Duncan Green's Blog, page 161

What can big foundations do to support Southern Influencing?

Took part in a really interesting conversation last week between some Oxfam southern campaigners and the big-but-as-yet-little-known Children’s Investment Fund Foundation (CIFF), which is exploring the whole idea of southern advocacy. Their main focus is on ‘children and mothers’ health and nutrition, children’s education, deworming and welfare, and smart ways to slow down and stop climate change’. Last year their grants came to $122m – I think we’ll be hearing a lot more of them in future.

Oxfam’s advocacy is shifting in two directions – towards a joined up ‘one programme approach’ where the traditional siloes (long term development, humanitarian, campaigns and advocacy) rethink their role into a joint attempt to influence the policies and practices that affect real people’s lives. As part of that, we are shifting the balance away from the global summit circus to ‘national influencing’ in developing countries.

Pooven Moodley (South Africa) and Kala Constantino (Philippines) led Oxfam’s bit of the discussion, highlighting among other things:

The need for INGOs to understand that their global brands can be both an asset and a liability in southern campaigning (are we keeping our heads down and supporting the development of local civil society, or sucking out the oxygen in our hunger for profile and funding?)

All countries are different (yes this does bear repetition), so national campaigning needs to start with national research and discussion on national solutions, not just a cookie cutter approach dreamt up in Oxford by some northern campaigner (tsk, what a suggestion….).

In working on southern influencing, we are tapping into some rich traditions – of mobilization, socially engaged celebrities and academics etc – please don’t think we’re talking blank slate.

Good campaigns often identify unusual suspects, like the not particularly progressive Senator who was instrumental in the victory of the People’s Survival Fund in the Philippines (for climate change adaptation).

Many successes are based on getting the right balance between insider and outsider approaches

I wrapped up with some thoughts on what a large foundation (e.g. CIFF) could do, where a bilateral (e.g. DFID) may struggle.

Advocacy around elections: elections are key moments of potential change, and targets for influencers – getting policies into manifestos, putting issues into public debate, candidates’ promises, keeping to those promises after the elections are over. But official aid agencies are understandably wary of getting involved. Foundations obviously aren’t going to start backing political parties, but they could fund research, encourage coalition building beyond political parties, media debates etc.

Litigation: An undervalued part of influencing in the development scene – just look at recent goings on in the US, or

Elections as change moments

the long term tradition of judicial activism driving social change in India. As a lawyer once explained to me ‘you must understand, the state sees the world through the lens of the law’. Legal victories (and defeats) can have huge and long term consequences. Training and supporting research for public interest litigators? Legal aid? I’m not a lawyer, but I’m sure the options are endless.

The long term: Foundations can think in 20 or 30 year timescales – perfect for tackling long term problems like norm shifts that seem to require simultaneous progress at global, national and societal levels (eg violence against women). What would a 30 year influencing programme in the rights of excluded/maltreated minorities (disability, sexuality, ethnicity) look like?

Counting what counts: CIFF stress the importance of rigour (political and power analysis; theory of change; M&E) for advocacy initiatives and managing the tension between this and maintaining fleetness of foot (don’t let the KPIs become a strait jacket). But there’s a huge challenge on measuring success/failure in influencing. How to attribute change to any given intervention? What constitutes rigour? The donors typically ask for it, but don’t fund the development of new approaches – a job for a foundation?

And two notes of caution:

In many countries, people trying to influence the system are literally risking their lives. I’ve heard horrendous stories of activists in constant fear being badgered by donors  because their reports weren’t in on time. And just because you have lots of money, doesn’t mean you should chuck it at the first good southern campaigning organization you see – done wrong, large chunks of dosh can destroy an organization’s legitimacy, as Masooda Bano has shown in Pakistan. Need to work out how best to support the work, and whether what is needed is cash, or something else.

Links I Liked

Gotta start with the Greek meltdown, I guess:

Whadya mean, ‘the Troika (EU, ECB, IMF) doesn’t understand the Greek economy’? (see right) [h/t Felix Salmon]

As for the rest of us: Branko Milanovic draws three depressing lessons from the Greek debt negotiations (he’s not joking; they are depressing) [h/t Sophia Murphy]

Greece’s Finance Minister cancelling Germany’s debt 1953

And let’s not forget that Europe cancelled Germany’s debt in 1953 and why it should apply to Greece today [h/t Alex Evans]

Some Oxfam business:

Best job in Oxfam (apart from mine). Oxfam GB looking for new Head of Research (closing date 30 July)

Calling all UK measurement wonks. ‘Adaptive Programming’ – how to measure impact? 16th July 2-5pm, hear from me, but also some clever people like Pete Vowles

