- Opportunities for policy intervention in fragile states are rarely straightforward
- How to safeguard the sustainable growth that can lift people out of poverty?
- CGD favours outcomes-based aid,where donors pay countries when they make real progress
On the face of it, it seems a little surprising that Nancy Birdsall has time to draw breath, let alone sit down for a conversation. As president of the Center for Global Development (CGD) she has no shortage of issues to focus on. Aid effectiveness, climate change, globalisation, trade, pandemics – and that’s not even including today’s most pressing issue: the ongoing refugee crisis from Syria and surrounding countries.
Such issues – deep-rooted, complex and multidimensional – have long taxed policymakers from countries near and far. Solutions do not come easy: they require patience, funding and a rigorous focus on outcomes and measurement. But that’s where the CGD comes in, providing crucial research and analysis on how policies and actions in the developed world impact those less fortunate.
From fragility to strength
Birdsall, a former executive vice-president at the Inter-American Development Bank and head of the World Bank policy research department, cofounded the CGD in 2001 but has been researching and writing on economic development issues for more than 25 years. During this period she has seen a variety of challenges emerge and fluctuate, but today she identifies the prevalence of “fragile states” as a particular concern.
“These are countries where there is conflict or which suffer from very low income,” she says. “They don’t have a taxpaying middle class that helps create accountable government. Over time you see in these states that appearances can be deceptive. They can seem to be doing OK but in a few years they’ve fallen back again. A country like Zimbabwe was looking like a star but under the leadership of Mugabe things started to fall apart.”
Another example, she continues, is Côte d’Ivoire, which was one of the better-off countries in Africa in the 1960s and early 1970s, but where ethnic and regional rivalries fuelled recurring episodes of political instability that worsened into outright periods of civil conflict in the 1990s and 2000s. The result was economic decline from which the country, under good leadership over the last five years, is only now beginning to recover. The same could be said of Honduras, Nepal, Egypt and Sri Lanka until recently; fragility seems almost inherent in low income itself.
There are a number of issues that make it hard to assist fragile states. The causes and consequences of state fragility differ, and this means that opportunities for policy intervention are rarely straightforward. More also needs to be done to improve the effectiveness of aid to fragile states, as well as working out when donors should shift from post-conflict to longer-term development assistance.
“There are many excellent efforts going on in these countries, but institution building of the kind that matters takes a long time and there is no easy recipe,” admits Birsdall. “This means that the development community has little grounding in what works and what has impact in fragile and post-conflict states and has to be prepared to recognise the risk of repeated setbacks – and to learn from failure.
Another big challenge is what she describes as “the underfunding of global public goods” – issues such as climate change, pandemics and so on. “Traditional donors have pretty much stayed with a country-based development approach, leaving these global spillover problems underfunded,” she says. “But an issue like climate change, for example, has potentially catastrophic effects for the poorest people and the most fragile states as well.”
Over the horizon
Birdsall, who is stepping down from the CGD this year but remaining as a senior fellow, says that development challenges will always be in a state of evolution. “Fast-forward 20 years and more donor money will be taken up in emergency relief and humanitarian aid,” she says.
“We don’t know what the next crisis will be, but what is on the mind of the big donors in Europe right now is how to finance programmes for Syrian refugees. A lot of the traditional aid money that donors assumed would be spent on aid programmes for poor countries is now being diverted to deal with the refugee problem. Although there remains the possibility that more developing countries will grow out of poverty, the business of aid will increasingly become about how to manage humanitarian crises and the aftermath of natural disasters.”
Another big development challenge is how to safeguard the sustainable growth that can lift people out of poverty. While progress has been made, she believes, there is no room for complacency. “The impulse triggered by the Millennium Development Goals, that aid needs to go to people, has been very healthy,” she says. “And this people-based approach, the recognition that girls need to be educated, children need to be protected from malaria, vaccines need to get out there has been taken up and championed by people like Bill Gates. But we now need to enter into a period of deeper thinking about economic development and how countries can build their economies to deliver growth – growth that reaches the poor and builds a middle class. Where will the good jobs come from in Africa and Southeast Asia in the new machine age? This is the type of question we need to focus on.”
Team up to shake up
A key priority for the CGD – and many others in government and the development community alike – is ensuring that the desired impact of aid spending and programmes is achieved: bang for the buck, in other words.
“There is now increased agreement that we have to measure outcomes,” says Birsdall. “Take education – it’s not about measuring the number of new schools or training new teachers, what we need to measure is whether children learned anything. We won’t get progress unless we understand why they learned more or less, and on what that depends: the school system, parents’ education, teacher attitudes and training. At the CGD we are very keen on outcomes-based aid – we call it Cash on Delivery – where donors pay countries when they make progress on something like how much children are learning, something they can measure and report to their own citizens and have country ownership of.”
This approach, she believes, maximises the effectiveness and impact of a programme but so, too, does the ability to collaborate and team up across borders. “One of the most successful developments over the last 25 years has been the interaction at global level, the global dialogue, which has led to a clear consensus in 95% of developing countries about a few fundamental macroeconomic issues. For example, there is now agreement that high inflation is a bad thing, especially for the poor, and that having a flexible exchange rate can be a good thing, making managing economic ups and downs easier.”
Such ideas, she points out, did not attract universal support from the start. “People used to put a whole load of things in a big basket and called it ‘the Washington consensus’ and it was derided,” she says. “But part of this consensus was that you don’t have growth and poverty reduction without sensible macroeconomic policies. This has been disseminated and become a norm among central bankers, finance ministers and heads of state – a process reinforced by globalisation and interaction at many different levels, such as the G20.”
An example like this offers reason to be hopeful that whatever crisis or problem emerges in the future, we need not panic. Collaboration and a pooling of expertise and resources offer us a pathway towards calmer, more prosperous times. Birdsall, who has made a habit of helping governments maximise their development impact, will no doubt continue to be a prominent voice in the arena today – and tomorrow.
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