UK Development Policy

The UK Labour Party recently set out its ideas on international development in a paper titled “A World for the Many, Not the Few.” There is much to like in the policy paper, including pledges to put in place an effective whole-of-government development approach, to advance DFID’s monitoring of whether aid reaches the most vulnerable and excluded, and to communicate more honestly with UK taxpayers about the successes, challenges, and complexities of development. 

But its core innovation is a proposed change in legislation to add reducing inequality to the required criteria for aid spending (alongside reducing poverty), while at the same time “reducing the importance of GDP growth.”

Jonathan Glennie, Director of the Sustainable Development Research Centre at Ipsos, offers a helpful mental model for the difference between reducing poverty and inequality:

Imagine two cars racing, one substantially ahead of the other. Now imagine the slower car speeding up—that’s poverty reduction. . . . If the car in front goes even faster—that’s widening inequality.

As Branko Milanovic has highlighted, global inequality has grown over two centuries, driven largely by inequality between countries (to use the racing cars analogy, if we imagine country populations are teams of cars, the largest gaps opened up between the teams of cars, with teammates bunched up together, rather than between cars on the same team). Since the 1980s, emerging economies have started to close the gap with richer economies through sustained economic growth, at the same time that inequality within some countries has widened. As levels of poverty have fallen faster than ever before in human history, there are fewer cars travelling at extremely low speeds.

In “A World for The Many, Not the Few,” Labour states that it would adopt a standard metric to assess progress on national inequality. The risk is that this metric will, perhaps inadvertently, characterise hundreds of millions of people who would be considered poor by rich-world standards as getting too rich too quickly. With poverty and global inequality still stark—700 million people remain in extreme poverty (below $1.90 a day) and the majority of the world’s population lives below $10 a day—should the UK really be shifting its focus away from poverty reduction, national development, and broad economic growth towards tackling inequality within poorer countries?

The Sustainable Development Goals includes a target on national inequality which, in motor racing terms, divides each country’s population between 10 cars and focuses on accelerating the last four cars to close the gap with the pack ahead. “A World for the Many, Not the Few” argues for “raising the bar on SDG Goal 10” by focusing on the gap between the last four cars and the car at the very front of the team (this is known as “the Palma ratio”: the ratio of income between the richest 10 percent and the poorest 40 percent of the population). The paper says that a Labour government would adopt this as the metric for assessing progress on inequality by its development partners. It would encourage all countries to pledge to halve their Palma ratio by 2030 and achieve a ratio of 1 by 2040 (Sweden, Denmark, and the Netherlands each have a ratio of 1).

The chart below shows the income levels of the top 10 percent and the bottom 40 percent together with the Palma ratios for 12 of the 20 largest recipients of UK bilateral aid.[*]

  The data shows that the poorest people are very poor, with average consumption amongst people in the lowest decile in DRC, Ethiopia, Kenya, Malawi, Sierra Leone, and Uganda less than $2 per day, and in the other countries a dollar or two more. But people in the top decile are not recognisably rich. In DRC and Sierra Leone, the richest 10 percent of people consume on average less than $10 a day, a level considered impoverished in rich countries. In Ethiopia, Malawi, Nepal, and Uganda, the mean of the top decile is only a few dollars more (these are purchasing power parity dollars, so it is not that the cost of living is less). In Bangladesh the mean income of the top decile is 20 percent less than the Asian Floor Wage, which its promoters argue is what a worker in a garment factory with a dependent family should be paid to have enough to live on (this tells us something about why living-wage campaigns have been so intractable, but it also makes clear that the threshold of the richest 10 percent in Bangladesh is a long way from the global elite).

The chart below shows income by decile for the same set of countries, with the UK included. In none of the 12 countries is the average income of the top 10 percent higher than the UK’s minimum wage.

  It is notoriously difficult to assess income distributions (particularly at the very top of the range), and some of these measures rely on surveys that are several years old. Still, the overall pattern is clear: while there will be a small proportion of very rich people at the top of the distribution, there will also be many more people within the top 10 percent earning less than the mean.

