The Principled Agent

Thoughts on development economics and impact measurement

Aid and State Development

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Greater accountability in international aid means different things to different stakeholders. Formally, the principals are the donors, who focus on the social impact of their funded projects, executed by NGOs or host government agents. At the same time, donors (and all aid organizations) are acting as agents on behalf of their intended beneficiaries (“recipients”). As these recipients exist as tangible beings in space, they live within political jurisdictions, wherein other people exercise government power in their name with varying levels of responsiveness and general interest in their well-being.

Given these realities, should NGOs attempt to help their intended recipients by expanding the capacity of host governments to provide social services or instead develop independent systems of social service provision?

In Owen Barder’s excellent working paper, Beyond Planning: Markets and Networks for Better Aid, Barder criticizes the development of “parallel processes which undermine the domestic system,” and advocates a “country led approach” with “developing countries themselves at the forefront of their development process. It is for the people of developing countries to decide how they want to build their institutions, economy and society.”

In this case, Barder equates the country’s government with the country’s people, presumably because “governments have a critical role in articulating and promoting society’s values and priorities, and a responsibility to guarantee security and human rights.”

Clearly, this government ideal does not exist in many developing countries. I understand investing resources in transparency and advocacy to make this ideal more of a reality. On the other hand, the Western historical experience of strengthening the state capacity of developing countries suggests that national government deference is not wise.

History suggests that citizens are better off when state power is dependent on negotiating with the citizens, rather than the windfalls of aid or commercial monopoly. If you accept that representative government requires a supporting balance of power (generally, elites with independent economic power bases, like in Somaliland), helping citizens advance without growing increasingly dependent on their government promises to support liberal political development.

While country-led development might solve some coordination problems, it is unwise to bring a smile to the face of the Cardinal Richelieu‘s of the world when avoidable. To use an analogy, some microfinance organizations aim to empower women in patriarchal communities, and they require that only the women receive the funds and participate in the communal groups. Why not simply disburse the loan to the husbands? Such an arrangement would fail to disrupt the power structure of the marriage and only increase the women’s dependency on her husband, while also decreasing the chance that she receives the benefit of the loan.

For the sake of completeness, even with the women-only rule,  the patriarch may force his wife to hand over the loan money upon her return, just as the government might prey on the aid supplied to its people. Regardless, direct aid gives the intended recipient a better chance of a) benefitting immediately and b) improving their standing relative to the central power.

While Barder might concede that centralizing more power in the state might have deleterious effects on political development (to point b above), he certainly questions whether the average NGO/donor will be more responsive to the needs of its intended beneficiaries then the host government. Certainly, there is reason to be skeptical. Future posts will look at how NGOs can put the intended recipients directly in the driver’s seat.


Written by Chris Prottas

February 24, 2010 at 7:49 pm

Posted in Development

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