Following the presentation of general principles (NdJ nº24), the macroeconomic approach (NdJ nº25) and the concepts of harmonization-alignment-ownership (NdJ nº26), the question of the effectiveness of international aid is here taken up with the assistance of concepts from institutional economics. The example given is that of the Sahelian economies with a dominant agricultural sector, but the concepts and elements presented can be applied to a large number of situations.

As regards analysis of the effects of international aid, institutional approaches offer good tools when it is a question of describing situations far from the hypotheses of the “pure and perfect competitive market”, where the statistical systems are too fragile for the modeled methods to be useful. The most attractive approaches concern the question of “social learning”, a concept introduced into the economics of development by Hirschman in 1958 and frequently mentioned by J. Stiglitz [1], for example.

The analysis presented below provides answers to two questions:
 What are the situations in which aid intervention offers the greatest sectoral economic growth potential?
 What are the “criteria” of effectiveness for reaching these sources of growth?

1. Analysis of Situations: Limiting Factors and Sources of Growth

Several international analyses [2] lead one to think that numerous African economies, when they are not affected by acute political turmoil, present a solid internal, more or less dynamic, state of equilibrium, but one that is blocked at an abnormally low level (“Low Level Equilibrium Trap” or LLET) in relation to what general macroeconomic conditions would allow in comparison with other countries of the world. From these considerations, it is concluded that there must be specific “limiting factors” that are essentially institutional. “Development” is thus the elimination of these limiting factors, starting with the most severe.

Do limiting factors always exist? A priori yes, but the margin of gain offered by dealing with the most constraining of them is going to fall, as each one is resolved. When several factors appear constraining or when the most limiting factor is a basic macroeconomic or demographic datum, the concept is no longer relevant, being replaced by the idea of sectoral equilibrium. This is, for example, the case with the grain market in West Africa beginning in the 1990s where, since the restructuring of the 1980s, production is limited only by the level of general demand.

On the other hand, situations exist where a particularly weak factor directly determines (even if other difficulties exist in other respects) most of the production parameters, while demand is far from being saturated. This is, for example, the case with the meat market of certain African countries, where this weak point is animal health, itself conditioned by the status of the veterinarian network. The difficulty is institutional: the effective change from a broken down public system to a viable and regulated private profession opens to a large number of stockbreeders equitable access to quality veterinary services at less cost. On this “point of detail” (veterinarians represent hardly more than a few hundred persons in a large Sahelian animal breeding country) directly depends the growth of one of the main sectors of the national economy. This is a true institutional blockage, not dealt with sometimes for dozens of years, and a true source of rapid growth.

Institutional failures are difficult to eliminate because they result from socially accepted rules of collective behavior, which are based on solid justifications. The justification is essential: it is the common reference to what is just, that which one can justify socially. This explains the importance of collective representations.

For example, many veterinarians, public as well as private, have a purely commercial perception of veterinary work, the private ones accusing the public ones of unfair competition, because the latter are subsidized. That is true. But is it possible to change their general view of the profession? Ideas of public service, regulation, control or even technical competence and clientele are not widespread. The public veterinarians sabotage privatization, the private ones demand a captive clientele.

To eliminate blockages and move away from the LLET, the country must adopt certain new behaviors. That is why a coordination authority must, in principle, impose a restrictive rule for everyone. But these new behaviors will be much more lasting if they are based on learning new collective representations. When, as in the case of the veterinary profession in several African countries, the coordination authority is weak, the learning process becomes the only way to leave the LLET behind.

This learning is all the more difficult since the analysis of points of blockage comes up against behaviors that are designed to avoid unpleasant questions that might upset internal relations of power and domination. The avoidance of problems is a widespread strategy.

Also, such learning is, inevitably, not spontaneous (under the pressure of necessity alone). The use of a “facilitator” can be useful, with “meeting places” where normal routines of avoidance are circumvented.

Such a learning facilitator can be the State, which, in principle, has political tools for this purpose (just as for its role as coordinator, even simple organizer, of the market). But in reality, the African State frequently plays none of these roles, itself relying on a collective representation that justifies predatory behaviors and behaviors for maintaining the status quo.

Encouraging the role of collective learning leader (“facilitator” State) can, nevertheless, unblock the situation (or speed up an unblocking that otherwise could be long and uncertain), insofar as this role of instructor can be delegated to an intermediary, a mediator, a learning catalyst. The State apparatus is thereby included as learner in the learning process. Hence an improvement in its various roles is possible, as is an unblocking of some limiting factors and access to sources of growth.