Modern day Opium Wars: How the US chamber of commerce fights anti-smoking measures around the world.  [h/t Erik Solheim]

China’s foreign aid reform and implications for Africa. Fascinating (if long) piece from Yun Sun of the Brookings Institution

Owen Barders guide to picking FFD dollars off the pavement in Addis

Delightful, on so many levels. CNN’s most embarrassing flub ever? The ISIS dildo gay pride flag, explained

Why is the World Bank cutting funding for agricultural research (CGIAR) and other global public goods? Nancy Birdsall is cross

Nice 7 minute explainer on aid in general, and UK aid in particular, from Matt Collins – worth it despite the annoyingly crass interviewer

The US Declaration of Independence, as edited by Oxfam

July 4, 1776.

How did they manage without track changes?

In an extraordinary historical scoop, it has come to our attention that the original declaration of US Independence was initially sent through Oxfam sign off procedures. Here is the final draft, before Oxfam America handed it over to the 13 states for a final edit.

‘We hold these truths to be self-evident evidence-based, although contested, that all men, women and other more confusing categories (hereinafter, ‘people of gender’) are created equal, that they are endowed by their Creator International Law and Amartya Sen with certain unalienable Rights, that among these [i] are Life, Liberty and the pursuit of Happiness self-reported life satisfaction.

–That to secure these rights, Governments are instituted among People of Gender, deriving their just powers from the consent and active participation of the fully and appropriately consulted governed,

–That whenever any Form of Government becomes destructive of these ends, it is the Right of the People, especially women, to use their leverage and convening network skills to alter or to abolish it, or at least complain a lot on social media with a catchy hashtag, and to institute new, innovative and out of the box Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety, Sustainable Livelihoods, Resilience, Gender Equity and Self-Reported Life Satisfaction.

Prudence [ii], indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind [iii] are more disposed to suffer [iv], while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. This demonstrates a serious need for capacity building of suitably transformative CSOs. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government [v], and to provide new Guards for their future climate-smart security.’

At this point, Oxfam decided that it couldn’t proceed because of the lack of a clear theory of change or monitoring and evaluation process, and suggested replacing the declaration with a tweet – much simpler:

‘All peeps r = with rights to life, liberty + pursuit of happiness + that’s what govts r 4. If a govt won’t, people have right to abolish it’

 

[i] Cd we please add full list of 190 ILO Conventions, UN conventions etc as an annex?

[ii] Is Prudence a staff member? Is she accountable for these kinds of decisions?

[iii] Oh dear, this won’t do

[iv] need to recognise that men, women, boys and girls experience suffering differently

[v] Sounds a bit radical for Oxfam, can we tone it down a bit?

Impact investing: hype v substance, the importance of ownership and the role of aid

Oxfam’s Erinch Sahan tries to disentangle hype from substance and makes a pitch for a new approach to impact investing.

Impact investment is the next black. It’s already worth about $46 billion, and rapidly growing. In 2010, when it was a mere $4 billion, JP Morgan predicted it would be between $400 billion to $1 trillion within a decade. Forbes has declared impact investing is going mainstream, and it’s certainly well on its way.

A big chunk of this money (70 per cent) goes to emerging/developing economies. While it’s still a fraction of global financial markets (estimated to be $210 trillion), this do-gooder money will soon dwarf aid flows, and might even suck up a good chunk of aid budgets.

Impact investing channels money to companies, organisations or funds that have a positive social or environmental impact. What sets it apart from your ‘plain vanilla’ investment is that it requires (and measures) social and environmental impact, alongside a financial return. It is also different in that it accepts lower financial returns, so long as the investment does some social or environmental good. Its do-gooder nature combined with an expectation that it’ll give you a financial return means it’s growing in appeal among investors of all shapes and sizes.

A vision for nicer capitalism?

The size of impact investing is important but its symbolic power in shaping the economic narrative may be even more critical. Impact investing is seductive because it rides the promise of the entrepreneur. It feeds the narrative that business-people, not governments or NGOs, can heal the world. It takes the excitement of neo-liberalism (the entrepreneur as the hero) but sprinkles in enough good intentions to make it likeable. It doesn’t challenge the economic narrative, because the ethos of impact investing is that solving the world’s problems should be profitable. As explained by a prominent lawyer working on impact investing: “Increasingly, there has been the realisation that there does not need to be any trade-off between profit and purpose”. Impact investing puts the entrepreneurial super-hero at the forefront of fixing all manner of problems.

