Wednesday, 24 November 2010

Growth and development - for whom?

Today’s post is from Stephen Groff, Deputy Director of the OECD Development Co-operation Directorate.

UNDP’s Human Development Report, launched on Friday at OECD headquarters in Paris, stresses that today’s development challenges require a new outlook. There are no silver bullets or magic potions for human development. Rather than trying to replicate past experience, we need to focus on new opportunities. Rather than attempting to apply policy prescriptions, we need to adapt general principles and guidelines to the local context. And we must address major new challenges - in particular, climate change - and build democratically accountable global institutions to deal with them. Our analysis must go deeper, and we must consider carefully the multidimensionality of development objectives.

The Human Development Index was one of the first serious attempts to broaden the debate around just how we measure development. Over time, the development community has moved from an initial, rather simplistic stance of increased GDP as synonymous with development, to an array of indicators for ranking how countries and people are faring. In recent years, the debate has become much more pronounced with the Stiglitz-Sen-Fitoussi commission and the OECD’s work on measuring the progress of societies.

At OECD we recognise how important measurements are; they are, quite simply, our means of defining success. And, as such, we feel that it is vital to consider development outcomes in their multiple facets—not just poverty or income growth levels. Growth is a means to an end, and not an end in itself. The Human Development Report confirms this central truth, and also makes it clear that there is no single pathway to success. Each country must have the ownership, capacity and resources to find their own solutions to their own development challenges.

In this respect, it is very positive to see the G20’s growing focus on development. Having just attended the G20 Summit in Seoul, I was fortunate to witness global leaders confirming the challenge of closing development gaps as a core element of their economic co-operation.

This is good news for at least two reasons. First, the G20 countries are the largest global economies and major partners of low-income countries (LICs), and what they do matters a lot for LICs’ growth. Second, G20 countries bring to the development debate new perspectives and fresh ideas—in particular, they bring their own development experiences and skills, enriching the menu of options available to LICs for the design of their development strategies and policies.

In Seoul, the G20 adopted the Seoul Development Consensus for Shared Growth and an action plan comprising nine pillars to promote LICs’ growth. The G20 is uniquely placed to provide leadership in advancing the international development agenda and achieving the MDGs. They can do this by: improving their own policies; sharing their development experiences; providing assistance to build capacity; and offering strategic guidance to international organisations, thereby enhancing the effectiveness of the multilateral system. It is essential that all these work together toward the ultimate objective of improving the impact of G20 policies on LICs’ growth.

The OECD, like the G20, takes a comprehensive approach to development and to knowledge sharing, cross-fertilisation and policy coherence, placing development at the core of our work and engaging our full range of policy communities. With decades of experience in development, we are pleased to be mandated by the G20 to work closely with the UN, the World Bank and other international organisations to contribute to implementing the action plan. We believe that our contributions will help the G20 to identify what works when promoting growth and poverty reduction, to better assess the impact of G20’s own policies on LIC growth, and to find ways of maximizing positive impacts.

The G20 approach to development is underpinned by a fundamental belief in the core importance of growth. This is the right perspective as growth is a necessary component of development but it is also important to remember that the rate of poverty reduction depends on the pattern, and not only the pace, of growth. One of the key messages of the HDR—and one that I know the G20 will heed—is that growth does not automatically equate to other aspects of development. Nor is there a minimum threshold of growth required for countries to develop.

At OECD, we are keen to share our experience regarding what makes growth benefit the poor—something we have been exploring for years in the DAC and its Network on Poverty Reduction. More generally, we will continue to put a strong emphasis on measuring the progress of societies, because people, as the HDR says, are the real wealth of nations.

Tuesday, 16 November 2010

Mashed-up Indexes: nonsense or enlightenment?

Today we present an ongoing debate between Chris and Johannes over the past couple of weeks. It’s become more intense and fun since Martin Ravallion, Director of the World Bank's Development Research Group, put out a Working Paper highlighting the various difficulties, shortcomings and flaws of a growing industry of "mash-up" development indexes. Whereas Chris is pleased someone has voiced his own concerns about the value of these indexes in a systematic and rigorous way, Johannes is much less convinced about the overall negative assessment of composite indicators. He feels criticism of the many development-related composite indicators ignores their main strength, which is to put otherwise ignored development issues on the table for discussion by policy makers, rather than relegating them to academic discussions in peer-reviewed journals.

Witness the following imaginative coffee talk between them both:

JOHANNES: Hey Chris, have you seen this?! Finally, somebody – and not just anybody, but the head of research at the World Bank –put down on paper some of your reservations about all these increasingly popular composite indicators, such as the Multidimensional Poverty Index, the World Gender Gap Index, the Human Development Index, etc – you must be quite pleased, aren’t you?

