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The Political Economy of Evaluation International Aid Agencies and the Effectiveness of Aid

J erker Carlsson Department of Economics University of Gothenburg, Sweden

Gunnar Kohlin Department of Economics University of Gothenburg, Sweden

Anders Ekbom Department of Economics University of Gothenburg, Sweden

M St. Martin's Press

© Jerker Carlsson, Gunnar Kohlin and Anders Ekbom 1994

All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.

No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WlP 9HE.

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First published in Great Britain 1994 by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world

A catalogue record for this book is available from the British Library.

First published in the United States of America 1994 by Scholarly and Reference Division, ST. MARTIN'S PRESS, INC., 175 Fifth Avenue, New York, N.Y. 10010

Library of Congress Cataloging-in-Publication Data Carlsson, Jerker, 1950-The political economy of evaluation : international aid agencies and the effectiveness of aid I Jerker Carlsson, Gunnar Kohlin, Anders Ekbom. p. em.- (International political economy series) Includes index.

I. Economic assistance-Developing countries-Evaluation. 2. Economic development projects-Developing countries-Evaluation. I. Kohlin, Gunnar. II. Ekbom, Anders. Ill. Title. IV. Series. HC60.C2945 1994 338.9'1'091724-dc20 93-17296

CIP

ISBN 978-0-333-59027-0 ISBN 978-1-349-23206-2 (eBook) DOI 10.1007/978-1-349-23206-2

ISBN 978-0-312-09992-3 (cloth)

ISBN 978-0-312-09992-3 (cloth)

Contents

List of Tables

List of Figures

Acknowledgements

1 Introduction

1.1 The Problem 1.2 Outlining the Book

2 Concepts

vii

ix

X

1

2 6

9

2.1 About Evaluations 9 2.2 Economic Analysis: The Concepts and their

Application II 2.3 Towards an Understanding of the Organization 31

3 Mapping the Terrain of the Case Studies

3.1 On the Logical Framework 3.2 About the Case Studies 3.3 The Model

4 The Gold Mines of Nicaragua

4.1 The Political Economy of Nicaragua 4.2 The History of the Project 4.3 The Focal Problem of the Project 4.4 Project Objectives 4.5 Evaluation of Project Performance 4.6 Conclusions

42

42 44 47

50

50 55 57 60 61 75

5 Non-Project Aid: The Case of Commodity Import Support 78

5.1 Introduction to the Case 5.2 Background 5.3 The Rationale for CIS 5.4 CIS in an International Perspective

v

78 78 79 79

vi Contents

5.5 The Problem Addressed by CIS 80 5.6 Evaluating CIS: the Historical Record 84 5.7 Decisions and Assessments of CIS 102 5.8 The Impact of CIS: Conclusions 105

6 Soil Conservation in Kenya 109

6.1 Introduction 109 6.2 The History of the Programme 110 6.3 The Evaluation Function 122 6.4 The Costs and Benefits of Soil Conservation 129 6.5 Conclusions 142

7 How the World Bank Went Green 145

7.1 The Role of Economic Analysis in World Bank Project Assessment 145

7.2 Adaptations due to External Pressure 149 7.3 The World Bank and Environmental Economic

Analysis: Concluding Remarks 172

8 Final Analysis 175

8.1 On Organization 176 8.2 On the Formulation of Objectives 186 8.3 On the Usefulness of Economic Analysis 189 8.4 The Lack of Knowledge 196 8.5 Improving the Use of Economic Analysis? 197 8.6 'It Takes Two to Tango' 203

Notes and References 205 Bibliography 226 Index 233

List of Tables and Figures

Tables

2.1 Possible Attitudes towards Evaluation of Different Interest Groups 34

4.1 Macro-Economic Indicators in Nicaragua, 1978-89 51 4.2 Macro-Economic Development in Nicaragua, 1988-90 51 4.3 Annual US Dollar Exchange Rates, 1980--87 52 4.4 Foreign Exchange Balance, El Limon and La Libertad,

1989/90-1991/92 66 4.5 Performance Indicators, El Limon, 1987 69 4.6 Sensitivity of the Net Foreign Exchange Earnings 71 6.1 Base Case: Catchment Costs and Benefits for 1990

(per ha at normal rainfall) 134 6.2 Net Present Value with Sensitivity Analysis 142 7.1 Variety, Endemism and Vulnerability of some Species in

Madagascar 153

Figures

1.1 Reality, Case Studies and Analytical Tools 7 2.1 Direction of Analytical Focus 29 2.2 The Links between PEA, MEA and CBA 30 2.3 Personal Interests 33 3.1 The Model 48 4.1 Real Monthly Exchange Rates, 1988-89 53 4.2 Sectoral Composition of GDP, 1980--89 54 4.3 Nicaraguan Gold Production, 1980--89 56 4.4 The Problem Tree 58 4.5 The Objectives Tree 62 4.6 The Hypotheses 75 5.1 The Problem Tree of CIS 82 5.2 The Objectives Tree of CIS 86 5.3 External Flows as a Percentage of GNP, Tanzania,

