My friend Devesh Kapur sent me his latest piece, “Perhaps the World Bank should stop helping those unwilling to help themselves,” with a note saying, “We may perhaps disagree on this.”  On the contrary, much of what he says in the article echoes what we have been saying in this blog.  While I agree with his diagnosis, that despite its many accomplishments, the Indian government is particularly weak at delivering essential services such as education, health, water and sanitation to the poor, I don’t agree with his conclusion that the World Bank should stop lending to India in these areas, and concentrate instead on knowledge assistance. 

For one thing, there is no guarantee that public services will improve if the Bank stops lending money for them.  For another, there is a good reason why the combination of knowledge and financial assistance can be more powerful than knowledge alone.

The reason is that development is a gamble.  We don’t know if a particular way of delivering education—school vouchers, say—will work.  By providing only knowledge assistance, for example by undertaking research on the global experience with school vouchers, and providing advice on designing a voucher scheme in India, the World Bank would be asking the Indians to absorb all of the risk associated with a voucher scheme.  If the Bank were also to invest in the scheme, it would be sharing the risk in two ways.  First by putting money behind the program.  Second, and perhaps more importantly, by signaling that we will stay with the program through implementation.  Often the success of a program depends on its implementation.  A pure knowledge provider would typically not be there for this stage of the exercise.