New research shows aid agencies get better results if they stop trying to control their people on the ground, especially in complex environments (and performance monitoring can make it worse)

May 23, 2014

Links I liked

May 23, 2014

The case for democracy – a new study on India, South Africa and Brazil (shame it’s not much good – missed opportunity)

May 23, 2014
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The ODI is a 10 minute train ride from my home, so I’m easily tempted out of my lair for the occasional lunchtime meeting. Last week it was the launch South African elections 1994of ‘Democracy Works: The Democratic Alternative from the South’, a paper on the three ‘rapidly developing democracies’ of Brazil, India and South Africa, co-authored by the Legatum Institute and South Africa’s Centre for Development and Enterprise (not ODI, who merely hosted the launch). I was underwhelmed.

Which is a shame, because the topic is great – China’s rise and the West’s economic implosion are undermining arguments for democratic and open systems around the world. The report quotes Jacob Zuma: “the economic crisis facing countries in the West has put a question mark on the paradigm and approaches which a few years ago were celebrated as dogma to be worshipped.”

The authors respond with a vigorous defence of democracy, broadly defined (not just elections):

‘The story of these three countries shows that inclusive growth is possible in a democracy; that democracy is not an obstacle to growth; and that democracy can in some cases be an enormous advantage to states pursuing high-growth strategies. Democracies can accomplish things that cannot be done in authoritarian states. Both elected leaders and their citizens can use the many rights, freedoms, processes, and institutions that comprise democracy to improve institutions when they falter or fail: fight the scourge of corruption; argue for rule of law, an independent judiciary, better legislation, and regulations; give legitimacy, and create support for policies which may at first seem difficult to accept.’

The panellists at the ODI avoided the temptation of saying democracy is a universal panacea: ‘it is empirically false that democracies grow faster than autocracies’, and settled for saying that democracy is not incompatible with growth, and as the previous para argues, even has some advantages.

By basing itself on actually existing democracies in the South, the report avoids what ODI boss Kevin Watkins called Bill Easterly’s ‘disastrous’ mistake of ‘establishing an evolutionary scale with the US at the top’ (I agree with Kev in my forthcoming review of Easterly’s new book, the Tyranny of Experts for an IMF magazine, and will post it here once it’s out).

The report also highlights the importance of ‘constitutional moments’ when new constitutions, agreed after periods of struggle and conflict, open up politics to new ideas and players, as in Brazil or South Africa.

So why was I underwhelmed?

Firstly the report’s unashamedly liberal capitalist stance produced some serious blind spots. Although the panellists denied it, lots of the talk of liberalization, bringing in the private sector on infrastructure and services, cutting fiscal deficits etc sounded pretty Washington Consensus (at least in its later variants). PPPs anyone?

So there is lots of vague language on ‘fairness’ and ‘inclusive growth’, but no serious discussion of inequality or redistribution, including the obviously critical question of why inequality is falling in Brazil, but not in South Africa and India. Instead, the focus is on efficiency and ‘unleashing the private sector’, for example by not overtaxing it – it could have been written by the IMF.

Second, if you’re going to study new democracies in the South, an interesting question is whether they differ from the old ones in the North, and if so how? But when I asked the panellists, they replied that there was really nothing to add to de Toqueville – democracy is democracy, anywhere and at all times. But surely it’s worth exploring possible differences, for example in the shifting balance between collective and individual rights; the role of participatory budget processes (Brazil); judicial activism in India; combined insider-outsider activism in South Africa (protesters dancing and singing outside the courthouse to keep the judges honest) or the relative efficacy of the nation state and more dynamic sub-national bodies such as cities or states in federal systems? Didn’t see much sign of any of that.

inequality brazilInstead what is presented is a curiously emaciated conception of democracy as a set of rules and top-down institutions, busily fighting corruption and fiscal indiscipline before periodically subjecting themselves to elections. And at times the conclusions get pretty banal: ‘democratic elections provide a mechanism for removing leaders’. Who new?

The report explicitly focuses on the economy and growth record, but ignores the important discussions in South Africa and elsewhere on whether you can have a ‘democratic developmental state‘, or whether growth take-offs necessarily involve a period of autocracy, as in the East Asian variant. And for my money, Dani Rodrik had more to say on all this in his paper on institutions and the quality of growth published back in 1999, which concluded, based on a sample of 90 countries from 1970-89:

  • Democracies yield long-run growth rates that are more predictable.
  • Democracies produce greater short-term stability.
  • Democracies handle adverse shocks much better.
  • Democracies deliver better distributional outcomes.

