Brookings: Experts - Laurence Chandy

The Final Countdown: Prospects for Ending Extreme Poverty by 2030 (Report)

Laurence Chandy, Natasha Ledlie and Veronika Penciakova — Mon, 29 Apr 2013 12:00:00 -0400

Editor’s Note: An interactive feature, highlighting the key findings from this report, can be found here.

Over a billion people worldwide live on less than $1.25 a day. But that number is falling. This has given credence to the idea that extreme poverty can be eliminated in a generation. A new study by Brookings researchers examines the prospects for ending extreme poverty by 2030 and the factors that will determine progress toward this goal. Below are some of the key findings:

1. We are at a unique point in history where there are more people in the world living right around the $1.25 mark than at any other income level. This implies that equitable growth in the developing world will result in more movement of people across the poverty line than across any other level.

2. Sustaining the trend rate of global poverty reduction requires that each year a new set of individuals is primed to cross the international poverty line. This will become increasingly difficult as some of the poorest of the poor struggle to make enough progress to approach the $1.25 threshold over the next twenty years.

3. The period from 1990 to 2030 resembles a relay race in which responsibility for leading the charge on global poverty reduction passes between China, India and sub-Saharan Africa. China has driven progress over the last twenty years, but with its poverty rate now down in the single digits, the baton is being passed to India. India has the capacity to deliver sustained progress on global poverty reduction over the next decade based on modest assumptions of equitable growth. Once India’s poverty is largely exhausted, it will be up to sub-Saharan Africa to run the final relay leg and bring the baton home. This poses a significant challenge as most of Africa’s poor people start a long way behind the poverty line.

4. As global poverty approaches zero, it becomes increasingly concentrated in countries where the record of and prospects for poverty reduction are weakest. Today, a third of the world’s poor live in fragile states but this share could rise to half in 2018 and nearly two-thirds in 2030.

5. The World Bank has recently set a goal to reduce extreme poverty around the world to under 3 percent by 2030. It is unlikely that this goal can be achieved by stronger than expected growth across the developing world, or greater income equality within each developing country, alone. Both factors are needed simultaneously.

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Authors

Laurence Chandy
Natasha Ledlie
Veronika Penciakova

The Final Countdown: Prospects for Ending Extreme Poverty by 2030 (Interactive)

Laurence Chandy, Natasha Ledlie and Veronika Penciakova — Wed, 24 Apr 2013 10:21:00 -0400

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Laurence Chandy
Natasha Ledlie
Veronika Penciakova

Getting to Scale : How to Bring Development Solutions to Millions of Poor People

Laurence Chandy, Akio Hosono, Homi Kharas and Johannes F. Linn, eds. — Mon, 15 Apr 2013 00:00:00 -0400

Brookings Institution Press 2013 240pp.

The global development community is teeming with different ideas and interventions to improve the lives of the world’s poorest people. Whether these succeed in having a transformative impact depends not just on their individual brilliance but on whether they can be brought to a scale where they reach millions of poor people.

Getting to Scale explores what it takes to expand the reach of development solutions beyond an individual village or pilot program, but to poor people everywhere. Each of the essays in this book documents one or more contemporary case studies, which together provide a body of evidence on how scale can be pursued. It suggests that the challenge of scaling up can be divided into two: financing interventions at scale, and managing delivery to large numbers of beneficiaries. Neither governments, donors, charities, nor corporations are usually capable of overcoming these twin challenges alone, indicating that partnerships are key to success.

Scaling up is mission critical if extreme poverty is to be vanquished in our lifetime. Getting to Scale provides an invaluable resource for development practitioners, analysts, and students on a topic that remains largely unexplored and poorly understood.

ABOUT THE EDITORS

Laurence Chandy

Akio Hosono

Akio Hosono is the director of the Research Institute of the Japanese International Cooperation Agency.

Homi Kharas

Johannes F. Linn

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Mobile Money: A Technology Game Changer for Tackling Global Poverty?

Laurence Chandy — Tue, 12 Mar 2013 13:00:00 -0400

Mobile money—the ability to store and transfer money using cell phones—is one of the most talked-about technologies in global development. Proponents believe it could redefine what it means to be poor by giving poor people access to basic financial services.

In Kenya, where two-thirds of the population live on less than $2 a day, mobile money is now ubiquitous and has enjoyed outstanding adoption rates among low-income customers. Early evidence indicates it is already changing lives. For Safaricom, the leading provider of the service in Kenya, mobile money—or M-Pesa, as its product is called—has contributed directly to the company’s bottom line, while strengthening its market share.

Mobile phone operators are now tripping over each other to roll out similar services in other developing countries, from Afghanistan to Zambia. Intuitively, we would expect these to match, if not better, M-Pesa’s record of success by learning from M-Pesa’s experiences. So far that hasn’t happened. While a number of offerings in different countries are now taking root, none have so far matched the speed and scale of M-Pesa in Kenya. Others have failed miserably.

The video above chronicles M-Pesa’s pioneering story in Kenya and delves into the question of why its success has not been easily replicated elsewhere. We discussed this and other technological innovations for development last year at the Brookings Blum Roundtable—a high-level conference held each summer to discuss solutions to global poverty. To read more about the challenges of replicating M-Pesa, and the propagation of other innovations in the developing world, please read the 2012 conference report.

Authors

Laurence Chandy

Clicks into Bricks, Technology into Transformation, and the Fight Against Poverty

Laurence Chandy, Kemal Derviş and Steven Rocker — Tue, 12 Feb 2013 09:42:00 -0500

The last century has witnessed dramatic global improvements in the quality of life. Many of these improvements can be attributed to the discovery and spread of new technologies and ideas, ranging from vaccines and antibiotics, to improved hygiene, to the agricultural reforms of the Green Revolution. Today there is growing excitement about a new set of technologies that could further improve the lives of poor people around the world. Mobile technology is giving poor people the capacity to use their cell phones to send, receive and store money. Connection technologies such as open source software have allowed people in Haiti and Pakistan to collect and analyze information about, and then respond to, violence, corruption and natural disasters. “Green growth” innovations are expanding access to electricity and increasing agricultural yields around the globe while also reducing harmful emissions.

The 2012 Brookings Blum Roundtable was convened to discuss how the role of technology and innovation in global development can be promoted. Development practitioners and thought leaders from the public, private and non-profit sectors came together to examine the constraints that prevent the take up of creative technologies and how these constraints can be lifted. A critical question for the roundtable was what role the U.S. government should play in this agenda and how it can crowd in greater private sector activity.

