How is global development cooperation changing in an age of aid cuts, geopolitical fragmentation, and shifting national priorities? In this episode, Dan Banik speaks with Elina Scheja, Chief Economist at Sida, about the future of foreign aid, poverty reduction, jobs, evidence, and what effective development policy looks like in a more uncertain world.
What happens to development cooperation when aid budgets are cut, geopolitical tensions rise, and poverty reduction competes with a growing range of strategic priorities? In this episode of In Pursuit of Development, Dan Banik speaks with Elina Scheja, Chief Economist at the Swedish International Development Cooperation Agency (Sida), about the changing politics of foreign aid and the future of development in a far more fragmented world.
The conversation explores why today’s turbulence cannot be explained by a single leader or decision alone, but must instead be understood in light of deeper structural shifts in global economic and political power. Dan and Elina discuss the implications of aid cuts in the United States and Europe, the growing emphasis on national interest and “enlightened self-interest,” and the difficult choices donor countries now face as support for Ukraine, climate priorities, regional security concerns, and poverty reduction compete for limited resources.
They also examine a central question in global development today: Do we still need aid, and for whom? Elina argues that the answer is clearly yes, pointing to the hundreds of millions of people who remain trapped in extreme poverty and multidimensional deprivation. The discussion highlights why poverty cannot be understood through income measures alone, and why access to healthcare, education, decent work, voice, and security must remain central to any serious development agenda.
Another major focus of the episode is evidence and learning in aid policy. Dan and Elina reflect on how development agencies such as Sida can make better use of research, impact evaluation, institutional memory, and artificial intelligence to improve decision-making. Rather than treating evaluation as something that happens only at the end of a project, they argue for a more iterative and adaptive approach — one that uses evidence throughout the entire chain of development cooperation, from country selection and sectoral priorities to implementation and course correction.
The episode also turns to jobs, productive employment, and structural transformation. If citizens across the Global South are asking for opportunity rather than handouts, what should aid agencies do differently? Should they focus more on employment, infrastructure, and economic transformation? How can democracy, human rights, and job creation be understood not as competing priorities, but as deeply interconnected parts of inclusive development?
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[Dan Banik]
Elina, wonderful to see you. Welcome to the show.
[Elina Scheja]
Thank you so much. It’s a great pleasure to be here.
[Dan Banik]
We’re living in a day and age marked by a lot of geopolitical tension and fragmentation, and a lot of concern about aid cuts in many, many countries. In our countries, there is concern about the role of aid agencies. What are we doing for poverty reduction? Are we losing that focus on poverty reduction?
Based on this turmoil that is happening around the world, what is your assessment? What is your diagnosis? Where are we? How are you actually operating? What is your take on what we are seeing in this field of development cooperation?
[Elina Scheja]
I just want to say that I’m a huge fan of this podcast. It’s a great way to keep updated on what colleagues in the field are talking about, because there are a lot of things happening. The pace of change has just accelerated. I’ve been giving talks to my colleagues about where we stand vis-à -vis where we were a year ago, and it’s just a totally different world.
So I think one thing is to realize that we are in a different place when it comes to situating our efforts on development cooperation. A lot is happening on a daily basis, but I think it is also good to take a step back and look at the broader trends that are driving these changes in order to understand where they are coming from.
A lot of people are searching for easy solutions and saying, well, it is that leader doing that, or it is that decision that brought us here. But I think there are geopolitical underpinnings and economic underpinnings that underlie this situation.
Some of these bigger shifts we have been experiencing for a longer time, but possibly haven’t been taking note of to the extent that we should have, include the relative change in the economic and political power of the great nations and regional powers. We are coming from an era where the US economy has been dominant, and a lot of countries have been relying on relatively peaceful development, relatively low levels of conflict, more opportunities for trade, rapid growth in many developing countries, and rapid reductions in poverty.
Those were the heydays when we talked a lot about poverty reduction, formed our policies for development cooperation, and succeeded first in halving and then rapidly reducing poverty over long periods of time.
