It seems to me that we have ended up in a strange equilibrium. With one hand, the Western developed nations are taking actions that have obvious deleterious effects on developing countries... With the other hand, we are trying (or at least purport to be trying) to help developing countries through foreign aid... Probably the strategy that we as the West could be doing, is to not take these actions that are causing harm. That is, we don't need to "fix" anything, but we could stop harming developing countries.
—Nathan Nunn, Rethinking Economic Development
EAs typically think about development policy through the lens of “interventions that we can implement in poor countries.” The economist Nathan Nunn argues for a different approach: advocating for pro-development policy in rich countries. Rather than just asking for more and better foreign aid from rich countries, this long-distance development policy[1] goes beyond normal aid-based development policy, and focuses on changing the trade, immigration and financial policies adopted by rich countries.
What would EA look like if we seriously pursued long-distance development policy as a complementary strategy to doing good?
The argument
Do less harm
Nunn points out that rich countries take many actions that harm poor countries. He identifies three main kinds of policies that harm poor countries:
- International trade restrictions. Tariffs are systematically higher against developing countries, slowing down their industrialization and increasing poverty.
- International migration restrictions. By restricting citizens of poor countries from travelling to and working in rich countries, rich countries deny large income-generation opportunities to those people, along with the pro-development effects of their remittances.
- Foreign aid. This sounds counterintuitive—surely foreign aid is one of the helpful actions?–-but there's sizable evidence that foreign aid can fuel civil conflict, especially when given with geopolitical/military motivations rather than humanitarian ones.
I think his argument is most compelling and best-demonstrated using the case of international trade. International trade barriers are low and have fallen over the past few decades, but they still show a clear bias against developing countries:
There is ample evidence that... tariffs placed against developing country products increase poverty, reduce growth and retard industrialization (e.g., McCaig 2011, McCaig and Pavcnik 2018). Despite this, tariffs have been, and continue to be, systematically higher against goods that developing countries produce. They are higher in less-skilled industries for which developing countries have a comparative advantage (Nunn and Trefler 2013). Even within industries—i.e., at the product level—there is a bias against poor countries. Goods and varieties that are of lower quality and tend to be produced by less developed countries, tend to have higher tariffs placed against them (Acosta and Cox 2019).
In addition to tariffs, developing countries often run afoul of anti-dumping duties. Tariffs are generally limited under the international trade regime. However, if a foreign producer is "dumping" (i.e. selling goods at below their home market value in order to drive out competition and later raise prices), World Trade Organization rules allow countries to place "anti-dumping duties" that can be an order of magnitude larger than tariffs. This yields the best articulation of Nunn's argument:
Since the initiation of antidumping duties requires significant legal capacity, these are typically initiated by wealthier countries and are often against less-developed countries... While the aggregate effects of these duties for developing countries are not fully understood, we do have some evidence from one of the hundreds of duties that have been filed. This is for an anti-dumping duty that was placed against Vietnamese catfish farmers by Mississippi catfish farmers in 2003. The effects on Vietnamese households has been studied by Brambilla et al. (2012). They find that for Vietnamese households that had specialized in catfish farming, average annual real per capita income decreased by 40%. This is striking given that, as shown by figure 2, there are hundreds of new antidumping duties imposed each year.
This is an enormous effect and much larger than the size of any effect on incomes found for any form of foreign aid or any policy intervention. If we did find an intervention that increased real per capita incomes by 40% it would be the closest thing we have to a panacea for economic development. However, we effectively have a policy intervention that does this, which is to not impose these policies that significantly harm developing countries.
I focus on this example to show that these macro-scale actions like trade policy do cash out into lower household welfare, often dramatically lower. Each anti-dumping duty wreaks havoc on a whole community of people making a livelihood.
Do some good
While Nunn’s argument is specific to avoiding harm that would come about through policy choices in the West, I think it generalizes very naturally to doing good, although it’s important that this scope is not limited to aid policy. For example, Stefan Dercon points out that rich countries often receive illicit financial flows from poor countries, from corrupt officials and oligarchs. They have the capacity to freeze those assets and return them to governments in developing countries, a policy that could return vast resources to governments in developing countries while disincentivizing corruption.
As another example, developing countries clearly benefit from science and technology created in the West, such as computers or the COVID vaccine. There was no aid involved in the creation of either. In studying the spillovers from publicly funded energy R&D in the US, one paper estimates that only 60% of the new patents produced from a government energy research grant are in the US. The remaining 40% are produced by inventors around the world, possibly in other rich countries, but it’s also easy to imagine that scientists and inventors in developing countries benefit from the US funding more energy research.