This report highlights 10 issues raised at the roundtable where either particular proposals were advanced and debated, or new perspectives and analyses were shared. In each case, we summarize the roundtable discussion or explore the issues raised.

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The video below chronicles M-Pesa, the leading mobile money service in Kenya, and delves into the question of why its success has not been easily replicated elsewhere. For more information on M-Pesa, read Chapter 2 of this report.

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Image Source: © Reuters Staff / Reuters

How Effective Is the World Bank at Targeting Sub-National Poverty in Africa? A Foray into the Murky World of Geo-Coded Data

Laurence Chandy, Natasha Ledlie and Veronika Penciakova — Mon, 04 Feb 2013 14:11:00 -0500

How efficiently is aid allocated to reduce poverty? This question was explored over a decade ago in a paper by the economists Paul Collier and David Dollar. Their definition of a poverty-efficient allocation included, among other elements, the simple maxim that to maximize poverty reduction, “aid should be given to countries with large amounts of poverty.” When actual allocations were analyzed, it was shown that donor agencies paid heed to this rule. (Donors did less well at giving aid to countries with good policies, which, the authors argued, resulted in poverty-inefficient allocations overall.)

Intuitively, we would expect this maxim to apply at the sub-national level too: aid will contribute most to poverty reduction in a country when it is allocated to its poorest regions. An examination of sub-national aid allocations could therefore lead to greater understanding of donors’ commitment to poverty reduction. However, the limited availability of sub-national data on both aid and poverty incidence has precluded this level of analysis.

This is starting to change. As part of its “Mapping for Results” initiative, the World Bank has geo-coded its entire project portfolio of 2,900 active projects across 30,400 sub-national locations in 144 countries. Meanwhile, IFPRI’s Harvest Choice initiative has gathered together sub-national poverty data (using the international poverty line of $1.25 a day) from recent household surveys in 24 sub-Saharan African countries to draw detailed poverty maps covering half the continent. Both datasets contain, at a minimum, information at the first-order administrative level, meaning the province, state and governorate.

By combining these two datasets, we can begin to explore the allocative efficiency of aid with respect to poverty at the sub-national level—albeit for a single donor, in a subset of countries, at a particular point in time. The 24 countries we study contain 359 World Bank projects, which together are valued at nearly $19.3 billion.

By combining these two datasets, we can begin to explore the allocative efficiency of aid with respect to poverty at the sub-national level—albeit for a single donor, in a subset of countries, at a particular point in time. The 24 countries we study contain 359 World Bank projects, which together are valued at nearly $19.3 billion.

Our findings suggest that the World Bank rarely focuses its aid in the poorest regions in a country. However we refrain from casting judgment on the appropriateness of the Bank’s allocations due to unresolved questions concerning how targeting is measured, when targeting is appropriate, and how it can best be brought about.

Our point of departure is to consider the different ways in which aid can target the poor at the sub-national level. One approach is to devote aid to regions that have the largest number of poor people. At the country level, this would be equivalent to giving aid to India which is home to hundreds of millions of people living in extreme poverty. Alternatively, regions with the highest poverty rates could be prioritized. This compares to giving aid to Liberia where four in five people live below the poverty line.

For each approach we construct a poverty targeting index. This weights World Bank allocations within each country to generate a measure of how far they deviate from a poverty-neutral scenario in which aid is allocated equally across the country’s sub-national regions on a per capita basis. A positive score means that more aid is allocated to poorer regions within a country whereas a negative score implies a bias against poorer areas. (Note that allocations at a country level are assumed to be fixed; we do not consider the possibility of reallocating aid between sub-national units across national borders. We are also interested only in the incidence of poverty, not the distance of individuals from the poverty line.)

The results from the two indexes are illustrated in Figure 1a and 1b. As might be expected, the two sets of results diverge. For instance, in Kenya, the World Bank is effective at targeting sub-national regions with large numbers of poor people, but avoids those regions with the highest poverty rates.

While both these indexes capture something important, neither provides an adequate account of poverty targeting on its own. We therefore create a composite index which rewards aid allocations to regions where both the number of poor people and the poverty rate is high. At the country level, this would be equivalent to allocating aid to Nigeria, which accounts for the largest number of poor people in sub-Saharan Africa and has a high poverty rate of 68 percent. This index is illustrated in Figure 1c. In only 5 of 24 countries does the World Bank favor poorer regions as reflected by a positive score.

The indexes described thus far invite comparisons between countries as to where the World Bank is most or least assiduous in targeting poverty. However, such comparisons must be made with care as a score recorded in one country may not be achievable in another. This is because the potential for sub-national poverty targeting—the scope for deviating from a poverty neutral scenario—varies from country to country.

This potential is determined by imagining two extreme scenarios in each country: where all aid is reallocated to the poorest sub-national region and the richest sub-national region respectively. The extent to which these two regions differ from others and the country as a whole determines what potential there exists for donors to differentiate themselves from a poverty neutral position.

In our final index, we take the scores from our composite index and express them as a share of the maximum or minimum possible targeting score in each country. This index is illustrated in Figure 2. In only 1 of the 24 countries—the Gambia—does the World Bank approach anywhere near the maximum degree of poverty targeting. Interestingly, we find no relationship between the potential for sub-national targeting and the degree to which that potential is fulfilled.

There remain a number of limitations to our analysis. Not least is that the significance of our findings hinges on the extent to which differences between sub-national units provide an effective lens for viewing the underlying level of inequity in each country. The risk is that our results are more indicative of the design of our indexes and the idiosyncrasies of the data that they capture.

Nevertheless, we believe that measures of poverty targeting can serve as a useful tool in supporting aid effectiveness and poverty reduction efforts. Furthermore, analyses of this kind are likely to become more common. We are on the verge of an explosion in publicly available geo-coded aid data as donors respond to demands for greater transparency and seek to harness information technology solutions for improved coordination and accountability. (The most immediate constraint for poverty data is procedural: standardizing the reporting and collection of sub-national data from household surveys, consistent with the treatment of country-level data.)

Rather than supporting sweeping judgments about donor intentions and performance, the value of poverty targeting assessments comes from their being combined with other sources of information and informing dialogue between donors and partner governments. However, even for this more modest purpose, there remain some significant challenges.

