Responding to Global Poverty: Expanding ‘What Works’ as Solution and Problem

Michael WoolcockProfessor of Social Science and Development PolicyUniversity of Manchester (on leave from the World Bank)

How Then Shall we Live?St Michael’s and All Angels Macclesfield, 20 October 2009

Theory is when you know everything but nothing works. Practice is when everything works but nobody knows why. We have put together theory and practice: nothing is working… and nobody knows why!

- Albert Einstein

Overview

• (Opening caveats)

• Global poverty today

• Why are so many still so poor?

• Types of responses

• Our current aid architecture– Its strengths and limitations

• Encouraging alternatives

Some opening caveats

• Poverty is bad, but wealthy people and countries aren’t morally superior per se

• Poverty is multi-dimensional– Not just lack of adequate income

• The World Bank and its discontents…• Charitable giving is important

– For everyone, for many reasons, but…

• Climate change is not a reason to discourage growth in poor countries

Pop Quiz!

• How many countries are there in the world?– Of these, how many are considered wealthy

(‘developed’) countries?

Pop Quiz!

• How many countries are there in the world?– Of these, how many are considered wealthy

(‘developed’) countries?• How many people are there in the world?

– Of these, how many are considered very poor (i.e., living on less than $1.25 a day)?

Pop Quiz!

• How many countries are there in the world?– Of these, how many are considered wealthy

(‘developed’) countries?• How many people are there in the world?

– Of these, how many are considered very poor (i.e., living on less than $1.25 a day)?

• True or false? The richest 20% of Indians are better off (life expectancy, education) than the bottom 20% in the UK

Pop Quiz!

• How many countries are there in the world?– Of these, how many are considered wealthy

(‘developed’) countries?• How many people are there in the world?

– Of these, how many are considered very poor (i.e., living on less than $1.25 a day)?

• True or false? The richest 20% of Indians are better off (life expectancy, education) than the bottom 20% in the UK

The true sign of success is not whether we [rich countries] are a source of perpetual aid that helps people scrape by -- it's whether we are partners in building the capacity for transformational change… The purpose of foreign assistance must be creating the conditions where it's no longer needed.

- Barack Obama, Accra, 11 July 2009

Excellent. But…

• How exactly does anyone “build the capacity for transformational change”?

• How do the right “conditions” emerge?

• How can “the rule of law” be established and consolidated?

Poverty reduction projects are very necessary but very insufficient for answering these vital questions

Global poverty today

Some basic definitions• In low-income countries, those who earn less than

$1.25 a day (~80p) are considered ‘very poor’– This is life for 1/6th of humanity today

• In high-income countries, those who earn less than $10 a day (~£6.25) are considered ‘poor’

- 5/6ths of humanity live this way today - UK rate is £15 per day

Distribution of global incomePeople Living in Nations by Average GNP per

Capita Level (PPP)

0%

5%

10%

15%

20%

25%

30%

35%

40%

GNP per Capita Level (Thousands of 1998 International Dollars)

Levels of economic development, historically and comparatively

$0

$10,000

$20,000

$30,000

$40,000

1700 2000

GD

P P

PP

pe

r C

ap

ita

UK USA

India, $2990

1851

China, $5332

1898

Ethiopia, $688 ~ Year 12501929

Mexico, $8165

Economic Trajectory of Leading Country

CurrentCrossSection

From: Pritchett (2009)

India $2990

Source: Pritchett 2009

Broad trends in relative poverty

Broad trends in absolute poverty

Poverty in the UK• 13 million people live in poverty (defined, for

single adults, as earning less than £108 per week after housing)– This decade: pensioner poverty down, gender gap

closing, but rising young adult poverty• 25% of 19 year-olds have insufficient education

to keep them out of poverty• Poverty rate among the disabled (30%) is twice

that of those who are not disabled• Tax credits have helped, but more families need

them (2m in 1995; 3m in 2005). Net effect: similar poverty

Source: http://www.poverty.org.uk/reports/mpse%202007.pdf

Poverty stagnant, but low incomes falling

What to do?• Historically, solutions reflect prevailing

sense of what ‘the problem’ is– Filtered through geo-politics, technology, £$€

• Today, four primary actors…– Bilateral (DfID) and multilateral agencies (IMF)– National (and sub-national) governments– NGOs / Advocacy Groups (Oxfam, Care, A4ID)– Foundations / Philanthro-capitalists (Gates)

