GLOBAL CHALLENGES: MULTILATERAL SOLUTIONS

CANADIAN DEVELOPMENT REPORT 2011

GLOBAL CHALLENGES: MULTILATERAL SOLUTIONS

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THE NORTH-SOUTH INSTITUTE

Th e North-South Institute (NSI), one of Canada’s leading, non-profi t, non-partisan and independent think tanks, is uniquely dedicated to research that reduces poverty, enhances social justice and promotes economic progress in the developing world. NSI strives to improve people’s lives through knowledge that addresses the global challenges of the 21st century – from promoting greater government accountability in the provision of basic needs to advanc-ing decent work opportunities; suggesting innovative fi nance and more eff ective aid for development; focusing on fragile and confl ict-aff ected states; and, working to expand the benefi ts of globalization. For 35 years, NSI has partnered with researchers in developing countries and actively engages with policymakers and other actors best positioned to put our research into practice.

Th e editorial content of the 2011 Canadian Development Report represents the views and fi ndings of the authors alone and not necessarily those of NSI’s directors, sponsors, or supporters, or those consulted in its preparation.

NSI thanks the Canadian International Development Agency for providing a core grant and the International Development Research Centre for its program and institutional support grant.

Canadian Development Report1996/97-Issued also in French under title: Rapport canadien sur le développement.Includes bibliographical references.

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DONORS


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CONTRIBUTORS (DONATIONS BETWEEN $1,000 AND $3,999)

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CONTENTS

CONTENTS

Abbreviations 3

ForewordJoseph K. Ingram 7

Multilateralism, the Shifting Global Economic Order, and Development PolicyDanny Leipziger 15

Multilateral Development Cooperation: Current Trends and Future ProspectsShannon Kindornay and Hany Besada 35

Multilateral Development Cooperation and the Paris Process – Th e Road to BusanRobert Picciotto 55

Toward a New Development Cooperation DynamicPenny Davies 77

Representation, Legitimacy and Accountability: Emerging Donors and Multilaterals in AfricaSanusha Naidu 95

Using the New Canadian International Development Platform to Enhance Understanding of Multilateral Development CooperationAniket Bhushan and Kate Higgins 115

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Abbreviations 3

ForewordJoseph K. Ingram 7

Multilateralism, the Shifting Global Economic Order, and Development PolicyDanny Leipziger 15 r

Multilateral Development Cooperation: Current Trends and Future ProspectsShannon Kindornay and Hany Besada 35 a

Multilateral Development Cooperation and the Paris Process – Th The e RoRoadad tto o BuBusasannRobert Picciotto 5555

Toward a New Development Cooperation DynamiccPenny Davies 777777

Representation, Legitimacy and Accountabiliityty:: EmEmerergigingngng DDDDononoonnoroooro s sss ananannnd dddd MuMuMuMuMultltltltilililililataterererere alalalalalss sss ininininin AAAAAfrfrfrfrf iicicicaaaaaSanusha Naidu 9595959595

Using the New Canadian International DeDevevelolopmpmenent tt PlPlPlPlataatata fofofofoformrmrmm t t tto o o o o EnEnEnEnEnhahahahancncncncce e e e ee UnUnUnUnUnUndededededededersrrsrsrsstatatatatatat ndndndndndndndininininining g g g gof Multilateral Development CooperatioonnAniket Bhushan and Kate Higgins 11111111155555


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ABBREVIATIONS | BRIDGING THE GULF

ACBF African Capacity Building Foundation

AfDB African Development Bank

AfDF African Development Fund

AIDS acquired immune defi ciency syndrome

AsDB Asian Development Bank

AsDF Asian Development Fund

AU African Union

BADEA Arab Bank for Economic Development in Africa

BASIC Brazil, South Africa, India and China

BRIC Brazil, Russia, India and China

BRICS Brazil, Russia, India, China and South Africa

CDI Commitment to Development Index (Center for Global Development)

CDR Canadian Development Report (North-South Institute)

CGD Center for Global Development

CGP Center for Global Prosperity

CIDA Canadian International Development Agency

CIDP Canadian International Development Platform

CIVETS Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa

COMPAS Common Performance Assessment System

CPA country programmable aid

CSO civil society organization

DAC Development Assistance Committee

DCD Development Co-operation Directorate

DCD/DAC Development Co-operation Directorate/ Development Assistance Committee

DCD/DAC/EFF Development Co-operation Directorate/ Development Assistance Committee/ Working Party on Aid Eff ectiveness

DCF Development Cooperation Forum (United Nations)

DFID Department for International Development (United Kingdom)

DIRCO Department of International Relations and Cooperation (South Africa)

ECOSOC Economic and Social Council (United Nations)

EC European Commission

ECDPM European Centre for Development Policy Management

ECG Evaluation Cooperation Group

EU European Union

FAO Food and Agricultural Organization (United Nations)

FSAP Financial Sector Assessment Program

FSB Financial Stability Board

G7 Group of Seven

G8 Group of Eight

G20 Group of Twenty

G-24 Intergovernmental Group of Twenty-Four

G77 Group of 77

GATT General Agreement on Tariff s and Trade

CDR 2011 ABBREVIATIONS


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GAVI Global Alliance for Vaccines and Immunisation

GEF Global Environment Facility

GDP gross domestic product

GNI gross national income

H1N1 infl uenza A virus subtype

HIV human immunodefi ciency virus

HIV/AIDS human immunodefi ciency virus/acquired immunodefi ciency syndrome

HLF High Level Forum

HLF-3 Th ird High Level Forum on Aid Eff ectiveness

HLF-4 Fourth High Level Forum on Aid Eff ectiveness

IATI International Aid Transparency Initiative

IBRD International Bank for Reconstruction and Development

IBSA India, Brazil and South Africa

IDA International Development Association (World Bank)

IDB Inter-American Development Bank

IDB (SF) Inter-American Development Bank (Special Fund)

IFAD International Fund for Agricultural Development

IFC International Finance Corporation (World Bank)

IFI international fi nancial institution

ILO International Labour Organization

IMF International Money Fund

INGO international non-governmental organization

IsDB Islamic Development Bank

MDB multilateral development bank

MDG Millennium Development Goal

MfDR Managing for Development Results

NDF Nordic Development Fund

NEP New Economic Power

NGO non-governmental organization

NSI North-South Institute

ODA offi cial development assistance

ODI Overseas Development Institute (United Kingdom)

OECD Organisation for Economic Co-operation and Development

OECD-DAC Organisation for Economic Co-operation and Development- Development Assistance Committee

OECD-DAC WP-EFF Organisation for Economic Co-operation and Development-Development Assistance Committee, Working Party on Aid Eff ectiveness

OPEC Organization of Petroleum Exporting Countries

PWYF Publish What You Fund

QE2 quantitative easing (second round)

QuODA Quality of Offi cial Development Assistance (Center for Global Development/Brookings Institution)

SADC South African Development Community

SDRs Special Drawing Rights

SSC South-South Cooperation

SWF sovereign wealth fund

TAZARA Tanzania Zambia Railway Authority

UAE United Arab Emirates

UK United Kingdom

UN United Nations

UNAIDS Joint United Nations Programme on HIV/AIDS

UNDEF United Nations Democracy Fund

ABBREVIATIONS | BRIDGING THE GULF

UNICEF United Nations Children’s Fund

UNCTAD United Nations Conference on Trade and Development

UNDP United Nations Development Programme

UNEG United Nations Evaluation Group

UNESCO United Nations Educational, Scientifi c and Cultural Organization

UNFCCC United Nations Framework Convention on Climate Change

UNFPA United Nations Population Fund

UN-HABITAT United Nations Human Settlements Programme

UNHCR United Nations High Commissioner for Refugees

UNIDO United Nations Industrial Development Organization

UNISDR United Nations International Strategy for Disaster Reduction

US United States

VFM value for money

WB World Bank

WFP World Food Programme (United Nations)

WHO World Health Organization (United Nations)

WP-EFF Working Party on Aid Eff ectiveness

WTO World Trade Organization


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FOREWORD | BRIDGING THE GULF

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FOREWORD


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It has become almost axiomatic for serious analysts of world aff airs to acknowledge that we are today part of a process of unprecedented global

transformation. Th is includes tectonic geo-political power shifts, accelerated technological transformation raising youth expectations globally and economic development producing a new global middle class, intensifying demand for the planet’s natural resources. While some of the results are positive — reduced levels of absolute poverty in certain parts of the world and “Arab springs” in others — on the whole there is a sense of greater uncertainty and unintended consequences, especially concerning the impact of this current period of economic vulnerability.

New risks and opportunities are emerging as diff erent sets of economic powers assert themselves, and as the established economies fi nd themselves in a weakened state. Some observers see these risks as nationally threatening, needing to be dealt with decisively through targeted public policies such as stronger controls on immigration or higher levels of trade protection. Others see them as more threatening for “the global commons,” increasingly perceived as being ill-suited and ill-equipped to deal with these new-order risks, most of which are economic or developmental in nature. Prominent among them are climate change and unregulated fi nancial fl ows.

Indeed, some observers forebodingly suggest that rather than entering a world where global problems can be met more eff ectively with an emerging and more manageable Group of Twenty (G20), we have instead entered a G-Zero world where “there is no collective security in a globalized economy.”1

To better understand the nature of the current global transformation and its impact on the development process, especially the multilateral system, Th e North-South Institute agreed with the Canadian

1 Ian Bremmer, Nouriel Roubini, “A G Zero World,” Foreign Aff airs, March/April 2011, Vol. 90.

International Development Agency (CIDA) to host a global conference on these issues in June 2011. Th e conference, entitled Multilateral Development Cooperation in a Changing Global Order, was our fi rst Annual Forum and brought together more than 40 experts from Canada and around the world.

Th e intent was to produce a set of conclusions and recommendations that could inform both Canadian and international public policy with respect to international development in this changing global order. From the outset, we felt it vital that representatives from the emerging economies, particularly the BRICS, be given prominence.2 We need to hear from developing nations since the future of multilaterally supported assistance and our global economic health will increasingly depend on the extent to which the new economic powers are prepared to engage in collective eff orts to solve global problems.

We were very much encouraged by the support we received from Canada’s Department of Foreign Aff airs and International Trade, which expressed particular interest in the conference’s trade and foreign policy implications, and from the Aga Khan Foundation Canada, which was keen to see the results of the conference given a wide national and international distribution through the publication of this Canadian Development Report for 2011. After all, the extent to which the global public views multilaterals as eff ective and legitimate will play a major part in shaping the future aid development framework.

Th e papers commissioned for this volume represent well the issues addressed and the outcomes produced during the conference. Written in the lead-up to the Fourth High Level Forum on Aid Eff ectiveness (HLF-4), held in Busan, South Korea, November 30 - December 1 2011, the papers off er suggestions to the international community for improving the overall

2 Included inter alia were speakers from Brazil, China, India and South Africa.

FOREWORDJOSEPH K. INGRAM


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eff ectiveness of international development cooperation. Th ough early versions of several papers were released prior to HLF-4 to ensure that they could inform discussions in Busan, their recommendations remain timely and relevant to policymakers preparing to implement HLF-4 outcomes, in particular the Busan Partnership for Eff ective Development Co-operation. Before introducing the chapters however, it is worth capturing some of the broader issues and conclusions.

Conference participants agreed that the changing global order is being dominated by “paradigm shifts” of unprecedented magnitude and pace. Specifi cally mentioned were:

• economic and political power shifts from OECD countries to the new economic powers emerging from the so-called developing world;

• the ongoing global fi nancial and economic crisis;

• the growing public debates around the respective roles of government versus the private sector in generating sustainable growth;

• demographic changes in today’s developed and emerging economies aff ecting prospects for future economic growth and its distribution;

• the widening income gaps both within and between countries;

• the unprecedented growth in demand for the planet’s resources; and

• climate change.

Th ese global shifts are resulting in what George Washington University Professor Danny Leipziger refers to as a growing number of perceived “global negative externalities.” Paradoxically, they are also producing more inwardly focused policy prescriptions such as defi cit reduction and seeking to shrink government, especially in many of the OECD’s more developed economies.

Concurrently, there appears to be decreasing enthusiasm for dealing with these global negative externalities through multilateral institutions, notwithstanding the widely acknowledged contributions such bodies have made to global stability and development since the Second World War. While this fl agging enthusiasm for multilateralism from some of the world’s traditional donors can be

explained largely by negatively perceived externalities such as increased outsourcing of jobs and increased competition from emerging economies, the lack of enthusiasm among emerging donors is largely based on a perception that the institutional structures of multilateral organizations are out-dated, inadequately representative of their needs and priorities, and do not refl ect the emerging international balance of power.

Leipziger off ers compelling suggestions on how to deal with newly forming and in many respects diff erent models of development cooperation, including a stronger and altered role for the World Bank Group. He also puts forward proposals for resetting the multilateral architecture in light of diverging views of development cooperation.

Following Leipziger’s warning of the looming risks arising from today’s global power shifts, NSI’s Shannon Kindornay and Hany Besada examine in greater detail two key issues facing the multilateral system, namely declining support and how to include the increasing number of development actors in global decision-making processes. In response to the growing proliferation of multilateral organizations and increasing concerns by traditional donors with system eff ectiveness, the authors suggest a more comprehensive evaluation of the multilateral development system itself rather than of individual or groups of institutions. Such an evaluation would serve as a basis to merge similarly mandated institutions, phase out those that are underperforming and improve the overall eff ectiveness of the remaining multilateral development system. Overall, this process would mean signifi cant consolidation and closing of certain institutions.3 Kindornay and Besada’s fi ndings are particularly important in light of the HLF-4 commitment to set common principles and guidelines for managing joint eff orts that would reduce the proliferation of multilateral, global funds and programme channels.

With respect to greater inclusion of developing countries in multilateral aid management, Kindornay and Besada argue that current suggestions in the lead-up to the HLF-4 are not suffi ciently grounded in solid research that examines: 1) the feasibility of various existing and possible arrangements and 2) the perspectives of various stakeholders. Th ey call for more

3 Other key speakers at the conference concurred, including Ms. Sigrid Kaag, UN Under-Secretary General.


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research to ensure that the post-Busan aid architecture is inclusive and eff ectively addresses the shortcomings of the current structure. Research-based evidence is key to the success of the new aid architecture that will emerge from HLF-4 particularly as new institutional arrangements meant to oversee commitments made in Busan are currently being negotiated. HLF-4 participants have agreed to fi nalize these new arrangements by June 2012.

Kindornay and Besada’s contribution sets the stage for the following three chapters that look at the eff ectiveness of multilateral development institutions (Picciotto) and the implications for the system of the emerging donors (Davies and Naidu). London’s King’s College Professor Robert Picciotto’s contribution engages critically with the contemporary rationale for multilateral aid. He probes the dilemmas that need to be tackled to achieve Paris Declaration objectives, identifi es key fi ndings from recent aid-quality assessments and draws implications for future aid allocations.

To reverse the erosion in support for multilaterals, Picciotto argues that urgent reforms are needed. Th e governance systems of multilateral development institutions need to be more inclusive and better refl ect the changing global order. He also stresses the need to adopt “harmonized metrics” and independent evaluations focused on results and development impact.

Picciotto sees the Busan High Level Forum as a key medium through which the infl uence of newly emerging economies and donors can be brought to both the design and practice of development cooperation. He also sees it as the institutional vehicle through which the emerging donors can act as major stakeholders in one important aspect of a global system. Although emerging donors have signed on to the Busan Partnerhsip for Eff ective Development Co-operation, what role they will occupy and to what extent they will engage in international discussions on aid eff ectiveness in the post-Busan era still remains to be seen.

Picking up on Picciotto’s hopes for the High Level Forum, Penny Davies, an independent consultant associated with Sweden’s development NGO, Diakonia, identifi es how new approaches should be brought into the design and implementation of a more harmonized development paradigm. She describes the rise of South-South cooperation and provides an important overview

of the new non-DAC donors and the implications of their emergence for development cooperation.

In response to the increasing number of development actors, Davies suggests that a new development paradigm is necessary that systematically engages civil society stakeholders, including the private sector, non-DAC donors and parliamentary bodies. At the same time, she suggests ways in which aid transactions can be made more transparent, highlighting the absence of South-South providers from the “International Aid Transparency Initiative” as a major weakness. While focusing on potential lessons to be learned from positive aspects of South-South cooperation, Davies nonetheless acknowledges that there are still serious shortcomings in the principles underlying the South-South approach, including apparent incompatibilities between their emphasis on national sovereignty versus declared respect for human rights and the environment.

Probing even more deeply into the impact of emerging donors on the global development-aid architecture, Sanusha Naidu of the South African Foreign Policy Initiative starts by asking whether the rise of the emerging donors refl ects the “beginning of the end of the western-dominated world” and the transformation of the values and aid principles which that world has supported since the middle of the last century. Taking the African continent as a case study, she examines whether emerging southern power formations, specifi cally the BRICS, off er something new in rendering the multilateral system more equitable in terms of representation, legitimacy and accountability, especially on behalf of the low-income and most marginalized states. As a result of commonalities in their colonial pasts, she asks whether the BRICS are promoting collective solutions to new global challenges or are tending to behave as states have historically behaved, namely in a relentless pursuit of their national interests, both economic and political?

Naidu also highlights how the presence of new donors is aff ecting the behaviour of the OECD-DAC members. She concludes, however, that the actions of the emerging donors have yet to match their rhetoric of solidarity and mutual interest. In response, Naidu calls on African governments to recognize their advantageous position within the new competitive aid environment and ensure that African interests are eff ectively represented in new and old aid relationships.


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Finally, the concluding chapter of this year’s report by NSI’s Aniket Bhushan and Kate Higgins introduces readers to our new Canadian International Development Platform (CIDP). Th e CIDP is a highly interactive web-enabled data and analytical platform examining fl ows between Canada and the developing world. Th e CIDP comprises over 30 comprehensive datasets on international development, including highly detailed data on aid, trade, investment, migration and other fl ows between Canada and developing countries. What is most innovative about this platform is that it is a one-stop analytical tool that allows researchers, the public and policy-makers to develop substantive outputs based on both publicly available and customized data sets.

In a time of acute resource stringency, having such a capacity can assist Canada’s policy-makers in ensuring that development and foreign policy resources are used in the most cost-eff ective way. Combined with CIDA’s new “Open Data Portal,” which was offi cially launched during our June Conference by Canada’s Minister for International Cooperation, the Honourable Beverly Oda, as well as Canada’s new membership in the

International Aid Transparency Initiative, which was announced in Busan, CIDP will contribute to the Government of Canada’s broader objective of more open government and greater transparency.

In the same chapter, using CIDP’s analytical tools, Bhushan and Higgins provide a comprehensive picture of multilateral development cooperation within the changing global order, including a detailed picture of Canada’s contributions to and through multilateral institutions. Th ey also examine donor patterns among other donors, as well as the relative merits and demerits of multilateral versus bilateral assistance. Th eir fi ndings substantiate the views expressed in earlier chapters on the state of multilateral development in our changing global order.

We are pleased to off er this free tool for those who want to improve our understanding of development assistance in a rapidly changing world. It is only through such enhanced knowledge that development cooperation can be revamped in the interests of those who need it most.


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CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY

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CHAPTER ONE.

MULTILATERALISM,THE SHIFTING GLOBAL ECONOMIC ORDER,

AND DEVELOPMENT POLICY


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WHY THE FATE OF MULTILATERALISM IS SO PRECARIOUS

Multilateralism is a convenient way of describing some of the cooperative arrangements that have characterized

the global economic order in the period following the Second World War. It has had a very good run, particularly with respect to economic cooperation among the more advanced countries. When it comes to supporting the development aspirations of poorer countries, multilateralism’s history is imperfect, yet substantially favourable. How else can one explain the rise of South Korea, Hong Kong, Taiwan, and Singapore? How else can one explain the massive increase in world trade, global value chains and international capital fl ows? How else can one explain the relative lack of international strife in the face of the emergence of a worldwide oil cartel, massive surpluses that required recycling, the fall of major currencies like the pound sterling, and the coordinated depreciation of the US dollar in the Plaza Accord? We have seen the General Agreement on Tariff s and Trade (GATT) formed and transformed into the World Trade Organization (WTO). We have seen the International Monetary Fund (IMF) and World Bank created and then replenished many times over. We have seen the creation of new institutions in areas of health, regional development, migration, and justice. While not all multilaterals are eff ective, they provide the world order with a sense of common purpose and cooperation (Haass 2008; Held and McGrew 2007).

Th e chinks in multilateralism were of course apparent from the beginning. However, as long as world trade and global output were rising at a respectable pace, many of the stresses could be accommodated. Th e gains from trade were large enough to manage the dislocations. Th e fl ows of capital were plentiful enough so that losses could be borne every decade or so when a fi nancial crises hit, whether in Latin America, Russia,

East Asia, or Eastern Europe. What has in the end frayed the edges if not the core of multilateralism was the synchronous unraveling of fi nancial markets, fed by excessive liquidity, excessive leverage, and excessive greed that went unpunished by regulators. Th is has led to such a severe global downturn that some of the fundamental faith in markets and the institutions meant to oversee them has been shaken — and with it, faith in multilateral solutions.

Recriminations now fl y fast and furiously about currency wars, predatory exchange rates, and unbridled liquidity creation. In parallel, and largely as a consequence, there is considerable talk about the need for greater government intervention and for a resetting of national priorities at the expense of global ones. Th is is unfortunate since the process of international integration has increased the importance of externalities in areas such as trade, health, migration, capital fl ows, crime, and corruption. At no time, therefore, has the need for multilateral solutions been greater and the appetite for national concessions been weaker. Th is is the world in which development cooperation fi nds itself in 2011.

Th is chapter is organized in four parts. Part One examines the changes in the economic order emanating from the ongoing economic crisis that began in 2008. Part Two deals with multilateral institutions and their emerging challenges, and provides a frank assessment of their eff ectiveness and their prospects. Part Th ree lays out some fundamental choices for the global community in coming to grips with the new economic landscape and its likely consequences. It stakes out a position based on the premise that the existing multilateral institutions and their memberships are not adequately armed to deal with the spate of potentially negative global externalities facing the international community. Part Four provides some insights into the institutions charged with fostering economic development and

MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICYDANNY LEIPZIGER


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indicates how development cooperation may need to adapt to the changes in both the landscape and the political economy of assistance. Th e conclusion off ers fi nal thoughts for those concerned with the challenge of “resetting multilateralism.”

PART ONE: HOW THE GLOBAL LANDSCAPE HAS CHANGED

The fi rst decade of this century was characterized by a dramatically new economic landscape. A snapshot of the shift in economic power in the

last decade alone as seen in Figure 1 is quite striking. Th e speed and magnitude of Chinese economic ascent is almost without precedent in modern history, coinciding with a dramatically aging demographic shift in Japan and Germany, previously the world’s second and third largest economies. At the same time, the immediate problems of the eurozone are distracting the continent from its longer-term challenges and the United States (US) is mired in a diffi cult high-debt, low-growth trap made worse by partisan politics and a widening mal-distribution of income.

For the advanced countries, the Great Recession could not have come at a worse time. Th e 2000–07 period of cheap money, booming trade, and excess purchasing in many nations, especially the US, provided fuel for economic expansion among high-saving, export-oriented countries, while seriously over indebting the markets in which the New Economic Powers (NEPs) sell.1 Th e net result — substantial and unsustainable imbalances — would have ultimately derailed the euphoric expansion of the period even without the housing collapse and consequences of under-regulation.

Some observers, such as former IMF Managing Director Dominique Strauss-Kahn, correctly saw the culprits as being a combination of imbalances, poor economic policy choices, and poor oversight, with disastrous consequences for the global economy and, even worse, a more constrained set of economic policy choices going forward (Strauss-Kahn 2011). Some unrepentant protagonists, such as Alan Greenspan (2011), who helped fuel the housing market bonfi re with an excessively expansionary monetary policy, are now unhappy with the idea of fi nancial regulations that would in any way impede markets. Th is, despite the overwhelming evidence that fi nancial markets misbehaved by taking on risks in the fashion predicted by Joseph Stiglitz (2002), that housing prices were artifi cially infl ated as warned by Karl Case and Robert Shiller (2003), and that the taxpayers of this, and probably the next, generation in the US will need to pay dearly for these regulatory failures.

Th e most dramatic economic shifts stemmed from phenomena that preceded the crisis, such as China’s accumulation of reserves, strong export strategy, and helpful exchange rate, and were then propelled by the crisis, including an increased global reliance on China and other NEPs for positive growth while advanced economies were shrinking (Canuto and Giugale 2010). It is clear that the maintenance of economic growth in the NEPs was the only counterweight to the steep declines in output experienced in the advanced countries in the 2008–10 period. For 2011, the IMF (2011b) forecasts a global expansion of 4.4 percent with the advanced countries contributing a 2.4

1 As per Leipziger and O’Boyle (2009), NEPs today control 13 percent of global output and are projected to represent 34 percent by 2030. NEPs in-clude China, India, Brazil, South Korea, Mexico, Russia, Turkey, Indonesia, and Saudi Arabia.

6000

5000

4000

3000

2000

1000

-1000

2000 4000 6000 8000 10000 12000 14000 16000

Mexico (1994)

0

Mexico

FIGURE 1: JOINING THE OECD “RICH CLUB”


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percent growth rate and the NEPs 6.5 percent. And so the trend continues, with an increasing share of world income derived from rising world output in the emerging market economies.

Th e trend of eventual economic convergence among countries was long predicted and has been the source of renewed attention as the rise of China has defi ed even the most exuberant expectations. New points of view on convergence include those of economists David Romer (2011) and Michael Spence (2011), each with his own take on the future, yet with a clear vision that the shifts in economic power are here to stay. Meanwhile, the World Bank (2005) forecasts the dual phenomena of increasing convergence between countries from the so-called North and South along with increasing divergence among income earners within both sets of countries. It was expected that rapidly rising incomes in China or Vietnam would be accompanied by a sharpening of income disparities because both Communist-led economies started with broadly fl at distributions. Concerns about these shifts in the distribution of income are mitigated in part by the dramatic movement of millions, indeed hundreds of millions in the case of China, out of abject poverty in recent decades. What was not so evident, except to some like Stiglitz, was that globalization would have such a signifi cant negative impact on the world’s largest trading nation, the US.

Also unanticipated was the dramatic narrowing of income distribution in the US, where the top 1 percent of the distribution that commanded 1 percent of national income in 1978 ended up obtaining 23.5 percent of national income in 2007, before the crisis began (Kennickell 2009; Saez 2009). Th is degree of income inequality is reminiscent of 1929, the last time it was as concentrated (White House Task Force on the Middle Class 2010). Th is trend is especially worrisome when combined with post-crisis developments in the employment picture in the US where job destruction is far sharper than job creation, and off -shoring continues to make globalization a prime target of domestic US political concerns (Blinder 2009). In fact, the Pew Research Center’s 2008 survey found less than half the US public believes trade is benefi cial compared to 78 percent who viewed it positively less than a decade ago (Pew Research Center 2008).

Around the world globalization is also under siege, with Brazilian-led talk of currency wars, a resurgence

of interest in national industrial policies, and warnings from academics and the IMF that unsustainable balance of payments imbalances are likely to re-emerge (Canuto and Leipziger forthcoming; Wheatley 2010; Wheatley and Garnham 2010). If Dani Rodrik is correct in suggesting that domestic-led growth needs to increase at the expense of export-led growth in order to support eff ective development strategies, then globalization is in for further shocks (Spence and Leipziger 2010). Even the independent Spence Commission on Growth and Development concluded in its post-crisis Supplemental Assessment to the Growth Report that the returns from an export-oriented strategy would be smaller than before, although it did not endorse the more activist domestic actions that a dirigiste industrial policy would imply (Spence and Leipziger 2010).

Many have opined on the new economic landscape, beginning with Mohamed El-Erian’s “new normal” of lower growth, higher debt, and a new equilibrium in capital markets, and the Rodrik and Arvind Subramanian (2009) view that capital fl ows need to be re-examined for their desirability. In the US, the experience with aggressive money creation, benignly known as quantitative easing or QE2 (and its aftershock in terms of capital outfl ows that appreciated other currencies such as the Brazilian real), combined with large rises in the debt-to-GDP relationship, have indeed created new challenges. Th e key question remains, how will the excessive liquidity be reined in without raising interest rates and short-circuiting the recovery?

Meanwhile, there has been concern in emerging markets about unwanted capital infl ows and a turnaround in IMF policy toward capital import taxes. Recall that it was the IMF (along with the US Treasury) that decried the Chilean excess reserve requirement in the 1990s to deter short-term fl ows. Contrast that with the current IMF posture of tolerance (IMF 2011a) and understanding toward capital import taxes (Strauss-Kahn 2011). Financial transaction tax debates are not new; however, the notion that they would deter capital fl ows in today’s integrated fi nancial markets is questionable, but nevertheless lends credence to anti-globalization sentiment.

Th e current focus on short-term policy responses to disturbing economic news should not distract us from


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a longer-term perspective on what has fundamentally changed. Th is is especially true for those changes that are inevitable in direction if not degree that will shape future policy choices. Among these landscape changers are climate change, where the issue is only the pace at which unacceptable climate change will happen, not whether it will occur. Much has been written about the issues of growth and climate degradation and about responsibility and ability to change the speed of climatic disaster (Mendelsohn 2009; Nordhaus 2007; Stern 2007). Apart from the overwhelming and intractable issue of shared global responsibility is the fact that carbon intensity is highest in the fastest growing economies. Climatic change epitomizes the kind of global externalities facing nations over the coming decades.

Less attention has been directed at the issue of demographic shifts (Spence and Leipziger 2010). Th e population declines in Japan and South Korea, for example, imply tremendous changes in future output. In the case of Japan, economic forecasts before the terrible recent 2011 natural disasters showed no relief from its low-growth trap (see separately Fukao 2010; Ito forthcoming; Yoshino forthcoming; all share the same pessimistic view). At the same time, forecasts for South Korea show that in order to avoid a continued precipitous drop in growth compared to past levels, dramatic changes in birth rates, women’s labour participation rates, and retirement ages need to occur (Ianchovichina and Leipziger 2008). Indeed, the same demographic phenomenon will ultimately aff ect China, exacerbated by the draconian but eff ective one-child policy and earlier actions that reduced the ratio of women to men in certain age groups. In Europe, the issue has been well documented by the Organisation for Economic Co-operation and Development (OECD) and others — namely that the drop in birth rates, if unaccompanied by more welcoming immigration policies, will depress future growth.

It would appear that most future trends — in demographics, health, and pension obligations, in particular — in the advanced economies point to economic decline (Canuto and Leipziger forthcoming). Starting with the basics of production as formulated by Robert Solow, Romer, and others, the factors of production that remain to be exploited are technology and innovation. It is for this reason that the work of Philippe Aghion and others on innovation-led growth

takes on special signifi cance inasmuch as development strategies are nuanced by countries’ abilities to either gain effi ciency in existing technologies or gain superiority by developing new ones (Aghion and Howitt 1998; Spence and Leipziger 2010). Higher growth rates may emanate from new innovations in information and communications technology in much the same way that the Internet aff ected so many sectors (Mann forthcoming). Ironically, however, many of the gains of information technology that incentivize global supply chains, new advances in the service sector, and additional off -shoring also lead to greater unemployment in the advanced countries, more pressure against free-trade, and greater concerns about the direction of industrial policy (Leipziger 2010; Rodrik 2011). Th is pervasive trend points to the need to re-invigorate multilateralism as an antidote to overtly nationalistic economic policies that are sure to hurt developing countries.

Th e outlook for the coming decade will be characterized by the increasing signifi cance of global externalities. Th e global community has become accustomed to a plethora of positive externalities in the post-war era such as great gains in openness to trade, matched by unparalleled increases in trade that enabled East Asia in particular to grow at lightning speed. But what we witness now is a greater consequence of negative spillovers, as seen during the Great Recession when trade volumes collapsed globally because of banking problems in a few countries. Similarly for Europe, the great gains in trade creation due to the expansion of the eurozone are history, and now the problems of internal convergence will command policymakers’ attention as we have seen in the crisis of Southern Europe.

Th e speed and consequence of negative spillovers has prompted the IMF to begin a new monitoring eff ort on country spillovers focused on fi nancial risks.2 Th e United Nations (UN) and others have attempted to identify major global risks that produce signifi cant economic externalities, but they have proven powerless to create a consensus on action (United Nations

2 Th e IMF will now take a risk-based approach to fi nancial sector sur-veillance and will make Financial Sector Assessment Programs (FSAPs) mandatory parts of Article IV surveillance for members with systemically important fi nancial sectors. If FSAPs were done for the top 12 fi nancial sectors, they would include the United States, Canada, Switzerland, China, Japan, and seven European Union (EU) countries.


page 21

2009, 2011). Many believe that the only body that can credibly intercede is the Group of Twenty (G20). Whether that will come to fruition remains to be seen.

In this diffi cult environment of increasingly high-speed, negative externalities, it is crucial to examine how the multilateral institutions charged with dealing with these phenomena are operating. We know that the IMF is charged with preventing currency wars. Th e Financial Stability Board (FSB) is charged with preventing regulatory arbitrage. Th e quasi-moribund WTO is supposed to help prevent trade wars. Each has failed in large measure in recent years. Th e challenge facing the global community now is whether these or other institutions that face an increasingly negative international environment can help prevent worst-case scenarios involving poor policy outcomes. Finally, there are the related questions about how the NEPs can play a more eff ective role in global governance and regulatory areas. And what are the consequences for the poorest countries still left out of the mainstream and the donors who have pledged to support their development aspirations?

PART TWO: THE SCORECARD ON THE MULTILATERALS

Far too little credit is given to certain key multilateral institutions that have helped drive economic growth, prosperity, and dramatic

development gains in some countries since 1960. Among them, the World Bank stands out as a source of data, fi nancing, and intellectual leadership. When it comes to understanding poverty, income distribution, and economic growth, the World Bank is the institution of choice to help analyze trends and prospects. It has also, depending on the decade, been the most infl uential global assessor of trends in social sectors, on urban development, infrastructure, gender economics, industrial structure, agriculture, and many other aspects of development. Th ose pockets of expertise, however, have come and gone in the midst of the World Bank’s internal strategic failures and management lapses. Nevertheless, if one asks policymakers in South Korea, China, or Indonesia about the World Bank’s major contributions, their answers are usually in the realm of policy advice and institution building.

Th is is not to downplay the importance of World Bank and International Finance Corporation (IFC) fl ows,

which have at times been counter-cyclical, especially during the oil shocks that spawned adjustment lending and in the recent Great Recession when precautionary borrowing from the World Bank tripled lending as markets became overly skittish and the IMF had yet to fully reposition itself. Th e World Bank Group has essentially three groups of clients: (1) the poorest countries receiving international development assistance, which require substantial debt relief granted through Heavily Indebted Poor Country Initiative3 and Multilateral Debt Relief Initiative4 in addition to institutional eff orts; (2) the lower-middle-income countries, which benefi t from cheaper fi nancing, investment lending via the World Bank’s International Competitive Bidding guidelines, and the World Bank’s guarantee for borrowing elsewhere; and (3) the upper middle-income countries, which benefi t from advisory work, pilot projects, and other instruments of World Bank lending and coordination to undertake their own development programs.

Some would say that the World Bank’s most signifi cant contributions come in the forms of: (1) data and analysis; (2) monitoring and validation; (3) fi nancial innovation; (4) intellectual leadership; and (5) providing development platforms for others. In the fi rst category, the World Bank’s published data on poverty, growth, and per capita income stands out, while Governance Assessments and Doing Business rankings epitomize the second rubric. In fi nancial innovation, one can point to catastrophe bonds, the Debt Reduction Facility, and local capital market development. Intellectual leadership is perhaps the World Bank’s strongest suit; there are myriad examples starting with its work on income distribution. In terms of mobilizing and shaping fl ows from donors, one may look to the Gender Action Plan, the Governance Partnership Facility, the Debt Management Facility, and many others across social sectors.

Th e package of development lending combined with analytic advisory work seems to have been the World Bank’s successful trademark. Unfortunately for the development agenda, the World Bank is now capital

3 Th e Heavily Indebted Poor Country Initiative was launched in 1996. Th e Initiative’s debt-burden thresholds are adjusted downwards, enabling a broader group of countries to qualify for larger amounts of debt relief. See World Bank 2011 for more information.4 Th e Multilateral Debt Relief Initiative provides 100 percent relief to a group of low-income countries on eligible debt from the IMF, the World Bank’s International Development Association, and the African Develop-ment Bank’s Africa Development Fund.


page 22

constrained. Th e combination of engorged lending during the 2008–10 crisis and a reluctance by its president to seek a fresh capital increase have left the World Bank limited to a sustainable lending program of US$15 billion per year. With larger loans now in fashion, at least for large borrowers like India, Brazil, and China, this implies that the regional development banks, which have extra capacity to lend, will become more popular. Material prepared for the G20 shows that recent capital increases in regional banks now render them the most capable of expansion in lending (G20 2009). With total offi cial development assistance (ODA) either fl at or falling and sovereign wealth funds (SWFs) concentrating on a few sectors such as oil and gas and a small number of wealthy or advanced countries, there is little room for new fl ows to those developing countries that are not the favoured emerging market economies.5 Interestingly, the sheer size of SWF investments,

5 SWFs that manage perhaps US$3 trillion in assets are said to hold undiversifi ed, conservative investments in oil and a few sectors via large-cap fi rms (Chhaochharia and Laeven 2010).

largely in safe, developed, or rich countries, dwarfs ODA by many multiples as seen in Figure 2.

