Tag Archives: regional development

Changemakers where you least expect them

It turns out crisis-ridden Greece is abuzz with innovation: resistance to bold, radical moves tends to melt away when it becomes clear that business as usual is not an available alternative. Perka, in Thessaloniki, are running a 200-people strong urban gardening operation in an abandoned military base. Anosi, in Volos, have set up an ingenious cut-out-the-middlemen food distribution system; Spithari are building a self-sustaining community “in the middle of nowhere”. There’s more where these came from.

I know this because my friend Petros at FreeLab found out. In the early stages of a project called Expedition Freedom, he combed mainland Greece for interesting stories, made contact with the people running these projects, and convinced them to share their experience for the benefit of all. This is a very respectable achievement: it denotes high-grade research skills and prowess at diplomacy in winning their trust over (some Greeks are not feeling overly friendly with respect to research efforts from Europe, as you might expect). This is even more impressive when you think Petros is not Greek and does not speak Greek.

You might be forgiven for imagining that Petros is some kind of hotshot development economist. And he is, in deeds – Expedition Freedom is sterling silver economic development, at least as much as “my” OpenPompei project. But he does not work for a government, an international organization such as the World Bank, or a large NGO. A former IT small entrepreneur, when his company went bust and he found himself owning nothing, he decided to become a “full time social contributor – a travelling commoner, anarchopositivist, political writer and homeless activist”. He stood on his own two feet for the first reconnaissance mission of Expedition Freedom, hitch-hiking for more than a thousand kilometers across mainland Greece. He raised some very modest funding for things he could not replace with his own time and work – myself and other people in the Edgeryders community put in a little help in this, buying things off a shopping list he had (the most expensive item was a bus ticket from Greece back to Poland for € 100).

What gives? For several years now I have been exploring the fringes of the economy, fascinated by human ingenuity at the edge. I have become convinced that hackers, activists, DIYers are a real force for development – perhaps the only fresh resource we could conceivably deploy after decades of failures and ineffectiveness. If you think of society as an ecosystem, these people are the variation part in the variation-selection engine: they build and unleash into the world strange artifacts like open source software, soft IPRs, 3D printers, cryptocurrencies. Like pioneer species, most of these innovations will go extinct. But some will colonize the economy, and shape the world we will all live in tomorrow. It is really important for any self-respecting government to engage with them; and yet, they seem to live in a blind spot of pretty much any official or credentialed expert I ever talked to. Petros, however, knows they are important. He can find them and engage them.

Make no mistake: this is public policy at work – except for coming from an unexpected direction. It is aimed at the common good (distill and circulate the practical knowledge for bottom-up innovation to thrive); it is guided by a clear vision (seed society with as many robust groups of innovators as possible, and let them compare notes to accelerate adoption of whatever works); it deploys tools off the policy makers’s shelf (research, networking and diplomacy). And it is several orders of magnitude more efficient than anything I have ever seen in the public or corporate sector. Any well-funded government project would hastily declare success even with the results Petros has achieved already. In fact – though I have something of a reputation myself for this kind of work, in some circles – his results on almost zero resources humble me, and prompt me to try and get better at what I do.

My takehome point from this story: development policies, traditionally a province of Big Government and Big Nonprofit, are now amenable to being rolled out by networked individuals – with uncanny efficiency. No longer a monopolist, if public policy is to make a meaningful contribution, it needs to enlist people like Petros; not divert them from what they are doing, but helping them to do it, lending it the state’s legitimacy (and maybe a little of its resources). From the point of view of the state, this looks like wielding a fishing rod: thick and rigid at the handle, where full-fledged Weberian bureaucracies interact with cabinet ministers, thin and flexible at the end, where people like Petros engage hackers and innovators as they try to patch together a viable societal model for a crisis-stricken country. The intermediate section of the fishing rod ensure that the policy has the necessary latitude at the end, while still being tightly compliant with regulatory requirements at the handle. Petros might make an unusual ambassador for a state (he would be the first one to say so!), but hey – we are not mass societies anymore. Better get used to it.

Petros is now fundraising for the second phase of Expedition Freedom.

Do no harm: when well-meaning public policies hurt society

Just as I prepare for Policy Making 2.0, I wonder if we are not missing something important there. I am as fond of technology, science-based modeling and data-powered approaches as the next guy. And yet, the technology, the modeling and the data crunching are just the glazing of the policy making cake. The dough beneath it, orienting the deployment of our technological wizardry, is the policy maker’s world view – and that is in bad need of an overhaul.

