Getting mileage from development investment

With tight budgets everywhere, a country’s growth ambitions can be achieved only by stretching investments.  Southeast Asia invests some 30 percent of GDP; if its efficiency were enhanced by just half of 1 percent, that would be like having an additional $10 billion. A powerful approach to improving efficiency is by forging “productive linkages”—in three ways.

The first is by connecting the dots across sectors. Projects in the Philippines, China and India show that development gains can multiply when education is linked to health, transportation and sanitation. It leads to better learning, which delivers stronger results when related to job matching, labor mobility and vocational training. Examples are providing financial and management skills for overseas Filipino workers in the Philippines, combining skills training with unemployment insurance in Thailand, and entrepreneurship and life skills education for enterprises in India.

Southeast Asia shows that disaster response is better when it goes beyond rehabilitation to build resilience, linking several sectors.  Cagayan de Oro shows the value of teamwork in preparedness and evacuation, as Typhoon “Pablo” in 2012 avoided the huge fatalities that Tropical Storm “Sendong” brought in 2011.  A cyclone in Bangladesh in 1970 killed 300,000 people, but following the installation of early warning systems and community outreach, when a similar storm struck in 1997, only 188 lives were lost.

Second, collaboration among neighbors, as with Asean, can leverage cross-border trade, transport, energy and water, and protect against disease and environmental damage. Regional programs are complex because the project’s spending and benefits need to be equitably shared. But new evidence suggests that regional cooperation is well worth the effort.

The independently evaluated success rate of regional projects supported by the Asian Development Bank in the past decade was 81 percent compared to 59 percent for those only country-focused. These returns are significant, given the greater complexity of regional projects. In the same period, 81 percent of ADB projects cofinanced by development partners were rated successful compared to 67 percent that were not, despite dealing with multiple financiers.

Public health programs gain from diverse expertise—as shown by a cross-border project to control communicable diseases in Cambodia, Lao and Vietnam, which was completed in 2012 with financial partnering from the countries, ADB and the World Health Organization. It established a common regional stance on communicable diseases. The project contributed to reducing infant and under-five mortality and HIV.

Third, productive connections extend to continuity of successful policies. Take the world’s first national program of cash transfers to the poor on condition they meet education and health goals, launched by Mexico in 1997. An independent study showing encouraging results enabled the program to continue during a power transfer in 2000 even as the new leader came from the opposition.

Similarly, the Pantawid Pamilyang Pilipino Program, the flagship propoor program of the Arroyo administration, was scaled up by the  Aquino administration despite their differences, and is being carried forward by the Duterte administration. Credible assessments of the cash-transfer program have kept it going.

At the start of the Trump presidency in America, three major policies from the Obama administration—climate action, trade liberalization and health coverage—are in jeopardy. These programs do not have a full evaluation, but research says they were in the right direction, albeit with improvements, and policy reversals would be costly.  A U-turn on climate policy would be a crime against development.

Efficiency gains from making linkages seem obvious, but are often ignored for a lack of motivation to pursue them. Better knowledge-sharing is one part of the solution. The other is encouraging teamwork across boundaries, rather than doing things in isolation.

Vinod Thomas, visiting professor at the Asian Institute of Management, is a former director general of independent evaluation at the World Bank and Asian Development Bank.