Toxic Aid: A Tanzanian Study

Every few months the question is asked: Does aid work? Sebastian Edwards, professor and former World Banker, wrote "Toxic Aid: Economic Collapse and Recovery in Tanzania" (2014) to help wade through the an answer. In short, he concludes "aid affects economic performance in a highly complex way, and through multiple and changing channels. It also underlies the fact that this is a two way relationship: aid agencies influence policies, and the reality in the recipient country affects the actions of aid agencies. This relationship is too intricate and time-dependent that it is not amendable to being captured by simple cross-country regressions; in fact, even sophisticated specifications with multiple breakpoints and nonlinearities are unlikely to explain the inner workings of the aid-performance connection." (p. 261). Success or failure largely depends on the timeframe looked at – Edwards concludes that in the long-term "Tanzania doesn't look quite like a major successful story. It rather looks like a case of a remarkable recovery, but this is not the same as outright success" (p. 254).

Edwards argues that Tanzania is a useful case study because "foreign assistance has been at the center of the country's economic failures and successes" (p. 2). Some suggest that Tanzania is a classic example of "deadly" or "toxic" aid, others argue that it is an example of success. Edwards wades through the different conclusions using a broad, long-term perspective. While the international community, the actions of donors and the impact of aid played an important role, at times Edwards over projects the aid narrative such that national priorities, policies, politics and decision making rationale are secondary, and in some ways subservient to, the donor community. For example, the author states that the "first order of business for the Mkapa administration was, as noted, to put in place a budget process that would be accepted by the donor community" (p. 218). Not one that serves its people, via that acceptance. The Tanzania story shows that this is certainly not the only driving force for decision making – most notably that President Nyerere expelled the International Monetary Fund from the country (which he knew would have negative consequences).

The failures Edwards highlights from the 1970s includes the attempted collectivization of agriculture, a bloated and inefficient parastatal sector, corruption, grandiose industrial projects, and a general collapse of the economy – on the latter he suggests "it is possible to argue that this disintegration happened because aid agencies were heavily involved in supporting (and even helping design) Nyerere's ujamaa policies" (p. 3). Again, in the concluding chapter, he writes: "After analyzing in great depth Tanzania's history during its first two decades as an independent nation, it is clear to me that the official aid community had a major responsibility in one of the most colossal collapses of a poor country in the history of the modern world. When one adds and subtracts everything – the misguided policies, the blunders, the growing corruption, and the socially worthwhile projects – the balance is hugely negative. The inescapable conclusion of that exercise is that during 1961-81 aid was worse than ineffective; it was toxic" (p. 257). Interestingly, however, is that this "responsibility" does not translate into an issue of justice when speaking about aid to Tanzania today, but rather greater "ownership" is merely a better pathway to effectiveness (see long quote below).

For the 1961-81 period, Edwards grades the aid agencies performance as a failure, and not "a run-of-the-mill "F"; it would be a failing grade with a strong worded reprimand. I would use words such as "irresponsible," "arrogant," "misguided," gullible," "ineffective" (p. 259). For 1981-94, he give a passing grade of B- and after 1996 a B+ (p. 260). The ways forward, Edwards concludes with, include: (1) ending support for grandiose, costly projects with limited impact, (2) increasing engagement with civil society, (3) strengthening institutions, (4) reducing corruption, (5) relying more on RCTs to guide development choices, and (6) beginning thinking about "the end game" for reducing aid.

The book offers interesting perspectives, such as this (long quote) on "ownership":

  • "From a conceptual point of view, an intriguing question is why would donors give up their control over how funds are allocated? After all, according to theoretical models of international aid, donors provide assistance – and allocate is across alternative uses – in a way that maximizes their ow utility function. This requires that, at the aggregate level, aid is provided to the point where its marginal benefit (including non-pecuniary effects, altruistic goals, and possible externalities) equals its marginal cost. At the same time, the marginal benefit to marginal cost ratio should be equalized across alternative uses of the aid funds. Donors' utility functions are highly complex, and include the wellbeing of the population in the recipient country as well as the level of activities in specific areas supported by taxpayers and bureaucrats in the donor nations (i.e. literacy, women's health, protecting the environment, improving governance, and so on). These utility functions also include distributional weights, and political considerations both in the donor and recipient nations. A direct way to incorporate into the analysis the ownership issue is by assuming that the "productivity" of aid depends on the level of "effort" exerted by the local government and community. Effort, in turn, will depend on a number of factors, including how well the donors' intentions and goals are understood, the beliefs of the recipient community, and the degree of participation of the local population in the design and formulation of aid programs. Greater ownership may reduce the volume of resources devoted to some of the donors' favorite projects, but it is likely to increase effort, and, thus, the effectiveness of those resources. By eliciting an increase in effort, a higher degree of "ownership" may generate Pareto superior outcomes, where utility increase for both donors and recipients." (p. 186-187)
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How Migration Shaped Our World and Will Define Our Future