 

Rodrik argued that this is the case because democracy has more feedback loops – government reformers face lots of opposition (so there are fewer big booms), but also much better information when things start to go wrong (so fewer busts). In autocracies no-one wants to tell the General (we know what happens to messengers…..). See chapter 5 of Rodrik’s great book ‘One Economics, Many Recipes’ for more.

Back to the report – some papers stimulate because they make you argue with them in your head and think about what’s missing – this is one of those, and in that spirit, I would recommend it. And of course, if I’ve been unfair, I’m sure the authors will put me right – that’s the joy of blogs.

5 comments

  1. Appreciate the reference here to “the relative efficacy of the nation state and more dynamic sub-national bodies,” such as cities. The experience of places as diverse as Lagos, Medellín, and Pristina would seem to suggest that local governments, especially in urban contexts, can deliver basic services, entrench responsiveness and accountability, and foster democratic legitimacy more effectively than national institutions. The implications for development policy and practice (and for assistance in fragile and conflict-affected contexts, in particular) are immense. Yet the literature on this phenomenon seems scant. The report in question misses this angle, but can you point to any literature that substantiates the superior development outcomes produced at subnational levels?

  2. We´re working with civil society networks in these countries, and there is definitely a strong sense that inequalities (economic, gender, ethnic, geographic) all undermine meaningful democracy.

    We are also keen to deepen our understanding of why inequality is falling in Brazil, but not in South Africa and India (and the other BRICSAM). This recent paper points to a few possible reasons http://csnbricsam.org/brazil-poverty-and-inequality-where-to-next/, and there´ll be more cross-country research and civil society perspectives to come…

  3. I’m not surprised the joint output from these organisations was naff: they are both pretty much fronts for corporate interests, so all too often have to square the circles in order to come up with conclusions demanded by their wealthy sponsors.

    The Legatum Institute is part of the Legatum Group, a private investment outfit. The Legatum Institute produces ‘research’ that fits in with and promotes the Legatum Group’s wider investment ambitions and priorities. So its hardly a neutral body. Its last big output I recall seeing was a quite ridiculous report on the 2010 Andhra Pradesh (AP) microfinance meltdown. They blamed the ‘microfinance meltdown’ on the AP government’s belated interventions, undertaken in mid-2010, designed to deal with an increasingly out-of-control and over-expanded microfinance sector. That is, the logic of their approach and conclusion was akin to blaming the 2008 Wall Street crash on the Dodd-Frank Act passed in 2010. Yes, the Legatum Institute report was really that silly. If you want some light relief, you can find it here:

    http://www.legatum.org/attachments/MicrofinanceCrisis.pdf

    Meanwhile, the Centre for Development and Enterprise (CDE) is funded by South African corporations and exists to defend their interests, mainly at the expense of organised labour and intrusive government. It apparently struggled to remain relevant after 2008, when its core neoliberal policy demands were shown to have created the global financial crisis, but it continues to act as if nothing untoward happened, or else it was all the fault of organised labour and governments, and so it pushes the same pro-big business stuff regardless. It’s a lobby outfit really, modelled on the sort of fake ‘research’ institutions increasingly popular in the USA that the likes of the Koch Brothers and others support.

  4. I was at the launch, not impressed. It was a case of having developed your conclusions and then fish around for a plausible causality. They really struggled to get it across. We all have our own ideologies and biases, but at least present credible evidence and know the other stories of the region you are working in.

  5. “The panellists at the ODI avoided the temptation of saying democracy is a universal panacea: ‘it is empirically false that democracies grow faster than autocracies’, and settled for saying that democracy is not incompatible with growth, and as the previous para argues, even has some advantages.”

    Worth noting that the best available evidence seems to suggest that democracies *do* on average deliver more growth.
    http://devpolicy.org/democracy-and-growth-20140506/

    And that there is a range of evidence, in addition to Rodrik’s that democracies deliver more of a range of stuff which we development types like.
    http://waylaiddialectic.wordpress.com/2010/07/29/the-consequences-of-democracy/

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