Bucks, bangs and governance: Two must-read books on aid

Jun 13th, 2011 12:21 PM UTC
By Alan Hudson

Aid budgets are under increasing pressure as governments in donor countries seek to deal with the aftermath of the global financial crisis. If public support for aid is to be maintained, and if continued progress on poverty reduction is to be made, it is essential that aid is spent in ways that deliver the biggest bang possible for taxpayers’ bucks.

The public needs proof -– living proof -– that aid, effectively delivered, works. In this context, it is no surprise to see the excitement that the publication of Dean Karlan and Jacob Appel’s “More than good intentions: How a new economics is helping to solve global poverty,” and Abhijit Banerjee and Esther Duflo’s “Poor economics: A radical rethinking of the way to fight global poverty” has generated in and beyond the development policy community.

The two books –- growing out of the work of Innovations for Poverty Action (IPA) and the Abdul Latif Jameel Poverty Action Lab (J-PAL) – set out a common manifesto for research, policy and practice on global development. Their three key messages are:

First, there is a need to revitalize the fight against global poverty and to move away from grand debates about whether or not aid works in general.

Second, there is a need to better understand the reality of poverty, with more attention given to how people experience poverty.

Third, there is a need to be innovative in coming up with solutions and then rigorous –- with Randomized Controlled Trials (RCTs) regarded as the gold standard of rigor –- in testing what works, in order to learn.

There is much to like in the books. The authors bring debates about how aid can be made more effective to a wider audience and do a great job of moving beyond what have become sterile and polarized debates about whether aid works. There is a need to revitalize the fight against global poverty, to better understand the nature of poverty, to be innovative and to learn about works.

However, there are questions to be asked. In terms of methods, while RCTs –- scientific experiments that enable one to see what difference an intervention made – are an important tool to enhance learning about what works in terms of tackling global poverty, their usefulness risks being over-sold by the more evangelical randomistas (Click here for a compilation of the backlash to RCTs and a response from IPA). In terms of focus, while the local or micro-level focus that the books prefer has considerable appeal, scalable and sustainable change is likely to require engagement at local, national and international levels. (Click here for a must-watch presentation by Esther Duflo at the Center for Global Development, making a persuasive case for a micro-level focus).

As ONE develops its work on governance, transparency and accountability, questions about the best ways of understanding what works, about whether approaches that work in one place will work in another (not all interventions are as transferrable as vaccines), and about how to engage at local, national and global levels, will need to be addressed. For my money, Matt Andrews remains the must-read author on governance but there is no doubt that Karlan/Appel and Banerjee/Duflo –- and J-PAL’s Governance Initiative –- provide useful food for thought as ONE seeks to expand its governance-related work while maintaining a clear focus on results. To maximize aid’s bang for its buck, it is essential that decisions about how aid is spent -– whether on vaccines against disease or on governance, transparency and accountability (vaccines against corruption?) – are made on the basis of evidence.

A fuller review of the two books is available here.

TAGS: Aid Effectiveness, Governance and Security, ONE, Policy News