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| The New Partnership for Africa's Development (NEPAD) - An Initial Commentary - Ravi Kanbur |
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| 4. Comparative Advantage, Poverty and The Four Domains of Policy |
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How is one to prioritize among the large number of actions and interventions
that could potentially fall under the rubric of NEPAD? This section considers
two governing principles: the comparative advantage of NEPAD in carrying out
specific actions, and the impact of those actions on poverty.
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The comparative advantage of NEPAD stems directly from its origins and
status as a Regional institution with roots in African democracies.
These twin features determine the level at which the institution is most
likely to be effective, and the issues on which it is likely to have
greatest credibility. Thus issues for which an Africa wide perspective
emanating from democratically elected African leaders is essential, are
likely to be the issues on which NEPAD has a comparative advantage relative
to the many other institutional arrangements which already exist in Africa.
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On poverty, it is suggested here that direct versus indirect impacts of
actions is a useful distinction. Relatedly, short run versus long run
consequence for poverty is another useful categorization. There are many
actions which reduce poverty indirectly and in the long run, as the economy
as a whole develops and prospers. Infrastructure investment that promotes
high technology manufacturing, is an example of this. And there are actions
that can have a faster and more direct beneficial effect on the poor. Direct
investment in health facilities in poor areas, or the development of an
effective anti-malaria vaccine, are examples of this. There may also be
tradeoffs. Actions and interventions which lead to long-term development
and poverty reduction may nevertheless have short-term adverse consequences
for some of the poor. Infrastructure investment like dams, or some forms of
trade liberalization, provide examples of these painful tradeoffs. Everything
else being equal, the position taken here is that actions which have most
direct and beneficial impacts on poverty should be prioritized.
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To illustrate the operation of these two principles, the framework can be
further developed by considering four domains of the operation of policy and
of its impact-Global, Regional, National and Local.
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By the global domain is meant the constellation of policies and impacts at
the level above the region, and where decisions are, or ought to be, made at
the global level. Global warming, the Law of the Seas, international financial
architecture, research into malaria vaccine, and WTO are examples of issues
that fall under this category. The regional domain is Africa-wide. Africa's
trade preferences with the EU, or Africa's response to the US African Growth
and Opportunity Act, cross-national issues within Africa like water rights or
infrastructure, or regional trade agreements and, most crucially, peace and
security within Africa, are all in the regional domain. The national domain
is the one most commonly discussed-exchange rate policies, sound public
finances, trade liberalization, privatization, the budget for education and
health, a well functioning legal system, democratic governance and a free
press are all examples of levers that operate essentially at the national
level. Finally, the local level is sub-national, going right down to the
community, the household and the individual. Household decisions such as
sending girl children to school, choosing cash crops versus food crops, or
community decisions such as how much labor to contribute to repairing
culverts, or on how to manage common property resources such as fish ponds or
wood lots, are examples of the issues that define the local domain.
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Of course, like any classification, the Global-Regional-National-Local
(GRNL) framework is not completely tight and well defined. Thus, for example,
the regional domain includes strictly region-wide issues as well as issues
which may be more properly classified as sub-regional-indeed, Africa has many
sub-regional organizations such as ECOWAS or SADC. In the GRNL framework
these are all subsumed under R. Similarly, as noted above, the local domain
stretches from the nation, through sub-national entities, to local communities
to households and individuals. There are overlaps as well. For example,
while the operations of WTO can be classified under the global realm, if
Africa were to take a unified stance on a negotiating position that would
be a regional level decision but one with a global impact as well as an
impact on the region. Similarly, local communities and organization do not
operate independently of the national legal structure, so the L and N domains
overlap and interact. These overlaps and interactions across the GRNL domains
will have to be kept in mind, and indeed will be an interesting part of the
analysis. But ultimately the framework's usefulness will have to be judged in
terms of the insights it provides in structuring discourse on NEPAD and
poverty.
