Getting the Best Advice: A Case of Market Failure?

One topic of conversation on the second and last day of the “New Petroleum Producers Discussion Group” event at Chatham House in London was how governments could get better advice from the international development advisory “industry.”

Is the market for such advice working properly, or is there a failure? Experts and representatives of governments from new producer countries explored both the demand side (what governments were doing to solicit and implement advice) and the supply side (what sort of advice the advisors were offering).

On the demand side, particularly in resource governance, governments must make a wide range of decisions and face a menagerie of donors, NGOs and others all offering their services and opinions. To manage these challenges, governments must become better consumers of advice. Mapping exercises that expose what decisions governments must make and the systems they need to implement decisions could be useful. Another suggestion was the establishment of an inter-ministerial body to act as a clearing house for advice; such a body could coordinate the needs of government and match this to the right advisors.

On the supply side, some present representatives criticized advisors for delivering a product that was overly academic in tone, difficult to digest and, in some cases, lacking in actual expertise. Participants at Chatham House identified other sources of advice, and some encouraged governments to support domestic think tanks and take opportunities to learn from peer governments. Indeed, widening the potential supply of advice might encourage greater competition amongst advisors, it was observed. This increased supply, combined with government officials who are better at “knowing what they don’t know” and therefore better at articulating and coordinating their demands, might result in a more efficient market for advice.

David Manley is an economic analyst for RWI-NRC.