That is not where we are living today. We now see more of a power struggle between the US and the Asian economies. They’re not really emerging anymore — they’re leading the pack. We also see a lot of middle-sized countries coming into play and saying, “Hey, we want to rewrite the rules.” And they do not only want to rewrite the rules when it comes to the economic interplay, they also want political influence. That causes some friction in the global economy.
So what we are seeing now is both an economic power struggle that then translates into a political power struggle. We see changes in trade policies and environmental policies that try to give one region or one bloc the upper hand over another. That also spills over into the development cooperation side of things.
I think it is an illusion to say that we were operating in a policy-free environment before. Development aid has always been political. But I guess now it is becoming even more politicized, as countries try to situate themselves more prominently in this geopolitical frame and bind development aid to their trade strategies, green transition policies, and other priorities at the same time.
So I guess the turmoil we see today is, yes, catalyzed by recent events, by certain leaders, and by political events, but it is driven by more long-term trends that we have been seeing for some time.
[Dan Banik]
What you’re pointing to is how the development landscape has changed because we’ve seen the rise of the Global South in unprecedented ways. It’s not just the big economies — India, China, and so on. I’ve been making this point on the show for many weeks: I thought BRICS was dead. And now we see many of these institutions that I thought were dead and buried being resurrected again. You see the G20 becoming an important part of this picture. So the balance of power is perhaps shifting.
I just had Homi Kharas from Brookings on the show — actually, today’s episode. The middle class is moving from Europe and Latin America and from North America towards Asia. So we’re seeing a big change in economics, in where the big markets are.
So obviously the question is — and I keep grappling with it — do we still need aid, and for whom?
There are obviously low-income countries. We have many countries that are struggling and that are not part of this emerging power trend. There are lots of countries in the Global South that do not agree with the big actors in the Global South and that are not necessarily benefiting. So there is still a strong rationale we can make for aid.
The question is: how do you think aid is changing? Is it the prioritization that is becoming clearer because we have less money? I know that your country, I think in January, slashed aid in some areas to over 50 percent to some countries or regions. So, you obviously have to prioritize differently because there is less money.
How do you see the role of aid changing? Is it going to be fewer sectors, fewer topics, fewer countries? I know that the Germans are now focusing on sub-Saharan Africa and not many other regions. Do you think that is the way forward for Sweden, and for many other countries like Norway?
[Elina Scheja]
I think it is fascinating how you frame the question: do we need aid anymore? Aren’t we done already?
Because I hear quite a lot of arguments saying that aid has failed, so therefore we should do something else. I think one of the big worries in the aid community is that we forget that the job is not done. We still need to focus. Almost 10 percent of the world’s population is living in extreme poverty. We’re talking about people not having food on the table.
The measure of extreme poverty is already criticized for being set at a very, very low level, and yet we still have around 800 million people below that threshold. We also have people facing other kinds of deprivation — not being able to get the education, healthcare, or decent living standard they need.
So no, we are not done yet. And even if you raised that bar to something more applicable to lower- and upper-middle-income countries, the size of the target group — the number of people still living in poverty and under oppression — would still be very large.
So there are people being left behind, and there are countries and regions being left behind. Yes, we still have a job to do. Then the question becomes: how are we going to do that? That is the million-dollar question everybody is discussing at the moment.
There is a lot of soul-searching going on in the development community and in the traditional donor countries. They are looking at the overall picture. I’m currently heading the OECD DAC Community of Practice on Poverty and Inequalities, where a lot of donor countries come together to discuss the best ways of using development aid to reduce poverty.
A lot of countries are going on their own journeys one after the other. But there are some striking similarities in what many of them seem to be coming up with. There seems to be more movement toward emphasizing enlightened self-interest and national interest, and framing development cooperation in light of overall foreign policy. As we were just discussing, the foreign policy landscape is changing, and thus the role of aid is changing within it.
We have also seen in the global figures that there has been a shift in development flows toward Ukraine, for a lot of good reasons. But in many cases that happens at the expense of spending in other regions and countries.
