NOTE: The views expressed here belong to the individual contributors and not to Princeton University or the Woodrow Wilson School of Public and International Affairs.

Friday, September 23, 2011

Buying local: Will the US troop pullout pull the afghan out from under the Afghan economy?

Andrew Shaver, MPA

American military officials have initiated plans to withdraw the first contingent of US forces from Afghanistan this year despite the Afghan government’s dependence upon US operations for its own security and political survival. No less important, though infrequently mentioned, is the very uncertain economic future for Afghanistan in the wake of American withdrawal. The Senate Foreign Relations Committee cautioned earlier this summer that, without proper planning, Afghanistan “could suffer a severe economic depression when foreign troops leave…” Meanwhile, the Congressionally-mandated Commission on Wartime Contracting (an independent, bipartisan group established to study wartime contracting in Iraq and Afghanistan) warned in its final report this summer that many social and security programs developed in Afghanistan by the US government likely cannot be sustained by the government of Afghanistan.

While significant investigation has been done into the nature and possible effects of the significant State, Defense, and USAID spending in Afghanistan, similar scrutiny has not been applied to a major Department of Defense (DoD) program established in 2006 under which many billions of dollars have been spent on goods and services procured from Afghan firms.

Last month, Defense officials provided me with data recently made public on all contractual obligations made to Afghan firms by US Central Command’s primary contracting entity. The data are impressive. Based on commitments already made this year, DoD is on track to make more than $2 billion in obligations with Afghan firms by in fiscal year 2011. (To put matters in perspective, Afghanistan’s 2010 gross domestic product was roughly $27 billion.) While the US military begins to reduce its presence in Afghanistan, CentCom spending on goods and services provided by Afghan firms continues to increase significantly – obligations this fiscal year are 100% greater than 2009 and are set to exceed 2010 obligations by more than half a billion dollars.

Policymakers should consider possible effects on Afghanistan’s security conditions of terminating, quickly or slowly, billions of dollars in business with local firms. Has DoD business with local firms created industries that will remain functional in the years following America’s withdrawal? Has military spending created bubbles of economic activity that threaten to implode as the war effort grinds to a halt, leaving ranks of young males unemployed and susceptible to terrorist recruiting?

It is possible that the effect will be minimal. Of the roughly $1.7 billion already committed this fiscal year, nearly $1 billion are slated for purchases of various commodities. Because contracting guidelines do not require that Afghan businesses satisfy strict local-content or local-hiring requirements, little deters these firms from importing such commodities from abroad. Thus, the cessation of spending in Afghanistan may do little more than sound the death knell for an inflated market of Afghan middlemen. My discussions with contracting officials deployed in theater tend to corroborate this possibility. However, no formal study has been undertaken in this regard.

However, on the services side, data indicates that there may be jobs at stake, albeit within a somewhat narrow set of industries. Of the remaining approximately $700 million obligated this fiscal year, most are designated for the provision of “professional, administrative and management support services,” “utilities and housekeeping services,” and “transportation, travel, and relocation services.” Central Command also reported recently employing over 46,000 Afghans and estimated that a further 18,000 Afghans are employed as private security contractor personnel. Granted, many of these jobs may remain in place following a draw-down. But research into the way such industries have developed through US military spending is needed to provide policymakers with better understanding of how the timing and magnitude of troop withdrawal might ultimately affect Afghanistan’s economy.

Getting at such a question may not be as challenging as might otherwise be the case. Last year, now-retired General David Petraeus *85 *87 and Admiral Mike Mullen established Task Force 2010 to examine whether the Department’s contractual spending in Afghanistan is undermining efforts to stabilize the country. So far, this mandate has translated into investigations into whether funds have fallen into the hands of insurgency members, culminating with this summer’s finding that that the Taliban has extracted rents on US transportation spending. Yet, as an organization created to “follow the money,” as Petraeus testified to Congress, Task Force 2010 not only enjoys senior-level support but employs the type of civilian and military experts qualified to consider the broader effects of major contract spending on the country and the implications for its withdrawal. If properly resourced and directed, the task force could offer policymakers a unique way forward. Let’s hope.

A version of this article was published earlier this month by the Small Wars Journal blog, and is accessible here.

Smells Like Teen Xenophobia: Chinese “Angry Youth” and anti-Japanese nationalism

Keqin Wei, MPA

In spite of the growing economic cooperation and cultural exchange between China and Japan in recent years, the number of “Angry Youth” in China is also rising commensurately. The phenomenon of “Angry Youth” refers to young Chinese ultra-nationalists with a visceral hatred of Japan. Since most “Angry Youth” were born after the 1980s, they did not live through the Sino-Japanese War of the 1940s, but nevertheless demonstrate much stronger anti-Japanese sentiment than former generations. Importantly, these youth are generally highly educated and children of the internet age – blogs and chat rooms are often the repository for their anti-Japanese polemics. While there are many reasons for the growing numbers of “Angry Youth,” the most salient are the censored media in China and the way history is taught to students.

