Closing the Knowledgegap in the Scalingup Debate: An Agenda Nora Lustig Director of the Poverty Grou

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Closing the Knowledge-gap in the Scaling-up
DebateAn AgendaNora LustigDirector of the
Poverty Group, UNDPOctober 20, 2006
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• Main message
• the scaling-up debate is stuck in the
  rhetorical space
• must advance in the knowledge space to make
  headway

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• Is scaling-up of aid necessary to achieve the
  MDGs or, more generally, desirable human
  development outcomes?
• Most policy analysts, donors and multilaterals
  agree that scaling-up is desirable and needed.
• Why? Without aid, progress may be close to
  impossible due to poverty traps or it may be too
  slow.

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• How much aid?
• There is no consensus.
• The methods differ.
• The UN and BWIs go each their separate ways.
• gtShould work on a common framework.

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• Despite the consensus in favor of scaling-up
  there are a number of concerns which affect the
  size and pace at which aid is made available
• short-term concern Dutch disease.
• long-term concern aid-dependency.

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• Is the concern with aid-dependency well founded?
• Development Economics literature shows that
  improvements in health and education, promoting
  gender equity, eradicating endemic diseases and
  reducing income poverty can result in higher per
  capita growth.
• So, why does the concern exist?

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• Because
• 1. Positive impact on growth will only be
  visible in the long-run 20 or 25 years. In the
  short-term, there may be trade-offs.
• gt need interim indicators of progress.

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• 2. No agreed upon method to estimate
  quantitatively the growth dividend of investing
  in human development.

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• 3. Concern that returns or the growth dividend
  may not materialize because of corruption or
  gross inefficiencies.

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• This leads to
• gt a more conservative approach in the short-term
  on the part of donors because they are not
  persuaded that aid will lead to growth and
  self-reliance.

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• gt more uncertainty in aid-flows because without
  solid evidence it is easier for aid to become a
  political football.

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• gt a more conservative approach on the part of
  IMF and WB.

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• Leads to self-fulfilling prophecy of
• lower aid,
• lower growth, and
• lower human development.

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• What is needed on the part of international
  organizations?
• Less rethoric-based and more knowledge-based
  discussion and advocacy

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• gt refine methods to estimate scaling-up
  requirements costing methods must incorporate
  second-round and economy-wide effects as well as
  complementarities and trade-offs.
• gt develop practical approaches to identify and
  address the non-financial constraints for
  example, behavioral and institutional failures.
• gt formulate ways to estimate the growth
  dividend (or fiduciary payback) of investing
  in human development or the MDGs.
• gt construct interim indicators and device
  evaluation methods to monitor progress in the
  transition period (i.e., before the growth
  dividend materializes)