‘This American Life’ does development

Last week This American Life did This Haitian Life, a first foray into the travails of humanitarian aid. As I listened, I couldn’t decide if I found my favorite radio reporters naive or insightful. On reflection, the answer is both.

In Act One, the Planet Money reporters work their brains around their first development project. A poor woman can’t afford expand her mango crop without the hundreds or thousands of dollars to irrigate. Where is the government, they ask?

Meanwhile, a Haitian mango magnate wants to get poor farmers to upgrade their product, and tries to distribute free bins and washing equipment, to meet American export standards. The bins turn into chairs and cabinets, and not a single mango gets delivered.

So the magnate turns to an NGO to establish a washing, binning and training cooperative. Months and months of bureaucratic barriers ensue: land must be donated, communities must be mobilized, a cooperative registered, funds raised, and so on.

The reporters’ conclusion: why can’t the aid community and government do more or do better? My conclusion: what kind of businessman needs an NGO to build a functioning supply chain?

Act Two makes the listening worthwhile. It charts the stories of doctors and missionaries who choose the long, slow, inefficient path–basically, mentoring Haitian partners rather than doing the job for them–that gradually yield more lasting results than the international NGO’s slam-bam-thank-you-ma’am style.

Stream it here.

7 thoughts on “‘This American Life’ does development

  1. Isn’t it to be expected that business people in poor countries find it difficult to raise productivity, access new markets, and grow? (and to build functioning supply chains). If they didn’t, the poor country wouldn’t be poor for long. And isn’t one of the things that development agencies and NGOs try to do foster growth and economic development? If they are to do that, they need business people turning to them for help. So I think your conclusion is a tad harsh.

    (mind you, I am committing the classic error of commenting before listening to the radio show; maybe the individual in question is a dope).

  2. I agree with Luis Enrique. What the businessman is searching for is an effective intermediary of some sort, who has local information and contacts to organized and mobilize local resources. Look at the experience of contract farming world-wide (which seems to be precisely the kind of model this business man is trying to setup. While the vast majority of arrangements are mediated by private-for-profit firms (exporting firms, agroindustry input buyers, brokers of all sorts), it is not uncommon for such for-profit firms to partner with NGO and/or government extension agents particularly as they try to recruit and work with small farmers (who often possess cost advantages in certain crops and activities).

    If you look carefully at highly successful agricultural export countries such as supposedly uber-free market Chile you’ll find a very fluid partnering between for-profit and non-profit firms, with government money often lubricating the system. The bulk of financing is private but the government often pays for Many NGOs that have set up for-profit off-shoots and vice-versa, and the government uses a voucher system and competitive bidding to promote extension services to contract with either type of firm (the distinction between an NGO and a for-profit firm is simply a matter of where the ‘profits’ go). NGOs and for-profit firms with a social mission (often spun-off from NGOs) often have the competitive advantage b/c they have the trust of the local communities. You’ll see this kind of arrangement in supply chains to serve supermarkets, horticultural markets, certain types of fruit export, agroindustry processing.

    The fact of the matter is that even if you look at such market arrangements in advanced developed countries you’ll find similar arrangements with mix of actors: private firms and farmers, producer cooperatives, local governments and extension agents, local NGOs, with financing/guarantees/oversight from a combination private lenders (firms, suppliers, buyers, banks, or regional or national credit cooperatives).

    Getting the incentives right to build new contractual arrangements and markets that reach out to the poor is really difficult — if it weren’t development would be easy. You need people with ideas and capital with the right incentives to see the whole thing work.

    Thanks to Bill Easterly and others it has become currently fashionable to beat up on NGOs, governments and anything other than a for-profit firm. I don’t disagree with the observation that places like Haiti have too many less than effective NGOs, too many absent and/or predatory government officials, and not enough successful medium and large businesses to solve problems like this. NGOs often have the wrong incentives. In this particular Haitian case it sounds like these folks got the mix wrong: too much NGO and not enough private enterprise.

    But Haitians should do **whatever it takes** to build a functioning supply chain and the right intermediaries for the job. It seems to me that the naive approach would be to apriori rule out solutions just because they involve “NGOs.”

  3. These are good points. I see roles for NGOs and the state in agricultural development–indeed most of my ongoing research shows the benefits–but what makes the TAL story frustrating is the instant jump to the state or NGO solution, and the failure to ask whether the failure was one of the individual entrepreneur rather than entrepreneurship in general. I don’t see a market failure in this story, I just see a naive businessman and NGO, both of whom are looking for quick fixes where none exist.

  4. Thanks for the reply.. I agree this case does look like that of a businessman trying to offload his complicated business incentive-contracting problems to an NGO, in the naive belief that they might have had a ‘slam/bam’ solution, which they obviously didn’t .

    There is a failure in this story – the failure to bring about the innovations necessary to raise productivity and sustain mutually beneficial trade. It IS a “market failure” in the very broad sense that it is a failure of markets to overcome asymmetric information and costly enforcement problems which have made it very difficult for private parties to establish the credible commitments needed to sustain productivity enhancing investment and mutually beneficial trades. But you are quite right that it IS NOT a “market failure” in the narrower sense in which the term is sometimes used: i..e. a situation where the government or some other non-market actor can improve on the market outcome through simple tax/subsidy interventions. It’s not at all evident that the government or NGOs have anything to offer to improve the situation, plus in Haiti they seem to have track record of messing things up.
    One can try to argue that the thick presence of NGOs and/or excessive red-tape means that private-market initiatives are suppressed and crowded out. There’s surely truth to that but I’m skeptical about jumping from there to the often-implied conclusion that if only government and the NGOs got out of the way, deep and inclusive markets would necessarily flourish .

    So there we have it, back to one of the main themes of your blog: development is not easy.

  5. international NGO’s slam-bam-thank-you-ma’am

    – a mischaracterisation if ever there was one: most INGOs spend a heck of a lot of time on local capacity building.