The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (Grove Art)

by Paul Collier

The venture capital fund approach is, I think, the right managerial model for dealing with such risks because it reconciles accountability with incentives. A “venture aid fund” preserves accountability for overall performance, but managers can achieve overall success despite a lot of failures. Without this sort of model bureaucracies just cannot cope with risk. Their staff will not take large risks because they imply periodic failure, and failure means a blighted career. Unsurprisingly, people are simply not prepared to take risks on these terms. The situation is getting worse as people are increasingly assessed in terms of the “results” they achieve. Within aid agencies there is a vogue for a results orientation, and up to a point this is sensible—senior managers are trying to get their workforce to focus on outcomes, not inputs. But a focus on results can very easily encourage people to avoid failures at all costs. And if this happens aid will increasingly be directed to the safe option of countries where performance is already satisfactory.