Development debates: Micro-level contradictions

My earlier post started with the observation that the big-picture development debates seem to have died down recently. See Ranil Dissanayake’s post at Aid Thoughts for more on that.

I also wanted to comment on the little-picture development debates. As I argued earlier, I think the big-picture questions are important for pushing our thinking forward. But in many ways, the micro-level issues are even more neglected in development discourse. This is especially true for the questions of management, accountability and incentives that the actual practice of development raises for various actors (including international NGOs/donors and also national/sub-national agencies and organizations).

Even while the macro-level debates have gotten quieter, a number of contradictions persist on the micro-level. Here are four instances where supposed principles of good aid and development actually contradict one another:

1. Reduce overhead vs. increase accountability

The drive to reduce overhead is not new. Overhead has long been used as a metric for assessing a charity’s “efficiency”. This is a bad metric for several reasons, but many donors cling to it for simplicity.

Standing in sharp contrast to this is the movement to increase accountability. This can take many forms, as accountability is a multi-dimensional concept. (Whenever you hear a call for more accountability, be sure to ask: “Who will hold whom accountable for what, and how?”). Regardless of how you interpret the term, I can almost guarantee that accountability means paperwork. It might involve financial audits, beneficiary surveys, citizen oversight boards, or something else entirely – but it will certainly cost resources.

In other words: increasing accountability will increase your overhead, every single time.

2. Hire local vs. the NGO/UN economy

This contradiction is especially relevant to international agencies working in very poor countries. On the one hand, there are good reasons to hire local staff, rather bringing in a bunch of expats: local staff bring local knowledge and long-term commitment to their communities, and hiring them helps to build their skills.

On the other hand, the NGO/UN economy distorts local labor markets. When the best-paying jobs are with international agencies, other employers and industries will struggle to attract talent. Doctors will look for jobs as NGO drivers, government agencies will see high staff turnover, and (some argue) the entrepreneurial spirit will be crushed.

So how can you fulfill the principle of hiring local while avoiding the NGO/UN economy? This contradiction is especially tricky because it’s a collective action problem. As I discussed in a previous post, any given agency has a small impact on the local labor market, but collectively the impact can be quite large.

3. Competition vs. cooperation

In the private sector, competition for customers and capital results in the death of inefficient enterprises, leaving the best to thrive. In the aid/development sector, this doesn’t happen. Mediocre organizations continue to do mediocre work for a long time, wasting resources that could be better used for other efforts and possibly causing harm in the process.

It’s easy to see this situation as an inefficient market. The sector needs better competition to improve the allocative efficiency. This thinking springs from a focus on individual organizations: competition creates the incentives to ensure that they’re managed well or go out of business.

On the other hand, one symptom of the inefficient market is overlapping efforts. This wastes resources too. We could overcome this problem through greater cooperation among actors. You might come to this conclusion if you’re thinking about the overall aid/development industry: there’s a fixed pie of resources available, and you want to ensure that none of it is wasted through duplication.

The tension here exists across multiple sub-sectors: humanitarian relief, infrastructure development, institutional capacity-building, etc. How do you improve the competition among agencies for scarce resources, while also getting them to coordinate better in how they use those resources? We can start by admitting that not all competition is inherently good (for example, charity contests inject competition, but it’s not clear that they actually improve allocation decisions) and the same goes for coordination. In fact, it seems short-sighted to pursue an initiative promoting either principle without simultaneously considering the other.

4. Short-term services vs. long-term capacity

The provision of short-term services can undermine the development of governance institutions or private businesses. For example, an NGO providing health services will relieve pressure on local governments to do the same. This could result in lower long-term capacity.

This contradiction is a classic. I could have titled it “aid vs. development” or “give a man a fish vs. teach him to fish”. It encompasses many of the big-picture questions as well. Increasingly, people are realizing that how short-term services are provided has implications for whether they build or undermine long-term capacity. Unfortunately, for many actors in the aid/development system, this just isn’t even a concern.

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What else? I’m sure there are other micro-level contradictions that I’m missing. I’d love to hear your ideas on this.

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