Failure Should be an Option

The aid industry needs to familiarize itself with failure and become accountable. That was the message from a few of the aid world's leading lights at New York University's Feb. 6 conference on aid evaluation.

Nearly 250 students, academics, and development professionals squeezed into a 7th floor lecture hall overlooking a frigid Washington Square Park to hear a dozen speakers outline the various failings of the aid industry at "What Would the Poor Say: Debates in Aid Evaluation," an event organized by NYU's Development Research Institute.

"I don't think there's anything aid can do to cause a country to develop," said William Easterly, known for his aid-trashing bestseller, "White Man's Burden." "I know it's unpopular to say, but aid can change lives and alleviate a lot of suffering for people, but that's not development."

Pushing for greater accountability, Easterly, NYU economics professor and co-director of DRI, offered a litany of problems with the current aid system: There's no scientific freedom with which to disprove failed projects and ideas, few independent evaluations and little peer review. Information and power is centralized. There's no penalty for missing data or implementing ineffective projects. And, unlike consumers, the poor are given neither choice nor opportunity to tell aid agencies how they're doing.

A glaring example of that lack of accountability: In 1997, the United States stopped reporting how much aid it ties - the only OECD country to do so. Today, nobody knows the exact figure - varying estimates peg the 2005 tied aid as somewhere between 93 percent and 8 percent - but in 2003, USAID briefly posted an announcement on its Web site stating that "almost 80 percent of our aid goes to American firms." To Easterly, this amounted to USAID bragging that "most of that aid money doesn't go anywhere near poor countries."

Andrew Mwenda, founding editor of the Independent, a Uganda weekly, offered an African perspective at last week's event.

"Professor Easterly made a fine presentation about making aid accountable," said Mwenda as he took the stage. "I want to make a presentation on why it is almost impossible."

According to Mwenda, Western governments have enlightened accountability because people pay taxes to make sure their country is run well, and politicians are kept to account because they rely on citizens not only to get into and stay in office, but to fund their government.

"The aid industry has distorted this incentive structure: our governments turn to developed nations, not their own people, for money, for approval," he said. "Enlightened accountability comes only from those states that are facing existential threats."

Esther Duflo, a rising research star and an economics professor at the Massachusetts Institute of Technology, advocated smaller bites.

"Researchers and policymakers are prisoners of the ambition to do too much, to solve the entire problem at once," said Duflo, who co-directs the Abdul Latif Jameel Poverty Action Lab, which evaluates aid and social programs. "We must be able to fail, and we must learn from the experience of others."

Duflo pointed to aid agencies' tendency to overestimate success, and called for more random evaluation to assess the true effectiveness of aid projects - an approach that has been widely embraced in recent years, including by the World Bank and Millennium Challenge Corp.

Duflo believes social science can contribute to aid via creative experimentation.

"We should never assume that everything has been invented already," she said. "Keep in mind always that you're probably wrong - everyone should have that humility."

The founding president of the Washington-based Center for Global Development, Nancy Birdsall, saw a different problem.

"Governments often don't know what to do," Birdsall said. "Thus we need experimentation and accountability."

She suggested binding donor-recipient contracts, in which the donor guarantees funds, the recipient reports progress and the contract is public. Aid agencies would keep hands off as poor countries chose their own projects and the impact would be independently verified.

Despite calling herself the day's lone quasi-establishment figure, Birdsall summed up the proceedings with her animated take on what would the poor say: "These guys are crooks!"

About the author

  • David Lepeska

    David has served as U.N. correspondent for the newswire UPI and reported for several major newspapers, including the New York Daily News and Newsday. He was chief correspondent for the Kashmir Observer in Srinagar, India, and regularly contributes to the Economist, among other publications. Since 2007, David has reported for Devex News from Washington, New York, as well as South Asia.