Role of an Economist in DFID

17 March 2008

There are over 90 economists in DFID. The economists are located throughout the organisation and play a full part in the day-to-day business. Some are in London and some are in the offices overseas. Locations include Bangladesh, the Caribbean (Barbados), Democratic Republic of Congo, Ethiopia, Ghana, India, Kenya, Malawi, Mozambique, Nepal, Nigeria, Pakistan, South East Asia (Thailand), Sierra Leone, South Africa, Tanzania, Uganda, Zambia, Zimbabwe and the World Bank in Washington.

There are two main types of jobs for Economists in DFID:

A. Regional work. Work includes developing, managing and monitoring strategy, programmes and projects for DFID support to developing countries. You will work in multi-disciplinary teams (for example with social anthropologists, engineers and project managers) and you will need to develop excellent team-working skills.
B. Policy and research work. The other jobs are described as policy jobs -although in practice you will be involved in a range of activities including developing policy papers, briefing senior management, managing research, supporting your colleagues in the field by keeping up to date with good practice in aid programmes, synthesising experience with DFID projects, maintaining a dialogue with the UK and international aid community (eg NGOs, academics).

Why is an Economist Needed??

The range of roles includes:

Understanding development issues: Some of the other disciplines in DFID and the project managers (or administrators) will not have had a professional or academic background which includes development issues. On the whole the economists will have a masters or first degree which includes development issues and therefore you should be contributing an understanding of how economies in developing countries work and what constrains them. You should be familiar with the general growth, trade, adjustment and other development literature, as well as the issues and literature on poverty.

Strategy and policy development: A key issue for DFID is how to utilise very limited staff and financial resources with the maximum impact on poverty elimination. Each country programme will develop a strategy about once every three years. Preparing for and influencing this strategy is a key role for the economist. You will be expected to have a good understanding of the macro-economic situation of a country, of the key development constraints and ideas to unblock these constraints. This understanding should be broader and deeper than the knowledge you gain purely through the projects that you work on. You should develop the confidence to be able to challenge historic patterns of aid if you think that the aid programme can be targeted more efficiently. You will also need to be able to consider how international and domestic policies impinge on development and propose reform, if desirable.

Economic Appraisal: All projects and programmes in DFID must be appraised. This involves determining whether the costs warrant the expected benefits. There are standard techniques for appraisal including cost-effectiveness, cost-benefit, financial appraisal, option review etc. These are explained in the Treasury Green Book (see below) and in a wide literature on Cost Benefit Analysis - including a DFID manual. You should become familiar with these techniques and at the project level you should try to ensure a link between appraisal and performance targets for projects. Some sectors eg Health and Education have specific economic appraisal issues and as the economist you should make sure that the economics of social sector projects are given strong attention. At the practical level focusing on option appraisal and cost-effectiveness may prove to be the best way to influence project design and choice. It is very important to become involved at an early stage and to be able to stand back and consider options and re-design of projects.

Understanding the role of the public sector: Most aid interventions are made by the UK public sector through the partner country public sector. This means that a solid understanding of the role and justification for involvement in the public sector (ie market failure, public goods, regulation) is essential and underpins much of what is done by the aid programme in all sectors. Other advisers will not have this understanding and you can add value across all sectors by bringing this perspective. In many countries - particularly in Africa - it is also important to understand the budgetary implications of aid and the options for passing aid directly through the budget. You should familiarise yourself with ideas about this (see Policy Division guidance on budgetary support, conditionality, and macroeconomics).

Capacity Building and Institutions: Many projects and programmes in DFID concentrate on developing the capacity of institutions, particularly public sector institutions. There is a set of advisers called "Governance and Institutions Advisers" who provide advice on these initiatives. Sometimes there can be a tendency to focus on internal organisational development issues rather than on the relationship between an institution and external users/customers of services or the external environment that influences it. A good understanding of principal-agent theory and new institutional economics will help you see the key role that an economist can play in the appraisal of these types of projects. Similarly an understanding of the impact of development assistance on the labour market is important. Aid interventions by providing Western Know-How can distort local labour markets (and related tax bases) and it is important for the economist to think through the implications of technical assistance on the labour market.

Impact Assessment: It is important for DFID to assess the impact of policies, projects and programmes. This means setting targets and measuring change over time or change compared with control groups. Economists should play a very important role in designing the monitoring and evaluation framework, in measuring and judging impact and in feeding this through into new programmes. Over time you should develop confidence in impact assessment techniques. Many of these involve social science research approaches and if you lack these (eg if you have done a taught Masters) then this an important area in which to build expertise.

Building Networks: Economists in developing countries are often in influential positions, whether they be in government, in academia or in the private sector. As the DFID economist it is important to try to build networks and seek to learn about issues and eventually to build the confidence to try to influence networks. Similarly you should try to build networks with economists from organisations such as the World Bank and the IMF who can also be influential.

Innovation: The economist on geographical programmes often plays what is called a cross-cutting role i.e working across a range of sectors (such as health, education, agriculture). Sometimes this can leave little time or energy for developing your own ideas for initiatives and change. Try to find time to think about new interventions and do not just react to proposals developed from others.

Problems and Difficult Issues: For those economists who are working in multi-disciplinary teams it is sometimes difficult to understand the exact role that the economist is expected to play in the team. Often the immediate issues surrounding a strategy or project seem to be technical or institutional and the specific role for the economist can sometimes seem unclear. In these situations it is important to remember the key issues of rationale/market failure, option appraisal, cost-effectiveness and impact.

Policy and Research Work: Much of the above list relates to regional work. You should not face the same problems of defining your role in relation to the rest of a team when you are doing policy work. For an Economist in International Division and Policy Division much of the work will be Task Based. (eg preparing research papers) and you will work closely with your Economic Adviser manager. You will need to develop good research skills - including making effective use of the DFID Library - and make contacts with the UK development community, particularly academics.

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