There’s a lot I love about impact investing. It won’t channel investment into companies who slash rainforests, enslave workers or burn coal. It acknowledges that business is not a single entity, that there are different classes of businesses that are materially different, intrinsically better for the world. It accepts the difference between a solar-energy company vs a coal-burning utility, an organic rice producer vs a fertilizer-dependent mono-crop plantation, or a company specialising in providing services to smallholders vs a large-scale agribusiness that drives communities off their land. Critically, it acknowledges that social impact is possible when we compromise on financial return. This is all good stuff and is a step ahead of development practitioners who are just trying to get more business investment in developing countries, regardless of the broader cost.

Inclusive ownership and the DNA of a business

But here’s my quibble: ownership and governance of a business determines its DNA, driving who reaps the rewards when the business succeeds. Impact investing mostly twists itself in sophisticated knots trying to measure the impact of an enterprise, putting impact metrics at the heart of its decisions. But why not start with the DNA of the business, asking whether it’s structured to be really pro-poor? If you have a choice, why not opt for companies that, if successful, will spread prosperity the furthest and widest?

Employee-owned companies distribute wealth among their employees. Farmer-owned businesses bring profits back to farmers. Community-owned fishing enterprises mean communities get the benefits (and incidentally are more likely to lead to sustainable fisheries management). And the right governance mechanisms, for example those that

Mmmm, tasty impact

put workers  (e.g. in Germany) or farmers (e.g. Divine Chocolate) on the board, give workers and farmers a real say over the direction of the company, and how key stakeholders are treated. Impact investors sometimes do channel funds into enterprises with inclusive ownership models. But it isn’t the key hurdle on whether an investment can qualify as “impactful”. It should be.

What should donors do?

Donors are being seduced by impact investing, as they search for private-sector development programmes that can show results. While the concept isn’t particularly new, with IFIs and enterprise development programmes having invested into ‘impactful’ businesses in developing countries for years, the interest is growing. USAID, DFID/CDC, DFAT (can I not still call it AusAID?) and others appear intrigued with the possibilities. Want further proof on the perceived trend among donors? Just look at the direction of the large development consultancies (who are the real experts on their clients’ direction of travel). Firms like GRM, who have build their business around delivering bilateral donor programmes, are putting impact investing ’front and centre of their private sector related service offering’ to their clients. In my view, as donors go deeper into impact investing, they should in turn put inclusive ownership ‘front and centre’.

Businesses that are truly different in their ownership and governance do exist. Many such businesses are thriving. Employee-owned companies in the UK alone represent £30 billion in GDP. And according to Cass Business School, their sales grew 18-times faster during the economic downturn than those of their competitors. Inclusively owned and governed companies have greater productivity and innovation, through more motivated staff. The economic case for alternatives to shareholder-owned corporations stacks-up. Impact investing could justifiably decide to give these materially different kinds of enterprises a ‘leg-up’.

It’s not too late to shape the 100s of billions of dollars that will go toward impact investing over the coming decade, including from donors. It’s a young field that is still grappling with what it means for a business to have social impact. It can be shaped so it gives a different breed of businesses a ‘leg-up’. The aid world can help make this happen.

The C Word: How should the aid business think and act about Corruption?

Went to a seminar on corruption and development on Monday – notable in itself as corruption is something of a taboo topic in aid circles. Aid supporters often cite framing – George Lakoff’s ‘Don’t Think of an Elephant’ or Richard Nixon’s ‘I am not a crook’ (below)- as justification for avoiding the topic; even if you raise it to dismiss it, the connection between aid and corruption will be established in the public mind.

Unfortunately ignoring it/leaving it to the Daily Mail hasn’t worked too well – David Hudson’s research (still unpublished, but previewed here) shows that the % of the UK public agreeing with the decidedly clunky (DFID-drafted) statement ‘corruption in poor country governments makes it pointless donating money to help reduce poverty’ has risen rapidly from 44% to 61% since 2008. He also found that talking to members of the public about how aid is trying to tackle corruption can undo the damage of raising the issue in the first place (and help immunise people against the barrage of press reports).

The seminar heard from David, and the findings of a DFID evidence review by Alina Rocha Menocal and Nils Taxell (among others). Some impressions:

The word itself doesn’t help. According to Nils Taxell, ‘The papers we looked at do not define what they mean by corruption – it’s a blanket term.’ Overall, the word feels externally imposed – I’m not at all sure people in developing countries would use the same term to describe embezzling a billion dollars that means a road is never built and an underpaid official asking for a sweetener. See this research from Papua New Guinea for how citizens themselves see the issue.