Our analysis points to a number of questions that are likely to emerge in future discussions regarding the use of aid to target the poor, which we outline below. In anticipation of more frequent, sophisticated and complete analyses of poverty targeting, we believe these deserve proper attention.

What is the salient level of analysis for assessing the allocative efficiency of aid? The ability to drill downwards in assessing the allocative efficiency of aid need not stop at the immediate sub-national level. In the future, better data could allow analysis at the village, household or individual level. Indeed governments and donors are taking advantage of breakthroughs in biometric identification and cell phone ownership to design increasingly sophisticated social protection schemes that target poor individuals—a feat that the aid community considered a pipedream only a few years ago. However, just because individual targeting is possible does not make it appropriate for all types of aid; neither is sub-national targeting always appropriate, even where aid projects can be accurately geo-coded (for instance, the creation of an industrial park). The aid community should avoid the reductionist view that poverty impact can be equated with proximity to the poor.

What level of inequality or poverty is necessary for targeting to be an efficient strategy? The case for sub-national targeting is greatest when there is a danger that the benefits of aid will be captured by the non-poor. This seems less likely in countries where poverty rates are very high or where inequality is very low. In these settings, the transaction costs incurred in micro-level targeting may exceed the efficiency benefits of discriminating between different beneficiaries.

How should poverty targeting efforts be coordinated? A true assessment of an aid agency’s allocative efficiency in a country requires an understanding of what other organizations are funding, including the partner government and other donors. The prospects for poverty reduction are almost certainly higher if aid agencies heed the wishes of the partner government rather than each unilaterally deciding to concentrate their efforts in the country’s poorest region. Poverty targeting measures should be used to promote, rather than to evade, a greater division of labor, led by partner governments.

Authors

Laurence Chandy
Natasha Ledlie
Veronika Penciakova

Image Source: © Omar Faruk / Reuters

Mobile Technology: A Change Agent in the United States and Across the Globe

Thu, 13 Dec 2012 09:00:00 -0500

Event Information

December 13, 2012
9:00 AM - 12:00 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Mobile technology has revolutionized how we communicate with one another, but is also transforming the world in the areas of culture, education, banking and personal finances, and politics. How is mobile technology being used to engage voters, raise money, deliver candidate messages, and help reporters cover campaigns domestically and globally? What is mobile technology’s impact on different populations, ethnic groups and communities? Which countries are best leveraging mobile innovations to enable democracy and empower citizens? In which countries is the impact of mobile greatest, and which policies have proven the most effective and should be replicated in other countries?

On December 13, Governance Studies at Brookings hosted an event focused on the powerful influence of mobile technology in the United States and around the world. This forum is part the Mobile Economy Project, which examines how the rapid expansion of mobile technology around the world is transforming economic opportunity for millions of people. A panel of experts examined the sociological, governmental and economic effects of mobile technology’s sudden growth in the United States as well as in developing countries.

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Harnessing Technology and Innovation in the Fight Against Global Poverty

Wed, 10 Oct 2012 15:56:00 -0400

This collection of policy briefs was commissioned for the ninth annual Brookings Blum Roundtable on Global Poverty, held in Aspen, Colorado on August 1–3, 2012.

There is growing excitement among governments, international organizations, the private sector, philanthropic organizations and civil society about the potential of technology and innovation to dramatically improve the lives of poor people around the world.

Mobile technology is giving poor people the capacity to transact, borrow and save through their cell phones. Connection technologies such as open source software are allowing people in Haiti and Pakistan to collect and analyze information about, and then respond to, violence, corruption and natural disasters. Myriad ‘green growth’ technological innovations across the globe are expanding access to electricity, increasing agricultural yields while also reducing harmful emissions.

But innovation in the service of development goals is not just about achieving technological breakthroughs. Recent research shows that new business models often matter far more than the technology of a given product when serving poor communities. Moreover, promising technologies do not bring about improvements in the lives of the world’s poorest people unless they are adequately invested in, rigorously evaluated, and then brought to scale, which typically requires the collaboration of many actors, including the private and philanthropic sectors and government.

The following policy briefs explore these issues in detail, lay out the challenges, and offer a range of specific recommendations on what needs to happen and why.

Image Source: © Suhaib Salem / Reuters

The Innovation Revolution and its Implications for Development

Wed, 10 Oct 2012 15:56:00 -0400

Laurence Chandy and Homi Kharas explore how technology-driven innovations in finance, management and accountability can catalyze scaled up development interventions that reach poor people around the world, but that this depends on the forging of partnerships between nonprofit and for-profit actors.

Publication: Harnessing Technology and Innovation in the Fight Against Global Poverty

Views from the Brookings Blum Roundtable on Global Poverty: Innovation and Technology for Development

Laurence Chandy — Thu, 02 Aug 2012 13:41:00 -0400

Several staff members and scholars from the Global Economy and Development program have traveled to Aspen, Colorado for the annual Brookings Blum Roundtable—an off-the-record forum for global leaders, entrepreneurs and practitioners to discuss innovative ideas and advance groundbreaking initiatives to alleviate global poverty. Since 2004, participants have come together for our roundtable to explore timely subjects ranging from emergent new players in the international donor community to the poverty-insecurity nexus.

This year’s theme is “Innovation and Technology for Development.” New technologies offer the promise of breakthroughs in development and poverty alleviation by spurring innovative business models and pushing down transaction costs in the developing world. One example many of our participants have been talking about is mobile money, with a rapid rate of scale up in Kenya that is unparalleled, having reached more than half the country’s population in less than three years.

In the spirit of this year’s theme of innovation and technology, we have incorporated social media and other online elements to the roundtable. We are live tweeting from the conference using the Twitter hashtag #Blum2012. We are also filming short videos of some of our participants answering questions about their thoughts on innovation and technology for development.

We will be posting these videos starting August 1 and into the next week. We hope you enjoy watching them and welcome your feedback on the topics our participants are addressing.

