Rachel Nugent on Development's Changing Landscape

Has the economic crisis reduced governments' willingness to invest in development assistance?

RACHEL NUGENT: There is strong evidence that the economic crisis affected private funding in the short-term though official development assistance (ODA) was not similarly affected. In fact, ODA rose in 2009 and appears to be doing the same in 2010. But all is not rosy. We are now seeing knock-on effects of a longer-term structural economic problem amongst some of the major donors – the US and UK being prominently among them. Others seem to be taking a pause to reconsider their foreign assistance plans and budgets for a range of reasons, including the staggering commitments to global health already made over the past decade.

Some are also asking how to better channel aid, and this effort to come up with new, better approaches to aid seems to have contributed to a slowdown or pause in the steady rise of ODA, especially for global health, that occurred over the past decade.

PSI’s market-based approach raises an interesting question with regard to a specialty of yours: demographics. Do demographics so broadly affect health policy that we need to simply accept that, sometimes, the market fails?

RN: Unarguably, there are times the market cannot suffice, but we need to distinguish where government needs to step in, and where markets don’t exist or are not fully functioning, to come up with the optimal role for government programs.

In the realm of demographics, there are macro-level needs and micro needs. Countries that continue to have relatively high population growth will face serious problems with poverty and slow development if they cannot educate and employ young people. A good plan for how to benefit from the “demographic dividend” of a large youth cohort when it becomes working age is certainly a role for government – and failure to prepare can present governments with many other challenges, such as security.

On a micro level, families and women need information, access to family planning products and good maternal care in order to achieve desired fertility levels. Those can all be offered by the market, but social marketing and other extra efforts are often needed to reach the poor.

You are an economist by training. Has development economics, particularly as it relates to health, become notably more sophisticated in the last 20 years?

RN: It certainly has become richer in the questions asked and more varied and rigorous in the methods used and data available to researchers. One recent and rather controversial revolution in the sub-field is the widespread application of experimental methods, using randomization and controlled interventions, to get better insight into what aid programs can actually accomplish.

One thing I’m certain of is that development economics now attracts many of the best and brightest in the economics profession. This not only produces better work and a more sophisticated understanding of
development problems but makes this sub-field far more interesting and intellectually dynamic than it was a few decades ago.