Sunday, August 17, 2014

Why not ask poor people their priorities for an agenda to succeed the Millennium Development Goals?

A few years ago a senior official of the Australian government aid agency asked me my view of the Millennium Development Goals (MDGs).  My response was that I had not thought much about them. I am not proud of that. As a person who claims to have a strong interest in human flourishing I should have shown more interest in the MDGs, even if only to be able to articulate why I didn’t think their existence made a significant contribution to reducing world poverty.

If I did not have a strong interest in issues relating to human flourishing, there is a good chance that I would not even have been aware of the existence of the MDGs. World Values Survey data (for 2005-2009) shows that only 12 percent of Australians had actually heard of the MDGs. The relevant percentages varied widely among the 43 countries included in the surveys - from 64 percent in Ethiopia to 5 percent in the United States.

If asked about the MDGs now I would say that providing poor people with better opportunities should be the most important goal. That is mainly about opportunities to earn income. Poverty has some multidimensional aspects that are not adequately reflected in conventional measures of income. For example, it is important to recognize that people with disabilities can have greater needs than others with similar incomes and that income measures do not normally take account of such things as availability of safe drinking water. But when people have opportunities to earn income they are in a better position to help family members and to contribute to provision of public goods.

 Nevertheless, I would still struggle to list all the MDGs. The problem is that there are 8 to remember – including four goals relating to health issues. One of the goals that sticks in my mind is “Develop a Global Partnership for Development”, which seems to be mainly about flying bureaucrats to international conferences.

The most important thing to know about the MDGs is that good progress has been made to achieving many of them. The proportion of people living in extreme poverty has halved since 1990. Unfortunately, that still leaves about 700 million people in the world who are living on less than US $1.25 a day.

Much of that progress toward achieving the MDGs has to do with increases in economic freedom in China and India, and would have occurred if the MDGs did not exist.  Nevertheless, the monitoring and reporting process associated with the MDGs has served a useful function.

Meanwhile, a sub-committee of the Global Partnership for Frequent Flying – sometimes referred to as the UN General Assembly's Open Working Group on Sustainable Development Goals - has held meetings where it:
 reaffirmed the commitment to fully implement all the principles of the Rio Declaration on Environment and Development, including, inter alia, the principle of common but differentiated responsibilities, as set out in principle 7 thereof”.   
 “It also reaffirmed the commitment to fully implement the Rio Declaration, Agenda 21, the Programme for the Further Implementation of Agenda 21, the Plan of Implementation of the World Summit on Sustainable Development (Johannesburg Plan of Implementation) and the Johannesburg Declaration on Sustainable Development, the Programme of Action for the Sustainable Development of Small Island Developing States (Barbados Programme of Action) and the Mauritius Strategy for the Further Implementation of the Programme of Action for the Sustainable Development of Small Island Developing States. It also reaffirmed the commitment to the full implementation of the Programme of Action for the Least Developed Countries for the Decade 2011–2020 (Istanbul Programme of Action), the Almaty Programme of Action: Addressing the Special Needs of Landlocked Developing Countries within a New Global Framework for Transit Transport Cooperation for Landlocked and Transit Developing Countries, the political declaration on Africa’s development needs and the New Partnership for Africa’s Development. It reaffirmed the commitments in the outcomes of all the major United Nations conferences and summits in the economic, social and environmental fields, including the United Nations Millennium Declaration, the 2005 World Summit Outcome, the Monterrey Consensus of the International Conference on Financing for Development, the Doha Declaration on Financing for Development, the outcome document of the High-level Plenary Meeting of the General Assembly on the Millennium Development Goals, the Programme of Action of the International Conference on Population and Development, the key actions for the further implementation of the Programme of Action of the International Conference on Population and Development and the Beijing Declaration and Platform for Action, and the outcome documents of their review conferences. The Outcome document of the September 2013 special event to follow up efforts made towards achieving the Millennium Development Goals reaffirmed, inter alia, the determination to craft a strong post-2015 development agenda. The commitment to migration and development was reaffirmed in the Declaration of the High-Level Dialogue on International Migration and Development”.