“The Modern History of China” is an important course in both Chinese middle school and high school. Stereotypes aside about China’s infatuation with inculcating math and science, great efforts have been made to teach students their national history from the Opium War of the 19th century to the founding of the People’s Republic of China in 1949. Particular concentration is placed on the eight-year Sino-Japanese War in the 1930s-40s. This curriculum is also included on important exams, such as the College Entrance Exam, in order to encourage students to spend more time learning history. For most Chinese young people, having received the compulsory education, Japanese wartime atrocities are described in such vivid details that it becomes deeply ingrained in their memories. In comparison, other aspects of Japan, such as its culture, economy, and politics, are largely neglected.

Furthermore, the internet provides biased reports of modern-day Japan by amplifying its conflicts with China and reiterating tense historical issues. Just a few months ago, if one searched for “Japan” on Baidu, the most popular Chinese internet search engine, the top three news hits were: “Crisis in Fukushima,” “Japan claims its sovereignty over Diaoyu Islands,” and “Japanese history textbooks deny the Nanjing Massacre.” If it were not for the disaster in Japan, there would also very likely be articles criticizing the “basic quality” of Japanese people among the top news articles. As these “Angry Youth” spend their leisure time on the internet and browsing the websites that host such articles, this kind of information is constantly repeated, which intensifies the stereotype of Japanese brutality and hostility towards China.

Psychological research shows that people often make judgments based on accessible information. Most “Angry Youth” don’t have the opportunity to visit Japan, so the information available to them from textbooks and media is often the main resource to make their judgments. Their attitudes towards Japan are biased based on these historical memories and prejudiced news source.

Social norms also help shape people’s behavior, especially in a country like China which has a strong tradition of collectivism. As framed by former PRC president Jiang Zemin: “Forgetting the humiliating Chinese modern history means betraying your country.” In this environment, forgetting or even forgiving Japanese aggression is tantamount to treason. A second example comes from a popular Chinese movie about the Nanjing Massacre, “Nanjing, Nanjing” (2009). The Nanjing Massacre of 1937 is widely regarded as evidence of Japanese soldiers’ brutality and is still a hot topic given current Japanese leaders’ reluctance to apologize for its occupation of China. Upon the film’s release, one influential movie critic was quoted as follows: “You are not qualified to be Chinese if you do not watch this movie.” The assertion that failure to appreciate a movie about Japanese wartime brutality means losing one’s Chinese identity puts extreme pressure on those who do not plan to see the film.

While these social norms partly explain the expansion of anti-Japanese nationalism, why does the anti-Japanese sentiment in the “Angry Youth” surpass that of other age groups, including older generations who actually lived through the brutality of occupation?

One would not be surprised to find out that peer pressure plays a large role in shaping this attitude for teens. The Chinese internet, which is notorious for its censorship of sensitive political topics, has no problem with the proliferation of nationalist comments. Allowing the “Angry Youth” to be the only outspoken adolescent political group in the country gives the false impression that they are the only politically-oriented youth in China. When “Angry Youth” spread their anti-Japanese comments on internet, people their age with similar education backgrounds tend to take this movement as a reference group, and modify their own attitudes accordingly.

Nationalism proves to be an effective tool for totalitarian states to suppress dissidents and maintain social stability. To date, it seems China has been successful at stoking nationalist themes and training “Angry Youth” to vent their frustrations in politically-acceptable directions. Unfortunately, it seems that these “Angry Youth” have already begun to transform their attitudes into behaviors, as evidenced by frequent anti-Japan demonstrations that have taken place since 2004. One way to assuage the hostile attitudes towards Japan is to expand the information channels about Japan, by introducing Japanese cartoons and movies in China in order to show different aspects of the island nation; and most importantly, to revise Chinese modern history textbooks to show the Chinese people that modern Chinese history is much richer than an eight-year war with its neighbor.

Thanks to Eddie Skolnick for his comments and editing.

"Randomized control trials" on trial: Evaluating the efficacy of RCTs

Jake Velker, MPA

Are randomized trials the way to finally start making a dent in reducing poverty, after years of hopeful thinking and disappointing results? Does this tool for evidence-based policymaking hold the key for practitioners to determine which poverty reduction programs work and which don’t? These questions motivate two recent books published by researchers who are at the vanguard of the randomized control trials (RCT) movement: More Than Good Intentions by Dean Karlan and Jacob Appel of Innovations for Poverty Action (IPA) and Poor Economics by Abhijit Banerjee and Esther Duflo of the Abdul Latif Jameel Poverty Action Lab (J-PAL). They deliberately introduce randomization in the implementation of anti-poverty measures to provide confidence in the programs’ efficacy (or lack thereof).