Open doors or build walls? Immigration is one of the most politicized issues. Thus, the value of the book by Goldin, Cameron and Balarajan (2011): "Exceptional People – How Migration Shaped Our World and Will Define Our Future". Before delving into the detail, this book was likely written for an undergraduate audience – those moderately well read on migration will find the first two sections ("Past" and "Present") a summary of the literature. The third section ("Future") offers some interesting food for thought that draws from the literature. It is also worth emphasizing that this book was published in the year the Syrian Civil War started, before the large movements of people into Europe and well before Trump began promising walls and bans.

In the introductory remarks, the authors make clear their position: "International migration pays dividends top sending countries, receiving countries and migrants themselves. In receiving countries, it promotes innovation, boosts economic growth, and enriches social diversity, and is a boon for public finance. Sending countries have their economies stimulated by the financial and social feedback of migrant networks. Migrants reap the welfare benefits of higher wages, better education, and improved health when they move to relatively more developed countries. High rates of migration do, however, produce costs that are carried unevenly by particular localities and countries. These costs are often short-run, and they can be reduced through resource transfers and by building the capacity of public institutions to manage the social and administrative changes presented by higher rates of migration" (p. 5-6). Later chapters (e.g. 6: Impacts of Migration), confront assumptions and assertions with evidence, which has a tendency to emphasize the positive and downplay the negative, but nonetheless makes a strong and clear case for the important, and positive, role that migration has played, and will continue to play, globally.

The first part of the book ("Past") provides an overview of migration in human history. One notable point in reflecting upon history is the novelty of citizenship and immigration restrictions in the modern sense: "Throughout the development agrarian civilizations and the emergence of the first states and empires, borders were porous, and cross-cultural encounters were intermittent but far from uncommon. Cross-cultural interaction was a primary stimulus for the growth of commerce, the spread of ideas and religion, and the advancement of civilizations" (p. 28). Yet, the value of ideas moving with people began to have less of an impact because "somewhere around 1000 CE, world history began to shift from a pattern of divergence – or separate development of civilizations – toward a pattern of global convergence. Up until this time, migration had virtually always meant a permanent departure from the home community. Around the turn of the millennium, however, the accelerating tempo of cross-civilization commerce was launching transoceanic journeys and satellite communities that were the first tremors of globalization" (p. 32). Thus, a shift occurred from migration being an important way for ideas to move, toward migration as an important way for labor and innovative people to move.

It was not until recent centuries that the world of regulations, quotas and applications took shape: "The twentieth century would witness rising nationalism accompanied by a system of states increasingly capable of monitoring their borders. As migrant destination countries received people from ever more diverse locations – and often with fewer skills – native residents demanded greater management of migration flows by the state. Opposition to migration was commonly xenophobic or racist, and prejudices toward foreigners were inflamed by economic downturns and unemployment. The defense of perceived national interests through rising economic protectionism in the early twentieth century was extended to migration control" (p. 67-68). An interesting contribution this book offers, at least in my perspective, is how many nations (e.g. West Germany) used temporary worker programs, and much might be learned from these for the expansion of such programs in countries like Canada today.

Migration is "a key driver of human and economic development and that our future will be strongly influenced by policies regarding migration. How governments craft and coordinate migration policy will determine whether our collective future is defined by a more open and cosmopolitan global society or one that is unequal, partitioned, and less prosperous" (p. 2). What do the authors see for the future (from the vantage point of 2011): "all the evidence tells us that the first half of the twenty-first century will be characterized by more migration… By the middle of the twenty-first century, our societies will be more diverse than ever before" (p. 213). Yet, some caution of what this increase entails: "The dramatic forecasts of as many as 200 million "environmental refugees" by 2050 have been widely cited in official reports, but they have not held up to wider scrutiny. We believe it is unlikely that climate change alone will lead to a tenfold increase in the number of refugees and displaced persons, and doubling of the total number of migrations, as implied by these guesstimates" (p. 237). The authors note that the "'pressure points' include intercountry inequality and wage disparities, growing working-age populations in many developing countries, and environmental stress. More people will have the capacity and propensity to move because of economic growth in poor countries, urbanization, and rising education standards" (p. 241). Additionally, "developed countries are already witnessing a contracting in the supply of native low-skilled labor, a trend that will continue into the future… Without increased migration, these labor shortages will generate a long-term drag on the economies of developed countries" (p. 250).