Lant Pritchett points out something similar in relation to the quality of education globally. In most developing countries it is not that “the rich get a good education and the poor get a bad one” but “the rich get a bad one and the poor get none at all.” For example, in standardised educational test scores, 15-year-old students from Thailand, Mexico, Mauritius, and Chile fall below the 20th percentile of students in Denmark. Students from Qatar, Ghana, Saudi Arabia, and El Salvador fall below the 5th percentile when compared to their counterparts in Australia. 

“A World for the Many, Not the Few” argues that “what people need and want in the UK, people need and want everywhere: our needs, our rights and our struggles to achieve them are one and the same.” Yet at the same time it suggests a development target which counts improvements in the living standards of people who would be considered amongst the poorest in the UK as eroding progress, suggesting that their advancement should be slowed down. What moral authority can the UK have to tell people whose incomes are barely comfortable, and whose priorities are overwhelmingly for jobs and economic growth, that their ambitions and aspirations should be put on hold in pursuit of “happier and more harmonious societies”? 

There are certainly reasons to be concerned with inequality within countries. Angus Deaton argues that we should view inequality not so much as a cause of economic, political, and social processes, but as a consequence. Some of these processes are good (areas of economic growth in poor countries), some are bad (uneven access to opportunities), and some are very bad indeed (extractive political institutions and monopoly rents). He argues for sorting the good from the bad in order to understand inequality and what to do about it. As Nancy Birdsall highlights, a rising number of people with steady jobs, a secondary education, and a stake in rule of law and protection of private property rights is a development good, not a development bad, not only for those people directly, but because growth of a middle class in emerging economies has been intimately linked with poverty falling.

DFID should support efforts to address damaging causes of inequality—rigged markets and politics, rent extraction, lack of political voice and agency—and work to increase the productivity and market power of the poor and the emerging middle of workers, traders, and consumers. But if DFID manages-to-the-metric, it might mean refusing to support any investment that would have a first-round effect of increasing incomes in the top decile, including improving the lives of Malawians earning more than $10 a day or Sierra Leoneans earning over $5. It might also mean prioritising projects supporting the 40 percent poorest in Kenya over the poorest 40 percent in the DRC, because even though they are richer, their country’s Palma ratio is higher.

More broadly, the goal of achieving some mathematically Scandinavian level of equality in poor and middle-income countries, and the general disparagement of economic growth in the paper, suggest a zero-sum view of prosperity, which is not in line with people’s aspirations, or their possibility. As Simon Maxwell notes, the paper focuses on the “narrative of predation” but misses out on a companion “narrative of accumulation,” by which countries and people prosper: trade, technology, migration, and mobilisation of finance. Migration, probably the most powerful lever that developed countries for enabling poorer people to improve their lives, barely gets a look-in. As E. Glen Weyl highlights, much migration exacerbates inequality both in sending and receiving countries, and yet reduces global inequality. It is a difficult political issue, much harder to communicate than the story of venal global elites, and it is a gaping hole in Labour’s articulated vision of a fairer world.

Domestic taxation, public services, and redistribution are important, and the consensus, (including from researchers at the IMF) is that moderate redistribution does not impede growth. But it is easy to fall into an overoptimistic vision of what can be achieved through taxing the rich and domestic redistribution. The truth is the many are too poor, the middle too few, and the elite just too tiny for evening up income levels while “reducing the importance of GDP growth” to be the answer for broad prosperity in poor countries.

The Secretary of State for International Development, Penny Mordaunt, is giving a big speech this Thursday, setting out her strategic directions on development. She has already impressed many people in development by the way she has embraced the mission of the department while challenging some of its ways of working. She has also won plaudits for her deft handling of the important issue of safeguarding in development.

What I’d like to hear this week is how the government’s new “Fusion Doctrine”, launched last week in the National Security Capability Review, applies to the government’s development objectives.

The “Fusion Doctrine” described in the capability review is that all the levers at the government’s disposal, including aid, should be available to secure the government’s economic, security, and influence goals.  It is represented in the review in the diagram below.

