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Dennis Whittle Headshot

Are aid "partnerships" dangerous?

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Recently I was invited to Oxford University to speak at an excellent conference led by Ngaire Woods and Ravi Kanbur on new directions for international aid. As with many such conferences, there were calls for better partnerships between aid organizations. There is understandable frustration in some countries with too many aid agencies and NGOs tripping over one another and "doing the same thing." There is also a sense that the aid industry is under-funded, and that it is wrong for any organization to "waste" resources by doing the same thing another agency is doing.

I have heard this same old complaint so many times over the years that I could not take it any more. So in my talk, I said that this is the wrong way to look at it. The problem is not duplication. The problem is the lack of a market-type mechanism to ensure that over time more resources flow to the agencies providing the best service. Focusing on partnerships often implies a zero sum game, based on a scarcity of resources that need to be parceled out carefully. Markets, by contrast, are a non-zero-sum game, since market-based transactions by their very nature create new value.

From 1992 to 1997, I worked in Russia for the World Bank, and I met many people who were formerly part of Gosplan, the central planning bureau of the Soviet Union. The mentality of central planning was also a psychology of scarcity. Therefore, the Soviets resisted any form of "wasteful" competition, and created single, enormous enterprises designed to provide huge regions or even the entire country with items ranging from cars to shoes. One outcome of this was terrible quality (have you ever ridden in a Lada car?), little consumer choice (you could have that Lada in any color as long as it was black or white), lots of shortages ("actually, we are out of stock of that Lada right now"), and v-e-r-y slow innovation ("this year we are introducing a new feature - front seats that slide back and forth to accommodate taller or shorter drivers!")

Can you imagine if there was only one cell phone manufacturer in the world? Do you remember how big and heavy those first cell phones were? Last time I checked, there were literally hundreds of cell phone choices available, with all sorts of different features, and at all different prices. Different people buy different phones based on their own particular needs, preferences, and resources available. By contrast, this choice is not easily available to governments or communities looking for help in growing their economies and improving their societies. And calls for more partnerships in the aid industry are actually calls for restricting this choice even further.

If Microsoft and Google announced a new "partnership" to provide a single search utility, there would be loud cries of "monopoly" and out anti-trust regulators would get to work right away to protect the interests of consumers. Why don't we hear the same cries when the UN and the World Bank announce a joint, coordinated program to provide clean water to poor people?

I expected my speech at Oxford to elicit protests from some of the senior aid people there. But you know what? Deep down they know what I was saying is true. In this fast-paced world with innovations leaping out at us from every angle, no one likes working in a kludgy system that is unable to respond to what the world needs now. And aid officials are no exception.