How to predict someone’s chance of escaping poverty

And why international development efforts are not the determining variable

Ask for the passport. It better be Chinese. Eight in ten Chinese living in extreme poverty in 1990 no longer did so in 2010*. In Sub-Saharan Africa, not only were you probably still poor in 2010, but your children might be so as well (this excludes South Africa). The number of people living of less than $ 1.90 per day in the region increased by 40% from 1990 to 2010.

While the jury on aid and international development is out, it is remarkable that 73% of the reduction in global poverty over the last 20 years comes from a country where the government, not donors are in charge. This contrasts sharply with the trend in donor hotspot Sub-Saharan Africa.

Percentage of global population living of less than $1.90 per day at 2011 PPP. Source: http://iresearch.worldbank.org/PovcalNet/

Yet, this might be comparing Apples and Lemons. Trying to fix 47 countries from outside seems a little harder than fixing one, being in the position of government. The analytical challenge of what to do could already explain why progress sometimes doesn’t happen at lightning speed. One quite telling piece of evidence is coming from the World Bank, probably one of the more advanced institutions in results measurement: Attempting to properly evaluate its interventions to make sure that they are effective, the Bank is using over 40,000 indicators.


While that story might go some way in justifying why things aren’t getting better faster, it doesn’t really explain why donors tend to keep engaging with governments regardless of their commitment to development. Maximising bang for the buck by working in places focused on improving the lives of its people would be a simple first step to make the uphill challenge a little more manageable. However, the US provides foreign assistance to all countries it has subjected to sanctions except for North Korea (see here and here).

And even if it is hard to improve countries from outside, shouldn’t there at least be very significant progress towards development goals in countries where donor spending equates if not even exceeds government resources? The list of countries below makes one question whether that is really the case.

Official DAC flows as percentage of general government final consumption expenditure (current $). Source: http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators#

The example of Afghanistan is particularly interesting: Stakes are clearly very high, the US alone contributes funds equivalent to 75% of government expenditure. However, a recent audit showed that only one out of 127 USAID projects commenced since September 2014 actually used monitoring systems, allowing the mission to understand whether progress was being made. Maybe development doesn’t just have an analytical problem.

Instead, the function of government aid might be fundamentally misperceived. It is not free handouts to improve the global good but an instrument to further the interests of the taxpayers coughing up the money in the first place. Every dollar spent abroad will not be available for domestic priorities and hence needs a clear justification. Theresa May’s new government in the UK even suggested to leverage aid commitments for trade negotiations with emerging countries.

In the case of aid, the main justification seems to be influence abroad. In times where military interventions are not exceedingly popular, money is the remaining weapon of choice for realists believing in physical and financial forces as key levers for power. For the better or worse, money buys a seat at the table. Once aid is viewed through this lens, donors withdrawing from countries with little willingness to reform no longer makes a lot of sense. It may also explain the frequent focus on getting funds out of the door rather than ensuring high quality interventions which take much longer to design and require less money. Thus, it doesn’t seem so surprising that countries with large inflows of development money don’t necessarily make fast progress.


But even where donor interests and development objectives are aligned, it is not all that straightforward. Donors don’t have the mandate to just make development happen, they need to work with and ideally through the host government: As our world currently stands, nations are sovereign and have the last say as to what happens on their soil. That even applies to well intentioned aid agencies attempting to eradicate extreme poverty. There are obviously some limitations to sovereignty and the global community seems to largely agree on the responsibility to protect in case of genocide, but there is definitely no quorum for interfering with governments’ business because they are not disbursing aid money to maximum effect.

There are several very good reasons for the sovereignty of nations and I am not trying to argue against the former. The point here is that our current world order does not have improving lives for everybody, no matter what the trade offs, at the top of its agenda. Instead, there are numerous competing objectives. One of them is ensuring the sovereignty of nations. Another one, touched upon earlier, is the obligation of every government to serve its own people rather than the global community. A third one, flowing from our acceptance of capitalism, might be ensuring continued economic growth. Again, all of the above are very valid objectives in their own right. But once one embraces them, providing effective aid becomes a lot harder. Development is not just battling with politics but also some unresolved moral issues about the competing norms governing our current world order.


As such, those handling official aid money might actually be in a much less enviable position than obvious at first sight: Their ability to achieve what they initially set out to do (improve the lives of fellow human beings) is limited by the complexity of the challenge, political conundrums and global norms, while incentives to push other agendas can be quite strong.

There seem two ways to make development work a little better: For those on the inside, following David Miliband’s lead in working towards a convergence of development objectives and other goals (such as advancing the interests of tax payers in countries giving aid) might be a more realistic strategy than appealing to moral ideals we simply aren’t so sure about yet. But to achieve more fundamental progress, the moral foundation for development also needs strengthening. Maybe that requires frank conversations in the donor capitals of this world about what those moral principles we all agree on, are in the first place. Key questions such as how to trade off funding domestic priorities versus supporting other countries and how to balance support for better lives across the globe versus respecting the sovereignty of a nation still seem unanswered.

In the meantime, there might be no escape from the fact that today, governments of developing countries have the privilege of being first in line when it comes to improving the lives of their citizens.