Th e World Bank’s position as expressed to the G20 seems to be that a small capital increase is needed to avoid breaching certain prudential risk ratios and single-borrower limits, but that it is generally satisfi ed to have its annual lending capped at US$15 billion, while regional banks will lend upwards of US$35 billion a year (World Bank 2010). Th e International Bank for Reconstruction and Development’s (IBRD) request for a US$58 billion general capital increase would not change its sustainable lending levels and is, by comparison, one-half of the Asian Development Bank’s recent general capital increase from the World Bank/IMF Development Committee (World Bank 2010).

Considerable attention has been directed at the World Bank’s governance, while an insuffi cient amount of time has been spent looking at its management. Similarly with the IMF, there is a fi xation on shares in the World Bank’s Executive Board, although, as the Zedillo Commission (2009) pointed out, the World Bank’s governance is less infl uenced by its Board than by its shareholders at a distance and by its management in Washington. In the end, shares only matter symbolically. Major redirections at the World Bank, such as its push to decentralize (which has proven to be exceptionally costly both fi nancially and in terms of degrading its global knowledge), have been undertaken with minimal oversight and little regard for trade-off s. Its overwhelmingly powerful presidents have had almost cartes blanches to pursue their own agendas and the Zedillo Commission recommendation for “report cards” has been delayed until the next presidency, much as the notion of a non-American president is only supported in the abstract.

Meanwhile, the WTO and its predecessor, the GATT, have contributed impressively to the growth of world trade and the relatively free market access that has helped the Asian “tigers” (Taiwan, South Korea, Hong Kong, and Singapore), Asian “cubs” (Th ailand, Malaysia, and other rapidly growing economies of Southeast Asia), and now the Asian giant, China, to develop so remarkably. Th e WTO has done well in terms of negotiating the elimination of tariff s, moderately well on non-tariff barriers, well on admitting new members, and relatively poorly on services reform and adjudication. Th e fact that the Doha Development Round has been stalled for a

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1956 1962 1967 1979 1994 2001 20100

FIGURE 2: SIZE OF WORLD TRADE AT THE CONCLUSIONS OF GATT/WTO ROUNDS


page 23

decade is not the fault of the WTO, but rather refl ects the particular sectoral lobbies in advanced countries whose potential losses cannot be balanced by new trade gains because, ironically, the system is remarkably open.

Th is is at the strategic level. At the tactical level, Doha failed because political leaders in the OECD countries cared too little about the success of the round and some newly emerging economies felt that they could show their muscle in Geneva, while at the same time delay opening their own markets in services and other areas that were useful in generating balance of payments surpluses. Th e net result is a dead Doha round and perhaps a dying WTO, given the elapsed time of the round as seen in Figure 3.

Th e WTO may have a future as the arbiter of trade disputes, although since those outcomes are “win-lose” rather than “win-win,” such a role may not be popular. In any event, such a role for the WTO would be possible only if countries saw it in their interests to have an arbiter rather than deal with trade disputes bilaterally (Meltzer 2011). And this would occur only if the NEPs decided to invest in multilateralism. Unfortunately, the smaller developing countries gain little from a WTO that adjudicates, given the time and cost of such actions.

Th e OECD also has had a good run, especially on issues where externalities among the advanced countries needed to be tackled by naming and shaming. Th is worked well for the OECD Anti-Bribery Convention, but only moderately well on anti-money laundering initiatives. Despite a push to expand its membership, the OECD is losing steam because representation is too low-level, commitments to action too halting, and the cohesion of the group has been diminished both by the politics of the EU and the divergent interests of potential new members. It is a club with good data collection and an informed forum for conversation, but in today’s policy vacuum it is less of a player than one would hope, the excellent eff orts of its Secretary-General notwithstanding. Th e OECD’s Development Assistance Committee (DAC) lacks focus and is not overtly relevant to the development agenda. While the OECD can use moral suasion at times, its lack of enforcement, even in areas such as illegal cross-border banking, limits its reach.

For its part, the IMF has exhibited a remarkable resurgence of late, returning to the centre of the international fi nancial debate under the recent leadership of Strauss-Kahn after a period of signifi cantly lower relevance. While some (Bergsten 2007; Stiglitz 2011) would like to see the IMF become the issuer of a new reserve currency in the form of Special Drawing Rights (SDRs), an unlikely occurrence in my view, others are content to see the IMF provide precautionary access programs when markets are skittish and play the role of global arbiter on matters currently covered by the G20. Among the G20 issues that group is asking the IMF to weigh in on are assessments of spillover risks of too-big-to-fail institutions, surveillance of imbalances, cross-border issues that aff ect global systemic risks (including mandatory FSAPs), and the underpinnings for mutual assessment frameworks of G20 members. Th is large an agenda implies quite a comeback for the IMF.

It is no exaggeration to say that some of the success of the G20, the main multilateral economic forum, is based on the ability of governments to outsource work to the IMF and their confi dence in the way the institution was led. Th e IMF has shaken off its reputation for attaching unreasonable conditions to its adjustment programs. Its current position as the assessor of macroeconomic behaviour and calibrator of systemic risk is critical for successful

FIGURE 3: SOVEREIGN WEALTH FUNDS($2.6 TRILLION IN 2009)


page 24

multilateralism going forward. Strauss-Kahn (2011) admitted that the institution missed major warning signs on the regulatory front and was politically incapable of infl uencing either the US on its twin fi scal and balance of payments imbalances or China on its exchange rate, yet he was determined to show a new face to the international community. Th is began with a 180-degree turnaround on the suitability of capital import taxes, long a taboo at the IMF, and new analyses aimed at identifying sources of negative spillovers or risk externalities (IMF 2010).

Going forward, it is clear that the major grouping that will attempt to steer multilateralism is the G20. While there are anomalous members of the group due to historical political accidents and notwithstanding the fact that the EU has an independent seat despite its four main member states being present, the group gains credibility from its expanded membership when compared to the Group of Eight (G8), for example6. Th e G20 benefi ts from certain countries that are committed to multilateralism and “punch above their weight,” such as Australia, Canada, and the Netherlands. Th e fact of the matter is that the G8 is no longer seen as suffi ciently representative of global economic players and, to be frank, has only infrequently acted boldly (for example, the Multilateral Debt Relief Initiative of the 2005 Gleneagles Summit under the presidency of the United Kingdom). Th e G8 also lacks a follow-up mechanism for implementation and monitoring and is unconnected to either the World Bank or IMF, except in special circumstances. With regard to the latter, the G20 is diff erent — it relies on the IMF and FSB for implementation and reporting.

Much has been written about the optimal G grouping. Famously, World Bank President Robert Zoellick declared the G2, the US and China, to be the proper forum to decide international issues. Unfortunately, however, the world’s two largest economies have much to disagree about and are unlikely to steer the international agenda forward. One is hamstrung by fractious politics and the other by a lack of political freedom, hardly a felicitous combination. Others, such as Ian Bremmer and Nouriel Roubini (2011),

6 For some observers, the expansion from Group of Seven to G8 also lacked realism since Russia is non-compliant with many of the OECD’s basic principles and lacks advanced-country status on crucial matters of governance.

align themselves with the G0 concept, namely that there is no grouping that can at present eff ectively steer the international system in the right direction. Still others have hope in the BRICS (Brazil, Russia, India, China, and South Africa), a grouping of countries with nothing in common except their newly strengthened economic status and an acronym coined by Goldman Sachs. Th e fi ve have little in common politically and each pursues a fundamentally diff erent economic strategy. Th eir recent pronouncement against the role of the US dollar as the global reserve currency notwithstanding, they appear unlikely to be positive global players in the near term for shoring up multilateralism (Xinhua 2011).

Th e G20 has scored some successes during the Great Recession, namely credible pronouncements on coordinated stimulus packages and following through on fi nancial regulatory announcements by empowering the FSB to set new international prudential norms. It also has boldly empowered the IMF in areas such as market surveillance, cross-border risk assessments, and making FSAPs mandatory for some systemically important countries. Th is could be a positive step to emulate in other areas of Article IV surveillance, for example, if the IMF indeed could enforce greater discipline vis-à-vis nations that experience sustained imbalances and/or practice exchange rate manipulation. Th at verdict on IMF eff ectiveness in these areas is still pending and some doubt exists that countries like the US, China, Germany, Brazil, or India will bend to the IMF’s pronouncements. If any country can ignore the analysis and implications of the Mutual Assessment Process, for example, the process will lose its credibility.

Th e two areas where the G20 has so far lacked resolve are the trade and development agendas. Despite the heroic eff orts of South Korea at the 2010 G20 Seoul Summit, no progress was recorded on the Doha round and the international development agenda remains a tame one at best with only vague pronouncements and committees to examine infrastructure constraints and other basic impediments to development progress.


page 25

PART THREE: NEW CHALLENGES FOR MULTILATERALISM AND ITS ORGANIZATIONS

The set of challenges facing the international community have never been greater. What sets them apart from similarly robust challenges in

earlier decades is the dramatically diminished ability of individual countries to shield themselves from the negative externalities of policy actions or inactions. Whether it is in the area of health, where Avian fl u, the H1N1 virus, or HIV/AIDS may abound, or in the area of migration, where countries and institutions have been proven inadequate in dealing with refugee problems, let alone illegal immigration, the world has become smaller if not fl at. Drug traffi cking has also proven to be impossible to control and a series of countries in the Western hemisphere have fallen like dominoes to drug cartels and violence.

In the arena of banking and fi nancial fl ows, the recent economic crisis has shown how cross-border risk cannot be easily managed and fi nancial contagion can have disastrous eff ects. Even as regulation attempts to play catch-up, new fi nancial instruments are being developed with untested risks. Th e issue of excessive leverage, which the German government attempted to attack during its G8 presidency in 2007, remains a concern and even higher new capital requirements are not suffi ciently in line with either risk or the potential for losses. Moreover, the sharing of losses across national borders is a complicated matter, as seen by the recent Icelandic banking collapse.

Governance of illegal fl ows is a major challenge to international organizations and the magnitude of fl ows is enormous (Reuter and Truman 2004). Th e amounts are estimated to total many hundreds of billions of dollars and measures to control them, such as the UN Convention against Corruption, are still unsigned by some countries that house major fi nancial centres. Even coordinated attempts by the UN Offi ce on Drugs and Crime and the World Bank under the umbrella of the Stolen Asset Recovery Initiative are slow to gain traction. Th e level of hypocrisy among some countries is palpable and the lost revenue that could be used for proper public sector purposes is large, especially — ironically — in the poorest countries. Th e UN system has proven to be particularly impotent when dealing with many of these cross-border issues and consensus often eludes the regulators and custodians of the global

commons, be it in the area of whaling, nuclear safety, pollution, arms shipments, or human traffi cking.

In the area of climate change, the record of the UN is also poor. Some progress has been made in controlling pollutants, but international agreements have proven elusive. Th e UN Secretary-General’s report on climate change fi nancing (United Nations 2010) claims that an additional US$100 billion will be needed annually by 2020 to manage climate-related investments in mitigation and adaptation. Th e report would like to see some 30–40 percent of this amount delivered by multilateral development banks (MDBs) — regional development banks and the World Bank — and it argues that a modest increase in paid-in capital, approximately US$10 billion, could fi nance this. While many of the report’s assumptions are questionable, the basic point that MDBs need to achieve higher net levels of sustainable lending to deal with climate-change issues is clear. It appears, however, that they are not equipped either fi nancially or technically to address such issues.

Finally, in the area of intellectual property protection the international community turns a blind eye to the theft of patents, especially for pharmaceuticals and new technologies. Th ere is a strong moral case for cheaper drug prices, but the costs of research and development are also very real and the theft of patents to produce generics, often of dubious quality, is a breach of international law. Th e fact that many of the BRICS are the main culprits in the theft of intellectual property does not augur well for their taking up the mantle of multilateralism (Rodrik 2011). Many in the global community would like major new players such as China to behave like OECD countries and accept greater responsibilities, but the reality is that many are still at per capita income levels that make them, as seen in Figure 4, unlike the newest members of the OECD.

At the same time, the international environment is fraught with greater negative externalities and fewer international safeguards. Indeed, the probability of poor outcomes has increased, whether in climatic events, cross-border fi nancial crises, or commodity price shocks. Whether one refers to “black swans,” “fat-tail” distributions, greater volatility in trends, or the chaos theory of Benoit Mandelbrot (2004), there is evidence that the past may not be the most reliable guide to the future. Th is is not comforting when taken in conjunction with Carmen Reinhart and Kenneth


page 26

Rogoff ’s (2009) historical evidence of the very long recuperation time for major economic variables after fi nancial crises.

If the chances of economic crises have indeed increased and the safety valves that might mitigate the severity of crises have diminished, then multilateralism is in for a rough ride. If, as I believe the evidence shows, transmission mechanisms are more fl uid, shocks will be transmitted with greater ease making the need for new and better global institutions to deal with them increase.

Meanwhile, others argue that the degree of global integration has peaked and we are in for a prolonged period characterized by the resurgence of national policy (Rodrik 2011; Rodrik and Subramanian 2009). According to Rodrik (2011), “Democracies have the right to protect their social arrangements, and when this right clashes with the requirements of the global economy, it is the latter that should give way.”

Th e ability and willingness of countries to put international demands on the same level as or above

national demands depends in part on economic conditions, partly on global civility and in part on the extent to which national governments have the trust of their citizenry. A series of arguments can be put forth suggesting that in many advanced countries all three phenomena are weaker than in the past. Th e result, if these hypotheses are correct, is that multilateralism will face greater resistance from national politics. I believe we have begun to see this trend in the US and increasingly in Europe. Why?

Th e fi rst reason is because economic conditions have worsened. Witness, for example, the deteriorating net worth positions of US households between 2007 and 2009 — two-thirds saw their net worth fall. According to surveys conducted by the Pew Research Center between 2001 and 2008, job losses and a sense of unfair competition from China has undermined the American public’s support for globalization. Th e dramatically increasing inequitable income distribution over the past 30 years makes it harder to promote global issues at the expense of national issues. Th ese deteriorating national trends also limit the traditional US leadership role and, when combined with eurocentricity, make it hard to identify new globalization champions.

Cooperation is fraying within Europe, which has incurred huge costs to keep the expanded eurozone intact and to maintain a common currency in the face of greatly diverging economic conditions among its members. Bailouts of Greece, Ireland, Portugal, and Spain have proven costly with eurozone members running budget surpluses being forced to fi nance bailouts for weaker members.

Observers predict continued economic diffi culties as the highly indebted eurozone members lack the ability to formulate independent monetary policies. Furthermore, with a fi xed exchange rate they must continually reduce fi scal imbalances without increasing their export competitiveness. Th is combination of fi scal retrenchment and a fi xed exchange rate is not a recipe for growth. Instead, it will continue to produce unsustainable debt dynamics, further bailouts, and political stresses in the eurozone.

Overall, growth prospects now are weaker than during the last decade, although the 2000–08 period had an unreal characteristic to it brought about by an

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FIGURE 4: DISTRIBUTION OF ECONOMIC POWER


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over-expansionary US monetary policy and an overly zealous trade and growth trajectory for China. Th ese twin imbalances allowed Americans to over-consume and the Chinese to over-save.

Currently, advanced countries are below their potential growth rates because of fi scal pressures, insuffi cient confi dence after the Great Recession, and confusing signals with respect to global monetary policy. Some fault the US for its excessively expansionary monetary policy, including particularly quantitative easing. Th is use of monetary expansion by the reserve currency nation has also led to a united call by the BRICS for the end of US dominance of international liquidity and a Chinese-led demand for a greater role for the IMF’s SDRs as a unit of account (Xinhua 2011).

Finally, fi scal pressures have also led to some retrenchment in bilateral assistance programs, especially among those donors that have traditionally been at the forefront of global aid eff orts. Whether the EU will be in a position to continue its ambitious increase in aid commitments undertaken in the past decade remains to be seen. Some of the slack has been taken up by China and other new donors, although their failure to report transparently is not encouraging. Th e track record of new donor adherence to the DAC’s best practices has been weak. Nevertheless, some aid recipients welcome the availability of large amounts of mixed aid credits.

However, these new fl ows, while large, are clearly at odds with attempts at aid harmonization and improved aid eff ectiveness. Philanthropy as an aid instrument is a newer phenomenon, although it is largely dedicated to the health area and can be seen as inconsistent with overall health sector management and reforms. Much greater eff ort is needed to integrate philanthropic eff orts, again often quite large in a particular sector, with national strategies and implementation capacity. Health policy cannot be fought one disease at a time, especially in countries with weak institutions and human capital.

Th us, a reasonable assessment of the multilateral situation is that we are experiencing a surfeit of negative externalities and a paucity of global solutions. New problems are becoming more severe and older institutions are not adapting suffi ciently to cope with them. Hence, we are entering a period of major new challenges to globalization. Indeed, some like Rodrik

(2011) argue that there is an impossible trinity of globalization, independent national policies, and democracy.7 He sees a weaker form of globalization as inevitable since it will collide with national policies and the politics that underpin them. Whether or not one takes that pessimistic an outlook, Rodrik is correct in arguing that strong national governance is a prerequisite for common global eff orts and their legitimacy.

What is relatively clear is that the path of the global economy will not be mean-reverting, either quantitatively or qualitatively. On the latter score, Rodrik (2011) argues that “National Democracy and deep globalization are incompatible.” Hence, we can either aim for a lighter form of globalization in which domestic policies take precedence or we need to fi nd better ways of making national and global goals more complementary.

PART FOUR: IMPLICATIONS FOR DEVELOPMENT COOPERATION

There is no dearth of diagnostics as to what ails development assistance. Th e Paris Process has clearly laid out the inconsistencies of bilateral

aid programs and many of their defects. Eff orts toward harmonization have yielded only modest success. Th e EU’s aid targets have added pressure on member states to increase assistance but have not been matched with eff ectiveness measures. Th e multilateral horizon is dotted with regional development banks, the World Bank, vertical funds, and various UN agencies that in general fail to measure up well in terms of either eff ectiveness or impact. Th ere are new players on the scene such as fi rst-time donors, philanthropists, and even SWFs. However, the impact of these players is less than the allocation of resources would imply.

Th ere is now a pressing need to reform the development assistance constellation. Th e need arises from two factors. First, the advanced economies, including signifi cant traditional donors, are fi scally strapped and aid budgets will not be increased — indeed the new mantra is “value for money.” Second, there are new actors whose policies are still evolving but who may see the world diff erently from

7 China would be able to fulfi l two of the three legs of Rodrik’s impos-sible trinity since it has no pretext of democracy and can thus manage its national and international obligations.


page 28

traditional donors. For both reasons, a recalibration of development cooperation is needed. And such recalibration must begin with political support.

Th e support for development cooperation comes from those who believe in fi ghting poverty, others who want to see growth and development to secure the future, some who wish to give back to the global community for the aid they have received, and others who have only political motivations. Th e IBRD and the International Development Association have managed to keep enough of these objectives in the forefront to sustain support from many quarters. Recently, however, the situation has changed as many middle-income countries have made impressive economic strides, while many low-income countries have fallen further behind in their development struggles despite massive debt relief. At the same time, some countries have become aid darlings and others aid orphans. Aid has in many cases become fragmented on the supply side, while in a few recipient countries it has consistently and uncomfortably dominated budgets. Links between offi cial aid and private sector fl ows have never really congealed and attempts, such as parallel lending (so-called “B Loans” or co-fi nancing) and the use of guarantees, have not lived up to their promise.

Th e rise of the G20 provides a massive political opportunity for development cooperation. Because several G20 countries are recent aid recipients and new donors, the G20 has a broader view of what constitutes acceptable development assistance. Th e belief often espoused by the most generous aid donors that assistance should directly alleviate poverty, rather than contribute to broad-based economic growth, is no longer the dominant sentiment. Indeed, current World Bank Chief Economist Justin Lin (2010) advocates for a new structuralist approach that is perilously close to government-led growth and strong on supporting the real economy and developing comparative advantages.

Much in the way that the G20 has empowered the IMF to be the lead institution for macroeconomic considerations and fi nancial risk concerns, the G20 needs to empower the World Bank to be the lead agency on development. Th is may require changes in the way the World Bank operates, but such empowerment can also provide it with greater authority on development coordination. Some of the most successful assistance programs have involved

large amounts of aid, committed governments, and independent coordination. Examples of such coordinating mechanisms include the Consultative Group for Indonesia and the donor group for Vietnam, among others.

Th e World Bank must be more selective, reducing its programs and presence in countries that have neither the political will nor the institutions to make good use of assistance. Th ere may be many charitable organizations that can eff ectively operate in that space, but the World Bank cannot and should not. Instead, the World Bank should reposition itself to operate in: (1) countries that have eff ective governments and suffi cient governance to utilize global aid; (2) countries from which it can learn and where it can make a diff erence in particular sectors or with particular groups of the population, even if the country is creditworthy; (3) sectors that create global externalities, such as climate change mitigation; (4) innovative sectors that it is well positioned to assist, such as natural disaster adaptation; and (5) areas where there are coordination failures that it can ameliorate or redress.

Furthermore, the World Bank should close small offi ces and retrench. Its decentralization process has gone far beyond the economical, the effi cient, and the eff ective. It is now a series of outposts combined with a group of independent affi liates. Th ese affi liates dot Africa and Central America, but lack both scale and expertise to make meaningful contributions. Its outposts, such as the Jakarta offi ce, receive a large portion of their annual budget from local donors and contribute little to the knowledge base at headquarters, which is problematic because global expertise should be the World Bank’s raison d’être. Despite many eff orts to revitalize the “knowledge bank,” these eff orts have failed. In this context, the refusal by the World Bank’s president to deal with internal deterioration has cost it dearly in terms of expertise.

Th e one area in which the G20 could most visibly empower the World Bank is climate change mitigation and adaptation. Th e World Bank’s capital should be increased — it was an error not to have already moved more forcefully on this front — and new lending should be aimed at reducing emissions. Th e BRICS are among the most carbon-intensive producers in the world and other developing countries will follow in that path unless alternative energy sources are funded and fi nanced.


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Th e World Bank is ideally positioned for this challenge. It was the international fi nancial institution of choice during the oil shocks, when adjustment lending began. It has been the agency charged with managing debt relief for the poorest countries. It was called upon to do major fi nancial sector lending in the aftermath of the Tequila crisis in 1995 and the Russian default in 1998. Now, its crisis leadership established, it is the right agency for the climate change agenda.

Th is mandate will not emanate from the Executive Board of the World Bank, its Development Committee, or even its Board of Governors. A new mandate will require direction from the heads of state or government of G20 countries. Th e steps required after the political commitment to use the World Bank as the lead climate change fi nancier are straightforward. Begin with a sizable capital increase for the World Bank so that its sustainable lending level is doubled to US$30 billion annually. Th is additional lending destined for investments to adapt infrastructure to climate change mitigation measures can then deal with this major risk to many developing countries going forward.

Th e G20 can give impetus to the World Bank in the same fashion that it empowered the IMF. A general capital increase at least as large as that granted the Asian Development Bank would be the right order of magnitude. Th is increase in fi nancial capacity can be matched with hiring more technically trained staff , which would increase the World Bank’s knowledge and expertise. To manage this transition within a fi xed budget, savings could be generated by addressing the budgetary burden caused by costly and excessive decentralization.

CONCLUSION: 10 POINTS ABOUT THE NECESSITY OF REINVESTING IN MULTILATERALISM

1) Th e current commitment to multilateralism falls short of what is needed for globalization to be successfully maintained. We have many indicators — international surveys, recent scholarly work, and editorial commentary — that all point to a lapse in dedication to the post-war goals for the international system. Th e original OECD members and groupings such as the North Atlantic Treaty Organization and G8 emerged from a common understanding as to how

the international economy should be shaped. One can easily blame the originators of the Bretton Woods system for a failure to suffi ciently adapt. However, there was enough common ground and suffi ciently shared economic benefi ts to keep the system’s custodians — primarily the US, Europe, and Japan — committed to that system. Cohesion continues to fray and is threatened by the emergence of the NEPs. Many advanced economies are now either too dependent on China and other NEPs or too preoccupied with internal troubles to pay suffi cient heed to global warning signs.

2) Th e NEPs should invest in multilateralism since it serves their long-term interests; moreover, their actions will either reshape or signifi cantly redefi ne economic cooperation going forward. It is easy to complain that the international system is biased against emerging market countries and others by looking at how the heads of the Bretton Woods institutions are chosen or simply looking at voting shares in these institutions. But the selection of institutional leaders and voting shares are not, however, real measures of either infl uence or economic reality. Th e current reality is that the NEPs are drivers of world markets, global prices, capital fl ows, and new technologies. Th at they are so infl uential is a measure of their successful policies and also of the system in which they operate. If multilateralism is seriously at risk, the future of the NEPs will be less fortuitous and more fractious — this does not serve their economic interests well.

3) Development cooperation is more important than development assistance. However, altered development paradigms make cooperation even more vital as the negatives of non-cooperation will mount. More nationally driven development strategies and greater inward thinking among both advanced and emerging market economies will produce detrimental changes in global trade and capital fl ows. As a result, the global economy will grow more slowly as will its component shares. Even as countries adjust to new growth poles and new regional trading arrangements, attention to globalism should be nurtured. Th e world economy is too interlinked to avoid the negative externalities of economic parochialism.

4) Th e changing economic landscape implies a set of stronger and altered roles for the World Bank Group, in particular the IBRD and the IFC. Th e empowerment of the IMF by G20 leaders has left


page 30

the World Bank Group adrift. Th e IBRD has ceded its previous role in fi nancial sector development to the IMF. Th e IFC is not a major player in the risk management arena at a time when this is of increasing importance to its clients. More generally, as the World Bank’s Executive Board has pushed it to be more engaged in fragile states and in the poorest countries, this has meant that it has also begun to lose its vital role in the fi ght against poverty in middle-income countries, where the majority of the poor reside and where their chances of escape are highest.

5) To exert leadership in new areas such as climate change, the World Bank Group requires a new mandate from the G20, a signifi cant increase in its capital, and new leadership. Climate change mitigation and adaptation investment needs dwarf the current capacity of the World Bank. Th e decision not to push for a large capital increase, while the IMF was refi nanced and regional development banks gained lending space, has left the World Bank Group in a weak position to take on new and critical challenges.

6) Bilateral assistance needs to be signifi cantly leveraged to be meaningful and new donors need to become more transparent. Bilateral aid is highly fragmented and too often motivated by donor fetishes. Each donor, even those that mean well, has its preferred sectors and a list of preferred countries. Such procedures are antithetical to good development assistance policy. Th ey create donor darlings and orphans and programs without context or institutional underpinnings. Philanthropy also has downsides when divorced from institutions and national policy. New donors, often with new ideas and approaches that may be meritorious, are prone to be less transparent than the DAC has come to expect, which reduces eff ectiveness and creates concerns about new forms of economic colonialism.

7) Eff ective donor coordination can produce large positive externalities and, conversely, uncoordinated eff orts can limit welfare gains. Examples of well-coordinated donor fl ows are few, but they have existed. Indonesia may have set the standard in the

1970s and 1980s. Vietnam was similarly successful in the 1990s. In the same way that economic planning raises the return on individual investments, especially in infrastructure, coordinated donor eff orts are indispensable, yet diffi cult for agencies to accept. Examples of duplication, overlaps and uncoordinated eff orts are unfortunately frequent. Indeed, some observers argue that multilateral eff orts should replace some bilateral eff orts that are too small and isolated to be eff ective.

8) A much more serious eff ort is needed on the anti-corruption front in order to create credible and eff ective institutions for growth and development. Considerable resources have been devoted to nitty-gritty eff orts on accountability for the use of public resources (for example, the Public Expenditure and Financial Accountability Program). However, progress on larger-scale corruption as refl ected in the UN Convention against Corruption, the Stolen Asset Recovery Initiative, and multilateral eff orts to identify and address safe havens has not been similarly successful. Th e current business-as-usual approach is simply unacceptable.

9) With regard to globalization, the costs of retrogression will be high for developing countries, while the OECD countries and the BRICS can fend for themselves. Developing countries — not represented adequately in the G20 and not suffi ciently by the World Bank as an observer to the G20 — will in the coming years be put to a tougher test as the global economic climate becomes less hospitable. ODA is useful, but the key determinant of success will be the eff ective operation of the global economy.

10) A lot is riding on the G20, the bulwark against national policy resurgence and globalization risks. To be eff ective, the G20 must be one — but not the only — element in a revitalization and reinvention of multilateralism. Countries such as Australia, Canada, and the Netherlands, which punch above their weight in international fora, have a crucial role to play in any eff ort to restore strength to the multilateral system.


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Danny Leipziger is Professor of International Business at George Washington University and Managing Director of the Growth Dialogue. He is former Vice President for Poverty Reduction and Economic Management at the World Bank, a position in which he oversaw a network of over 700 economists and professionals. He was also Vice Chair of the Spence Commission on Growth and Development, a major international four- year project that resulted in the 2009 Growth Report, and is a frequent commentator in the media and the press on global economic issues. Prior to joining the Bank, Dr. Leipziger served in senior positions at USAID and the U.S. Department of State. He obtained both MA and PhD degrees in economics from Brown University. He has published widely on issues related to development economics and fi nance, industrial policy, and banking.

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CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS

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CHAPTER TWO.

MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS

AND FUTURE PROSPECTS


page 36


Traditionally, multilateral development institutions like the United Nations (UN) and the World Bank — institutions whose

aims are to promote and facilitate cooperation among countries — oversaw and delivered concerted responses to development challenges alongside their bilateral and trilateral counterparts.1 However, the landscape in which development organizations operate has changed dramatically in the past decade, calling into question their current role as multilateral development institutions and their ability to address new, emerging and evolving global development challenges.

Paradoxically, the ongoing fi nancial, water, food and fuel crises, the growing inequality between and within countries, the global population growth and its impact on natural resources, and the challenge of climate change — all of which have implications for development — demonstrate the crucial importance of multilateral development agencies in dealing with these “problems without passports” (Picciotto, this volume) that transcend international borders as well as cultural, linguistic, religious and ethnic diff erences. Th is is especially true given the intensifi cation of economic and social interconnectivity among countries. All these problems require collective solutions. As Picciotto points out, no one country at a time or one country acting alone can tackle today’s global challenges.

However, in the midst of the current fi nancial crisis, many traditional leading nations have turned inwards, focusing more on their own socioeconomic problems. Politicians in the North are increasingly required to demonstrate strong leadership in defending their

1 While earlier occurrences of multilateralism exist, we use the term multilateral development system to represent the myriad of formal and informal institutions of varying scope, structure and membership that exist today. Th ese institutions range from the UN system organizations, such as the Food and Agricultural Organization (FAO), United Nations Develop-ment Programme (UNDP), to the World Trade Organization (WTO), Organization for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF), the World Bank, the Group of Eight (G8)/Group of Twenty (G20), continental organizations, regional economic communities and regional development banks.

national economies. As a result, the multilateral development community is facing tri-dimensional challenges where 1) institutions are ill-equipped to confront emerging issues;2 2) responses aren’t proportionate to the size of problems; and 3) the leading governments behind multilateral development institutions are focusing inward. While all three dimensions are consequences of the current global fi nancial crisis, the future character of these challenges will necessarily depend on how well the multilateral development system can respond, evolve and, ultimately, contribute to resolving global problems over the medium and long terms.

Th is chapter critically examines the eff ectiveness of the multilateral development cooperation system. In addition, it provides solutions to important challenges facing that system and identifi es areas for future research. Th e chapter is organized in two main sections to address key issues: 1) declining donor support for multilateral organizations; and the problem and extent of multilateral proliferation; and 2) eff ectively incorporating new development partners into the multilateral aid architecture.

To combat these trends, the authors support, in the fi rst section, that the number of multilateral organizations be greatly reduced while those that remain need to better demonstrate their eff ectiveness and impact on poverty alleviation to both recipient countries and donor governments. To do this transparently and effi ciently, the international community should agree on a standardized multilateral evaluation and assessment framework that is universally applied and serves three key functions: 1) identifi es areas where redundancy and overlap exist and mergers among organizations might occur;

2 See Leipziger and Picciotto, this volume, for a range of suggestions on how reforms might be implemented.

MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS SHANNON KINDORNAY AND HANY BESADA


page 38

2) assesses the extent to which multilateral development institutions are contributing to development goals; and 3) sets a minimum benchmark for performance, providing a mechanism to phase out underperforming organizations if they are unable or unwilling to make the necessary reforms to improve their eff ectiveness. Such assessments must take into consideration the perspectives of developing countries as benefi ciaries of multilateral interventions, along with their national development priorities when working with partner multilateral organizations.

Th e second section examines the future of the multilateral aid architecture in light of the rise of new development partners, namely the private sector, foundations, philanthropists, international non-governmental organizations and emerging donor nations. Recognizing the importance of including new actors in the aid architecture to reduce fragmentation, improve coordination and deliver eff ective assistance, the section then examines strengths and weaknesses of the various forums that deal with issues relating to aid and development cooperation in light of their potential to engage new and old actors.

THE CURRENT MULTILATERAL DEVELOPMENT COOPERATION SYSTEM

The proportion of aid from bilateral donors to multilateral development institutions through core contributions is declining (OECD-DAC

2011). According to the draft 2011 DAC Report on Multilateral Aid, core multilateral contributions as a share of offi cial development assistance (ODA) fell from 33 percent in 2001 to 28 percent in 2009. Meanwhile, earmarked funding3 to multilateral organizations is the fastest growing component of ODA, leading to what some are calling the bilateralization of multilateral aid (OECD-DAC 2011, p. 4). Earmarked funding increased from US$13.4 billion in 2008 to US$15 billion in 2009, representing 12 percent of total ODA (OECD-DAC 2011, p. 28). In total, roughly 40 percent, or US$52 billion, of gross ODA was channelled to and through the multilaterals in 2009 (OECD-DAC 2011, p. 4).

According to the OECD - Development Assistance Committee (DAC) (2011, p. 4), there are several

3 Earmarked funding refers to the offi cial development assistance allocated to multilateral development institutions for a specifi c purpose.

reasons why earmarked funding is growing. Donors can better track results and have a greater say over how funds are used. As well, such assistance raises the visibility of donor contributions to their domestic constituencies (see also Burall 2007; Carlsson 2007; DFID 2011a).4 Moreover, as donors focus their eff orts on a smaller number of countries as a means of channelling their development assistance toward specifi c and targeted programs, the provision of multilateral aid allows them to continue working in diff erent regions with smaller amounts (OECD-DAC 2011, p. 4).

Meanwhile, bilateral donors are also pressuring multilateral organizations to work in fragile, confl ict- and post-confl ict states where they have greater access and a comparative advantage, owing to their historical relationships, expertise and perceived neutrality. In 2009, nearly 70 percent of aid allocated for select countries through multilaterals by bilateral donors went to fragile states (OECD-DAC 2011, p. 28). While multilaterals see this phenomenon as the bilateralization of multilateral aid, bilateral donors see this as the multilateralization of bilateral aid.

Th e provision of earmarked aid through multilateral channels is a worrisome trend because it contributes to the fragmentation of aid interventions (Picciotto, this volume). Aid is already highly fragmented —there are more than 80,000 aid projects annually, delivered by more than 56 donor countries through 197 bilateral agencies and 263 multilateral agencies (World Bank 2008; Kharas, Makino, and Jung 2010, p. 2). Meanwhile, the number of bilateral donors has increased from fi ve or six in the mid-1940s to some 55 today (World Bank 2008, p. 12).

Th e average number of bilateral donors per recipient country has increased from 12 in 1960 to 33 in the early years of this century (World Bank 2008, p. ii). Th e result is a system wherein too many actors contribute too little (DCD/DAC 2011c, p. 7). Moreover, the rise of earmarked funding makes it more diffi cult for multilateral development organizations to set their own priorities (Carlsson 2007).

Earmarked funding encourages organizations to carry out individual programs rather than coordinating

4 For an overview of the theoretical underpinnings as to why donors choose multilateralism, see Milner and Tingley (2011). Th ey argue that the principal-agent dilemma best accounts for a state’s relationships with multilateral institutions.


with other multilaterals, which sometimes results in duplication and ineffi ciency as seen, for example, in the case of the UN (Carlsson 2007, p. 62). It also makes it more diffi cult for recipient governments to program and implement national development plans. As pointed out by Helmut Reisen (2010), this fragmentation seems at odds with the Paris Declaration on Aid Eff ectiveness that seeks to limit duplication and promote harmonization of aid activities.

