Aid Thoughts

Over at the Roving Bandit, the Skeptical Bandit asks an important question: we've spent a lot of time arguing over the net effect of 'the brain drain,' the migration of skilled labour from poor to rich countries, but we spend very little time worrying about the internal brain drain - the movement of skilled labour from the public and private sectors to development agencies and NGOs.

Donors and NGOs typically have a mandate to hire local staff (we would be worried if they didn't). Since foreign agencies have the desire to get the best and the brightest to work for them have a higher ability (and perhaps willingness) to pay, there is a small, but perceivable migration of talent from local governments to their development partners.

Anyone who's spent time working for a developing government is familiar with the following scene: your department has a few extremely capable servants who spend a disproportionate amount of their time looking for jobs outside of government, at the expense of their work.

Efficient civil services rely on a key driver of effort: career concerns;  you work hard because you want to climb the ladder. When the top of that ladder ends at the UN, not the government, ambitious civil servants will feel less motivated to excel (unless they are trying to impress a donor). Even when the few bright stars do bother to overachieve, they're quickly snapped-up into the development sector.

This also reduces a government's incentives to invest in the human capital of their own civil service. Why send your employees off for further education if it will increase the chance they'll defect?

Donors and a charities, on a whole, don't see a problem with this; they are typically smitten with the belief that the recipient government is incompetent or corrupt and so lose little sleep over recruiting local expertise. These beliefs aren't entirely unjustified - NGOs and aid agencies often are much more efficient than local governments, but the practice of poaching talent reinforces this reality as the internal brain drain inevitably hinders government's capacity. By contributing to a low-capacity 'trap' for governments, the development sector ensures its place in the world (even if this is not their intention).

Of course, governments are not entirely blameless when their best people jump ship. Aside from the lure of a international salary, people ordinarily leave government because the working environment can be really awful. Government ministries, especially in Sub-Saharan Africa, are notoriously anti-meritocratic. Advancement up the career ladder is contingent on you are connected to, not how you perform, and lacklustre performance is at best punished by transfer to another department and at worst met with indifference. No wonder the bright and capable move at the first opportunity.

The internal brain drain is also not limited to government - the presence of large donors willing to pay big salaries will also draw smart, driven people who were otherwise destined for the private sector. Unlike the external brain drain, which is usually driven by overseas (private) demand for cheap skilled labour, the internal brain drain is caused by the development sector, which in many senses is an artificial market, subsidised by foreign aid, which crowds out private human capital. Why risk starting up that new business when you can get a guaranteed UN salary?

Like the external brain drain, movement of skilled workers to the development sector might still have a few positive impacts. The chance to work for a hot-shot NGO or aid agency might be inducing people to invest more in tertiary education. Also, migration need needn't be strictly one-way - local staff may eventually make their way back to government, bringing their experience with them.

What about the net effect? Is it positive or negative? We really can't say - this is an area of aid that has been neglected from day one - partially because it's difficult to collect and analyse data on the internal brain drain, and partially because the donors really don't care. Nancy Birdsall warned us of the dangers of poaching it in her CGD paper Do No Harm, but otherwise the internal brain drain has consistently been considered little more than a footnote of worthy concern.

There are some tangible solutions to bring to the table: instead of poaching it, aid agencies should subsidise talent within recipient governments wherever possible. This can be politically tricky - a civil servant with a hefty paycheck coming from DFID or the UN may be considered an outsider. Also, as I discovered in Malawi, intra-office inequality can create feelings of jealousy and damage team performance. A better approach could be to establish funding streams for high performing civil servants, rather than subsidising individuals. Government should reciprocate by reforming their systems to make them more friendly to the career-minded workforce.