I previously mentioned two indexes, the Department for International Development’s (DFID) needs-effectiveness index and the Fund for Peace’s Failed States Index. There are many other examples though and in recent years it has seemed to be a growth industry with everyone and anyone wanting to have a piece of the action. As the recent errors at the Department of Transport have shown though economic modelling is at times a deeply flawed component of modern day domestic, as well as international, policymaking.
To focus on DFID’s needs-effectiveness index, it is the basis by which DFID provides a clear rationale for which countries it works in and which it does not (in effect it provides a priority list of countries from the highest at number 1 to the lowest at 106). At number 1 is India (fact check from my previous post: India is not counted as a fragile and conflict-affected country by DFID).
The House of Commons International Development Select Committee has described the methodology used to construct the index as biased because it uses the total population living under $2 a day – the international definition of moderate poverty – rather than the proportion of population living under $1.25 a day – the definition for extreme poverty. This means that the results of the index are purposefully shaped so that large populous countries are at the top creating an index that may well neglect those countries that have the most acute and deepest poverty.
A case in point being Burundi, which in 2010 had the lowest gross national income (GNI) per capita in the world (at number 215) and is in the bottom three of the 2011 United Nations Development Programme’s Human Development Index. India by contrast has a GNI per capita ranking of 164 and does not figure in the low human development group. It is strange therefore that Burundi lost all funding after the needs-effectiveness index’s results were compiled in the Bilateral Aid Review whilst India’s continued.
In part, this is undoubtedly a question of how to measure poverty, which has important ramifications for where the poorest in the world live as this Economist article explains. Nevertheless, indexes in general are exceptionally poor policymaking tools because they involve a process of severe agglomeration of diverse criteria across a wide range of states. The eventual result is only a snapshot of the situation through the necessarily blinkered perspective of the index, which gives no indication of whether a country is progressing or declining or why it is doing so.
In DFID’s case it thus fails to acknowledge that poverty is a relative and dynamic concept not static and absolute. This is of particular concern when considering that such a snapshot is being used to project forward UK spending. In essence, indexes, economic modelling, and statistical information have a part to play in informing policy but they are no substitute for analysis and understanding of uniquely poor, marginalised, unequal and war-torn societies from the ground.