-Laurence Chandy

Rakesh Rajani, Twaweza

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Kemal Derviş, The Brookings Institution

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Mung Ki Woo, MasterCard Worldwide

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Mary Robinson, Mary Robinson Foundation - Climate Justice

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Juliana Rotich, Ushahidi

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Lalitesh Katragadda, Google

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Madeleine Albright, former U.S. Secretary of State

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Rajiv Shah, USAID:

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Gillian Tett, Financial Times:

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Anne-Marie Slaughter, Princeton University:

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Authors

Laurence Chandy

Image Source: Mohamed Nureldin Abdallah / Reuters

Scaling Up in Agriculture, Rural Development, and Nutrition

Johannes F. Linn, Laurence Chandy and Raj M. Desai — Wed, 27 Jun 2012 14:06:00 -0400

Editor's Note: The "Scaling up in Agriculture, Rural Development and Nutrition" publication is a series of 20 briefs published by the International Food Policy Research Institute. To read the full publication, click here.

Taking successful development interventions to scale is critical if the world is to achieve the Millennium Development Goals and make essential gains in the fight for improved agricultural productivity, rural incomes, and nutrition. How to support scaling up in these three areas, however, is a major challenge. This collection of policy briefs is designed to contribute to a better understanding of the experience to date and the lessons for the future.

Scaling up means expanding, replicating, adapting, and sustaining successful policies, programs, or projects to reach a greater number of people; it is part of a broader process of innovation and learning. A new idea, model, or approach is typically embodied in a pilot project of limited impact; with monitoring and evaluation, the knowledge acquired from the pilot experience can be used to scale up the model to create larger impacts. The process generally occurs in an iterative and interactive cycle, as the experience from scaling up feeds back into new ideas and learning.

The authors of the 20 policy briefs included here explore the experience of scaling up successful interventions in agriculture, rural development, and nutrition under five broad headings: (1) the role of rural community engagement, (2) the importance of value chains, (3) the intricacies of scaling up nutrition interventions, (4) the lessons learned from institutional approaches, and (5) the experience of international aid donors.

There is no blueprint for when and how to take an intervention to scale, but the examples and experiences described in this series of policy briefs offer important insights into how to address the key global issues of agricultural productivity, food insecurity, and rural poverty.

Authors

Publication: International Food Policy Research Institute

Image Source: Michael Buholzer / Reuters

New in Town: A Look at the Role of Emerging Donors in an Evolving Aid System

Laurence Chandy — Mon, 16 Apr 2012 15:40:00 -0400

Editor's Note: This article originally appeared in the April 2012 issue of Monthly Developments Magazine.

Over the past decade, the international aid community has grown both in size and in diversity. Among its new members are various new NGOs from the Global North and South, mega-philanthropists, vertical funds, social enterprises and corporations. The newcomers that have drawn most attention, however, are emerging donors: countries transitioning from recipients to providers of aid.

Data on the scale of emerging donors’ aid programs are sketchy, but it is clear their levels are quickly growing. Best estimates indicate that these donors currently disburse $10-15 billion of aid per year, or 7-10 percent of global official aid. In contrast to traditional donors whose aid volume is expected to stay flat over the medium term, total aid from emerging donors is forecast to double in the next five years.

The rise of emerging donors is not a new phenomenon. Many of these countries have longstanding aid programs. For instance, both China and India began giving aid in the 1950s. Moreover, today’s emerging donors are not the first countries to “graduate” from their former aid relationships. Countries such as Germany, Japan and South Korea, which are now members of the traditional donor club, the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD DAC), each have a history as aid recipients.

Yet this time is different. The recent growth of emerging donors cannot be disassociated from the broader global trend of economic weight shifting away from advanced to developing countries, and the growing role of regional economic powers. For recipients, the rising prominence of aid from emerging donors has coincided with a greater reliance on these same countries for trade, investment and driving global growth. Furthermore, while some emerging donors (such as those from Eastern Europe) are following in the footsteps of Germany, Japan and South Korea by falling into rank behind traditional donors, others seem intent on blazing a different trail.

The arrival of emerging donors brings obvious benefits, not least the potential of additional resources and ideas for development. However, it also creates two challenges for the global aid system. Understanding these challenges and identifying how they can be resolved is key to improving trust and advancing reform within the international aid system.

First, emerging donors risk undermining donor norms and international efforts to improve aid effectiveness. While practices vary from donor to donor—and the differences between emerging and traditional donors are often exaggerated—emerging donors are perceived as showing less regard for environmental and labor standards, the democratic credentials of recipient governments, and the sustainability of recipients’ debts. Each of these actions imposes a moral hazard on recipients. Emerging donors have also, until recently, stayed outside OECD DAC-led agreements to improve the quality of aid. This has, in theory, made it more difficult to address issues that rely on coordinated action across all donors, such as reducing aid volatility, agreeing a division of labor and untying aid.

These problems are serious, but must be weighed up against the positive contribution emerging donors have made by challenging Western orthodoxy. By delivering aid that is deliberately deferential to recipient demands, low-cost and quickly administered, and explicitly framed as being of benefit to both donor and recipient, emerging donors have provided an alternative interpretation of the effectiveness principles of ownership, managing for results and mutual accountability, and encouraged traditional donors to reexamine their approach.

At the recent High Level Forum on Aid Effectiveness in Busan, traditional donors succeeded in persuading emerging donors to sign up to a new global partnership. Securing their participation was rightly seen as crucial to the credibility of a new international framework and a necessary condition for taking forward efforts to improve effective development cooperation.

According to insider reports, the negotiations of the agreement were hard fought and required last gasp interventions from various countries to keep the emerging donors satisfied. Indeed, the wording of the agreement stresses the differences in “nature, modalities and responsibilities” between traditional and emerging donors, and the voluntary basis on which emerging donors will abide by agreed principles, commitments and actions.

Nevertheless, these concessions are surely justified and simply make explicit the complex realities of placing two very different aid models under a common agreement. Moreover, contrary to fears that a “big tent” approach might stifle meaningful progress on improving aid effectiveness due to a lack of consensus among members, it might well achieve the opposite result. The establishment of so-called “building blocks” under the global partnership will allow coalitions of select donors, recipients and other stakeholders within the partnership to pursue effectiveness issues on which they find common ground and a shared interest. The extent to which emerging donors participate in these building blocks may therefore be the truest test of whether the global partnership succeeds.

The second challenge associated with the rise of emerging donors is the blurring of lines between traditional donor and recipient roles and the complications this brings for how aid should be allocated across countries.

Aid relationships have traditionally been framed as charitable acts in which donors are perceived as enlightened guardians bestowing favor on those less fortunate. But when recipients can afford the luxury of their own aid programs, the charitable motive seems ill-fitting.