It’s amazing how little we know about almost anything in development. A 100 page review of the evidence finds confusion, contradiction and very little certainty about the effects of corruption, or what to do about it. We can’t even properly answer basic questions like ‘is country X more/less corrupt than it was 5 years ago?’ Is that the inevitable result of the complexity of political and social systems or the inbuilt bias of researchers to default to NMR (Needs more Research)? Probably both.

Indirect is best. In his book Obliquity, John Kay argues that many goals in life are best achieved by approaching them indirectly. This appears to apply here. It’s almost never the interventions directly targeted at corruption that work. Often the fight against it is characterized as the end, but the goal should be about promoting some aspect of development, with tackling corruption as simply one of the means to that end.

In similar vein, combination effects matter. Delivering isolated interventions eg on police reform, judiciary or setting up on anti-Corruption body, often fail. A huge effort at police reform, but no action on sorting out the judiciary simply means ‘you just bribe the judge instead’.

There’s only one thing worse than being ignored by donor politicians, and that’s not being ignored by them….. Corruption is top of ministers’ agendas, but like all politicians, they want simple clear messages they can sell to the public, not the ’50 shades of grey’ beloved of researchers. ‘In 15 years at DFID, I have never been asked DFID is concerned about corruption, and hence why DFID is working on it. Ministers have to defend a simple, stark message – no Minister will stand up in Parliament and say ‘well, some corruption is worse than others’.’

In such a climate, if you argue that some corruption is actually not that important, is a symptom of a particular stage of development, is really just an informal tax, or may even be helpful (for example in achieving political stability after a civil war, by buying off opponents) you will rapidly be denounced as an apologist for corruption and cast into the political outer darkness. A problem as all of those views are more or less correct, in some places, some of the time.

That political profile also means ministers demand big splashy anti-corruption projects, even if they don’t work, rather than obliquity-style attempts to tackle corruption as part of something else. ‘Our taxpayers won’t let it disappear from the agenda.’

A further problem for bilateral donors is that anti-corruption work is very different to traditional partnerships on health, education or infrastructure. Health or transport ministers are more or less interested in the latter, but on corruption, politicians are often the de facto enemy. So tech fixes and public service capacity building won’t work (they don’t work that well in normal circumstances, let alone in this!). What you get instead is an ‘act of complicit theatre between donors and governments – lots of technical assistance progs, while business carries on as normal. Tackling the fundamentals is far harder.’ Somalia is apparently setting up an anti-corruption body. Enough said.

Mushtaq Khan, for decades one of the clearest thinkers on corruption, was in the audience and made some great points. He reckons that short-term aid programmes have little chance of success in promoting systemic change – the way that over several decades, interactions between police, judiciary, private sector and politicians become less corrupt as a country develops and institutionalises.

Instead, he argues for a more acupuncture approach, identifying small, specific problems like customs corruption in the garments sector, and then following a PDIA-type process of getting broad agreement on the problem, and convening the right individuals and institutions to sort it out.

If we do that, and add some historical positive deviance approaches, where instead of thinking about our interventions (hammers, nails), we identify and analyse real world cases where corruption has fallen, we might have the beginnings of a more intelligent approach. But you’d have to sell that to donor politicians first.

Update: here’s a half hour BBC radio ‘File on 4′ programme on aid and corruption. Haven’t listened to it yet, so if it’s terrible, tell me and I’ll take it down [h/t Sarah O’Connor]

Current aid design and evaluation favour autocracies. How do we change that?

I loved the new paper from Rachel Kleinfeld, a Senior Associate at the Carnegie Endowment for International Peace, and asked her to write a post on it

What strategy can make a government take up smart development programs, better policing techniques, or tested education initiatives?  RCT and regression-based studies have taught us a great deal about “what works”, but we still know very little about how to get what works into government policy.  The problem is whisked under the carpet with the familiar phrase “political will is essential”, which is disturbingly close to: “and then a miracle occurs”.

The development field tends to conflate the “what” and “how” questions (or ignores the latter entirely).  The result?

The recognition that most development involves politics and policy is on a collision course with the canonization of logic-frame models for program design and the spread of RCTs and regression-based analysis for evaluation.

What’s the difference between the two questions?  Traditional science has proven that good hygiene reduces the spread of disease.  Smart RCTs and regressions have shown us counterintuitive ways to get people to use better hygiene.  But nothing has helped us figure out how to get a government to invest in, for example, sanitation education rather than more photo-op friendly, but less useful, toilet building.

It’s not that traditional studies are not looking at this sort of problem.  It’s that they aren’t suited to that type of question.  We are building ever-more sophisticated tape measures, but they can’t determine the volume of a pond.