I hope no-one tried to read all that. The reasons I included that passage should be obvious, so I will resist the temptation to try to explain.

Actually, as well as reaffirming their commitment to fully implement the outcome of their previous frequent flying activities, the Open Working Group on Sustainable Development Goals managed to suggest 17 sustainable development goals to succeed the Millennial Development Goals.

I don’t object to any of the goals specified. If anything I would like to add to the list. For example, I would like to see a specific reference to ending slavery and intergenerational debt bondage. As more people emerge from poverty there is also a case for greater recognition of the importance of reducing vulnerabilities and building resilience (but without the welfare state ideology being advocated by UNDP - see my last post for comment).

However, if 8 goals is too many for me to remember, there is not much hope that I will be able to remember 17. Following the recommendations of Bjorn Lomborg’s Copenhagen Consensus group, Matt Ridley has suggested 5 goals:
1. reduce malnutrition;
2. tackle malaria and tuberculosis; 
3. boost preprimary education;
4. provide universal access to sexual and reproductive health;  and
5. expand free trade.

Those seem to me to be worthy goals, but my views are no more relevant than those of the bureaucrats, diplomats and development experts who attend UN conferences. 

In using any top-down approach to determine the development agenda, bureaucrats and development experts are telling the world’s poor what their priorities should be in order to live happier lives. That is highly impertinent in my view.

As I see it, the best way to determine the development agenda would be by using surveys to ask the world’s poor about their priorities. Those priorities might not meet the approval of all members of the global partnership of frequent flyers, because they may differ for people living in different circumstances in different parts of the world. If that is what emerges, then so be it.

The over-arching goal should be to ensure more widespread opportunities for individuals to live happy lives, rather than to produce a uniform development agenda that conforms to the ideals of bureaucrats and development experts.

Sunday, August 10, 2014

Could the adoption of welfare states reduce vulnerabilities and build resilience in developing countries?

2014 HDR CoverI was delighted when I first noticed that Human Development Report 2014 has looked at the question of how poor people in developing countries can be made less vulnerable and more resilient in the face of natural disasters, commodity price instability and other threats to their well-being. In turning its attention to vulnerability and resilience the United Nations Development Programme (UNDP) has recognized the progress that has occurred in reducing world poverty in recent decades.

However, I am appalled that the UNDP has adopted an approach that is likely to lead to lead to greater welfare dependency and increased government debt in developing countries, and inevitably make the poor people in those countries more vulnerable to extreme poverty when fiscal restraint has to be re-imposed. There is something very peculiar about the idea that people can become more resilient by being made dependent upon unsustainable government largesse. The UNDP seems to have an obsessive desire to encourage developing countries to adopt the most expensive kind of welfare system imaginable.

At this point you probably think that I must be exaggerating. If so, you are wrong! The report does not argue for provision of a targeted safety net to assist those most in need of help at time they most need that assistance. In fact, it rejects that approach explicitly in favour of universal provision of basic social services such as education and health care. The authors argue:
“Universal coverage of basic social services is not only imperative – it is also possible at an early stage of development. And recent evidence shows that it can be achieved in less than a decade” (p 85).

The authors recite the view that when social benefits are targeted, “the middle class and elites are less willing to fund them through taxes”.  They obviously see little merit in public policy transparency. They also over-estimate their ability to pull the wool over the eyes of middle and upper-income voters. Such voters have not been backward in shifting the burden of funding universal welfare back to low income earners via taxes on wages or goods and services (as in Scandinavian countries) or in shifting it forward to future generations through increases in public debt (as in many other high-income countries).

