Get money, get aid.

Archive for November, 2010

In London on December 1st?

Time for some shameless self promotion!

One of us will be launching a briefing at SOAS (Russel Square). Also speaking will be Hannah Roberson, a researcher at Action Against Hunger and Dr. Laura Hammond, author of This Place Will Become Home. Refugee Repatriation to Ethiopia.

We’d love to meet any Arrested Development readers (yes, all four of you) that might be in London. We’ll have free wine and copies of the briefing.

Official Flyer below:

CHAD:A Call to end decades of hunger
Wednesday 1st December6pm
Room 116
SOAS, Thornhaugh St, London WC1H0XG
 

Speakers:

Dr. Laura Hammond, Senior Lecturer (SOAS)
Samuel Haunstein Swan, Senior Policy Advisor (Action Against Hunger)
Alex Merkovic-Orenstein, Policy Mapping Officer (Action Against Hunger)
Hannah Roberson, Policy Researcher  (Action Against Hunger)
Chair: TBC

Event description:

Action Against Hunger and the Royal African Society invite you to the launch of Action Against Hunger’s report on the food crisis in Chad followed by a panel discussion.

The food crisis in the Western Sahel has reached catastrophic proportions. Yet what is most appalling is that this crisis has been allowed to continue for decades. Drought, policy failure and volatile food markets have created deep structural problems that could have been prevented and still can be tackled with appropriate interventions. Unfortunately, aid efforts have remained focused on short-term solutions. The recent scale-up of aid in the region provides the possibility of making deep, durable changes. Will international and government actors seize this opportunity to reverse the disastrous trends of the past?
 
Join Laura Hammond, Samuel Hauenstein-Swan, Alex Merkovic-Orenstein and Hannah Roberson to launch, discuss and debate the food crisis in Chad.
 
Please RSVP for all RAS events at RSVP@royalafricansociety.org

Facebook event

Royal Africa Society

Advertisements

In case you haven’t already seen it…

Trying to impress people at dinner parties with your vast knowledge of economic thought but haven’t actually read any of the work you want to talk about?

No readings? No problem! Here comes rap to your rescue.  Happy Friday!

(from Econ Stories)


An Upside to Conflict?

The conclusion that civil wars are destructive to development shouldn’t come as much of a surprise.  But what if the opposite were true—that is, what if there was something positive that comes out of war’s devastation?  The idea certainly isn’t obvious, but it is just what Philip Verwimp recently presented in a new working paper.

The gist is this: Being directly affected by violence changes an individual’s preferences.  That is, people affected by conflict don’t think in the same way as before.  This might not seem like breaking news.  In fact, it’s pretty obvious.  But for economists, who generally accept preferences as more or less given, it’s relatively grey territory.

Using games to test for social, risk, and time behavior, the researchers evaluated villages in Burundi.  Due to the somewhat random and indiscriminate progression of violence during Burundi’s civil war, they were able to compare the responses of those who had been affected by conflict with those who had not.

What’s the take away? Those affected by conflict tended to be more altruistic but also more impatient and risk-seeking.

What does this imply? That exposure to violence could foster stronger social networks but also increase the likelihood for individuals to want immediate returns over longer term ones.  These ideas link up with psychological studies and some recent research by Chris Blattman and others.  It’s all very muddy, but understanding more clearly how behavior changes as a result of external trauma like conflict is an extremely important dimension in the structure of development interventions.

And what about the limitations? Ignoring more technical points, the overall positive or negative effect here is ambiguous.  There is also a distinction between behavior and preferences—here they assume that behavior changes reflect preference shifts but this isn’t always so.  But, from common sense, behavior changes are no doubt more complex than the basic experiments shown here can gauge.

It’s a good start but only a start.