In a second blog post coming soon, I will be considering the trend to allow other government departments to manage an increasing share of British aid, and the questions this has raised about the quality of aid. In this post, I want to deal with a different, even more important, point: a whole-of-government development strategy should mean more than letting the whole of government spend foreign aid.

I’m all for joining up all the government’s instruments and levers to achieve the government’s economic, security and influence goals. These are legitimate and important goals for any nation, and if the manner and scope of our development policy can help us achieve them, then this will be good for our country, and will build support and legitimacy for development cooperation.  There is nothing wrong with identifying and pursuing “win-win” policies which benefit us directly at the same time as pursing our development goals, though of course we must be vigilant to ensure that the reasonable pursuit of our national interest does not lead us into significantly less effective development policy.

It is not surprising that the National Security Capability Review should focus mainly on how the instruments of government can achieve the government’s security objectives. I don’t have a problem with that. I hope that Penny Mordaunt’s speech on Thursday will build on that, by explaining how the coherent and sensible concept of the Fusion Doctrine applies also to the government’s development objectives. 

If we apply the Fusion Doctrine to development we might expect to hear about how government trade policies will open our markets to producers in developing countries and promote high standards in supply chains to improve the well-being of workers there; how we will meet our international commitments to accelerate the transfer of technology and knowledge to developing countries, for example through changes to intellectual property laws; how our tax authorities will cooperate internationally to increase taxes paid by individuals and companies to the governments of developing countries; how we will help to prevent the outflow of capital from developing countries by tackling illicit financial flows; our commitment to a rules-based international system with appointments to key institutions based on merit; working to prevent the spread of antimicrobial resistance, including by changing our own use of antibiotics for humans and livestock; isolating corrupt and unaccountable governments from access to our economic and legal institutions; how when we have control of migration policy we will use it to accelerate development by increasing the circulation of skills and knowledge, strengthening remittances, and creating legal pathways for migrants escaping poverty; how our military capability will be used for UN-approved peacekeeping operations and to interdict breaches of international law on human trafficking and sanctions busting; how our new sanctions legislation will be used to promote democratic accountability; how we will improve our regulations intended to prevent money laundering so that they do not lead to hollowing out of financial systems in the poorest countries; and so on.

None of this is yet in the Fusion Doctrine, at least as articulated so far in the national security capability review. That review focuses on the impact of government policies on UK interests, ignoring their wider impact. To give one small example, the sentence on arms control reads:

We will continue our work to choke off the supply and availability of illegal firearms to prevent their use by criminal or terrorist groups in the UK.

There is no mention here of limiting conflict in other countries, including in developing countries, by better controlling the sales of arms from Britain and other countries.  As far as the National Security Capability Review is concerned, the Fusion Doctrine will help prevent criminality and conflict in the UK, not the rest of the world.  That’s understandable in a statement about national security, and I realise that the government is determined to justify its aid spending robustly by describing clearly how it protects Britain’s national interests. But from reading the capability review, you could be forgiven for thinking that international development is merely an instrument for British national security, and not also one of the government’s objectives in its own right. Of course it is—or should be—both.  And what’s more, given that development does contribute to Britain’s national security, then a true fusion would surely ensure that as many levers as possible are being pulled to accelerate it. That is why I eagerly await the Secretary of State’s opportunity next week to fill in the parts of the picture which were missing from a security-oriented review.

The Labour Party has set out a promising vision of joined-up government in its recent policy paper, A World For The Many Not The Few, launched on 26 March:

We will ensure that an annual whole-of-government plan is in place across government departments, setting out development objectives for the year with measurable indicators, and signed off by the Secretary of State for International Development. Each government department will be accountable for delivering on their objectives.

That sounds a lot like what you would get if you applied the fusion doctrine to development. (To continue with the example of arms sales, the Labour Party policy statement pledges “we will ensure DFID plays a proactive role on the Export Controls Joint Unit, the government body currently responsible for sanctioning UK arms sales.”) Of course, as Mario Cuomo observed, you campaign in poetry but govern in prose. When in government, development goals are often given low priority compared to other, more politically pressing concerns. The last Labour Government also established the principle that DFID should be consulted about arms export licences, but over the thirteen years when Labour was in power, DFID never once successfully contested the issuing of an arms export licence.

