Why We Are Expanding the Field of Development Engineering

By Shankar Sastry

This winter, the Blum Center was among the many groups in academia and development to celebrate the recipients of the Nobel Prize in Economics. Professors Abhijit Banerjee and Esther Duflo of MIT and Michael Kremer of Harvard were lauded for their innovative use of randomized control trials and behavioral economics to evaluate the effectiveness of global poverty interventions—and for a body of scholarship that has transformed the field of development economics.

Stated the Royal Swedish Academy of Sciences: “This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty. In brief, it involves dividing this issue into smaller, more manageable, questions—for example, the most effective interventions for improving educational outcomes or child health. They have shown that these smaller, more precise, questions are often best answered via carefully designed experiments among the people who are most affected.”

One of Banerjee, Duflo, and Kremer’s innovations—strengthened by other leading development economists like UC Berkeley’s Edward Miguel—is to emphasize the importance of field work and the contribution of teams. Previously, development economists worked largely in isolation; today, their studies often include dozens or even hundreds of people representing government, nonprofits, civic organizations, and private firms. This approach leads to greater transparency of both the data collected and the methodology used, as well as a richer inquiry into which poverty reduction programs and policies should be studied and whether or how they should grow.

At the Blum Center, we are studying how advances in development economics are part of a new and emerging field, which we call “global problem solving” and “development engineering.” This field is responsive  to the UN Sustainable Development Goals and to the fact that, in many cases, we have the scientific and technological tools to meet the United Nations’ 17 goals but not the financial will or transformative tools for changing people’s behavior to achieve them. Development engineering builds on what development economics has revealed—which poverty interventions are succeeding—and then modifies or scales or re-invents them for implementation elsewhere.

In this way, development engineering is both deeply indebted to development economics as well as a transdisciplinary field for our time. Its rigor is in understanding complex societal challenges—such as the need to build earthquake and typhoon-resistant homes around the globe—and then devising the technological, cultural, financial, policy tools, and work force development to implement these problem solutions.

Elizabeth Hausler, who received her PhD in civil and environmental engineering from Cal, and went on to found Build Change to empower people to live and learn in safer homes and schools, is an exemplary development engineer. When she visited the Blum Center recently, she said her organization’s greatest challenge is not in seismic technologies but in all that surrounds resilient construction in developing nations: community buy-in, policy frameworks, government advocacy, financial product availability and affordability, and ensuring local construction workers are well trained.

Hausler called her efforts “Money, Technology, People” or “The Financial, The Technical, and the Social,” describing a kind of holy trinity of development engineering demands. Another way to describe development engineering is that it enables iterative problem identification and solution formulation propelled by interdisciplinary teams. In essence, we are advocating a transdisciplinary approach that combines the insights-oriented rigor of development economics with the solutions-oriented rigor of engineering. We also aim to integrate business, natural resources, public health, and social sciences into development engineering in order to appropriately and ethically create, implement, and scale new technologies to benefit people living in resource-deprived regions.

Over the next year, the Blum Center will take steps toward realizing the promises of development engineering by partnering with the College of Engineering and the Haas School of Business to hire two tenure track professors. One will be an assistant professor whose focus area may include: engineering better health, the nexus of food, energy and water systems, accessible low-cost energy technologies, the digital transformation of societal systems, climate change mitigation, or sustainable design and communities. Applicants will be hired 50 percent into the Blum Center and 50 percent into a home department in Bioengineering, Civil & Environmental Engineering, Electrical Engineering & Computer Sciences, Industrial Engineering & Operations Research, Materials Science & Engineering, Mechanical Engineering, or Nuclear Engineering.

The second hire will be an assistant, associate, or full professor in Entrepreneurship in Developing Economies who will split his or her time between the Blum Center and the Haas School and whose research topics may include productivity, innovation, small and medium-sized enterprises, financing for entrepreneurial activities, start-ups, venture capital funding, incubators, and policies to promote new businesses.

These professors will help us realize the promises of development engineering and be leaders, with their future students, in the achieving the UN Sustainable Development Goals.

Shankar Sastry is Faculty Director of the Blum Center for Developing Economies and NEC Distinguished Professor of Electrical Engineering and Computer Sciences at UC Berkeley.