• …but one common imperative– Identify, expand, replicate “what works”

• in the short run, in known, uniform, predictable ways

– Now, trend to define problems by solutions

Important to remember that…

• Scarcity, autocracy and fragility has been (and remains) the ‘normal’ human condition for most people, for most of history

• Widespread prosperity, democracy, justice and openness is an extraordinary human invention…

• …founded on a complex system of interdependent, context-specific institutions that largely emerged through advocacy and contestation, not a grand design

Explaining variation• Many ongoing debates, but some

consensus on importance of:– Productivity

• Technology, innovation (e.g., farming, factories)• High quality education, health care, social

protection– Politics

• Micro: capacity to enact one’s interests in the world• Macro: history, geo-political significance

– Policies• Content and timing of choices regarding openness

to trade, immigration, ideas, technologies• Capacity to manage shocks, constrain inequality,

uphold law impartially, negotiate transitions

Reducing Global Poverty: What Works?

Development’s Greatest Hits (DGH)1. Universal vaccination (prevention)2. Community health (cure)3. Property rights4. Microfinance5. Conditional cash transfers (BBC - ‘Cash in Hand’)6. Rural roads7. Girls’ education8. Green revolution9. Basic information technology10. [Economic growth, migration]

Shouldn’t we just replicateand expand DGH?

• After all, – problems are urgent– time is short– resources are finite– voters, politicians are sceptical (even hostile)– just doing DGH effectively is hard enough– why waste money ‘reinventing the wheel’?

• Maybe… but maybe not

More fundamental concerns

• Focus should be on finding solutions to prevailing problems, not re-working problems to fit the solutions we happen to have– Big danger: Have hammer, see nails– Huge bureaucratic imperatives to do just this

• You’re a star—a bona fide development expert—if you can provide a universal ‘tool kit’ based on global ‘best practices’

More fundamental concerns

• Focus should be on finding solutions to prevailing problems, not re-working problems to fit the solutions we happen to have– Big danger: Have hammer, see nails– Huge bureaucratic imperatives to do just this

• You’re a star—a bona fide development expert—if you can provide a universal ‘tool kit’ based on ‘best practices’

• Deep, pervasive, ‘binding constraint’ poverty problems may or may not map onto a known project or policy instrument – Inflation does, but what about ethnic violence?– What if it’s not even clear what ‘the problem’ is?

What we need• More (and more diverse) research

– Especially monitoring and evaluation

• Better diagnostic mechanisms– To identify and respond to ‘binding constraints’,

which are usually not obvious– To help projects themselves adapt in real time to

feedback, opportunities, local contextual realities

• More space for engaging with ‘adaptive’ (not just ‘technical’) problems– That is, problems (binding constraints) that

• have no single answer; often not knowable ex ante• require ongoing deliberation and contestation• are not solved by “ten smart people” and/or more resources

(e.g., ‘good governance’, building the ‘rule of law’, conflict)

The single most common source of leadership failure – in politics, community life, business or the nonprofit sector – is that people, especially those in positions of authority, treat adaptive challenges like technical problems.

Ronald Heifetz and Marty Linsky,

Leadership on the Line

Implications, challenges

Short term

DGH 2.0– Refine, adapt, expand access, lower costs

• Worthy and noble, but…

Medium term

Upgrade to 21CD– Develop new ‘learning to learn’ technologies

• Scale + context + conflict + ‘practices’ + feedback • Open and support spaces for “good struggles”

Implications, challenges

• ‘Doing development’ isn’t akin to global warming, Apollo Project, Manhattan Project or even the Marshall Plan– History can’t be “engineered”… – …just its processes made more/less fair,

equal, open, productive, peaceful, responsible

• Putting theory and practice together, so that things work, and we know why

How then should we live?

• Volunteer; be generous with time and money• Do menial work for some period of your life• Stay informed, be hopeful, get political• Beware anyone with a simple solution

– Right and Left both prone to selling simple stories

• Support (short-term) immigration• Don’t break anything you can’t fix• Figure out what you’re good at, and find a way to

help it serve those less fortunate than you…

“When I gave food to the poor, they called me a saint. When I asked why the poor were hungry, they called me a communist.”

Dom Helder Camara