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January 2013

Why Don’t People in Power Do the Right Thing - Supply, Demand or Collective Action Problem? And What Do We Do about It?

Duncan Green's picture

My last few days have been dominated by conversations around ‘convening and brokering’, including an exchange between assorted ODI wonks and a bunch of NGOs on the findings of the Africa Power and Politics Programme, and a ‘webinar’ (ugh), with our Latin American staff on the nature of ‘leverage’ (a closely associated development fuzzword). Last week, I set out the best example of this approach that I’ve found to date, the Tajikistan water and sanitation network. Today it’s some overall conclusions from the various discussions.

David Booth from ODI described the question he is trying to answer as ‘why don’t people in power do the right thing?’ He thinks aid agencies (both official and NGOs) have moved from thinking that the answer is building capacity in government (supply side) to strengthening the voice of citizens to demand better services (demand side), but argues that both approaches are wrong.

The mistake, he argues is seeing power as a zero sum game, whereas often the barrier to progress is better seen as a collective action problem: ‘doing the right thing involves cooperating with others and people aren’t prepared to take risks and bear the costs of working with others, unless they believe that everyone else will do so too.’

That requires a different approach, getting everyone into a room to build trust and find joint solutions to a common problem.

Multipliers in Europe and Africa

Shanta Devarajan's picture

IMF Chief Economist Olivier Blanchard created quite a stir at the recent American Economics Association Meetings when he presented his joint paper with Daniel Leigh that showed that, for 26 European countries, the fiscal multipliers—the amount by which output expands with an increase in the fiscal deficit—were considerably higher than previously thought.  Whereas these multipliers were previously thought to be around 0.5, they find them to be above 1.0.  Applying these figures to a reduction in the fiscal deficit (sometimes called “fiscal consolidation”), Olivier and Daniel suggest that people may have underestimated the extent to which European economies would contract in the wake of their fiscal consolidation.

Why Dismissing Water Supply through Water Vendors Is a Bad Idea

Tobias Lechtenfeld's picture

Water supply and sanitation services are important for a whole host of reasons – time saving, dignity, convenience, economic growth, – including of course, public health.  Yet it remains difficult to evaluate the extent to which those services actually do change health outcomes. Public health is affected by many variables, which interact in complex ways.

How can we cut the high costs of remittances to Africa?

Massimo Cirasino's picture

Read it in French, Spanish or Mandarin.

Migrant workers, earning money in jobs far from home, sent more than $400 billion to their families back home in 2012. Such remittances remain a vital source of income for millions of people in developing countries: Food, housing, education, health care and more are paid for every day by workers who earn money abroad. Through a simple and repetitive transaction – sending money home – those workers are really sending heart-warming feelings like hope for a better future and love of family.

The Unbanked Four-Fifths: Informality and Barriers to Financial Services in Nigeria

Michael King's picture

Estimates from the Finscope surveys suggest that in Africa, the proportion of the population without access to formal financial services ranges from 44 percent in South Africa to 92 percent in Mozambique (see Honohan and King 2012). Nigeria, the most populous country in Africa, lies at the higher end of this scale with 79 percent, approximately four-fifths of the adult population, estimated to be ‘unbanked’.

Despite economic theory and an increasing body of empirical research suggesting that access to savings, payment, and credit services facilitates consumption smoothing, helps insure against risk, and allows investment in education and other forms of capital, little is known about the relative importance of different barriers to financial services. Disentangling the roles played by demand constraints, such as income insufficiency, poor education, informality and financial illiteracy, and supply constraints, such as distance and high cost, is a crucial first step for attempts to design effective policies to broaden the reach of formal financial services.


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