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Duncan Green's blog

Why rethinking how we work on market systems and the private sector is really hard

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Whatever your ideological biases about ‘the private sector’ (often weirdly conflated with transnational corporations in NGO-land), markets really matter to poor people (feeding families, earning a living, that kind of thing).  But ‘making markets work for the poor’ turns out to be really difficult and, just as with attempts to tackle corruption or improve institutions, there is a rethink going on in the aid business. Critics of conventional approaches (of which I am one) argue that systems thinking and complexity both explain why a lot of previous approaches haven’t worked that well, and suggest some new ways to tackle the problem.

To catch up on some new research on all this, I spent a fascinating afternoon at DFID last week. The ‘knowledge hub’ BEAM Exchange (they don’t like to be called a thinktank) presented a discussion paper and technical paper on ‘rethinking systemic change’, along with a warts-and-all case study from Palladium on the difficulty of trying to put this into practice in a large market development programme in Uganda. Some highlights.

The discussion and technical papers reviewed the lessons from the 3 elements of New Economic Thinking: evolutionary economics, new institutional economics and complex adaptive systems. Eric Beinhocker’s influence much in evidence. The papers draw some useful and pretty challenging conclusions:

‘The aim of development must be to enhance the evolutionary process in an economy and create access to this process for all levels of the society, both politically and economically.’

Blockchain for Development: A Handy Bluffers’ Guide

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Top tip: if you’re in a meeting discussing anything to do with finance, at some point look wise and say ‘you do realize, blockchain is likely to change everything.’ Of course, there is always a terrifying chance that someone will ask what you actually mean. Worry not, because IDS has produced a handy bluffer’s guide to help you respond. Blockchain for Development – Hope or Hype?, by Kevin Hernandez, is the latest in IDS’ ‘Rapid Response Briefings’ series, (which itself is a nice example of how research institutions can work better around critical junctures/windows of opportunity). It’s only four pages, but in case even that is too onerous, here are some excerpts (aka a bluffer’s guide to the bluffer’s guide).

‘What is blockchain technology?

At its heart, the blockchain is a ledger. It is a digital ledger of transactions that is distributed, verified and monitored by multiple sources simultaneously. It may be difficult to think of something as basic as the way we keep and maintain records as a technology, but this is because record-keeping is so ingrained in daily life, albeit often invisibly. The ubiquity of ledgers is in part the reason why blockchains are held as having so much disruptive potential. Traditionally, ledgers have enabled and facilitated vital functions, with the help of trusted third parties such as financial institutions and governments. These include: ensuring us of who owns what; validating transactions; or verifying that a given piece of information is true.

Review of Doughnut Economics – a new book you will need to know about

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https://flic.kr/p/9XqtbSMy Exfam colleague Kate Raworth’s book Doughnut Economics is launched today, and I think it’s going to be big. Not sure just how big, or whether I agree with George Monbiot’s superbly OTT plug comparing it to Keynes’s General Theory. It’s really hard to tell, as a non-economist, just how paradigm-changing it will be, but I loved it, and I want everyone to read it.

Down to business – what does it say? The subtitle, ‘Seven Ways to Think Like a 21st Century Economist’, sets out the intention: the book identifies 7 major flaws in traditional economic thinking, and a chapter on each on how to fix them. The starting point is drawings – working with Kate was fun, because whereas I think almost entirely in words, she has a highly visual imagination – she was always messing around with mind maps and doodles. And she’s onto something, because it’s the diagrams that act as visual frames, shaping the way we understand the world and absorb/reject new ideas and fresh evidence. Think of the way every economist you know starts drawing supply and demand curves at the slightest encouragement.

Building State Capability: Review of an important (and practical) new book

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Jetlag is a book reviewer’s best friend. In the bleary small hours in NZ and now Australia, I have been catching up on my reading. The latest was ‘Building State Capability’, by Matt Andrews, Lant Pritchett and Michael Woolcock, which builds brilliantly on Matt’s 2013 book and the subsequent work of all 3 authors in trying to find practical ways to help reform state systems in dozens of developing countries (see the BSC website for more). Building State Capability is published by OUP, who agreed to make it available as an Open Access pdf, in part because of the good results with How Change Happens (so you all owe me….).