CHRIS: Well, Johannes, as you're an admitted fan of these "mash-up" indexes, I am surprised to hear about this from you, but sure, I think it’s not only great but also timely. UNDP just launched last week its HDR report using Foster and Alkire’s new methodology for measuring international poverty and yes, I must say, I have problems with it. For sure, development doesn't depend on economic growth alone, so a single measure like GDP isn't sufficient to measure progress. But what use are development indexes or composite indicators at all, like the UN's Human Development Index , when we can’t even keep track of development progress along a few commonly agreed dimensions of progress, such as the eight goals that make up the internationally agreed upon Millennium Development Goals?

JOHANNES: Well, Chris, good point. I think we agree that measuring development is a messy business. As you know there are literally hundreds of measures used by international organizations, such as the UN, the World Bank, and the OECD to compare and benchmark countries along different dimensions of development. For example, the MDGs try to boil down progress on development into 8 simple measurable objectives. Eight goals seem easy enough to handle, right? But, if you dig a little deeper into the official UN documentation on the MDGs, you realize that the 8 goals are actually only the tip of the iceberg. Each goal is associated with up to six related targets. Each of these targets then is associated with up to seven related indicators. All in all, that means that to measure development using the MDGs, you need to keep track of eight goals, 21 targets, and 60 indicators! See link

Try explaining that to the average person in the street-- let alone, to a president or prime minister!

Thus the need for composite indicators. They allow different dimensions of development to be combined into one measure that is simple to understand and explain. And what's more and often forgot, is that these development indexes aren't made to please ivory tower Harvard PhD researchers; instead their main aim is to alert policy makers to important issues. Countries are ranked according to these indexes, which kicks off a healthy debate about issues that otherwise would not even be noticed. The media likes them so much that you can even get them interested in such boring topics as the time it takes to open up a business! Do you know that probably the most influential "mash-up" index in recent memory was IFC's Doing Business index? It's had real success in getting countries to pay attention to the concerns and importance of small businesses.

CHRIS: Ugh! Don't me remind me of the dark ages! Actually, I am surprised that you defend the Doing Business indicators so much as they clearly show how ideology can drive the composition of these indexes. In 2008, for example, the World Bank’s own Independent Evaluation Group criticized the indicators as being overly biased towards deregulation and having no statistically significant relationship with economic growth and development. I suspect this is why you can sometimes draw bizarre conclusions from these indexes, like the fact that according to the ease of starting a business indicator, Liberia ranks higher than Germany , where many would argue that the dynamism of its small business sector has helped make the country one of the strongest exporters worldwide.

JOHANNES: Okay, Chris, good point. Paying too much attention to the index ranking can miss the point. And ranking countries can be harmful if they focus debate on the ranking, rather than on the issue itself. What is really important is why the data makes one country score better than another in a given dimension. But the value of ranking as an advocacy tool shouldn't be underestimated. Countries don't like to see themselves ranked low on an index or composite indicator. Often it can be perceived as bad for business and investment in a country. In this way, index rankings can help policymakers focus on an issue of concern and try to build political will for reform to improve their country's ranking. This is where composite indicators can be particularly valuable by combining related measures so that an important issue, like, for example, gender inequality, is tackled holistically by policymakers and is confronted as a cross-cutting problem.

CHRIS: But doesn't it all depend on how the data is combined in a composite measure? Aggregation of only loosely related components in these indexes and the use of arbitrary weighting can make these indexes troublesome as well – you risk adding up apples, oranges, and cherries. If, for example, your index is based on the average of GDP per capita, educational attainment, and life expectancy, you are assuming that lack of economic growth can be compensated for by increases in education or increases in life expectancy. Not everyone would agree on such strong assumptions! How a composite indicator combines and weights its constituent parts is an important issue. Ideally, the weighting and combination of various indicators should be grounded in a theory of how the various parts work together. Put simply, you should only combine apples and oranges if you are interested in fruits as a whole! Establishing how a composite indicator should be weighted is therefore open to debate in a large number of cases (e.g., some people think fruit as whole is interesting, while others only find discussion of citrus fruits to be valuable!).

JOHANNES: Interestingly enough, there is increasing openness to discussion of the weightings and assumptions underlying composite indicators. For example, the Human Development Report 2010, has introduced new methodologies for examining the holistic nature of human development and poverty through it's new IHDI and MPI measures. One way to address these concerns is actually related to the word "mash-up" used in the title of Ravallion's working paper , which was borrowed from the web 2.0 jargon.

How to use today's technology to permit this greater openness is demonstrated by a web application used on the OECD’s Social Insitution and Gender Index’s “Build My Own Gender Index” website. Rather than rely solely on the weighting provided by the authors of the index, the site allows users to both drop and add as well as change components of the index and observe how the rankings change in real time. Users can also drill down into the underlying data for each country and see the qualitative research that informed the quantitative data.

