset that you’re against all intervention, whilst at the same time professing to care about human rights, is simply another strategy for thwarting change and protecting privilege, while appearing ethical yourself.

Easterly’s post is a good illustration of this. Aid agencies face a real dilemma when dealing with authoritarian states: if they provide aid they may, in effect, be propping such states up, on the other hand, if they withdraw aid they may do nothing to bring about regime change and simply harm the very people they were hoping to help. Or worse, as recent research appears to show [pdf] (h/t the Monkey Cage), rapid aid withdrawal may well lead to armed conflict.

What’s more, it’s very hard for an aid agency to openly criticise a host country: official government aid agencies aren’t actually mandated to do this (criticism must come from their political masters) and, for NGOs, criticism usually leads to being expelled – in other words withdrawing your aid.

Which isn’t to say that aid agencies should never criticise repressive regimes or that they should never withdraw their support. Rather, as I’ve pointed out before on this blog, the point is that there is a dilemma. A challenge with no easy answers. This is the sort of thing aid agencies have to negotiate all the time. And it would be nice if at some point William Easterly would stop polishing his own halo long enough to acknowledge this.

August 24, 2010

Whole-lotta-links

Ok so I missed Friday but here goes…

The Guardian covers recent criticism of Wilkinson and Pickett’s book the Spirit Level, while the authors have a page devoted to responding to the critiques.

Meanwhile, the British Medical Journal has a meta-review of studies of the impact of inequality on health. Summarised conclusion:

The results suggest a modest adverse effect of income inequality on health, although the population impact might be larger if the association is truly causal. The results also support the threshold effect hypothesis, which posits the existence of a threshold of income inequality beyond which adverse impacts on health begin to emerge.

On the subject of inequality, and following from my earlier post on inequality in Latin America, Arthur Ituassu has an interesting article at OpenDemocracy in which he examines the relationship between Brazil’s falling inequality and its rising democracy.

Speaking of democracy, Dani Rodrik a does good job of summarising the economic case for democracy at Project Syndicate.

And at VoxEu John Gibson and David McKenzie examine the economic consequences of migration, in particular the dreaded brain drain. Their conclusion:

Our findings question both the pessimistic view that high-skilled migration hurts development, and the optimistic view that most countries can benefit to the extent Taiwan, China and India have from trade and investment flows. For most countries, the first-order effects are mostly an individual phenomenon – individuals stand to gain a lot from migration, and the second-order effects on others are small in comparison and seem to at least balance one another out if not also be a net positive. In the absence of compelling evidence for massive externalities from their presence, we argue governments should not be so concerned about high rates of skilled emigration, but focus instead on the basics of providing the policy environment needed to foster growth and innovation at home.

On to aid, and a blast from the past in the form of a 1997 Foreign Affairs review by David Rieff of Michael Maran’s book the ‘Road to Hell’. No surprise to discover that people have been launching polemics at aid for a very long time. Rieff’s review is well worth a read both because, depressingly, many of the issues covered remain with us, but also because its evenhanded on the aid industry, criticising where it’s fallen short but also acknowledging the real dilemmas the aid workers face.

I wrote a while ago on the challenges for aid agencies when it comes to admitting they got it wrong. Meanwhile Johann Hari tries to do this on a personal level.

On Melanesian Politics, Phil Twyford writes of his time as an election observer in Solomon Islands, and in doing so provides a handy summary of Solomons politics.

And finally, Our Word is Our Weapon, one of the first blogs I encountered writing regularly about aid, is back. Or maybe it never went away and I just had the URL wrong? Still mostly only posting links; interesting links mind you…

August 5, 2010

Complacency in Democracy

Filed under: Governance — terence @ 8:15 pm
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Just been to hear David Runciman speak on democratic confidence and over confidence.

I’m not sure if I got or missed the point (not Runciman’s fault – he was a clear and engaging speaker – but rather me fading at the end of the day) anyhow, I think the key idea was this…

1. Are democracies up to the task of tackling complex challenges such as climate change?

and

2. Should we be optimistic or pessimistic about the ability of democratic societies to produce solutions to such challenges?

and

3. Which of the answers to these two questions is dependent on which?

Surely, you’d think the answer to question 2 is dependent on question 1. If democracies are up to the task then be optimistic; if they’re not – hello pessimism.

