This article looks at the methodological implications of bringing what has been termed an 'ethnographic perspective' on literacies, identity and social change, into the international policy discourse on education and development. Through an analysis of the UNESCO Global Monitoring Report 2006, Literacy for Life, I explore how and whether ethnographic insights can be translated into a policy context dominated by an economistic paradigm of development. The difficulties lie not just in how to avoid simplifying lengthy ethnographic analysis or generalising statistically from tiny unrepresentative samples but, also, around the kind of questions for which answers are being sought from researchers. I suggest that the predominantly instrumental approach to literacy, where literacy is discussed in terms of its 'benefits', contrasts with ethnographic research on multiple literacies and identities: for instance the 'illiterate' woman who is viewed by herself and others as 'educated'. These more complex understandings of literacy, identity and social change might complicate the unambiguous message that Literacy for Life aims to put across to national and international policy makers: that 'Literacy Matters'. I end by reflecting on how ethnographic researchers could contribute more effectively to policy debates on literacy.