I think this positive view of how Western policy can benefit development is important. For my tastes, Nunn’s argument ventures a bit too close to a kind of “the West is just really bad and responsible for all problems” strawman. It’s useful to highlight that often there is low-hanging fruit for policy in Western countries, that is not designed with developing countries in mind, to nonetheless help global development.
Isn’t this just aid advocacy?
One could argue that EA already does something like long-distance development policy, by lobbying rich countries to provide more effective aid to poor countries; see OP's Global Aid Policy program, the former Center for Effective Aid Policy, or the Partnership for a Lead-Free Future.
I think global aid advocacy is a step in the right direction! But just as much as foreign aid is not a substitute for good policy, global aid advocacy is not a substitute for advocacy into good policy by the West. It's hard to see how increasing the USAID budget really offsets the income losses for Vietnamese farmers. So global aid advocacy, while a good starting point, is far from a full realization of long-distance development policy.
Can we do anything about this?
When I’ve suggested anything like long-distance development to people, the cached response that I've heard is, "advocating for policy changes in rich countries is much less tractable than implementing interventions in poor countries, because there are lots of special interest groups/political considerations binding rich governments."
The problem with this argument is that it uses a highly general framing of the relevant policy area ("migration", "trade policy") to imply that much more narrow and specific advocacy will be caught up in all the baggage of the broader area. But that does not have to be the case! Adjacent to the EA community is the progress studies/meta-science community, which does forcefully advocate for policy changes in the US. The Institute for Progress is a DC think tank that, among other things, advocates for increasing high-skilled immigration to the US. Their white papers are technocratic, focusing on little-known barriers to migration (e.g. bringing attention to the Exchange Visitors Skill List) or on how to increase immigration within the current system (e.g. modernizing the Schedule A list of occupations with fast-tracked work visas). Even though immigration is a politically charged issue, they produce technocratic work on useful fixes that could be made using institutional details of specific immigration programs, using pitches designed to appeal to Congressional staffers.
I am not in the DC world, and I don't know if IFP is a model of effective advocacy. But they are at least a proof of concept that technocratic advocacy is possible even on politically charged issues, and that there is power in framing policy advocacy as being in the US's national interests even if it benefits other countries too. Their activity fits into Ezra Klein's description of how policy change happens:
So this is a governing model that in the political science literature is called "punctuated equilibrium": nothing happens, and then all of a sudden, it does. Right? All of a sudden, there's a puncture in the equilibrium and new things are possible. Or, as it's put more commonly: you never let the crisis go to waste. And when there is a crisis, people have to pick up the ideas that are around. And a couple things are important then: One is that the ideas have to be around; two is that they have to be coming from a source people trust, or have reason to believe they should trust; and three, they have to have some relationship with that source...
It's funny, because I've seen this happening in Congress again and again. You might wonder, like, why do these think tanks produce all these white papers or reports that truly nobody reads? And there's a panel that nobody's at? It's a lot of work for nobody to read your thing and nobody to come to your speech. But it's not really nobody. It may really be that only seven people read that report, but five of them were congressional staffers who had to work on this issue. And that's what this whole economy is. It is amazing to me the books that you've never heard of that have ended up hugely influencing national legislation.
This is the core strategy that EA would have to adopt in order to scale a long-distance approach to development policy; going into the weeds of policy, cultivating relationships in DC, working consistently to promote the same policies for a time when someone influential is willing to listen.
To be concrete, here are some long-distance development policies that I think could be impactful to push for. I have not compared them to GiveWell’s top charities, nor do I think such a comparison would be interesting. The crux for most people is whether it is possible for us to improve people’s lives through pushing for US policy levers to be moved. I think these examples provide an intuitive case for why that’s possible. Take them as a provocation.
Nunn uses travel visas to demonstrate how a narrower target than "immigration" can still be quite beneficial for developing countries:
While a dramatic loosening of immigration restrictions may not be feasible for political reasons, there are small changes that could be made in terms of labour restrictions that would have huge effects. Take the example of restrictions and requirements on travel visas. Figure 4, which is taken from Umana-Dajud (2019), shows the visa restrictions facing Ethiopians who want to enter a foreign country. Each country is shaded according to restrictions faced. As can be seen, nearly every country in the world requires a visa to be obtained ahead of time. The handful of countries that allow a visa upon arrival do not have direct flights from Ethiopia. The transit countries all require a visa beforehand. Effectively travel is very difficult for any person from Ethiopia. This must affect international business relations between Ethiopia and the rest of the world, especially given that it is now well documented that very small travel costs—i.e., the cost difference between a direct flight and a two-leg flight—have important effects on business travel, capital flows and economic growth (Campante and Yanagizawa-Drott 2018). Consistent with this, a recent study by Umana-Dajud (2019) finds that visa restrictions have a significant negative effect on trade flows and are estimated to reduce the aggregate welfare of the most-affected countries by as much as 5%.