When the authors discuss policies to promote full employment they show some recognition that a somewhat different approach might be appropriate in developing countries. They recognize a need for policies to address the vulnerabilities of people engaged in traditional agricultural activities and informal sectors. For example, they mention the role of micro-credit schemes, improved small-scale technologies and support for farmer cooperatives.

I was hoping to see some innovative thinking about food security in the report, but I didn’t find any. The issue is mentioned in the discussion of agricultural trade liberalization, where it is in the “too hard” basket. There is recognition that “spikes in the prices of food and other commodities are adding to hunger and starvation for the poor and vulnerable”, without consideration of how this could be avoided. There is recognition that farmers in developing countries often have to compete with subsidized agricultural products from developed countries, again without providing any suggestions about how this could be avoided. And there is this peculiar recommendation: “Agricultural liberalization needs to be selective in targeting goods mainly exported by developing countries to avoid increasing prices of food staples of developing countries”. So much for free trade, or even fair trade!

Actually, apart from that example of absurdity, I found the section on trade in Chapter 5 of the report to be one of the more sensible parts of the report.

While I am in a positive frame of mind I should also mention that the report has some informative diagrams showing progress in reducing world poverty. For example, Figure 2.6 (page 41) shows that for most countries the poorest 40 percent of the population have enjoyed more rapid consumption than the population as a whole over the period 2005-10. However, when the authors wrote about that Figure, what they emphasized was that consumption for those at the poorest end of the distribution has been slower than for the population as a whole in some countries where inequality has been high or rising. The three countries they cite as examples are Malaysia, China and Uganda. That seems to me to be grossly unfair to China and Uganda; in those countries, growth in consumption at the poorest end of the distribution has been much the same as for the population as a whole.

It was almost inevitable that the UNDP would produce a disappointing report about how to reduce vulnerabilities and build resilience in developing countries. People who work for international agencies are always subject to the temptation to see themselves as architects of human development. It would be overly optimistic to expect anyone writing a report for the UNDP to show an understanding the bottom-up processes through which economic development has tended to lead to growth of emancipative values and progressively greater efforts to protect vulnerable people from misfortunes.

The authors of the report seem to have hopes that the approach they advocate will influence international debate about the post 2015 development agenda, which is to follow the Millennium Development Goals. In my view their report should be ignored. The approach the authors advocate is a recipe for a return to more widespread poverty and misery throughout the world.

Monday, August 4, 2014

How can good health care be affordable in developing countries?

When you consider that there are people in high-income countries who are struggling to afford good health care, it might appear obvious that it can only be afforded by wealthy people, or by people who have access to the bank accounts of wealthy people (including wealthy taxpayers). That perception is not entirely wrong – access to the most advanced medical technologies is often costly. Research, equipment embodying high technology and extensive staff training have to be paid for one way or another.

Pharmacy on a Bicycle: Innovative Solutions to Global Health and PovertyHowever, it is surprising how good, and how affordable, the health care available to ordinary people in developing countries could be with appropriate technology and incentives. The book, Pharmacy on a Bicycle, by Eric Bing and Marc Epstein, provides many examples of good health care being provided at low cost in low-income countries.

The authors are well qualified to write on this topic. Eric Bing is a physician with an MBA, who works on global health challenges at the George W Bush Institute. Marc Epstein is a business school professor, who has a special interest in commercializing technology in developing countries. The authors acknowledge assistance of several other people including their editor, Troy Camplin.

