Lant Pritchett: The Best of Aid

The Best of Aid: Guiding the Movement Lant Pritchett At The Best and Worst of Aid: Accountability, Incentives, and Effectiveness March 5, 2010

Capabilities, Functionings, Utility, Well-being, Happiness, Life Satisfaction (Dimensions and Valuations) Human Development Smallest unit of Analysis: Individual Development Polity Economy Administration Social Smallest unit of Analysis: “Nation” Economy, Organization, Society, H0: Tightly Causally Connected

The Challenges of a Movement
Maintaining the core
Allowing for transformational excellence

Economics as a Craft
Robert Solow (roughly): Graduate student papers are the equivalent of child violin recitals, not interesting for what the produce but for what they promise.
Paul Krugman (roughly): The production of the thousands of boring, unread, uncited, academic papers exists just to give heft to the economist at the policy table. All of academic economics existence can be justified if all it produces is 1 percent of GDP welfare gain from freer trade in the USA (120 billion vs 2.5 billion)

Well-being gains from the 1990s reforms in India exceed the previous 20 years of aid, plausibly by an order of magnitude Cumulative aid, 1970-1990: ~1 trillion US GDP 12 trillion Counter-factual “without reform” growth rate Gains from post-reform growth (relative to counter-factual) adjusted to OECD marginal utility in trillions $113.49 $202.47 1/y^2 $11.57 $20.63 1/y $1.18 $2.10 Constant 2% 0% Marginal utility:

Did Aid Contribute to Reform?
Not directly as conditionality.
But…
Policy makers with international exposure coming and going from multi-laterals
Influential studies
Promoting alternative views within India for decades (one independent view on the economy)
Contributions of specific information
Supporting domestic think tanks
Just being the fat part of the pyramid

Any of a number of reform initiated growth episodes could, by themselves justify decades of the entire endeavor of aid Widjojo, the Indonesian economist Total gains in trillions Gains with log Utility (2 ppa) Relative to Counter-factual growth rate of: Growth Episode 1.68 0.15 0.21 1986-2007 Vietnam 5.91 0.70 1.22 1966-2007 Indonesia 2 ppa 0 Country

Orthodox Principles, Heterodox Implementations
Successful growth episodes involve the expansion of orthodox principles of generating prosperity (incentives, security of claims, space for innovation and ecological learning)
But…
Domestically driven and adapted
Often heterodox implementations (marginal, incremental, adaptive)

The Achievements of the best of aid look the Conditions of the worst of aid Every Hollywood movie has the same plot: a sympathetic character overcomes increasingly difficult obstacles to achieve their final objective William Goldman

The Achievements of the best of aid look the Conditions of the worst of aid Every Hollywood movie has the same plot: a sympathetic character overcomes increasingly difficult obstacles to achieve their final objective William Goldman The problem wasn’t that Rocky had the same plot as all other Hollywood movies, it was the inauthentic repetition

Isomorphic Mimicry: Which is a bee, which is a fly looking like a bee?

The worst of aid encourages isomorphic mimicry to thrive as a viable organizational strategy Space for novelty (E)Valuation of novelty Legitimation Leadership Front-line worker use of capacity Open Functionality Demonstrated Success Wealth Creation Concerned Flexibility Closed Agenda promotion Isomorphic mimicry Rent Seeking/ Distribution Compliance Agents (leaders, managers, Front-line workers Organizations (firms, ministries, NGOs) System Characteristics

The worst of aid encourages isomorphic mimicry to thrive as a viable organizational strategy Space for novelty (E)Valuation of novelty Legitimation Leadership Front-line worker use of capacity Open Functionality Demonstrated Success Wealth Creation Concerned Flexibility Closed Agenda promotion Isomorphic mimicry Rent Seeking/ Distribution Compliance Agents (leaders, managers, Front-line workers Organizations (firms, ministries, NGOs) System Characteristics Big Development: Closing Space, Promoting External Agendas, Rewarding Inauthentic BAU Small Development: Against the system Creates Innovative Small Scale Success Allows dysfunctional Programs, policies, Organizations to thrive Without systemic Changes this remains Localized and effervescent

Fighting against our baby ontology to focus on properties of complex adaptive systems: allowing success to emerge Space for novelty (E)Valuation of novelty Legitimation Leadership Front-line worker use of capacity Open Functionality Demonstrated Success Wealth Creation Concerned Flexibility Closed Agenda promotion Isomorphic mimicry Rent Seeking/ Distribution Compliance Agents (leaders, managers, Front-line workers Organizations (firms, ministries, NGOs) System Characteristics

Fighting against our baby ontology to focus on properties of complex adaptive systems: allowing success to emerge Space for novelty (E)Valuation of novelty Legitimation Leadership Front-line worker use of capacity Open Functionality Demonstrated Success Wealth Creation Concerned Flexibility Closed Agenda promotion Isomorphic mimicry Rent Seeking/ Distribution Compliance Agents (leaders, managers, Front-line workers Organizations (firms, ministries, NGOs) System Characteristics Markets succeed by creating Conditions for ecological learning Through Creative Destruction And then Allowing Emergent Properties of Complex Adaptive Systems to Emerge Pull systems this way Allow this to emerge

Best Aid: SSA?
Program from central to state governments
Huge support from World Bank, Dfid
Built schools, hired teachers (mainly)
Had components for deconcentration and marginal groups and innovation
“ state of the art” design
Spent the money, substantially expanding education budgets
Met most physical implementation targets
Enrollments did increase
India on way to meeting MDG for universal primary completion

But….Rocky or Rocky VI?
Learning levels remain abysmally low, and are not increasing (over five years)
Entrenched “perfect storm” among teachers (high pay, low performance, disillusioned teachers) persist (PROBE repeat)
Not a single piece of evidence that SSA caused increased enrollments (in many states total public school enrollment fell).
Few (any) scaled innovations emerge

Worst of Aid: ASER/EI?
ASER: nationwide, district representative, testing of simple reading and math competencies using local partners
EI: Sophisticated testing with techniques for feedback
Don’t teach a single child
Not clear what exactly to do in response
Aren’t rigorous evaluations of “solutions” that could be scaled

ASER/EI as the Best of Aid
Have, with amazingly few resources, completely changed the discourse about schooling in India
Are creating pressure for defining success in functional terms where isomorphism doesn’t trump
Facilitate the emergence of lots of solutions: “vouchers”, low cost franchises, remedial programs, innovations in the public sector (learning for all)
By demonstrating the failure/slow progress of BAU open up the space for innovation

“We few, we happy few…”
Core principles (open structured systems pressured on performance)--heterodox implementation that avoid baby ontology to allow solutions to emerge as reification of good struggles
Free up aid from either complacency or narrow accountability to make more transformational successes possible

http://aidwatchers.com	587
http://nyudri.org	131
http://dri.fas.nyu.edu	94
http://virtualeconomics.com	83
http://dri.as.nyu.edu	51
http://www.slideshare.net	17
http://www.pangeome.org	6
http://blogs.nyu.edu	1

Lant Pritchett: The Best of Aid

by NYU Development Research Institute on Mar 19, 2010

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