A Year of Solutions Science and Scholarship at the Blum Center

Shankar Sastry

What is the role of the university in the wider world? What is the role of scholarship in an era of vast digitally enabled knowledge?

These are two questions we at the Blum Center keep forefront in our minds, as we pursue forward-looking curricula and solutions scholarship related to development. During the 2018-2019 academic year, we sought to practice what we preach by holding interdisciplinary faculty salons on large development questions, both to bolster what we teach and how we can learn from one another.

The faculty salon series was kicked off by Michael Nacht, UC Berkeley’s Thomas and Alison Schneider Chair in Public Policy. The former Assistant Secretary of Defense for Global Strategic Affairs explored the nexus of national security, diplomacy, and development—and gave a sober assessment of what that nexus might produce under the Trump administration. Michael concluded that development in low-income countries will not come out of the strategic interactions of the U.S.’s economic and foreign policy positions but likely will be spurred by the for-profit sector through advances in agricultural technology, artificial intelligence, and bioengineering.

In November, Robotics Professor Ken Goldberg and Business Professor Laura Tyson, Blum Center Chair of the Trustees and Business Professor, debated the effects of automation and machine learning on employment across nations and economies. Ken, who believes automation will both eliminate and create new jobs, proposed a “multiplicity movement” to foster uniquely human skills that AI and robots cannot replicate: creativity, curiosity, imagination, empathy, human communication, diversity, and innovation. He recommended the U.S. reinforce creative and social skills in high schools and universities, so that Americans are in a position to leverage machines with varying levels of automation alongside diverse groups of people to amplify intelligence and spark problem solving.

Laura pointed out that the substitution of intelligent machines for low-cost, low-productivity workers poses the greatest challenge in Africa, where by 2050 the continent’s youth population is estimated to increase by 50 percent to 945 million. She said we must focus our attention on how African countries will fare in global trade and global supply chains, when the availability of comparatively cheap labor is no longer a competitive advantage. She advocated that nations develop comprehensive educational and development strategies that support the livelihoods of their citizens—and that share the benefits of intelligent machines broadly.

In December, Bioengineering Professor and Blum Center Chief Technologist Dan Fletcher presented on his own solutions science related to the London Declaration of Tropical Diseases. Nearly a decade ago, the declaration brought together more than 80 global organizations to control, eliminate, or eradicate at least ten of the diseases by 2020. Progress has been made on some of the diseases, but they still affect nearly one billion people, even though major pharmaceutical companies have pledged to contribute the treatment drugs. The main problem now, explained Dan, is a health information gap—both in terms of who has the diseases and where they are located. His mobile microscopy device CellScope, developed over a decade plus, can fill this gap because it both identifies the infected through testing and provides effective treatment and monitoring, even in the most remote areas. Dan has proven his technological intervention in several major papers, and is now on mission to fund the implementation of this life-saving innovation.

In early 2019, we welcomed Joshua Blumenstock from School of Information, to the faculty salon. Blumenstock, director of the Data-Intensive Development Lab, cautioned that even though the application of machine learning to monitor and alleviate poverty has become a much discussed aspiration, new digital methods may serve more as a complement than a replacement to traditional approaches, especially in the area of economic assessment. However, he did point out that satellite imagery is becoming a key source for development research because it reveals basic physical infrastructure and quality of life trends. In his own research, Joshua has shown that by leveraging machine learning to analyze satellite data, we can draw conclusions about certain aspects of the quality of life with nearly the same accuracy as traditional, multimillion-dollar field surveys.

Technological interventions are never clear cut. This was illustrated in the April Faculty Salon by Professors Isha Ray of the Energy and Resources Group and Alison Post of the Political Science Department. They shared their analysis of the effects of the UC Berkeley-incubated social enterprise NextDrop, which designed a mobile phone intervention to alert Indian households via text when to expect water supply. Isha and Alison’s two-year study found the SMS service failed to have its intended time-saving effect due to a combination of oversights by NextDrop in terms of water service provision, mobile phone ownership, and other information gaps. “It is absolutely essential to understand the role of human intermediaries and how drastically the conditions and results of an intervention can change from one setting to the next,” said Isha.

