Fads, Fashions, Fluctuations and Functionality in Foreign Aid
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Transcript of Fads, Fashions, Fluctuations and Functionality in Foreign Aid
Fads, Fashions, Fluctuations and Functionality in Foreign Aid
Robert W. Herdt41st Annual Meeting of the Association for
International Agriculture and Rural Development
Washington, D.C., June 5-7, 2005
Fads, Fashions, Fluctuations and Functionality in Foreign Aid
• Aid is beset by fads and fashions – The Silver Bullet Syndrome– Politically driven from the top – Democracy– Effectiveness and impact > evaluation
• Functionality – Does aid work?
• Does agricultural aid work? What kind?
• Need more agricultural aid that works!
Fluctuations: Where does aid go? (from all OECD countries)
five year moving averages, million 2001 $
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000 Public services
Production
BusinessservicesMacroeconomicadjustmentCommodities
Disaster relief
Multisectoraland other
Functionality: Meta-analysis of Impacton rate of economic growth
• “First generation studies”: few variables, single equations relating aid to savings
18 of 39 studies showed positive effects• “Second generation studies”: Many variables,
several equations; relate aid to growth
40 of 72 studies showed positive effects• “Third generation studies”: multiple equations;
many countries, many years; many conditioning factors examined
Fluctuations: Aid to Agriculture (From all OECD countries)
• AgAid peaked in 1983 at $9 billion – Fell to less than $5.0 billion by 1997– Multilaterals went from $4 billion to $1.2 billion
• US aid to ag was 17.5% of US aid in 1980-81 and 3.9% in 2000
• Aid to agricultural research is 3-4% of total
• Agriculture sector has no convincing story
Fluctuations: Aid to ag sub-sectors OECD 5-year moving average, million $, deflated
0
5
10
15
20
25
30
35
1975
1978
1981
1984
1987
1990
1993
1996
1999
Policy, administration,services supportIrrigation, land resources,forestryArea development, cropproduction, generalLivestock, vet services,fisheriesResearch on crops,livestock, fish, forestsCredit, coops, landreformFertilizer, other inputsupplyExtension
Fluctuations: Agricultural Aid: US, Bilateral, World Bank
2002 constant $ million
0
2000
4000
6000
8000
10000
12000
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
IBRD IDA
DAC less US
US
Total
Fluctuations: US aid to Agriculture
0
200
400
600
800
1000
1200
Total current $
Total 2002 $
Current $ million
Functionality: Agricultural Growth?
• Multi-country studies (Hayami-Ruttan, etc) show
– Agricultural growth depends on:• Inputs – explain 25-40% of outputs• Intangibles – explain 50-75%
– Intangibles• Technology • Markets• Human capital • Institutions
Functionality: Aid impact on InputsWorld Bank irrigation and drainage
• 208 projects 1950-1993: $31 billion
• Summary evaluations– 70% to Asia (85% of irrigated land)– “benefits of most projects reached the poor” – median beneficiaries: 2 ha.– average ROR: 15%– 67% >10% ROR (satisfactory)– All bank projects: 76% satisfactory
Functionality: Aid impact on InputsWorld Bank multiple-goal water projects
• 336 projects completed 1988-99• Evaluated against multiple goals:
outcomes in agriculture and health, institutional development, sustainability– 1988: 40% satisfactory– 1991: 75% satisfactory– 1996: 53% satisfactory
• No reference to ROR or impact on agricultural or economic growth
Functionality: Aid impact on TechnologyResearch
• 3 to 4% of AgAid since 1980
• Few evaluations of aid for ag research– But: Many evaluations of agricultural research
And many assessments of CGIAR
• Alston et. al. meta-analysis of 292 studies reporting 1,886 rates of return – Median ROR on research was 48%– Median ROR on research+extension 37%
Functionality: Aid impact on Technology Crop varieties & CGIAR
• Crop varieties in developing countries– 8000 varieties released 1965-1998
• # releases/year in: 1970s 1980s 1990s
160 240 350• % of area covered: 1970 1980 1990 1998
9 29 46 63• 36% were CG crosses + 17% one CG parent
Agricultural technology can not be transferred across agro-ecologies
Farm sizeFinancing capacityRelative labor/machine costDealer support (engineering & marketing capacity);