At an abstract level, the issue pits David (Ludwig von Bertalanffy) against Goliath (Sir Isaac Newton).   Measurement and design based in Newtonian science relies on testing separable variables, and assumes change progresses at a steady rate in a single direction.  But political and policy reform involve complex systems, where variables affect each other rather than being separable, and their interactions can also change the system itself.  As Bertalanffy realized, the system is more than the sum of the parts.

For instance, you can deconstruct a watch (a Newtonian system) learn the interactions of each part, and put them together to understand how a watch works.  But if you kill a cat (an interdependent system), and test each part of its anatomy, you understand only some of how it behaves in real life.  Political and social systems are like cats, not watches.

Reform and then counter-reform

Reforms that involve policy and politics are punctuated, not steady or linear.  Nothing may happen for years – and then a new government causes change to skyrocket. A sudden event may harness a public mood and create an opportunity, or block one.  Reformers or their opponents may “create” a sudden event with good pr.  There is always an opposition who may disagree with the means or the ends, and the relationship between reformers and opponents is interdependent.  The adversary can learn, so a method that works well at one time may flop if reused.  Successful reform can galvanize opponents, sowing the seeds for a counter-reform.  Implementation is often two steps forward then two or three steps back—and sometimes it moves sideways

When we design and evaluate programs that involve politics and policy based on the standard logic-frame model, regressions, and RCTs, unfortunate things happen.

First, measuring progress at single pre-set times can lead to lauding organizations that caught a wave, while blaming good groups that have the bad luck to have an assessment fall just after a counter-reform.  Meanwhile, such measurement says nothing about reform sustainability.

Second, measurements based on achieving a “best practice” can actually obstruct the process of cobbling-together agreements of coalition politics that yield so-so policies that are the best that can be achieved with sustainable local buy-in.

Perhaps most nefariously, these design and evaluation systems inadvertently favor autocracies.  After all, the grit that mucks up a steady linear march towards a best practice is politics – the need to satisfy different interest groups who vote or finance parties.  These forces can’t be ignored by democratic governments, but they can be squelched by more authoritarian rulers.  Thus, many indices that use traditional design and measurement techniques find the Rwandas and Ethiopias of the world doing far better than the messy democracies, ignoring the brittleness of more authoritarian systems.

So how can we design and measure better when reform trajectories look like sailboats, not trains?  Complexity, or systems, theory offers a few pointers.

To start, problem driven iterative analysis (PDIA) with hypothesis testing is a better programming model for these dynamic implementation problems than logic frames.  Setting firm outcome goals while leaving activities (and, crucially, funding streams) flexible, then constantly testing what works, allows for more impactful work.

But we can do more than just “be flexible”.  Development agencies can anticipate the punctuated reform/counter-reform rhythm of policy change by planning in advance for multiple battles.

For instance, programs can focus less on whether the outcome was achieved in a set period, and more on the process of building coalitions of reformers locally who will carry on the fight even after the initial reform has been achieved.  Evaluation can rank how strong and sustainable the long-term, broad coalition and/or elite influencer group is, as much as the outcome itself.

Second, instead of ending grants when a reform is achieved, funding should continue to help reform groups stay together.  That way, there will be organized constituencies who can fight back when opposition rallies to undermine the initial reform.

Similarly, they can plan for windows of opportunity before they open, by funding preliminary work so that policy ideas and an organized group of vocal, powerful, politically-savvy supporters are ready to go when the moment arises.

Complexity theory also tells us what kinds of outcomes can yield the greatest impact.  Programs should aim to alter the “rules of the game” or the incentive systems that shape and constrain a system.  Changing a single policy is like throwing a rock in the middle of a stream – it makes a big splash, but the stream returns to normal. Changing incentive systems is like moving rocks along the water’s edge – each one doesn’t make much difference, but move enough rocks and the stream flows in an entirely different direction.

So, for instance, to alter a political outcome, it makes sense to focus on changing who gets to vote, how votes are aggregated for representation, and how campaigns are financed – the structural constraints in all democracies.  To affect the culture of a profession, changes to hiring, promotion, and firing standards, or professional accreditation standards and processes will bring about the deepest change.

And in nearly all cases, reforms that enable local people to organize, increase transparency and public voice in policy, reduce violence against reformers, and increase avenues to power can yield systemic change that allow reformers to carry on after outside funding ceases.

Political and policy reform is not just complicated – it is a fundamentally different kind of problem than those tackled by our current design and evaluation processes.  But we can do better than just leaving it to the gods of “political will”.  Now the challenge is to reform ourselves.