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The basic definitions and characterizations of poverty all fall in the local
domain. This is not the place to review the huge and evolving literature on
the conceptualization and measurement of poverty. The last quarter century
has seen a progressive broadening of the characterization from low income to
inadequate achievements in education, health and nutrition. Most recently,
the additional conceptualization of poverty as vulnerability (to events
outside the control of the individual or the community) and voicelessness
(in the face of unresponsive local and national institutions) has also
entered the discourse. But all of these focus on the individual, the
household or the community. The moral weight of the concept of poverty comes
from its direct link to human beings and their well-being, rather than the
state of larger entities and statistical abstractions. The ultimate focus of
policy in the global, regional and national domains must therefore always be
its impact, directly or indirectly, on the poor at the local level.
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| The issue of direct and indirect impacts also cuts across the GRNL
classification. Policies and forces at the global level can impact the
poor directly, or indirectly through their consequences for the regional
or national level. For example, an international breakthrough in developing
a vaccine for malaria has the potential for a direct impact on the well being
of the poor in Africa. But an international financial architecture which leads
to a more stable global trade and payments system will work more indirectly,
hopefully through stimulating economic growth at the regional and national
levels. Similarly, cross-regional cooperation on river blindness has had major
direct impact on the health of Africa's poor at the local level. Agreements
that bring peace and security to war torn countries have a direct consequence
for the poor. But they also have an indirect effect as the stability lays the
basis for national economic growth. For those countries not mired in civil
war, national level policy such as the sectoral composition of public
expenditure-for example, whether it is targeted towards poor regions and poor
households-is a key determinant of poverty impact. Macroeconomic and trade
policy works more indirectly, by creating the environment for private
investment and growth. At the same time, some macroeconomic and trade policies
at the national level, while promoting growth and poverty reduction in the
medium term, may have short-term adverse consequences for the poor.
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| As noted earlier, NEPAD's comparative advantage is that it is a regional
institution speaking with an authority rooted in democratically elected
governments. Its regional character locates it squarely in the R domain of
our four-fold classification. It follows that its natural niche is in
policies and interventions that apply in the regional domain, and those in
other domains for which having a united African voice is particularly
important. Examples that come to mind are (i) regional peace and security
initiatives (R), (ii) regional level infrastructure or environmental
investments (R), (iii) a united African position on international financial
architecture, WTO and debt relief (G), (iv) pressing for global research on
tropical diseases (G), (v) peer monitoring and pressure on governance and
rule of law in African nations (N) and (vi) establishing and pushing for
"best practice" standards in public expenditure management (N). However,
while all of these examples make use of NEPAD's regional nature, only a few
of them benefit particularly strongly from the second feature of NEPAD-its
credibility as an initiative in which democratic governance is "one of the
foundations." Of the examples given above, it can be argued that only (i)
and (v) make particularly strong use of the democratic basis of NEPAD.
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| Moreover, each action with an impact in the R, G or N domain, which is
where NEPAD's actions are likely to be most effective, has also to be assessed
for its efficacy for poverty reduction-directly, and indirectly. Thus, for
example, regional peace and security has a direct and immediate impact on
the wellbeing of the poor since they are the ones most negatively affected
by insecurity. It also has an indirect and medium term effect because
security establishes the conditions for investment and growth. Relatedly,
once basic peace and security is in place, the legal and police system, and
governance more generally, has an immediate impact on the lives of the poor,
as well as improving the climate for private sector investment for medium
term growth. The same is true, in the G domain, of global investments in
vaccine research, or international debt relief (although for both of these
to work national level governance has to be appropriate). However, regional
level infrastructure investments, while crucial from the medium term point
of view, may only have minor effects on poverty in the short term. Similarly,
improving the global climate for investment, important over the medium term
for global growth and hence growth in Africa, may not pay immediate dividends
for the poor.
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| The above illustrative discussion suggests three key questions that
should be asked of any set of actions or program proposed under the NEPAD
umbrella, as an aid to establishing priorities:
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- Is the program particularly well suited to a regional organization,
and are there not other regional organizations that are already doing it
reasonably well?
- Is the program particularly well suited to a regional organization
that is rooted in democratic values?
- Does the program combine both direct and indirect benefits to the
poor?
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| Programs and actions which score high on these criteria should be
prioritized. The next section illustrates the application of these criteria
by considering individual actions discussed in the NEPAD document.
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