Th e problem of declining support for multilateral development organizations is compounded by their incredible proliferation. Th e head of research for the OECD Development Centre, Reisen (2010), calls this the “multilateral donor non-system.” Meanwhile, the system has grown from 15 organizations in 1940 to more than 260 in 2008 (Reisen 2010, pp. 4-5). Between 1971 and 2005, there was a six-fold increase (Carlsson 2007). As a result, the international assistance system has become highly fragmented with too many organizations with overlapping mandates (Reisen 2010, pp. 5-7; see also Kharas (2011)). Of the 264 organizations identifi ed through the OECD-DAC Creditor Reporting System in 2008, just fi ve groups of multilaterals accounted for two-thirds of funding to multilateral agencies (Reisen 2010, p. 8).5 In 2009, 81 percent of core multilateral aid went to fi ve clusters: the European Development Fund and European Union (EU) budget;6 the World Bank’s IDA;7 UN Funds and Programs; the African and Asian Development Banks; and the the Global Fund to fi ght AIDS, Tuberculosis and Malaria (Global Fund) (OECD-DAC 2011, p. 5). More than 200 multilateral organizations share the remaining 19 percent. Th e international community has expressed concern over the proliferation of multilateral development agencies, agreeing at the Th ird High Level Forum on Aid Eff ectiveness in 2008 to think twice before setting up new ones (Kharas, Makino and Jung 2011, p. 2).

5 Th e fi ve are the European Commission (EC), the World Bank’s International Development Association (IDA), the Global Fund, Asian Development Bank and the African Development Bank. 6 Between 2007 and 2009, 65 percent (US$8 billion) of total DAC EU members’ ODA to EU institutions came from members’ contributions to the EU budget, which is overseen by the European Parliament and Council. 7 Th e IDA off ers “interest-free credits and grants for programs that boost economic growth, reduce inequalities and improve people’s living condi-tions” to low-income eligible countries (World Bank 2011). See http://go.worldbank.org/ZRAOR8IWW0.

It is time for the international development community to further assess the multilateral development system (rather than individual multilateral organizations per se), including the roles and responsibilities of various organizations, as well as their eff ectiveness. A large number of multilateral assessments and evaluations already exist. Obser (2007) identifi es at least eight diff erent approaches to assessing multilaterals.8 According to Scott et al. (2008), this proliferation of assessments is ineffi cient and no single one can provide a complete picture of a multilateral’s performance. Th ey suggest that rather than conducting self-assessments, as the United Kingdom (UK) recently did (DFID 2011a), bilateral donors should use their weight on the boards of multilateral institutions to encourage them to deliver better assessments and evaluations.

Picciotto (this volume) calls for the creation of harmonized good-practice standards and peer-review processes focused on the independence and quality of internal evaluation systems. He adds that these evaluation tools be implemented across the multilateral system with the same diligence since current self-assessments do not focus on accountability nor adequately demonstrate multilateral agencies’ eff ectiveness. Picciotto points out that evaluations require independent verifi cation, suggesting that current self-evaluations by multilaterals and collective assessments, such as the Common Performance Assessment System for multilateral development banks and the bilateral-donor sponsored Multilateral Organization Performance Assessment Network, have not strengthened overall public confi dence in multilateral agencies.

While the suggestions outlined above are useful in relation to measuring the eff ectiveness of individual multilateral organizations, they do not suffi ciently address the proliferation of multilateral development organizations or the assistance system as a whole. What is needed is an approach that combines these suggestions with an overall review of the multilateral development system.

Drawing on Christiansen and Rogerson (2005), Picciotto further points out that a “radical redesign

8 See Picciotto (this volume) for a full discussion of recent evaluations and assessments, including those by the Independent Evaluation of the Paris Declaration, the Centre for Global Development/Brookings Institute Quality of ODA assessment and the UK’s Multilateral Aid Review.


page 40

[of the multilateral system] would not be a realistic medium-term goal since existing institutional arrangements are the result of historical antecedents and geo-political infl uences shaped by complex interactions among states and non-state actors pursuing diverse goals and responding to multiple constituencies.” Nevertheless, he favours a phased consolidation of agencies. However, in order for such a consolidation to occur, policymakers need to have a clear understanding of the organizations that exist, including their mandates, activities, stakeholders, the political and economic environments in which they operate, and how eff ectively they deliver.

In order to reduce duplication and increase the eff ectiveness of the system as a whole, the international community should agree on a transparent standardized multilateral evaluation and assessment framework that serves three main functions. Th e framework should:

• identify overlap, serving as a starting point to assess the division of labour among multilateral development institutions and begin discussions on potential organizational mergers;

• demonstrate how and to what extent multilateral development institutions contribute to development results; and

• set a minimum benchmark for performance, providing a mechanism to phase out underperforming organizations if they are unable or unwilling to make the necessary reforms to improve their eff ectiveness.

Ideally, this process would encourage greater focus and specialization within multilateral development institutions on areas in which they have expertise and can deliver. It would help reduce fragmentation and encourage convergence by reducing the number of multilateral organizations and simplifying their mandates (BetterAid 2011, p. 5). Clearly, such a process would generate multilateral winners and losers, much as the 2011 UK Multilateral Aid Review has done.9 Some organizations might be forced to consolidate their eff orts or redesign their existing or planned programs and eff orts to better refl ect desired outcomes, while others may have to close their doors

9 For example, “losers” from the recent UK evaluation include UN-HAB-ITAT, UN International Strategy for Disaster Reduction, UN Industrial Development Organization and the International Labour Organization, which will either see a large decrease or end to their funding (DFID 2011b, p. 15).

for good. Th e 2010 amalgamation of the UN Division for the Advancement of Women, the International Research and Training Institute for the Advancement of Women, the Offi ce of the Special Adviser on Gender Issues and Advancement of Women, and the UN Development Fund for Women into UN Women, sets a precedent for mergers among similarly mandated multilateral development institutions, in this case UN organizations devoted to improving gender equality and the status of women.

Evaluation and assessment processes are political, and it is certain that an international review of the multilateral development system, as outlined above, would be no exception.10 Such an endeavour would most certainly encounter challenges in securing agreement between donors and aid recipients on the standard evaluation and assessment framework. Evidence suggests that developing countries are more concerned with the extent to which multilaterals support recipient ownership of the development process. A 2007 study11 conducted by the UK’s Overseas Development Institute (ODI) indicates that recipient countries prefer to work with regional development banks and the UN as opposed to the World Bank, although latter is often perceived as more eff ective (Burall 2007).

Th ese preferences are understandable in light of the recent UK Multilateral Aid Review fi ndings. Although the World Bank performed very well overall in this exercise, reviewers found evidence of its International Development Association making limited use of country systems and “working alone on issues that were not key national priorities” (DFID 2011a, p. 53). Th ey also found that developing countries valued highly regional development banks as partners, owing to what they see as a deep commitment by the banks to their regions (DFID 2011a, p. 53).

Regional development banks with overriding objectives of promoting development in their respective regions play a three-fold role of lenders, advisers and

10 Th e political aspect of evaluations was also a challenge in the Phase 2 Evaluation of the Paris Declaration (Patton and Gornick 2011), which is the closest comparable evaluation to what is suggested above.11 Th e study looked at perceptions from stakeholders in six countries: Bangladesh, Ghana, India, South Africa, Tanzania and Zambia. It also examined seven multilateral organizations: the African Development Bank, Asian Development Bank, EC, the Global Fund, the UNDP, the UN Chil-dren’s Fund and the World Bank. Researchers learned the perspectives of more than 250 recipient business leaders, civil servants, civil society leaders, government ministers and members of parliaments (Burall 2007, p. 1).


development partners. Th ese banks provide a range of products and services that are tailor-made for their respective regions’ development requirements. In addition, developing countries tend to feel a greater level of ownership when aid is delivered through regional development banks, owing partly to their more equitable governance structure (Burrall 2007, p. 3; Griffi th-Jones et al. 2008, p. 2). Burrall, for one, found that respondents in three out of four African countries preferred to work with the African Development Bank over the World Bank and the EC, even though they see it as less eff ective (2007, p. 3; see also Waythne and Hedger 2010).

An international review of the multilateral development system will require tradeoff s between donors and recipients regarding assessment standards and indicators. However, if donors are concerned about recipient country ownership — the fi rst principle under the Paris Declaration on Aid Eff ectiveness —they need to consider how to support the multilateral partners favoured by developing countries. Th is initiative would require the political will of both donor and recipient countries to take fi ndings seriously and act upon them in a coordinated manner.

Regardless of the challenges, the number of multilateral organizations should be reduced — and the current environment may provide the necessary impetus for this reform. With few exceptions, advanced economies concerned with their own domestic problems are less willing to allocate scarce resources to aid, while emerging economies support only the multilateral development institutions that align with their national interests (OECD-DAC 2011).

Moreover, emerging donors and the private sector (discussed later in this chapter) are providing developing countries with alternatives to traditional aid modalities, including aid channelled through multilateral organizations. Indeed, between 1995 and 1998, roughly 80 percent of total aid came from DAC countries, whereas between 2005 and 2008 DAC countries contributed two-thirds of total aid (Kharas, Makino, and Jung 2011, pp. 13-14). As the pool of development resources grows, the proportion of aid allocated multilaterally will likely continue to decrease.

Another factor that may provide impetus for reform is the current international obsession with eff ectiveness.

In an attempt to show unequivocally that aid works, the international development community is making results a key theme in the lead up to the Fourth High Level Forum on Aid Eff ectiveness (HLF-4) in Busan, South Korea to take place in November 2011. Indeed, declining resources and increasing concern with eff ectiveness may provide a fertile ground from which to launch an international assessment of the multilateral development system. Th e point here is not to suggest that the multilateral development system is not playing, or will not continue to play an important role in international development cooperation. Rather, it is to suggest that the changing international context provides policymakers with an opportunity to examine and address the shortcomings of the current system in order to ensure continued donor support and enhance its eff ectiveness.

DEVELOPMENT IN A CHANGING INTERNATIONAL CONTEXT

The development cooperation system is highly fragmented, involving a range of states and non-state actors that work alone and/or in

concert through formal and informal channels. In this context, multilateral development institutions play a key role in harmonizing and coordinating responses to global development challenges. However, new actors are playing increasingly prominent roles. While some of these new actors are engaging with the multilateral system, many have chosen not to for various reasons, raising concerns on how to best include these groups to ensure coherency and greater aid eff ectiveness with-in the international aid and development architecture.

Private sector actors

One major new evolution in the development cooperation system is that both donors and recipients are seeing the private sector as a key partner. Th ey recognize the private sector can provide an engine for growth, acknowledging the important role it plays through private-public partnerships and large philanthropic foundations. Th e OECD-DAC has also launched discussions with private sector actors on their role in achieving greater aid eff ectiveness12 and plans to release a statement on this issue at HLF-4.

12 Th e OECD-DAC held its fi rst informal meeting on the role of the private sector and aid eff ectiveness in 2010. See http://www.oecd.org/document/38/0,3343,en_2649_3236398_45675430_1_1_1_1,00.html. It has also commissioned a paper on the subject (see Davies 2011).


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In contrast to several decades ago, private sector actors, including foundations, are making a signifi cant contribution to assistance. Kharas, Makino and Jung estimate that private philanthropy has grown from 1 percent of total aid between 1995 and 1998 to 17 percent between 2005-08 (2011, p. 14). According to one estimate, total private assistance donations13 in 2008 amounted to US$53 billion, compared with US$121 billion in offi cial development assistance (CGP 2010, p. 14).

As part of this shift, private sector actors are providing money to governments and multilateral agencies for development projects. Th e Bill and Melinda Gates Foundation (Gates Foundation) is probably the most prominent. As the largest philanthropic grant-giving organization in the world, the Gates Foundation supports poverty alleviation and the improvement of health conditions in developing countries. Since

13 Includes foundations, corporations, private and voluntary organizations, volunteerism, universities and colleges, and religious organizations.

1999, it has released a total of US$24.8 billion.14 In 2010 alone, it released US$2.6 billion to more than 100 countries. In 2010, it provided some US$1.9 billion for global health and global development activities.15 Th e organization allocates grants to multilateral institutions such as the UN World Health Organization and World Food Programme (WFP), as well as to the Global Fund, regional development banks and the World Bank.16 Between 2000 and 2011, the Gates Foundation granted US$550 million to the

14 “Fact Sheet,” Bill & Melinda Gates Foundation (May 2011), accessed at http://www.gatesfoundation.org/about/Pages/foundation-fact-sheet.aspx.15 See http://www.gatesfoundation.org/annualreport/2010/Pages/grants-paid-summary.aspx.16 See http://www.gatesfoundation.org/grants/Pages/search.aspx.

FIGURE 1 - THE GLOBAL FUND TO FIGHT AIDS, TUBERCULOSIS AND MALARIATOTAL CONTRIBUTIONS FOR TOP 25 DONORS, 2000-09 (US$ MILLION)

0

1000

2000

3000

4000

5000

Nig

eria

Chev

ron

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Source: The North-South Institute, 2011. Canadian International Development Portal.


Global Fund,17 making it the fund’s ninth largest of more than 50 bilateral and private donors.

Figure 1 depicts the total contributions made to the Global Fund over the 2000-09 decade by its top 25 donors. It shows that private sector actors, such as Product Red and Partners18 and Chevron Corporation, as well as the Gates Foundation, are making a major contribution to a particular programming area.

According to at least one observer, states and multilateral agencies do not have the capacity, or in some cases, the willingness to combat global problems alone. Th is has led them to search for partners, resulting:

. . . in a mutual dependency between resource-constrained multilateral institutions and private actors who also require partners to execute projects. Arguably these kinds of partnerships may not be possible without foundations, which occupy a unique position within the aid regime as intermediary institutions straddling state-civil society divides (Moran 2009, p. 26).

International non-government organizations (NGOs)

International development NGOs are also making a signifi cant contribution to global development eff orts. At the height of globalization in the late 1990s, NGOs became the preferred vehicles of development aid. Th ose years saw a rapid rise of ever-better fi nanced development NGOs (Ronalds 2010) along with growing taxpayer pressure in donor countries for governments to show results for money being spent. As Fowler notes, NGOs were seen as part of governments’ plans to reach their objectives. “Th eir [NGOs’] contribution is seen to lie in an ostensibly distinct practice in terms of direct operations and policy contribution, as well as in terms of persuading (taxpaying) domestic constituencies (and free-market economic critics) that ‘aid works’ and that the system is worth keeping and supporting” (Fowler 2000, p. 590).

17 Th e Global Fund provides grants on a discretionary basis for projects aimed at the prevention of infection and the treatment and support of per-sons directly aff ected by HIV/AIDS, tuberculosis and malaria (http://www.theglobalfund.org/en/activities/). It provides a good basis for comparison between private sector actors and bilateral donors in contrast to other mul-tilaterals. Other multilateral organizations address multiple development challenges, making it diffi cult to assess how much private sector actors are contributing to a particular area or issue vis-à-vis bilateral donors. 18 Product Red and Partners include: American Express, Apple, Bugaboo International, Dell + Windows, GAP, Giorgio Armani, Hallmark, Motorola Foundation, Motorola Inc. & Partners, Starbucks Coff ee, Media Partners and (RED) Supporters.

As a result, NGOs began to enjoy increasing access to national government policymakers and multilateral institution decisionmakers. Northern governments channelled more and more development aid through NGOs, displacing traditional government development institutions in several areas of offi cial development assistance. While NGOs became crucial to development aid eff orts, multilateral institutions have also been increasingly working through non-governmental channels. World Bank fi gures show that the proportion of its project funding involving civil society organizations has risen from 21 percent in 1990 to 81 percent in 2009 (Hamad and Morton 2011, p. 4).

As budget funding for government agencies responsible for development aid declined over the past decade, governments turned increasingly to NGOs as collaborative partners. Hence, the development aid sector gradually saw greater interaction and cooperation among donor governments, multilateral institutions and the non-governmental sector. Governments increasingly viewed NGOs and foundations as part of the development sector solution. As Bräutigam and Segarra (2007, p. 173) note, it was an era where “governments and NGOs [learned] that partnerships can be useful, and NGOs (in particular) learn[ed] how to engage the government offi cials as professionals.”

Th e international community has seen exponential growth in the number of NGOs operating inter-nationally, from approximately 985 in 1956 to more than 21,000 in 2003 (Hamad and Morton 2011, p. 5). As illustrated in Figure 2, some of these NGOs have budgets that rival those of smaller OECD donors.

Th eir growing size and presence has led to greater pressures on international NGOs to achieve more concrete results in terms of aid eff ectiveness and to become more accountable (Koch 2008).19 Indeed, NGOs are playing an important role in international discussions on aid eff ectiveness and the future of aid and development cooperation. At the Working

19 See Hammad and Morton 2011 for a discussion of NGO account-ability standards and their eff ectiveness. More broadly, in the lead up to the HLF-4 in Busan, civil society organizations have launched a participatory process to develop guidelines relating to their eff ectiveness through the Open Forum on CSO Development Eff ectiveness. See also http://www.cso-effectiveness.org/.


page 44

Party on Aid Eff ectiveness (WP-EFF),20 which is spearheading eff orts for HLF-4, civil society organizations, including NGOs, are represented by the BetterAid Coordinating Group.21

Emerging economies

Th rough the provision of their own brand of development cooperation, emerging economies are challenging the Western-dominated aid and development cooperation agenda, specifi cally in terms of what it entails and how it ought to be delivered. According to Oxford University’s Ngaire Woods (2008, p. 17), emerging powers are “quietly off ering alternatives to aid-receiving countries . . . introducing

20 Th e WP-EFF is a multi-stakeholder forum, distinct from but hosted by the OECD-DAC, that brings together policymakers and aid practitioners from donor and developing countries, multilateral development agen-cies and civil society organization representatives. Th e WP-EFF monitors progress on implementing the international aid-eff ectiveness agenda, strives to improve partnerships between aid actors and serves as the principal discussion forum on issues related to aid eff ectiveness (see OECD-DAC WP-EFF, 2010).21 Better Aid represents over 700 members from 325 civil society organiza-tion and 88 countries. It sits on the Executive Committee of the WP-EFF.

competitive pressures . . . into the aid market and . . . weakening the bargaining position of Western donors in respect of aid-receiving countries.”

Th ese emerging powers — many of whom are large developing countries with growing economies and global or regional agendas for infl uence — do not necessarily follow the aid practices developed by Western donors and their multilateral counterparts. Th ey are instead injecting new ideas about development cooperation into the international political discourse under banners such as South-South cooperation and solidarity.22 Th ey off er partners comprehensive packages that include aid and non-aid elements in exchange for access to natural resources and investment opportunities. Th eir cooperation also includes knowledge exchanges; in some cases, countries

22 For a full discussion on the emerging donors and the challenges and opportunities they present for international development cooperation, see Davies (this volume). For a historical perspective on the rise of emerging donors and, in particular, their role in the African context, see Naidu (this volume).

FIGURE 2 - DAC DONORS AND PROMINENT INTERNATIONAL NGOS LARGEST TO SMALLEST ODA/PROGRAM EXPENDITURE 2009 (US$ MILLION)

Nor

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ian

Peop

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Aid

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0

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Source: Hamad and Morton 2011


participating in South-South cooperation23 may not even engage in a monetary exchange.

For example, spurred on by the global fi nancial, energy and food crises, as well as the demand for markets and natural resources to fuel their burgeoning economies, leading emerging powers such as the BRICS (Brazil, Russia, India, China and South Africa) have become important players in global economic aff airs. As well, these new players have become some of Africa’s most important development partners over the past decade. 24 To a large extent, their engagement with Africa is based on the principles enshrined in the Non-Aligned Movement: mutual nonaggression, mutual respect for each other’s territorial integrity and sovereignty, equality and mutual benefi ts, mutual non-interference in domestic aff airs and peaceful coexistence.

Developing countries see emerging economies’ experiences as valuable, in particular their success in overcoming development challenges in an environment similar to what they face today (Kharas, Makino and Jung 2011, p. 18). Moreover, many of the emerging economies such as Brazil, China and India have followed a unique development path leading to successful results, demonstrating that there are alternatives to the policies promoted by Western donors and international fi nancial institutions embodied in the Washington Consensus (Naidu, this volume).25,26 Indeed, the international development

23 UN Conference on Trade and Development defi nes South-South coop-eration as “the process, institutions and arrangements designed to promote political, economic and technical co-operation among developing countries in pursuit of common development goals (2010, p. 1). ” Zimmermann and Smith draw a further distinction, describing South-South Development Co-operation as “developing countries that deliver expertise and fi nancial support to foster the economic and social welfare of other developing coun-tries,” including countries like Brazil, Chile, China, Egypt, India, Malaysia, Mexico, South Africa, Th ailand and Venezuela as providers (Zimmermann and Smith 2011, p. 728).24 Th e aid programs of China, India, Brazil, Venezuela, Turkey and the Republic of Korea will soon each surpass US$1 billion annually (Kharas, Makino and Jung 2011, p. 7). In the case of Africa, China pledged to increase aid to the continent from about US$2.3 billion in 2006 (Wang 2007, p. 22) to US$10 billion by 2009 (Baldauf 2007). 25 Th e phrase “Washington Consensus” is often seen as synonymous with “globalization and neo-liberalism.” It was coined by economist John Wil-liamson to refer to policy advice off ered by the Washington-based IMF and World Bank to Latin American countries in 1989. Broadly, these policies included deregulation, privatization of national services, trade liberalization and fi nancial opening.26 As Birdsall and Fukuyama point out, many developing countries (some of which we refer to as emerging economies today) lost faith in the Wash-ington Consensus following the fi nancial crises of the 1990s. As a result, these countries accumulated large foreign currency reserves and regulated their banking systems, thereby reducing their exposure to foreign fi nancial markets (2011, p. 46).

community has become increasingly interested in these alternatives, as evidenced by calls for a Post-Washington Consensus (Birdsall and Fukuyama 2011), the return of the developmental state27 (Wade 2010) and ongoing discussion regarding the Beijing Consensus.28

Among the new ideas and processes contributed by the emerging economies to development cooperation are innovative development assistance modalities like South-South and triangular cooperation.29 Th ey contribute to increased and more diverse resources for partner countries to support national development strategies and have relevant development experiences to share with other countries. Some even suggest that their development cooperation model can be seen as a critique of the neoliberal aid/development paradigm (Kim and Lightfoot 2011; Naidu, this volume).

Emerging donors represent a heterogeneous group. Some are new to the aid scene while others are re-emerging after a hiatus, such as China (Woods 2008; Davies, this volume). Th eir level of engagement with the multilateral system varies. Some, such as the new European donors, report their aid fi gures to the OECD-DAC’s Creditor Reporting System and disperse the bulk of their aid through the EC (Zimmermann and Smith 2011, pp. 725-6). Among new non-European major donors, Brazil and Russia make fairly signifi cant aid contributions to multilateral organizations, while China and India do not (OECD-DAC 2011, p. 6). Others such as Colombia and China, for example, have engaged in trilateral

27 See Lin and Monga (2010) for an example of this thinking in practice. 28 Beijing Consensus is a term that represents an alternative economic development model to the Washington Consensus of market-friendly poli-cies promoted by the Washington-based multilateral institutions, often for guiding reform in developing countries. Th e term was fi rst coined by Josh-ua Cooper Ramo, a former journalist who now lectures at China’s Tsinghua University. In a May 2004 paper he pointed out that China and India, who ‘most pointedly’ ignored the World Bank- and IMF-championed Washing-ton Consensus, ‘now have records that speak for themselves’. Th e Beijing Consensus is skeptical about the benefi ts of privatization and free trade. It is often argued that a new “Beijing Consensus” is emerging with distinct attitudes to development, politics and a shift in the global balance of power. Critics contend that it is shaped by a strong belief in multilateralism and national sovereignty, a desire to accumulate the tools of “asymmetric power projection” and a strong willingness to innovate. It is further argued that China off ers an alternative model to development through a more equitable paradigm of development that countries in East Asia are following closely. See Ramo (2004) for more information on the “Beijing Consensus.”29 Naidu (this volume) points out that trilateral cooperation is an impor-tant means by which traditional donors are engaging the new. However, she argues that this system tends to relegate African countries to the status of junior partners in contrast to the emerging donors’ rhetoric of mutual interest, equality and solidarity.


page 46

cooperation with multilateral organizations such as the WFP and the UNDP.30

Meanwhile, the India-Brazil-South Africa Dialogue Forum, launched in 2003 to support these countries’ attempts to get onto the UN Security Council, has shifted its attention toward development, economic reform and cooperation with each other, and other developing countries and multilateral organizations. According to one estimate, Brazil allocates 90 percent of its aid to multilateral organizations, while South Africa allocates roughly 77 percent (Davies 2010, p. 6).

Nevertheless, some emerging economies continue to operate at the margins of the multilateral development cooperation system. Th ree major Arab donors — the Gulf states of Saudi Arabia, Kuwait and the United Arab Emirates — provide the bulk of their aid, nearly 85 percent, bilaterally (Park 2011, pp. 45-46). On average, emerging donors allocate roughly 18 percent of their aid multilaterally in comparison to traditional donors who allocate roughly 30 percent (Davies 2010, p. 6). For their part, multilateral development institutions have attempted to bring these donors into the fold by off ering them a seat at the table (Perroulaz, Fioroni and Carbonnier 2010, p. 147; Atwood 2011, p. 21) and through specialized institutional units focused on South-South cooperation.31

Th e reality facing the multilateral development system, therefore, is that there is a plethora of new and old development actors, creating opportunities and challenges for existing players and, most importantly, developing countries.

What forum to debate global development?

While some cooperation exists between new and old actors, many of the new ones operate outside the multilateral development system, increasing the risk of duplication and overlapping eff orts that undermine overall aid eff ectiveness. Although these actors bring new insights and opportunities, they also present a challenge to those seeking coherence in an already complex aid architecture. Moreover, new providers of

30 See http://www.oecd.org/dataoecd/62/54/44652734.pdf for a list of trilateral cooperation projects compiled by the OECD-DAC in 2009.31 For more information on the UNDP’s Special Unit on South-South Cooperation see http://ssc.undp.org/. Information on the WP-EFF Task Team on South-South Cooperation is available at http://www.oecd.org/document/38/0,3746,en_2649_3236398_44006694_1_1_1_1,00.html

assistance present a challenge to recipient countries that must coordinate their interactions with old and new actors (Davies, this volume). One commentator has dubbed this menagerie of actors the “aid noodle” (Kharas 2011), suggesting that the metaphor of a structured “aid architecture” is no longer fi t to order, if it ever was. Kharas, Makino and Jung have called for a new aid “ecosystem” since a single-aid architecture is impossible, given the number of new development actors. Rather, they suggest establishing a set of guidelines, responsibilities and accountabilities to shape interaction among diff erent groups (2011, p. 15).

Nevertheless, there is a need to involve all development actors in discussions on the future aid and development architecture.32 New development partners need to engage with the multilateral system in order to avoid increased fragmentation or duplication of eff orts. At this point, however, it is unclear where these discussions should take place to ensure maximum participation by new and old actors and what incentives are required to garner their support. Many are presenting HLF-4 as the appropriate starting point (Picciotto this volume; Davies this volume; DCD/DAC 2011; Atwood 2011).

Th e WP-EFF is hoping to enlarge the tent at the coming HLF-4 and achieve buy-ins from new development partners for the OECD-DAC aid-eff ectiveness agenda. DAC Chair Brian J. Atwood has called for “bigger, better and more inclusive partnerships,” suggesting that relationships between new and old actors should be institutionalized, with mutual respect and mutual accountability at their base (2011, p. 26). Supporters of this approach believe that Busan could off er an opportunity to transform the aid eff ectiveness agenda into a more widely shared road map for development. Yet this approach faces challenges such as how to incorporate the growing number of new development actors in a way that is logistically feasible (Atwood 2011, p. 27). Moreover, while the WP-EFF is technically separate from the OECD-DAC, its historical antecedents are in traditional donor preoccupations with aid eff ectiveness (Chandy and Kharas 2011).

Meanwhile, some emerging donors have questioned the legitimacy of the Paris Process that led to the

32 See for example, Picciotto (this volume) and Davies (this volume). See also the “Policy Arenas” in the Journal of International Development, 23 (5), 2011.


WP-EFF. According to the Geneva-based South Centre (2008), many developing and emerging countries do not see the aid eff ectiveness agenda in its current form as being widely endorsed or even relevant. Th e Paris Declaration excludes more than half of all aid to developing countries when the contributions of private foundations, NGOs, humanitarian groups and non-DAC donors are taken into consideration (Kharas and Linn 2008, p. 3), a proportion that will likely grow further as emerging economies and private development assistance expands faster than aid from DAC countries.

Promoting HLF-4 as an opportunity for a new consensus on development, the Development Cooperation Directorate (DCD) of the DAC has suggested that such a “consensus on this scale will entail some ‘letting-go’ by the DAC and [DAC members] should proceed with the understanding that ‘nothing is sacred’,” including the specifi cs of the Paris Declaration and its 2008 companion, the Accra Agenda for Action (emphasis original, DCD/DAC 2011, p. 4). Th e DCD has suggested that the DAC may need to “lose its ‘copyright’ on the Paris Principles in order to see them taken up at the global level” (DCD/DAC 2011, p. 4). Nevertheless, Atwood suggests that the core aid eff ectiveness principles should not be forgotten (Atwood 2011, p. 25).

Suggesting that the Paris Process in its current form provides little incentive for emerging economies’ engagement, Park (2010) argues for the development of a tiered aid eff ectiveness system to be considered in Busan based on three categories of donors. He classifi es them based on their willingness to engage with Paris principles: 1) traditional DAC-donors who abide by Paris principles; 2) non-DAC donors willing to use Paris principles as a guide; and 3) recipients and providers of assistance for whom more fl exible, but defi ned principles could be developed (Park 2010). At this point, it is unclear where trade-off s will need to be made between old and new actors and on what principles to achieve the outcomes envisioned above.

Th e draft of the Busan outcome document refers to the creation of “a new and inclusive Global Partnership for Development Eff ectiveness to oversee and support the implementation of commitments [made in Busan] at the political level (DCD/DAC/EFF 2011b, p. 10).” Further, it includes a clause that parties will agree by June 2012 on the working arrangements and

membership of a multi-stakeholder ministerial steering committee to oversee the partnership. However, at this point it is unclear what form the partnership itself will take (DCD/DAC/EFF 2011b, p. 10).

Th ese suggestions are based on the recommendations of an informal working group struck by the WP-EFF to examine possible global governance arrangements, including where future dialogues might occur and how monitoring of commitments might be approached (OECD-DAC EFF 2011, p. 6). Th ere is support within the WP-EFF for nationally led mechanisms “with a streamlined and rationalized global structure” (OECD-DAC EFF 2011, p.6) or what one WP-EFF civil society representative has dubbed the “global light, country heavy” approach.33

Following this thinking, the working group recommended the use of a National Aid Policy that would articulate recipient country needs and be monitored annually (DCD/DAC/EFF 2011a). At the global level, the partnership would draw on existing development partnerships, such as the International Health Partnership and the G7+ Group on fragile states (DCD/DAC/EFF 2011a, p. 6). It would be overseen by a steering committee responsible for drawing “together best practices and norms and [seeking] horizontal linkages to key international processes” such as the G20 agenda and the UN Development Cooperation Forum (DCF) (DCD/DAC/EFF 2011a, p. 7).

Th e working group further suggests that the WP-EFF identify the parameters of the steering committee in more detail, which it suggests should be no larger than 20 to 24 members, selected using objective criteria, to ensure functionality. Th e steering committee would represent both new and old development partners. Th e working group adds that monitoring progress should be provided by a secretariat “that builds on existing competencies of the DAC secretariat” (DCD/DAC/EFF 2011a, p. 7). Still, it is unclear that an architecture that builds on existing institutions and includes a continued, albeit limited, role for the OECD-DAC will ensure buy-in from new development partners.

33 Personal communication with authors. Th e increasing recognition of the importance of country context and ownership within the WP-EFF has prompted some members to express concern about the relevance of global targets.


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Others, for their part, advocate for a stronger UN role in discussions on aid and development cooperation, arguing that it is the only legitimate body to govern the international aid and development cooperation regime (see, for example, BetterAid 2011; Glennie 2011). HLF-4 could be a starting point for transitioning the aid eff ectiveness regime toward the UN on the basis of the unexplored division of tasks between the UN and the WP-EFF (Schulz 2009, p. 2). BetterAid agrees, adding that HLF-4 should be innovative in developing inter-institutional arrangements between WP-EFF and UN mechanisms that will begin to construct a new architecture that is legitimate and inclusive (BetterAid 2011, p. 6).34 Th e UN Development Cooperation Forum (UN DCF), which addresses development cooperation dynamics beyond aid, may be well placed to take on this role.

Th e DCF held its fi rst meeting in June 2008 and has met biennially since. Its mandate is to “exert a positive infl uence on the international development cooperation system . . . and to engage relevant actors . . . in a dialogue on key policy issues . . . aff ecting the quality and impact of development actors” (ECOSOC 2011). Development actors participating in this forum include bilateral, multilateral, non-governmental and civil society organizations as well as international fi nancial institutions, the private sector and developing country representatives (ECOSOC 2011). For those concerned with enlarging the tent, the DCF already encompasses many of the new development partners discussed above and research suggests that emerging powers such as South Africa, Brazil, China and India, as well as developing countries, view the UN as a legitimate decision-making forum (South Centre 2008).

While this approach may generate a more inclusive aid and development architecture, doubts remain about the extent to which DAC donors are willing to relaunch discussions on aid eff ectiveness at the UN level as such a process would greatly reduce their negotiation power (Schulz 2009, p. 2). Moreover, notwithstanding the establishment of the Millennium Development Goals, concerns remain regarding the

34 BetterAid has proposed a Convention on Development Cooperation that would: 1) draw on existing UN human rights and development trea-ties, conventions and norms; 2) serve as the basis for an accountable and legitimate international development cooperation system; and 3) detail new governance structures that would reduce complexity and clarify lines of accountability (BetterAid 2011, p. 6-7).

eff ectiveness of UN processes to generate international agreements and ensure commitments are carried out. Nevertheless, DAC-donors concerned with enlarging the tent may need to consider a change of venue from the current OECD-DAC led processes if they are to achieve buy-in from new development partners.

As these options are debated at HLF-4, it is important that they be suffi ciently grounded in evidence of key stakeholder perceptions and preferences as well as a clear understanding of the option’s feasibility. For example, it is not clear that developing countries want all aid actors operating under the same banner, namely the aid eff ectiveness agenda (Africa Regional Meeting 2010), or if they prefer a new multilateral aid and development regime to the existing status quo.

While, as pointed out above, research suggests that emerging economies may be more willing to engage in processes under UN auspices, it is unclear what form such engagement might take and under what terms. Similarly, the incentives for DAC donors to agree to launching discussions on aid and development cooperation outside the WP-EFF are not strong, especially in an environment where these actors are concerned with eff ectiveness and results, an area in which the UN has seen its fair share of criticisms. In terms of feasibility, it is not clear whether the DCF has the capacity to deliver on monitoring and evaluation should it lead on the aid eff ectiveness agenda. It is also questionable that the auspices of the UN would be suffi cient to ensure that the agenda is truly shared, rather than serving as a de facto donor body much like the WP-EFF. More research is required to gather evidence on stakeholder perceptions and preferences, including traditional and new development partners, regarding the future of the multilateral aid and development architecture. Th e goal must be to ensure that alternatives are desirable, feasible and meet the needs of the international community. Th e architecture that emerges must not only be eff ective at generating legitimate agreements on issues relating to aid and development, but inclusive with a high degree of buy-in from new and old development actors.


CONCLUSION

Development today is in a state of fl ux. Th e ongoing fi nancial and food crises, scarcity of resources, particularly land and water,

and the challenge of climate change demonstrate the crucial importance of multilateral agencies in dealing with global problems that can be solved only through collective and cooperative eff orts. Yet the international landscape is changing. New actors are (re-)emerging, such as the BRICS and the private sector, presenting new challenges and opportunities for multilateral development cooperation. A key concern has been how to include these new actors in the aid and development cooperation architecture, which has been historically dominated by the traditional donors. Spurred by international calls for aid and development eff ectiveness, most notably in the Paris Process, development agencies are also facing greater pressure to demonstrate results.

More specifi cally, the international community should agree on a transparent and universally applied standardized multilateral evaluation and assessment framework to help reduce duplication and increase the eff ectiveness of the multilateral development cooperation system. Th is framework should:

• identify overlap among organizations in order to assess the division of labour among multilateral development institutions and establish the groundwork for discussions on potential organizational mergers;

• demonstrate how and to what extent multilateral development institutions contribute to development results;

• set a minimum benchmark for performance, providing a mechanism to phase out underperforming organizations if they are unable or unwilling to make the necessary reforms to improve their eff ectiveness.

In response to the increasing number of actors engaging in development cooperation, the international community has become concerned with the future aid and development cooperation

architecture in the post-Busan era. While some useful ideas have been put forward, more research is required to gather evidence on stakeholder perceptions and preferences to ensure that the institutional arrangements that arise are desirable, feasible and meet the needs of the international community. Th is is key to ensuring that any solution found in Busan regarding the future aid architecture is legitimate and eff ective and serves the purpose of achieving greater inclusion.

Shannon Kindornay is a Researcher at The North-South Institute. Her research in the Global Flows and Decent Work theme focuses on development cooperation. Her current research addresses development effectiveness. Prior to joining NSI, Ms. Kindornay focused on governance and human rights. She co-authored “The Politics of Governing Development” to be published in Politics of Development Encyclopedia (forthcoming) as well as “Rights-based approaches to development: Implications for NGOs” (Human Rights Quarterly, forthcoming 2012). Ms. Kindornay has also worked at the Canadian International Development Agency. She holds a BA in Global Studies and Political Science from Wilfrid Laurier University and an MA from Carleton University’s Norman Paterson School of International Affairs.