But jetlag was also poor preparation for the first half of this book, which after a promising start, rapidly gets bogged down in some extraordinarily dense academese. I nearly gave up during the particularly impenetrable chapter 4: sample ‘We are defining capability relative to normative objectives. This is not a reprisal of the “functionalist” approach, in which an organization’s capability would be defined relative to the function it actually served in the overall system.’ Try reading that on two hours’ sleep.

Luckily I stuck with it, because the second half of the book is an excellent (and much more accessible) manual on how to do Problem Driven Iterative Adaptation – the approach to institutional reform that lies at the heart of the BSC programme.

A masterclass on cash transfers and how to use High Level Panels to influence Policy

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One of the things I do in my day-a-week role at LSE is bring in guest lecturers from different aid and development organizations to add a whiff of real life to the student diet of theory and academia. One of the best is Owen Barder, who recently delivered a mesmerizing talk on cash transfers and the theory of change used by his organization, the Center for Global Development, which is one of the most effective think tanks around (although I don’t always share its politics….). Here’s the summary (and here are his powerpoint slides, if you want to nick them).

Owen chaired a recent high level panel on humanitarian cash transfers and presented its work in his talk. The traditional aid response is ‘people are hungry due to drought, flood, conflict etc → there isn’t enough food → we need to ship in loads of food’. Both arrows are wrong: Amartya Sen showed that the problem in famine is not lack of food, but lack of purchasing power among the affected populations – in nearly all of Ethiopia’s famines, the country has produced enough food to feed its people. The second arrow is wrong because giving people cash is usually a much more effective response than shipping food over from the US or wherever: the food often arrives too late, just when local farmers are recovering, and a flood of free food promptly destroys local markets. The evidence is now substantial:

  • Cash transfers are 25-30% cheaper than in kind aid (so more food per dollar)
  • When people are given in kind aid, they typically sell 30-50% of it to get the cash they need, at roughly 30% of the actual cost of the aid – a massive level of waste
  • When you ask refugees, they invariably say cash is better than stuff (eg 80% of Syrian refugees in Lebanon)

Plus it’s good politics – cash stimulates the local economy, so local people are less resentful of the influx of refugees, and is more respectful – refugees don’t all want the same thing; cash respects their right to make decisions about their lives.

20th Century policies may not be enough for 21st Century digital disruption

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It’s often a good sign when you rock up at a conference and hardly know anyone there. That was my experience at a recent, rather grandiosely-named, ‘Digital Development Summit’, hosted by IDS, Nesta and the Web Foundation, which clearly got people’s attention – the places were fully booked within a day of going live. Participants were diverse: developing country ministers, donor officials, tech company execs, AI pioneers, and civil society types like me.

The topic was ‘the future of work in the digital age’ (see the IDS background paper for more details), and I got to listen to a day of presentations, taking in both the substance and the mood of the discussion. This topic, more than most others, attracts both tiggers and eeyores (for Winnie the Pooh fans – optimists and pessimists, if you’re not). The tiggers bounce around telling stories of amazing start-ups in African slums, or how drones are about to start delivering aid; the eeyores sigh and say ‘every driver in America is about to lose their job to driverless vehicles, and developing country jobs are even more at risk’. Both were represented in roughly equal numbers (and some people seemed to move from one to the other at a startling rate). Who’s right?

What do aid agencies need to do to get serious on changing social norms?

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Earlier this week I spent a day with Oxfam’s biggest cheeses, discussing how we should react to the rising tide of nationalism and populism (if you think that’s a Northern concern, take a look at what is going on in India or the Philippines). One of the themes that emerged in the discussions was how to engage with social norms – the deeply held beliefs of what is natural, normal and acceptable that underpin a lot of human behaviour, including how people treat each other and how they vote.