In May, we discussed Kenya’s rural electrification efforts, studied by Ted Miguel, Oxfam Professor of Environmental and Resource Economics, and Catherine Wolfram, Cora Jane Flood Professor of Business Administration. Although Kenya has received massive foreign assistance to achieve universal energy access, the economic benefits of rural electrification in the world’s poorest places are not straightforward. Ted and Catherine’s research team conducted a randomized control trial to study the effects of electricity connections in 150 Kenyan communities, and found no meaningful medium-run impacts on economic, health, and educational outcomes. The reason? Even when heavily subsidized, the cost of connecting was a significant burden for many households whose average annual cash earnings were $205. In addition, rural Kenyans had no money to buy time-saving, productivity-enhancing appliances like refrigerators or computers. 

“Power isn’t like water,” said Ted. “It isn’t like turning on the tap and getting something that improves your livelihood. Power requires you to connect to an appliance. But if you are too poor to buy something to connect to power, the hypothesized effects are not there.”

The last faculty salon of the academic year was led by Dan Kammen, Distinguished Professor of Energy, and Solomon Hsiang, Chancellor’s Professor of Public Policy, who engaged in a wide ranging conversation with interdisciplinary faculty on the economics, politics, and development impacts of climate change. Kammen has spent much of his two-decade career at UC Berkeley focusing on renewable energy research, with a focus on the role of developing economies. He underscored that in Kenya, which has a robust mobile money system, off-grid solar-generated energy is becoming the norm in many rural areas. This illustrates, he said, that around the globe—from California (which will reach its 2025 zero net carbon emission targets ahead of time) to Morocco (which is the only country meeting Paris climate accord goals)—solar, wind, and other renewable energy sources are proving to be implementable and economically viable.

The problem, of course, is that the transition away from fossil fuels to renewables is not happening quickly enough. However, Solomon, whose Global Policy Laboratory researches what we need to know to design global policy, said public interest in climate change modeling  has increased dramatically over the last two years and the conversation among governments is now how detrimental will be the social cost of global warming, particularly for Southern Hemisphere countries. “This is where the role of information and academic research becomes economically powerful,” he argued.

The Blum Center Faculty Salons will continue in the fall. Stay tuned for more news about how faculty across the disciplines can collaborate on solutions science and scholarship for global public benefit.

Shankar Sastry is Faculty Director of the Blum Center for Developing Economies and NEC Distinguished Professor of Electrical Engineering and Computer Sciences at UC Berkeley. 

Power Isn’t Water: Learnings from Kenya’s Rural Electrification Efforts

In Sub-Saharan Africa, two out of three people, or 600 million individuals, still lack access to electricity. Given the massive scale of energy poverty, several large foreign aid institutions have launched major initiatives aimed at connecting millions of rural residences to the grid.

In 2013, the United States Agency for International Development commenced one of the largest public-private partnerships in development history, Power Africa, allocating more than $54 billion in commitments from more than 150 public and private sector partners. In 2015, the UK’s Department for International Development launched Energy Africa, an initiative to help Africa achieve universal energy access by 2030 through market-based off-grid energy to rural households. And in 2016, the African Development Bank started the New Deal on Energy for Africa, a partnership-driven effort to increase clean, renewable energy solutions and achieve universal energy access across the continent by 2025.

This massive push in foreign investment dollars is largely motivated by the assumption that rural electrification is a primary pathway out of poverty. However, new research from UC Berkeley demonstrates that, at least in the medium term, rural electrification may not be the silver bullet many think it is, especially if rural Africans are expected to pay a sizable portion of their income to get connected.

At an April Blum Center Faculty Salon, Ted Miguel, Oxfam Professor of Environmental and Resource Economics, and Catherine Wolfram, Cora Jane Flood Professor of Business Administration, shared their findings from a multi-year study in Kenya, funded by the Development Impact Lab.

“We noticed a lack of experimental evidence on the economics of rural electrification,” explained Miguel, founder and faculty director of the Center for Effective Global Action. “We hoped our study would establish rigorous evidence in this space and improve the effectiveness of such massive investments.”

Together with Kenneth Lee from the Energy Policy Institute at the University of Chicago, Miguel and Wolfram designed a randomized control trial in western Kenya in 2012 with the goal of answering the question: Does electricity help lift households out of poverty? (Randomized control trials, originally used for medical evaluations, are considered the gold standard of evidence for informing development policy.)