So I hope we will soon hear something similar from government ministers, including the Development Secretary. The government should make clear that international development is indeed a goal in its own right and not merely an instrument for our security, economic, and influence objectives, and that the Fusion Doctrine will be applied in the same way to this important goal, just as it means that development policy will be applied to other government goals. Distributing aid budgets around Whitehall is not a good substitute for a joined up and coherent government using all of its instruments strategically in pursuit of all its goals.

In my next blog post, I look at how the Secretary of State might address growing concerns about how the government can ensure that aid spent by other government departments is effective and coherent.

Here are a few facts:

These facts, and the many others like them that have emerged from research, reveal the extent of the global learning crisis. They are at the heart of DFID’s new education policy refresh, “Get Children Learning.” The cost of ignoring or ineffectively acting on the learning crisis is high: if we do nothing, half of the world’s children and youth will be out of school or failing to learn by 2030 (The Learning Generation, Education Commission).

The good news is that stakeholders are taking notice. DFID’s new education strategy to tackle the learning crisis prioritizes a pivotal part of any well-functioning education system: good teaching. It is obvious that any attempt to reform education systems cannot work if it does not generate effective teaching practices, which requires skilled and motivated teachers in the classroom.

While good teaching is a key component of any education system, available statistics on teacher ability and motivation paint a dismal picture. The Service Delivery Indicators (SDI) from Africa show that a good fraction of existing teachers are functionally illiterate and innumerate. Data from Nigeria suggest that less than 6 in 10 teachers could do a simple division problem (something almost 90 percent of teachers in Kenya could do). Statistics on classroom effort aren’t encouraging either.

DFID is right to focus on teachers who can and do teach well. However, as the DFID policy notes, creating accountable and effective systems that recruit, retain, and motivate good teachers requires system-level reform. For example, often teachers are judged based on simply pushing kids through grades, rather than based on whether the children actually learned. Parents, on the other hand, rightly expect their children to come out of early grades being able to read, write and do simple math. As the recent World Development Report 2018 on education and the RISE accountability framework emphasize, the alignment and coherence of the objectives of the various stakeholders is key to effective systems. 

Based on findings from the United States and evidence from Pakistan, we know that there are big differences in the learning progress of students with different teachers. Estimates of teacher-specific “learning value-added”—the contribution the teacher makes to student learning—show huge, persistent differences across teachers. However, the research also finds that these measures of “teacher value-added” have very low association with “thin” observables about teachers, like age, seniority, sex, and formal qualifications. The “thin” versus “thick” distinction builds off the anthropologist Clifford Geertz’s notion of “thick description,” the political scientist James Scott’s distinction between metis (practical knowledge) and techne (technical knowledge) in his book Seeing Like a State, and economists' distinctions in principal-agent models of the ease of “contractibility.” Quality teaching is a “thick” practice; it takes the application of practical knowledge.

But many education systems are hierarchical bureaucracies that manage teachers exclusively around “thin” characteristics and observables, such as formal qualifications, training, seniority, etc. We don’t want to fall into the trap of defining “quality teachers” based on a set of thin bureaucratic criteria that ignore quality teaching. Quality teachers are those who practice quality teaching.

Creating well-functioning education systems that support good teaching will be complex and challenging. The goal of RISE, an education research programme initiated and funded by DFID (along with DFAT), is to understand how to create systems that deliver learning for all at scale. DFID’s education policy is right to note that there are useful lessons to be learnt from other countries. For example, Vietnam outperformed many wealthy countries, including the United States, on PISA (Programme for International Student Assessment). Recognizing this, RISE has commissioned research in Vietnam to understand how the country “got it right” despite facing many governance and poverty-related challenges that many other developing countries also face.

The future is being written today in the world’s classrooms and there is urgency to actively address the learning crisis. Prioritizing investments in good teaching, recognizing that the spread of effective teaching practices is a system issue, and, that as a system issue, achieving good teaching will take much more than just meeting narrow “thin” qualifications for teachers, are big steps in the right direction for DFID education policy.