What then to do – what policies and approaches do the authors recommend – on the question of open doors or walls? They conclude: "We propose five key principles that should guide engagement with migrants and migration by governments and international organizations: extend transnational rights; promote social and economic advancement for migrants; widen the umbrella of legal migration; combat xenophobia and migrant abuse; and improve data collection" (p. 272). Each of the principles is outlined in detail within the book.

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Seeing Like A State – Prescribing Society

Thought provoking quotes from Scott's (1998) Seeing Like A State: How Certain Schemes to Improve the Human Condition have Failed.

The rationale:

  • "The publicly stated rationale for planned settlement schemes was almost always couched in the discourse of orderly development and social services (such as the provision of health clinics, sanitation, adequate housing, education, clean water, and infrastructure). The public rhetoric was not intentionally insincere; it was, however, misleadingly silent about the manifold ways in which orderly development of this kind served important goals of appropriation, security, and political hegemony that could not have been met through autonomous frontier settlement." (p. 191)

The response:

  • "Rural Tanzanians were understandably reluctant to move into new communities planned by the state. Their past experience, whether before independence or after, warranted their skepticism. As cultivators and pastoralists, they had developed patterns of settlement and, in many cases, patterns of periodic movements that were finely tuned adaptations to an often stingy environment which thy knew exceptionally well. The state-mandated movement threatened to destroy the logic of this adaptation. Administrative convenience, not ecological considerations, governed the selection of sites…" (p. 235)
  • "What is significant, however, is that the modern planned village in Tanzania was essentially a point-by-point negation of existing rural practice, which included shifting cultivation and pastoralism; polycropping; living well off the main roads; kinship and lineage authority; small scattered settlements with houses built of higgledy-piggledy; and production that was dispersed and opaque to the state. The logic of this negation seemed often to prevail over sound ecological or economic considerations." (p. 238)

When it all falls apart:

  • "Lest there be any doubt that villagization meant central control and not simply village formation and communal farming, the sorry fate of the Ruvuma Development Association (RDA) settled the matter. The RDA was an umbrella organization representing fifteen communal villages scattered over one hundred miles in the Songea, a remote and poor district in the southwestern part of the country. Unlike most ujamaa villages, these were the spontaneous creation of young local militants in TANU. They began in 1960, long before Nyerere's policy declaration in 1967, with each village inventing its own forms of communal enterprise. Early on, Nyerere singled out one of the villages, Litowa, heralding it as a place where he could send people to see rural socialism in action. Its school, milling cooperative, and marketing association were the envy of neighboring villages. Given the high level of patronage and financial backing the villagers attracted, it is hard to tell how economically sound their enterprises were. They did, however, anticipate Nyerere's declared policy of local control and nonauthoritarian cooperation. The villagers were, on the other hand, independent and assertive vis-à-vis the state. Having won over many of the local party officials and having pioneered village cooperation on their own, they were not about to let themselves simply be absorbed into bureaucratic party routines. When each family in these villages was ordered to one acre of fire-cured tobacco, a crop they considered to be labor-intensive and without profit, they openly protested through their organization. In 1968, following a high-level visit by TANU's central committee, the RDA was officially banned as an illegal organization, its assets seized, and its functions assumed by the party and bureaucracy. Although it put into practice Nyerere's espoused goals, its refusal to fit into the centralized scheme of the party was fatal." (p. 233-234)

What is lost:

  • "The logic of actual farming is one of an inventive, practiced response to a highly variable environment, the logic of scientific agriculture is, by contrast, one of adapting the environment as much as possible to its centralizing and standardizing formulas." (p. 301)
  • "It goes without saying that the farmer was familiar with each of several varieties of any crop, when to plant it, how deeply to sow it, how to prepare the soil, and how to tend and harvest it. This knowledge was place specific in the sense that the successful growing of any variety required local knowledge about rainfall and soils, down to and including the peculiarities of each plot the farmer cultivated. It was also place specific in the sense that much of this knowledge was stored in the collective memory of the locality: an oral archive of techniques, seed varieties, and ecological information. Once the farmer was moved, often to a vastly different ecological setting, his local knowledge was all but useless." (p. 251)
  • "Diversity and certain forms of complexity, apart from their attractiveness, have other advantages. In natural systems, we know, these advantages are manifold. Old-growth forest, polycropping, and agriculture with open-pollinated landraces may not be as productive, in the short run, as single-species forest and fields or identical hybrids. But they are demonstrably more stable, more self-sufficient, and less vulnerable to epidemics and environmental stress, needs far less in the way of external infusions to keep them on track." (p. 353)