Advocating for targeted migration policies, such as expanding guest worker programs or reducing travel visa restrictions for business purposes, could have outsized economic benefits to poor countries. Unlike with "immigration", it is unlikely that there will be any coalition against faster visa processing for business travel, or visa-on-arrival. That change could make it more likely that businesses in Ethiopia can form relationships with businesses in the US and thus join global value chains, increasing exports and growth. This is the kind of technocratic policy that need not get tied down in a large political debate.
Consumer purchasing power
Nunn argues that using consumer purchasing power to improve worker welfare in developing countries could also have large impacts. This could either take the form of pressuring corporations to improve welfare standards for workers, or simply purchasing fair trade.
There are a number of cases where consumers, by voting with their wallets, have been able to affect change for the global poor. For example, the public outcry in the 1990s against Nike, Adidas and Reebok sourcing their products from sweatshop factories resulted in pressure that led to changes in production and labour standards in their factories. Harrison and Scorse (2010) document the effects that this had for Indonesian workers. It resulted in higher wages, as the Indonesian government increased the minimum wage by 400%. At the same time, this does not appear to have come at the expense of less production or fewer jobs…
Similarly, recent evidence by Dragusanu and Nunn (2018) finds that consumer purchases of fair trade-certified coffee result in increased incomes of FT-certified coffee farmers in Costa Rica... Since the inception of certification programs, the most well known being Fairtrade in 1997, sales of certified products has grown exponentially. This is an indication of consumers untapped demand for the production of products that occurs in a way that benefits workers in developing countries. As of 2016, the last year for which data are available, there are now over 1,400 organizations and 1.6 million farmers and workers, spanning 73 countries and 19 product categories that are Fairtrade certified (Fairtrade International 2018). This, combined with the growing popularity of such labelling initiatives, suggests the possibility of this being a tool that helps alleviate poverty in developing countries.
To be clear, subsidizing fair trade coffee is clearly not a cost-effective use of resources. But it isn't using our resources! It just involves taking advantage of a consumer preference that descriptively does exist. One of the benefits of long-distance development policy is that it leverages resources that are not normally available if you’re only pursuing impact through aid. Consumer spending is not going to become aid spending, yet it can still have an impact.
Payment processing for remittances
Our World in Data highlights that international migrants send 4x more back to their home countries than the entirety of foreign aid ($781 billion vs $202 billion). However, 6-7% of these remittances are absorbed in fees by remittance processing companies. That means a loss of $50 billion that would otherwise go to households in poor countries.
Why are processing fees high? It’s hard to say. The two important possibilities are that a) remittance processing companies have high costs of transferring money internationally, or b) companies charge high markups over their costs, because they have price-setting power. In either scenario, there are useful policies that Western countries regulating this market can take. If costs are too high, e.g. because the payment systems of the sending and receiving countries are not integrated, then governments can take steps to reduce those costs. For example, OWID cites the US and Mexico integrating their central banks’ payment systems as causing a dramatic fall in the transaction costs of sending money from the US to Mexico. Alternatively, if the culprit is high markups, governments can work out regulations that make it easier for companies to enter the market and increase competition, or they can mandate easier price comparisons between the processing companies.
It’s likely that not all of this cost can be solved by governments in sending countries, that some of it will have to be done in receiving countries, but low-hanging fruit should be picked while it exists.
What would we need to do to make this work?
Suppose you granted this argument entirely and accepted that long-distance development policy is a good idea. You could still argue that EA as a movement is ill-equipped to focus on US advocacy. For example, even if long-distance development policy was a better use of resources than GiveWell's best interventions, it would be a terrible idea for GiveWell to suddenly reinvent itself as a US policy advocacy organization. That's just not their comparative advantage. Similarly, you could argue that global health EAs have a comparative advantage in implementing interventions in poor countries, not in lobbying the US government. They usually don’t have an advocacy background, for example.
To some extent, this argument is weakened by the existence of global aid advocacy. EA, and the development community as a whole, does actively lobby governments all the time – I’m just arguing to expand the focus of these efforts beyond aid.
But possibly a more important counter to that argument is that EA is actually uniquely suited to advocacy. Unlike development policy or development academia or any particular organization like GiveWell, EA is a big tent with different kinds of people working in it. In particular, I think there's a lot that global health EAs can learn from EAs working in animal advocacy and AI governance. These are wings of EA with significantly more experience working with big corporations and the US government to achieve their goals. EA as a movement already contains people and organizations with expertise in pressuring companies to change their sourcing policies, people and organizations with DC policy experience. This ability to learn from each other gives us a pretty strong advantage in advocating for long-distance development policy.
