Monday, November 28, 2011

Jeff Sachs's Millennium Villages Project not looking good

A remarkable study reached the public last week. It is the first independent, rigorous, firsthand evaluation of the Millennium Villages Project (MVP), an effort by the United Nations and Columbia University whose admirable goal was to show that “the poorest regions of rural Africa can lift themselves out of extreme poverty in five year’s time.” The new study shows that the MVP is far from reaching that goal at its flagship site

Working on her own, without the collaboration or endorsement of the MVP, Kenyan economist Bernadette Wanjala of Tilburg University collected data on households in or near the site at Sauri, Kenya, where the project was launched in 2005. She interviewed 236 randomly-selected households that had been exposed to the MVP’s large package of agriculture projects, education programs, infrastructure improvements, and health/sanitation works. She also interviewed 175 randomly-selected households from an area of the same district (called Gem) that was not exposed to the intervention. ...

In their just-released paper, Wanjala and her colleague Roldan Muradian of Radboud University use the new survey data to measure the project’s impact on poverty. They carefully compare treated and untreated households that were otherwise similar in many ways—such as household composition, adults’ education, fertility, economic sector, and land holdings. Because this project is large and intensive, spending on the order of 100% of local income per capita, it is reasonable to hope that it might substantially raise recipients’ incomes, at least in the short term.

Wanjala and Muradian find that the project had no significant impact on recipients’ incomes.

How is this possible? While Wanjala and Muradian find that the project caused a 70% increase in agricultural productivity among the treated households, tending to increase household income, it also caused less diversification of household economic activity into profitable non-farm employment, tending to decrease household income. These countervailing effects are precisely what one might expect from a large and intensive subsidy to agricultural activity. On balance, households that received this large and intensive intervention have no more income today than households that did not receive the intervention.
 --Michael Clemens, Center for Global Development, on another big-push development failure. HT: Marginal Revolution

UPDATE: See a skeptical appraisal of the Muradian and Wanjala paper by Chris Blattman here.