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Practicing "Development" (Ferguson, 1990)

Following an earlier post on the construction of "development", the following are thought provoking quotes from Ferguson's (1990) The Anti-Politics Machine on the practice of "development":

Context:

  • "The argument, in brief, is the following: "development" institutions generate their own form of discourse, and this discourse simultaneously constructs Lesotho as a particular kind of object of knowledge, and creates a structure of knowledge around that object. Interventions are then organized on the basis of this structure of knowledge, which, while "failing" on their own terms, nonetheless have regular effects, which include the expansion and entrenchment of bureaucratic state power, side by side with the projection of a representation of economic and social life which denies "politics" and, to the extent that it is successful, suspends its effects. The short answer to the question of what the "development" apparatus in Lesotho does, then, is found in the book's title: it is an "anti-politics machine," depoliticizing everything it touches, everywhere whisking political realities out of sight, all the while preforming, almost unnoticed, its own pre-eminently political operation of expanding bureaucratic state power." (p. xiv-xv)

On being (a)political:

  • "… just as the "development" problematic had misunderstood the economic structure of the "target population," in the same way it failed to appreciate the larger political-economic situation of the project itself as an instrument of the Government of Lesotho." (p. 193)
  • "… the project did end up hiring many local people for unskilled work, chiefly in road construction and similar activities. This labor, which at the project's peak amounted to many hundreds of jobs, was recruited through the Village Development Committees. It was seen in Chapter 4 that these Committees were political organs of the ruling National Party, and it should thus be no surprise to hear that project jobs were often alleged to be preferentially allocated to National Party supporters. When I asked the Project Coordinator about this in 1983, he expressed what appeared to be genuine ignorance of the political role played by the Village Development Committees, and said that he had never before heard that they were associated with the ruling party. The project hired through the Committees, he stated, because the Government had told them to. "We can't afford to get involved with politics," he said." (p. 244)

On being uninformed:

  • "…stock owners were usually reluctant to oppose the idea of improved stock in principle, but cited particular reasons why such a move was inappropriate for them. Several reasons were commonly cited. First, improved stock were said to be less hardy than the local animals - they would easily die off up in the mountains or when grazing got scarce. Secondly, they would need to be fed fodder, which would be very expensive. To grow one's own fodder, one would have to give up badly needed food… officials almost invariably recorded this opposition as a lack of understanding. Time and time again I was told by officials (whose own claims to power and authority, of course, rested on their education and technical expertise) that villagers who opposed their schemes lacked education, that they did not understand the proposals, that matters needed to be explained better." (p. 185-6)
  • "Project planners came eventually to realize the impossible position they occupied. The "technical measures" the project was competent to implement, a 1978 appraisal noted, were of "little significance" without far-reaching structural changes that were beyond the power of the project to effect." (p. 191)

On failure:

  • "The main reason for this was simply that the project had no legal power to restrict movement of livestock, limit numbers or restrict access to grazing. The planners seemed to have assumed that the project could divide up and regulate rangeland in any way it pleased, but under the laws of Lesotho it had no such right… In this context, the project had absolutely no authority to implement any of the grazing-control measures the early documents proposed." (p. 171)
  • "… the Principal Chief of Rothe gave the Thaba-Tseka Project permission to start a grazing association for owners of small stock on 1,500 hectares of rangeland near the new town of Thaba-Tseka. By 1979, the area had been fenced, and a CIDA evaluation was able to claim that "the introduction of the first Graziers' Association in August 1979 in the mountains of Lesotho is considered to be an outstanding achievement of the TTIRDP" (CIDA 1979: 57). By the end of the next year, the fence had been cut or knocked down in many places, the gates had been stolen, and the association area was being freely grazed by all. The office of the association manager had been burned down, and the Canadian officer in charge of the program was said to be fearing for his life. In 1982, when I arrived on the scene, the project was being described by project officials as "a complete disaster." (p. 171)

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Logan Cochrane

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