A lot of countries are making clearer priorities about what to do in different regions, but many of them are ending up with similar conclusions. For example, they say we should be working on green transition in Asia, or focusing on EU accession in Europe, or refocusing on countries that are growing. That means that the cuts we have seen worldwide, and also in Sweden recently, are not just cuts in the overall level. They are hitting disproportionately some regions and countries that do not fit the current priorities.
So there is a more nuanced picture and a more nuanced story to be told.
[Dan Banik]
Indeed. I just saw a press release, I think from January of this year, on the Sida cuts. And if this is correct, it was something like a 57 percent reduction in Africa, 63 percent in Asia, and 41 percent in Latin America. Apparently one of the reasons articulated was precisely Ukraine — that one needs to support Ukraine — which is also something that is concerning us in Norway.
I have been interacting with many actors in the aid business here, and over the last few months there have been concerns — not about increasing support for Ukraine as such, but about how it affects existing areas, and how and to what extent poverty reduction, which should be the main focus of aid, is being affected. By increasing something, one is reducing something else, rather than increasing both areas.
And related to this, I want to pick up on what you said about self-interest, or enlightened self-interest. Around five years ago, when the then new head of Norad, BĂĄrd Vegar Solhjell, was here in my studio, I asked him about interests and self-interest. He began talking about enlightened self-interest, saying our interests are different from those of the big powers.
Norway and Sweden are often seen as humanitarian superpowers, right? We have often been told that we punch above our weight. So I’m beginning to wonder whether that notion of enlightened self-interest requires even further operationalization. What does it mean?
Because in Norway at least, we have been promoting the private sector. Our interests are important. We want to make sure that somehow this serves the Norwegian economy. It should not be just a one-way street — it should go both ways. I heard people today talking about win-win solutions, and that that is what we should be pursuing.
So I wonder what you think about this enlightened self-interest. Does it mean that we will focus on certain things that are important to us at the moment, whether it is security or access to certain goods and services? Or do you think enlightened self-interest means retaining our original values — our core values of democratic rights, gender equality, and fighting climate change — and that these cannot be negotiated away?
[Elina Scheja]
First, a quick comment on the numbers you were just citing. Even that story is a bit more nuanced, because the Swedish aid budget is divided into different strategies and sub-budgets. So it is true that there have been significant cuts to different sub-budgets, but the overall budget reduction is relatively marginal. It is the disposition within that budget that has changed.
Also, the Swedish International Development Cooperation Agency, Sida, used to manage approximately half of that money. Sida’s budget is currently being reduced more than the overall budget. So there are some nuances to that story. But the fact remains that there are big reallocations ongoing, and that has real consequences for operations on the ground.
However, the objective of these operations and projects — and of our work — has not shifted. The overall objective is, and remains, improving living conditions for people living in poverty and under oppression. That has been the objective for a couple of decades now. We are quite proud that this is something decided by parliament. So it remains in place irrespective of the political color of the government, and that has guided our work for a long time.
What that then means in practice is, I think, the challenge ahead: how to frame that and make it work even in the current context of geopolitical turmoil. We do need to take this new situation into account. One way of doing so is to look at the broader spectrum of mobilizing financing for development, where you work with other types of partners and exploit the full range of actors out there.
Nobody has ever said that aid alone would be the savior or the sole driver of poverty reduction. It is the countries themselves, and the actors within those countries, that actually make that happen. So how do we collaborate and build those alliances? That is one part of the answer.
But coming back to self-interest, I would like to disagree somewhat with how the issue is framed, because the overall objective remains the same — improving the lives of people living in poverty and under oppression. The self-interest part can perhaps be disentangled in the short and long run.
What we need to be clearer about is creating a narrative around how what we are doing — what benefits the countries where we work and the people we serve — also links to the bigger picture of global change. How does that connect to overall prosperity and stability in the world and between countries? How does that relate to trade flows over the long run?
In that perspective, reducing poverty and supporting development in different countries is in the greater interest of us all. So I believe it can be framed in that light as well.
There is now a more urgent need to argue for what we do, to show the results of what we do, and to show how it is connected to our welfare back home. But we have conducted surveys about how people feel about aid, and there is still very strong support among the general public for the more altruistic arguments for development aid and for continuing to be a generous donor going forward.
