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USAID needs outcome measures

The United States Agency for International Development (USAID) was established in 1961 with a mission of fomenting economic and social development through direct assistance. The State Department and USAID are currently operating off a strategic plan developed in 2007 for fiscal years 2007 through 2012. The plan presents seven strategic goals, including the promotion of economic growth and prosperity, with an emphasis on immediate, inclusive, and sustainable development.

USAID utilizes various performance metrics to promote transparency, incorporating the measures into annual performance and accountability reports in accordance with the Government Performance and Results Act of 1993 and the Reports Consolidation Act of 2000. This paper identifies the shortcomings in the performance indicators related to the strategic goal of promoting economic growth and prosperity (see Appendix), and offers alternative measures and direction for metric development. Performance indicators guide agency planning and accountability, and USAID would benefit both operations by employing better focal points.

In fiscal year 2008, USAID conducted 117 evaluations, assessments, and special studies in order to assess the agency’s promotion of economic growth and prosperity, but failed to produce metrics that communicate the agency’s public benefit or cost-effectiveness. In November 2009, the Office of Inspector General noted that “managing for results” was an area in need of improvement for USAID, and specifically referenced problems with the relevance and accuracy of performance measures. USAID responded that it was working to better prepare operational units for performance planning and reporting, but did not express intentions to address shortcomings in the metrics themselves.

The Mercatus Center at George Mason University reviews the quality of federal agencies’ performance reporting, and, in May 2009, noted several deficiencies in USAID’s efforts: few measurable and mostly intermediate outcomes, lack of strategic objectives, raw number measures rather than percentages of end goals, and budget costs only connected to the broad strategic goals. The Mercatus report criticizes USAID for failings endemic in many reviewed agencies: metrics are focused on outputs and fail to communicate the actual public benefit of the agency’s work. Some indicators do measure benefit, such as the number of people with access to modern energy or internet services; however, these measures are vague, only tangentially related to the strategic goal of economic growth, and less relevant to the measure of prosperity than change in income, for example.

The assessment of agency impact on economic growth and prosperity can be difficult. USAID efforts are affected by factors outside the control of the State Department, such as macroeconomic conditions, the cooperation of other donor governments, and the commitment of foreign governments to implement the agency’s plans. In some cases, it might not be possible to isolate the precise causal relationship of a USAID program on the development of beneficiary income or productivity. In addition, impact evaluations can be costly to conduct. Yet none of these complications are insurmountable.

Other agencies have overcome these same challenges in order to measure tangible impact on economic prosperity. The World Bank’s Results Measurement System tracks development effectiveness through measures such as gross domestic product per capita, and the population percentage living on one dollar a day. Franck S. Wiebe, Chief Economist of the Millennium Challenge Corporation (MCC), developed a monitoring and evaluation program for MCC rooted in quantifiable impact on the premise that any agency concerned with reducing poverty needs to demonstrate its effect on income. Wiebe notes that health, education, and other quality-of-life issues related to USAID’s strategic goal of prosperity are also positively correlated with increased income.

USAID should measure agency impact on beneficiary productivity and income as proxies for economic growth and prosperity, respectively, rather than simply counting the number of rural households benefiting from US interventions in agriculture. Following the example set by MCC, USAID could then utilize the new outcome metrics and existing cost data to better understand and communicate the agency’s development efficiency and effectiveness. The processes that generate economic growth and prosperity can vary by time and place, and it follows that agency impact on growth and prosperity cannot be understood by output measurement. Performance accountability that focuses on specific processes or outputs may lead the agency to focus on strategically unproductive activities. MCC spent two percent of its $6.4 billion of expenditures on monitoring and evaluation through March 2009. A similar investment and commitment to measuring USAID’s impact on beneficiary income and productivity is a necessary step towards ensuring that USAID is effective and efficient in its promotion of economic growth and prosperity.

Appendix

USAID Performance Indicators for Promotion of Economic Growth and Prosperity
  1. Time Necessary to Comply With All Procedures Required to Export/Import Goods
  2. Credit to Private Sector as a Percent of GDP
  3. Number of People with Increased Access to Modern Energy Services
  4. Number of People with Access to Internet Service
  5. Number of People Benefiting from U.S. Government-Sponsored Transportation Infrastructure Projects
  6. Number of Rural Households Benefiting Directly from U.S. Government Interventions in Agriculture
  7. Percent Change in Value of International Exports of Targeted Agricultural Commodities as a Result of U.S.
  8. Number of Commercial Laws Put into Place with U.S. Assistance that Fall in the 11 Core Legal Categories for a Healthy Business Environment
  9. Percent of U.S. Government-Assisted Microfinance Institutions that Have Reached Operational Sustainability
  10. 10.  Quantity of Greenhouse Gas Emissions Reduced or Sequestered as a Result of U.S. Assistance
  11. Number of Hectares Under Improved National Resource or Biodiversity Management as a Result of U.S. Government Assistance
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Filed under: Economic Policy

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