Hany Besada heads the Governance of Natural Resources program at The North-South Institute. Previously, he was Senior Researcher and Program Leader at the Centre for International Governance Innovation, Business in Africa Researcher at the South African Institute of International Affairs and policy analyst with the South African Government. He is the editor of Moving Health Sovereignty: Global Challenge, African Perspective (Ashgate, forthcoming 2012); Zimbabwe: Picking Up the Pieces (Palgrave, 2011); Crafting an African Security Architecture: Addressing Regional Peace and Confl ict in the 21st Century (Ashgate, 2010); and From Civil Strife to Peace Building: Examining Private Sector Involvement in West African Reconstruction (WLU Press, 2009). Mr. Besada holds an MA in international relations from Alliant International University in San Diego, California.


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CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN

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CHAPTER THREE

MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS:

THE ROAD TO BUSAN


page 56page 6


“We cannot reverse the economic predicament of the poor across the world by withholding from them the great advantages of contemporary technology, the well-established effi ciency of international trade and exchange, and the social as well as economic merits of living in an open society. Rather, the main issue is how to make good use of the remarkable benefi ts of economic intercourse and technological progress in a way that pays adequate attention to the interests of the deprived and the underdog” Amartya Sen (2002).

In 2005, most aid donor nations and more than 60 developing countries subscribed to the Paris Declaration on Aid Eff ectiveness, thus consecrating

a milestone in development history. Th ree years later, after follow-up meetings in Rome and Paris, the Th ird High Level Forum held in Accra noted that progress toward Paris Declaration goals had been modest. Th e Second Phase evaluation of the Paris Declaration issued in May 2011 reached similar conclusions (Wood et al. 2011, pp.19-20).1 Th us, collective eff orts to improve the quality of aid remain highly relevant.

Beyond aid eff ectiveness, the 2,000 delegates who will gather in Busan for the Fourth High Level Forum (HLF-4) must address an overarching challenge: to reinvigorate donors’ commitment to development in the wake of fi nancial, food and fuel crises of unprecedented severity. Industrial democracies’ electorates bruised by severe cuts in domestic programs have become less inclined to sustain (let alone increase) foreign aid spending, especially if public doubts persist as to whether “aid works” (Nye 2011).

In order to mobilize fresh support for development, new policy directions refl ecting public concerns are urgently needed. Th e context has changed dramatically

1 Out of 20 intended outcomes tracked by the Paris Declaration Evalu-ation, the pace and extent of change was rated “moderate to fast” in only one instance; “moderate” in one instance; “mostly slow/some moderate (or moderate to fast)” in 11 instances; “mostly slow” in fi ve instances; and “slow to none” in two instances.

since the Paris Declaration. Th e centre of gravity of the global economy has shifted, and the prevailing North-South model of international relations that lumps together emerging middle-income economies with low-income and vulnerable least-developed countries has become anachronistic. China’s gross domestic product already exceeds Japan’s (BBC News 2011),2 while Brazil’s is likely to overtake that of France and the United Kingdom by the middle of this decade (Elliott 2011).3

Since 2005, new government donors have joined the fray while global funds and programs involving private foundations have proliferated. While reliable data about the volume and terms of aid provided by the new donors are scarce, a conservative estimate of aid fl ows provided by emerging market countries and private sources (that have not subscribed to the Paris Declaration) is already US$28–29.5 billion of aid annually (Prada et al. 2010),4 compared to US$129 billion of offi cial development aid provided by Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC) donors (DCD-DAC 2010a).

Th e Busan conference off ers a convenient platform for broadening the aid coalition. Th e Working Party on Aid Eff ectiveness (WP-EFF)5 has the legitimacy required to forge a new consensus among leaders

2 Japan’s economy was worth US$5.5 trillion at the end of 2010 while China’s economy was closer to US$5.8 trillion in the same period. 3 Th is was determined based upon Price Waterhouse Cooper’s projections using World Bank assumptions about population growth, and increases in human and physical capital, etc.4 Based on published reports on international giving by major founda-tions and corporations, Prada et al. (2010) estimate private aid fl ows to be around US$8 billion annually. By contrast, the 2011 Report on Global Philanthropy and Remittances of the Hudson Centre for Global Prosperity estimates global fi nancial fl ows from foundations, corporations, volunteers, universities and religious organizations at US$53 billion a year (of which US$38 billion is from the United States).5 Since its inception in 2003, the WP-EFF has evolved into a global coali-tion involving 80 participants, including bilateral and multilateral donors, aid recipients, emerging providers of development assistance, civil society organizations, global programs, the private sector and parliaments.

MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN ROBERT PICCIOTTO


page 58

of major development assistance agencies, private foundations and civil society organizations. Most developing and developed country governments concerned with development have joined the HLF-4 process. But in the new operating environment, WP-EFF will have to broaden its reach even beyond its current broadly based membership.6

Accordingly, HLF-4 should explore ways of incorporating the perspectives of new aid donors in development cooperation as well as encouraging them to carry a fair burden as major stakeholders of the global system (Schwab 2011). Within a broader aid constituency, HLF-4 off ers a rare opportunity to highlight the shared benefi ts of a reconfi gured development agenda embodying fresh development goals, new aid allocation protocols and revised policy directions aimed at enhanced development eff ectiveness (Dissanayake 2011).

THE PARIS DECLARATION AND THE MDGS

The Paris Declaration (concluded in 2005) is fully consistent with the Millennium Development Goals (MDGs), which were

solemnly endorsed at the United Nations (UN)Financing for Development Conference in Monterrey, Mexico in 2002.

By specifying a wide range of socioeconomic indicators, the MDGs displaced economic growth as the core objective of development by enshrining a holistic human development framework adapted to the circumstances of individual countries. In turn, the Paris Declaration highlighted that donors should align their support with partner countries’ priorities and processes.

By stressing the concept of ownership, the MDGs shifted the primary focus of responsibility for development eff ectiveness to national aid recipients. Similarly, under the Paris Declaration, donors undertook to respect the leadership of developing country governments and to help strengthen their capacity to exercise it responsibly and effi ciently.

6 Th e recognition that key emerging market countries were not adequately represented in global policy debates led to the creation of the increasingly infl uential G-20 comprised of fi nance ministers and central bank governors of 19 countries (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, United Kingdom, United States of America) and the European Union.

Drawing a distinction between country ownership and government ownership, poverty reduction strategy paper guidelines prescribed partnership processes designed to involve civil society and the private sector. Equally, mutual accountability is central to the Paris Declaration, which encourages participation of civil society and the private sector.7

Setting up elaborate mechanisms for monitoring the progress of developing countries toward the MDGs, the Monterrey Consensus consolidated the results orientation of the development agenda. Along the same lines, the Paris Declaration emphasized managing for results and identifi ed indicators of aid quality applicable to all donors.

Since 2005, disillusion has set in. Prospects for securing the extra US$50 billion of aid needed to reach the MDGs have evaporated (Clemens and Moss 2005). Similarly, the prospects for a development trade round and a robust global climate change agreement have faded. Th e 2008 fi nancial crisis has added to the gloom. World trade has contracted, foreign investment fl ows toward developing countries have declined and migration opportunities have shrunk (Coricelli 2010). Th e resulting global economic slowdown is undermining development prospects: 71 million fewer people than expected prior to the global economic meltdown will escape poverty by 2020 (World Bank 2010).

RENEW THE GLOBAL COMMITMENT TO DEVELOPMENT COOPERATION

The development momentum generated by the 2005 Gleneagles G8 meeting has been interrupted. Offi cial aid statistics for 2010

imply a shortfall of about US$19 billion compared with 2005 promises. Only a little more than US$1 billion of the shortfall can be attributed to lower than expected gross national income (GNI) levels in developed countries. Th e remaining gap simply refl ects inadequate political will (DCD/DAC 2010b).

In real terms, current offi cial aid levels are estimated at 0.33 percent of GNI — less than half the 0.7 percent target pledged by OECD countries in the 1970s (DCD-DAC 2010c). Forward estimates of aid commitments are even more worrisome. Country

7 Th is may have discouraged fulsome involvement of countries that insist on state dominance over the development process (e.g., China).


programmable aid (CPA)8 is planned to grow at a real rate of 2 percent per year from 2011 to 2013, compared to 8 percent per year on average over the past three years (Benn et al. 2010).

For bilateral aid only, the projected increase is 1.3 percent per year. Th e deceleration will be especially sharp for low-income countries and for African nations, where overall CPA is projected to increase at about 1 percent per year in real terms, compared to a 13 percent annual growth rate in the past three years (DCD-DAC 2010b).

Restoring confi dence in development cooperation over the long haul will be a tough challenge since hard-pressed donors are looking for short-term, quantifi able and measurable results. Mobilizing broadly based support for development cooperation is the critical challenge. In order to succeed, HLF-4 will have to forge a new development compact. It should focus on tackling the insecurities of a complex and interconnected global system felt by people everywhere.

SHIFT THE FOCUS FROM AID EFFECTIVENESS TO DEVELOPMENT EFFECTIVENESS

More and better aid matters a great deal, but the MDGs cannot be reached in an adverse enabling environment. Non-aid

policies should also be marshalled to contribute to development. Th is is the view of DAC Chair J. Brian Atwood. He has made clear that HLF-4 is about much more than aid (ECDPM 2011; HLF-4 2011).

Th e Paris Declaration defi ned aid eff ectiveness pragmatically in terms of aid delivery norms (ownership, alignment with countries’ development strategies, harmonization of practices, reduced transaction costs and fragmentation, increased predictability and results orientation). Yet aid alone cannot be expected to deliver on the promise of the MDGs.

A thematic study on the Paris Declaration has off ered broader defi nitions of development eff ectiveness (Stern et al. 2008). Th e fi rst describes the intent of development interventions as “the achievement of

8 CPA is the portion of aid that can be programmed for and by recipient countries. It excludes humanitarian aid and debt relief, administration costs, food aid, core non-governmental organization funding and aid not allocable by country.

sustainable development results related to MDGs that have country level impacts that have discernible eff ects on the lives of the poor” (Stern et al. 2008, p. vii).

Th e second defi nition mirrors the broader conception of development cooperation favoured by civil society organizations. It focuses on enhancing “the capability of states and other development actors to transform societies in order to achieve positive and sustainable development outcomes for its citizens” (Stern et al. 2008, p. vii).

Th ese conceptions of development eff ectiveness emphasize the critical importance of strengthening the development capacities of benefi ciary countries. Th ey also imply a concern with non-aid policies and their impact on development and acknowledge that donor governments have a wide range of non-aid instruments at their disposal to contribute to development, such as humanitarian assistance, security arrangements, peace building, diplomacy, trade, investment, migration and intellectual property rules. Such policy instruments can be used to complement (or alternatively to undermine) aid policies — with major consequences for development (Lockhart 2004).

Non-aid links have become major mechanisms of resource transfer. Th ey dwarf the money impact of aid and create new and powerful connections between industrialized and developing countries, as well as among developing countries. For example:

• Developing countries’ exports (about US$5.8 trillion) are about 45 times the level of 2010 offi cial aid fl ows (DCD-DAC 2010a; IMF 2011; WTO 2011).

• Remittances from migrants (US$283 billion) are 2.2 times as large as aid fl ows (World Bank 2008).9

• Foreign direct investment (US$548 billion) is 4.2 times as large as offi cial aid fl ows (UNCTAD 2010).

• Royalty and licence fees paid by developing countries to developed countries (US$27 billion) are more than one-fi fth of offi cial aid fl ows (World Bank 2007).

9 Remittance fl ows to developing countries stood at US$283 billion in 2008, which projected them to dip slightly in 2009 and more than fully recover in 2010.


page 60

• Th e huge damage to developing countries caused by climate change as a result of OECD countries’ unsustainable environmental practices is getting worse, given the rapid growth in emerging market countries (UNFCCC 2007).

Th ese stubborn facts justify a focus on development eff ectiveness rather than merely aid eff ectiveness. Such a reconsideration of HLF-4’s mission would strengthen the links between the Paris Declaration and the MDGs by acknowledging that policy coherence for development should be an integral part of development cooperation strategies (Picciotto 2005). Th is would align HLF-4 more closely to MDG8, which aims to develop a global partnership for development that commits developed countries not only to provide more and better quality aid, but also to address international trade, fi nance and investment policy constraints that hinder the achievement of the MDGs.

ADAPT THE DEVELOPMENT PARADIGM TO TACKLE HUMAN SECURITY ISSUES

Rapidly evolving information and communication technologies have increased the fl ow of ideas, goods, services, capital and

people across borders. But these technologies have also increased instability, insecurity and illegality (Naim 2003). Economic and fi nancial shocks are now transmitted instantly throughout the world. Th e cascading disasters that devastated Japan in the wake of the March 11, 2011 tsunami, including the radioactive plumes over its stricken nuclear power station, have disrupted economic activity throughout the world and roiled international markets.

From the perspective of the poor, the critical role of development cooperation lies in giving globalization a human face. Food insecurity, aggravated by misguided biofuel subsidies, is back on the international agenda: about 925 million people go to bed hungry every night, of which 19 million are in developed countries (Hunger Notes 2011). Developing countries account for 93 percent of the worldwide burden of disease, yet account for only 11 percent of global health spending (Schieber and Maeda 1999).

Given energy-intensive development patterns, global warming has accelerated with deleterious

consequences for the least-developed countries. As the poorest continent, Africa is especially susceptible to climate change due to its vulnerability and inability to cope with the physical, human and socioeconomic consequences of climate extremes. Th e development agenda has yet to give prominence to adaptation mechanisms that would stem the dire economic and environmental consequences of greenhouse gas emissions.

In this insecure, fl uid and interconnected global system, the weakest link creates problems for all. Th is is illustrated by the concentration of contemporary warfare in fragile states and the spillover of violence across borders. In 18 fragile countries, warfare has prevailed for more than half the past two decades (Picciotto et al. 2005). Given these trends, it is not surprising that fragile and confl ict-prone countries have become a key preoccupation for development cooperation under the High Level Forum (HLF) process.

A human security agenda would facilitate compliance with this priority. In Kofi Annan’s words, human security “encompasses human rights, good governance, access to education and health care, and ensuring that each individual has opportunities and choices to fulfi ll his or her own potential” (Michaelson 2006). For Amartya Sen, Co-chair of the Commission for Human Security, “Human security as an idea fruitfully supplements the expansionist perspective of human development by directly paying attention to what are sometimes called ‘downside risks’” (Ogata and Sen 2003, p. 8).

Such an agenda would have implications for the division of labour among multilateral and bilateral agencies by discriminating between risks that are genuinely transnational in character and those that can be adopted without aff ecting other states. Managing the former category of risks without excessive bureaucracy by opting for decentralized implementation and independent verifi cation would yield considerable benefi ts in terms of reduced transaction costs and improved eff ectiveness. A human security paradigm for development cooperation would also put the spotlight on the provision of global and regional public goods.


ENCOURAGE THE PROVISION OF GLOBAL AND REGIONAL PUBLIC GOODS

Linked to a recognition that risk management has been neglected under the current development agenda, a review of HLF goals will have to

come to terms with the fact that a host of global and regional threats induced by massive political, social and technological change will in the foreseeable future undermine global poverty reduction prospects unless enhanced development cooperation tackles such threats.

Hunger, disease, pollution, climate change, fi nancial instability, regional confl ict, international crime and terrorism do not respect national borders. Th ese “problems without passports” constitute the most serious obstacles to equitable and sustainable development: the problems of some have become the problems of all. Th ey cannot be tackled one country at a time or by one country alone. In this context, the case for multilateralism has been considerably strengthened: states must join together if they are to achieve the shared objectives of international peace and prosperity.

Eff ective solutions require multilateral cooperation. In the words of Kofi Annan, “Ours is a world in which no individual and no country exist in isolation. All of us live simultaneously in our own communities and in the world at large” (Annan 2002). Similarly, Richard N. Haass, president of the Council on Foreign Relations, a US think tank, says, “we are all multilateralists now (or at least need to be)” (Haass 2010, p. 9).

Th e global and regional public goods defi cit is due to the fact that development cooperation today is highly fragmented while the international economy is increasingly integrated. Th is has increased the complexity of contemporary international relations. It also underlies the diversity of aid delivery channels and it explains the messy institutional patchwork of the aid system.

To be sure, not all development problems require multilateral solutions. Some of the risks associated with economic growth (for example, land erosion in a watershed fully within a country’s borders) are purely territorial and may have no discernible impact on other states. Th ey can readily be handled through projects funded by bilateral donors. But other major risks such as climate change are inherently

non-territorial and can only be managed through multilateral action.

Still other risks like infectious diseases or itinerant terrorists can be isolated through border controls. Such controls create inconvenience and unintended costs such as a reduction in travel for business and tourism. If they are not exercised — for example if an infected passenger or a terrorist originates in (or passes through) a state that does not exercise eff ective border controls — a global pandemic or a spectacularly violent act may ensue, with far-reaching consequences across national borders.

In such circumstances, norm setting and multilateral action become imperative. No longer can national approaches adequately address global health pandemics or deal with the spectrum of contemporary security threats that range from bioterrorism to climate-induced disasters. More than ever before, leaders and institutions from around the world are discovering that any approach to human security necessitates cooperation across borders.

ADOPT AND MASTER FLEXIBLE APPROACHES TO MULTILATERALISM

Multilateralism takes diff erent forms. State-centric international conventions set precise principles of conduct, regulate

governments’ behaviour and coordinate their actions. But they are open to challenge by a wide range of infl uential private and voluntary associations. When binding comprehensive global agreements come into confl ict with powerful special interests, they often fail to materialize.

For example, it has not been possible to make signifi cant progress with respect to agricultural protectionism, nuclear proliferation, climate change or the harmonization of national tax regimes. Absent ties of loyalty, trust and shared values, the larger and more diverse the group, the harder it becomes to achieve consensus. Getting all 193 UN members to agree on what needs to be done, let alone how to do it, is rarely feasible.

As a result, international conventions are very hard to design and negotiate and they are not always complied with since they can restrain freedom of action and imply a reciprocity that may not be


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forthcoming. Th ey also raise expectations, often unmet, that joint action will yield a rough equivalence of benefi ts to all participants (Ruggie 1993).

From this perspective, traditional multilateralism that imposes universal constraints on governments is not a panacea. In order to minimize transaction costs and information asymmetries, the management and funding of development activities is best left to the lowest level at which it can be handled effi ciently or, in other words, in line with the principle of subsidiarity. Partial multilateralism, admittedly a second-best option, may be the only feasible solution.

Th us, the collective action dilemmas embedded in classical multilateralism have given rise to a pragmatic approach to global diplomacy that entails assembling the smallest number of parties needed to have a positive impact on a given problem. Th is is known as “minilateralism” (Naim 2009). Reliance on this approach has spread and explains the rise in trust fund arrangements managed through multilateral agencies by tailor-made coalitions of states, private interests and voluntary organizations.

Failing universal agreement on collective norms, regional multilateralism has fl ourished while functional multilateralism has brought together coalitions of the willing committed to the pursuit of specifi c development objectives on a global scale. In parallel, informal multilateralism has taken the form of ad hoc and nimble groupings of state and non-state actors engaged in knowledge sharing and the formulation of good practice standards.

Flexible networks that bring together coalitions of governments, private sector representatives and voluntary groups induce cooperation through adherence to common goals, principles and practices. Th ese networks rarely aim at formal agreements. Th ey consist of voluntary partnership arrangements geared to the search of collaborative solutions to common problems and the design of good practice standards.

Collaborative programs that share knowledge and generate good practice standards have also multiplied. Some of these programs have been voluntary and based in the private sector or civil society. Others have been embedded within intergovernmental organizations. Still others have been handled by ad hoc coalitions under the aegis of specialized UN agencies or the World Bank.

To connect with these networks, the traditional unitary state is being transformed into a “disaggregated” state that allows government offi cials suffi cient latitude to interact with their counterparts in other countries, civil society and the private sector (Slaughter 2004). Th us, the multilateral system is not only an assemblage of intergovernmental bodies. It also encompasses international regimes, norms, laws and networks (both formal and informal) that regulate collective decision-making and behaviour.10

Typically, donor countries have fi nanced programs for global and regional public goods not as core activities of international agencies, but through ad hoc programs that they control, thus marginalizing developing countries. Th e legitimacy of these arrangements is somewhat enhanced when multilateral organizations that combine convening power, policy research capacity and outreach to developing countries are used as platforms for program design and administration.

Non-core funding of programs managed by multilateral institutions amounted to US$14 billion in 2008, an increase of 27 percent over 2006 (DCD-DAC 2010d; OECD-DAC 2008). Th is trend, if confi rmed over the medium term, will add to the fragmentation of aid interventions. In this context, the challenge faced by HLF-4 is to ensure that the bewildering diversity of development networks and initiatives complies with Paris Declaration principles.

Th e legitimacy of these pragmatic coalitions must also be buttressed. Developing countries should be adequately represented so that the voices of the poorest and the weakest are heeded in the oversight and management of multi-country programs (Lele and Gerrard 2003). Th is would also enhance their development eff ectiveness since, at country-level, multi-country collaborative programs are not sustainable without country ownership and alignment with partner governments’ processes and programmatic priorities.

10 Designed to enhance the regular monitoring and sharing of good practices and the eff ectiveness of international development cooperation through standard setting, the High Level Forum on Aid Eff ectiveness is itself a multilateral institution. Indeed, the advent of a crowded develop-ment scene populated by a diverse cast of actors creates an opportunity for the High Level Forum to emerge as a linchpin of the emerging develop-ment architecture.


INVOLVE ALL DEVELOPMENT ACTORS

In sum, pragmatic multilateralism works through coalitions that fall short of universality. But the management of globalization is a shared

responsibility that involves all countries and all sectors of society. National governments are not the only actors. Th e private sector, the engine of economic growth, has been adept at working across borders. Th us corporate globalization has been instrumental in shaping trade, investment and fi nancial fl ows.

Equally, limits to the unbridled pursuit of private interests have been set by a civic globalization movement. It has contested the market-driven model, embraced human rights and operated on a global scale using the same information and communications technologies as multinational fi rms. Indeed, as national borders have become more porous and the private and voluntary sectors more infl uential, governments have had to resort to public-private partnerships and/or to playing moderating roles designed to avoid or mitigate the negative social and environmental eff ects of foreign direct investment.

In this new operating environment for aid, the management of network eff ects has required formal or informal agreements between the public, private and voluntary sectors. Many new players have appeared on the development scene. Emerging market countries, private foundations and vertical thematic funds have joined the fray. While they have off ered new partnership options to developing countries, the resulting sprawl has contributed to the incoherence and the administrative burdens that the Paris Declaration was designed to contain. In particular, the BRICS (Brazil, Russia, India, China and South Africa) do not report their aid to the DAC.11 Nor do most private foundations (DCD-DAC 2010d; DCD-DAC 2011).12

China, a large aid player, used to treat its aid statistics as a state secret. Recently it has made more data available and reported that by the end of 2009, China had provided a total of US$39.59 billion in

11 Nineteen non-DAC donors report their aid to DAC (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic, Slovenia, Iceland, Israel, Liechenstein, Turkey, Chinese Taipei, Th ailand, Kuwait, Saudi Arabia, United Arab Emirates).12 Beyond the international fi nancial institutions (IFIs), the Regional Development Banks and the UN agencies, the GAVI Alliance, the Global Fund to Fight Aids, Tuberculosis and Malaria, the Global Environment Facility and the Montreal Protocol submit regular reports to the DAC.

aid to foreign countries, including grants of US$16.4 billion; interest-free loans of US$11.82 billion and concessional loans of US$11.35 billion. Even now however “fi nding information on Chinese aid is like putting together a jigsaw puzzle” (Grimm 2011). Evidently China does not wish to be perceived as a member of the rich countries’ club and it is ambivalent about the DAC standards.

Informed guesses by the US Congress regarding annual fi nancial transfers from China to the developing world put the fi gure at US$25 billion in 2007, mostly consisting of loans, credit lines and state-sponsored investment (Kilby 2010), while a Lowy Institute survey of China’s aid to the Pacifi c region (consisting mostly of concessional loans) estimates that it rose from US$33 million in 2005 to US$200 million currently (Fifi ta and Hanson 2011).

Further illustrating the shift toward South-South cooperation, Brazil, Russia and India have emerged as signifi cant aid donors on a par with (or even ahead of ) such long-time Western donors as Finland, Ireland or Portugal. Brazilian aid has been estimated at around US$1 billion a year (ODI 2010). India allocated about US$547 million to aid-related activities in 2008, initially focusing on its own neighbourhood but now reaching out to Africa (Ramachandran 2010).

A prominent aid recipient in the 1990s, Russia has quintupled its annual foreign aid budget in four years — reaching US$500 million (Reuters 2011). Other signifi cant non-DAC donors include the Czech Republic, Hungary, Slovakia, Saudi Arabia, South Africa, Indonesia, Th ailand and Venezuela.

Private foundations have contributed to the diversifi cation of aid channels. But it is diffi cult to generalize about them, given the scarcity of offi cial data about their operations. Th ey seem to have favoured support to specifi c and innovative global or regional initiatives concentrated in the health and agricultural fi elds and sought to manage their operations for results. As is common with vertical aid programs, they have had diffi culty coordinating their activities with those of sector ministries.

Th e new donors have adopted less demanding aid modalities. Th ey have shunned conditionality. Th ey have been more fi nely attuned to developing countries’ sensitivities than most traditional donors. But they are still on a steep learning curve and enduring some of


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the same growing pains that traditional donors have had to face during their formative years. Trilateral development cooperation that entrusts the execution of some Western donor aid projects to Southern contributors has helped in this process (ECOSOC 2008).

Undoubtedly, aid from non-traditional sources will continue to grow. Th e expanded resources, diversity of perspectives and more fl exible approaches to aid delivery should be welcomed. But the common interest would be well served if the new actors subscribed to the Paris Declaration. Th is would help fi ll information gaps and contribute to reduced aid fragmentation and volatility. It would also require proactive involvement of non-DAC actors and principled agreement with them regarding updated development cooperation norms.

MANAGE THE INEVITABLE TENSIONS AMONG PARIS DECLARATION OBJECTIVES

According to eminent Harvard economist Dani Rodrik, the demands of globalization, national sovereignty and cosmopolitan democracy

are not compatible: it is feasible to design policies that satisfy two of these criteria but not the third (Rodrik 2011). For example, Rodrik maintains that globalization in concert with the protection of national sovereignty can undermine democracy.

Th is very conundrum has plagued IFIs policy-based operations. In pursuit of globalization, they induced developing countries to adopt market-based principles of economic management. But the conditionality attached to such aid often infringed on the sovereignty of recipient countries by denying them the policy space they needed to achieve sustainable reforms. Similarly, developing country governments have often perceived bilateral aid that favours the sector priorities embedded in the MDGs as ex ante social conditionality.

Similar tensions between global norms, national policy prerogatives and public interest concerns explain why Paris Declaration objectives have proven so hard to achieve. For example, bilateral aid conceived as an instrument of commercial promotion or put at the service of narrow foreign policy objectives has hindered aid coordination. Conversely, tight aid coordination by donors in pursuit of harmonization has often been interpreted as “ganging up” by developing countries,

thus undercutting alignment with country processes and priorities.

Th e advent of state fragility as a key focus of development has intensifi ed the challenges implicit in the Paris Declaration (Manning and Trzeciak-Duval 2010). For example, increased use of country systems has been identifi ed as a key objective of HLF-4. But this is not a realistic option in confl ict-prone countries that display human rights violations, gender inequalities and systematic discrimination. Performance-based aid allocation protocols have sought to minimize this risk. But they have generated “aid darlings” and “aid orphans” (Rogerson and Steensen 2009).

Such dilemmas do not justify aid pessimism. Th e risks involved can be managed. Good aid managers strike sensible trade-off s geared to deliver value for money even in diffi cult circumstances. In the social and development realms, as in business, high rewards can be secured only by incurring and managing risks. Authors of prominent best sellers focused on the failures of aid do not inform their readers about the robust evidence that confi rms that well-managed aid programs can and do work.13

REVIEW AID ALLOCATIONS

Aid trends suggest that the share of core multilateral aid in offi cial development assistance (ODA) is eroding. Th e relative share of core

funding for multilateral aid is in decline even though it is still a signifi cant component of development assistance (US$35 billion out of US$124 billion in 2008). Specifi cally, the 2010 OECD-DAC Report on Multilateral Aid shows that in 2008 multilateral aid accounted for more than 60 percent of total ODA; bilateral aid through multilateral channels accounted for about 11 percent and core multilateral aid for about 28 percent, after peaking at 33 percent of total ODA at the turn of the century (DCD/DAC 2010d).

It is axiomatic that aid resources should be channeled toward the most eff ective vehicles. Apart from their distinctive role in delivering global and regional public goods, are multilateral development agencies eff ective aid channels for country-based programs? Revealing answers

13 Dambisa Moyo’s, Dead Aid, is a paragon of aid pessimism whereas Roger Riddell’s, Does Foreign Aid Really Work? provides a balanced assess-ment and demonstrates that well-managed aid works.


can be drawn from the monitoring and evaluation reports carried out under the aegis of Accra to assess the progress of the development community toward Paris Declaration objectives (OECD HLF-3 2008).

In brief, the evidence presented in Table 2 suggests that HLF-4 should help channel more development aid through well-managed, transparent and effi cient multilateral agencies. Th is would enhance aid predictability, harmonization, coordination and coherence. It would also ensure that a larger share of aid is country programmable. Greater use of judiciously selected multilateral channels would also strengthen fragile states and set good practice standards for rich and poor countries alike.

More specifi cally, the 2006 Survey on Monitoring the Paris Declaration confi rms that major economies of scale are associated with multilateral development banks and European Union assistance. Compared to annual World Bank disbursements of US$8.5 billion to the governments of developing countries, the European Commission disburses US$4.1 billion a year, while each of the regional development banks disburses an average of US$2.3 billion, the UN system US$2.2 billion and each of the 22 major bilateral donors an average of US$738 million (OECD 2008).

Th e diseconomies associated with the limited scale of most bilateral aid programs imply a major imbalance in administrative burdens. Paris Declaration evaluation data show that whereas the World Bank sets up an average of two project implementation units per

partner country, each bilateral donor on average sets up three such units for disbursements that are less than one-tenth of World Bank levels (OECD 2008). Th e same survey found that multilateral channels enjoy signifi cant advantages with respect to other aid quality indicators (OECD 2008).

Specifi cally, harmonization indicators measure the extent to which donor countries coordinate, simplify procedures and share information to avoid duplication. Alignment indicators measure the extent to which donors make use of developing partner country fi nancial and budget systems and align technical assistance with capacity development objectives. Predictability indicators measure the extent to which aid is disbursed according to agreed schedules. Th e indicator on progress with aid untying measures the extent to which suppliers from individual donor countries are unfairly favoured.

Based on these indicators, as demonstrated in Table 1, multilateral aid, especially from the World Bank, is far more compliant with Paris Declaration standards than overall aid. Of course, such ratings conceal as much as they reveal since they fail to bring out the extraordinarily wide range of quality standards among bilateral and multilateral agencies. Not all multilateral aid is equally eff ective: the ratings show that the multilateral development banks, the European Commission and the International Fund for Agricultural Development enjoy a signifi cant advantage over UN agencies. Th is said, the indicators

TABLE 1: PARIS DECLARATION INDICATORS (DONOR PERFORMANCE)14

Aid Agency Harmonization Alignment Predictability Aid untying Total

AfDB 94 76 86 133 97 AsDB 97 102 134 133 117 IDB 126 90 118 133 117 WB 137 132 123 133 131 MDBs 114 100 115 133 116 EC 142 74 12 133 117 IFAD 163 144 64 133 126 UN 129 54 59 133 94 All multilaterals 127 96 101 133 114 All donors 100 100 100 100 100

14 Source: OECD 2008. See Appendix B: Donor Data. The ratios are based on aggregate indicators for the most recent year available (2007) as follows: harmonization (indicators 9, 10a and 10b); alignment (indicators 4, 5a and 5b); predictability (indicator 7); aid untying (indicator 8).


page 66

do not capture the unique capacity-building and standard-setting contributions of UN agencies.

Other reports confi rm the overall fi nding that multilateral agencies are “doing things right” more often than bilateral agencies. Th us, according to an authoritative 2010 review of multilateral assistance, multilateral aid is far less fragmented than bilateral aid: its concentration ratio is 75 percent versus 57 percent for bilateral aid (DCD/DAC 2010d). Th e same review concludes that multilaterals allocate a larger share of their aid to low-income countries (55 percent versus 33 percent in 2008) and to fragile states (66 percent versus 64 percent in 2008). Th ey also deliver a higher proportion of CPA than the bilateral agencies (92 percent versus 53 percent over the past fi ve years). Finally, they react more quickly to fi nancial crises through counter-cyclical assistance (DCD/DAC 2010d).15

Similarly, with respect to aid quality, a well- documented joint Brookings and Center for Global Development (CGD) report, the Quality of Offi cial Development Assistance Assessment, shows that, on average, multilateral aid does signifi cantly better

15 Th is report highlighted economies of scale, lower unit costs, political neutrality and provision of public goods as additional benefi ts of multilat-eral aid.

than bilateral aid in maximizing effi ciency, fostering institutions and reducing administrative burdens (Table 2).

Multilaterals only fall short on transparency — with the exception of the largest two multilateral donors (the World Bank and the European Commission), which rate well on this indicator. Th e Brookings/CGD report also indicates that vertical funds (Global Fund, International Fund for Agricultural Development) do better in maximizing effi ciency given their specialized staff , while horizontal country-based institutions such as the multilateral development banks do better in fostering domestic institutions, given their proven ability to adapt to country circumstances.

To be sure, aggregate Brookings/CGD statistics do not tell the whole story: multilaterals are not invariably more eff ective than bilateral agencies or vertical funds. For instance, Ireland ranks fi rst in fostering institutions (as well as fi rst in overall eff ectiveness, in a tie with the World Bank), while Australia ranks fi rst in transparency and learning and the Global Fund ranks fi rst in maximizing effi ciency (Birdsall and Kharas 2010).

While the World Bank and the European Commission respectively rank fi rst and second on the Brookings/CGD league table (Birdsall and Kharas 2010), four bilateral donors (Ireland, United Kingdom, Netherlands and Finland)

TABLE 2: QUALITY OF DEVELOPMENT ASSISTANCE RANKINGS16

Aid agency Efficiency Institutions Admin. burden Transparency Average

AfDB (AfDF) 2 4 12 25 10.8 AsDB (AsDF) 3 3 10 29 11.3 IDB (SF) 5 8 3 31 11.8 World Bank (IDA) 9 2 2 5 4.5 EC 11 12 9 2 8.5 IFAD 4 20 1 23 12.0 UN 15 28 24 16 20.8

Aggregate rankings

Bilateral 19.4 17.4 18.4 15.4 17.7 Multilateral 6.3 11.9 9.0 17.6 11.2 Vertical 2.5 19.0 6.0 16.5 11.0 Horizontal (country-based) 6.0 5.8 7.2 18.4 9.4

Source: Birdsall and Kharas, 2010

16 See p. 25 of the Brookings/CGD Report. See Birdsall and Kharas (2010, p. 25). The report ranked 31 agencies.


as well as the Global Fund are among the best performers and outclass the regional development banks and the International Fund for Agricultural Development.

Finally, a World Bank research paper synthesizes the fi ndings of major studies on aid quality and puts forward an overall index for 11 multilateral institutions and 27 bilateral institutions. Once again, multilateral donors (score: 0.51) led by the Asian Development Bank and the World Bank draw a far better aggregate mean score than the bilateral donors considered as a group (-0.20). However, a few bilateral donors (Denmark, Ireland and the Netherlands) outrank the African Development Bank, the Inter-American Development Bank and the International Fund for Agricultural Development, while the UN (-0.48) trails behind most DAC donors (Knack et al. 2010).

Table 3 also shows that performance among multilateral donors varies. Th e data are drawn from a comprehensive and transparent multilateral aid review recently carried out by the UK Department for International Development (DFID). Th e vertical funds and multi-country collaborative programs funded by

DFID deliver good or very good value for money. Th e multilateral development banks also do relatively well. Less impressive are the ratings awarded to UN agencies. Out of 21 UN agencies rated by DFID, only UNICEF is rated as very good while seven are rated as good, six as adequate and nine as poor. Some UN agencies are doing sterling work, others are not and the UN development system as a whole is in dire need of reform. To sum up, available evidence confi rms that there is considerable variation in the eff ectiveness of multilateral agencies, but it is equally clear that most bilateral aid agencies are less eff ective than most multilateral agencies.