[Dan Banik]
One of the big challenges that I suppose you have in Sweden, just as we do in Norway, is that politicians have to justify aid to taxpayers. And there is always that demand. In both countries, we know there is a high amount of public support for aid, but there is always that hunger. People want to know more. Or unfortunately, sometimes one scandal is blown out of proportion and people get the impression that nothing works. It could also be political parties campaigning against aid.
So the picture is nuanced, and it is actually quite difficult. I know a lot of people in the aid business, and it isn’t easy to keep up and to keep justifying aid. You have to have proper evidence.
Which is what I wanted to talk to you about. You listened to one of my recent conversations — I know you did, because you posted on LinkedIn — the one I had with Lindsey Moore, about how she and her company are using AI to create an institutional memory for USAID. They are looking at millions of pages of evaluations and making sure that all the lessons learned through the spending of billions of dollars are actually used.
I wanted to ask you how you are operating with evidence, because we keep saying — and as academics we keep throwing around this idea — that policy should be evidence-based. That is what I just told the Norad people earlier today at a conference. But it is easier said than done.
We do produce a lot of evidence. How do you see this evidence, produced over decades, being used effectively to shape current and future policy?
[Elina Scheja]
I think this is one of my favorite topics, so thanks for raising it.
First, on how we counteract the different narratives around development cooperation: there will always be people who have opinions — grounded or ungrounded — about aid. I do not think we will win that argument by addressing those critiques one by one.
There is already an overwhelming evidence base, and there are many strong results and examples that we could be promoting. I think we need to get ahead of that narrative and bring out our own more positive, nuanced, and evidence-based narrative, rather than merely reacting to random critiques that show up now and then.
We know there are some zombie statistics on corruption that are way off from the real figures. We know there are recurring critiques that we need to counter with facts. But on top of that, we also need to bring out a more proactive narrative about what we are actually doing, so that people can feel that their money is being spent effectively, that it is being well managed, and that they know what kinds of results they are contributing to.
At the moment, when there are many aid cuts being made, there is greater focus on getting the most out of the money, or getting the biggest bang for the buck. And sometimes we hear the argument that we should be doing more with less. It is an interesting and somewhat problematic argument, because you only hear it when it comes to aid. I have not seen that argument being used for military expenditure.
[Dan Banik]
Yes, aid is scrutinized in such a way that 1 percent in Norway receives far more attention than many, many other sectors.
[Elina Scheja]
Let’s think positively — it gets far more attention than a lot of other public spending areas. And because it has been so scrutinized, we also know that the money is, to a large extent, spent effectively.
I do not think we should expect more results with considerably fewer resources. But there is still a lot we can do with the resources we have, and there are ways to tweak how we work so that we actually get the biggest bang for the buck. And this is where the use of evidence comes in.
If we are to maximize every dollar or krona we get, I think we should use evidence throughout the whole decision-making chain in development cooperation. It starts with what colleagues at the Gates Foundation talk a lot about: allocation efficiency. Which countries do you pick? Which sectors do you work in?
That is something we have already touched upon in this discussion, because there do seem to be shifts in regional allocations and other priorities. That is not a decision we as an agency take. That is a political decision based on several factors. But we can influence those decisions by providing evidence on the consequences of them.
Here we usually talk about evidence-informed decisions rather than evidence-based decisions, because there are a lot of other factors that come in. Being explicit about what you are doing and what the consequences are — I think that is an appropriate role for an expert agency, whereas politicians make the final decisions on allocation.
Once we have decided on the countries, regions, or the overall size of the budget, then another kind of evidence comes in: diagnosing what the most binding constraints are in the country and where we could make the biggest difference for people living in poverty.
That is something we have been working on for a long time. We recently evaluated our efforts to analyse multidimensional poverty in our partner countries. It was fascinating to get an external view on how we are doing. Basically, the evaluation confirmed that it keeps us on track and that we are strong at analysing the main avenues through which we could make the biggest difference.