 

Links I Liked

It was a maptastic week (click maps to expand): First up, the number one reason people die early, by country (plus a top tweeted response



from RJ Chilvers: ‘surprise is Saudi Arabia’s leading cause is road accidents. I think they need more women drivers…’)

 

Dear governments & aid agencies: Please stop hurting poor people with your skills training programs. Vintage Blattman

 

Causes of disability by country type: back pain (rich countries); depression (poor countries); anaemia (fragile and conflict states)

 

Must read, especially for secular activists/aid types. ‘Will the left ever get religion?‘ by Mike Edwards

 

And some happy maps on African progress, including Child mortality. From uber-visualizer Max Roser

 

In 1979, homosexuality was still classified as an illness in Sweden. Protesters called in sick to work, claiming they felt gay.

 

The new Global Multi-Dimensional Poverty Index is out, covering 101 developing countries

 

Litigation avalanche on the way? A judge in the Hague has ruled that the Dutch government’s stance on climate change is illegal

 

Excellent 3 minute animation on climate change & public health, from The Lancet [h/t Andy Norton]

Have technology and globalization kicked away the ladder of ‘easy’ development? Dani Rodrik thinks so

Dani Rodrik was in town his week, and I attended a brilliant presentation at ODI. Very exciting. He’s been one of my heroes ever since I joined the aid and development crowd in the late 90s, when he was one of the few high profile economists to be arguing against the liberalizing market-good/state-bad tide on trade, investment and just about everything else. Dani doggedly and brilliantly made the case for the role of the state in intelligent industrial policy. But now he’s feeling pessimistic about the future (one discussant described it as ‘like your local priest losing his faith’).

The gloom arises from his analysis of the causes and consequences of premature industrialization. I blogged about his paper on this a few months ago, but here are some additional thoughts that emerged in the discussion. He’s also happy for you to nick his powerpoint.

Dani identified two fundamental engines of growth. The first is a ‘neoclassical engine’, consisting of a slow accumulation of human capital (eg skills), institutions and other ‘fundamental capabilities’. The second, which he ascribed to Arthur Lewis, is driven by structural differences within national economies – islands of modern, high productivity industry in a sea of traditional low productivity. Countries go through a ‘structural transformation’ when an increasing amount of the economy moves from the traditional to the modern sector, with a resulting leap in productivity leading to the kinds of stellar growth that has characterized take-off countries over the last 60 years.

Manufacturing has been key to that second driver. It is technologically dynamic, with technologies spreading rapidly across the world, allowing poor countries to hitch a ride on stuff invented elsewhere. It has absorbed lots of unskilled labour (unlike mining, for example). And since manufactures are tradable, countries can specialize and produce loads of a particular kind of goods, without flooding the domestic market and driving down prices.

But that very dynamism has produced diminishing returns in terms of growth and (especially) jobs. Countries are hitting a peak of manufacturing jobs earlier and earlier in their development process (see graph). And it could get much worse – just imagine the impact if/when garments, the classic job-creating first rung on the industrialization ladder, shift to automated production in the same way as vehicle production.

At the same time, lower transport costs and globalization is making it harder and harder to pursue import substitution and use exports to boost the wider economy through local linkages – Ethiopia imports cardboard boxes from China in which it puts its cut flower exports. A return to import substitution would require much higher tariff barriers than in the past, to counter the lower transport costs and Asia’s hyper cheap production costs.

The result has been deindustrialization in much of Africa and Latin America, exacerbated by the recent commodity boom (now ending). A byproduct has been rising inequality – manufacturing has become more like mining – a low employment/high wage enclave with few linkages to the rest of the economy.

There is very little sign that services or agriculture can substitute as long term drivers of labour-intensive growth – hence Dani’s pessimism. The easy road of industrial policy and manufacturing catch-up that has driven such spectacular gains, is coming to an end. It’s back to the long haul of neoclassical growth, unless something new turns up.

The panellists (Nick Lea, Dirk Willem te Velde and chair Stephanie Griffith Jones) went into straw clutchist mode, looking for possible rays of light to ease Dani’s gloom. These included:

The numbers may be better than we think: new calculations of GDP, especially in Africa, show a lot more economic activity than we realized, plus a lot of manufacturing may not be picked up in official stats.

Global Value Chains: intriguing – in one direction, companies are outsourcing more stages like design, which are then counted as services, whereas before they would have been part of manufacturing. On the other hand, companies are also taking some services in-house, such as after-sales support. Not clear which is greater, but it means that the division between manufacturing and services is a lot more blurred than it appears.

Fragile States:  Nick Lea saw possibilities of leaps in growth in the ‘non-linear, chaotic group at the bottom of the pool’

Climate Change: Stephany Griffith-Jones wondered if the new techs required for the green revolution could fill some of the gap.