Recipient aid programs also serve as an inconvenient reminder of the fungibility of aid: the possibility that aid spending frees up recipient governments’ resources, which can then be allocated at their discretion. Complaints about fungibility are normally loudest when recipient governments commit a large share of their budgets to military spending or fritter away their revenues on presidential jets and palaces, yet they also resonate when recipients give away aid themselves. Irrespective of whether a causal chain exists, stakeholders in traditional donor countries view their aid as enabling a different aid program over which they have no say or influence.

Moreover, the decision by some aid recipients to devote money to supporting development overseas is perceived as betraying a lack of seriousness about their own development needs. Today there exist around a dozen emerging donors—including Brazil, China, India, South Africa, Turkey and Venezuela—that continue to receive development aid. Many of these countries face severe development challenges and contain large numbers of poor people. Indeed, approximately two-fifths of the world’s extreme poor (those living on less than $1.25 a day) can be found in these countries.

A more balanced view would acknowledge that the binding constraint to poverty elimination in these countries is not the scale of public financial resources. Each of their governments has the financial firepower to end extreme poverty within their borders; a social safety net program could theoretically be put in place to lift their poor above the poverty line, costing only a modest fraction of existing levels of public expenditure. Instead there are other limiting factors that inhibit progress on reducing poverty: bad governance, low administrative capacity and other constraints donors might be able to help alleviate.

The recent uproar in the U.K. over its aid program to India demonstrates the difficulty of convincing taxpayers and politicians of the value of giving aid to countries that are also aid providers. It also highlights a broader challenge in reconciling contrasting images of emerging economies. Thus India is portrayed both as a rising global power with its own space program, a nuclear program and home to 55 billionaires (compared to the U.K.’s 33); and as a country plagued by weak governance and prone to violent conflict, where millions remain malnourished. Both of these images are equally accurate, but only the latter is compatible with Western ideas of what a worthy aid recipient should look like.

It is time for aid relationships to evolve beyond their current conception of rigid donor and recipient roles and a narrow focus on money, towards a model where aid is viewed more as a free exchange involving both money and knowledge.

Triangular cooperation offers a promising example of how modern aid relationships can work in practice, and in a manner that encourages traditional and emerging donors to recognize and draw on each other’s strengths. In these arrangements, traditional donors serve as financiers or brokers between two developing nations: one of whom seeks to impart its experience and ideas, and another who is eager to learn. Thus, in recent months India has been a recipient of advice from Brazil on improving a social protection scheme in Delhi, and a provider of expertise on information technology and outsourcing to eight African countries, both through initiatives sponsored by the World Bank.

Through efforts such as these and through their active participation in the new global partnership agreed at Busan, emerging donors can come to play a critical role both in supporting international development and in driving positive change within the international aid community.

Authors

Laurence Chandy

Publication: Monthly Developments Magazine

The Contradictions in Global Poverty Numbers

Laurence Chandy and Homi Kharas — Tue, 06 Mar 2012 10:50:00 -0500

The World Bank has just issued its latest estimates of global poverty. In 2008, 1.29 billion people lived on less than $1.25 a day (the bank’s global poverty line) while 2.47 billion people lived on less than $2 a day. Poverty is falling across all regions. While expressing caution given the lack of comprehensive data, the World Bank indicated that it has enough information to declare that the first Millennium Development Goal of halving global poverty was met in 2010.

The World Bank’s numbers for country and global poverty matter. They can affect the allocation of aid dollars. They frame the scale of the poverty challenge confronting each country and more broadly the global development community. They define areas of focus: Africa, fragile states and lagging regions in middle-income countries. And they are used to justify funding expansions of the concessional windows of the multilateral banks and capital increases for these aid agencies.

Given all this, it is surprising that the empirical basis for country and global poverty numbers is rather weak. Taking the bank’s figures at face value also implies that we have to believe the following:

North Korea has roughly the same poverty rate as China.
Individual consumption in India has grown at a paltry 1.5 percent per year since the country’s economic takeoff in the early 1990s, and the much vaunted Indian middle class only numbers 9 million people—in a country with over 900 million cell phone subscribers and 40 million cars.
In 1981, China was poorer than any country in the world is today, with a level of individual consumption below the current level in Liberia.

These three examples highlight three key difficulties in making global poverty estimates.

First, it is impossible to say anything meaningful about poverty in a country without having a household survey to explain how income (or consumption) is distributed among its people. The World Bank gets around this by making the assumption that any country with no survey has the same poverty rate as the average for its region. This leads to the peculiar result of North Korea being assigned essentially the same poverty rate as China, from whom it regularly receives food aid. (China dominates the East Asia Pacific regional poverty rate because of its vast population).

Thankfully, the number of countries for which no household surveys exist is shrinking—a result for which the World Bank deserves some credit given its push for greater coverage and its technical support to countries administering surveys. Nevertheless, those countries that remain without a survey—a group which includes Burma, Zimbabwe and Somalia—are unsurprisingly among those where one would suspect poverty levels are especially high. While small as a share of the global population, these countries may contain a significant share of the world’s global poor.

What is more, the increased coverage of surveys flatters to deceive. Of the 49 countries in sub-Saharan Africa, a seemingly credible 43 have a survey. Yet only half of these countries have undertaken a new survey in the past six years. Of the 386 million people who are estimated to live on under $1.25 a day in the region, a third are derived by extrapolating from surveys dating from 2005 (the year of the bank’s last global poverty estimate) or earlier.

Second, surveys need to be reasonably accurate and representative if they are to be used as a basis for estimating poverty. However, the World Bank uses household surveys as an article of faith, even when the data is at odds with other sources of information.

Unfortunately, inconsistencies between surveys and other data are not uncommon. The case of India is the most famous and widely studied, and also the most important for global poverty numbers by virtue of India’s population size. Survey numbers suggest that the average Indian consumed $720 per year in 2010, while the country’s national income accounts indicate that household expenditure was about two-and-a-half times greater, at $1,673 per person per year. As one might expect, such a discrepancy has dramatic implications for India’s poverty estimates—a difference in the order of hundreds of millions of people.

Which figure should be believed? Relying blindly on survey data, the World Bank must conclude that growth in India’s household expenditure per capita has been only 1.5 percent per year since the country embarked on its celebrated economic reform program in the early 1990s. This also implies hardly any acceleration from India’s pre-reform period when surveys reported an equivalent growth rate of 1.1 percent.