Even so, if EA organizations did want to pivot towards long-distance development policy, it would be important to get hiring right. There are a lot of people and organizations in DC or Brussels with experience in policy advocacy, some of whom are closer to EA than others (e.g. the Institute for Progress is partly funded by OP).
Conclusion
Long-distance development policy offers a different approach than traditional EA development work. Targeted policy changes in rich countries can have large effects on poverty in developing countries. While at first it seems like policy advocacy in the US is intractable, there is a lot of low-hanging fruit, such as technocratic changes to policy or leveraging consumer preferences.
EA is well-positioned to take on this work, both from our existing work on global aid advocacy, and because of learnings from animal advocacy and AI governance work on how to lobby governments and companies to take actions. Long-distance development is not a replacement for effective interventions like GiveWell’s top charities, but it can leverage resources that we don’t normally have access to, and it can achieve benefits at a scale that we can’t otherwise imagine.
Name credits to Sandefur and Subramanian who propose that the US adopt long-distance industrial policy i.e. subsidizing the African textile industry’s exports to the US. ↩︎
I think the bigger question as you've summarised at the end is "what effect would EA spending in these areas have", particularly with GHD being very focused on measuring marginal impact and having some robustly data-supported alternatives. The reason why EA orgs have targeted lobbying more in other areas is the perception they're neglected politically. Trade policy and migration aren't and I don't think EA is a bigger or more politically palatable tent than the people already promoting such ideas....
The virtues of free(r) trade, after all, is a 250 year old economic argument, and one of the least contested arguments amongst people that have actually studied it. Technocrats working in government learn it in their undergrad economics classes, think tanks with various degrees of partnership widely promote it. It's about the only point of agreement between George Soros and the Koch brothers, the world's biggest spending donors to economic policy lobbying. It's difficult to see where EA funding changes anything and the context (Trump promoting protectionism on the [incorrect] assumption that if it hurts foreigners it'll help Americans) couldn't be a worse time to contemplate shifting in emphasis from trade benefiting everyone to the even less contested fact it benefits foreign exporters in poor countries. Maybe a lobbyist in the Brussels could get a slightly more sympathetic hearing from people running that free trade bloc, but the idea that the EU's external tariff policies harm the developing world isn't one they haven't heard before, and they have entrenched interests in protected industries to look after and full blown negotiations with other countries when they;'re looking at lowering external trade barriers too.
Immigration is something facing even louder political pushback in more countries, and the basic fact that immigration tends to benefit immigrants' families is even less contested[1], even by people who don't like immigrants or the idea of immigration very much. But ultimately there are a lot of people in those groups (whilst ironically, the self-interests of politicians they elect on a "tough on migration" platform keep employment visas open). I guess that's evidence you're right that changes can be made at the margin without [or despite] large political debate, but they're keeping guest worker programmes because they're worried about the consequences of lack of guest workers, not because they feel compelled to offer routes out of poverty and the accompanying lobbying is likely to reflect that. The travel visa issue fits into that same "uphill struggle" bracket. I think there's potential to make a huge difference to help individuals' experience with immigration at the margin (not necessarily cost effectively, although making it self-financing is a possibility) but it seems like a losing cause in advocacy terms
Looking at remittance barriers might be more neglected, but I'm under the impression that the main factors pushing those remittance fees as high as 6-7% aren't regulatory, they're the "last mile" to typically unbanked people often in remote areas. That imposes service costs and tends towards natural monopoly (except where it can be avoided e.g. with M-PESA). I think some of those fees trickle into local remittance company offices and agents in villages anyway. That doesn't mean there isn't scope for bringing those fees down but I don't know how easy something like the US-Mexican system is to implement in practice. I think some of the implementation barriers aren't on the developed country side...
with all due respect to "brain drain" arguments that are probably reasonable for aggregate impact in some sectors
"And one of the least contested arguments amongst people that have actually studied it. "
Is it really that far from mainstream in economics to think that sometimes in poor countries, some trade barriers can help protect nascent industries and hence speed industrialization, and that this can be worth the cost to consumers in those countries of the trade barriers themselves? I kind of had a vague sense some famous books/people argue this?
There are some good arguments that in some cases, developing countries can benefit from protecting some of their own nascent industries.
There are basically no arguments that the developed world putting tariffs (or anti dumping duties) on imports helps the developing world, which is the harmful scenario Karthik discusses in his article as an example of Nunn's argument that rich countries should stop doing things that harm poorer countries. Developed countries know full well these limit poorer countries' ability to export to them... but that's also why they impose them
Yeah, I know what I described is not really relevant to Karthik's argument. But we don't want a situation where people hear "free trade is good, economists agree" and then decide to lobby for developing countries to drop their trade barriers in cases where that is actually harmful.
Fair. I agree with this
Plenty of entities who aren't EAs doing that sort of lobbying already anyway