Tuesday, December 19, 2006

Bang for your aid buck 

Captain Ed writes a couple of articles yesterday and today on the question of aid for developing countries. First, writing about tsunami aid in Aceh, Indonesia, he notes:
The problem with foreign aid for disaster sites is the prevailing political structure of the country or area. When the government is corrupt, the aid will not go to its intended recipients but instead to support the corrupt government. Massive amounts of cash only serve to allow these regimes to keep and extend their grip on power. In this case, some could be forgiven for forgetting the lesson, given the random and acute nature of the disaster, but it shows that even in these circumstances aid will get diverted to purposes other than those intended.
In the second piece this morning, Ed discusses Bono's frustration with the Democrats in holding up promised money to go to Africa that President Bush had pledged earlier (probably during one of those Bono-John Snow lovefests on tour of the continent). Ed suggests that it wouldn't be a bad thing for the Democrats to get stingy with aid.

That's both right and wrong. It's right insofar as Bono seems to equate more money with more effectiveness. William Easterly debated Hilary Benn, the UK secretary of state, over the point and marks the similar problem.
...there is an unfortunate tendency in the white paper to talk of aid promises being kept simply by spending more aid money. Alas, we have 50 years of experience that tells us that aid spent does not equal aid received by the poor. Aid money spent is the cost, not the benefit. Would General Motors tell its shareholders that it had achieved a breakthrough with consumers by setting a new record for production costs? Mr Benn, could you please break the pattern�could you introduce a permanent moratorium on aid money spent as an indicator of success? Far better to redirect our energy and concentration entirely to the other side of the ledger�evaluate what benefits have been achieved for the world�s desperately poor.
It's not clear to me, though, why Ed would think distribution of DDT would be any more efficient than distribution of mosquito nets. The profit in the chemical distribution, because it could be centralized, would most likely be greater and therefore provide a greater opportunity for corruption. DDT isn't cheap, and mosquito nets are. The benefit cost ratio for netting in sub-Saharan Africa was estimated by the Copenhagen Consensus at greater than 10 to 1. The advantage of the netting is that it is under individual control. Distribution of drugs to combat diseases as well tend to be very cost-effective. Distribution can be performed by NGOs or volunteer aid organizations. I'd go so far as to argue that the lack of sexiness of mosquito netting makes it more desirable. (Angelina Jolie and Sharon Stone notwithstanding.)

The Bush administration has tried to make aid more results-oriented with its formation of the Millennium Challenge Corporation, an aid-granting agency that acts outside the usual rules that govern State Dept. aid programs. But even MCC has had major difficulties with establishing sufficient controls to assure money given to targeted governments reach their intended goals, and there has been a question over the use of quantitative criteria (this is a research interest of mine, and so as not to bore you I won't go into that here. Write me if interested.) The MCC's operation is a continued matter of discussion, and I will be interested to see what happens to it when the Democrats take charge next month. If Ed is correct that on this one the Democrats have it right, it should strengthen the commitment of MCC to evaluate the poverty reduction performance of its investments to improve the initiative that Bush began four years ago.

P.S. This note from Political Calculations tells how science might help target the aid for malaria. But a political calculation has to ask whether or not political actors will have an interest in delivering that aid.