Frugal Technology: she also wondered if the shift in design and innovation to countries such as India might partially reverse the trend to automation, and revive job creation.

Even the earlier peak in industrialization is still decades away for most of Sub-Saharan Africa – hitting a wall at a GDP per capita of $5,000 would be a nice problem to have for many governments (missed this in first draft – thanks to Dirk for pointing it out).

All great stuff, although despite the panelists efforts, I found Dani’s pessimism rather too convincing for comfort.

One minor whinge on the panel – 3 male speakers, and a woman chair (even if it is the wonderful Stephanie Griffith-Jones) does not pass the CGD test, and every single person called on in Q&A was (I think) male (including me, I know, my bad). Come on ODI, please get with the anti-Hoff programme!

The video of the event is also up on the ODI website.

Who is the richest man in history? The answer might surprise you

Ricardo Fuentes-Nieva (@rivefuentes) is shortly leaving his current role as Oxfam GB’s head of research to

One of these men is Carlos Slim

take  over as Executive Director of Oxfam Mexico (I’ll have to start being nice to him now). Here he introduces Oxfam Mexico’s new report on one of Mexico’s many claims to fame – the richest man in history.

In his 2011 book, The Haves and The Have Nots,  Branko Milanovic asked a simple but quite illuminating question: who is the richest man in history? (Given the gender structures and distribution of wealth and resources across men and women, it had to be a man). To simplify comparisons across time and space, he used a common metric for wealth: the number of people that a rich person could hire in his society with a conservative return on his wealth.  Milanovic was following the thinking of Adam Smith, who wrote in The Wealth of Nations  “[A

person] must be rich or poor according to the quantity of labour which he can command.”

Milanovic found that the richest man in history was the Mexican Carlos Slim, who at the time of the calculation could hire 440,000 Mexicans with his income (not with his wealth). That’s a huge amount of people. By comparison, John Rockefeller could hire about 116,000 during the Gilded Era. Bill Gates could only hire a paltry 75,000 workers at the peak of his wealth.

How has that changed since the publication of Milanovic’s book?

Gerardo Esquivel, a Mexican economist, did a similar calculation for an Oxfam Mexico report launched yesterday in Mexico City.  The methodology is slightly different in Esquivel’s calculations. But see how it’s changed in ten years. In 2004, Carlos Slim could hire half a million Mexicans. Ten years later, he could hire 2 million (or about the number of officially unemployed people in the country). And just to be clear, this analogy  does not try to vilify Carlos Slim but to highlight a skewed system that allows this enormous disparities.

The report has lots of new findings. Another interesting one: using tax records to calculate the share of income going to the richest 1% (as Piketty and other have done in several countries) Esquivel finds that the top 1% in Mexico take 21% of total income. That’s the highest share for all the countries with available information.

Mexico is a vastly unequal country in a vastly unequal region (despite some recent progress)  so there is no real surprise there.  The shock is just how fast the wealth at the very top continues to grow while salaries stagnate and the economy tumbles with skeletal per capita growth rates. In other words, the Mexican economy is not working for anybody except a privileged few. For instance, in 1996, the wealth of the 16 billionaires was $25.6 billion dollars. Today, the same group controls $142.9 billion dollars. In the same period, poverty has remained stubbornly constant – in its broadest definition, the poverty rate in Mexico has been hovering around 50% for the last two decades. There is wealth creation in Mexico, but it’s going into a small number of hands. Mexico is experiencing a sort of trickle-up economics.

The report argues that, this is the consequence of different failures in public policy in Mexico. On tax policy:

“One of the big problems is that our tax policy favours those who have more. It is in no way progressive and the redistributive effect is almost non-existent. By taxing consumption—over and above income—poor families end up paying more taxes than the rich, since they spend a higher percentage of their income. The marginal income tax rate—one of the lowest among OECD countries—the fact capital gain in stock markets is not taxed and neither is inheritance, among other things, are examples of how the tax system benefits more privileged sectors”

There is also a close relationship between wealth and political influence that skews the system in the favour of the affluent. On this, the report says:

“The constant inequality and political capture by elites have serious economic and social consequences that are

Mexico City

also exclusionary. The internal market is frankly weak. When facing the scarcity of resources, human capital is curtailed and the productivity of small businesses is jeopardised.”

Mexico is a good example of the failure of trickle-down economics, just as the IMF also highlighted last week: per capita growth rates have been low but positive, between 1992 and 2012 they averaged 1.17%, but official poverty rates are back to where they were in the early 1990s.