The results thus far have been dramatic and not always intuitive: microfinance is less effective than we hoped [1]; free bed nets are used more often (and prevent more malaria) than those that cost money.[2] IPA and J-PAL are currently involved in dozens of trials and are generally credited with bringing an unprecedented level of rigor to the evaluation of development—a field normally dominated by grand theories and polemics.

Enough praise has been heaped on the “randomistas” that I feel confident I can focus on the criticisms of their methodology without sounding uncharitable.[3]

The first criticism—leveled forcefully by Princeton’s Angus Deaton—is that randomized trials do not help us in any systematic way to gain an understanding of why interventions work.[4] In this sense, IPA and J-PAL are part of a broader trend in economic research that eschews theory in favor of real-world applications and problem-solving. This is irksome for many economists, particularly those who believe that poverty cannot be solved without a broader accounting of the mechanisms that keep people trapped in poverty. Randomized trials are beginning to test theoretical frameworks more directly, but there is still much progress to be made.

The most relevant criticism, however, is political. IPA and J-PAL economists have been accused of ignoring the institutional constraints against which their interventions would inevitably contend if scaled up. Often, research from randomized trials offers a conclusion like “we find that intervention X lowers Y disease transmission by Z percent.” While it is extremely helpful to have confidence in the efficacy of a treatment, glaring questions remain. Does the program work when it is implemented by a weak bureaucracy, rather than university-trained researchers? At scale, who will be responsible for administering the recommended program? What are their incentives to perform? Where will the money come from? If the intervention is so successful, were there good reasons it wasn’t tried before?

A troubling case in point involves one of the most heralded studies from the RCT movement to date. Working in Kenya, economists Michael Kremer and Ted Miguel found that providing de-worming medicine to students boosted school attendance cost-effectively.[5] Spurred by their research, the Kenyan government committed to making de-worming medicine available to more than 3,000,000 of its primary school children in 2009. But the policy was recently discontinued due to a dispute between the Kenyan government and international donors over corruption and the administration of education funding.[6] It should go without saying that for the ultra-poor, these sorts of bureaucratic obstacles are the norm, rather than the exception.

If economics is just supply and demand, the work of IPA and J-PAL has focused thus far mostly on demand. It is difficult to quantitatively study governance—imagine what an RCT studying a poor country’s provincial governance, for example, might look like—and even harder to actually improve the quality of basic services in developing countries. So many of the interventions RCTs have found to be effective involve classic public goods, which by definition remain under-provisioned by private markets. But the bureaucracies of developing countries are generally ineffective, if not downright corrupt. This is where economics loses its relevance and institutions and leadership rear their ugly heads.

These problems have not been amenable to ever-more creative randomized trials. In fact, many of the most celebrated finds of the RCT movement are relative “no-brainers.” Who, after all, would argue against treating poor school children for intestinal worms? Esther Duflo and her colleagues have said that we do not know what works. Many would respond that we know perfectly well what works; but do not know how to do it. Perhaps the real questions start once an intervention has been proven to work.

Randomistas respond to this critique as follows. First, it was never their ambition to overhaul the political economy of the developing world. The fact that they have found real evidence of effective interventions is in itself a major accomplishment. They believe that their approach can improve lives even in discouraging political settings. They are not promising a sweeping social revolution, but rather a “quiet revolution” of incremental gains. And even critics will concede that though the modesty of this approach may be unsatisfying, it is nonetheless an improvement on the empty promises all too frequent in the development world.


[1] Abhijit Banerjeey, Esther Duflo, Rachel Glennerster, and Cynthia Kinnan, “The miracle of microfinance? Evidence from a randomized evaluation,” Working Paper (unpublished), May 2009.

[2] Jessica Cohen and Pascaline Dupas, “Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment,” Quarterly Journal of Economics, Vol. 125:1, 2010.

[3] For examples of such praise, see: Ian Parker, “The Poverty Lab: Transforming development economics, one experiment at a time,” New Yorker, May 2010
; James Crabtree, “Attested Development,” Financial Times, April 2011; William Easterly, “Measuring How and Why Aid Works – or Doesn’t,” Wall Street Journal, April 2011; Ben Goldacre, “How can you tell if a policy is working? Run a trial,” The Guardian, May 2011; and Nicholas Kristof, “Getting Smart on Aid,” New York Times, May 2011.

[4] Angus Deaton, “Instruments, Randomization, and Learning about Development,” Journal of Economic Literature, Vol. 48:2, June 2010.

[5] Edward Miguel and Michael Kremer, “Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities,” Econometrica, Vol. 72: 1, January 2004.

[6] Justin Sandefur, “Held Hostage: Funding for a Proven Success in Global Development on Hold in Kenya,” Global Development: Views from the Center blog, Center for Global Development, April 2011.