ENCOURAGE MULTILATERAL REFORM

The WP-EFF that manages the HLF process combines eff ectiveness and inclusiveness (Killen and Rogerson 2010). It is the

appropriate forum for coordinating the aid reform agendas of the three main clusters of development actors — the IFIs, fi nancial institutions, the UN agencies and the OECD-DAC donors’

TABLE 3: VALUE FOR MONEY RATINGS OF SELECTED MULTILATERAL AID ORGANIZATIONS17

Agency Development Results Managerial Partnership Transparency VFM

Objectives Orientation Strength

AfDB 2.8 2.0 3.0 3.0 4.0 Good AsDB 2.8 3.0 3.3 3.0 3.0 Very good IDB 2.3 2.7 3.0 3.0 3.0 Adequate WB (IDA) 3.2 2.0 3.0 2.0 3.0 Very good IFAD 3.0 3.0 2.3 3.0 3.0 Good EC Budget 2.7 2.0 2.3 3.0 3.0 Adequate UNDP 3.0 2.0 2.3 3.0 3.0 GoodWHO 2.8 2.0 2.0 3.0 2.0 Adequate FAO 2.7 2.0 2.0 3.0 1.0 PoorUNESCO 2.3 1.0 1.7 2.0 2.0 PoorUNICEF 3.3 3.0 2.7 3.0 2.0 Very goodILO 2.2 2.0 1.7 3.0 2.0 PoorUNIDO 1.8 2.0 1.7 3.0 2.0 PoorWFP 3.2 3.0 2.7 3.0 2.0 Good UNHCR 3.2 4.0 3.0 2.0 2.0 Good

Source: DFID (2011)

17 The ratings are derived from Annex 6. Development objectives averages ratings for role in meeting international and UK aid objectives, fragile contexts, gender, climate, and poverty focus. Managerial strength averages performance management, financial management and cost consciousness. Also rated but not displayed in the table is the “likelihood of positive change.”


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network.18 Its focus on ownership, harmonization and mutual accountability should be sustained and extend-ed to the new donors.19

Conversely, the weight of emerging market countries should be refl ected in multilateral governance. Gradual streamlining of the aid architecture and oversight of institutional reforms should become explicit aims of the HLF-4 process. Furthermore, the process should promote enlightened multilateral agency leadership focused sharply on increased legitimacy, transparency, responsiveness and effi ciency. To ensure a level playing fi eld, independent monitoring of how individual agencies tackle internal obstacles to aid eff ectiveness should be based on common results-based metrics.

Th e current multilateral aid architecture is exceedingly complex. But a radical redesign would not be a realistic medium-term goal since existing institutional arrangements are the result of historical antecedents and geo-political infl uences shaped by complex interactions among states and non-state actors pursuing diverse goals and responding to multiple constituencies (Christiansen and Rogerson 2005). A phased consolidation of aid agencies should nevertheless be encouraged and reform eff orts should be focused on the UN and the multilateral development banks, given their prominence in the development arena.

Th e UN’s inclusive membership is a precious asset, given the need for inclusiveness in development cooperation referred to above. It enjoys a superior ability to get close to developing country governments, engage in technical cooperation activities and advocate for human rights. Th e “one country, one vote” feature of its development governance is prized by developing countries, but it is also a major drawback to aid eff ectiveness, given the gridlock in decision-making that frequently plagues the General Assembly, which oversees UN development activities.

18 Th e Executive Committee consists of around 25 members. Th e Chair(s) and Vice-Chairs of the Working Party and the DAC Chair (ex offi cio) coordinate the Working Party clusters. Other members are chosen on the basis of geographical representation and balanced participation between donors (bilateral and multilateral) and developing countries (aid-receiving and recipient/donors). Th e civil society is also represented on the Executive Committee.19 Th e second phase evaluation of the Paris Declaration relied on six HQ bilateral aid studies and a single multilateral aid study complemented, by six bilateral aid and one multilateral aid updates. Looking ahead, more comprehensive coverage and greater transparency regarding the perfor-mance of individual donors would be desirable.

Th e unwieldy UN development system consists of 17 specialized agencies, eight functional commissions, fi ve regional commissions and 16 organizations and programs. It is wracked by duplication and undermined by archaic management processes. It cannot even be called a system since it is an assemblage of loosely interacting groups. Given their separate mandates and their autonomous governance arrangements, the specialized agencies operate autonomously without much interaction with the UN Secretariat or with one another.

Unless systemic reform takes place and is supported by powerful members, including the large emerging market countries, the share of aid resources fl owing through UN agencies will continue to decline. In time this may jeopardize the the role of the UN in the security sector, as a platform for global and regional goods delivery and as a norm setter.

To achieve synergy and eff ectiveness, the global and country roles of the organization need to be connected far more intimately. Th is would help to: (i) enhance knowledge transfer across themes and regions; (ii) relate the advocacy role of the organization to country realities; and (iii) overcome the “silo culture” that stands in the way of achieving the MDGs. System-wide knowledge networks would help reach across institutional boundaries within and outside the UN. Th ey would also facilitate sharing of good practices and help close the gap between the UN’s normative and analytical role and its country operations.

At a global level, the UN should adopt a development paradigm that embraces human security and gives the same emphasis to MDG8 (that points North) as to MDGs 1—7 (that point South). At the country level, the time has come to go beyond process reforms under the One UN initiative by formally upgrading the resident coordinator position and strengthening his/her authority over the operations of all UN agencies on the ground. In parallel, the UN superstructure would be realigned under a Deputy Secretary-General of Security, Development and Human Rights.

Th e IFIs’ strong executives and their corporate management cultures help them deliver results. Th ey link research and practice somewhat better than other organizations. Th ey enjoy considerable economies of scale. Th ey are better shielded from the shifting winds of international power politics. But they are less


responsive to local needs and evoke the metaphor of big tankers which cannot shift course in a nimble fashion.

Hence the IFIs need reform too. Th eir internal processes are complex, cumbersome and time-consuming. Th ey still tend to adopt blueprint and technocratic approaches shaped by orthodox economic doctrines whereas bilateral and civil society actors are frequently more adaptable. Most of all, their legitimacy is undermined by a voting structure that no longer refl ects the relative size and importance of their member countries and by archaic methods of selecting chief executives that give more weight to nationality than to competency.

FILL THE EVALUATION GAP

Without the discipline of the ballot box, the use of more tax proceeds for multilateral aid must be fully justifi ed

to skeptical industrial countries’ electorates. Paris Declaration tenets (alignment, harmonization, mutual accountability, untying of aid, etc.) imply less direct control by individual donor governments over aid funds as well as looser connections with the national interest of donor countries.

Hence, increased contributions to multilateral institutions cannot be taken for granted. Contributions hinge in large part on verifi cation of the soundness of their institutions’ governance structures, the validity of their policy prescriptions and transparent proof that multilateral funding delivers results by doing the right things and doing them right.

Th is is why fi lling the monitoring and evaluation gap facing multilateral aid agencies is a compelling priority for HLF-4. Paradoxically, the 2010 OECD-DAC Report on Multilateral Aid supports the DAC Evaluation Network’s proposed joint assessments of multilateral agency eff ectiveness. Its dubious premise is that “a shift towards self-reporting by multilaterals would be a way to apply the Paris Declaration Principles of ‘ownership’ and ‘alignment’ to their funding” (DCD/DAC 2010d, p. 87).

In other words, the initiative proposes to rely on existing desk reviews and available monitoring and evaluation data so as to avoid duplication and minimize evaluation fatigue. Yet, self-evaluation that

is not buttressed by independent verifi cation would lack credibility.

Public trust in the governance structures of multilateral agencies, the quality of their management and the development impact of their interventions should be nurtured. Th is implies credible evaluation systems. While good practice standards and peer review processes focused on the independence and quality of internal evaluation systems exist, they have not been harmonized or implemented with the same diligence across the multilateral system.20

Current self-assessments by multilateral agencies do not aim at accountability and fail to attest to the adequacy of multilateral agencies’ eff ectiveness in a suffi ciently rigorous manner. Th us, the Common Performance Assessment System (COMPAS) was designed in 2005 as a framework through which the multilateral development banks track their own capacities to manage for development results.

As a self-reporting exercise, COMPAS is explicitly restricted for use as a corporate learning instrument (MfDR 2010). As such, it provides opportunities for the participating institutions to share information and promote good practices.21 Similarly, the Multilateral Organisation Performance Assessment Network has not aimed at formal evaluations. Instead, it uses 70 indicators of interest to donors that relate to strategic management, operational management, relationship management and knowledge management (AsDB 2011).

Responsiveness to donors’ concerns has been sought either from ad hoc reviews carried out by individual donors or by collective donors’ reviews connected to periodic replenishment exercises. Th e former approach cannot be replicated by all donors, given the prohibitive transaction costs and administrative burdens implied by a proliferation of bilateral reviews.

Notwithstanding some hard-hitting and objective evaluations, the latter collective review approach has done little to strengthen overall public confi dence in

20 In particular, the Evaluation Cooperation Group has issued Good Practice Standards on Independence of International Financial Institutions’ Central Evaluation Departments and the UN Evaluation Group has issued norms and standards for evaluation in the UN system.21 Examples include the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-Ameri-can Development Bank, International Fund for Agricultural Development, Islamic Development Bank Group and the World Bank Group.


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multilateral agencies since the results have not been widely disseminated and have failed to comply with consistent standards of evaluation, independence and quality.

Th e lack of consistent, resilient and objective external evaluations of multilateral agencies should therefore be a matter of considerable concern. Specifi cally, the HLF-4 process should aim at strengthening its own capacity to oversee the evaluation systems of aid agencies and take the lead in commissioning cross-cutting independent evaluations of the overall development architecture.

In sum, to enhance the legitimacy and credibility of oversight mechanisms, there is no satisfactory substitute for the harmonization of monitoring and evaluation standards across multilateral agencies. Objective assessments of multilateral agencies’ compliance and periodic verifi cation that their corporate performance is up to scratch and that their development results are adequate should be a major focus of HLF-4.

For example, HLF-4 might task independent evaluators with the duty of designing evaluation standards for multilateral institutions that combine sound self-evaluation methods with rigorous independent evaluation processes that will reliably attest to the quality of self-evaluation. Special attention should be paid to the evaluation of trust fund programs since the resources fl owing through them are growing, and they have largely escaped systematic and independent evaluation.

Methodological rigour would not be suffi cient to ensure credibility of evaluations. Th e design of evaluation governance to guarantee independence, objectivity and “value added” are of equal importance. Independent assessment of self-evaluation, as well as of transparency and oversight of self-evaluation standards, are basic features of sound governance. Th ese principles would lead to organizational solutions that combine self-evaluation with independent evaluation.

Th e foundations for an overarching approach to comprehensive and independent evaluations of the multilateral system would best be grounded in good practice standards of the Evaluation Cooperation Group (ECG) for the multilateral development

banks,22 and informed by the agreed norms and standards of the UN Evaluation Group (UNEG).23 Adequate coverage of activities funded by DAC and non-DAC donors, foundations and the voluntary sector should also be promoted so that all development initiatives are judged according to the same standards.

Last but not least, credible evaluation of multilateral interventions would imply a serious eff ort to involve developing countries in the process. Th is also implies a major commitment to evaluation capacity development from donors. As well, it would call for ad hoc joint-evaluation governance arrangements that give substantive control to developing country governments, organizations and citizens.

CONCLUSION

The principles of the 2005 Paris Declaration remain highly relevant for development cooperation. However, the overall operating

environment has changed. Given the growing importance of non-aid factors, the HLF’s dominant paradigm should shift from aid eff ectiveness to development eff ectiveness.

WP-EFF is uniquely placed to oversee coordination of the aid eff ectiveness agendas of the three main clusters of offi cial development actors — the IFIs, the UN agencies and the OECD-DAC donors’ network. It should also reach out to new donors and ensure that the ad hoc coalitions charged with the delivery of global and regional public goods and policy standard setting comply with Paris Declaration principles.

A reversal of the erosion of core multilateral funding to refl ect development performance should be an explicit goal of the HLF process since the economies of scale and country orientation associated with multilateral development banks and European Union development

22 Th e ECG was established by the heads of evaluation of the multilateral development banks in 1996 to: (i) strengthen the use of evaluation for greater development eff ectiveness and accountability; (ii) share lessons from evaluations and contribute to their dissemination; (iii) harmonize perfor-mance indicators and evaluation methodologies and approaches; and (iv) enhance evaluation professionalism within the multilateral development banks; (v) collaborate with the heads of evaluation units of bilateral and multilateral development organizations, and (vi) facilitate the involvement of borrowing member countries in evaluation and build their evaluative capacities. 23 Th e UNEG is a professional network that brings together the units responsible for evaluation in the UN system, including the specialized agen-cies, funds, programs and affi liated organizations. Th e UNEG currently has 45 such members, is chaired by the UNDP, and is supported by an Execu-tive Secretary and the UNEG Secretariat.


initiatives mean that multilateral aid has been demonstrably more eff ective than most bilateral aid. However, not all multilateral institutions rank high on available rating tables that common and reliable metrics should be designed to guide resource allocation.

It is equally clear that HLF-4 should induce multilateral agencies to reform. Th e UN should be pressed to undertake the restructuring needed to achieve greater value for money while the multilateral development banks should realign their voting structures, adopt nimbler operational procedures and improve their relationship management.

Finally, HLF-4 should focus on fi lling the major monitoring and evaluation gaps that still plague the multilateral development cooperation system. Truly independent and transparent processes should be established to encourage compliance with agreed norms and attest in a reliable fashion to the development impact of multilateral interventions.

Robert Picciotto is a Visiting Professor at King’s College in London and a member of the Academy of Social Sciences. He sits on the boards of the United Kingdom Evaluation Society and the European Evaluation Society. He has held several senior management positions at the World Bank including Director, Projects Department in three of the Regional Offi ces, Vice-President, Corporate Planning and Budgeting and Director-General of the Independent Evaluation Group. Since 2002, he has been a senior adviser to the Asian Development Bank, the African Development Bank, the United Nations Development Program, the International Fund for Agriculture Development, the Organization for Economic Cooperation and Development, the Council of Europe Development Bank, Sweden’s Ministry for Foreign Affairs, the Department for International Development of the United Kingdom and the Global Environment Facility. He is a graduate of the École nationale supérieure de l’aéronautique et de l’espace (France) and of the Woodrow Wilson School of Public and International Affairs (Princeton University).

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CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC

page 77

CHAPTER FOUR

TOWARD A NEW DEVELOPMENTCOOPERATION DYNAMIC


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International development cooperation is going through major transitions just as the need to ad-dress global development challenges — from eradi-

cating poverty to making equitable sustainable devel-opment a reality for all people — is gaining urgency.

Recent years have witnessed an increase in the number of actors providing various types of development assistance, as well as new types of modalities, channels and partnerships for development. As a result, the global development cooperation landscape and so-called “aid architecture” have become more diverse. Most notably, there has been an increase in activities and funding from sovereign bilateral assistance providers outside of the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC), a refl ection of changes in global economic and political power dynamics. Th ese include countries with very diff erent experiences of aid and approaches to providing assistance. Some have long histories of providing assistance while others are new or re-engaging. Some are both assistance providers and recipients, or were so until recently. Some of these countries are making use of DAC defi nitions and standards as a reference point while others provide assistance under the framework of South-South Cooperation (SSC)n within and across geographical regions.

Regardless, it is clear that these heterogeneous non-DAC countries are playing and will continue to play an even more central role in delivering assistance to and engaging in partnerships with developing countries. New forms of cooperation and models are emerging, all at once complementing, challenging and providing alternatives to DAC donor practices and the multilateral institutions DAC donors traditionally dominate at a time when there is increased pressure to demonstrate tangible development results.

Th is dynamic highlights the need for new thinking and restructuring of international, and multilateral dialogue

on aid and development cooperation to include and refl ect the practices and experiences of all development cooperation partners. Furthermore, this dynamic underscores the need for multilateral cooperation and sharing of lessons learned to maximize the benefi ts of diversity and ensure a common strategy for combating poverty and addressing the crises and challenges of this century. While some steps have been taken in this regard, further action is needed. Th e Fourth High Level Forum on Aid Eff ectiveness (HLF-4) in Busan (29 November – 1 December 2011) provides a key opportunity to form a new consensus on development cooperation on a multilateral level that is inclusive and capable of addressing the tasks ahead.

PROVIDERS OF ASSISTANCE BEYOND “THE USUAL SUSPECTS”: WHO ARE WE TALKING ABOUT?

Sovereign bilateral development assistance provid-ers beyond the membership of the DAC are often referred to as “non-DAC donors” or “non-DAC

providers of assistance,” “emerging donors” or even “new donors.” However, these labels are all unsatisfac-tory. Several of the countries in question have long-standing histories of providing various types of assis-tance. For example, China’s and India’s assistance dates back to the 1950s, Arab donors have provided sub-stantial assistance over the past decades and Russia is re-emerging rather than emerging as a donor. By using the DAC as a reference point, these actors are defi ned by what they are not, rather than by what they are —“non-DAC” has the connotation of separating those that are outside from those that are inside the club.

Furthermore, some non-DAC members such as the new European Union (EU) member states use DAC standards as a reference point, which makes the DAC/non-DAC distinction less relevant. Finally, several countries, including Brazil, China, India and South Africa, are reluctant to refer to themselves as donors,

TOWARD A NEW DEVELOPMENT COOPERATION DYNAMICPENNY DAVIES


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and do not describe their cooperation in terms of donor-recipient relationships. Rather, they consider themselves as engaging in partnerships of mutual benefi t within the framework of SSC.

Th is terminological challenge is more than a matter of semantics and points to the need to fi nd better ways of capturing the increasingly diverse forms of, and partners engaged in, development cooperation. Th e heterogeneity of these providers makes it questionable to refer to them as a group and raises the question of how best to describe providers of assistance in ways that actually enhance the understanding of their roles and activities. Previous categorizations, including that of donor/recipient or developing/developed countries, are clearly non-applicable, outmoded or interchangeable. While recognizing its limitations, the term “non-DAC providers of assistance” is used in this paper when referring to the heterogeneous group of countries that are not members of the DAC and that provide various types of assistance.

Current analyses divide providers of assistance outside the DAC into diff erent overarching (sometimes overlapping) categories based on their political affi liations and characteristics. Th e categorization of these countries also depends on which institutional perspective informs the analysis. Twenty countries outside the DAC report their offi cial development assistance (ODA) to the DAC. OECD-DAC statistics divide these countries into three categories: OECD non-DAC; Arab countries; and “other” donors (OECD-DAC 2011). At times, analyses also single out EU members (some of which are OECD members), or the BRICS countries — Brazil, Russia, India, China and South Africa1 — as major providers of assistance and as emerging political and economic powerhouses. Southern providers of assistance engaging in SSC are often treated as a separate category (UN ECOSOC 2008).

An article by OECD Development Co-operation Directorate staff members introduces the categorizations “emerging donors,” “providers of South-South Development Cooperation” and “Arab donors” based on their diff erent features (Zimmermann and Smith 2011). Emerging donors are countries that model their expanding aid programs

1 At the end of 2010, South Africa was invited to become the fi fth member of the BRICS adding the ‘S’ to the former BRIC acronym. South Africa attended the third BRICS Summit held in April 2011 as a full member.

on those of DAC donors. Th is group consists mainly of the 12 newest EU members,2 but also includes countries with more long-standing cooperation programs such as Israel, Russia and Turkey. In contrast, Arab donors like Kuwait, Saudi Arabia and the United Arab Emirates, who have delivered substantial assistance for more than three decades, often have diff erent approaches to development assistance from those used by most DAC donors. Th ey have their own coordination group, light administrative structures for aid and allocate almost all of their assistance bilaterally. Finally, providers of South-South development cooperation include middle-income countries and emerging economies, many of which are also aid recipients. Th ese providers do not refer to themselves as donors, and they base their assistance on key principles within the framework of SSC.

Th ere are diff erences between the respective groups and individual non-DAC countries in terms of what Kim and Lightfoot (2011) call the “DAC-ability of donors,” referring to their public willingness to adhere to DAC standards. Th e principles and approaches of assistance within the SSC framework are distinct from those applied by DAC donors. Although much attention has been paid to SSC of late, its principles date back to the 1955 Bandung Conference that pointed to the need for developing countries to reduce their dependence on industrialized countries, including through the provision of technical assistance to one another. Th e conference provided inspiration for various South-South alliances and the subsequent formation of the Non-Aligned Movement in 1961. Th is was followed in 1978 by the Buenos Aires Plan of Action, adopted at the United Nations (UN) Conference on Technical Cooperation among Developing Countries, which provided further guidance for SSC (UNCTAD 2010, pp.7-9).

Since then, various conferences and multilateral initiatives on SSC have taken place within diff erent fora. In 2009, the High Level United Nations Conference on South-South Cooperation was convened in Nairobi. Th e same year, the Group of Seventy-Seven (G77) plus China, a leading voice of developing countries, adopted a Ministerial Declaration that puts forward guiding principles for SSC (UNCTAD 2010, p. 8). Th e OECD-DAC

2 Th ese are Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia.


Working Party on Aid Eff ectiveness (WP-EFF) now hosts the Task Team on South-South Co-operation, which played a key role in bringing about the 2010 High Level Event on South-South Cooperation and Capacity Development in Colombia. Th is conference resulted in the so-called Bogota Statement Towards Eff ective and Inclusive Development Partnerships to enhance the practice of SSC. In sum, SSC frameworks have generated a range of multilateral initiatives, that complement existing structures and which build upon the principles established in the 1950s.

Key guiding principles for providing assistance within the SSC framework include solidarity, mutual respect, mutual benefi t and non-interference in the internal aff airs of partners. Countries providing assistance within the SSC framework claim to attach no policy conditions to their assistance, in contrast with DAC donor and international fi nancial institution (IFI) practices. Th e mutual benefi t principle refl ects how the interests of the assistance provider are also seen as important in the partnership.

Furthermore, South-South development assistance is not distinguished from and is often mixed with other types of fi nancial fl ows, including investments and non-concessional loans. Th e concept of South-South development cooperation is sometimes used to separate the specifi c development dimension of SSC, although according to the G77 plus China, SSC is itself “a development agenda” (UNCTAD 2008, p.8).

While key diff erences exist — such as the emphasis on non-interference of Southern providers versus the conditionality practices of DAC donors — there is shared interest in ensuring that development assistance, in its various forms, contributes to the achievement of partner country development objectives and the Millennium Development Goals (MDGs). However, a key challenge is that the international discussions on development cooperation, including those surrounding the Paris Declaration on Aid Eff ectiveness, have until recently been dominated by DAC donors, resulting in a lack of ownership of the declaration and its principles by non-DAC members.

Yet, it is clear that many non-DAC providers of assistance support principles similar to those of the Paris Declaration, including strengthening partner country ownership (Davies 2008). However, interpretations of how to implement them might

diff er from DAC donor practices. It can be argued, as phrased by Abdel-Malek (2009, p.5), one of the Chairs of the WP-EFF, that “we have to rid ourselves of the counterproductive discussion that stresses diff erences between the Paris Declaration principles and South-South Cooperation practices,” and that “eff orts should focus on identifying how each approach can benefi t from the distinct advantages of the other.”

Calls and initiatives for further dialogue, experience sharing and cooperation among diff erent providers of assistance are now being made. However, such calls raise questions regarding the willingness of all actors to learn from each other and of the inclusiveness of international and multilateral fora where development cooperation is discussed.

ASSESSING VOLUMES OF ASSISTANCE - HOW MUCH ARE WE TALKING ABOUT?

The increase in volumes of assistance from non-DAC development assistance providers has generated a lot of attention. However, assessing

volumes of assistance is diffi cult as several non-DAC assistance providers do not systematically collect or transparently report fi gures in a detailed and disaggre-gated manner. Furthermore, there is no globally agreed upon defi nition of what counts as aid. For non-DAC countries, the DAC defi nition of ODA does not necessarily serve as a relevant reference point. Many non-DAC providers of assistance operate within the frameworks of SSC and/or triangular cooperation, and data to measure these modalities is particularly scarce. South-South Development Cooperation assistance is often delivered in package deals and includes other fi nancial fl ows, some of which would be ODA-eligible and others not, according to DAC criteria.

However, several non-DAC members do report their assistance to the DAC. In 2008, total reported ODA from non-DAC countries amounted to US$9.5 billion in net fi gures. Th is is a steady increase since 2003 when the amount was US$3.4 billion, refl ecting both a growth in volumes of assistance from individual donors as well as a rise in the number of countries reporting to the DAC (Davies 2010, pp.4-5).3 In 2009, the amount was down, however, to US$6.7 billion. In terms of volume of assistance, Saudi Arabia

3 Th e fi gures in Davies are based on the OECD-DAC 2009 and 2010 Development Co-operation Reports.


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stands out among non-DAC countries with an ODA of just over US$3 billion in 2009 (OECD-DAC 2011).4

For the countries that do not systematically disclose their fi gures, estimates often vary due to data constraints and diff erent interpretations of what counts as aid. According to Zimmermann and Smith, the estimated total gross development cooperation fl ows from bilateral providers beyond the DAC amounted to almost US$11 billion in 2009, the equivalent of around eight percent of global gross ODA in the same year (Zimmermann and Smith 2011, p.724).

Th is US$11 billion comprises the assistance from the 20 countries that currently report their annual ODA to the DAC, plus estimates for the BRICS countries based on various government sources.5 China is the heavyweight among the BRICS with an annual estimated aid budget of US$1,947 million followed by Russia at US$785 million, India US$488 million, Brazil US$362 million and South Africa US$109 million.

However, China also illustrates the challenge of comparing aid data with that of DAC ODA. A breakdown of Chinese development assistance, taking into account debt relief (included in DAC ODA), puts it at US$3 billion in 2007 (Brautigam 2009, p.169).

As suggested earlier, volumes of assistance for non-DAC donors are diffi cult to assess, and analyses of fi gures change as reporting gets more sophisticated and transparent. Figures of external analyses also frequently vary due to methodological diff erences. A general conclusion is that development assistance from non-DAC countries on an aggregate level is comparatively low, albeit on the rise, although in certain sectors or countries it can constitute the main bulk of assistance. Th e importance of development assistance providers beyond the DAC does not lie primarily in the volume but rather in the way in which this assistance transforms international and multilateral

4 As of January 2010, South Korea is a member of the DAC and is no longer included in non-DAC donor ODA statistics provided by the DAC. South Korea has also been omitted from the 2009 statistics and from earlier years as well in OECD-DAC (2011), hence resulting in a discrepancy compared with the fi gures for 2009 and earlier as presented in the 2009 and 2010 Development Co-operation Reports.5 Th e estimate assumes that fi gures for individual countries’ development cooperation programs are consistent with the defi nition of ODA. Th e fi g-ures are, however, likely to be even higher given that active providers within the framework of SSC, such as Chile, Colombia, Egypt, Malaysia, Mexico and Venezuela, are not included.

development cooperation by contributing new ideas and modalities, as well as increasing the options available to partner countries. Th is diversity brings both challenges and opportunities.

OPPORTUNITIES AND CHALLENGES

Opportunities

Increased and more diverse resources for development

Th e increased engagement of more development partners means greater resources are often available for partner countries to pursue their national development strategies and the MDGs. Th is is signifi cant, given that many DAC donors are failing to meet their aid commitments and the fi nancial and climate crises have put additional pressure on scarce public resources. While the fi nancial meltdown may aff ect SSC negatively, the deterioration of the global economy has also resulted in renewed opportunities for SSC as developing countries look to one another as well as to innovative cooperation mechanisms to respond to the crises (UN General Assembly 2009).

Th e diversity of resources also generates more options and increases leverage of partner countries when negotiating with donors. Southern providers of assistance to some extent complement the eff orts of DAC donors and multilateral institutions, particularly in terms of focus on infrastructure and productive sectors (Davies 2010).

Relevant development experiences and lessons to share

Assistance within the SSC framework from “fellow developing countries” is valued by partner countries, as they both face similar challenges and have relevant insights to share based on their own eff orts to reduce poverty. Furthermore, several non-DAC countries were until recently, or are still, recipients of aid. Th erefore, they are also well placed to draw on their experiences as aid recipients, and have lessons to share about managing incoming aid.


Innovative development assistance modalities and effi cient partnerships

Th e diversity of partners engaged in development assistance has brought innovative cooperation modalities to the fore in the form of SSC and triangular cooperation; North-South-South as well as South-South-South (UN ECOSOC 2008). Th ese modalities have gained increased recognition as eff ective contributors to development. For example, SSC and knowledge exchange have become part of the work programs of multilateral institutions.

Compared with DAC donor and IFIs approaches, SSC is valued by partner countries for being less bureaucratic and less donor driven, as well as more responsive to country priorities with few or no policy conditions attached. Assistance is often highly fl exible and assistance providers are often quicker in processing and disbursing assistance. Partner countries have expressed the view that traditional donors could learn more from these positive aspects (Davies 2008).

Challenges

Lack of transparency and sharing of information

Partner countries, civil society organizations and donors (DAC and non-DAC) see the lack of transparency regarding volumes, types and terms of assistance of some non-DAC providers as a key challenge. SSC agreements are often made at the highest political level, bypassing aid management systems in partner countries. Th e resulting lack of transparency inhibits broad-based ownership and the possibility for citizens to engage in the development process and hold their governments to account. It has also made it diffi cult to conduct impact assessments of these engagements and led to misunderstandings. Furthermore, lack of transparency constitutes an obstacle to coordination of assistance among diff erent providers (Davies 2008).

Challenges in adhering to social and environmental standards and aid-eff ectiveness principles

Concerns have been expressed by civil society organizations, multilateral organizations and others that SSC agreements do not suffi ciently take into account social and environmental standards. At times, rapid and low-cost assistance takes place at the expense of wider development concerns without prior adequate environmental and social-impact assessments.

In particular, concerns have been put forward in relation to the impact of infrastructure projects on the environment and local communities.6 Governance and corruption are also concerns when assistance is provided to countries where accountability frameworks are weak and where reforms to address these problems are lacking (G24 Secretariat 2008, p.18).

On the question of aid eff ectiveness and progress on the Paris Declaration and the Accra Agenda for Action, performance of non-DAC countries varies (similar to DAC donors). Tied aid is often a concern as non-DAC project assistance, with a few exceptions, is almost always tied to the purchase of goods and services. However, some of the drawbacks of tied aid, such as higher costs for the recipients, are not always applicable to “Southern assistance,” which tends to be cost eff ective and can also involve skills transfers. Th at said, there are also examples of projects that do not involve local contractors, including turnkey projects, and that inhibit the transfer of skills (UN ECOSOC 2008; G24 Secretariat 2008). Another concern is that in SSC partnerships there is little involvement of non-government actors, bypassing input from parliamentarians and civil society, a trend that runs counter to the Paris agenda and detracts from broad-based national ownership and mutual accountability (UNCTAD 2010, p. 27; UN 2010, p. 36; Th e Reality of Aid 2010).

Th e proliferation of partners poses challenges for partner country management

Although increased choice in partners presents a key opportunity for developing countries to pursue national development priorities, strategic management of these diverse actors can pose a challenge — particularly where national capacity is weak. Depending on how well assistance is aligned with national systems or coordinated at the country level, this proliferation can lead to higher transaction costs, for example, in the form of a plethora of reporting requirements. Evidence suggests that there is little coordination between Southern providers of assistance and DAC donors. Likewise, providers of assistance within SSC frameworks, like many DAC donors, have a tendency to set up their own structures for engagement and delivering assistance with little

6 For further information, see UN ECOSOC (2008), Th e Reality of Aid (2010) and UN (2010).


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multilateral cooperation (UNCTAD 2010 p. 27; UN 2010 p. 35; UN ECOSOC 2008 p. 34).

Th ese challenges are also applicable to assistance from multilateral development banks as well as from DAC donors, many of whom have more experience engaging in development cooperation than some capacity constrained non-DAC countries. To assess the impact of aid and development assistance in terms of development outcomes is a key challenge for all. To make the most of their opportunities, partner countries need to carefully negotiate with all development partners, compare the various options available and consider what impact they will have on development objectives such as social and environmental targets and debt levels (G24 Secretariat 2008, p.17).

RESHAPING GLOBAL DEVELOPMENT COOPERATION — TOWARD GREATER INCLUSIVENESS?

The surge of activities from non-DAC develop-ment assistance providers is often described as challenging so-called established donors and

the multilateral institutions they traditionally domi-nate. As described by Woods (2008, p. 17), “emerg-ing donors” are triggering a silent revolution, “quietly off ering alternatives to aid-receiving countries” and thereby “introducing competitive pressures into the existing system.”

Th is challenge comes at a time when the established international development cooperation system is fac-ing a legitimacy crisis. After a series of high-profi le commitments (including unfulfi lled ones like those made at the Group of Eight [G8] Gleneagles Summit in 2005), DAC donors and multilateral agencies face increased pressures to demonstrate results, and skeptics are making their voices increasingly heard, questioning the accomplishments of aid over past decades.

In the wake of the fi nancial crisis, there are also concerns that donors are increasingly focusing on short-term results in their pursuit of value-for-money and national interests at the expense of championing aid-eff ectiveness principles of ownership and mutual accountability. According to Zimmermann and Smith (2011, p. 733): “Th e emergence of alternative models of development, sources of development fi nance and modalities for development co-operation has only

served to intensify this legitimacy crisis. If they are to maintain their relevance, established donors will need to grasp the rise of other providers of co-operation as a major opportunity.” Th is, in turn, means opening up dialogue and decision-making processes.

Th ere are various signs of how existing development cooperation fora are giving recognition to the diverse players and modalities and how these players are claiming space in global policy-making on develop-ment cooperation. Th e Th ird High Level Forum on Aid Eff ectiveness that took place in Accra, Ghana, in September 2008 took an important step in this regard by acknowledging the contributions of all develop-ment actors, “in particular the role of middle-income countries as both providers and recipients of aid.” Furthermore, recognition was given to “the importance and particularities of South-South Co-operation” and acknowledgement was made in the Accra Agenda for Action that “we can learn from the experiences of developing countries” (OECD 2005/2008). As men-tioned, the 2010 High Level Event on South-South Cooperation and Capacity Development was a further manifestation of how developing countries are actively shaping development cooperation policies and prac-tices and how a new type of multilateral cooperation is taking form.

Th e DAC — the so-called traditional donor’s club — is pursuing dialogues with development assistance providers outside its membership to enhance mu-tual learning and collaboration. In the run-up to the HLF-4, the DAC endorsed a statement “Welcoming new partnerships in international development co-operation,” acknowledging the role played by major nations beyond its membership in contributing to the MDGs. Th e DAC, in the same April 2011 statement, endorsed the forging of new relationships, mutual learning and cooperation “without requiring accep-tance of the norms and rules required of DAC mem-ber states” (DAC 2011). Th is statement signals the eagerness of DAC members to work more closely with other providers of assistance. Interestingly, as part of the DAC discussions ahead of the HLF-4, recognition exists that in order to reach an inclusive agreement on aid and development, some “letting go” by the DAC is needed. For example, in a document on the politi-cal roadmap to Busan, submitted for discussion at the DAC Senior Level Meeting in April 2011, it is suggest-ed that the DAC must be prepared to lose its copyright


on the Paris principles and that a change in language is needed to respect the development traditions of all groups (DCD/DAC 2011, p. 4).

Th e increased activities of non-DAC assistance providers are a direct refl ection of shifts in global economic and political power and a trend toward a multipolar world order. Developing countries and so-called emerging powers are claiming space in global policy-making on development issues, among others. Th e replacement of the G8 with the Group of Twenty (G20) as the main body for global economic policy coordination in the wake of the fi nancial crisis and the adoption in November 2010 of the “G20 Seoul Development Consensus for Shared Growth” can be seen as game-changers in this regard. Th e Seoul consensus refl ects and gives recognition to the principles and perspectives that are of importance to countries providing development assistance within the SSC framework.

Meanwhile within the G20, the BRICS countries have played a role in pushing for reform of the Bretton Woods Institutions, traditionally dominated by DAC donors (Sidiropoulos 2011). Th is has resulted in an increase in voting shares for emerging economies, thus boosting their incentive to engage with and contribute fi nancially to these multilateral institutions.

While much focus has been placed on the BRICS, a third wave of development actors in the form of the so-called CIVETS countries (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) also wants to engage in the global governance of development cooperation (Schulz 2010). CIVETS are active in SSC and are, according to Schulz (2010), especially suited for triangular cooperation with traditional donors as they generally acknowledge the standards developed by the DAC. While neglected in the past, multilateral institutions are becoming more aware of the specifi c contributions these countries can make in delivering development solutions. Th ese countries were key driv-ers behind making South-South knowledge exchange a policy and an operational tool for multilateral players, including the World Bank and specialized UN agencies (Schulz 2010, p. 4).

Th ere is much optimism that South-South knowledge exchange can transform the development cooperation agenda. According to the UN Conference on Trade and Development (UNCTAD) (2011, p. 2),

“strengthening South-South economic and political relations can give a signifi cant contribution towards global convergence within a development-led process of globalization.” Indeed, as demonstrated earlier in this chapter, developing countries are playing an active part in reshaping international and multilateral development cooperation. However, concerns remain regarding the extent to which an inclusive global development agenda is in the making.

While the G20, accounting for two-thirds of the world’s population, is more inclusive than the G8, it still excludes the UN’s remaining 173 member states, including the poorest countries. Th ere are questions as to what extent these poorest countries and civil society actors with a global justice agenda will be able to engage and infl uence the G20 and to what extent the G20 will implement concrete action to address global development challenges. Moreover, it is unclear to what extent the new economically and politically infl uential developing countries, notably the BRICS, will champion the development interests of all developing countries and to what extent they will include “the entire South” in their eff orts and partnerships (Senona 2010).

