Development-aid institutions face several large challenges: selecting the most appropriate projects for support, coordinating financial and technical resource flows so that they are applied to the neediest of beneficiaries, and measuring the impact of those efforts. These are all hard problems to solve, and aid institutions—in partnership with recipient governments—continue to struggle to find adequate responses to them. Unfortunately, arguments such as Abhijit Banerjee’s are not only unfair and inaccurate but also serve to widen the divide between academics and practitioners.
Banerjee illustrates his laziness theory with an account of the emergency relief effort after the devastating earthquake in northern Pakistan. Unfortunately, he fails to distinguish between emergency aid and development aid: in emergency situations, Murphy’s Law seems to be the norm. Furthermore, emergency relief efforts involving multiple donors and NGOs usually require a strong institutional framework at the national level to provide the overarching framework for effective coordination and resource allocation. But such institutional support at the national level is rare. As we observed from the chaotic relief efforts in the aftermath of Hurricane Katrina, institutional coordination is a challenge for even some of the most developed countries. Most emergency relief efforts in developing countries have to coordinate multiple donors, each with its own mandate, style of operation, and technical-administrative capacity. When multilateral institutions provide planned development aid, they must take into account the economic, technical, institutional, and legal basis for any project that they finance.
Nonetheless, the Pakistani earthquake does suggest some important lessons. Coordination and simple planning can enhance the effectiveness of crisis assistance, as shown by the economists that Banerjee mentions who designed a relatively simple system to improve coordination on the ground. Though they had the best intentions, their system was poorly received by donors and local authorities, probably because they were perceived as outsiders with little field experience. The lesson here, as in all developmental assistance, is that the beneficiary needs to be a part of the process for there to be legitimacy. No doubt the resources could have been applied more effectively, but to infer that donors and NGOs were lazy simply for their failure to fill out a form is profoundly disrespectful to the professionals who were working on the ground in the midst of tremendous tragedy and chaos. Innovative mechanisms are surely needed to improve emergency-relief efforts. But these mechanisms must be learned and systemized before emergencies occur. And it is surprising that the author fails to assign any of the responsibility for coordination to the Pakistani government.
Banerjee also challenges the ways that practitioners measure the impact of a project. He focuses on a sourcebook called Empowerment and Poverty Reduction, which was published by the World Bank six years ago. Empowerment is the expansion of poor people’s abilities to participate in, negotiate with, influence, control, and hold accountable institutions that affect their lives. In order to support empowerment, the book identifies four areas of concentration: information, inclusion/participation, accountability, and local organizational capacity. Like many of the World Bank’s publications, the book also provides a selection of tools and practices based on operational project experience, each of which generated varied levels of success. The purpose of the book was not to analyze alternative projects that might have had better outcomes, as Banerjee would have liked, but rather to present a selection of projects that have helped to achieve greater empowerment at the local level.
Banerjee’s rhetorical comments on randomized trials are very disconcerting. Using randomized trials with separate control and treatment groups can certainly provide valuable lessons about the efficacy of programs in education, health, violence prevention, sanitation, and other areas; moreover, recent research has shown that they are no more costly or labor-intensive than other data collection. But qualitative methods are important both as adjuncts to randomized field trials and as alternatives when randomization is not feasible. One of the central barriers to randomized trials is convincing policymakers of the importance of this method. Development-aid organizations, such as the World Bank and the Inter-American Development Bank, are already heavily criticized by their clients for the amount of time it takes to get desperately needed projects off the ground. Waiting time for project approval can often be as long as a year because of the in-depth analysis that policy requires for each project.
This is partly why some donor countries have begun to provide support (usually less than five percent of overall aid given by donors) directly to the national budgets of developing countries, a practice Banerjee condemns. However, this type of support is provided only when a government has demonstrated the political will to reduce poverty and strengthen their institutional framework. Not surprisingly, a recent OECD report found that budgetary support to the governments of developing countries has strengthened the relationship between them and donors and encouraged coordination between different donors. It has also strengthened planning systems, making them more transparent and therefore more accountable.
Having worked as a development banker for over 25 years, I am well aware of the institutional weaknesses that plague the development process. Practitioners and social scientists need to explore different models that might improve the quality of research and project implementation. But development aid will never succeed without the support and ownership of its recipients. Unfortunately, Banerjee’s article says little on this essential question.