It’s pretty common to hear progressive types (in which category I include Oxfam) worry that while they have been busy having geeky conversations on the evidence on this or that intervention/project, or the case for this or that policy change, they have ignored the tide of disillusionment with politics-as-usual that underpins the rise of populism. We need to engage the public in a wider conversation aimed at encouraging progressive norms, or opposing exclusionary ones.

Fair enough, but what struck me is just how much would need to change for that to become reality. What would a ‘guide to shifting norms’ cover? Here are a few thoughts; please add your own.

Analysis

There doesn’t seem to be much evidence on how to change norms. Eg what lies behind the increasing acceptance of the rights of people with disabilities? Or the age at which we deem chlldhood to end? Or even why dog owners routinely pick up their pooches’ pooh in my local park, something that was unimaginable a generation ago? How do deliberate attempts at change interact with the forces of demographic, technological or cultural change that also help drive norm shifts? This is one area where we really do need more research, both historical and current.
 

How can media inspire accountability and political participation? Findings from massive BBC programme

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bbc media action logoA recurring pattern: I get invited to join a conversation with a bunch of specialists on a particular issue (eg market systems). Cue panic and some quick skim-reading of background papers, driven by the familiar fear of finally being exposed as a total fraud (some of us spend all our lives waiting for the tap on the shoulder). Then a really interesting conversation. Relief!

Last week it was the role of the media in governance, a conversation at the "Ministry of Truth" BBC, organized by the excellent BBC Media Action, the BBC’s international development charity. Recording here.

What emerged was a picture of increasing churn and fragmentation – a media and information ecosystem that is casting off vestiges of linearity (a few big newspapers and one or two big TV and radio stations) and becoming far more complex (social media, online, local radio, ever more channels of everything).
 

How change happens (or doesn’t) in the humanitarian system

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I’ve been in Stockholm this week [February 13-17] at the invitation of ALNAP, the Active Learning Network for Accountability and Performance in Humanitarian Action, which has been holding its annual meeting on the banks of a frozen Swedish river. I was asked to comment on the background paper for the meeting, Changing Humanitarian Action?, by ALNAP’s Paul Knox-Clarke.  I read the paper on the flight over (great believer in Just in Time working practices….) with mounting excitement. It’s a brilliant, beautifully written intro to how change happens (or doesn’t) in the aid business, and to a lot of different schools of thought about change.

The paper starts off with the widespread frustration in the humanitarian sector. Despite dozens of new initiatives, impressive sounding statements and resolutions, and endless organizational change processes, ‘everything has changed, but nothing has changed’ in the words of one African humanitarian veteran.  Changes include an avalanche of information technology, the rise of cash programming, geopolitical shifts towards new donors, growth in the number and size of humanitarian emergencies, organizations and the budgets allocated to them. Yet still people ‘did not see these ‘big’ changes as having made a real difference to the lives of people affected by crisis.’ So the paper is as much as study in how change doesn’t happen as how it does.

The bit of the paper that really grabbed me was the succinct summary of three conventional models of change that underpin humanitarian thinking, and three new ones that could shed new light. None of them are definitive; all contribute to a deeper understanding.

What determines whether/how an organization can learn? Interesting discussion at DFID

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I was invited along to DFID last week for a discussion on how organizations learn. There was an impressive turnout of senior civil servents – the issue has clearly got their attention. Which is great because I came away with the impression that they (and Oxfam for that matter) have a long way to go to really become a ‘learning organization’.

So please make allowances in what follows for all the warm, cuddly areas of mutual agreement – I’m going to focus on the areas of disagreement, which are inevitably the most thought-provoking.

To mean anything, learning requires a change both in ideas and behaviours. So what were the theories of change that underpinned the approaches to learning in the room? I found it hard to pin down exactly – they seemed mostly tacit – but a lot of what I heard reminded me of the discussion at Twaweza a couple of years ago. For many present, the tacit theory of change seems to be ‘knowledge → learning → changed behaviours → changed outcomes’. Yeah right.

What we realized at Twaweza was that ‘it’s all in the arrows’. You need to unpack the assumptions and think about what needs to be in place for that theory of change to have any chance of resembling what happens in practice.

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