An analytical framework to think about doing development

As an analytical framework to think about designing solutions to complex and intractable development problems, I have found the following very useful.

There could be three headline principles on thinking about development solutions. Then there could be six points to be cautious about while designing them. Let me caution that these are general principles and does not preclude the occasional exceptions, again most certainly depending on the nature of the problem. 

The three headline principles applicable while designing solutions are as follows:

1. There are no universally applicable models or rules. This is a cautionary note on cookie-cutter approaches to development problems. Free-markets or public private participation or private banks or low tariffs or deregulation in general have no universal application. This is a nod to the post-modern idea of rejecting grand narratives on development problems. So policy design depends... 

2. Success generally happens through long-drawn engagement. There are very few turn-on-tap type solutions. Even legislative changes like deregulation need to be implemented. In this sense, solutions to most development problems are like a long race, where you get to the starting line and then run the race. So policy implementation depends... 

3. Politics matters. Too often solutions are dressed up in technical terms. But addressing complex development challenges requires a combination of policy and politics. Politics is critical not only to to convince or keep at bay vested interests who lose out, but also change entrenched individual behaviours and collective norms. 

The following are the six generally applicable cautions to be kept in mind: 

1. History matters. Development is strongly path dependent. The historical evolution and cultural norms matter in the design of policies.  

The choices for Kerala and Uttar Pradesh between public health and treatment, or public health investments and health insurance are very different. The industrial policy requirements of the two states are similarly very different, as are in most other areas, including the models of access to drinking water.  

2. Context, or the starting point, matters equally. What is likely to work for a particular context most often fails for another. In particular, it's important to see whether the bureaucracy can implement the solution, and/or market is ripe enough to be catalysed, and/or the society can absorb the consequences that follow.  

So for example, nationalised banks and financial repression were good till the eighties, but not so in the millennium. Across the board tariff liberalisation was the need of nineties, but today demands a more nuanced approach. Targeting and leakage reduction in welfare programs were the only problem for long, but today addressing exclusion errors may be at least as important a problem. 

3. Solutions are multi-pronged. Solutions generally involve the simultaneous application of multiple interventions, and not doing so leads to failure. There are at least a few critical interventions associated with any effort to solve a development problem.

The outcomes from the recently announced labour or agriculture reforms demand bringing together several interventions at various levels of government and implementing them over a long period. Some like those involving changing individual behaviours and collective norms will require political engagement. 

4. The sequence of the interventions matter. While the solution may consist of a basket of interventions, some elements may have to be undertaken in a sequential manner. 

Financial liberalisation without reaching certain minimum levels of economic development and institutional maturity is most likely to lead to distortions and engender generally bad outcomes. So deregulation without the state capacity to monitor and manage is a recipe for exploitation and distortions. Similarly, efforts to catalyse markets without the supporting demand. 

5. The pace of the change matters. The pace of change is dependent on the system's capacity to absorb the change. Push too hard and the whole thing would likely unravel. Leapfrogging in case of fundamental development problems is rarely possible in practice.  

Antecedent student learning outcome gaps, poor sanitation, low farm productivity, weak state capacity and so on take time to be addressed. Even the most thoughtful process reforms, latest technologies, and deepest bureaucratic and political commitment have their limitations. Even supply side to a market takes time to emerge, thereby necessitating a gradual introduction of private participation in public activities. 

6. Policies should be dynamic. What was appropriate till a few years back may have become counter-productive. Then there are the inevitable unintended consequences. So, the need to monitor progress and make changes as required. 

Stakeholders respond to any policy and there are often emergent problems which need to addressed so as to keep the change process flowing unimpeded. This often manifests in the form of changing priorities. So, the focus on public health and primary education in health and education slowly gives way to tertiary and higher education. This applies just as much to the industry policy levers required to incentivise movement up the manufacturing value chain. 

This framework can be applied to any development problem and design and implementation of solutions motivated by them.