2. Criteria of Effectiveness for Interventions

Does international aid, in certain forms, have the power to act as an incentive to changing collective behavior? Can it constitute this delegated facilitator, this learning catalyst? It would then have a source of considerable effectiveness within reach. A study carried out at the beginning of the current decade with respect to aid interventions in West Africa proposes five key factors operating in this context. [3]

Point nº1: what is the targeted area? Is this area a limiting factor of the first order for economic development? Does its possible resolution enable to benefit from sources of rapid growth (or even to avoid a disastrous crisis)? If this is not the case, spectacular results should not be expected. This was one of the reasons for failure of the large agricultural popularization projects of the World Bank in Africa, the PNVAs (National Agricultural Extension Programs), focused for the most part on grain production in traditional environments.

This question returns, of course, to the detailed, diverse and changing local diagnostic capabilities of the aid agencies, since the true limiting factors should be sought in the details. Thus, even if it is true that the stock breeding sector offers a true source of growth, it is again necessary to identify within that sector the health aspects, then the question of the viability of private veterinarians.

This also returns to the question of the geographical, and not only sectoral, area. A very local intervention can have, from the very beginning, a more systemic aim, which it develops or validates. The mechanism of scaling (“scaling up”) must then be specified.

Point nº2: is the targeted area institutional in nature? Many limiting factors are, at least in part, of this kind. Interventions (particularly in the form of budgetary aid) that neglect or refuse to take into account the behavioral aspects of the State apparatus deprive themselves of a strong potential for results.

Moreover, the absence of an institutional aspect does not mean the absence of an institutionally caused effect, if only by the choice of contracting authority (explicit or implicit). The risks of perverse effects from financing that ignore questions of an institutional nature are significant.

For example, some pastoral management programs, ordinarily carried out by public services, and neglecting delicate land ownership questions, among other things, have held back the organization of animal breeders and provoked serious local tensions.

Point nº3: does the intervention truly intend to change something, at least in the medium term? Does it aim at a redefinition of the roles of the participants, a different division of public resources, a change in the balance of power? Or does it aim at responding to the wishes of the dominant group, reinforcing existing structures, improving operations without modifying representations?

Durability should also be taken into account: should the intervention finance the additional and temporary cost of a change or should it be a substitute for long-term recurrent costs, thus preventing the adjustments from being made? And is the intended change viable in the end without support? Or, conversely, is support really assured in the long term, without continual precariousness?

For example, the African PNVAs had the aim of giving a boost to the popularization apparatus, but by preserving it exactly as it was, at a largely “unsupportable” cost, and not by creating a new type of relationship between public authorities and producers, adjusted to the financial resources of the country, among other things.

Point nº4: do the means implemented express this will for change in practice? What is the place of the State apparatus in the intervention plan? Who are the real partners for the project? Is it only the Administration that makes the decisions for allocating resources or do the beneficiaries also have responsibilities? To whom is the money and support in kind given?

The question of the “project structure”, whatever its form, is here of great importance. Does it exist? Is it distinct from the ongoing actor(s) supported by the intervention? Does it have sufficient independence from the dominant actors, particularly from the State, to play a “facilitator” role for all the participants, including public services? Is it competent, does it have an outside perspective on the local power games? Does it benefit, if need be, from international technical assistance, guarantee of a certain independence from local problems? Does it benefit from attention, support, even protection, and intermediaries from the donor agency? Can it be withdrawn without what it has set up coming to a standstill?

In the dynamic of the process of harmonizing aid, the emphasis is put (cf. the Paris declaration of March 2, 2005) on reducing the use of organizations for implementing projects, which, it is true, sometimes are “parallel administrations” that are harmful to the operation of institutions and whose future is often problematic. On the other hand, organizations responsible for interventions that aim at institutional reforms or privatizations, if they are incorporated into the State apparatus, without independence and significant “political” support from their donor, modify no behavior.

Point nº5: does social learning seem to take place? Do “meeting places” exist within the framework of the project? Are they open to the real actors concerned, with a method of appointment independent from the administration? Are they a place for making real decisions on important subjects, including the financial aspects? Or, on the contrary, do the important decisions ultimately fall to the State apparatus or the donor, even “representatives of the beneficiaries” named by the administration?

Do they open the way, for example, to the negotiation of public policies by all of the participants concerned with a project? Do they make it possible for the collective representations of the State and its role in development to evolve?

Are these places ongoing? Do they make it possible to go beyond behaviors for avoiding conflict and maintaining the status quo? Do they create rules of decision-making that contain a project for learning new behaviors?

3. Is Aid Effective?

These five elements were used as an analytical grid, applied to 23 interventions at the end of the 1990s, all linked to the rural sector in West Africa and representing $166 million. Only seven of them, totaling $36 million, responded positively (at least partially) to the five groups of questions, around 20% of the total.