Except that to Runciman the causal arrow between these two questions runs both ways. If people (be it intellectuals, political or economic elites, or voters) are overconfident of democracy’s ability to produce the right answers to the hard questions then they may become complacent. On the other hand, if they’re overly pessimistic they may lapse into disengaged cynicism. At either of the extremes people may fail to tackle the issue at hand. You could I, think, call this an issue of endogenity between reality and belief.

Runciman’s solution to the issue – and he, I think, thought it was a real issue – was for political scientists (or maybe, more generally, thinking men and women) to correct, where appropriate, unfounded over or under-confidence in democracy.

Interesting, but are over and under-confidence really issues for democracy? I’m not sure but I don’t think so. If you were to ask me what the big contributing factors were to whether democracies met the challenges they faced, I’d say: their underlying political economies; the fit between formal and informal institutions; the power of ideas and their communication and how this plays out in discourses (and this wouldn’t include ideas about democracies).

Nevertheless, an interesting talk.

July 29, 2010

The Consequences of Democracy

Filed under: Governance — terence @ 5:45 pm
Tags:

There’s an intrinsic appeal to democracy – it seems only fair that people should have some sort of say in collective decisions that impact on their lives. Within small communities this may well be achieved through informal means, but once you get to the level of a nation-state, some sort of formal system of voting will be necessary to recognise this ideal. And so democracy. It’s only fair.

But idealised fairness is only one criteria on which democracy needs to evaluated. Another is consequence. I instinctively support democracy because it appeals to my sense of fairness but if you could show me that democracies were more violent, less healthy, worse performing economically, and less happy, my support would be seriously shaken*.

Fortunately though, as best I can tell, the bulk of the evidence suggests that democracies do generate better outcomes for people living in them.

First, in the economic sphere…

A common perception is that democracies don’t do a good job of generating strong economic growth, particularly in developing countries. It’s a perception informed by the relative economic success of non-democratic nations such as China and Vietnam, along with a belief that democracies simply aren’t capable of making the hard choices necessary for economic liftoff. And at first glance it seems plausible. However, in development arguments based on what seems plausible or what or on selected countries often don’t stand up to more detailed analysis. Which is precisely the case for the ‘democracies grow slower’ argument. A meta-review, for example, by Hristos Doucouliagos and Mehmet Ulubasoglu [PDF] using cross country data finds no evidence to show that, on average, democracies grow slower than authoritarian states. What’s more there’s some good evidence to show that on average countries that successfully transition to democracy grow faster than their authoritarian counterparts eventually. Also, while there is little evidence to suggest a strong short-term cross-country relationship between democracy and growth, there is some evidence to suggest that democracies perform better economically in the long-run.

So if we use GDP per capita growth as our yardstick of success, we certainly can’t say that democracies perform worse than alternatives – and indeed, if anything, the evidence suggests they perform better.

Second, in distribution…

In his book One Economics Many Recipes Dani Rodrik provides evidence that democracies tend to have more egalitarian distributions of wealth and pay higher wages to workers in the manufacturing sector (p180-182). In other words, for any given level of wealth democracies will do a better job at reducing inequality and poverty.

Third, in famines and shocks…

As far as consequences go, famines are about as bad as it gets. And so Amartya Sen’s famous finding that (Post WW2 IIRC) no democratic country with a free press had experienced a significant famine is further evidence in favour of democracy, particularly when you consider the welfare impacts of the massive famines in countries such as China. Sen’s finding is from a while ago now, and I’m not familiar enough with famines to know whether or not subsequent famines have occurred in democracies, but even if they have, the simple fact that democracies experience fewer famines is still good evidence in favour of democracy.

While they’re not as awful as famines, large negative economic shocks also have significant welfare consequences. And there’s a good theoretical reason to think that the same feedback mechanisms which cause democracies to experience fewer famines would also generate fewer negative shocks in democracies. And, indeed, that’s what the evidence suggests, with Rodrik (ibid, p175-77) finding democracies significantly less prone to such shocks.

Fourth in war…

The consequences of war are, of course, awful. So – to the extent that it holds (and it is certainly contested, although there is convincing evidence that it holds in part, see here, for example) – the Democratic Peace Theory which suggests that democracies are less likely to go to war with each other and which is backed by some evidence at least is another reason for consequentialists to favour democracy.