By contrast, the corresponding data from national accounts have household expenditure per capita averaging 4.5 percent growth a year over the past two decades, and show a clear break from the period before the reforms when it averaged 1.6 percent a year. The survey data not only deny the impact of India’s economic reforms, but reject the existence of an emergent middle class. According to the survey, less than 1 percent of Indians make it into the ranks of the global middle class, with consumption above $10 a day.

There even seem to be discrepancies within the survey data itself. Survey data show that meat consumption in rural India has grown at a rate of 4.8 percent a year since just prior to the reforms, while fruit and vegetable consumption grew by 3.2 percent. These trends do not seem compatible with overall consumption growing at 1.5 percent per year.

The third difficulty with generating global poverty data revolves around the use of Purchasing Power Parity (PPP) estimates. PPP estimates are used to convert survey data, measured in local currency, into globally-comparable data that takes into account cost-of-living differences between countries. The current estimates are drawn from a global exercise conducted in 2005.

The trouble is that for some countries, most notably China, the PPP conversions have little credibility. China did not permit a random sample of locations from which to survey prices, as was done in other countries. Instead, China restricted data collection to a few urban areas. When the results came in, a few eyebrows were raised: China’s prices were 40 percent higher than what had previously been thought, meaning that Chinese living standards were revised downwards by about 40 percent. If one takes this at face value, along with Chinese growth rates, it would mean that China in 1981 would have been as poor as the poorest country in the world today (except perhaps the Democratic Republic of the Congo), making its consequent economic transformation all the more dramatic. By the bank’s count, China has 173 million poor people consuming less than $1.25 a day. But if the PPP conversion rate was changed back to where it used to be, the poverty estimate would be cut to 69 million.

The World Bank’s global poverty estimates extend over nearly three decades, with its earliest estimates provided for the year 1981. Throughout this period, the global headcount (based on the $1.25 poverty line) has been dominated by three population groups: Sub-Saharan Africa, India and China. These three account for a remarkably constant three-quarters of the world’s poor—a share which has never deviated by more than three percentage points on either side. Yet poverty estimates for each of the three suffer from glaring problems: insufficient survey data, flawed surveys, and faulty PPP conversions, respectively. If we cannot believe the poverty estimates for Sub-Saharan Africa, India and China, then we cannot believe the World Bank’s global estimates, and we must admit that our knowledge of the state of global poverty is glaringly limited.

Calculating poverty numbers requires making many assumptions and the World Bank should be commended for making its methodology (and data) available in a transparent fashion. But one should not take the bank’s final figures at face value; there are too many discrepancies with common sense.

We are not ready to believe that North Korea has the same poverty rate as China; that India only has a middle class of 9 million people; or that China was destitute in 1981. Poverty numbers are too important a target for global development to be left in their current state. Isn’t it time for the development community to organize itself to resolve these contradictions?

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Benchmarking Against Progress: An Assessment of Australia's Aid Effectiveness

Laurence Chandy — Tue, 20 Dec 2011 14:21:00 -0500

INTRODUCTION

Is Australia’s aid program effective? Measuring the effectiveness of aid is no easy feat. For a start, there is uncertainty about what aid is trying to achieve. Even seemingly straightforward objectives, like poverty reduction, throw up a range of questions as to what precisely ought to be measured. For instance, how should one balance the provision of temporary relief to those in need with catalyzing permanent transformation in people’s lives (Barder, 2009)? Second, it is notoriously difficult to isolate the effect of a single aid program from other factors. Aid is delivered in an environment of enormous complexity where all manner of other events shape outcomes, including actions by recipient governments, aid from other countries, non-aid flows, and the performance of the global economy. To accurately attribute impact to aid therefore requires a thorough understanding of the setting in which aid is given. Third, the effects of aid are not always immediate or straightforward. For instance, improvements in people’s skills or the performance of institutions may manifest gradually. Measurements of what aid achieves must be sensitive to the different ways change is brought about (Woolcock et al., 2009).

A solution is to focus on Australia’s approach to giving aid and see how it stacks up against international best practice. International best practice is defined here by what is known to work well in aid, either because it has been demonstrated through research, identified by aid recipients, or agreed through consensus within the aid community. The latter is captured in the Paris Declaration on Aid Effectiveness and the Accra Agenda for Action—two statements of intent by ministers of developed and developing countries and heads of donor agencies, pledging improvements in the way aid is managed and delivered. As a member of the Organization for Economic Cooperation and Development’s Development Assistance Committee (OECD DAC), Australia is a signatory to both agreements.

While adherence with best practice principles cannot guarantee that Australia’s aid will always deliver its intended results, it increases the likelihood that those results will be achieved. And unlike the results of aid, adherence to best practice is fully within Australia’s control. Australia’s performance against best practice standards therefore serves as a touchstone of its commitment to greater aid effectiveness.

Introducing QuODA

A useful tool to assess Australia’s aid program is the Quality of Official Development Assistance (QuODA) assessment, developed jointly by the Brookings Institution and the Center for Global Development (Birdsall and Kharas, 2010; Birdsall et al., 2011). QuODA appraises donor performance along four separate dimensions, each representing distinct components of best aid practice: maximizing efficiency, fostering institutions, reducing the burden on recipients, and promoting transparency and learning. Each dimension is comprised of a collection of indicators against which donor countries are scored. Examining performance against the four different dimensions provides a basis for identifying donors’ strengths, weaknesses and areas for reform. The recent release of the 2011 QuoDA update provides an opportunity to assess Australia’s aid effectiveness based on the latest available evidence.

QuODA is used to assess Australia’s aid program in three ways. First, the aid program is appraised on its own based on Australia’s performance on the different dimensions and indicators. These results are then corroborated using other performance indexes. Second, Australia is judged against a “benchmark” donor of equivalent size, which is involved in similar development work. Third, other donor countries and multilateral agencies active in Australia’s region are assessed. These are donors with whom Australia has the option to partner or to delegate the delivery of its aid, and whose performance is therefore also relevant to assessing how effectively Australia’s aid budget is spent.

A Fragile States Lens

To help shape the analysis, particular attention is paid to the role Australia plays in providing assistance to fragile states. The term “fragility” captures a range of different country conditions, but in each case there is a failure of the state to perform some of its most basic functions, due either to a lack of political will, capacity, or a combination of the two, creating significant challenges for development. These failures are typically observed in terms of one or more persistent deficiencies of the state: its authority, its legitimacy as perceived by the country’s citizens, or its provision of services (Stewart and Brown, 2010).