In Kenya, the electrical grid is unevenly distributed. To describe households located close to the grid (within a half mile) but unconnected, the research team coined the term “under grid.” The researchers created a dataset of over 20,000 geotagged homes across 150 rural under grid communities in western Kenya and partnered with Kenya’s Rural Electrification Authority to randomly select treatment and control groups from among 2,200 of these households. The treatment group received free electricity service or subsidized service at a 30 percent or 60 percent discount; while the control group households were not given any special incentives and expected to pay $400 per connection. The cost to the REA for the household connections was ultimately over $1,000, an amount subsidized by foreign aid donors.

The research team conducted a pre-survey and 18 and 32 months later a post-survey to collect data on 11 primary social welfare outcomes. Measured outcomes included changes in energy consumption, productivity, wealth, food, health, security, political knowledge, and education. The team also administered detailed English and math tests on children to measure if access to evening electricity improved academic performance, a widely held notion.

“We were very taken aback by the results,” said Miguel.“We found no meaningful medium-run impacts on economic, health, and educational outcomes or evidence of spillovers to unconnected local households.”

Their results showed that while the treatment group did experience a modest increase in electricity consumption, that group was no better off socioeconomically than the control group, even after nearly three years. Perplexed by these findings, which seem to contradict the rationale for current large-scale rural electrification investment projects, the researchers set out to analyze why those given free electricity did not experience any of the predicted benefits.  

One startling finding was an overall lack of demand for household electricity, consistent with the result that demand for electricity connections falls sharply with price.

“We predicted demand would be twice as high as it actually was,” said Miguel. “Yet very few households connected at the 60 percent subsidy rate and still fewer connected at the 30 percent subsidy rate.”

The team, assisted by data and support from the Kenyan utility as well as REA, was able to trace out the demand and economics cost curve to more thoroughly interpret the data.

Wolfram and Miguel found several interacting negative factors in their research results. First, they postulated rural households were too poor to do much with electrical power once connected. Unlike the 1936 Rural Electrification Act, which provided federal loans for the installation of electrical distribution systems in rural areas of the United States—along with subsidies for productivity-increasing electrical appliances—Kenya’s electrification efforts have not fully been funded by its government or aid organizations. Households still face an upfront cost for rural residential connections, and there are no government subsidies for appliance purchases. In addition, rural Americans in the 1930s were several times wealthier than contemporary Kenyans; in other words, Americans were in a greater position to take advantage of the socioeconomic benefits of electrification, because they were rich enough to make complementary investments in appliances.

Said Miguel: “The cost of connecting, even when heavily subsidized, is still a significant burden for many of these households that have average annual cash earnings of $205 and three quarters of which practice subsistence agriculture.”

Miguel went on to explain that few of the Kenyan households were interested in or able to buying commercially valuable electrical appliances, like welding equipment, that would lead to greater economic benefit.”

Indeed, Miguel and Wolfram’s data found that the connected households used the equivalent of only $2/month on electricity, mainly for basic lighting and to charge a mobile phone. In addition, the researchers found other barriers to rural electrification: credit constraints, bureaucratic red tape, low grid reliability (frequent blackouts), and evidence of corruption such as over-invoicing for service.

“In the first year of our study, 19 percent of village transformers failed with a median repair time of four months. Thus, even if households could afford to pay for electricity, it was not reliable,” said Wolfram.

Wolfram added that unreliable grid quality can significantly inhibit economic growth for entrepreneurs and small businesses.

“Power isn’t like water,” concluded Miguel. “It isn’t like turning on the tap and getting something that improves your livelihood. Power requires you to connect to an appliance. But if you are too poor to buy something to connect to power, the hypothesized effects are not there.”

Wolfram and Miguel believe their research opens the door to at least two main lines of inquiry: 1) the extent to which electricity connection costs are too high and require further subsidization; and 2) the extent to which demand is being suppressed by poor service quality. There is also the larger question of whether, as Miguel put it, “We are too focused on power as a solution for development outcomes.”

“The research to date has been intellectually fascinating but disheartening; we are not maximizing positive development outcomes,” said Wolfram. “The billion people without power are also the world’s poorest billion. These are people who are struggling to meet their daily basic needs. Perhaps, to really benefit from electricity, we need diversified investments across multiple sectors.”   

—Lisa Bauer

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