Fifth in human rights…

Respect for human rights is clearly linked with better welfare (torture, like war and famine is about as horrific thing as can be afflicted on a person or people). And as you’d expect, systematic studies find that democracies have better human rights records (although the relationship is not always simple). Examples of evidence on this can be found here and here.

And finally, in social services…

Peter Lindert in his book ‘Growing Public‘ provides good evidence to suggest that democratisation in Europe was a key driver of state provision of social services. Public health care and education are essential components of well being, so once again we have good reason to suggest that the consequences of democracy for the people who live within democracies are on the whole positive.

So, in other words, the consequentialist case for democracy is pretty good, I think.

[Update: Democracies are more likely to provide free schooling in Africa according to this article; and more likely to engage in re-distributive spending (generally) although not more likely to be less unequal in the new Acemoglu Naidu et al paper]

[Update: See this, which looks potentially like very strong evidence democracy does lead to better economic performance on average.]

*Actually, technically it would be toast – as a Utilitarian (albeit a conflicted one) consequence is my ultimate metric of evaluation.

July 21, 2010

Diversity is not destiny…

Filed under: Conflict,Governance — terence @ 9:44 am
Tags:

A new, gated, NBER paper by Rachel Glennerster, Edward Miguel, and Alexander Rothenberg returns surprising results:

Scholars have pointed to ethnic and other social divisions as a leading cause of economic underdevelopment, due in part to their adverse effects on public good provision and collective action. We investigate this issue in post-war Sierra Leone, one of the world’s poorest countries. To address concerns over endogenous local ethnic composition, and in an advance over most existing work, we use an instrumental variables strategy relying on historical ethnic diversity data from the 1963 Sierra Leone Census. We find that local ethnic diversity is not associated with worse local public goods provision across a variety of outcomes, regression specifications, and diversity measures, and that these “zeros” are precisely estimated. [My emphasis.]

Surprising, but it would be a mistake I think to go as far as Chris Blattman in asking whether the “role of ethnic rivalry is exaggerated” in the existing literature*.What the combined weight of research seems to be indicating is that ethnic diversity within a nation has the potential to lead to under-provision of public goods but that the extent to which this potential is realised is a product of other factors. Diversity isn’t destiny in other words. Specifically, these other factors include:

  1. The building of identity that transcends ethnicity. This can be the product of active efforts (think Nyerere in Tanzania) or historical ‘accident’ and expediency (i.e the findings of Danial Posner’s 2004 paper on Chewas and Tumbukas in Zambia and Malawi.)
  2. The way history, particularly the slave trade, conflict and colonial rule, interacted with ethnic cleavages serving either to exacerbate tension or ameliorate it.
  3. Strong functioning formal institutions which override some of the collective action dilemmas/issues of trust/issues of enforcement. This being a tricky chicken and egg problem, because in many cases the very problems of collective action resulting from ethnic diversity will undermine the establishment of such institutions. Interestingly, in their study Glennerster, Miguel, and Rothenberg find no evidence that the chiefly institutions of Sierra Leone succeed in negating the impact of ethnicity in Sierra Leone – either this is a result of methodological limits, or the answer is elsewhere.

One explanation that Glennerster et. al. offer is language:

While its exact origins are uncertain, the popularity of the Krio language throughout Sierra Leone is clear. Speakers of the leading indigenous ethnic languages have adopted Krio, and Krio has had a major impact on spoken Mende and Temne as well as other languages. The widespread knowledge of Krio in Sierra Leone – despite the fact that the vast majority of adults in the country have no formal schooling – facilitates trade, communication and potentially cooperation across ethnic lines, as well as a common feeling of national identity.

Maybe, although in Solomons and PNG Tok Pisin (Tok Pijin)  plays a similar role, apparently without success in promoting collective provision of public goods. While violence in the PNG highlands is often between speakers of the same (first) languages. So I’m inclined to think that language alone will do little.

*Seminal papers/books, I think, including:

Alesina, Alberto, Reza Baqir, and William Easterly. (1999). “Public Goods and Ethnic Divisions”, Quarterly Journal of Economics, 114(4), 1243-1284.

Habyarimana, J., M. Humphreys, D. Posner, and J. Weinstein. (2007). “Why Does Ethnic Diversity Undermine Public Goods Provision?” American Political Science Review, 101(4), 709-725.