Australia’s focus on fragile states is a defining feature of its aid program: 50 percent of its aid goes to countries that are considered fragile. This focus on fragile states is a reflection of Australia’s region where fragility is commonplace. Among the countries that are not fragile, many still face related challenges associated with weak governance.

Why is fragility important to this analysis? It is broadly recognized that promoting development is much harder in fragile states than in other countries. The reason for this is straightforward: governments cannot be relied upon to support the development process in fragile states, and in some instances may serve to undermine economic and social progress. This has important implications for aid. Aid delivery tends to be both a more costly and more complex task in fragile settings. Part of the complexity lies in understanding how to apply good practice aid principles. While the principles of effective aid remain just as relevant in fragile states, they cannot always be implemented in the same way as they can in other countries (Chandy, 2011).

While delivering aid in fragile states—and doing so effectively—undoubtedly presents a challenge, many donor countries are tasked to do exactly that. Australia’s region obliges it to take on this type of work. Furthermore, there is a growing consensus within the development community that helping fragile states represents one of the core challenges of global development both now and in the future. Helping fragile states has become inseparable from a commitment to fighting poverty reduction, achieving the Millennium Development Goals (MDGs), and assisting low-income countries:

Fragile states account for a growing share of the world’s poor. As global poverty levels fall, driven by progress in more stable developing countries, the share of the world’s poor living in fragile states has doubled from 20 percent in 2005 to 40 percent today. More than half the world’s poor are expected to live in fragile states by 2015 (Chandy and Gertz, 2011).

No fragile country has yet achieved a single MDG. Fragile states are home to half of all children not in primary school and half of all children who die before reaching their fifth birthday (DFID, 2009). The remarkable success of many stable developing countries in achieving the MDGs has drawn attention to the lagging performance of fragile states.

Two-thirds of low-income countries are fragile. The past decade has seen a wave of 30 (mostly stable) countries graduate out of low-income status. Of the 35 countries still classified as low-income, less than a dozen are stable.

Understanding how to deliver aid effectively in fragile states is, therefore, a vital question for the aid community over the coming years and one Australia can help to answer.

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Laurence Chandy

Fragile States: Problem or Promise?

Laurence Chandy — Fri, 16 Dec 2011 14:41:00 -0500

Of the many aid effectiveness issues taken up in Busan, the fragile states agenda came away with one of the most promising outcomes and the potential to engender far-reaching change. The New Deal, agreed by a group of fragile states and their key donor partners, sets out a strategy for supporting development that is country-owned, context-specific, focused, practical and urgent.

The success of this New Deal should be judged not just by how closely its details are followed and its commitments are implemented − though these are obviously important − but by whether it can usher in a more fundamental change in the way fragility is perceived by the international development community. An updated narrative can be built around three simple arguments.

First, fragile states matter for development. In the space of a few years, fragile states have moved from the periphery of the international development agenda to a focus of global aid efforts. To understand why, consider the following three facts: the share of the world’s poor living in fragile states has doubled from 20% to 40% since 2005; no fragile country has yet achieved a single Millennium Development Goal (MDG); and two-thirds of the world’s remaining low-income countries are fragile. Helping fragile states has thus become inseparable from commitments to fighting poverty, achieving the MDGs and assisting low-income countries. The combination of these facts and the persistence of their underlying trends will come to have a significant effect on how donors allocate resources. Aid agencies are being forced to recognise the growing tension and competition between the allocation criteria of critical development needs, on the one hand, and on the other, good governance; only a few years ago, these were seen to regularly coincide.

Second, aid to fragile states can achieve results. Donors’ historical preference against aiding fragile states was informed by research indicating that the impact of aid on growth and poverty is diminished in countries with poor policies and institutions. While this research has been enormously influential in shaping donor views, serious doubts have been cast on the reliability of its findings, and there are plenty of reports of aid interventions being successful in even the most complex and unstable environments. For instance, the World Bank’s annual evaluation report for this year noted that its projects in fragile states now have a 70% satisfactory rating, which is not significantly lower than ratings in other countries. Similarly, a recent report on the experience of the Global Fund to Fight AIDS, Tuberculosis and Malaria found that their active grants in fragile states achieved, on average, 83% of their targets and performed well across all measures. Other studies have drawn attention to successful donor interventions in fragile states across a range of different sectors and settings. The World Bank’s 2001 Task Force on Low-Income Countries under Stress − a predecessor to the fragile states epithet − made sweeping conclusions: that aid “does not work well”, that it “may even be counterproductive” and that “donors are impotent against poverty” in these environments. Yet these conclusions can no longer be defended, given the mounting evidence to the contrary.

Third, effective aid in fragile states depends on donors delivering aid differently. The strong results cited above did not come about by following a business-as-usual approach. Rather, they were achieved by experimenting with new ways of working that better conform to fragile states’ characteristics and needs. Some common lessons can be discerned from this experience, many of which are echoed in the New Deal. Donors should narrow their resources on a few specific sectors that correspond to core functions of the state, to help foster its legitimacy based on demonstrable performance and to strengthen citizen-state and citizen-citizen trust. The scope of donor activities within these areas must be sufficiently large to bring about transformative change at the country level. To achieve this degree of scope and scale, donors should place a greater onus on donor co-ordination, risk management and institutional development. Finally, donors must design their engagement and interventions in fragile states around longer timeframes and use their aid programmes to counter the instability inherent in these environments. These lessons can help donors to satisfy the Paris principles, which remain a touchstone for effective donor-recipient relations in any setting.

The past decade has been a period of rapid learning about fragile states both inside the development community and beyond. Now that Busan is over, the challenge is to use this stock of knowledge to establish a consensus on why fragile states matter and what the international community can do to help.

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Laurence Chandy

Publication: DACnews

Ten Years of Fragile States: What Have We Learned?

Laurence Chandy — Wed, 23 Nov 2011 11:28:00 -0500

INTRODUCTION

Ten years ago this month, the World Bank established a taskforce to examine how the development community, and the bank in particular, should approach fragile states. This project took on special significance in the wake of the September 11th terrorist attacks, as Western governments awoke to the threats posed by weak and unstable countries, and expressed a new willingness to engage with them.