This 20% is both low and high. Low, because it means that 80% of the aid is presented more as assistance to the institutional status quo, reinforcing blockages that explain the LLET. But it is also a lot because:
 the institutional results obtained can be the effect of spectacular economic results (a relatively small veterinary project, between 1995 and 2001, was, according to an independent evaluation, at the origin of a profit of several million Euros per year for the poultry industry alone);
 the general result of the aid, at the level of the sector and the country in question, seemed rather positive, which was not obvious a priori. [4]

This 20% proves that international aid indeed has, in certain conditions, this capability to be a delegated facilitator and thus an aid to the change that numerous LLET situations require. Consequently, application of the criteria outlined above offers to international aid possible intervention strategies, indeed new justifications for its “effectiveness”.

Furthermore, it somewhat relativizes the importance only of the amounts of ODA interventions. In fact, while the economic results of an intervention are mainly linked to its ability to mitigate institutional blockages, there can be no direct link between financial amount and effects obtained. The cost of supporting a change is not inevitably linked with the benefit derived from this change. In an institutional approach, the results cannot be assimilated to the sums disbursed, insofar as the actions have sufficient means. Certainly, an amount that is too small leads to a purely local action, with no credible demonstrative effect and with high transaction costs. But for a large range of interventions, the financial amount is not determinant.

What is determinant, on the other hand, is the existence of amounts of aid sufficient to allow a large enough number of innovative interventions, among which some will have a strong effect and a high return.

4. Can “Social Learning” Be Absorbed into Harmonization?

Harmonization, “alignment”, “ownership”, budgetary aid... Next to these important themes, reaffirmed by the Paris Forum, the approach based on social learning can appear to be interventionist, and tinged with “micro-management”.

In fact, it leads the donor to demonstrate prudence in relation to the “demand” expressed, be equipped with the ability for a detailed autonomous analysis, be attentive to the balance among local authorities, sometimes to take sides (not always in favor of the social group that makes up the State apparatus) and, in all cases, show concern for its responsibilities for the institutional effects of its interventions. It leads the donor to be demanding in the details, so that useful “meeting places” can be built for all the actors involved and the necessary training provided to them (“capacity building”).

However, if one sticks to the true principles underlying the “HAO” (harmonization, alignment, ownership) approach, this possible contradiction dissolves itself and the approach in terms of social learning even comes to counterbalance the principal deficiencies that remain with the HAO approach:

1. Even more than in other areas, interventions that have the objective of mediating, of encouraging changes in collective behavior, require a perfect coordination among donors, if only so that the rules of the game do not change from one intervention to another, ruining all hope of a lasting learning experience.

2. This type of intervention is not the same as one that is purely a project. While it can only get started through pilot interventions, it can lay claim to broad objectives from the beginning and rapidly results in coordinated interventions (the “SWAPs) and, above all, by setting up funds that are co-managed by local actors that can be added to by donors through mechanisms similar to budgetary aid (local investment funds with decentralized local authorities, professional support funds through consular chambers...).

3. This type of intervention most often responds to policy orientations at the highest level, such as those reflected in documents like the SFFPs (Strategic Framework for the Fight against Poverty). It is a question, then, of taking seriously the needs for reform expressed at this level and helping the country to implement them despite the day-to-day reluctance of various levels of the State apparatus.

4. Finally, and above all, it is a question of extending the concept of “ownership” more to local actors, a concept which is too often limited only to the State apparatus (cf. Note du Jeudi (Thursday Note) nº 26). For example, when standard programs of institutional strengthening put, quite properly, the emphasis on “capacity building”, who really decides on the use of the funds, the choice of beneficiaries, the content of training, the methods employed? In general, only the State apparatus (or the donor), for its use alone, and without any local process of negotiation for decisions. Behind this support for aid to strengthen administrations, there are important issues of power and national institutional construction that aid should no longer ignore.

The “social learning” approach contributes to reducing the “ownership” deficit in international aid and may be considered a support to democratic processes in the developing countries.

5. Conclusion

International aid has more to provide than just financial resources, as important as they are. These additional contributions are outside analysis, support for the will to change, extraterritoriality and motivation. It can play an important role in internal political dialogue and institutional arrangements, at the sectoral level as well as the general governance level. These are real components in the effectiveness of international aid, which definitively extend the logic of means that predominates in the “HAO” approach.

These “additional contributions” can only happen if the aid agencies really have the will to do so and, in particular, are ready to set up the necessary human capabilities in their local agencies.

The 5 elements of “effectiveness” of rural development aid:

1 .is the targeted area a limiting factor of the first order?

2. are institutional aspects taken into account, notably the role of the State?

3. does the intervention truly have the objective of changing something?

4. do the means implemented express this will to change?

5 is social learning possible?