Habyarimana, J., M. Humphreys, D. Posner, and J. Weinstein. (2009). Coethnicity: Diversity and the Dilemmas of Collective Action. Russell Sage: New York.

Miguel, Edward (2004) “Tribe or Nation? Nation Building and Public Goods in Kenya versus Tanzania” World Politics 56:3, pp 327-362.

Miguel, Edward and Mary Kay Gugerty (2005) “Ethnic diversity, social sanctions, and public goods in Kenya”. Journal of Public Economics. 89:11-12, pp. 2325-2368.

Posner, Daniel. (2004). “The Political Salience of Cultural Difference: Why Chewas and Tumbukas are Allies in Zambia and Adversaries in Malawi,” American Political Science Review, 98(4), 529-45.

Habyarimana, J., M. Humphreys, D. Posner, and J. Weinstein. (2007). “Why Does Ethnic Diversity

Undermine Public Goods Provision?” American Political Science Review, 101(4), 709-725.

Habyarimana, J., M. Humphreys, D. Posner, and J. Weinstein. (2009). Coethnicity: Diversity and the

Dilemmas of Collective Action. Russell Sage: New York.

Miguel, Edward (2004) “Tribe or Nation? Nation Building and Public Goods in Kenya versus Tanzania”

World Politics 56:3, pp 327-362.

Miguel, Edward and Mary Kay Gugerty (2005) “Ethnic diversity, social sanctions, and public goods in

Kenya”. Journal of Public Economics. 89:11-12, pp. 2325-2368.

Posner, Daniel. (2004). “The Political Salience of Cultural Difference: Why Chewas and Tumbukas are

Allies in Zambia and Adversaries in Malawi,” American Political Science Review, 98(4), 529-45.

July 9, 2010

Link Friday

Filed under: Aid,Governance,Institutions,Social Justice,Trade — terence @ 12:13 pm
Tags: , ,

Starting with industrial policy…

At VoxEU Ann Harrison and Andres Rodriguez-Clare make the case for “soft industrial policy”…

…whose goal is to develop a process whereby government, industry, and cluster-level private organisations can collaborate on interventions that can directly increase productivity. The idea is to shift the attention from interventions that distort prices to interventions that deal directly with the coordination problems that keep productivity low in existing or raising sectors. Thus, instead of tariffs, export subsidies, and tax breaks for foreign corporations, we think of programmes and grants to help particular clusters by increasing the supply of skilled workers, encouraging technology adoption, and improving regulation and infrastructure. While “hard” industrial policy is easier to implement than “soft” industrial policy measures, tariffs and subsidies become entrenched and are more easily subject to manipulation by interest groups.

The article is an excellent overview of the industrial policy debate, and their suggestion certainly has appeal. As always though, I’m still not confident that what they’re arguing for could really work in the institutional environment of developing countries, or that it would be any less subject to manipulation by interest groups than traditional industrial policy. Still, well worth a read.

Meanwhile, industrial policy is now on the menu at the World Bank, courtesy of their interesting new chief economist Justin Lin. And at Poverty to Power Duncan Green reviews some of Lin’s suggestions for industrial policy, offering similar concerns about feasibility in less than optimal institutional environments. To which Lin offers a thoughtful response.

Sticking with Oxfam, Oxfam New Zealand, spurred by last year’s Ministerially mandated change of focus to New Zealand’s aid programme (the core focus now being on economic development), have produced a really interesting piece of research [pdf] on what might work in terms of aid for economic development in the Pacific.

Also on the subject of aid, Owen makes an uncharacteristic error in attributing an incorrect figure to William Easterly. And yet the underlying point of his post is correct and bares repeating. The West really, really hasn’t given that much aid to developing countries:

The G-20 countries have, over the whole history of aid, given less aid to sub-Saharan Africa than they spent on fiscal stimulus in the single year of 2009.

Keeping the segues flowing, William Easterly is at least 50 percent correct in his most recent post at AidWatch:

Here’s why direct solutions to problems cannot foster development. Each direct solution depends on lots of other complementary factors, so the solutions can seldom be generalized across different settings; Solutions must fit each local context. Solutions that generate the highest payoff in each setting should be a higher priority than the lowest payoff solutions. Since there is little or no feedback on how well each solution is working in each local situation, there is little possibility for any such adjustments.

