Noble intentions, short-sighted view

Political article
Three development economists were joint recipients of the 2019 Nobel Prize for Economics. Their approach and research methods are controversial, however.

It is gratifying to see the Nobel Prize for Economics going ever more frequently to researchers who address issues of poverty and development cooperation. Four years ago, however, the distinction went to Angus Deaton, a poverty researcher who is rather critical of the usefulness of development cooperation. This year, the prestigious prize is shared by Abhijit Banerjee, Esther Duflo and Michael Kremer. Their research shows that when properly done, development cooperation is eminently suited to the successful alleviation of poverty and need. For this year’s Laureates, the question of whether development cooperation serves any purpose whatsoever is simply the wrong one. Their research focuses on the question of which projects and programmes work best under what conditions.

In their famous book entitled “Poor Economics”, Banerjee and Duflo stress that when properly done, development cooperation needs no abstract theories and certainly no hard and fast rules that are supposedly universally applicable. What is needed is accurate knowledge of the specificities of local life and of the often culturally determined preferences of those experiencing poverty. Serious development organizations hold a similar view. They usually therefore maintain a long-term presence in their partner countries, they acquire detailed knowledge of the local context and in most cases work closely with local players.

The three 2019 Laureates regard Deaton‘s assertion that development cooperation relieves corrupt governments of their own responsibility to promote development as nonsense. In an interview with the NZZ Duflo said: “The idea that things must get worse so that virtually everything explodes and allows a new government to take power and a functioning democracy to emerge is moronic. It is also empirically untrue. The fact is that such a situation will simply continue to deteriorate.” But just like their predecessor, Banerjee, Duflo and Kremer also disregard the idea of development cooperation aimed at meaningful long-term social change and in the process helping disadvantaged groups to claim their political rights.

They rightly and importantly call for activities of development cooperation to be constantly and critically examined for their effectiveness and to be continuously improved. In the case of serious development organizations which for years have attached great value to impact assessments and lessons learned, they are preaching to the choir. What is problematic, however, is the preference of the three Laureates for experimental impact measurements by means of randomized controlled trials (RCTs). Ultimately, this method excludes randomly selected persons from development projects for the sole purpose of subsequently being able to measure whether they are actually worse off than project beneficiaries. This raises moral questions. Besides, in terms of methodology, it is disputed whether the outcomes of such experiments can be arbitrarily transferred to other regions and social contexts. The danger is that money which would otherwise have been allocated directly to poverty alleviation could go into comparative studies the findings of which cannot then be applied elsewhere.

The “randomistas” have no satisfactory answer to the question of how to measure the long-term social and political impacts of development programmes that contribute to the self-empowerment of partners. Their research focuses on projects that yield quick results or at best have medium-term impacts. Lasting systemic changes that even warrant being described as “development” clearly come up short.

But above all, the three researchers exonerate industrialized countries from any political responsibility whatsoever. Anyone consulting their publications for information regarding the way the unequal International power balance and unfair economic relations impact the development chances of poor countries, will be searching in vain. Nor would they find any reference to the consequences of global climate change that are compounding poverty. The three academics suggest that efficient development cooperation could save the world without further intervention. Within the meaning of the UN 2030 Agenda, however, sustainable global development requires of industrialized countries not just effective and sufficiently funded development cooperation but also equitable trade policies, courageous action against climate change and effective measures to combat the profit shifting and tax avoidance practices of multinational corporations.