Let me explain. I find that the vast majority of policy makers – regardless of their political preferences – subscribe to a linear model of policy. An issue is detected; it works its way into the political discourse; an approach is found to tackle it and validated by democratic vote; leaders make it into regulation; such regulation is then enacted by the executive branch, to the desired effect. The linear model may sound reasonable end even “evidence based” if the process leading to crafting the response includes data processing. But it holds only if society is like a machine: relatively simple and tractable, with no second-order effects. If you believe this to be an acceptable approximation of reality, you’ll like the linear model just fine. Traditional economics does: I have sat in classes where optimal policy is computed by maximizing a social welfare function, itself the result of aggregating each individual’s utility function. If your economy is not at the maximum, you should (and you can, in principle) push it there by manipulating the price system (through taxes and subsidies), the level of economic activity (through tweaking taxes and spending) and financial constraints on economic agents (through interest rate fixing, quantitative easing, reserve requirements etc.) and regulation (like standard setting).

If you, like me, believe you are living in a highly nonlinear world, resembling an ecosystem much more than a machine, and better understood by a complex systems approach, then the linear model will not work for you. Neither will its tools – taxes, subsidies, spending, monetary policy, regulation – be reliable.

It’s not a just a matter of not working. I am becoming convinced that deploying these tools can be downright harmful. In trying to correct for a perceived distortion, the state applies some pressure to try to offset the distortion. But, all too often, the economy reorganizes as individuals try to take advantage of the state’s intervention. An example with regulation: to contrast the proliferation of short-term employment, a government might make it more expensive to hire on a temporary basis. And companies might respond more or less forcing would-be employees to start one-man businesses, so as to transform employees into suppliers. Result: even more insecurity for the people in question. Another example, this one with spending: a government decides to encourage R&D spending by funding joint research projects between companies and universities. Problem is, when companies see a business opportunity, they will typically not wait for public funding, but just go ahead with the project. Later, they might apply for funding to pay what they have already done – shifting the burden of paying for the R&D to the taxpayer while not generating any additional new product. Final result: much application forms writing, many projects (with high overhead) funded, but very few new products.

Both these things – give or take some important technicalities – have happened in Italy. The distortion of a local economy by massive public spending is visible to the naked eye: you talk to smart, entrepreneurial young people in Italy’s Mezzogiorno, and chances are they will be aware of the main programmes funded by the European Social Fund, the European Regional Development Fund and their national counterparts. A discouraging amount of their time goes into second-guessing funding agencies and writing applications with all the right buzzwords. And why not? It’s the biggest game in town. Italy’s Strategic National Framework allocates 125 billion euro to economic development over the 2007-2013 period (source, p. 236). That’s a lot of money. To give you a benchmark, World Bank lending commitments worldwide for the same period amount to less than 200 billion euro (source – the page, as I can’t seem to reference the graph directly).

Of these, 101 are concentrated in four regions in the Mezzogiorno (rightly) perceived as lagging behind. Regions are the main spending agencies in Italy: this allocation of resources means that the four regions in question need to juggle the administrative workload of funding, in an accountable way, an average of 3.5 billion euro per year on regional development projects alone – whereas the remaining 15 regions “only” allocate an average of 200+ million per year to the same end. Since money This results in chronic underspending by the least developed regions, who struggle to manage this flood of money.

This accounts for the distortion in incentives I mentioned above. While a great majority of public spending ends up going through traditional channels – incumbents and old boys networks, like everywhere – many of the best and brightest people in Italy’s Mezzogiorno end up spending a lot of time thinking on how to get a piece of the action. Recently, my friend Tiago Dias Miranda spent some time in Basilicata and reported:

[…] one of the first things that struck me was the fact everyone kept on talking about bandi, which at first I thought it had to do with music bands. Little did I know bandi means “competitions” [public sector tenders and calls for proposals]. […] unless there is an elephant in the room that I haven’t seen­­— this territory is highly subsidised, just like developing country receiving donations from the wealthy families.

Most people, within government and without, are aware of this effect of spending, but see it as a necessary evil. “We have to do something for lagging regions – they say – This way of doing things may be inefficient, but it does move things in the right direction, bringing about more work and opportunities.” But here’s the catch: this argument only holds if you accept the linear model. If the economy is complex enough, self-organizing effects begin to show. People on the ground try different things (in Basilicata many people have been exploring tourism services, for example), tinkering with their lives and economic activities. Some selection mechanism functionally similar to natural selection for evolution rewards the successful strategies and eradicates the unsuccessful ones. The former get imitated by more and more people, while the latter go extinct. This gives the system a measure of self-healing, of bouncing back – unless, that is, an injection of public spending keeps the attention of innovators on goals set by the funding agencies and off the tinkering-then-selecting activity.

Tiago’s observation that “everyone is talking about tenders” in Basilicata implies that, in a different situation, the same people would be talking about something else. Maybe they would start companies; maybe they would migrate; maybe they would squat abandoned buildings. But they are not doing those things, and this is actively harming the local economy and society, pushing it into a spiral of dependency. In medicine, this would be called iatrogenics; physician’s actions that harm the patient, despite the best intentions.

Per se, these observations are not new – Dambisa Moyo and others have eloquently argued that too much public spending – no matter how well meaning – can hurt a local economy. But they are counterintuitive, and they never made it into the mainstream. In Italy, certainly, the political discourse is all about how much money you can amass behind which goal; so, the point bears repeating.