But once you understand what you should do in a country, a lot of the evidence discussion at the moment is focusing on RCT-type evaluations — how to improve specific interventions. If you have already decided that you want to work on health, maternal health, or education, and help children learn, then the question becomes: how do we help children learn in the most effective way?
There is a big and growing literature on impact evaluations that we should make better use of, and that is something we are strengthening at the moment. We haven’t been using it to the extent that we could.
But that is just one part of the chain. If you go further down the chain, you also have to use evidence when thinking about implementation. Which kind of actors should you work with? Is it more effective to work through a multilateral institution? Is it more effective to go bilateral and run your own projects? What actors are there in the country to work with in the first place?
So you bring this overall scientific knowledge into the context in which you work, and you use your own expertise and your partners’ expertise to figure out the most effective way of proceeding.
And then finally, once you sign the contract or give the grant, that is not where the story ends. Development impact is not set in stone. There are plenty of things you can do if you are able to use adaptive management, follow results, integrate evidence generation into implementation, and then learn along the way.
So this is the whole chain that we are looking at at the moment in order to squeeze out the most impact.
[Dan Banik]
Are you using AI to systematize what you already know — the institutional memory of Sida?
[Elina Scheja]
I was fascinated by Lindsey’s stories about how they had done that more systematically at USAID, and I have been following up with her about the possibility of doing something similar with our databases as well.
What we have been doing so far is easing the workload of our colleagues in the field when doing country diagnostics or updating datasets. There are already a lot of efficiency gains we can make.
We have also been looking at how partners like the World Bank are building AI databases to scrutinize the wealth of RCT evidence and package it in ways that are useful for country teams.
So I guess there are ways of incorporating and using AI to make all of these steps more efficient. There is no lack of evidence, data, or information. What there is a lack of is effective use of that evidence and linking it to our processes. And that is what we are working on, together with another previous guest of yours, Dean Karlan, who is helping some of our teams to integrate evidence more systematically into their processes and thinking.
[Dan Banik]
Well, Elina, you are making me happy that the podcast is actually connecting people.
[Elina Scheja]
I told you — I’m listening all the time.
[Dan Banik]
Just earlier today, I was giving a talk at Norad, and I was making the point that maybe we really have to move away from the idea that you sign the contract, the project gets done, and then you evaluate. We have to have iterative evaluations. We have to learn after the initial stage. We have to adapt and adjust, rather than waiting until the end.
Of course, that may mean more money has to be spent on evaluation. But the second point has to do with evidence more broadly. As you said, it is the expert agency — the bureaucracy, in your case Sida, and here Norad — that can compile the evidence, using AI or not. And as you said, it could be evidence-informed rather than strictly evidence-based. But it is ultimately up to politicians to make that final call.
And I know that here there has been debate about how much evidence is actually informing decisions. I do not expect you to answer on behalf of politicians, but there is that frustration that despite providing evidence — not just in Norway, but elsewhere too — that evidence does not always shape policy in the end.
Politicians come to power, they all have their pet projects, and they may want to distinguish themselves from their predecessors. And then the evidence, and all that good work, may not be used to the fullest extent.
[Elina Scheja]
I guess that applies to all researchers and development professionals who think they have brilliant ideas. If you just feel that it isn’t working and say, “I give up,” then I think you are in the wrong line of business.
It is a debate of ideas, and it is our role to provide evidence. I feel quite comfortable in that role. So we provide the best possible evidence base and then see whether it is used. To what extent it is used or not — that is a different ballgame.
But we did have this evidence conference organized by the Ministry for Foreign Affairs just a couple of weeks ago, where we were able to discuss together what evidence looks like and what the most effective use of it is. I know that colleagues on the political side are also discussing how their decisions could be informed by evidence to a greater extent. So we will stay tuned and see how that develops.
But a quick comment on your point that we need to spend more time, effort, and money on evaluation. We were recently in a workshop organized by the World Bank together with JICA and ADB, talking about using impact evaluations in the implementation of projects. Their argument was that the money saved, or the efficiency gains achieved, are multiples of the money actually spent on evaluation.