The taskforce was led by Paul Collier and Ngozi Okonjo-Iweala, then two of the World Bank’s leading lights and today considered among the world’s foremost development experts. Their report had a profound influence both in shaping how fragility is perceived through a development lens and in defining the emerging fragile states paradigm.

This is not to say that thinking on fragile states has stalled over the past decade. On the contrary, the intervening years have been a period of rapid learning. Many more studies and strategies have been written, not least by the World Bank itself, which is currently in the process of rolling out policy reforms informed by the groundbreaking 2011 World Development Report on conflict, security and development. A supporting set of institutions has sprouted, built around the g7+ group of fragile states and the network of donors with whom they partner, resulting in more honest dialogue, the sharing of experience, and the agreement of shared objectives, norms and metrics of progress. These have tended to build upon the taskforce’s initial insights rather than challenge them.

Looking back at the taskforce’s report, there is much that remains salient and even prescient. For instance, the report frames the development agenda for fragile states around a narrow prioritization of reforms, starting with security, stability and the rule of law; emphasizes the attainment of feasible, quick wins; and advocates looking beyond government channels for service delivery. Engagement strategies stress the need for sociopolitical analysis and much deeper forms of donor coordination. Many of these same ideas will, ironically, be presented as new innovations at the High Level Forum on Aid Effectiveness in Busan, Korea later this month.

In three important respects, however, the taskforce’s judgments were mistaken. Rather than being rebuked, these mistakes have been echoed in subsequent policy statements by the World Bank and others, and inform the prevailing narrative on fragile states which guides the international development community.

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Global Development Under Pressure

Laurence Chandy, Kemal Derviş, Homi Kharas, Ariadne Medler and Noam Unger — Wed, 09 Nov 2011 10:51:00 -0500

Over the past decade, many developing countries have experienced unprecedented economic growth that has left them more confident about their development trajectories, more assertive in articulating their needs for external assistance, and more capable of funding development from their own resources. Several of these countries are now simultaneously both recipients and providers of international development aid. But the reverse also holds for those developing countries that remain gripped in fragile and conflict situations, where none of the Millennium Development Goals have been achieved. So far, the international community has failed to provide an adequate solution for how these countries can be brought to stability. Meanwhile, the established club of advanced donor countries—a group directly affected by the ongoing financial and economic crisis—is heavily indebted and subject to strong financial and political pressures to cut budgets and development support.

Private philanthropic and civil society organizations have burst onto the development scene on a much greater scale than just a decade ago. Many international nongovernmental organizations have transformed themselves to mobilize resources for their own programs, giving them more independence from governmentfinanced projects. And multinational corporations are increasingly active in development as they do business, and find profit, in emerging markets. Each of these stakeholders must also contend with the pressures imposed by instant, technology-fueled global communications. Ours is an era of fast-moving change and exchange.

In certain respects, the global development community is awake to these shifting currents, which provide a popular topic for discussion and a motive for reforms. Yet both the pace and implications of change have been underestimated, and reforms to existing cooperation structures and activities are not keeping up. Widening gaps between international agendas and reality demonstrate that global development actors are struggling. The 2005 Paris Declaration on Aid Effectiveness and other grand agreements from the past decade have taken years to negotiate, only to then age quickly in the face of rapidly changing contexts and ideas. As an example, it has taken more than a decade to reach—and operationalize—a global consensus to focus development support on low-income, stable countries. However, this framework is of little relevance in today’s world in which 90 percent of the global poor live in middle-income countries or in fragile states.

The Arab Spring serves as another example of the failure of development cooperation to keep pace with the rapidly changing context in those countries. Government-to-government aid programs have proven ill-equipped to support development when recipient governments themselves are perceived as part of the problem of underdevelopment, rather than as part of the solution. Following political change, there is pressure on global development players to act quickly and responsibly—not least to make up for the shortcomings of their earlier engagement. Yet donors struggle to act without recourse to country-led development strategies that enjoy broad domestic consensus. In many of these countries, which have considerable domestic resources of their own, development cooperation does not revolve around aid, but requires the coherent application of non-aid instruments.

Clearly the process of reforms across the architecture of aid and development support must accelerate. If the relevance interval of global agreements has grown shorter, development actors should improve their ability to anticipate change and translate their ideas more quickly into action. Policy discussions on public-private partnerships, for example, still remain focused on the celebration of project-oriented deals after more than twenty years. What we need, however, is a wholesale shift to a new set of instruments that will enable larger-scale strategic programs.

The good news is that there is massive energy from millions of individuals around the world focused on tackling the challenges of development, which can help extract positive changes out of the present crucible of pressures. A key question is how to best harness that energy and coordinate connections and divisions of labor among the various elements of the modern development ecosystem. We convened the 2011 Brookings Blum Roundtable to address such questions and to discuss the state of global development cooperation, opportunities presented by international platforms for policy dialogue, the lessons of the Arab Spring, U.S. development policy reforms and the challenges of effective communications.

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Brookings: Experts - Laurence Chandy

The Final Countdown: Prospects for Ending Extreme Poverty by 2030 (Report)

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The Final Countdown: Prospects for Ending Extreme Poverty by 2030 (Interactive)

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Getting to Scale : How to Bring Development Solutions to Millions of Poor People

ABOUT THE EDITORS

Laurence Chandy

Akio Hosono

Homi Kharas

Johannes F. Linn

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Mobile Money: A Technology Game Changer for Tackling Global Poverty?

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Clicks into Bricks, Technology into Transformation, and the Fight Against Poverty

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How Effective Is the World Bank at Targeting Sub-National Poverty in Africa? A Foray into the Murky World of Geo-Coded Data

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Mobile Technology: A Change Agent in the United States and Across the Globe

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Harnessing Technology and Innovation in the Fight Against Global Poverty

The Innovation Revolution and its Implications for Development

Views from the Brookings Blum Roundtable on Global Poverty: Innovation and Technology for Development

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Scaling Up in Agriculture, Rural Development, and Nutrition

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New in Town: A Look at the Role of Emerging Donors in an Evolving Aid System

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The Contradictions in Global Poverty Numbers

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Benchmarking Against Progress: An Assessment of Australia's Aid Effectiveness

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Fragile States: Problem or Promise?

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Ten Years of Fragile States: What Have We Learned?

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Global Development Under Pressure

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