Policy with balls please! The Common Fisheries Policy

Fish: our tasty, slimy, and nutritious friends are disappearing. Fast. Since the rapid industrialization of the fisheries industry is hardly regulated, a lack of enforcement mechanisms means marine ecosystems are being scoured freely to keep up with the global demand for fish. Overfishing and bottom trawling by large, heavily industrialized fleets is destroying the physical environments of fish and preventing marine ecosystems from replenishing keystone species, essential to the food chains relevant to all marine life. Ironically, the large-scale fishing industries are not benefiting from their own greedy practices, as they are destructive beyond the rate of replacement necessary for their own profit in a given area. Entire coastal areas are rendered lifeless as large vessels fly flags of convenience from countries with few fisheries regulations and avoid legal recourse. Yet even these massive industrialized fishing fleets, able to move freely with their flags of convenience and exploit new waters are experiencing increasingly lower catch levels, caused by their own harmful practices. As a response to this growing worldwide ecosystemic crisis, the European Union has been debating the terms of future changes to its Common Fisheries Policy (CFP).

Realizing that such destructive vessels exist within the sovereign waters of EU countries is disturbing. However, realizing that many times that number of vessels operate internationally is absolutely terrifying. This is particularly pronounced in countries with weak capacities for enforcing environmental laws. The Environmental Justice Foundation has an excellent short documentary on the topic with particular relevance to the developing country context.

Data gathered in 2009 by the European Commission show that 88% of the catches exploited in EU waters exceed their stock’s renewal capacity because of trawling techniques. The same data also show there are 15,744 vessels (18% of the EU fleet) using trawling as their primary method of harvesting. If even the EU, among the strictest of environmental enforcers, is unable to prevent the decimation of their fish stocks, how can the international community expect to tackle the issue at a global scale?

European Commission 2008, http://ec.europa.eu

Bitching and complaining has indeed been rampant about the failure of quota proposals for overfished species. At the same time, those in the UK seem obsessed over the idea of regional policy management and a general reduction in overall fishing. Unfortunately, NGOs and European policy makers have failed to propose measures that strike at the heart of the ecosystemic issues I just highlighted. In addition to its current suggestions an effective CFP must set a bold global example by:

– Outlawing bottom trawling and industrialized vessels over 75 meters in length in all cases

– Going beyond the promotion of eco-labeling and create EU-wide policies that prevent any unsustainably caught fish from legally entering European markets

– Supporting the growth of small-scale, locally sourced and operated fisheries and markets

– Actively lobbying outside of the EU for municipalities, national governments, and intergovernmental organizations to recognize that, regardless of the short-term profitability, the global demand and supply for fish must decrease due to changes in policy, consumption ethics and a decrease in fishing practice, not an industry status quo through “free market” liberalization, deregulation, or a primarily economic focus


Index-a-thon

Since we bashed Transparency International’s Corruption Perception Index, it just wouldn’t be right if we ignored the brand new Human Development Report which is, it just so happens, chalk full of indices. Fortunately, it’s not all bashing this time.  (We have a love-hate relationship with statistics.)

Just which indices are we talking about here? The alphabet soup of HDR acronyms includes the well-known Human Development Index (HDI) and, this year, adds several others such as an Inequality-adjusted HDI and a Gender Inequality Index as well as a new Multidimensional Poverty Index.  The idea behind these measures is to look at aspects of poverty like education and health that can’t be seen through the lens of traditional income growth statistics.

Bear with us for a quick breakdown (or just skip ahead for some bashing):

The HDI includes three dimensions—health, education, and income—measured from life expectancy, school enrollment rates, literacy, and GDP per capita.  The new MPI expands upon this concept even further by combining health and education indicators like child mortality, nutrition, years of schooling, and child enrollment with standard of living measures such as access to electricity, drinking water, sanitation, flooring, cooking fuel and basic assets like a radio or bicycle.  The goal in all of this is of course to look at holistic deprivations, not just income poverty—recognizing that “people’s lives cannot be measured simply in terms of money or income.”

As we mentioned before, throwing a bunch of different ingredients together with arbitrary weights of importance can be a recipe for a completely muddled version of reality.  Because weighting (or giving importance to indicators) is pretty arbitrary, UNDP weighs everything equally and also has a website where anyone can build their own development index to assign their own weights to whichever indicators they want.

