Suman Bery: The market for ideas

Policy research is a fragile reed. It needs nurturing.

Observant readers by now would perhaps know that 2006 marks the Golden Jubilee of the National Council of Applied Economic Research (NCAER). Yet it is not only for this reason that I am choosing a topic for my monthly column that may be regarded as somewhat parochial.

At the beginning of this month, Business Standard reprinted a sharply critical column by Guy de Jonquieres of the Financial Times on the state of think tanks in Asia. De Jonquieres observes that most Asian think tanks "produce pedestrian work that often fails to grapple with""still less answer""the hard questions". He is willing to make something of an exception for India, which, he allows, has some "notably independent-minded research institutes". Elsewhere in the region he feels that questioning the established order is frowned upon. He concludes, I feel correctly, that Asia will need a more active market in ideas if it is to respond to the huge challenges thrown up by its development. Predictably, his column has generated protest in the correspondence columns of the FT, with people writing in to say that he has got it wrong and that there is a distinctive, non-confrontational Asian style for raising and resolving issues.

These observations raise a number of issues on the preconditions for an ecosystem of think tanks to survive and flourish. The indispensable Wikipedia defines a think tank as a "research institute, or informal group providing advice and ideas on any aspect of future planning and strategy". A public policy think tank explicitly focuses on government policies, usually for the purpose of improving those policies or creating viable alternatives.

Wikipedia further points out that the phrase "think tank" was first applied in the late 1950s to the RAND Corporation and to other groups assisting the armed forces (hence the Dr Strangelove associations). But by now the term has become generalised to refer to virtually any locus of analysis, including units within a government department or corporation ("our in-house think tank" is an oft-heard dismissive phrase).

I personally find it helpful to distinguish between those institutions that undertake empirical analysis and those whose focus is more on providing a forum for argument and the projection of ideas, political or ideological. My terminology for these two sub-species is "policy research organisations" and "advocacy organisations". But I am prepared to concede that for the consumer of their products the distinction is at best a fuzzy one.

To illustrate, an enormous amount of empirical research (and data) on developing countries emanates these days from such international organisations as the ILO, UNCTAD, the UNDP, the World Bank and the IMF. Having served within these organisations I know that the internal self-perception is that the results of their analyses are neutral and objective. But seen from the outside, the findings of such research are often dismissed as motivated and pre-determined.

Equally, the triumph of conservative ideas in both the UK and the US is widely attributed to the work of advocacy think tanks such as the Institute of Economic Analysis (IEA) in the UK and the Cato and Heritage Foundations in the US. Yet, to stay on the right side of the tax law, most, if not all, such institutions, particularly in the US, are formally required to be nonpartisan. Also, research output is always individually authored; the role of the institution is to provide quality assurance and infrastructure.

Economic policy analysis is in any case by no means the preserve of specialised research institutions and universities. The major commercial and investment banks now support large global research staffs to provide background research for their clients, while a consulting firm like McKinsey also is willing to underwrite a significant research effort as a way of differentiating itself from its peers. An increasingly active group of players in the Indian space are the major American and British universities, many of whom have Indian-origin staff conducting high-quality research on Indian policy issues.

This increased competition is welcome as it helps to raise the quality of the debate, but it also creates a need for constant innovation in the underlying "business model" of an independent research organisation like NCAER and its counterparts in the developing world. By its constitution NCAER was designed to be an institution supported by contract research. This is in contrast, for example to an institute of advanced study like the Indira Gandhi Institute of Development Research (IGIDR) in Mumbai. Our US role models, institutions such as the Institute for International Economics or the Brookings Institution, draw upon significant corporate and foundation support for their research work, in addition to whatever endowment income they enjoy. Accordingly, despite their reliance on corporate support, these institutions are able to enforce a policy of all research work being placed in the public domain. This luxury is not available to us or to most non-US contract research organisations whose first obligation is to cover their costs. It is not surprising that, in much of Asia, governments are the main research sponsors, with the loss of autonomy that this inevitably entails.

I have so far addressed only the issues that apply on the supply side of policy research. But as de Jonquieres rightly points out, there are equally powerful issues on the demand side as well. The US by far possesses the most fully evolved capacity to absorb ideas from outside sources into its policy process and there is an extensive literature on how this process works. There are many aspects of the US structure that work together to provide this porosity, but I believe a key element is its Presidential system of government and the associated "spoils system" where much of the senior bureaucracy turns over when a new President comes into office. Such a system provides much greater opportunity for radical thinking than a Parliamentary system. British friends of mine have suggested that the Thatcher period was an anomaly, and that the mandarins of Whitehall remain by and large immune to the blandishments of the academic community.

Developing the infrastructure for informed public policy debate is accordingly a tough business, and one that is very context-specific. But I agree with Guy de Jonquieres that it is a necessary component of a modern society. I am staggered by the foresight of NCAER's founders fifty years ago in designing a structure that has evolved and endured this far. If he is right, the biggest challenges lie ahead.

The author is Director-General, NCAER. The views expressed here are personal.

sbery@ncaer.org