So there is a huge task ahead to ensure that the economic and political system in Mexico delivers for Mexicans. The report suggest some initial steps: a genuine social state; a more progressive fiscal policy, improved targeting of expenditures, better wage and labour policies and enhanced transparency and accountability mechanisms.

There is nothing radically new in the proposals. What’s new is to have these conversations in a country with a long history of socioeconomic inequities.  Wealth creation is necessary if the poor, vulnerable and marginalized are to improve their lot, but wealth creation that goes only to a few billionaires is unacceptable.

Buena Suerte with sorting that lot out, Ricardo

What if the best way to be innovative is not to try?

This guest post comes from Oxfam’s James Whitehead

‘Is it innovative?’ ‘How can we be more innovative?’ When asked, my problem, which is slightly awkward as Oxfam’s Global Innovation Advisor, is that I’m not sure how useful the word ‘innovation’ really is. I’ve just written a research paper on the factors that enable or block innovation in Oxfam and one of the things that comes out is that those who are ‘innovators’ don’t see themselves as such and don’t label what they do as ‘innovation’. They just get on with working with others to solve problems.

Duncan may characterize it as an unwieldy supertanker, but Oxfam actually has a pretty good track record on innovation, stretching back to its earliest days. In the 50’s and 60’s it pioneered charity shops and humanitarian response. In the 1970’s it developed water tanks for emergencies and ‘magic stones’ terracing to reduce desertification in the Sahel that are both still in use today. The 1980’s saw the invention of energy biscuits with Oxford Brookes University and one of the first consortia on HIV/AIDS. In the 1990’s it launched the first Fair Trade Foundation and even got a nomination for the Nobel Peace Prize. In the 2000’s it played a pivotal role in the ‘Make Poverty History’ campaign and developed new approaches to fundraising like ‘Oxfam Unwrapped’ presents that have now raised more than £50 million. In this decade, we injected new energy into the campaign for an international Tobin Tax and helped secure a global Arms Trade Treaty. But the crucial point is that none of this happened because we were consciously trying to be innovative.

So if I’m looking to be ‘more innovative’ maybe I’m looking in the wrong place. Innovation is a by-product of the process of collaborative problem-solving – it’s not the destination. As a development community we are trying to address complex problems in a changing world – the response may be a proven approach developed thirty years ago or something unprecedented. I want to be working with people who are passionate about solving problems at scale rather than magpies obsessed with finding shiny new innovative solutions.

I also find that if I ask my colleagues across the organisation to identify work that is innovative I will often be met with a blank look, a pilot with little room for growth, or of course an app. If I ask where our work is exciting and has potential to make a massive difference for people, that’s when the lights come on and the conversation gets interesting.

But, and it’s quite a big but, we are usually not nearly creative enough, not nearly collaborative enough in addressing these complex problems. And that does people in poverty a monstrous disservice. Have you ever been to a health centre and seen a poster pinned up on a wall, with a cartoon of a man beating a woman with a stick and a UN logo and INGO logo proudly on the bottom of it, announcing that you should ‘say no to violence against women’? Where is the resourcefulness and ingenuity in that? Is that honestly the best we could come up with? In contrast, I was excited spending time with our Zambia country team earlier this month when they told me they are working with a major brewery to get messages onto beer mats about violence against women. Is it innovation? I don’t know. But it is most certainly a more resourceful approach.

So what enables or blocks this sort of creative problem-solving?  In the research paper we found that it starts with recognising, nurturing and retaining talent. Those who drive the change are the ones who consistently go beyond the call of duty. They are open to opportunities and challenges in their context, creative in their responses and delivery focussed. But frequently those staff face a chronic lack of time as they are busy delivering existing obligations. One staff member said “In the early stage this wasn’t core work – it was done at weekends and nights because we didn’t have funding.” And yet these initiatives might become the cornerstone of our future programmes.

There are leaders at every level who keep open the space, act as champions, find resources, encourage teams to take risks and defend them when things get difficult or don’t deliver. One respondent said about her manager “She would say – just go and do it, I believe in you. I knew even if I failed, she would be there to support me.” That sort of leader.

Another critical element is vibrant collaboration and partnerships. While working with diverse stakeholders takes time and effort, we found it pays dividends when we involve the right people and are prepared to develop solutions together. Flexible funding in the early stages, through proactive relationships with donors, also made a difference. So did a hunger for learning – the desire to know what’s working, what’s not and to fail fast, learn and adapt.

In order to be more resourceful problem solvers, we need to become highly collaborative across disciplines, less hierarchical, highly connected, open to experimentation and learning, open to considered risk-taking, very outward facing and get better at working with other organisations. Innovation is not the destination, it will occur as a by-product of our combined efforts.