UNDP has also responded to past criticisms by providing disaggregations of the indicators.  For example, income can be the sole driver behind a country’s HDI improvement (which, by the way, is exactly the case for China this year).  Since this obviously doesn’t paint an accurate picture of what is happening, the report lists countries’ HDI improvements accompanied by gains from non-income HDI.  This emphasizes the point that indices are often misrepresentations of reality if taken at face value—but at least UNDP is trying to get that message out there, too.

The MPI is another story altogether.  It has come under more fire because it aggregates  even more poverty indicators.  The pros? MPI can add more nuance to the MDGs by showing overlap between different dimensions—that is, it can figure out in how many ways an individual is poor.  This is important for comparing inequality among regions and even within countries.  The cons? For starters, it compares “apples and oranges” while implicitly putting value equivalencies on human lives.  And the need for homogeneous data means the indicators were drawn from less rich data sets.  Looking at it this way means it amounts to no more than an intellectual exercise since the most useful part of the data, as is the case with the China example above, comes from when it’s broken down, not mashed together.

Kudos to UNDP for highlighting the complexities of poverty but, as always with statistics, proceed with caution.  Or, in other words: “Math may be the language of the Devil, but statistics proves that reality really is what you make it.” (Stephen Colbert)


Can MFIs go commercial and stay pro-poor?

As you can tell, the team at Arrested Development has taken a little break ever since we picked up a terribly distracting hard drug habit had to return to the back-breaking grind of the real world.

In other news:

CGAP has a great series of posts on the recent release of Indian MFI giant SKS’s initial public offering (IPO). While this isn’t the first time an MFI has gone public (Los Compartamos got a lot of attention for it 3 years ago), it brings us to ask if the microfinance sector is going through mission drift. But more importantly, will this drift benefit the “bottom of the pyramid” that microfinance ostensibly serves?

By going public, an MFI gains access to vast amounts of capital and reduces their potential dependance on donors (although SKS is at this point well beyond the need for grants). At the same time, bringing in new share-holders necessitates a greater focus on short-term profits, which some might argue can be opposed to the needs of poor clients.

IPOs aren’t the only way MFI’s can commercialise. The more common route is for MFIs to offer more sophisticated financial products (individual loans for example) to comparatively richer clients. The new yields can either cross-subsidise more poor clients or help move the MFI closer to sustainability (or a commercial enterprise).
Commercial MFIs tend to have better profit focused results than their development-oriented counterparts. They achieve width (more clients) of financial inclusion. But do they have more depth (reaching poorer clients)?

Malawi provides an interesting case here. Around 2005, two of the largest MFIs, FINCA and OIBM began reaching out to richer clients by offering new savings and loan products marketed to the Malawian middle class. The other two major players, Microloan Foundation and Concern Universal kept the focus on poorer clients and continued to rely on donor subsidies to run low-yield, pro-poor loan programmes.

Two major changes happened within FINCA and OIBM. Their average loan size compared to GNI per capita rose and their ratio of female to male borrowers significantly decreased.

OIBM succeeded in widening financial access, jumping from 5,000 borrowers in 2005 to 45,000 in 2009. FINCA on the other hand actually experienced a decline in borrowing.
These charts are messy. But I really don’t give a shit. We apologize for this.

But did either achieve depth? Women, who are traditionally excluded from financial services in Malawi, certainly didn’t gain from commercialisation. Most of OIBM’s loan sizes were already too large for most of Malawi’s poor and commercialisation hardly made them accessible to the poor . Despite the volatility in loan sizes, balances continued to hover atleast 4 times higher than that of OIBM’s counterparts.

Commercialisation of MFIs can do wonders if your goal is to offer consumption credit to the middle class. But don’t expect it to increase access for the poor.


Heritage Foundation loves being awesome

The Heritage Foundation is adorable.

A recent article published in their foreign aid section lambasts the UN’s “statist” approach to development, arguing that it merely entrenches corruption.

I argued last week that Transparency International’s Corruption Perceptions Index (CPI) looks a lot like the Heritage Foundation’s bullshit Index of Economic Freedom. Thankfully, the defenders of liberty are here to prove that two indices which essentially measure the same thing will show a correlation.

Really, I love these guys.