Why monitor interactions with developing countries?

The UK already publicly reports details of its aid spending, so why should we care about monitoring other, non-aid, interactions with developing countries?

Policies beyond aid spending matter a lot

The policies of rich countries like the UK – in areas such as trade, migration, finance, environment, and security – can have a bigger (sometimes much bigger) impact on poor countries than the money we spend on development aid. Adopting policies which are consistent with helping poor countries, and avoiding ones which harm them, is known as policy coherence for development.

The UK’s policies could be more coherent

A recent parliamentary inquiry found that the UK needs to improve its efforts in making its policies for development more coherent.

This is not a new challenge. Ten years ago, a similar parliamentary inquiry called for greater policy coherence for development. According to a long running index of policy coherence for development (the Commitment to Development Index), there has been almost no improvement in the UK’s overall coherence over ten years.

Poor information can lead to poor policy making

What holds back the UK from more coherent policy making? It is not as simple as the interests of UK’s own citizens taking priority over those in poor countries. For example, sometimes our actions – or lack of actions – work against the money that we spend in aid.

Research by The Institute for Government identifies six factors that can lead to failures in policy making. One of these factors is imperfections in the information available to voters.Information imperfections can result in politicians pursuing policies designed to impress voters even when that runs against their best interests. Politicians may target outcomes for which information is readily available, or ‘pander to popular opinion’.

Aid gets all the attention

When it comes to voters who care about helping people in poorer countries, politicians may most easily impress them through aid spending. Aid is easily measured and communicated (i.e. as a single number). Most official reporting and scrutiny of government focuses on aid spending. Its results can be visible, for example children vaccinated, schools built etc.

However, aid alone is unlikely to address voters’ concerns in the most effective and efficient way if other policies remain incoherent. Development Monitor aims to tackle these information imperfections.

Accountability for domestic policies depends on good data

In most areas of Government policy, information on outcomes such as unemployment and crime levels, helps voters to hold politicians to account. It helps ensure politicians are judged on their overall performance, even if people cannot agree what the impact of individual policies (e.g. minimum wages or policing reforms) have been.

But there is an information gap for international development

Official reporting on international development is currently insufficient to hold policy makers to account for how well they support development in poorer countries.

  • Most official reporting, including DFID’s annual report and official statistics on international development, focuses on the effectiveness of aid spending. This misses many important ways in which the UK affects developing countries.
  • International organisations like the World Bank publish statistics about developing countries including aggregate financial flows to and from them. But they usually cannot separately show the impact of the UK on those countries.

A solution is to publish financial flows and risks

An effective and practical way to fix the information problem is to publish bi-lateral financial flows and a risk assessment.

Many financial flows between the UK and developing countries can already be directly reported on a bi-lateral basis. Others need to be made available.

Where there is no simple bi-lateral financial measure, a risk assessment is a practical alternative. This can show the risk of the UK having a negative impact and the potential scale of that impact. This includes:

  • impacts which are not easily measurable in financial terms – e.g. impacts on human rights or conflicts; or
  • effects where the UK contributes to a wider problem without directly affecting individual developing countries  – for example the UK’s contribution to global warming; or
  • Resource flows which (by definition) are not reported because they are illicit – for example illicit financial flows.