More interestingly, I am thinking hard about ways to do two things to operationalize these ideas:

  1. diagnose when it is that local economies are complex enough to find an adaptive path towards improvements. This is harder than it sounds, because you have to choose an appropriate level for the analysis, and whichever level you choose you will likely have winners and losers within that level. For example, Italy is definitely big and complex enough to do interesting stuff, but historically it has tended to concentrate the action in the north, with southern regions lagging behind. If you look at the level of a small region, you are almost sure to find, again, areas that are quite dynamic and areas that are not.
  2. suggest tools that lend themselves well to a “do no harm” approach, that assumes you are doing public policy on a complex adaptive system, not on inert matter or on a simple machine.

These will be the subject of forthcoming posts.

Seeds that take roots: the long march of Visioni Urbane


Sorry, this post in Italian only. I review the medium term fallout from a generative regional policy I worked on in 2007-2009, wearing a Ministry of Economic development hat. The policy in question seems to have spawned quite a lot of interesting stuff. My tentative conclusion is that the ingredients of this success have very little to do with the amount of funding allocated, and are basically a function of an initial investment of attention for details, time, and freedom to explore alternative paths. Feel free to use automated translation if you are interested, and to get in touch with me if you want to learn more.

Era il 2007 quando ho iniziato a lavorare a Visioni Urbane, un progetto della Regione Basilicata che si proponeva di realizzare alcuni spazi per la cultura. Nel gruppo di lavoro rappresentavo il Ministero dello sviluppo economico; il mio compito era di spingere il progetto nella direzione di investire molto sulle competenze creative e imprenditoriali invece che nella costruzione di edifici.

I risultati di Visioni Urbane hanno superato le migliori previsioni. Il progetto – almeno per ora – ha avuto successo: la scena creativa lucana, in precedenza divisa da una cultura di sospetto reciproco, ha collaborato con generosità e competenza con la Regione per progettare una rete di nuovi centri per la cultura. Quattro di questi sono stati anche realizzati, non costruendo nuovi edifici ma recuperando edifici pubblici esistenti ma in decadenza e non utilizzati (in questo modo, circa 3 milioni di euro di nuovi investimenti in mattoni hanno messo a valore 10 milioni di euro di investimenti pubblici già effettuati), mentre un quinto, a causa di problemi strutturali insanabili, ha dovuto essere demolito ed è attualmente in corso di ricostruzione. La gestione di tutti e quattro i centri completati è stata messa a bando; in tre casi è già stata assegnata, mentre il quarto bando scade a gennaio. Due dei tre bandi già assegnati sono stati vinti da consorzi di associazioni e piccole imprese della comunità di creativi raccolta intorno al progetto.

Questi sono già ottimi risultati. Ma ancora più notevole è il fallout di Visioni Urbane: il piccolo gruppo di funzionari che lo ha condotto, e che risponde direttamente al Presidente della Regione, ha esteso l’approccio del progetto ad altre policies, parzialmente integrate con VU stesso. A quanto ne so io:

  • la rete di coordinamento tra i centri immaginata per Visioni Urbane si è evoluta in una fondazione di comunità, partecipata dalle associazioni e le imprese della comunità creativa, da diversi enti locali e dalla Fondazione per il Sud (che funziona da acceleratore, perché raddoppia la dotazione finanziaria raccolta dagli altri soci). La comunità appoggia energicamente questa operazione.
  • la linea di apertura a collaborazioni nazionali e internazionali di VU ha attecchito; i bandi per lo startup dei centri saranno aperti anche a soggetti esterni al territorio.
  • il gruppo di VU è stato protagonista nel lanciare la candidatura di Matera a capitale europea della cultura nel 2019. La responsabile del progetto e il direttore vengono entrambi dall’esperienza di Visioni Urbane.
  • la Basilicata ha costituito una film commission negli ultimi mesi del 2011. La comunità creativa ha chiesto più volte che il metodo molto partecipato di Visioni Urbane venisse applicato anche in quel caso. Non sono sicuro, però, che questo sia effettivamente accaduto.

Visioni Urbane è stato un progetto generativo. Nei primi tempi è stato necessario fare un investimento iniziale di attenzione, tempo e libertà. Attenzione ai dettagli, per imparare a fare fruttare al massimo ogni occasione e ogni euro di denaro pubblico; e tempo e libertà di azione per crescere, esplorare le alternative a disposizione, rimettere in discussione il proprio modo di pensare la policy (ne ho parlato nel mio libro). Questo ha ridotto, inizialmente, l’efficienza amministrativa misurata in velocità di spesa (ci abbiamo messo diversi anni a spendere quattro milioni di euro), ma ha lasciato all’amministrazione nuovi strumenti per analizzare e per fare. In tempi di crisi e di risorse calanti, è un pensiero che mi dà speranza.