Debates in Development: Comments

Last thursday I attended a development conference hosted by the Development Research Institute at New York University. The conference was centered around finding answers to what works in development. This conference was partially hosted by Bill Easterly who is a fierce critic of “top down” development policies. Policies that center around a person, presumably from the World Bank or Columbia, figuring out what works. A classic example of this is the millennium village project. You can read more about it here. The project represents a typical “top down”, presumably well thought out development project but does it actually work? Do the millennium villages actually reduce poverty? A couple of speakers gave evidence to the contrary. The case for the millennium villages is also not helped by the apparent lack of transparency from the organization behind the project.

So what actually works? Turns out its very difficult to figure out which development projects and ideas actually generate the desired impact in reality. The flavor of the month in figuring out “good” development projects centers around the use of randomized controlled trials (RCT’s). These are basically experiments aimed at identifying a cause and effect relation between development projects and development outcomes. If results from these trials are positive then they are supposedly good ideas and can be applied elsewhere

This method of experimenting with projects before wide application also sounds good in theory. There are however issues with this approach. It is very expensive and takes a long time to get results. A typical RCT costs millions of dollars, requires highly skilled and very scarce scientists, and takes about 3 – 4 years to get results. Is it really practical to spend so much time, effort and scarce resources ( the scientists) on these experiments? Prof. Easterly likens it to using gold to make kleenex.

There are also technical issues with RCT’s. The context of the experiment itself is very important. Just because an experiment worked in country A does not mean it will work in country B. The context also seems to be constantly changing. An experiment which worked in 2006 may not work in 2012 even in the same community. The sample sizes used in most RCT’s also seem to hardly ever be large enough to make the conclusions consistent. All these call into question the long-term usefulness of RCT’s as a strategy for development. But what alternative is there?

The trial and error method may be a credible alternative. A change of emphasis by governments and international institutions from trying to figure out solutions to empowering entrepreneurs to try their individual ideas. A dumb solution finding system. A bunch of entrepreneurs all working towards the goal of making profits are more likely to figure out sustainable ways to generate profits and wealth than governments and the like. Most of these entrepreneurs will probably not succeed but the few that do will lift more out of poverty than most government or international institution led projects could hope to. Entrepreneurial activity, after all, is the driver of development in most of the rest of the world. The recent progress in the reduction of poverty in Rwanda and Uganda have not been driven by international development polices but by the entrepreneurial activities of coffee farmers and distributors (Andrew Rugasira, Founder and Chairman, Good African Coffee, Uganda was present at the conference). Trade not aid is fast becoming a slogan for development activists perhaps highlighting a change of attitude. This trial and error method carried out by entrepreneurs probably stands a better chance of reducing poverty than traditional development projects.

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