So whether this is really increased spending or whether it is actually saving money is worth discussing. They may come from different budgets, but I do think there are large efficiency gains to be had from spending that extra dollar on integrating evidence use into implementation.
And going back to our earlier discussion about the legitimacy of aid and the self-interest argument: I think it is much easier to demonstrate what you have actually done if you have proper impact evaluations embedded in projects, so that there is solid evidence showing where taxpayer money went. That could then be used as part of a proactive argument for continued engagement in development cooperation.
[Dan Banik]
The one thing that citizens in many, many countries often want is jobs. They want to work. They do not want a handout. They want a job.
And it is in that context that I would like to hear your views on how you think Sida, Norad, and similar agencies — what should we be doing differently or more of? Sometimes the criticism has been that we are too interested in promoting democracy and human rights and the so-called softer parts of the development agenda. We are not building enough infrastructure, like the Chinese are.
How do we stimulate the economy? Do you have any best practices in mind? What should we be doing differently and more of?
[Elina Scheja]
That is another huge hot topic. Everybody is talking about jobs these days.
The view we have had at Sida is that jobs, or productive employment, are the main route to sustainably reducing poverty. That is the way to link people living in poverty to growth, so that they can both contribute to and benefit from it. That is the way to provide sustainable livelihoods and agency to the people we are working with.
So it is a hugely important topic — not to say that everybody should be working. There are legitimate reasons why some groups may not be. But overall, this is what countries are asking for, and it is definitely a major concern.
I do not think that this is totally different from democracy and human rights. They are inherently interlinked. It is about economic rights, human rights, agency, and anti-discrimination. There are many middle-income countries today where certain parts of the population are simply excluded from the labour market.
So analysing what the problem is and why people are not working is one part of the story. But quite often the answer is that there are simply not enough jobs, and we need to create new ones.
We recently had another external evaluation — we have been evaluated a lot these days — and this one was a long-term evaluation of how Sida has been working with job creation in Africa. There are some lessons to be drawn from that.
One of the insights was that we haven’t actually been creating that many new jobs. But the basic reason is that people are not unemployed in Africa in the same way as in other contexts. People living in poverty are often already working, because they cannot afford not to. So creating “new jobs” is not really the right question. The question is whether we have been able to create decent and productive jobs that help people lift themselves and their families out of poverty.
And there the answer was yes — we are largely doing the right things. However, linking back to our earlier points about evaluation and learning, we also received some criticism that while we are obviously doing the right things and can show change, we cannot always put exact figures on that change. And we could strengthen that story if we had better impact evaluations embedded in those programmes as well.
So I think the overall direction of change is the right one. Different organizations can play different roles. Some are good at building roads, some are good at creating institutions, some are good at building capacity. All of that is needed.
But what we do need to do is connect those dots and make sure that together they lead to results that we can measure, report back on, and use to support active and proactive change in countries.
[Dan Banik]
I’ve been making the argument that because USAID no longer exists in its old form, the contours of development aid are changing. Maybe what we are going to see going forward are new alliances — that we will collaborate not just with so-called like-minded countries.
Maybe the time has come for issue-based partnerships, where on certain issues such as infrastructure or education we widen the number and type of actors we work with. I’m talking about European actors perhaps collaborating more with Middle Eastern or Asian actors.
What are your thoughts on that? Do you see that kind of shift taking place — new coalitions being formed in the aid world?
[Elina Scheja]
I think that has already happened. I do think we see that all the time. And I do not think it is as black and white as saying that we cannot work with certain countries. I do not think that has really been the case before either.
That does not mean that we should compromise on our core values. Sida will still be prioritizing gender equality. We will still be talking about environmental issues and climate change. Democracy and human rights are still our biggest sector.
But as I was saying, as budgets are being squeezed and we are now heading toward an era in which poverty levels are expected to start rising again, I think we do need to use all the resources available, and build alliances where they make sense. There are plenty of good things that can be done with new methods of working, new instruments, and new partners where we share common interests and values.
[Dan Banik]
Elina, this was great fun. Thank you very much for coming on my show today.
[Elina Scheja]
My pleasure.
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