Despite some reforms to the Bretton Woods Institutions, there is still a pressing need to strengthen the voices and votes of developing countries. One fl agrant example of how the post-Second World War power structures linger on in today’s multilateral system is the selection processes for the heads of the World Bank and the International Monetary Fund (IMF), which remain in the hands of traditional Western powers.

Meanwhile, although the DAC is making eff orts to open its doors and cooperate with countries beyond its membership, many developing countries still view it as a traditional donors’ club. Furthermore, although the global development architecture is meant to meet the needs of the poorest countries, “it does not explicitly build on the collective will of their citizens” who “at best have to hope that international power-brokers have their interest at heart when they decide on development issues” (Killen and Rogerson 2010, p. 2). In addition, there are power imbalances between recipients and providers of aid as well as between partners in SSC, which play out above the heads of citizens.


page 86

From a diff erent perspective,the surge of non-DAC assistance providers and SSC is complicating an already complex institutional sprawl of multilateral and other development cooperation bodies. Th ese fora often overlap and weigh inclusiveness and eff ectiveness diff erently — two diffi cult principles to balance. (Killen and Rogerson 2010). As a result, some observers suggest that the international community is facing “an institutional vacuum” when it comes to discussing the way forward for the global governance of development (Schulz 2010, p. 2). Clarifi cation of mandates and how to make best use of synergies among diff erent institutions are needed to prevent a stalemate in multilateralism and achieve, through collective action, eff ective and tangible development results and contribute to meeting the MDGs and then some. Th e upcoming HLF-4 in Busan off ers one such opportunity.

As part of such international restructuring, existing institutions need to better incorporate the experiences and modalities of the heterogeneous actors beyond DAC-donors. Th is means more than just inviting and making room in the tent. All development actors must also refl ect upon whether the tent is still fi t for the purpose and allow space for new ideas and mutual learning beyond business as usual.

Multilateral cooperation has a history of going through changes and restructuring, and this should be seen as an opportunity. Most important, the needs and interests of those people who are the intended benefi ciaries of development assistance should inform to a greater extent the future direction of development cooperation. Th is is what inclusiveness should mean.

WAYS FORWARD

Enhance collective multilateral action and broad-based participation in partnerships

Th e global aid and development architecture suff ers from “systemic ineffi ciencies created by too many actors contributing too little” (DCD/DAC 2011, p. 7). Th ere is a worrisome trend of donors planting their fl ag on unilateral contributions, as part of their eff orts to demonstrate results to their own taxpayers. A spirit of collective multilateral action and a subsequent willingness to collaborate and pool resources is needed to counter this trend. Th e increased engagement of non-DAC providers of assistance and

the resulting increase in complexity calls for further collaboration to ensure complementarity and to harmonize aid at the national level based on partner country development plans. However, coordination should not diminish diversity; rather, it should make the most of the comparative advantages of diff erent providers.

Th e current lack of progress on coordination and cooperation among DAC donors raises questions about the prospects for accomplishing these goals among an even wider set of providers. Th ere are many challenges for moving from words to action. Triangular cooperation has been identifi ed as one way to combine the respective strengths of diff erent development partners, and such partnerships are evolving between DAC and South-South Development Cooperation partners.7 However, such joint eff orts are still marginal and more fi nancing and support of triangular cooperation should be explored. For example, DAC donors could increasingly support and make resources available for triangular cooperation by channelling resources to Southern partners who, in turn, could share their relevant expertise with other developing countries.

Multilateral organizations can play a role in bringing diff erent stakeholders together around such partnerships to facilitate and institutionalize lessons learned, data gathered and how to make triangular cooperation eff ective.8 For triangular cooperation to have a positive contribution, it is vital that partner countries are the drivers, and that they set the agenda based on national democratic development priorities that strengthen broad-based national ownership. Th ere is a need to prevent donors ganging up, setting priorities and dividing tasks among themselves rather than engaging with local stakeholders and actors when deciding their strategies. Likewise, there is a need to be aware of power relations in all partnerships — South-South as well as North-South.

Furthermore, development partnerships should involve civil society organizations that have an important role to play in putting forward suggestions based on

7 Triangular cooperation is encouraged in the Accra Agenda for Action, Paragraph 19b. Th e China-DAC Study Group is one example of triangular mutual learning among DAC donors, African countries and China. Th e India, Brazil and South Africa (IBSA) initiative is another example of South-South-South triangular cooperation. 8 Yamashiro Fordelone (2009) provides an overview of triangular coopera-tion, its merits and challenges.


their fi rst-hand experience of what the impacts are of development cooperation and other policies on poor people and the environment. In this context, civil society organizations have raised concerns that South-South Development Cooperation has almost exclusively been limited to government-to-government aff airs with little opportunity for civil society organizations or parliamentarians to engage (Th e Reality of Aid 2010). Broad-based participation in development partnerships is a prerequisite for sustainable multilateral collaboration.

Increase transparency and the sharing of information

All actors engaged in providing assistance should transparently share information on the volumes, types and terms of assistance provided. Information should be available on who does what at the country level. Such transparency remains a key challenge, as described above, for many South-South Development Cooperation providers, but also for several DAC donors.

Transparency is essential to ensure national ownership of development plans and accountability of governments to the people on both sides of a partnership. Making information available on terms and volumes of assistance in a predictable manner enables the integration of assistance into national planning tools and budgets at the country level. In the context of enhancing multilateral cooperation, information sharing is a prerequisite for mutual learning on how to best achieve development outcomes and for drawing on each partner’s comparative advantages.

Th e demand for transparency in development cooperation is frequently made. Partner countries have called on all development partners to make public the types of fi nancing provided, including the terms of loans. Th is request was, for example, expressed by partner countries at the regional consultations ahead of the Accra High Level Forum on Aid Eff ectiveness (HLF-3) (Davies 2008) and is brought up in a report by the Group of Twenty-Four Secretariat (2008), among others.

Transparency does not, however, necessarily mean that non-DAC providers of assistance need to apply the DAC’s defi nition of ODA and its reporting standards, which could be politically sensitive. Th e key issue is to

commit to transparent reporting, regardless of what defi nition of aid is applied or how the reporting is done.

Th ere are some signs of commitments toward increased transparency on the part of non-DAC and DAC donors alike. One example is the International Aid Transparency Initiative (IATI), which aims to make information about aid spending easier to fi nd, use and compare. However, to date, this initiative does not include South-South Development Cooperation providers. Th e case for improved measurement, monitoring and transparency of SSC has also been made, for example, in the Bogotá Statement (Steering Committee, High Level Event on South-South Cooperation and Capacity Development 2010).

Looking ahead, transparency commitments need to be put into practice and should not be limited to aid partnerships. Transparency is equally vital in all types of cooperation to ensure accountability towards citizens.

Engage in genuine mutual learning for development results

Th ere is widespread agreement that aid and development cooperation dialogues and initiatives need to incorporate the diverse experiences of all actors, rather than only those of DAC donors who have traditionally dominated these discussions. Th e need for mutual learning between and among actors is also recognized. In November 2010, G20 leaders requested that the Task Team on SSC and the UN Development Programme “recommend how knowledge-sharing activity, including North-South, South-South, and triangular cooperation, can be scaled up” (G20 2010).

On a practical level, mechanisms and initiatives for mutual learning at the global and country levels are needed to enhance development results. DAC donors should, in accordance with the recommendations of the Accra Agenda for Action, learn from the positive aspects of SSC that are appreciated by partner countries. Likewise, those who are scaling up their assistance should incorporate lessons learned from multilateral and bilateral agencies that have more experience enhancing aid eff ectiveness and addressing challenges related to data gathering, reporting, monitoring and evaluation of development outcomes. However, mutual learning is not a technical fi x. Th ere needs to be openness and a genuine will to learn from each other and to critically assess one’s own


page 88

principles and strategies based on lessons learned from the experiences of diff erent actors, not least from local communities and citizens. Mutual learning can be a challenge, also among DAC donors whose aid programs, as pointed out by Chandy and Kharas (2011, p. 747), tend to “refl ect each country’s own experiences, much more than they do common lessons.” Th ey add that there is also a reluctance to learn from recipient governments at times.

As demonstrated, there are diff erences in approaches between South-South Development Cooperation assistance providers and DAC donors that are sources of tension. Most notably the non-interference vis-à-vis the conditionality approach of providing assistance. SSC is based on the principle of non-interference. Southern providers claim not to attach policy conditions to their assistance,9 while DAC donors and international fi nancial institutions continue to apply conditionality when providing loans and grants. Both approaches have been criticized from diff erent perspectives — conditionality for overriding national democratic ownership and non-interference for disregarding social and environmental standards and perspectives beyond those of governments, including those of civil society.

Donors have committed to limit and “change the nature of conditionality to support ownership” in the context of the Paris Declaration and the Accra Agenda for Action, although progress has been slow and the commitment itself is vague. Th e international community has recognized the non-interference principle in the context of SSC in the fi nal draft of the Accra Agenda for Action (OECD 2005/2008). However, there is a lack of clarity on what non-interference means and how it relates to widely agreed upon social and environmental standards.

Th e Reality of Aid Network, a global network of civil society organizations, argues that “respect for national sovereignty should not mean ignoring gross human rights violations, environmental destruction, corruption and blatant abuse of power in partner countries” (Th e Reality of Aid 2010, p. 17). In a report assessing SSC, the network expresses concerns based on a number of cases, but at the same time it

9 Tied aid, applied by many Southern providers of assistance in their projects, can however be described as a conditionality, albeit diff erent from the kind of conditions applied by DAC donors that stipulate policy reforms to take place in the recipient countries.

states that these concerns should not lead to attaching conditionalities to development assistance. Rather, it argues that human rights “are obligations assumed by all governments and should therefore inform their dialogue and agreements on international cooperation” (Th e Reality of Aid 2010, p. 17).

Looking ahead, there is a need to build a common understanding on how to strengthen ownership in development partnerships beyond the limitations of both conditionality and non-interference. DAC donors and international fi nancial institutions need to end their practice of conditionality, which overrides national democratic ownership. Th ose who apply the non-interference principle need to ensure that they do not disregard the interests and rights of citizens, particularly in situations where governments do not act in the best interests of their population.

Such rethinking requires an openness and willingness to learn from past mistakes and to fi nd common ground based on joint interests in achieving development results. Multilateral cooperation can play a bridging role in creating mutual understanding, starting with joint cooperation on a more practical level in the form of concrete projects that could, in turn, facilitate overcoming eventual diff erences between actors. Multilateral institutions that bring together diff erent actors and are seen as legitimate by those involved could provide a starting point for such cooperation.

Put policy coherence for development into practice and deliver on aid targets

According to DAC donor discourse and current views on best practice, aid should be separated from trade and foreign direct investment fl ows (UN 2010, p. 3). It should also be free from the national interests of the provider, although this is far from always the case in practice. Th is separation is challenged by SSC, which bundles diff erent fl ows and explicitly builds on the principle of mutual benefi t for both partners.

Th ese diff erences in practices frequently result in misunderstandings. Often outsider debates and DAC donor politicians criticize aid from Southern providers, most notably China, for being driven by self-interest, in comparison with DAC donor aid. Th is is a gross misconception as DAC donor aid is often politicized


despite its stated objective of poverty reduction.10 Moreover, such discourse compares DAC donor activities with all of China’s engagement in and with developing countries. A relevant comparison would look at a similar package of DAC donor policies, including offi cial fl ows, trade and investments, etc. vis-à-vis developing countries. It would then become clear that both the policies of Southern providers of assistance, including China, and those of DAC donor countries have varying impacts across aid and non-aid contributions to poverty eradication and sustainable development. It is critical to recognize this reality and avoid sweeping generalizations as well as one-sided criticisms that employ double standards.11

Despite diff erent approaches, there is widespread recognition that coherent policies are needed for development across sectors that aff ect developing countries, as well as on the global level between diff erent policy agendas. Th is implies that all policies should support development objectives. Aid, even when it is eff ective, cannot by itself end poverty. Th is insight has yet to be translated into practice as the objectives of aid are undermined by non-aid policies, or the absence of policies, in the same countries and institutions that provide aid. One fl agrant example of policy incoherence is the fact that no eff ective measures have yet been taken to combat the annual illicit fi nancial outfl ows from developing countries that amount to approximately 10 times global ODA. Tax evasion and avoidance in the commercial sector constitute the largest part of these illicit outfl ows, facilitated by tax havens (Kar and Curcio 2011). Furthermore, there are other numerous policies of rich countries that undermine the intended positive impacts of their aid. For example, export subsidies undermine local production in developing countries, investment agreements often confl ict with the rights of citizens and unsustainable production and consumption patterns undermine a necessary shift toward low/zero-carbon economies to combat climate change. Th e list goes on.

Addressing global challenges or “problems without passport” (Picciotto, this volume), require multilateral

10 For example, see Oxfam (2011) on how aid is politicized in crises and confl icts and AidWatch (2011) for a critical scrutiny of EU members’ ODA.11 Brautigam. (2011) provides a good overview of the myths about China’s assistance. She also identifi es the double standards in the debate about China’s engagement and cooperation with Africa.

cooperation. However, there are several constraints to such comprehensive global agreements and, as Picciotto argues, “partial multilateralism, while a second best, is sometimes the only feasible solution.” However, this might only be eff ective for addressing some problems, as many global challenges, such as climate change, require truly collective global action. Meanwhile, the absence of agreements on these issues should not provide an excuse for individual countries and stakeholders to take no action; instead, they should lead by example and take necessary fi rst steps.

Although there are many depressing examples of policy incoherence, coherent multilateral cooperation for development that explores the synergies of diff erent policies and actors has the potential to maximize development results. Th e current shift in discourse from aid to development eff ectiveness, which recognizes the need to put aid into a broader picture while still fulfi lling the commitments made to enhance aid eff ectiveness, might provide an opportunity moving forward. However, it should be noted that there is some confusion as to what this actually means in practice. Regardless, there is an urgent need to move from rhetoric to action on policy coherence for development in all international and multilateral cooperation. To make this shift, methodologies for assessing policy coherence for development are needed at diff erent levels. Providers of assistance could cooperate within diff erent multilateral frameworks on this issue as part of their joint eff orts toward the targets of the MDGs and beyond.

It should be underlined that the current focus on development eff ectiveness and policy coherence should not distract from delivering on aid commitments. Th ere might be a danger that development actors will jump on the bandwagon of broadening the aid agenda as a way of diverting attention from unfulfi lled aid commitments and targets. Th e fact that aid resources promised at the 2005 G8 Gleneagles Summit have not yet materialized and that aid levels remain far below the 1970s UN target of rich countries providing 0.7 percent of their gross national income is eroding confi dence in donor policies. Th e 2011 Evaluation of the Paris Declaration points at some worrisome underperformance on the part of donors who have made less progress and eff ort in implementing aid eff ectiveness than developing countries. As well, the fi ndings of the 2011 Survey on Monitoring the Paris


page 90

Declaration reveal that only one of 13 targets have been met.12 Th ese documents highlight the necessity of speeding up performance on the Paris agenda to avoid disillusionment and boost confi dence in the multilateral development cooperation process.

CONCLUSION

The heterogeneous group of non-DAC providers of assistance are bringing new forms of cooperation, ideas and models that comple-

ment, challenge and provide alternatives to DAC donor practices and the multilateral institutions tradi-tionally dominated by them. Th is new dynamic brings opportunities and challenges. It highlights the need for new thinking and restructuring of international, in-cluding multilateral, dialogues on aid and development cooperation so that they become more inclusive of all development cooperation partners. Th ere are now various signs of how existing development cooperation fora are giving recognition to the diversity of players and modalities, and how these players are claiming space in global policy-making on development cooper-ation. However, concerns remain regarding the extent to which an inclusive global development agenda is in the making. Old post-Second World War power structures linger in the multilateral system, and there are questions as to what extent the emerging powers within the G20, most notably the BRICS, are pushing a development agenda.

At the same time, we are facing an increasingly complex institutional sprawl of multilateral and other development cooperation bodies. Clarifi cations of mandates and how to make best use of synergies

12 See Ellmers/Eurodad (2011) for commentary on the two documents.

among diff erent institutions are needed to prevent a stalemate in multilateralism. As part of this restructuring, existing institutions need to better incorporate the experiences and modalities of the heterogeneous actors beyond DAC donors. Th e HLF-4 in Busan off ers one such opportunity. Most importantly, to ensure fair and sustainable development, the needs and interests of the people who development assistance is intended to benefi t should, to a greater extent, inform decisions on the future direction of development cooperation and other policies.

Penny Davies works as an independent consultant on development fi nance issues and is also Senior Policy Advisor to Swedish NGO Diakonia. She specializes in the changing development cooperation landscape, so-called “emerging donors,” China-Africa relations and the role of the private sector in aid. Her reports and articles have been published by the OECD, the World Bank and the UNDP. She works closely with the pan-European Network on Debt and Development (Eurodad) where she chaired the Board for fi ve years. She is a frequent speaker at international conferences.

Ms. Davies holds a master’s degree in Political Science from Uppsala University and has studied at the University of Salamanca.

Previous employment includes Vice Director, Centre for Environment and Development Studies at Uppsala University and the Swedish University of Agricultural Sciences in Sweden, and Project Manager for a “Concerted Action on Environmental Communication,” part of DG Research of the European Commission.


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AidWatch. 2011. Challenging self-interest, getting EU aid fi t for the fi ght against poverty. CONCORD, Brussels, Belgium. 27 pp.

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Chandy, L.; Kharas, H. 2011. Why can’t we all just get along? Th e practical limits to international development cooperation. Journal of International Development 23(5), 739–751.

DAC (Development Assistance Committee). 2011. Welcoming new partnerships in international development co-operation. Organisation for Economic Co-operation and Development, Paris, France. Statement, 6 April 2011, http://www.oecd.org/dataoecd/7/3/47652500.pdf, cited 27 July 2011.

Davies, Penny. 2008. Aid eff ectiveness and non-DAC providers of development assistance. Informal Working Group on non-DAC Providers of Development Assistance, Accra, Ghana. Consultative Findings Document, 18 Aug. 2008, http://www.ipc-undp.org/publications/southlearning/penny.pdf, cited 27 July 2011.

_____ 2010. A Review of the Roles and Activities of New Development Partners, CFP Working PaperSeries no.4, Th e World Bank, February.

DCD/DAC (Development Co-operation Directorate/Development Assistance Committee). 2011. Th e political roadmap to Busan. Organisation for Economic Co-operation and Development, Paris, France. 8/REV1, 24 March, http://www.oecd.org/offi cialdocuments/publicdisplaydocumentpdf/?cote=DCD/DAC(2011)8/REV1&docLanguage=En.11 pp.

Ellmers, Bodo. 2011. Four months until Busan aid forum and a long way from more eff ective aid. European Network on Debt and Development, Brussels, Belgium. Article, 7 July 2011, http://www.eurodad.org/whatsnew/articles.aspx?id=4584, cited 27 July 2011.

G20 (Group of Twenty). 2010. Multi-year action plan on development. G20, Seoul, South Korea. Annex, 12 Nov. 2010, http://www.g20.org/Documents2010/11/seoulsummit_annexes.pdf, cited 27 July 2011.

G-24 (Intergovernmental Group of Twenty-Four) Secretariat. 2008. Financing development in Africa: the growing role of non-DAC development partners. Discussion Draft. Paper prepared for Meeting of the African Caucus of the International Monetary Fund and the World Bank, 1 Aug. 2008, Nouakchott, Mauritania. http://www.mgdf.ru/fi les/New_Africa_Partners_072408-fi nal.pdf, 51 pp. Kar, D.; Curcio, K. 2011. Illicit fi nancial fl ows from developing countries: 2000-2009. Global Financial Integrity, Washington, DC, USA. 64 pp.

Killen, B.; Rogerson, A. 2010. Global governance for international development: who’s in charge? Organisation for Economic Co-operation and Development, Paris, France. Development Brief, June 2010, http://www.oecd.org/dataoecd/34/63/45569897.pdf, cited 27 July 2011.

Kim, S. and Lightfoot, S. 2011. Does “DAC-ability” Really Matter? Th e Emergence of Non-DAC Donors: Introduction to Policy Arena. Journal of International Development 23 (5), 711–721.


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OECD (Organisation for Economic Co-operation and Development). 2005/2008. Th e Paris Declaration on Aid Eff ectiveness and the Accra Agenda for Action. OECD, Paris, France. 22 pp.

OECD-DAC (Organisation for Economic Co-operation and Development, Development Assistance Committee). 2009. Development Co-operation Report 2009. OECD, Paris, France, http://www.oecd-ilibrary.org/development/development-co-operation-report_20747721.

_____ 2010. Development Co-operation Report 2010. OECD, Paris, France, http://www.oecd.org/document/62/0,3746,en_2649_33721_42195902_1_1_1_1,00.html

_____ 2011. Table 33: “ODA from Non-DAC Donors” in Statistics on Resource Flows to Developing Countries, Development Co-operation Directorate, February, http://www.oecd.org/dataoecd/53/43/47137659.pdf.

Oxfam. 2011. Whose aid is it anyway? Politicizing aid in confl icts and crises. Oxfam, Cowley, Oxford, UK. Briefi ng Paper, 10 Feb. 2011, http://www.oxfam.org/sites/www.oxfam.org/fi les/bp145-whose-aid-anyway-100211-en_0.pdf, cited 27 July 2011.

Schulz, N-S. 2010. Th e third wave of development players. FRIDE, Madrid, Spain. Policy Brief, Nov. 2010, http://www.fride.org/publication/818/the-third-wave-of-development-players, cited 27 July 2011.

Senona, J. 2010. BRIC and IBSA forums: neo-liberals in disguise or champions of the south?” South African Institute of International Aff airs, Johannesburg, South Africa. Policy Briefi ng, Sept. 2010, http://www.saiia.org.za/images/stories/pubs/briefi ngs/saia_spb_24_senona_20100828.pdf, cited 27 July 2011.

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Steering Committee, High Level Event on South-South Cooperation and Capacity Development. 2010. Bogota statement: towards eff ective and inclusive development partnerships. High Level Event on South-South Cooperation and Capacity Development, Bogotá, Colombia. Statement, 25 March 2010, www.un.org/en/ecosoc/newfunct/pdf/bogota-statement-fi nal.pdf, cited 27 July 2011.

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UNCTAD (UN Conference on Trade and Development). 2010. Economic development in Africa report 2010, South-South Cooperation: Africa and the new forms of development partnership. UNCTAD, Geneva, Switzerland. 116 pp.

_____ 2011. “South-South Integration is Key to Rebalancing the Global Economy,” UNCTAD Policy Briefs, N°22, February, http://www.unctad.org/en/docs/presspb20114_en.pdf.

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UN General Assembly. 2009. Th e state of South-South Cooperation, Report of the Secretary-General. New York, USA. http://southsouthconference.org/wp-content/uploads/2009/10/64th-Session-A-64-321.pdf.

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CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA

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CHAPTER FIVE

REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS

AND MULTILATERALS IN AFRICA


The recent changing dynamics of the political and economic global architecture have had considerable impact on international relations

theory and development cooperation scholarship. At the centre of current normative and epistemological debates is the preoccupation by most scholars, policy-makers and development practitioners with the juxtaposition of the unilateral versus the multilateral character of the international order. What makes this current phase of the evolving global system signifi cant is the rise of the Global South1 and, more importantly, the South’s primary state actors that are the lead drivers in pushing for a substantive transformation of the global agenda.2

In the 20th century, the overall hierarchical structure of international institutions refl ected a set of values and norms that governed interstate relations and promoted a good governance framework. Th is framework is now being challenged by a new set of impulses based on the simple logic that nothing is static and everything is cyclical. Th e latter issue has been explicitly expounded by Paul Kennedy3 in his seminal book Th e Rise and Fall of the Great Powers. He (1987) astutely argues that the rise and decline of states, especially those that are seen as hegemons or signifi cant actors in shaping the international military and economic architecture, can have a corresponding and profound impact on the global architecture.

1 Global South refers to developing countries in contrast to the industrial-ized countries of the North. 2 Th ere is an emerging view that the rise of the Global South will signifi -cantly shape and infl uence the discourse on development as well as how development cooperation is administered. Commentators have made the general assumption that the rise of the Global South through state alliance networks like BRICS and IBSA impact the global agenda in two ways. First, it is assumed that these emerging markets will have a profound eff ect on the distribution of power and resources in the global economy. Secondly, it is also expected that these emerging actors, especially the BRICS coun-tries, can off er an alternative development paradigm for other developing countries in the South. 3 Kennedy is Director of International Security Studies at Yale University.

But more importantly, what Kennedy’s magnum opus provides is important insights into how such shifts in the international order open opportunities for those states that have been lurking in the shadows to fi ll gaps in power vacuums that arise when the world order transitions.

Given the current unprecedented historical restructuring of the international system, we are witnessing such a transition in the making. Th is shift is underlined by the increasing move toward multipolarity where the global distribution of power is fragmented, and it is unclear where authority and governance reside or who actually enforces the rules of the international order. Th is leads to a set of critical questions around what constitutes the new global architecture and whether or not the Western-centric world is being challenged by the rise of the South. Consider, for example, the plethora of academics who are now asking, like Dirk Messner4 (2011, p. 1), whether we are being confronted by “the beginning of the end of the Western-dominated world order” with the rise of China and India.

Th e answer to this question provokes a critical appraisal of the various emerging power blocs and alternative geographical centres of infl uence. Th e pluralistic nature of the contemporary world order represents a constellation of interests and prompts speculation about whether the new actors or (re-)emerging states, individually or collectively through multilateral networks and institutions, will change the status quo through their rising infl uence. Or, will they maintain the existing global framework by working within the system and extracting benefi ts aligned to their domestic and international ambitions?

In short, what has become a preoccupation in the discourse on the rise of the South and the role of emerging actors like China, India, Brazil and South

4 Messner is Director of the German Development Institute in Bonn.

REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICASANUSHA NAIDU1


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Africa is their impact on the institutional governance framework of the international system. It is becoming imperative to ask the following questions: Do new Southern formations like BRICS,5 BASIC6 and IBSA7 off er something diff erent in making the international governance system more equitable in terms of legitimacy, representation and accountability, especially in increasing the voice of marginalized states in the developing world? Or will the behaviour of the states that lead these Southern multilaterals become conformist and refl ect the way states have always behaved on the international stage based on their national interests?

Th ese questions, it must be borne in mind, are being shaped by an emerging perspective among scholars and commentators in the North and the South who argue that countries like China and India are going to replicate a new elite club of hegemons that will serve their parochial ambitions. For now, China and India have remained cautious and continue to placate the South with platitudes that they share common diffi culties because they are still developing countries.8

Perhaps what underlines this fascination with the emerging actors from the South is the search for a new coterie of potentially powerful countries that can stabilize the rules-based international system in the face of the waning Western-dominated world order. In whatever way these new actors may direct their focus and synchronize their place in the international system, it has become increasingly clear that their actions have impacts on the continent’s international relations.

Th e North’s engagement with the South provides African governments with a new momentum to assuage the way Western donors have sought to defi ne and disburse development cooperation. Western

5 BRIC refers to the grouping of Brazil, Russia, India and China that, due to their economic growth, may redefi ne the international economic archi-tecture. In 2010, China invited South Africa into the grouping to create BRICS, provoking debate about its economic suitability despite the desire to have an African voice at the table. 6 BASIC is a coalition that emerged during the 2009 United Nations Climate Change Conference in Copenhagen. It consists of Brazil, South Africa, India and China. Its goal is to ensure the industrialized states of the North shoulder more responsibility in meeting climate change targets. 7 IBSA is a trilateral cooperation agreement among India, Brazil and South Africa. Formed in 2003, IBSA addresses social development issues within their respective countries and supports social stability initiatives within the South.8 For China’s white paper on Africa, see Ministry of Foreign Aff airs of the People’s Republic of China (2006). For insight into India’s Africa policy, see India Africa Connect (2011).

perspectives, which frequently prompt African frustration, come from two mutually reinforcing points of view. On the one hand, there is a sense of deep-seated burden by former colonial powers that feel that they have a moral duty and justifi cation to intervene, given Africa’s poor integration into the global economy. Here the delivery of aid has an ethical justifi cation (Easterly 2006).

On the other hand are notions of self-fulfi lling prophecy that Africa represents a passive, voiceless space in which Western thought and philosophy off ers the best path to rehabilitate the continent’s ills and prevent its self-destruction. Projects like the Millennium Development Goals, the United Kingdom’s Commission for Africa, the Africa Action Plan under the Group of Eight (G8),9 and the African Growth and Opportunity Act in the United States (US) have become frameworks for engaging with the continent in the 21st century.

Seemingly, then, the emergence of new donors becomes a somewhat less interventionist engagement, which in the view of African countries creates the space for doing things diff erently and having access to alternative sources of development fi nance that are easily available without undertaking the stringent conditionalities10 normally attached to Western donors’ development cooperation.

For their part, Organisation for Economic Co-operation and Development (OECD) donors consider the moral value of being transparent and accountable to the social development needs of the poor, vulnerable and economically marginalized in African societies as a signifi cant benchmark in measuring the eff ectiveness

9 Th e Africa Action Plan was informally instituted in 2001 when the G8 industrialized countries pledged to double aid by 2010 to US$50 billion, to support Africa’s socioeconomic development. At the same time, the G8 committed to doubling aid to Africa as part of addressing the continent’s urgent socioeconomic needs. It was under Canadian leadership at the following year’s Kananaskis G8 meeting that the Africa Action Plan was formally adopted. Meanwhile, Canada independently set up a $500 million Canada Fund for Africa to support the objectives of the New Partnership for Africa’s Development and the G8 Africa Action Plan, in addition to its own bilateral commitments to the continent. 10 Th ere are two schools of thought in the debate around emerging donors and conditionality. Th e fi rst argues that engagements with emerging donors are less rigid and more fl exible because they do not insist that recipient governments undertake any political and/or governance reform, contrary to the Western model of interference in domestic aff airs. Th e second school of thought is more critical. It argues that the emerging donors conspire with illegitimate and corrupt regimes based on their self-interests. Yet there are situations where the emerging donors place loan conditions in their techni-cal assistance packages. For instance, Export-Import Bank of India loans for African technical assistance contain clauses that most materials must be sourced from Indian companies.


of development assistance. As a result, OECD donors view the emerging donors as perhaps undermining the framework for how aid should be judiciously disbursed. Moreover, the presence of emerging donors unsettles attempts by OECD donors to demand compliance from African governments to respect the development rights of their citizens through aid disbursements.

In this regard, OECD donors have developed Joint As-sistance Strategy groups within recipient countries to ensure that their development cooperation has a tangi-ble impact on the lives of ordinary people. Yet, one of the criticisms of the emerging donors is that they tend to operate outside of this country-level multilateral donor grouping. Not only does this complicate the co-ordination of development assistance, but it results in a lack of clarity about how development cooperation conforms to the eff ectiveness framework.

In light of the above considerations, this chapter sets out to explore some of the salient issues that characterize the debate on the role of (re-)emerging donors in the African landscape. Indeed, this African landscape represents an important factor in issues such as aid eff ectiveness, accountability, transparency and donor coordination.

Donors have not yet made adequate progress in aligning their offi cial development assistance (ODA) with national development priorities, untying aid and harmonizing their own policies and procedures at the country level. As a result, some developing country governments receive large amounts of aid, possibly even more than they can absorb, while others suff er from serious underfunding.

ODA continues to be volatile for individual countries. According to some analyses, it is as volatile as private capital fl ows for developing countries. Some suggest that the role and performance of traditional donors have neither lived up to the expectations of African recipient countries nor had the desired development impact (see Tandon 2009). As a result, the African landscape has been identifi ed as a special context, with its myriad of development challenges. Here, the dichotomy between the development cooperation experience of the OECD donors and what the emerging donors can deliver for the continent’s development needs can be examined (see Naidu et al. 2009).

For purposes of narrowing the expansive emerging powers discourse, this chapter will focus on the BRICS multilateral as the basis for assessing how emerging donors are performing in Africa. More importantly, choosing the BRICS forum as the unit of analysis conforms to some of the contemporary views that identify this grouping as the G8 of the South and as the main driver in promoting South-South cooperation (see Unnikrishnan and Saran 2010). It should also be remembered that two of the BRICS countries, China and India, have been widely recognized as having a strategic impact on the future trajectory of the international system. For these reasons, the BRICS multilateral serves as a critical platform for examination, particularly because there is also an overarching, though debatable, view both in Africa and outside of the continent that the BRICS (perhaps with the exception of South Africa) do not carry any historical, political and/or colonial baggage of exploitation.

In consideration of the above nuances, this chapter will draw on a comparative analysis of development cooperation in Africa. In particular, it will focus attention on the sensitivities of whether the BRICS provide an acceptable platform of representation, legitimacy and accountability in respect of their perceived role as development partners. Th e underlying premise of this chapter is to understand the extent to which the emerging donors enhance the dynamics of representation, legitimacy and accountability by enabling recipient countries to have ownership of the development process.

Th ere is also the view that the emerging donors, particularly the BRICS, enhance the prospects of representation and legitimacy for the South through their inclusion in multilateral organizations like the World Bank and the International Monetary Fund (IMF). Th is view is supported by the notion that the emergence of the BRICS represents a clear advantage for the Global South. Th e promotion of the South’s interests by these emerging economies aids the promotion of their own interests. Th eir growing power permits them to exercise increasing infl uence within multilateral organizations.

Th ese intertwining facets of representation, legitimacy and accountability, and the way they infl uence the behaviour of the BRICS as development partners, lead to a subset of questions regarding whether these


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actors advance their own representation and legitimacy within multilaterals through the banner of South-South cooperation. For these reasons, how the BRICS advances ownership of the development process by recipient countries cannot be separated from their own representation and legitimacy in multilateral organizations. Th ese are mutually interdependent issues for the BRICS — enabling recipient countries to have control and ownership over the development processes is anchored by the legitimacy that recipient countries give the BRICS as representative and accountable actors in multilateral development organizations. And herein lies the dilemma for the BRICS and recipient countries: to what extent will the BRICS be accountable in their own development cooperation as emerging donors in multilateral institutions? Will it be according to the benchmarks set by the OECD donors? Or will the BRICS set up their own accountability mechanism that holds them more responsible to the Global South?

Th is focus of the aid discourse is particularly relevant for African states since they have become ardent supporters of the view that development cooperation with the BRICS represents an alternative development consensus that promotes mutual respect, partnerships and benefi ts.

HISTORY OF MULTILATERAL COOPERATION IN AFRICA: THE RISE OF THE (RE-)EMERGING ACTORS

Africa’s development cooperation experience with the new actors has often been perceived as contradictory and sometimes unbalanced in

comparison to its relations with traditional donors.11 In this view, the 21st century represents a new set of arrangements that is redefi ning the continent’s identity and position in the international arena (see Tandon 2009). At the same time, African confi dence and infl u-ence are growing as the continent becomes a signifi -cant source for minerals thus presenting trade and investment opportunities.

11 Th is assertion is accompanied by the view that Africa’s development cooperation experience with Western donors has often been asymmetri-cal. Th is has subsequently resulted in competing schools of thought that characterize donor assistance from the North’s rich industrialized countries as either undermining the development process in Africa or, more benignly, off ering critical resources for redressing Africa’s poverty and uneven growth.

With a resurgent Africa, the imagery of the “hopeless continent” (Th e Economist 2000) is giving way to a more popular rhetoric that is challenging the free-market approach of the Washington Consensus.

Conveyed through media agencies and think tanks, the Western reaction to the emergence of new donors on the African landscape is informed by the perceived threat that the emerging donors represent to the global disbursement of development cooperation,12 namely that they fall outside the established moral code of conduct. Moreover, these emerging donors are considered to be junior partners because of the lack of clarity that characterizes their development cooperation.

While the development cooperation debate in Africa centres on the effi cacy of the assistance disbursed by emerging donors, it has also exposed the presumption that the emerging donors are new players in Africa’s development cooperation. To be precise, the historical footprint of the new actors in Africa is a moot point. For instance, in the cases of China and India, development cooperation in Africa is based on the foundation of their historical dealings with newly independent African states (see Liu 2010; Bhattacharya 2010).

Th e principles of non-alignment and South-South cooperation have become pillars in how the South and, in particular, China and India, have shaped their engagement with Africa. Certainly, the support that Beijing and New Delhi demonstrate toward Africa is determined by their respective leadership stances against imperialism, colonialism, racism and all forms of foreign aggression. From this perspective, the principles of development cooperation were anchored along the lines of mutual respect, non-interference, and the norms of equality, partnership and harmony.

