M Govinda Rao: Developmental salesmen

An important consequence of transition to liberal open economies in developing and transitional countries is the emergence of the profession of consultants. This new tribe may be more appropriately called "developmental salesmen".

The proliferation of activities of bilateral and multilateral agencies has opened a vista of opportunities for the tribe, and the establishment of businesses by multinational consulting firms in these countries under whose umbrella they can function provides them respectability and honour.

Interestingly, this is a tribe which is never under a scanner for, the usefulness or otherwise of their advice can never be ascertained with definitiveness. In any case, once a mission is complete, they move onwards and upwards for one kill after another.

The opening up of the economies following globalisation and the increased activities of bilateral and multilateral aid agencies provided enormous opportunities for the new profession. The persistence of poverty and backwardness in Africa, and parts of Asia and Latin America provided a fertile breeding ground.

The breaking up of the Soviet Union expanded their area of operation and the political problems in Afghanistan and Iraq added to their business. Indeed like poverty, development to this tribe is an industry and lack of development provides enormous opportunities to proffer advice to the policy makers in those countries that are by definition uninformed and incapable!

The fact that many of these consultants are not adequately qualified to offer advice does not matter. After all, you do not have to be qualified to advise on why public enterprises should be privatised, revenues should be increased, and expenditure compressed to achieve fiscal consolidation, excessive government employment should be rolled back, foreign investment promoted, so on and so forth.

There is already plenty of distilled and packaged wisdom; and peppered with their own common sense, a standard set of policy advice can easily be proffered. In fact, these worthies are experts in everything and there is no subject they cannot cover. They can offer advice on everything""from redesigning toilets for use by Japanese tourists to promoting tourism to methods of auctioning and procurement.

In India, the proliferation of the tribe is relatively of recent vintage. Liberalisation since 1991 and the increased activities of various aid agencies have opened up large opportunities for the profession. In fact, many bilateral donors ordain that their consultancy assignments should be primarily done by their own countrymen.

The multilateral donors would like to offer consultancies through international bidding where a handful of multinational consultancy firms get shortlisted. These hire "international experts" from the list of freelance consultants and the names included are an important consideration in winning the bid.

Interestingly, the expertise of the consultants is determined not on the basis of their research and publications but simply on the basis of whether they have done consultancy work elsewhere.

Of course, "local experts" and institutions have to be taken as partners to do the leg work, connect to the policy makers and provide understanding of the local institutions and systems.

These aid agencies have a great agenda such as fighting poverty, protecting the environment, ensuring gender equity, efficient service delivery, achieving millennium development goals, improving governance and furthering decentralisation.

In the end not much happens because it is not intended to happen. An overwhelming proportion of funds meant for these worthy causes are used for paying huge consultancy fees.

In Cambodia, for example, the Technical Cooperation Assistance Programme, under which $6.4 billion was spent for co-ordinating assistance and building local capacity in fiscal policy, ended up with 82 per cent of the assistance going to international consultancy fees.

The various multinational consulting firms provide an easy framework of linkage and they co-ordinate consultancy by assembling an impressive list consultants. It does not matter whether they have the qualification to undertake the task. What matters is whether they have the experience in proffering advice elsewhere.

Thus, a person with an undergraduate degree in geography can be a team leader for a study on development strategy for the central regions of Vietnam or the team leader for a consultancy on fiscal reform in an Indian state may not know the concept of fiscal deficit.

Of course, retired officials from multilateral agencies and governments find this a lucrative post-retirement opportunity and they are preferred because of their "knowledge", experience and ability to win the bids.

Once hired by these firms, these worthies go around, meet the locals to collect their ideas, package the ideas with jargons, and put them in sleek covers. It is entirely a different matter that the recommendations may have little regard for reality and the institutional milieu in which the policies have to be implemented. In this everyone is a winner. Who cares if the policy advice is inappropriate or unimplementable?

Besides the issue of relevance and quality of the advice, the development has had some important fallouts. Unlike many other countries, India has built a strong tradition of policy research and this faces a serious challenge. The other side of the coin is that the cost of providing the advice to central and state governments has escalated manifold.

Even when one thinks that the money comes from these aid agencies, it must be remembered that nothing comes free. In fact, on fiscal matters, the work that was done by Indian institutions is done by these multinationals at ten times the cost. If the Indian institutions continue to charge low fees as in the past, they are not likely to be taken seriously.

Anything that is cheap, including poison, is not valuable! Second, there are serious questions on the quality of the advice given for, these international experts, even if they are well-qualified do not have an understanding of the institutions in which policies are framed and implemented.

Finally, good researchers who are not risk-averse are likely to join the ranks of developmental salesmen merely for the lure of money and that is likely to drain already depleting human resources in these research institutions. Surely, the institutions will have to change their own policies in meeting this challenge.

The views here are personal. The author is Director, National Institute of Public Finance and Policy. Comments at mgr@nipfp.org.in