CHRIS: I totally agree about the value of these online tools for making indexes more transparent, Johannes. The latest developments in these technologies will be the focus of a joint seminar organized by the OECD, World Bank and Statistics South Africa in Cape Town in December. Although the seminar is called "Turning statistics into knowledge", I think it will also be a good chance to discuss turning knowledge into "implementation and action”!

CG and JJ

Friday, 12 November 2010

Linking Migration and Development: What Comes after Puerto Vallarta?

The 4th Global Forum on Migration and Development (GFMD), held in Puerto Vallarta, Mexico, 8-11 of November, has been the opportunity for representatives from the civil society and governments to share and discuss on the migration-development nexus. But it is not sure that the vivid debates that have taken place since the beginning of the meeting really contribute to changing the preconceived thoughts that each delegate had previously to her arrival. As a matter of fact, the 2010 Global Forum has confirmed that we are still far from a global consensus on migration issues.

The non-binding nature of the GFMD

Since 2007, the GFMD has gathered representatives from the countries of origin, transit and destination to discuss best practices. It is not meant, however, to produce agreements or normative decisions. The non-binding nature of the Forum is by itself a point of disagreement between those who consider the flexibility of the process as a chance to move forward on such a sensitive issue as migration, and those who see it as an obstacle to concrete actions towards a more co-operative governance framework.

The role of the civil society

Even though Mexico decided to create a Common Space, where representatives from the civil society and governments have been able to share specific concerns, it is striking that the GFMD remains divided into two consecutive events: the Civil Society days (8 and 9 of November) and the Government days (10 and 11 of November). The fact that delegates from the two sectors barely meet is significant of the many discrepancies between them, in particular as regard the role of migrants, as well as their status and position in the society. In general, the delegates of the civil society complain that their recommendations are not really taken into account by governments.

The protection of the rights of the migrants

Mexico has decided to put the emphasis on the protection of the rights of migrants. But this is rather controversial. Indeed, most countries of immigration consider that migrants who try to irregularly cross borders violate immigration laws, and therefore cannot blame states for the difficulties they face doing so. By contrast, countries of origin, as well as most representatives from the civil society, reckon that by raising increasingly restrictive migration policies, countries of destination are responsible – even indirectly – for the violations of human rights that affect migrants.

The direction of the link between migration and development

In theory, sending and receiving countries share the same interest for migration and development issues. In this respect, the GFMD enables all parties to coordinate their policies to maximise the benefits associated with international mobility. However, in practice, there is a discrepancy on the direction of the link between migration and development. Indeed, while industrialised countries see development as a way to contain immigration, developing countries tend to consider emigration as an instrument for development.

The lack of discussions on the regulation of migration flows

The Global Forum, as its name itself denotes, focuses on the link between migration and development, but does not contemplate the regulation of migration flows. However, migration policies have been at the centre of many discussions, at least implicitly. Indeed, it is difficult to mainstream migration into development strategies while putting a brake on international mobility.

So, what should be the priorities of the next GFMDs and more generally of international discussions on migration and development?

· The dialogue between the representatives from the civil society and governments should be strengthened, by making the entire Forum a common space where NGOs, trade unions, employers and public authorities could share their experiences and work together towards a better governance of migration.

· It is time to stop disconnecting discussions on the link between migration and development and those on the regulation of migration flows. This implies a more co-operative framework, with binding negotiations on migration issues.

· Industrialised countries should acknowledge that they need foreign labour (not only qualified, but also unskilled and low-skilled workers), in particular to answer the challenge of population ageing. In this respect, political leaders need to explain the role and importance of immigration instead of playing with public’s opinion fears.

· As migration flows are mainly caused by public policy failures both in industrialised and developing countries, discussions on migration and development should be oriented towards a co-responsibility framework, which implies that public authorities take into account the spillover effects of migration policies on other countries.

· A governance framework based on co-responsibility should be centred around five main priorities: the protection of migrants, the accumulation of human capital, the promotion of financial democracy, the transfer of technology, and the strengthening of social cohesion.

A position paper on Linking Migration and Development: The Need for a Co-responsibility Framework will be soon available on the OECD Development Centre website.

David Khoudour-Castéras

Please feel free to comment below or contact me directly...

Thursday, 4 November 2010

What has the wiki team jumping for joy ?

Over the last year Wikiprogress has been monitoring the media coverage of the ‘measuring progress’ movement. Each month, news articles and blogs reporting on: dimensions of progress, new indexes, the limitations of GDP etc. are gathered in the Wikiprogress community portal. Last month there was an incredible amount of media coverage and we thought we’d share a few of the highlights with you:

The community portal is home to more than just media coverage. Have a look at a few new sections that were added last month:

If you come across a news article or anything you feel is community portal worthy, please add it by editing the Community Portal- remember you must be signed in to edit and if you add an external link you must answer a simple maths question after saving.

Lets see if we can make November better than October !