1981-89 95 5.4 Investment and Savings as a Percentage of GNP,

Tanzania, 1981-89

vii

96

Vlll List of Tables and Figures

5.5 The Changing Structure of CIS 103 5.6 The Hypotheses 105 6.1 The Problem Tree of a Soil Conservation Programme in

Kenya 112 6.2 The Objectives Tree of a Soil Conservation Programme

in Kenya 114 6.3 Interdependent Causal Factors of Soil Erosion 118 6.4 Network of Actors in the Programme, 1974-80 123 6.5 Network of Actors in the Programme, 19800-92 125 6.6 Public Expenditures on Sites A and B, 1986-92 140 6.7 The Hypotheses 143 7.1 Problem Tree of an Environmental Project in

Madagascar 156 7.2 Objectives Tree of an Environmental Project in

Madagascar 158 7.3 Types of GEF Projects 171 7.4 The Hypotheses 173 8.1 The Hypotheses in the Case Studies 175 8.2 The Use of Economic Analysis 198

Acknowledgements

The authors are very grateful to the Swedish International Develop­ment Authority (SIDA) for its financial support of the research project which made this book possible. We are also indebted to the partici­pants of the seminars on this topic that have been held at the Department of Economics, Gothenburg University, especially to Professor Arne Bigsten who has followed the project and commented extensively on its content. We would also like to thank Professor Timothy M. Shaw, Dalhousie University, Halifax, Professor Lars Herlitz, Department of Economic History, Gothenburg University, Dr Kim Forss, ANDANTE AB, and Mattias Iweborg for valuable comments and insights. Needless to say the views expressed in this book are those of the authors alone and do not necessarily coincide with any of the individuals and institutions mentioned above.

IX

]ERKER CARLSSON

GUNNAR K6HLIN

ANDERS EKBOM

Acronyms and Abbreviations

AERR AET AN GAP

ARI B/C BOP BPA CBA CEA CFA CIDA CIS CPF CUA DAC DEF DFI DRC ENVPR

ERP ERR FPMP

GDP GEF GNP GTZ IBRD ICOR IDA liED IMF INMINE IRR

Appraisal economic rates of return Absolute efficiency test National Association for the Management of Protected Areas (Madagascar) Accounting Rate of Interest Benefit/cost Balance of Payments Border price adjustment Cost-benefit analysis Cost-effectiveness analysis Cost feasibility analysis Canadian International Development Agency Commodity Import Support Counterpart funds Cost utility analysis Development Assistance Committee (of the OECD) Forestry Department (Madagascar) Direct foreign investment Domestic resource cost Policy and Research Division of the Environmental Department Effective rate of protection Economic rate of return Forests Protection and Management Project (Madagascar) Gross Domestic Product Global Environment Facility Gross National Product Deutsche Gesellschaft fiir Technische Zusammenarbeit International Bank for Reconstruction and Development Incremental capital-output ratio International Development Association International Institute for Environment and Development International Monetary Fund Instituto Nicaraguense de Ia Mineira Internal Rate of Return

X

IUCN

LFA MEA MOA MPAEF

MSEK MTAS NCPB NEAP NFEE NGOs NORAD NPV ODA OECD

OED OER OGL PCI PEA PO PPSCA

RERR RET RSCU SAL sc SCBA SCF SCP SDRs SECAL SER SGAB SIDA SNA SSA

Acronyms and Abbreviations

International Union for Conservation of Wildlife and National Resources Logical framework approach Macro-economic analysis Ministry of Agriculture (Kenya) ~inistry of Livestock, Fisheries and Forestry (Madagascar) Million Swedish Crowns Million Tanzanian Shillings National Cereals and Produce Board (Kenya) National Environmental Action Plan Net foreign exchange earnings Non-governmental organizations Norwegian Agency for Development Cooperation Net present value Overseas Development Administration Organization for Economic Cooperation and Development Operation Evaluation Department (IBRD) Official exchange rate Open General Licence Per capita community income Political economic analysis Programme officer

xi

Permanent Presidential Commission on Soil Conservation a·nd Afforestation Re-estimated rates of return Relative efficiency test Regional Soil Conservation Unit Structural adjusment lending Soil conservation Social cost-benefit analysis Standard conversion factor Soil conservation programme Special Drawing Rights Sectoral adjustment lending Shadow exchange rate Sveriges Geologiska AB Swedish International Development Authority System of National Accounts Sub-Saharan Africa

xii

STAP TCBA UNCED

UNDP UNEP UN IDO US AID VACBA

Acronyms and Abbreviations

Scientific and Technical Advisory Panel (of the GEF) Traditional cost-benefit analysis United Nations Conference on Environment and Development United Nations Development Programme United Nations Environment Programme United Nations Industrial Development Organisation US Agency for International Development Value-added approach to cost-benefit analysis