The book is written around the acronym: IMPACTS.
I” stands for innovation and entrepreneurship. In some instances products have been designed specifically for use in developing countries. For example, to detect heart abnormalities General Electric designed a low cost ECG. The product was developed for use in India but is now marketed globally.
M” stands for maximizing efficiency and effectiveness.  An example provided is the Aravind Eye Center in India which uses a production line process to undertake a large number of surgeries per day. This reduces cost, but it also improves surgeons’ skills and enhances the quality of care they can provide.
P” stands for partner coordination. This is not always about government regulation. For example, VisionSpring, a non-profit organisation, has developed partnerships with schools and businesses to provide inexpensive spectacles to students and workers.
A” stands for accountability. As might be expected, the authors emphasize the need to set clear goals and targets, and to monitor and evaluate performance to support effective decision-making. This is easier said than done, particularly in the public sectors of low-income countries, but the authors manage to find examples to illustrate how accountability systems have improved performance.
C” stands for creating demand. The benefits of services are not always obvious to potential users. One method of creating demand discussed by the authors is the use of vouchers which enable consumers to obtain access to services at reduced cost. They can also create competition among providers and create incentives for them to give low-cost, quality care. Several examples are provided of successful use of vouchers, but the one that appealed most to my imagination was an experiment in Uganda where expectant mothers were given vouchers to take motorcycle taxis to attend a clinic for prenatal care, delivery and postnatal care.
T” stands for task shifting.  This involves shifting tasks from doctors to nurses and from nurses to community providers or patients. Task shifting reduces bottlenecks and reduces cost.  For example, nurses have been trained to conduct screening in a program for prevention of cervical cancer in Zambia. Photographs were taken as part of the procedure and reviewed on a weekly basis by doctors and nurses. Over time, nurses became nearly as accurate in their diagnoses as doctors.
S” stands for scaling. How can innovations that have proved successful for small groups of people be scaled up to reach more people? The authors claim:  “By focusing heavily on the fundamentals of program, process and passion, organisations operating in even the most challenging of conditions can achieve scale while maintaining outstanding quality”. The contribution the authors have provided on the scaling question seems to me to be a good example of the well-meaning, but ineffectual, approach that management experts tend to adopt when they are confronted with economic problems.

Readers might have gathered by now that I think the discussion of the scaling issue is the weak point of this book. In scaling up successful pilot programs to reach large numbers of people the prime consideration has to be to ensure that organisations (firms) have appropriate incentives to deliver high quality goods at low cost. It would be useful for more consideration to be given to the question of whether market incentives, such as those that drive high quality service delivery around the world in franchise operations such as McDonalds’ fast food restaurants, could apply to a greater extent to delivery of medical services in developing countries. An irrational aversion to the idea of McDonaldizing health seems to prevent governments from allowing health markets to function effectively in the interests of patients.

My overall impression of this book is favourable, despite the reservations just expressed. The authors have done an admirable job in demonstrating that there is potential for a lot more people in the world to have access to high quality, affordable health care.  

Monday, July 28, 2014

What are the implications for PNG of Australia's new foreign aid policy?

My interest in Australian aid to Papua New Guinea was heightened while I was in Papua New Guinea late last year and earlier this year working on a review of agricultural policy implementation for the PNG government. I was surprised to learn that, apart from some ACIAR projects, not much Australian aid money has gone to agricultural development in PNG in recent years. (In case anyone is wondering, the project I was working on was not funded by foreign aid. Work on this post was not funded by anyone other than myself and I have not discussed the topic with anyone prior to publication.)

PNG is still a major recipient of Australian foreign aid. Development grants to PNG are estimated at about $500 million in 2014-15, which is more than half of all allocations for Pacific countries and about 15 percent of total allocations for country and regional programs.

From a PNG perspective, however, development grants from Australia do not now make a huge contribution to the government’s budget. Such grants currently account for about 6 percent of total PNG government spending; development grants from other foreign sources account for a further 2 percent of spending. The amounts involved are substantial when compared with current tax receipts from sources such as GST and personal income tax, but seem quite small when compared with amounts raised by borrowing – amounting to about 34 percent of estimated government spending for 2014. The high level of borrowing reflects the rapid rise in government spending in recent years in anticipation of substantial revenue flows from LNG exports.