Practical, widely usable machinery depends on:
AdaptationCapacity is vital
The six maps show the latest recommended planting week for corn hybrids based on their growing degree day requirement and climatological data for the state developed from 30 year weather station records throughout the state. Penn State | College of Agricultural Sciences | Department of Crop and Soil Sciences
1800 Growing Degree Day Corn Hybrids
2200 Growing Degree Day Corn Hybrids
Agricultural technology can not be transferred across agro-ecologies
Corn varieties
Functionality: Impact on Human CapitalHigher Education
• World Bank 68 institutions, 25 countries ’64-’90– Strong support in 1970s; apologetic in 1980s;
reversed to strongly positive in 2000
• USAID: 70 institutions in 40 countries 1960s $40 mil, India; $10 mil, Indonesia; $18 mil, Nigeria Support evaporated in ’70s: 18 in ‘74; 10 in ‘78
• Dozens of evaluations in 1980s (after the fact!): – India: >1000 MS& PhDs: teaching capacity,
not research– Nigeria:>44,000 students, lack financial support– Not Land Grant model – teaching base
Functionality: Impact on InstitutionsAgricultural credit 1950-80
• Major component US AgAid: cheap credit; fertilizer tied to credit; created new government agencies; required bank credit to agriculture
• Results: – OK initially, Price, Weather reverses => skyrocketing default– Governments intervene to ‘forgive’ loans– New agencies or programs initiated – Cycle repeated
• Evaluations: – “disappointing”; “serious default” “poor farmers unable
to get loans;” “lenders floundering” Adams 1984– “Impossible to assert that an intervention in the credit
markets is justified” Besley 1998 • Is “micro-credit” headed in the same direction?
Functionality: Impact on InstitutionsIntegrated Rural Development
• “Integrated” provision of advice, soil testing, farm planning, credit, fertilizer, marketing assistance
• # World Bank RD projects:
1971-73 1974-76 1977-79 1979-82 1983-85
5 17 24 21 18
49% successful; average 10.4% ROR• USAID: 1970s to 1987 over 100 IRD projects
1985 evaluation summary: “no longer encouraged”
too complex to manage; extra-institutional
Functionality: World Bank loans
Completion evaluations
% satisfactory
agricultural
% satisfactory
all loans
1970-73 75 78
mid-1980s 65 80
1996-99 67 71
2000-01 81 78
Africa projects generally low
Functionality: USAID Summary evaluation, McClelland,1996
Policy reform and planning
Projects to build capacity were generally successful – capacity was built
Rural roads, irrigation, electrification
Impossible to disentangle effects of infrastructure from the water, electricity or goods carried
Agricultural services Services like fertilizer sales and credit are best left to private sector; land reform best done by national government
Natural resources Five programs all had positive impact to different degrees – resources protected
Technology development and diffusion – research
Rates of Return generally very high – productivity increased
Aid to Agriculture: What works?
• Aid to agriculture “intangibles” speeds growth • Evaluations: Agriculture aid: effective as any • WORKS: Irrigation, Research, University
development (fellowships) • DOESN’T: Integrated rural/area development,
Subsidized credit, Land reform – Complex institutional requirements
• SHOULD: Price information systems, Cheap internet access, Cell ‘phones
Building capacity takes a long time and steady support
• Rockefeller Rice biotechnology program: 1986-2001• Strategic research $31 mil; Applied $45 mil; Fellowships
$26 mil; Meetings $5 mil; Management $7.5 mil
Crop molecular mapGenetic transformation “Golden rice”400 trained scientistsAnther-culture derived rice varieties Capacity in Asia for informed debate & policy makingOngoing work w/local $
Accomplishments
How to give effective aid
• Choose an appropriate strategy – 20%– Suited to the problem and available resources
• Carefully identify opportunities beforehand – 20%– But don’t let analysis to lead to paralysis
• Find trustworthy, able grantees – 25%• Provide the funds and get out of the way – 5%• Evaluation – 30% • Maintain support 10-15 years or more, until either
– The strategy has succeeded; OR– It becomes clear it will not succeed
• Universities do Education Best - Fellowships