Evaluation

Commenting on a post I wrote last month on randomized control trials (RCTs), Scott Guggenheim, a Lead Social Development Specialist at the World Bank, points out the practical value of this approach:

I've worked closely with several of the JPAL people to carry out randomized evaluations of our big community development programs in Indonesia and Afghanistan over the years. These evaluations have been extremely useful for improving our programs, and they've done it through findings that were both counterintuitive and which almost certainly could not have been obtained any other way. To cite one example, we did a big, RCT study on what reduces corruption in community programs. Whereas my entire team thought that increasing participation and transparency would be most effective, in actual fact increasing the frequency of locally publicized audits had far greater effects. That finding has now translated into a revised audit policy and procedure for $1.7 billion/yr in CDD investments. Surely this sort of work is both constructive and useful for development programs. Other RCTs are looking at what can improve community-state interactions in Afghanistan, MDG performance in Indonesia's poorest villages, and what incentives will lower police extortion. Again, surely these are positive and relevant -- and where it's important to be sure that we've nailed the right factors that explain them before we urge governments to translate them into national policies.

The whole comment is worth reading. Guggenheim is an authority in the field of social capital and community development, having done pioneering work in Indonesia via the Kecamatan Development Project.

Ziv on the India Development Blog makes the case:

While having MFIs hold deposits may be too drastic of a change to their business model for now, and it would introduce too much risk too soon, allowing them to offer a basic BC [business correspondent] service is an easy step that would have a large positive impact. As for accountability concerns, banks can use their discretion in selecting MFIs as BCs, working only with those having good track-records on process control. NBFCs are already entrusted with handling a large amount of bank cash through the SHG linkage framework, and misconduct has not emerged as a major interference.

Also see a related post on the PSD Blog about the efforts of the Gates Foundation to solve the microfinance savings riddle.

Responding to a post on Duncan Green's excellent From Poverty to Power blog, World Bank Chief Economist Justin Lin argues that his proposal for an updated version of industrial policy does not assume exceptional talent on the part of government institutions:

I certainly do not assume that “states possess a well informed, effective bureaucracy”. In fact development is a challenging process everywhere and all types of public policies and strategies—from education to health, from structuralist import substitution to Washington Consensus reforms—require some government capacity. However, the required capacity for the proposed Growth Identification and Facilitation framework is relatively minimal, compared to almost any other policy proposal: many of the specific instruments recommended in the paper are far easier to implement in low-capacity environments: setting up an export-processing zone for instance requires much less capacity than building infrastructure for the whole country as often advocated; implementing tax exemption schemes for a few years to attract investments in industries with latent comparative advantage is easier than collecting large tax revenues or repressing the financial system to subsidize nonviable firms for endless years in industries that are inconsistent with a country’s comparative advantage.

The WSJ reports on the troubles that seasonal rains have brought to northern India. The federal government had previously bought up large quantities of local wheat and rice, and now has no place to store it, so seasonal rains are washing the rice away or causing it to rot. One New Delhi-based think tank says that the solution is simply to bring in the private sector:

It is gross mismanagement and negligence...If only you had handed over the grain to the private sector, not a grain would have been lost. But now, it is nobody's grain.