The relatively small amount of Australian aid money flowing to agricultural projects can be explained in terms of the priorities established in the “PNG-Australia Partnership for Development” in 2011. This agreement gives priority to education, health, transport infrastructure, and safety and justice (policing, security, access to justice etc.). Those priorities, in turn, reflect the priorities of PNG’s Medium Term Development Plan 2011-2015 (MTDP).

That all seems to make sense in terms of ensuring that aid money contributes to national goals of the recipient country. The priorities of the MTDP also make sense in terms of its objective of laying the foundation for economic growth by addressing supply side constraints. Improvements in law and order and transport infrastructure have potential to reduce costs and improve the competitiveness of export industries. Improved education and health services (e.g. malaria prevention) have potential to make an important contribution to improving productivity. Moreover, while many services in the priority sectors can be most efficiently provided by private firms, those sectors also encompass core functions of government.

So, what is wrong with the idea that foreign aid should be used to help the government to perform its core functions better? Not much really, except that in the context of a country like PNG there is no magic wand that can be purchased, with or without foreign aid, to improve performance of core government functions. I puzzled over one aspect of this question a few months ago in a post entitled “How do peaceful societies come about?”. History seems to tell us that law and order is more likely to be established through the emergence of better economic opportunities for potential criminals than through massive investments in deterrence of crime.

The dynamics of the development process certainly do not require that improvements in core government functions must necessarily precede the development of more widespread economic opportunity. In the PNG context I think such considerations provide a strong case for agricultural policies to be used to help promote more widespread economic opportunity. I don’t want to attempt to explain why that is so in this post. I think it is adequately explained in the report I helped to prepare, entitled “Towards Agriculture Transformation and a New Direction for Enhancing Productivity in Agriculture”, which is now publicly available. The recommendations of the report have been accepted by the PNG government.

So, that provides the context in which I ask myself what are the implications for PNG of Australia’s new foreign aid policy. The new aid policy has a strong focus on private sector development, growth of international trade and the development of agriculture and fisheries.  The new policy links funding to performance: programs and partner organisations that perform well will be rewarded with additional funding.

There seems to be potential for the new framework for agricultural transformation adopted by the PNG government to mesh well with Australia’s new foreign aid policy. It will be interesting to see how much emphasis there is on encouraging innovation in agriculture in PNG as Australia’s new aid policy is translated into Aid Investment Plans over the next 12 months. 

The following comment has been supplied by the PNG Minister for Agriculture, Hon. Assik Tommy Tomscoll, MP:

“I read your article and agree. In PNG the best opportunity to create wealth, capture a large proportion of the population in economic participation, promote industrialisation and improve living standards for the majority, lies in the development of the agriculture. Around 87% of our people depend on agriculture for both cash and subsistence, and the agriculture sector contributes 24% to 27% to gross domestic product. PNG is an agriculture-based economy, not a hydrocarbon and mining economy.
Thanks for your worthy contribution in the FER - and so the sector is forging ahead at long last.”

Appreciative comments were also received from Dr Vele Ila’Ava, Secretary of the PNG Agriculture Department, and Dr James Kaiulo, Chairman of the FER Steering Committee and FIA Team Leader. Dr Kaiulo commented as follows:
“You have ‘hit the nail on the head’ in relation to the Australian Foreign Aid Policy on social (health, education, law and justice) programs that are being promoted and funded by the Australian Government while ignoring the agriculture sector.  The Australian Aid on agriculture has been focused in the area of R&D programs without any significant impact on the improvements to the livelihoods of the rural farmers.

I hope they take note of your comments.”

Some of my colleagues on the FER team have also provided supportive comments. I would like to draw attention to the comment provided below by Dr Eric Omuru: 
"Increased funding support to agriculture by PNG government is gaining momentum. The findings and recommendations of the FER report have been well received by the government. The support and efforts to this cause by our minister and secretary is the best I have seen in the sector in a long time. If Canberra can join the party and contribute a certain % of what it gives to PNG as foreign aid specific for agriculture, it will be a meaningful contribution. 

Enjoyed reading your article."