Th e fact that the emerging donors’ history was distinguished by a similar trajectory of external domination and interference in domestic aff airs has meant that any form of engagement with Africa would be nestled under the rubric of creating a just world by erasing the wrongs of the past. Th is was

12 It must be recognized that the disbursement of development coopera-tion by emerging donors is a mix of monetary and non-monetary aid. According to Dorothy McCormick (2008, p. 79): “Monetary aid includes grants and concessionary loans. Non-monetary aid includes debt relief, ‘free’ or low-cost technical assistance, access to scholarships or training programmes, tariff exemptions and outright gifts of buildings, equipment, or other capital goods.”


explicitly illustrated by the need to strengthen the position of the South vis-à-vis the North, particularly in terms of redressing forms of dependency, unequal power relations and trade imbalances. Consider the example of the eight principles governing China’s aid fl ows, unveiled in a speech delivered by former Premier Zhou Enlai during a state visit to Ghana in 1964 (see Box 1 above) and still offi cially endorsed today. Th ey accentuate the importance of, inter alia, mutual benefi t, equitable partnerships and respect for sovereignty (see Naidu and Herman 2009).

Undoubtedly, the shared history of exploitation and oppression prompted the emerging donors to advocate for a South that is ideologically separate from traditional Western donors. As a result, the projects through which emerging donors engage African states

have been anchored in initiatives that underpin a sentiment of people-to-people exchange. For instance, Chinese leadership still identifi es one of its biggest fl agship projects, the 1,860-kilometre TAZARA Railway linking Zambia to the Tanzanian coast, as a symbol of development cooperation in Africa.13

13 Th is is not to suggest that China’s assistance in other areas, especially health care, is not as signifi cant as the TAZARA project. Over the past four decades, more than 20,000 Chinese doctors have worked in more than 50 countries across Africa, treating some 180 million people. What makes the TAZARA project signifi cant is that Beijing was able to provide the necessary fi nancial and technical resources at a time when Western agencies refused to do so.

BOX 1: THE EIGHT PRINCIPLES GOVERNING CHINA’S AID FLOWS

1. Th e Chinese Government always bases itself on the principle of equality and mutual benefi t in providing aid to other countries. It never regards such aid as a kind of unilateral alms but as something mutual.

2. In providing aid to other countries, the Chinese Government strictly respects the sovereignty of the recipient countries, and never attaches any conditions or asks for any privileges.

3. China provides economic aid in the form of interest-free or low-interest loans and extends the time limit for repayment when necessary so as to lighten the burden of the recipient countries as far as possible.

4. In providing aid to other countries, the purpose of the Chinese Government is not to make the recipient countries dependent on China but to help them embark step by step on the road of self-reliance and independent economic development.

5. Th e Chinese Government tries its best to help the recipient countries build projects that require less investment while yielding quicker results, so that the recipient governments may increase their income and accumulate wealth.

6. Th e Chinese Government provides the best-quality equipment and material of its own manufacture at international market prices. If the equipment and material provided by the Chinese Government are not up to the agreed specifi cations and quality, the Chinese Government undertakes to replace them.

7. In providing any technical assistance, the Chinese Government will see to it that the personnel of the recipient country fully master such technique.

8. Th e experts dispatched by China to help in construction in the recipient countries will have the same standard of living as the experts of the recipient country. Th e Chinese experts are not allowed to make any special demands and enjoy any special amenities.

Source: Speech by Premier Zhou Enlai, Accra, Ghana, 15 January 1964, quoted in Naidu and Herman (2009)


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In this regard, Chris Alden (2007, p. 11) notes that it is the historical features14 of Chinese overseas develop-ment assistance that “interestingly… [today refl ect] many of the aspects of Beijing’s current approach to African relations, [especially] the impulses and deci-sions of that era.” In this way, Beijing plays the legiti-macy card with African partners by invoking the sense that it has always been a friend to Africa based on good faith and in times of need. Consider, for example, for-mer Chinese Ambassador to South Africa Liu Guijin’s words: “Th at’s why all through history China never occupied an inch of African land and never put a fi nger in the slave trade” (Guijin 2006, p. 3).

Similarly, India also interprets its development cooperation through a historical lens and within the context of assisting recipient countries to fi nd the right path toward sustainable development and prosperity. Guided by former Prime Minister Jawaharlal Nehru’s principles of equality, mutual benefi t and anti-racism, India’s historical development cooperation model advocated a “New International Economic Order” that promoted the self-suffi ciency of African states. By focusing on strengthening Africa’s human resource capacity, New Delhi was confi dent that non-alignment could be achieved through technical assistance, including scholarships and training programs.

Unfortunately, and despite their noble intentions, the countries of the South (including China and India) could not remain disassociated from Cold War dynamics. Eventually, the South became aligned to either the capitalist or communist bloc. Th e dilemma for most Southern countries was that limited resources meant they could not be signifi cant development partners for each other. Th e outcome was that the emerging donors themselves became recipients of substantial development assistance packages from the traditional donors and relied on these aid disbursements to grow their economies and become globally competitive.

In the African context, the situation was more complex. Some Northern donors were directly aligned to internal political power and leadership struggles and the maintenance of minority regimes. Th is was clearly evident in the case of apartheid South Africa. In fact, the country’s identity during the Cold War was one of a pariah state trying to ensure its survival.

14 For a historical account of China’s engagements in Africa, see Snow (1988).

However, it was the close alignment to the West’s proxy wars against the Soviet Bloc in African states15 that strengthened the hand of the apartheid state.

From this perspective, South Africa’s historical connection to the rest of Africa is ambiguous and fragmented. Yet apartheid South Africa nevertheless attempted to off er in development assistance to certain African countries, albeit for diff erent reasons. In fact, South Africa used aid16 to secure allies in the United Nations (UN) General Assembly who could belie the international consensus on the apartheid state and possibly counteract decisions taken against the white minority regime. But this did not always yield satisfying outcomes, and the international community generally viewed the apartheid state’s development cooperation as negligible and largely ineff ectual.

Th e traditional donors fi rst tied development assistance in Africa to the traction of the Cold War. But as the Cold War détente became more obvious in the mid- to late-1980s, traditional donors revised their assistance fi rst toward their own development projects and later to rectifying socioeconomic imbalances. More importantly, it was the ideal of how aid disbursements should be implemented that became what post-colonial scholars like Edward Said and Frantz Fanon, among others, described as the “mirror in which the West defi nes itself ” (Dunn and Shaw 2001, p. 3). Th us, the adoption of initiatives like the IMF/World Bank Poverty Reduction Strategy Papers were aimed at instilling a moral rejuvenation in Africa’s development agenda that amounted to a sense of saving the continent from the scourges of human poverty and deprivation.

Such policies were based on the belief that aid disbursements were being misappropriated. As a result, traditional donors demanded greater fi scal and democratic transparency and reforms to ensure accountability. It was not a coincidence that the triumph of capitalism over communism ushered in a post-Cold War phase where the conditionalities of good governance were seen as the representative,

15 For how the apartheid state benefi ted from Western support and the arms trade to contain the spread of communism in Southern Africa, see Hanlon (1986).16 As much as apartheid South Africa was a pariah state, some African countries like Botswana, Lesotho and Malawi saw the benefi ts of economic engagements as well as feared the regime’s military might. For more on apart-heid history and external relations, see South African History Online (2011).


legitimate and transparent way to infuse a sense of morality and acceptance into a shifting global order.

Michela Wrong captures the impact of this post-Cold War shift on the relationship between Western donors and African recipients. She (2009, p.184) argues that:

In the early years, donors carefully steered clear of what were known as “governance issues” . . . Raising the issue in the prickly era when memories of colonial injustices were still sharp was deemed intolerable interference in a nation’s sovereign aff airs. Th e World Bank and IMF’s raison d’être, their members argued, was to fi ght poverty, not corruption — which was a political, not an economic issue. … But with the passage of time came the growing realization that fi nancial transparency, human rights and institutional checks and balances mattered more to the quest of prosperity than had previously been recognized.

Wrong (2009, p.185) adds:

And so as the OECD donors and the [G8] industrialized countries continued to push for alignment between aid and transparency, the framework of engagement between traditional donors and recipient African countries became strained, not least because the “cynical realities of the Cold War … [which allowed for the] … support for disreputable African regimes could no longer be justifi ed”.

WHY DO AFRICAN NATIONS FIND THE (RE)-EMERGING DONORS ATTRACTIVE?

The African attraction to emerging donors is, in this author’s view, intrinsically linked to an ideational perspective that these new donors

off er a somewhat diff erent trajectory of relations in their development cooperation. Of course, this belief is anchored by the shared historical experience and a willingness to confront traditional Western donors. Th e new donors are seen as less patronizing and more sympathetic to the plight of the developing world in general and Africa in particular.

While there are attempts to quantify how much aid the (re-)emerging donors disburse to the developing

world, the total amount still remains unclear.17 Most mainstream policy-makers from the traditional donors, however, are preoccupied with the way the new donors go about implementing and executing their development cooperation. In Africa, comparisons in donor approaches have led to notions that the emerging development partners are less cumbersome in the delivery of development aid packages and, more importantly, do not prescribe how the money should be spent (see Amin 2009; Davies et al. 2008; Tandon 2008).

Views on how developing countries perceive traditional donors in contrast to emerging donors touch at the core issue of the current debate on development cooperation — who owns the aid funds? Samir Amin and Yash Tandon18 suggest that the arrival of Southern donors has been the catalyst in restructuring the global aid architecture, especially for Sub-Saharan Africa. But they are also critical of the frameworks that govern the contemporary aid environment on eff ectiveness, transparency and accountability. Th ese criteria, according to Amin (2009, p. 60), are heavily biased toward the process “inscribed by the triad (US-Canada-Australia, Europe and Japan).” Amin (2009, p. 60) further exemplifi es this point by arguing that non-Western development partners “who themselves are donors have with absolute legitimacy refused to associate themselves with the ‘donors club’ proposed by the [Paris] Declaration.” But as Penny Davies (this volume) highlights, this perception seems to be out of sync with what is happening in practice, suggesting that some emerging donors are more engaged than others with their Western counterparts in donor coordination initiatives.

Th is compartmentalization of the new donors as distinct actors perhaps oversimplifi es their behaviour and needs to be examined in context of their interests and rising power status within the South. Th e bottom line is how these (re-)emerging donors identify themselves as development actors and to what extent their behaviour shapes and infl uences a more equitable global environment on development cooperation and impacts multilateralism in Africa. Th e insights

17 Quantifying disbursements of development assistance from the emerg-ing donors, notably the BRICS, to African partners is compromised by the lack of transparency in fi gures.18 Amin, one of the leading African socialist scholars, is Director of the Th ird World Forum in Dakar. Tandon, also considered to be a leading African scholar, is the former Director of the South Centre in Geneva.


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into these vexing issues can be found in the way that development cooperation is defi ned and interpreted by the emerging donors.

AID GIVER VERSUS DEVELOPMENT PARTNER?19

At the very outset, it must clearly be stated that the (re-)emerging donors from the South are uncomfortable with the term donor. In their

lexicon, the word implies an unequal dependency rela-tionship. It further conjures up the image of the giver being more powerful and dominating the receiver. As much as this may refl ect the sobering realities of the global distribution of economic power during and after the Cold War, labelling the emerging actors of the South as donors does not fi t with the overall impres-sion they want to make to the outside world, especially in their relations with fellow Southern states.

Th erefore, alignment to the historical rhetoric provides a common identity characterized by oppression that fi nds an easy resonance within the African landscape and makes it easier for these emerging actors to portray their development cooperation relationships as partnerships. By emphasizing that they are still developing countries, the emerging donors are able to create the sense that they share the same ideals of working together toward the same development goals. In this way, these new actors have managed to create the image that their brand of development cooperation with Africa is not about saving the continent but rather based on a mature and equitable form of mutual dependency and engagement. Th is symbiotic relationship is captured by terminology that invokes the notion that Africa’s development is inherently attached to the emerging partners’ own development agenda. As a result, the values that these emerging actors espouse are embedded in mutual benefi ts, win-win partnerships and equity that are tactfully defi ned in their development cooperation relationships as a positive sum game (Lundsgaarde 2011).

To this end, the emerging actors’ development cooperation framework displays a set of uniform principles that include:

19 Th e use of the term development partner is aimed at creating a sense of equality between the emerging donors and recipient countries. Emerg-ing donors prefer partnership since it strengthens the view that they are not creating a dependency relationship between themselves and recipient countries.

■ a historical alignment;

■ equality among donors and recipients;

■ ownership over the development process and self-reliance;

■ respect for national sovereignty; and

■ non-conditionality.

Th is approach enables recipient states to identify emerging donors as partners in their development and, more importantly, avoids the construction of us-and-them scenarios. Meanwhile, the engagement between OECD donors and new development partners is beginning to intensify with dialogue around trilateral cooperation in Africa and coordinating joint strategies with reference to the Paris Declaration on Aid Eff ectiveness.20 As this dialogue deepens, understanding the impact of multilateralism on the future of Africa’s development cooperation architecture will be crucial in evaluating how a growing relationship between the traditional donors and new development partners may benefi t Africa’s industrial capacity and integration into the global economy. But will it lead to greater representation, legitimacy and accountability over the development process?

SHARED DESTINIES, SHARED CHALLENGES

The fact that the new development partners rep-resent a renewal of South-South cooperation is seen as “break[ing] the monopoly upon which

the supremacy of the [Western aid] triad rests (Amin 2009, p. 74).” Even so, the issue at hand is not really whether they can break the monopoly, but rather do the new development actors want to? In other words, are these emerging actors status quo players or revi-sionist powers?

As Amin (2009, p. 64) reminds us, “Aid policies, the choice of benefi ciaries, the forms of intervention, and their immediate apparent objectives are inseparable from geo-political objectives.” In this regard, the rational actor model chosen by the new development

20 In terms of the Paris Declaration on Aid Eff ectiveness, one avenue where the traditional and emerging donors are seen to being working together is through trilateral relationship development cooperation. For instance, the EU-China-Africa trilateral has emerged as part of the development dialogue with the EU-China summits and as a participant in,[ok?] joint develop-ment projects in Africa. More recently, US President Barack Obama’s 2010 visit to India highlighted the importance of food security cooperation between Washington and New Delhi and Africa.


players should not be romanticized. Instead, it should be remembered that these new development partners are bound by their own domestic priorities.

Indeed, the fact that the new developing partners are in the midst of their own industrial rise means that Africa’s importance is linked with how the continent contributes to their industrialization. At present, the emerging development partners have recognized that access to resources forms an integral part of their partnership with Africa. At the same time, they are mindful of the sensitivities related to the extractive sector. Even though the new donors want to distinguish themselves as helping to create enabling conditions for Africa’s own development and self-suffi ciency, they are cautious about being labelled with the same brush as the traditional Western donors.

Yet in assessing whether they are diff erent, Erik Lundsgaarde (2011, p. 3) highlights that:

Development cooperation activities of the new actors cover a broad spectrum of activities, including funding infrastructure, which has been perceived as an area of neglect among traditional donors, and investments in social sectors where OECD donors have been very active in recent years.

Perhaps, however, it is P.K. Sinha’s (2010, p. 93) analysis of India’s development cooperation that best sums up the major emerging development partners’ footprint in Africa: “It can be said that Indian development cooperation, which started out with the principle of South-South cooperation and mutual benefi ts, is now focused on promoting India’s strategic and commercial interests in Africa.” From this perspective, the dilemma for the new development partners is to reconcile their own national development interests with Africa’s development needs. Th is means that the emerging donors must convince African actors that they are going to leverage their global infl uence and push for the reconstruction of the international structures of powers that govern the global aid architecture.

By supporting the equitable redistribution of power, these new donors have identifi ed themselves as the representative voice of the Global South. As well, they have positioned themselves as entitled to seats at the

high table in international fi nancial institutions like the World Bank and the IMF.21

Th e standpoints of new development partners support this sense of legitimacy. Whether it is India’s lead at the Doha Development Round of the World Trade Organization or South Africa co-chairing the Development Working Group at the Group of Twenty, these emerging development partners are beginning to demand accountability and transparency in the relations between North and South.

Most of these new development partners are free of the political and economic baggage that distinguishes Western donors’ historical entanglements with Africa. Th is makes them appear to be ideal partners and provides them with a reputation that they are better placed to redefi ne the practices of development cooperation.

But is this a realistic refl ection of the new development partners? Can we assume that their behaviour will actually intersect with Africa’s development agenda and assist in strengthening the continent’s ownership of its development processes? Is it plausible that emerging donor will exert pressure within multilateral organizations in the interests of Africa and the Global South? Or will their national domestic interests and foreign economic ambitions overwhelm the pledges of South-South cooperation and mutual benefi t? Will the new actors indeed become the beacon of representation, legitimacy and accountability in their development cooperation? Or are they seeking their own legitimacy, representation and respect from the traditional donors?

Th ese and other pertinent questions must be answered before it can be assumed that these new development actors can create an alternative platform that promotes the infl uence and engagement for Africa and the Global South.

Th e following set of challenges raises a set of important inquiries for African governments and civil society

21 Th ere are mixed views about whether the emerging donors have lived up to the expectations of representing the interests of Africa or, more broadly, the Global South through their representation in international forums. Part of the criticism is that emerging donors have used seats at the UN Security Council to forward their self-interests. Mzukisi Qobo (2011, p. 12) ques-tions whether these donors have the capacity and will to transform existing global institutions to “construct a new framework of global governance that bequeaths humanity with better standards and outcomes, which fundamen-tally improves the existing Western paradigms, affi rms human dignity and allows for expression of man’s highest desire for liberty.”


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actors engaged in scholarly and policy debates on understanding emerging actors’ roles and the new dimensions that they bring to Africa’s development cooperation.

First, emerging actors are just that — emerging. It is still too early to predict with any certainty that these new actors will have a signifi cant role in reordering the established practices of development cooperation. At the moment, the euphoria surrounding the presence of these new actors in the African landscape is in response to a relationship with the traditional donors that has been fragmented and uneven. From this vantage point, commentators see the new development partners’ engagement with African states through the prism of overconfi dence.

Th ese emerging actors appear to be touching the right pulse points and setting new impulses when it comes to how they navigate their relationships with African countries.22 However, it remains doubtful that these actors are working in a coordinated, cohesive group like the OECD’s Development Assistance Committee (DAC) donors.

Th is leads to a second issue, namely that even among the emerging donors there are diff ering degrees of consensus. A case in point is the recent race for the top job at the IMF. While the BRICS countries argued that the IMF management should refl ect the changing dynamics of global power and infl uence, they did not utilize their leverage with an eagerness that demonstrated seriousness about restructuring. In fact, even as the name of a possible African candidate, Trevor Manuel,23 was made public, the BRICS countries, excluding South Africa, were ready to support and endorse the French nominee and successful candidate, Christine Lagarde.

Th is lack of cohesion demonstrates that while the BRICS countries would like to be heard as the voice of the poor and marginalized from the Global South, they have not always been willing to push for real change. Th eir inertia regarding the gentleman’s agreement between the US and European Union (EU) over the top positions at the IMF and the World Bank has not sent a strong signal that they are willing to

22 For insights into the tensions and criticisms levelled against emerging donors, see Naidu (2011).23 Manuel was South Africa’s minister of fi nance from 1996 to 2009.

push for greater developing country ownership over the way development cooperation is implemented.

In fact, the IMF debacle was perhaps the fi rst litmus test for the emerging actors to illustrate whether their own geostrategic interests will override the broader rhetoric of South-South cooperation. Moreover, it also implies that Africa’s own position within multilateral organizations does not warrant special attention in spite of how these new donors package their development assistance for the continent.

Even South Africa’s own position in the debate on the IMF top job was incongruent with those of its BRICS partners. To be precise, Pretoria did not have a clear position regarding whether the next IMF boss should be from the South, let alone an African.

Th ird is the question of whether the emerging actors are willing to change the status quo for a global development policy that is inclusive and counters the prevailing Western-centric model. It would appear at a cursory level that this is the intended goal. But again the impact will be felt only in the policy prescriptions that these emerging actors enact. In this regard, it seems that each of the emerging actors is more willing to engage on its own with the DAC through trilateral cooperation that once again confi nes Africa to a junior partner in engagements.

Th e soft power capacities of these emerging actors make them seem less invasive in the domestic aff airs of recipient countries. However, this does not mean that emerging powers will avoid similar challenges that face Western donors, especially when public opinion calls them to account for supporting illegitimate regimes or when their economic interests become threatened (Kragelund 2008). Th e fragility of the African continent, prone to political instability and/or fl agrant regime changes, will likely test these new actors as they seek to deal with these crises and their own economic ambitions. Th is is especially relevant as domestic public opinion prompts awkward questions about the value of development assistance to African states in the face of growing social development problems. See Box 2 on South Africa’s development cooperation with Africa.

While the traditional Western donors have formulated a strategic framework to harmonize their aid eff ectiveness, the new donors in comparison seem to lack clarity of purpose. Th is means that as much as the


BOX 2: SOUTH AFRICA’S DEVELOPMENT COOPERATION WITH AFRICA

South Africa’s development cooperation with its continental neighbours is more than just a develop-ment agenda. It signifi es post-apartheid South Africa’s attempt at legitimacy in lieu of its predecessor’s tumultuous relationship with African states. Elizabeth Sidiropoulos (2010, p. 1) argues that Pretoria’s

development cooperation is “encapsulated in its African agenda … driven fi rst by the necessity of the new democratic government to re-integrate [South Africa] into Africa (i.e., to return the country to its African identity) and second by the aversion to the apartheid government’s destabilizing ‘hard power’ policies that it wielded in the region.”

Th is approach is sustained by South Africa’s belief that it can share its experience with transition toward stability. It is also motivated by what it sees as a moral responsibility to enable conditions of peace, security and development in other African countries. Th is sense of duty is informed by Pretoria’s Africa policy, which is intrinsically linked to the view that a stable Africa is critical to South Africa’s own development needs. Th e primary focus of the Africa policy is to strengthen the continent’s multilateral organizations like the African Union (AU), forge strategic partnerships with African counterparts to consolidate and empower the African agenda within international multilateral organizations like the UN, and improve the capacities and insti-tutional foundations of regional economic development communities like the South African Development Community (SADC) for regional development.

South Africa’s development assistance is a small fraction of the government’s expenditure, constituting about 1 percent of gross national income (Grimm 2011) and is mostly multilateral, aimed at regional organizations like the AU, SADC and South African Customs Union.

Th e core focus of South Africa’s assistance is to fund projects aligned with “the promotion of democracy and governance, the prevention and resolution of confl ict, social and economic development and integration, humanitarian assistance and human resource development (DIRCO 2011).”

South Africa wants to eschew any reference to its apartheid baggage and, therefore, like its BRICS partners, insists that its development cooperation with the continent should be seen in the context of partnership and without political conditions. Yet this has not always been well received by other actors in Africa.

For one thing, South Africa is still viewed with suspicion by its African neighbours. Whether this has to do with its apartheid past or the impression that post-apartheid South Africa has not changed its spots, many African countries doubt whether Pretoria genuinely speaks with an African voice. Th is lack of confi dence makes it diffi cult for Pretoria to position itself as a legitimate development partner. Th is diffi culty is further entrenched by South Africa’s membership in multilateral development cooperation agencies that other Afri-can governments are not comfortable with.

As a result, South Africa’s development cooperation is somehow caught between a rock and a hard place. As much as Pretoria is trying to counter “accusations that its development cooperation masks an underlying commercial and self-interested political agenda” (Sidiropoulos 2010, p. 1), its African National Congress-led government is in a precarious situation as it attempts to justify to its electorate why it needs to launch a development agency1 when it faces economic and social challenges at home.2

1 Some of the criticisms levelled against the South African Development Partnership Agency, which is to be launched in April 2012, revolve around whether South Africa is punching above its weight. At a technical level, there is confusion with regard to how the South African government aims to capitalize the agency. While it is understood that the African Renaissance Fund budget will be administered under the agency, there is also talk that the agency will have an initial budget of approximately US$360 million to US$480 million. It would seem that part of this start-up capital, accord-ing to the director-general of the Department of International Relations and Cooperation, will be drawn from donations made by three (unnamed) traditional donors “that have committed to equally match funding for... the agency. Th is raises concerns about the independence of the agency’s mandate and the fact that it contradicts Pretoria’s assurances that it will pursue an autonomous foreign policy as highlighted in the recently released South African Foreign Policy White Paper. ” (See also Fabricus 2011.) Th is is not withstanding other issues focusing on capacity building, effi cacy in monitoring and evaluating impact, and political sensitivities. 2 See National Planning Commission (2011) for an overview of South Africa’s development challenges.


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new donors may be seen as pushing for a multilateral order that represents and repositions the South, the fact of the matter is that their framework is built mainly around rhetoric and platitudes. To what extent this framework will lead to greater representation, legitimacy and transparency for which African partners can hold new donors accountable is yet another challenge particular to the region.

However, it would appear that there is a hierarchy in the way that African states engage with the new development partners. Th is can be seen in African states diff ering relations with South Africa as a development actor and with, inter alia, China, India or Brazil. Clearly, South Africa’s turbulent history with the continent creates divisiveness when developing a coherent development framework with the BRICS partners. As a result, African partners’ abilities to assert ownership of the development process is weakened, reinforcing an asymmetrical relationship with the emerging actors that is contrary to the rhetoric of South-South cooperation.

Finally, consideration must be given to the weakness of the current global fi nancial architecture. With the US and EU economies still reeling from the eff ects of the 2008–09 fi nancial crisis, the state of global fi nancial markets cannot be ignored. Given that the markets of most emerging donors are tied to the US dollar, tighter fi scal control by Western donors and judicious spending of foreign reserves may result. Th is could lead to more streamlined development cooperation disbursements from traditional donors to Africa, thereby leaving the continent vulnerable to becoming dependent on the emerging market donors as an alternative source of funds.

WHERE TO FROM HERE?

As much as the emerging actors are beginning to grapple with their own identities as develop-ment partners, there is also increasing pressure

on them to demonstrate their resolve as responsible stakeholders. Th e OECD considers the new develop-ment partners to be critical actors. In this way, the Paris Declaration on Aid Eff ectiveness can create im-portant benefi ts for recipients, especially African states. Currently, the aid eff ectiveness framework embodied in the Paris Declaration is seen as a signifi cant way in which the new development partners can leverage their

diplomacy and legitimacy with African actors vis-à-vis the traditional Western donors. Th is shift signals that traditional Western donors are identifying trilateral cooperation as the most appropriate form of engage-ment around a development cooperation framework for representation, legitimacy and accountability.

To make this work, African governments also need to exercise their own leverage and make their new development partners accountable to a set of benchmarks particular to the African landscape. Not only will this ensure that African recipients own the accountability process, but it will show where African governments can do better with the emerging actors after determining where they have failed with traditional Western donors.

One area where such a new best practice can be tested is around the climate change discourse. African recipients should invite the emerging donors to become part of African climate change interventions and demonstrate how they are going to compensate African countries for the environmental impacts that their trade and investment patterns will have on Africa. Th e result could become a benchmark for traditional donors.

CONCLUSION

At the beginning of this chapter, a set of ques-tions was asked about what new impulses the emerging donors bring to Africa’s develop-

ment cooperation landscape and how these should be interpreted vis-à-vis the goals of representation, legitimacy and accountability. Th e answers, so far, are that the emerging actors do not exhibit a new form of development assistance behaviour. However, the new actors have clearly entered Africa’s aid architecture, often behaving in ways that mimic the behaviour of traditional donors. Specifi cally, there are parallels in fa-vouring national businesses when it comes to projects, tying export credits to the use of services and goods from donor countries, and bringing in large teams of consultants to advise on programs.

Th e impact of the new development partners has been to increase African governments’ leverage vis-à-vis the traditional Western donors. No longer are African governments compelled to be junior partners in the donor-recipient relationship. But at the same


time African governments fail to realize that they do not have to be muted partners with emerging actors. Th is is where African leaders need to fi nd the right mix in their responses to all of their development partners. Th ere is no room for double standards and diff erentiating modes of diplomacy toward existing and emerging actors. All development partners must be held accountable to the same standards and rules.

As much as the emerging actors may be seen as alternative development partners for African governments and to provide much-needed assistance for their infrastructural needs, Africa needs to see its role in this relationship as less of a recipient and more of a strategic partner with valuable assets. While the high demand for raw materials has pushed Africa into the volatile global commodity price cycle, this is short-term and not sustainable. As before, Africa runs the risk of relying on export markets for revenue, a strategy that will backfi re when raw material prices fall, which will undoubtedly compromise social spending on anti-poverty programs.

Africa needs to take ownership of and manage the aid fl ows it receives. Th e starting point should be at a country level in dealings with the Joint Assistance Strategy group.24 At present, the emerging actors seem reluctant to even come to a consensus about development cooperation. But as Western donors seek more alignment with the emerging powers around aid harmonization, African governments, regional blocs, and continental institutions like the AU need to seize the opportunity to promote continental development projects. To this end, African governments can insist that new actors which are signatories to the Paris Declaration on Aid Eff ectiveness and have experience as aid recipients, deliver on their promises.

Th e emerging actors have set in motion a new competition with traditional donors that are scurrying to retain their traditional spheres of infl uence and upping their own aid packages to Africa. However, African stakeholders need to remember that the new development partners will to continue to be driven by their national interests. Moreover, African recipients must not fall into the trap of thinking that the emerging actors are more legitimate, transparent, and

24 Joint Assistance Strategy Group is a collaborative undertaking by OECD donors to coordinate support for a recipient’s development strategy. Th is group meets to ensure that there is no overlap and that assistance supports the recipient country’s vision for development. It enables development partners to formalize cooperation and agreements with recipient countries.

accountable in their interactions by mere virtue of a shared historical experience and common development challenges.

Th us, if Africa wants the emerging actors to demonstrate an eff ective development assistance relationship, then African states — perhaps through the AU — need to develop their own set of conditions that underwrite how development cooperation should be delivered to individual countries. To do this, Africa must recognize that its leverage from its valuable resources can also be used against the emerging actors. African states could demand more openness in how the new development partners engage with them, specifi cally making information and transactions related to development assistance more freely available. China, for example, could be held accountable to former Premier Zhou’s eight principles that still publicly underpin its development assistance. Finally, civil society networks must be enabled and strengthened so that a broader policy monitoring environment can be developed.

African governments and civil society actors need to recognize that despite a perceived focus on South-South cooperation with new development partners, the African continent’s interests may not always be represented by these emerging actors within multilateral organizations. Perhaps the fi rst step for African nations standing up for their interests is to acknowledge that the emerging actors are becoming competitive powers that want to project their own interests. Such considerations are important if the new development partners are slow to reconcile their new global profi le with the increasing need to become responsible international stakeholders.

Sanusha Naidu is a Senior Researcher with the Africa and Global South unit in the Democracy, Governance and Service Delivery Programme at the Human Sciences Research Council. Prior to joining the HSRC, she was the Research Director of the China/Emerging Powers in Africa initiative based with Fahamu and before that she was a research fellow at the Centre for Chinese Studies at Stellenbosch University. Ms. Naidu holds a MA in International Relations from Staffordshire University in the UK. Her current research focus is on the Emerging Powers in Africa, especially the footprint of China and India, and the pending issues that arise with regard to governance,


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socio-economic development and the continent’s response in terms of the engagement. She has published widely on the topic including in journals like the Review of Political Economy, Politikon. She is also co-editor of two books on China in Africa: African and Chinese Perspectives on China in Africa (Fahamu/Pambazuka Press: 2010) and Crouching Tiger; Hidden Dragon: Africa and China (Centre for Confl ict Resolution: UKZN Press: 2008). She has also been interviewed by and quoted in international news agencies including Reuters, IPS News, AP, BBC, Aljazeera, LA Times, and the International Tribune Herald.

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CHAPTER SIX

USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM

TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION

CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION

The North-South Institute (NSI) began publishing the Canadian Development Report (CDR) in 1996. Global Challenges:

Multilateral Solutions, the 13th edition of the CDR, marks an important change to one of its most popular components — the statistical annex.

Th e CDR’s statistical annex is the only “one-stop shop” for comprehensive data on Canada’s relationship with developing countries, including fi gures on aid, trade, investment and migration. Since the CDR’s inception, NSI has compiled, analyzed and presented this data in the CDR’s statistical annex. Th e annex has been an invaluable tool for researchers, students, policy analysts and civil society organizations in Canada and around the world.

Until now, the contents of the annex have only been available in print, PDF, or on CD-ROM. To bring this vast store of information to a wider audience in a free, easy-to-use and interactive manner, NSI is pleased to be launching the Canadian International Development Platform (CIDP).

Th e CIDP is a highly interactive web-enabled data and analytical platform for presenting fl ows between Canada and the developing world. Like the CDR, the CIDP includes data on aid, trade, investment and migration.1 In addition, the CIDP covers a wide range of new data points and indicators. Use of the CIDP is free and available through the NSI’s website (www.nsi-ins.ca). Users can select specifi c issues they want to explore and determine the depth and breadth of their analysis. Customized outputs can be generated by the user and downloaded in a range of formats such as charts, cross-tabs, maps or Microsoft Excel fi les. Researchers can draw on the CIDP to analyze critical development questions in an evidence-based and interactive way. In addition, the CIDP can be used for

1 Currently, the CIDP covers years only from 2000 for some data points.

on-demand customized analysis using parts of our primary dataset, our new data or both.

Th is chapter formally introduces the platform. To demonstrate how the platform can support research and analysis, we have used the CIDP to perform an analysis of multilateral development cooperation.

Following this introduction, the second section provides context on the need for the CIDP by briefl y discussing the demand for increased transparency on aid. Th e third section provides information on data currently covered by the platform, how the platform compares with information provided in past CDRs and the sorts of questions that can be addressed using the platform. An illustration using the CIDA’s 20 countries of focus is also included.2 Similarly, the last section shows how the CIDP can be used to enhance our understanding of multilateral development cooperation.

THE CIDP CONTEXT: OPEN GOVERNMENT, TRANSPARENCY AND ACCOUNTABILITY

Canada’s Open Government initiative

Th ere are welcome signs that Canadian politicians and policymakers are taking “open government” seriously. Th e 3 June 2011 Speech from the Th rone recognized accountability as a key pillar of the current government. Earlier that year in March, the Treasury Board launched a government-wide open data portal.3 And in September 2011, Canada joined the Open Government Partnership — a new multilateral

2 As part of its Aid Eff ectiveness Agenda, the Government of Canada announced in 2009 that it will be focusing 80 percent of bilateral resources in 20 countries. Th ese 20 countries were chosen based on their real needs, their capacity to benefi t from aid and their alignment with Canadian foreign policy priorities. Th e countries are: Bolivia, Col ombia, Haiti, Honduras, Peru, Afghanistan, Bangladesh, Indonesia, Pakistan, Vietnam, Ukraine, West Bank and Gaza, Ethiopia, Ghana, Mali, Mozambique, Sen-egal, Sudan, Tanzania and one regional program (Caribbean). 3 See for instance: http://www.tbs-sct.gc.ca/media/nr-cp/2011/0317a-eng.asp and the portal at www.data.gc.ca.

USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATIONANIKET BHUSHAN AND KATE HIGGINS


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initiative that aims to secure concrete commitments from governments to promote transparency, empower citizens, fi ght corruption and harness new technologies to strengthen governance.4

In the area of international development, Minister of International Cooperation Beverley J. Oda launched the Canadian International Development Agency’s (CIDA) new Open Data portal in June 2011 at NSI’s Ottawa conference on the future of multilateral development cooperation. CIDA’s Open Data portal provides information on where and how foreign aid contributions are spent.5

Canada’s international assistance now exceeds $5 billion annually. Th is represents an aid expenditure of approximately $150 per Canadian citizen per year. But there is little awareness among the general public about where this money is spent and what is achieved as a result of these eff orts. Th is situation is not unique to Canada. Th is suggests that there is a need for governments to be more transparent about their spending choices on aid and other types of public expenditure. Making data and information publicly available and easily accessible can help governments achieve this. NSI’s CIDP contributes to these broad eff orts.

Global eff orts on aid transparency, accountability and data access

In the lead-up to the Fourth High Level Forum on Aid Eff ectiveness to be held in Busan, South Korea in November, it is worth refl ecting on the recent developments in aid transparency, accountability and data access. Th ese developments can be categorized as either demand-side initiatives, which call for greater access to aid data, or supply-side initiatives, which prescribe that eff orts made by aid agencies and others to be more transparent and accountable.

Perhaps the most prominent demand-side initiative is the International Aid Transparency Initiative (IATI). IATI is a multi-stakeholder eff ort that includes donors (such as the World Bank and the United Nations [UN] Development Programme), partner countries and civil society organizations and aims to implement

4 See: http//www.opengovpartnership.org/about.5 See: http//acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/eng/FRA-511112638-L57. Th e new Offi cial Development Assistance Accountability Act is also noteworthy as it has accelerated the delivery of aggregate and detailed reports.

the transparency commitments made in the 2008 Accra Agenda for Action.6 IATI has developed and agreed on common, open, international guidelines for publishing information on aid spending. Th e IATI standard comprises three components: an activity standard designed to report details of individual aid activities; an organizational standard for reporting total future budgets and forward planning; and a new set of code lists that make both sets of information comparable across reporting institutions. Th e goal is to make the information useful to all stakeholders, especially in developing countries. Th is involves presenting the information in simpler and easy-to-understand formats. To date, 20 organizations have signed on to IATI. Th ese include the World Bank,the United Kingdom’s Department for International Development and the African Development Bank, among others.