Hear, hear.

Where his post falls apart is in it’s extolling of markets and democracy as the best possible means of finding solutions to the complexities of context. The invisible hand is a miraculous allocational tool, and functioning markets have a critical role to play in enhancing human welfare. But markets are embedded in institutions and when institutions are poor markets are often absent or have perverse outcomes. And in most developing countries institutions are poor. Similarly, democracy is an incredibly good thing. And it’s certainly the least worst means of governance that humans have developed. But in countries where the nation state sits awkwardly against identity and informal institutions, democracy struggles. It’s not a panacea.

Which isn’t to say that economic markets or democratic polities are bad things, even in the most troubled developing countries, but rather that they aren’t the sole answer to the curly problems of aid and development. They’re only part of the answer: compliments to good aid and hard work in determining what works in governance; not alternatives.

Finally (and by now I’m all out of segues) Johann Hari attributes the commodity price crisis, not to rising demand in China, not to supply shocks, not even to ethanol, but rather to investment banks working the futures market. Is he correct? I don’t know. If he is, he’s certainly right about one thing: morally, if not legally, that’s an incredible crime.

June 30, 2010

Aid and Corruption

Filed under: Aid,Governance — terence @ 5:01 pm
Tags: , ,

“Power corrupts”, a commenter on Duncan Green’s blog wrote, “PowerPoint corrupts absolutely.”

Yes, well, we all know about PowerPoint, but what about aid? It’s taken as axiomatic by people such as Dambasa Moyo and Helen Hughes that aid creates corruption. But one of the many troubles with Moyo and Hughes’ work is that so much is taken axiomatic, and so little is argued on the basis of actual evidence.

Speaking of evidence, while one working paper certainly isn’t the final word, the findings of Nicholas Charron’s paper, Exploring the Impact of Foreign Aid on Corruption: Has the ‘Anti-Corruption’ Aid been Effective?, make for interesting reading.

The abstract:

Though many studies have referred to an ‘anti-corruption movement’ beginning in the 1990’s by major international organizations, none has empirically tested its effectiveness on corruption. The data show that from 1997 on, the impact of multilateral aid is strongly and robustly associated with lower corruption levels, while bilateral aid is shown to be an insignificant determinant. An increase in any ODA pre-1997 is associated with higher levels of corruption or has no impact at all. Using panel data from 1986-2006, this study reveals a more nuanced relationship between ODA and corruption than in previous studies and demonstrates that when disaggregating the time periods, there are sensitive temporal effects of ODA’s effect on corruption overlooked by earlier studies, and provides initial evidence of the effectiveness of the international organization (IO), anti-corruption movement in the developing world.

This would certainly correspond with the belief of many in the aid world that the aid game changed somewhat around the turn of the millennium, with less aid being given for overtly political reasons and a much greater emphasis being placed on aid quality.

June 25, 2010

Two Types of Corruption

Filed under: Governance — terence @ 2:04 pm
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Just musing (inspired by readings on Melanesian politics)…

Two types of corruption in developing countries:

Venal Corruption: the simple stealing of social resources for your own or for your associates’ use. There’s a straight line from greed to this type of corruption. It’s also the type of corruption we see in the West. And it’s present in developing countries.

The Corruption of Conflicting Rules: Relatively rare in the West. When informal socially mandated rules come into conflict with the law of the land. For example, when the family members of a bureaucrat prevail upon that person to ‘take care of their own’ and focus a service on their area of origin.

In terms of morals, Venal Corruption is far worse than the Corruption of Conflicting Rules. The difference here is the difference between selfishness and decisions made in difficult situations.

In terms of consequences, both types of corruption can be equally detrimental to governance and the provision of public goods and services, and good governance.

In terms of what to do, strategies for tackling the two different types of corruption might be quite different. A strong audit office could be sufficient to check Venal Corruption. On the other hand, in some cases, the Corruption of Conflicting Rules might be incredibly difficult to eliminate save through wholesale social change or, at the very least, the redesign of formal institutions.

June 1, 2010

The previous post summarised in 1,985 fewer words

Filed under: Governance — terence @ 5:34 pm
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Where trust is low, life is one big long collective action dilemma.

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