Wednesday, August 19, 2009

Nailing The "What Has All That U.S. Aid To Pakistan Really Bought?" Canard

Reading this tweet from Arif Rafiq -- yes, I have succumbed in that I read some tweeters (twitterers?) now; no, I have not gone so far as tweeting myself -- made me think of one very general point about the "What have all the billions of dollars of U.S. aid bought in Pakistan?" argument. The basic position of this argument is that the U.S. has given Pakistan in excess of $10 billion since 9/11, and yet many of the problems that the aid is designed to take care of (defeating the Taliban and dismantling militant networks on Pakistani soil) are still very much with us. This state of affairs then leads to a common set of complaints, that can be captured in one sentence: what is all that money buying us?

The seemingly obvious empirical observation that high doses of foreign aid are "not working" in Pakistan is plagued by selection bias. It should be fairly intuitive that, all else being equal, the biggest problems, whether for governments or firms or families or individuals, will attract the most money. And yet, because the biggest problems are so big, they need more than money to solve them.

If one runs a simple regression of effectiveness of foreign aid vs. amount of foreign aid, my best guess is that there will be a negative coefficient. That is, it will appear -- at first glance -- that the more money you give, the more likely you are to fail. However, this would be plainly due to selection bias: the most money is going to places where it is least likely to work. Think of it this way: no one complains about the billions of dollars spent to cure cancer by arguing that it only took $1.65 to figure out what to do about ankle sprains. Different problems, different requirements. If a lot of money is going somewhere, and the results aren't coming, it could just be that the problem is very hard to solve, and that while billions of dollars are a necessary condition for success, they are by no means a sufficient condition.

There are of course many reasons other than the selection-bias issue that the money the U.S. has sent has not resulted in more success. These include (1) a lack of close operational cooperation on the ground, until recently, between the U.S. and Pakistan despite the existence of a formal alliance; (2) the siphoning off of cash by the Pakistani military for armaments better aimed at India than non-state actors; (3) the inherent difficulties in winning guerrilla wars against multiple actors (which many analysts underestimate drastically); (4) the Pakistani military's relative weakness and lack of training in fighting a counterinsurgency; (5) the weak public support, until recently, to take the fight to the Taliban; (6) the ability of the Taliban to secure funding from disparate sources including drugs, local taxation, and kidnapping; (7) the deals and concessions granted to the Taliban at critical junctures which backfired considerably; and (8) a lack of organizational unity within Pakistan's military establishment on how (and who) to fight.

While each of these factors -- and others I have neglected to mention -- are surely important, it is useful to consider a more general assessment of what money can and cannot buy, and the conditions under which we should expect large flows of aid to secure politico-military gains on the ground. Treating all problems as relatively equal, and therefore expecting that greater inflows of cash will result in greater likelihood of success, is foolhardy.


dudelove said...

i think the whole point of making the "what have all the billions..." statement is to indicate the very point you are making, so it's not really a canard. as far as i understand this is being uttered by those in the US who want to point out the same thing i.e the demand for money/arms by the Pak representatives (most recently the drones) is a sham.

Ahsan said...


I don't really follow your logic there. For one thing, I don't think the Pakistan govt asking for drones (or control of them) is a "sham". And I certainly don't think most analysts in the U.S, informed or otherwise, realize that just throwing money at a big problem is going to solve everything. They seem painfully unaware that they themselves have thrown a lot more money into Afghanistan directly and hasn't seemed to pay off.

somethingrichandstrange said...

"If one runs a simple regression of effectiveness of foreign aid vs. amount of foreign aid, my best guess is that there will be a negative coefficient."

awww you geek! too cute.

Anonymous said...

And one of the things that money cannot buy is right strategy.

What also amazes me is that such questions and all conditions and restrictions to aid are reserved for democratic govts rather than dictators ruling Pakistan.

anoop said...

Mere aid is not going to solve anything.. Pakistan unlike India, must start from scratch and decide what kind of a system of governance it wants.. It has been 60 yrs for god sakes.. I suggest to look at the Indian constitution and adopt it and just copy and paste the Indian laws.. and, please don't say that Indian constitution cannot be accepted because it is written by a Hindu.. Even though it is written by a predominantly Hindu panel, it is still a secular document.. It is the reason behind all the good in India.. Comparing us to Pakistan it makes me or us realize how far we have traveled in the right direction.. And, compared to countries like US, it makes people like me think how far we still have to go..