Other demand-side initiatives include the Center for Global Development’s Commitment to Development Index (CDI) and Quality of Offi cial Development Assistance Assessment, the latter of which is jointly produced with the Brookings Institution. Th ese indices track and rate the performance of bilateral and multilateral aid agencies on various dimensions including transparency, effi ciency, support for institutions in recipient countries and cut transaction costs, as well as overall commitment to development or policy coherence beyond aid (including areas such as trade, investment and immigration as is the case in the CDI). Another eff ort is the UK-based Publish What You Fund (PWYF) campaign that advocates for aid transparency and has developed an Aid Transparency Assessment tool. More on each of these below.

At least partly in response to these calls for greater transparency and accountability, donors have initiated a number of supply-side measures that seek to present aid information in a more comprehensive and accessible manner. Notable recent initiatives include the World Bank’s Mapping for Results, which provides an interactive and user-friendly detailed view of World Bank programs. Th is follows the World Bank’s highly publicized eff orts at “democratizing development

6 Th ese include steps such as making use of country systems, publicizing all conditions linked to disbursement, providing timely information on commitments and disbursements, etc. However, these were calibrated to individual country plans.


data,” which includes making its World Development Indicators database publicly available at no cost.

A number of bilateral donors are also bolstering their eff orts. In addition to CIDA’s new Open Data portal, the United States (US) has developed a website (www.foreignassistance.gov) on American aid while Sweden has launched a similar site (www.openaid.se). Th e US and Swedish initiatives both involve web-based interactive data platforms that aim to provide a comprehensive picture of each country’s international assistance eff orts.

While these initiatives clearly represent progress toward more transparency, accountability and access, there is much more that can be done. Th ree areas in particular require greater attention. First, steps should be taken to improve the comparability and consistency of data across reporting institutions. Second, more information on the results of aid programs and projects must be made available. Th ird, users of the information need to be cognizant of the importance of interpreting the data correctly. While increased availability of aid data is a positive trend, the danger is that the data may be misinterpreted.

UNDERSTANDING CANADA’S ENGAGEMENT WITH THE DEVELOPING WORLD: THE CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM

Th e CIDP’s datasets

Th e CIDP is divided into two datasets. Th e fi rst (primary) dataset comprises data that NSI has been compiling for its statistical annexes since 1996. It includes detailed information on aid, trade, investment and migration fl ows between Canada and developing countries. NSI will continue to update this dataset using a format and framework similar to those used in previous CDRs.

Th e second dataset includes indicators that are incorporated into the CIDP in response to NSI’s research and analytical needs. Th ese include a range of income and multidimensional poverty measures such as the World Bank’s $2-a-day measure, the Multidimensional Poverty Index and the Social and Economic Rights Fulfi llment Index. It also incorporates governance and other indicators such as the Freedom House Index, Transparency

International’s Corruption Perceptions Index and the State Fragility Index. Box 1 includes a list of key data covered in both of the CIDP’s datasets.

Using the data provided through the CIDP, users can answer a range of questions on Canada’s engagement with developing countries. Th is can be demonstrated using CIDA’s 20 countries of focus. For example, the CIDP can answer the follow questions:

• How much aid has Canada disbursed to the CIDA’s 20 countries between 2000 and 2010?

• What type of aid — bilateral or multilateral — is most important for the CIDA’s 20 countries?

• Which Canadian departments and agencies are involved in providing assistance? And at the project level, which sectors are most important for Canadian assistance?

• What is the total volume of trade, breakdown of exports and imports and trade balance over time?

• How have CIDA’s 20 countries been performing on growth, poverty and inequality?

• Are there particular social sectors that are lagging?

• How do the countries perform on governance measures, such as corruption?

Th e CIDP brings together a vast amount of information on CIDA’s 20 countries of focus in one place and in an interactive, fast and easy-to-use manner via development dashboards.7 Th e fi rst image (Figure 1)is of the user interface, or dashboard index. Th e index page typically includes a short description of the topic, details on navigation and other instructions that make the information easily accessible.

7 Dashboards, charts and other visuals presented here are snapshots of live online views, and as such, intended purely as illustration. For the actual data or views please see the CIDP portal page via www.nsi-ins.ca to be launched in early 2012. For all data sources please see the CIDP portal page.


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BOX 1: KEY DATA COVERED BY THE CIDP: MORE THAN 30 COMPREHENSIVE DATASETS ON INTERNATIONAL DEVELOPMENT

Below is a list of key data points and indicators covered by the CIDP. Th is is not an exhaustive list since the platform is always evolving, as new data, features and analyses become available. Th e four key areasthe CIDP tracks for Canada are aid, trade, investment (including debt) and migration. Each area comprises several data sources, indicators and variables. A complete list can be found in the CIDP technical document on NSI’s website.

Aid: Includes detailed data on Canadian aid fl ows, disaggregated into bilateral and multilateral and Offi cial Development Assistance (ODA) qualifying fl ows from all departments and agencies. Information can be sorted by country recipient, type of aid and department involved, among other options. Th is area also includes highly detailed project-level data on all Canadian-funded projects and programs in developing countries. Sector-wise (e.g., health, education, infrastructure, etc.) breakdown of aid at the general level as well as project level. It also includes Development Assistance Committee (DAC) data other than ODA (e.g., other offi cial fl ows). Breakdowns into sector-wise components, including administrative costs, refugee costs, etc., are also included. Overall net aid received from all sources from recipient country perspective.

Trade: Includes detailed information on Canadian exports to developing countries, as well as imports from developing countries (all countries, including advanced, encompassed for comparisons). Th is area also includes balance-of-trade data as well as data on tariff revenue collected and applied rates. Product-wise breakdown for all developing countries’ exports and imports is under development.

Investment: Includes aggregate data on Canadian direct investment abroad, foreign direct investment in Canada and stock values. Data on concessional and non-concessional outstanding debt balances. Portfolio fl ows (debt and equity) under development, but currently available at the aggregate level.

Migration: Includes detailed data on migration to Canada, countries of origin, type of migration (permanent, temporary), all available subgroups (such as refugees and, foreign students). Also available by province (in some cases city) of settlement.

Poverty: Includes range of poverty measures from standard headcounts and the World Bank’s $1- or $2-per day measure to indices such as the Multidimensional Poverty Index, Social and Economic Rights Fulfi llment Index, Human Development Index, Gender-related Development Index, employment statistics and others.

Demographic: Captures range of demographic information including population, population growth, male/female ratios, fertility, urbanization rates, dependency ratios and more.

Governance: Includes broad range of indices from World Bank’s Worldwide Governance Indicators and Country Policy Institutional Assessment to Transparency International’s Corruption Perceptions Index, Freedom House Index, the Database of Political Institutions, the Ibrahim Index of African Governance, the World Bank’s Doing Business project, Th e World Economic Forum’s Competitiveness Report and others.

Country characteristics: Area ranges from classifi cation systems (e.g., following the World Bank lending system, regional groupings, etc.) to basic economic indicators (GDP, GDP per capita, growth rates, etc.) to social indicators (Millennium Development Goals progress, health, education and nutrition) to fi nancial fl ows (private fi nancial fl ows, remittances, export earnings, investment) and public revenue and expenditure (tax/GDP ratio, tax rates, public expenditure rates on health, education, etc.).

Customized datasets: Th e platform allows fl exibility to plug in new data in a range of formats. Analysis of new data alongside existing data points can then be performed. For instance, data generated in the course of NSI research, fi eldwork or other surveys is periodically inputted to generate custom outputs. For an example of a customized dataset, see the set created for multilateral development cooperation discussed in detail below.


Th e CIDP begins to convey useful information when the user simply places the cursor on one of the circles (which represent the amount of aid in a particular year from Canada to the particular country). For instance, Figure 2 shows the total Canadian aid to Haiti in 2009-10 without having to perform any operations.

Th e on-mouse-over mark invites the user to click for more details. Following this instruction takes the user to a further set of options that allow more detailed analysis. Th ere are two options provided to make navigation simple. A box below the map provides direct links to a set of suggested topics (and

descriptive questions that suggest what sorts of information are available). A list of countries on the right hand side allows the user to explore individual countries in more detail.

If, for instance, the user is interested in exploring aid to Haiti in more detail, with less than a couple of clicks the user is able to switch to a much more detailed view (Figure 3). In addition to the total amount of aid to Haiti, the trend over time and detailed breakdown across all departments and agencies becomes visible.

FIGURE 1 - SCREENSHOT OF CIDP USER INTERFACE (DASHBOARD)


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FIGURE 2 - CIDP DASHBOARD DISPLAYING TOTAL CANADIAN AID TO HAITI 2009-10


Aid is only one of many important facets of Canada’s engagement with Haiti. Should the user want to look at trade fl ows, in a few clicks (using similar navigation options), the user is able to plot bilateral trade patterns and disaggregate total trade into exports and imports

(Figure 4). In a future iteration (available currently for a select group of countries), simply clicking on one or more of the bars representing imports and exports breaks the aggregate fi gures into individual products.

FIGURE 3 - CIDP DASHBOARD DISPLAYING DETAILED VIEW OF TOTAL CANADIAN AID TO HAITI 2009-10


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Th e custom dashboard in Figure 4, discussed here as an illustration, allows the user to navigate across aid, trade and other fi nancial fl ows to draw comparisons. It also allows the user to track governance indicators that demonstrate how a country has been doing on governance, whether political and civil liberties are increasing and whether corruption is declining. It also fl ags key demographic indicators and provides information on security and state fragility, helping address questions such as whether or not the security situation in the recipient country is jeopardizing the ability of state and non-state actors to deliver basic services.

Important diff erences between the CDR’s statistical annex and the CIDP

While indicators included in past CDR statistical annexes will continue to be updated, there are some diff erences in format, organization and presentation between the annex and the CIDP.

Cross-section (yearly update) versus time-series: Past CDR statistical annexes have provided data for one year only. Typically, this has been the year prior to the edition of the report. Th e CIDP provides time-series coverage. For instance, its Canadian aid data covers the period 2000-10.

Country classifi cation system: Past CDR statistical annexes relied on multiple country classifi cation systems. For example, in some cases the regional classifi cation of the World Bank was used, whereas for Canadian data the CIDA regional classifi cation was used. Th ese two classifi cation systems can be quite diff erent.8 Th e CIDP has standardized country classifi cation, relying only on the World Bank system. As well as being the most comprehensive approach,

8 Canadian sources divide Africa into Sub-Saharan Africa and North Africa or Maghreb. Asia is not divided. World Bank sources divide Africa into Sub-Saharan Africa and one region known as Middle East and North Africa. Asia is divided into South Asia and East Asia.

FIGURE 4 - CIDP DASHBOARD DISPLAYING TRADE FLOWS BETWEEN CANADA AND HAITI 2009-10


this helps organize data under new fi elds such as income level and lending category.

Presets versus user-defi ned aggregations and custom calculations: Past CDR statistical annexes included preset group aggregates such as totals or averages for the Low Income Country group. Th e CIDP includes these preset options, but also allows users to defi ne their own criteria for groupings. Users are also easily able to plot simple custom calculations (e.g., percent change in an indicator over a defi ned period of time), whereas in the past such comparators were pre-selected.

Tabs (covering fl ows and indicators separately) and dashboards (combining a range of fl ows, indicators and data-sources around a theme or narrative): Tabs (covering fl ows and indicators separately) and dashboards (combining a range of fl ows, indicators and data sources around a theme or narrative) come closest to the long reference tables, charts and graphs in the CDR’s statistical annex, but add several new functionalities. Tabs are individual sheets that are organized by topic. Typically, each tab will be linked to one primary data source. A fl ow, such as aid, which has many data sources, may be divided into multiple tabs. For instance, NSI’s aid data includes detailed information on Canada, as well as comparative data from the Organization for Economic Co-operation and Development (OECD)-DAC, which helps situate Canada among other large donor countries. In this case, the data would be organized into two diff erent tabs. Information in diff erent currencies, or diff erent bases (current versus constant dollar values), may be kept in diff erent tabs to avoid confusion. Dashboards are customized views of the larger dataset. A dashboard may bring together diff erent indicators to cover a particular region or group of countries. For instance, a dashboard may look at the evolving political and economic situation in a particular region. Th e CIDP enables us to pull together data on Canadian fl ows to the countries in this region, covering for example type and quantity of aid, imports, exports and balance of trade, overseas investment by Canadian companies in these countries, and migration patterns from countries in that region to Canada. Th e fl ows and trends can be presented in interlinked charts, tables and maps.

New data sources and analyses across indicators: As already mentioned, the CIDP off ers a broader range of indicators and data sources than previous CDR statistical annexes. Because the CIDP is an interactive

online platform that links multiple sources, it allows users to undertake analyses across indicators. Th e user is able to perform a range of analyses from simple correlations (yielding R-square and other statistical estimates including signifi cance) to more complex multivariate analyses. Previously, this would have been very time consuming (if not impossible), given the static nature of past CDR data.

MULTILATERAL DEVELOPMENT COOPERATION IN A CHANGING GLOBAL ORDER: USING THE CIDP TO ENHANCE UNDERSTANDING AND ANALYSIS9

Through the CIDP, researchers can compile detailed disaggregated information on multilateral development cooperation, which

together provides a comprehensive picture of trends, patterns and key developments. Th e multilateral data also help situate Canada’s use of multilateral channels compared to other DAC donors.

Th is section shows how the CIDP can be used to explore major trends and patterns in multilateral development cooperation. First, the CIDP presents a general analysis of the proportion of the aid disbursed by major DAC donors that is multilateral, and how this has evolved over time in comparison to bilateral aid fl ows. Next, multilateral contributions are disaggregated into the major types of organizations (e.g., the regional development banks, UN system, World Bank) and it is shown how donor country contributions to various multilateral institutions can be examined and compared.

A key question is whether multilateral aid is more predictable than other forms of assistance. A relatively simple way of answering this is by tracking the gap between commitments and disbursements for bilateral and multilateral ODA. Once again the user is able to easily and quickly select, explore and compare the diff erentials across DAC-reporting donors. Th is section also refl ects on the volatility of aid relative to other fi nancial fl ows such as private fl ows.

Th e next set of data focuses on Canada’s contributions to multilateral organizations. It covers highly disaggregated data on contributions to the major institutions, in some

9 Data used for all charts, graphs and discussion were drawn directly from the CIDP and are available online. For the original data source, consult the CIDP technical document also online on the portal homepage.

FIGURE 5: DAC DONOR CONTRIBUTIONS TO MULTILATERAL INSTITUTIONS 1960-2010


cases down to the level of the implementing agency. Users, for instance, are able to see how much Canada provides as core support relative to responsive and directive funding, for a range of institutions. Th e dataset provides these data for the top 20 institutions that received Canadian funding (2000-10).

Th is section provides a great picture of donor contributions to multilaterals, and in the case of Canada, a detailed view of which institutions the country has been supporting and the types of funding. However, this is only one side of the coin. It is also benefi cial to look at which project, programs or other initiatives the major multilateral institutions have been funding, and in which countries. Th e CIDP provides this view and lets the user select and compare either from the perspective of a multilateral institution, of a receiving country, or by project/activity type or sector.

Together Figures 6 and 7 provide a comprehensive picture of multilateral development cooperation in a changing global order. Finally, the CIDP brings together data rating the performance of multilateral institutions. Th ese paint further contextual

information in order to better assess how these institutions contribute to eff ective development.

DAC donors’ multilateral aid: how does Canada compare?

Th e total reported aid for all DAC donors in 2010 reached approximately US$140 billion (in constant 2008 terms). Th e majority of this aid is classifi ed as bilateral. Indeed, in 2010 more than US$100 billion was disbursed as bilateral aid. Th e United States (US) remains the largest aid donor in dollar terms. However, it is interesting to note diff erences among the largest bilateral and multilateral donors.10 While the US is the largest donor in bilateral terms (nearly US$26 billion in 2010), the largest multilateral donors in overall dollar terms were France (US$5.4 billion), Germany (US$4.9 billion) and the UK (US$4.7 billion).11 Canada ranks ninth out of the 23 DAC donors on overall aid and ninth on bilateral aid. On multilateral aid it ranks 10th. Figure 5 below provides a snapshot

10 Note that DAC multilateral aid covers only ODA conforming grants and capital subscriptions to multilateral institutions. In most cases, donors channel additional (bilateral) aid through multilateral channels and special-ized institutions. 11 Th is is primarily because contributions to European Union (EU) institutions are classifi ed as multilateral aid.


of how DAC donor contributions to multilateral institutions have evolved since 1960.

Th e CIDP allows users to compare individual DAC country multilateral contributions in detail. Among the categories are: EU Institutions, Global Environment Facility, Heavily Indebted Poor Countries, the World Bank International Development Association (debt forgiveness), Montreal Protocol, other agencies, Regional Development Banks, UN agencies, World Bank group, and World Bank

International Development Association (IDA). As Figure 6 below shows, World Bank IDA contributions have been growing since 2000, especially since the funds can be used as a countercyclical tool during the recent global fi nancial crisis. Th e US remains one of the most important funders of IDA, the World Bank’s lending window aimed at the poorest and most vulnerable countries. Contrastingly, as Figure 7 shows, contributions to UN agencies (including by the US) are declining. Given their relative size, Sweden,

FIGURE 6: WORLD BANK IDA CONTRIBUTIONS, 2000-10

FIGURE 7: UN CONTRIBUTIONS, 2000-10


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Norway, the Netherlands and Japan are important contributors to the UN.

What can the CIDP indicate about Canada’s contributions to multilateral institutions?

Figure 8 provides an overview of Canadian multilateral contributions, as noted by the OECD. While World Bank IDA and the UN agencies remain important, the share of multilateral contributions going to regional development banks has recently increased.

Th e CIDP allows fast and easy comparison across indicators and donors and allows the user to generate simple trends. Figure 9 compares Canada’s multilateral aid share with selected other major donors. Th is illustrates that Canada’s multilateral share of aid has been stable in recent years, though it has declined since the 1980s. France’s multilateral share of aid has grown the fastest, while the UK and Germany are rebounding to past levels.

FIGURE 9: MULTILATERAL SHARE OF AID FOR SELECTED DONORS, 1980-2008

FIGURE 8: CANADIAN MULTILATERAL CONTRIBUTIONS, 1960-2009


Commitments versus disbursements: multilateral and bilateral aid

Is multilateral aid more predictable than bilateral aid?

A straightforward way of assessing this is by comparing the gap between commitments and net disbursements by DAC donors, as well as aggregate groupings (such as the Group of 7). As Figure 10 shows, the gap between bilateral aid commitments and disbursements is much higher than the gap between multilateral commitments and disbursements for all DAC donors combined.12

12 Despite common defi nitions and standards, donors have diff erent con-ventions when it comes to reporting on commitments. Th is analysis only provides a useful general picture. For a more detailed account, individual donor conventions should be taken into consideration. For instance, OECD-DAC fi gures presented here are not based on in-year but rather project-level commitments. Th erefore, they are inherently prone to spikes in some years. Th e fact that some donors have less spikes could well be because they are overly prudent in reporting project commitments or they simply report the same values for commitments and disbursements.

Using the CIDP, users can identify whether this pattern is replicated for individual donors. In the case of Canada, while the pattern is similar, the gap between bilateral commitments and disbursements is less severe than for the DAC as a whole.

Th ere are, of course, outliers. In the cases of the Netherlands, Norway, Sweden and the UK, commitments and disbursements tend to track fairly closely. At the other end of the spectrum, Japan is a clear outlier, with a large gap between commitments and net disbursements on the bilateral side, but a much more predictable (and much smaller) multilateral aid share.

FIGURE 10: COMMITMENT DISBURSEMENT GAP: BILATERAL VS. MULTILATERAL


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FIGURE 10 (CONTINUED)


Canada’s multilateral assistance (2000-10)

OECD-DAC multilateral aid comprises mainly grant and direct capital contributions by DAC donors to the major multilateral (DAC-reporting) institutions. However, bilateral donors often use multilateral channels, such as specialized institutions like the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund), to direct large amounts of their bilateral aid. Th erefore, there can be substantial diff erences between contributions to multilateral institutions and aid channelled through multilateral institutions.

Figure 11 charts the evolution of Canada’s multilateral aid channelled through all multilateral institutions over the past decade.13 Canada has increasingly used

13 Figures are for CIDA aid. Other departments may channel more ODA-qualifying fi nancial fl ows through multilateral channels not mentioned here. However, since CIDA accounts for the vast majority of aid, this is the most accurate picture of Canada’s use of multilateral aid channels.

multilateral aid channels to deliver aid. Aid channelled through multilateral institutions increased from $900 million to nearly $2 billion between 2000-01 and 2009-10. Th e international fi nancial institutions (IFIs) — including the regional development banks, multilateral development institutions and humanitarian assistance institutions — are the multilateral channels that Canada uses most prominently. In addition, Canada is an important contributor to the Commonwealth and the Francophonie.

From this aggregate level, the CIDP allows the user to peer further into the data. For instance, users may be interested in knowing which institutions among these groups received the largest amount of Canadian aid. Using the CIDP, users can break down groups, such as IFIs, multilateral development institutions and humanitarian institutions, to conduct more granular analysis.

FIGURE 11: CANADA MULTILATERAL AID DASHBOARD, 2000-10


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Figure 12 above shows that IFIs are the main multilateral channel for Canadian assistance, with approximately $900 million channelled through them in 2009-10. Th is is followed by multilateral development institutions ($430 million) and humanitarian institutions ($400 million). Figures 13 through 15 provide a breakdown for each group.

Among IFIs, the World Bank14 ($540million), followed by the African Development Bank ($118 million), Asian Development Bank ($74 million) and the International Fund for Agricultural Development ($50 million) are the main channels for Canadian multilateral aid.

14 Th e World Bank fi gures include large multi-donor trust funds such as the Global Agriculture and Food Security Program, Advance Market Com-mitments and major components of Canada’s work in Afghanistan such as the National Solidarity Program and the Afghanistan Reconstruction Task Force, as well as Canada’s contribution to the Global Fund.

FIGURE 12: CIDA MULTILATERAL AID DASHBOARD, 2000-10: INTERNATIONAL FINANCIAL, MULTILATERAL DEVELOPMENT AND HUMANITARIAN INSTITUTIONS


Among multilateral development institutions, UN Children’s Fund (UNICEF), UN Development Programme (UNDP) and the Consultative Group on International Agricultural Research are the major

recipients of Canadian assistance. Th e UN World Food Programme (WFP) ($305 million) is by far the largest recipient among humanitarian institutions.

FIGURE 13: CIDA MULTILATERAL AID DASHBOARD 2000-10: IFIS

FIGURE 14: CIDA MULTILATERAL AID DASHBOARD 2000-10: MULTILATERAL DEVELOPMENT INSTITUTIONS


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Figure 16 lists the top 20 multilateral institutions that Canada used to channel assistance over the past decade, with their associated trends. CIDP users have a high level of interactivity within this set of tabs and dashboards. For instance, users can compare totals

by highlighting individual trend lines to make them more prominent. Table amounts associated with the selection automatically turn bold, and the user can drill further down to more detailed levels. Th is is illustrated in Figure 17 using UNICEF as the example.

FIGURE 15: CIDA MULTILATERAL AID DASHBOARD, 2000-10: HUMANITARIAN INSTITUTIONS

FIGURE 16: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA


Th e dashboard highlights the trends for UNICEF. Th e user can select UNICEF by using a built-in highlighting option, which shows the selected series more prominently and marks a graph line with numerical values. Notice that in the top left-hand corner, the UNICEF total for 2009-10 has automatically been highlighted by the program.

Aggregate fi gures for disbursements to (and through) multilateral institutions provide only a general picture. Th e dataset in Figure 17 is also able to divide the aggregate amount into its three main components: core (core support provided by Canada to that institution for hard costs and other operational expenses); responsive (funding specifi cally requested by the institution to meet mutually defi ned development goals or targets); and directive (funding channelled by Canada through a particular institution due to its particular expertise).

Including these components in the analysis provides a much better sense of the spike clearly visible for

UNICEF in 2004-05. Over the past decade, UNICEF has tended to be Canada’s third largest multilateral channel. However in 2004-05, Canadian funding to and through UNICEF witnessed a sharp break (increase) from the trend. Disaggregating this trend in the CIDP — in the bottom left-hand corner of Figure 17 — shows that the reason for this spike is that Canada released a large amount (likely for multiple years) in core funding to UNICEF.

Th e disaggregation also shows that while core and directive funding have remained constant (with the mentioned exception), the growth in Canadian disbursement to UNICEF is driven primarily by responsive funding, or funding requested and allocated by the institution as per mutually agreed priorities.

Th e CIDP user is able to carry out this simple disaggregation for Canada’s top 20 multilateral channels. Below are some examples from the World Bank, WFP and the UNDP.

FIGURE 17: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA (UNICEF)


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FIGURE 18: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA (WORLD BANK GROUP)1

FIGURE 19: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA (WFP)

1 Note: fi gures presented for World Bank group here are infl ated as they include contributions to the Global Fund (see footnote 14). Actual breakdown for World Bank group (2010) is as follows: $67.9 million (core), $3.2 million (directive) and $330 million (responsive).


Th e CIDP also enables the user to go beyond disaggregation of funding type. Output data enables the user to analyze the types of programs, projects or initiatives funded by Canada, covering data on channels, countries, regions, partners and implementing institutions. For instance, Figure 21 covers Canadian multilateral assistance channelled to and through humanitarian multilaterals. As shown in the analysis, total Canadian assistance channelled

through multilateral institutions was approximately $400 million in 2009-10, with three-quarters of this amount ($300 million) being responsive funding for the WFP.

Figure 22 provides data on, for example, institutions working with the WFP or on diff erent WFP projects and programs.

FIGURE 20: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA (UNDP)

FIGURE 21: ASSISTANCE CHANNELLED THROUGH HUMANITARIAN MULTILATERALS


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By focusing on Canada’s assistance to all WFP programs, the user can see that Haiti earthquake relief, the Purchase for Progress initiative, initiatives in Sudan, core funding for the WFP itself and assistance for internally displaced persons in Pakistan accounted for some 70 percent of Canada’s total WFP contribution in 2009-10. Th is analysis can be easily replicated for all other multilaterals in the dataset.

Mapping global multilateral aid

Th e CIDP also enables users to analy ze multilateral aid beyond Canadian contributions. Data on all projects and initiatives undertaken by selected multilaterals is captured by the CIDP. Box 2 outlines the multilateral institutions that the CIDP covers. Detailed project-level information for each of these is available through the platform.

Th e CIDP makes this information available through a diff erent but linked dataset in the same user-friendly manner as described earlier. For example, the CIDP includes data on the Global Fund — one of the largest vertical multilateral funds.

In a few simple steps, the CIDP allows the user to browse very large Global Fund project databases. Th e CIDP generates tables and charts, and Global Fund commitments can be plotted on an automatically generated map.

Figure 23 below maps Global Fund commitments in 2008 and provides a country-level breakdown. As can be seen both from the map and the table, some of the largest commitments are in East Africa.

FIGURE 22: ASSISTANCE CHANNELLED THROUGH HUMANITARIAN MULTILATERALS (DETAILS FOR WFP)


1. African Capacity Building Foundation2. African Development Bank 3. African Development Fund4. Arab Fund for Economic and

Social Development5. Asian Development Bank6. Asian Development Fund7. Arab Bank for Economic

Development in Africa8. Andean Development Corporation9. Caribbean Development Bank10. European Bank for Reconstruction and

Development11. European Communities12. Fast Track Initiative (IMF)13. GAVI Alliance14. Global Environment Fund15. Global Fund to Fight AIDS,

Tuberculosis and Malaria16. Inter-American Development Bank17. International Bank for Reconstruction

and Development18. International Development Association

19. International Fund for Agricultural Development

20. International Monetary Fund21. Islamic Development Bank22. North American Development Bank23. Nordic Development Fund24. Nigeria Trust Fund25. Organization of Petroleum Exporting Countries26. Joint UN Programme on HIV/AIDS27. UN Democracy Fund28. UN Development Programme29. UN Economic Commission for Europe30. UN Economic and Social Commission

for Asia and the Pacifi c31. UN Economic and Social Commission

for Western Asia32. UN Population Fund33. UN Children’s Fund34. World Bank Carbon Finance Unit35. World Bank International Finance Corporation36. World Bank Managed Trust Funds37. World Trade Organization 38. World Trade Organization International

Trade Centre (WTO)

BOX 2: PROJECT LEVEL INFORMATION FOR MAJOR MULTILATERAL INSTITUTIONS IN CIDP

FIGURE 23: GLOBAL FUND COMMITMENTS IN 2008


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It is possible to drill down further into this data by, for example, comparing projects for three of the largest East African recipients: Uganda, Ethiopia and Rwanda. From this general level, by clicking the drill-down options (hover over a category such as “Multilateral Donor” in the table and click “+” sign), the user is able

to look further into projects and initiatives delivered by the Global Fund.

As Figure 24 above shows, while control of sexually transmitted diseases, including HIV, was the main focus in all three countries, in Uganda a large amount

FIGURE 24: GLOBAL FUND COMMITMENTS IN 2008 (DETAIL)

FIGURE 25: GLOBAL FUND COMMITMENTS IN 2008 (UGANDA)


of resources was also committed toward infectious and parasitic disease control. Th e user is able to select the project subgroups to delve deeper into the data (see Figure 25 for an example exploring all Uganda projects in 2008).

Rather than taking the institution as the starting point in the analysis, the user can begin with a country, region or sector. Using Uganda as the example in Figure 26 below, one sees that IDA, the European Commission, African Development Bank, African Development Fund and International Finance Corporation are other major multilateral institutions in addition to the Global Fund that operate in Uganda. Th e CIDP provides this data for all countries and all major multilateral institutions.

Assessing multilateral performance: QuODA, PWYF, Easterly and Pfutze

Assessing the performance of multilateral institutions and comparing them to bilateral donors is not a straightforward task. Results depend on data availability and methods employed. Th at said, three recent studies help assess the performance of multilaterals in at least two areas of interest: effi ciency and eff ectiveness (including reducing burden on recipient countries, fostering institutions, getting

value for money and minimizing ineff ective channels) and transparency (from international standards like the IATI and the DAC Creditor Reporting System to assessing behaviour by recipient governments and civil society). Th e Quality of Offi cial Development Assistance (QuODA) assessment developed by the Center for Global Development and Brookings Institution, the Aid Transparency Assessment developed by PWYF and “Where Does the Money Go? Best and Worst Practices in Foreign Aid,” a 2008 working paper by William Easterly and Tobias Pfutze, provide a good set of performance indicators.15

QuODA utilizes some of the most comprehensive measures of effi ciency, including share of total allocation to poor countries, allocation to well-governed countries, administrative costs and support for public goods. Here multilaterals fare well. Six out of the top nine performers are multilateral — Global Fund (1), African Development Fund (2), Asian Development Fund (3), International Fund for Agricultural Development (IFAD) (4), Inter-American Development Bank (IADB) Special Fund (5) and IDA (9).

15 QuODA covers 38 institutions, of which 15 are multilateral donors; PWYF covers 30 institutions of which eight are multilaterals, including vertical funds; Easterly et al. cover 48 institutions and agencies of which 17 are multilateral.

FIGURE 26: MAJOR MULTILATERAL INSTITUTIONS IN UGANDA


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QuODA also measures the extent to which donors support local institutions by, for example, allocating aid to recipient priorities, avoiding use of implementation channels that weaken local institutional capacity, recording aid in recipient budgets and using recipient fi nancial management and procurement systems. Here the multilaterals have a mixed record. IDA (2), the Asian Development Fund (3) and African Development Fund (4) perform the best, while the UN agencies do not fare well. Th e best performers in reducing the administrative burden on partner countries are IFAD (1), IDA (2) and IADB (3) while other UN agencies again do not fare well.

Low overhead costs can be another indicator of effi ciency. In the Easterly and Pfutze assessment the bilateral donors fare better on this indicator. Italy, Norway, Japan, Portugal, and Australia have the lowest overhead costs, whereas WFP, UNDP, UN High Commissioner for Refugees, Global environment facility (GEF) and the International Monetary Fund’s Structural Adjustment Facility (SAF) and Enhanced Structural Adjustment Facility (ESAF) have the highest. Th is is further corroborated by the QuODA measure, which defi nes costs per dollar of country programmable aid.

Easterly and Pfutze attempt to quantify the eff ectiveness of the use of aid channels by netting out the share of aid that goes to tied aid, food aid and technical assistance. Th is is similar to one of the QuODA sub-indicators on effi ciency and eff ectiveness. IDA (1), African Development Bank (1), Asian Development Bank (1), UNICEF (1) and IADB (2) perform the best (all tied, with the exception of IADB) at avoiding ineff ective aid channels, whereas the UN WFP and UN Population Fund perform the worst.

While all three studies cover transparency, PWYF provides the most comprehensive assessment. It focuses on three areas — “commitment to aid transparency,” “transparency of aid to recipient governments” and “transparency of aid to civil society.” On PWYF’s composite measure, seven multilaterals are in the top half with World Bank (1), European Commission (EC) (4), Asian Development Bank (6), Global Fund (9), African Development Bank (10) and IADB (11) performing particularly well.

QuODA, which measures transparency along similar lines, rates EC (2) and IDA (5) highest, while IADB

and Asian Development Bank rank lower. In the Easterly and Pfutze measurement, which assesses the extent to which donors are transparent about operating costs, World Bank IDA (1), Asian Development Bank (2), African Development Bank (4) and IADB (7) perform well, whereas UN Global Environment Fund, UN Population Fund, Nordic Development Fund and IFAD have the lowest scores.

While each of these studies has limitations, together they provide a useful general picture of how multilateral institutions are contributing to eff ective development. In summary, three points can be made. First, on the set of measures discussed here with emphasis on effi ciency and eff ectiveness of aid delivery, as well as in regard to transparency, multilateral institutions in general tend to perform better than bilateral donors (see also Picciotto, this volume). Second, while the multilaterals perform better than bilateral donors on a host of effi ciency indicators, their overhead costs are higher per dollar of aid delivered. And third, while transparency seems a more diffi cult area to rate objectively, multilateral institutions on the whole fare better on average than the bilateral (with notable exceptions like the UK, Nordics and Australia). Th e World Bank and IDA in particular consistently rate amongst the highest across a host of indicators and sources and across most major categories (transparency and effi ciency and eff ectiveness).

CONCLUSION

Th is chapter demonstrates how the CIDP can be used to enhance understanding of multilateral development cooperation. Th e CIDP can help determine how Canada compares with other DAC donors in its use of multilateral aid channels, which multilaterals are most important for Canada and what sorts of aid are channelled through them. As well, the CIDP platform can be used to delve deeper into the types of project and programs diff erent multilateral institutions have been supporting and where they are carried out.

Anyone interested in international development, especially Canada’s relationship with developing countries, will fi nd the CIDP useful. Th e platform is the only “one-stop shop” for accurate, comprehensive and up-to-date information on aid, trade, investment, debt, migration and other fl ows between Canada and


developing countries. Interactivity is at the CIDP’s heart. Th e user is able to interact with the data on a fast and easy-to-use web-enabled platform that does not require software downloads or plug-ins.

Policymakers and senior analysts will fi nd the CIDP particularly valuable and engaging. Students and researchers will fi nd it a useful resource for statistical information and analysis. Civil society organizations may fi nd important information and reference material to bolster messaging and advocacy campaigns. Th ose in the media with an interest in development, trade, investment and other facets of the relationship between Canada and the developing world will fi nd it a useful reference and resource.

Th e platform is constantly evolving, with new data and other information added continually. Th e CIDP team is keenly interested in hearing feedback from users and is open to new ideas and suggestions for improvement.

Th e CIDP is also available for customized analyses. Its software and tools can be used to track and report on external (offl ine) data sources and run customized reports and analyses.

Th roughout 2012, NSI will be conducting a series of interactive training events based on the CIDP. Th ese sessions are ideal for researchers, students, analysts, civil society representatives and media personnel interested in development issues. During these half-day sessions, users will be introduced to the platform, shown examples of what information is available and what sorts of research needs the CIDP can meet.

Aniket Bhushan is a Senior Researcher at The North-South Institute (NSI). His research with the Governance for Equitable Growth program focuses on domestic resource mobilization in Sub-Saharan Africa, fi nancial sector policy, governance reform of the international fi nancial system and the relationship between growth and socio-economic outcomes. His previous work focused on trade and health policy. Mr. Bhushan leads NSI’s work on the Canadian International Development Platform (CIDP), a data and analytical platform on Canada’s engagement with the developing world. Mr. Bhushan has completed studies in commerce (B.Com, Mumbai University, India), political science (BA, University of Windsor, Canada), and political science and international affairs (MA, Carleton University, Canada).

Kate Higgins is a Senior Reseearcher at NSI and leads the Governance for Equitable Growth program. Her research interests include economic growth, trade, inequality, wealth redistribution and poverty dynamics. She also has a keen interest in the political economy of development. Ms. Higgins has worked extensively on global development frameworks, such as the UN Millennium Development Goals and the post-2015 development framework. Previously, she was a Research Fellow at the Overseas Development Institute in London and an offi cer with the Australian Agency for International Development (AusAID). She holds an M Phil in Development Studies from the University of Oxford, and a B Ec. (Social Sciences) from the University of Sydney.


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GLOBAL CHALLENGES: MULTILATERAL SOLUTIONS

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