Political Science Bachelor Thesis Stina Ahnlid

USAID and Sida: How and Why they Engage in PPPs

BACHELOR THESIS IN POLITICAL SCIENCE 2013-‐14

SUPERVISOR: JONATHAN KUYPER

STINA AHNLID

WORD COUNT: 12 346 During the last decade public-‐private partnership (PPP) initiatives have taken on increased importance for development co-‐operation and development agencies in OECD-‐countries. This thesis takes a closer look at how and why the United States Agency for International Development (USAID) and the Swedish International Development Cooperation Agency (Sida) engage in PPPs to achieve development objectives. The thesis is a comparative, cross-‐national case study using a framework that analyses context, actors, and governance structure in the PPP-‐programs of USAID and Sida. Differences will be analyzed using a theoretical framework taken from rational choice theory inspired by Schäferhoff et al. The thesis argues that government agencies engage in PPPs in order to bridge existing governance gaps and that PPPs occur when the preferences of the development agencies and private companies overlap. Also, the thesis argues that the compliance level within USAID’s PPP-‐initiative is less formal than that of Sida’s. KEY WORDS: PUBLIC-‐PRIVATE PARTNERSHIP, DEVELOPMENT, FOREIGN AID, SIDA, USAID

2

Table of Content Table of Content ....................................................................................................................... 2

1. Introduction ................................................................................................................... 3 1.1 Public Private Partnerships ................................................................................................. 3 1.2 Research Question .............................................................................................................. 4

2. Background and Previous Literature ............................................................................... 6 2.1 USAID and the GDA ............................................................................................................. 6 2.2 Sida and the B4D ................................................................................................................. 6 2.3 PPP as a Mechanism for Development ............................................................................... 6 2.4 Previous Literature .............................................................................................................. 7

3. Theoretical Framework .................................................................................................. 9 3.1 Approaches within Rational Choice Theory ........................................................................ 9

4. Methodology ............................................................................................................... 13 4.1 Comparative Cross-‐National Case Study ........................................................................... 13 4.2 Case Selection ................................................................................................................... 14 4.3. Data .................................................................................................................................. 15 4.4 Operationalization ............................................................................................................ 15

5. Empirical Analysis ........................................................................................................ 17 5.1 Context .............................................................................................................................. 17 5.2 Analysis of Context ........................................................................................................... 21 5.3 Actors ................................................................................................................................ 24 5.4 Analysis of Actors .............................................................................................................. 27 5.5 Governance Structure ....................................................................................................... 28 5.6 Analysis of Governance Structure ..................................................................................... 34

6. Conclusion ................................................................................................................... 36

7. References ................................................................................................................... 38

3

1. Introduction

During the past decade, the development community has increasingly realized that

development aid will not suffice to alleviate poverty and reach the millennium

objectives. Since the Monterey Conference on Financing for Development in 2002

several international development conferences have pointed at the role of the private

sector for development. Most recently, the Busan Conference in 2011 and Ban Ki Moon’s

High Level Panel in 2013 clearly stressed the importance of partnering with

corporations in order to move towards sustainable development. For example in the

final document from the OECD conference on aid effectiveness in Busan leaders commit

to:

…modernize, deepen and broaden our co-‐operation, involving state and

non-‐state actors that wish to shape an agenda that has until recently been

dominated by a narrower group of development actors. In Busan, we forge

a new global development partnership that embraces diversity and

recognizes the distinct roles that all stakeholders in co-‐operation can play

to support development (Busan Conference, 2011:2).

Thus, development agencies have increasingly turned their interest towards the private

sector (Lindahl, 2005). Recently, many policy strategies and programs have been crafted

in a way that encourages cooperation between foreign aid actors and the private sector.

Two examples are United Nations’ (UN) “Unleashing Entrepreneurship – Making

Business Work for the Poor” (2004) and the World Bank’s “A Better Investment Climate

for Everybody” (2005).

1.1 Public Private Partnerships

This thesis will take a closer look at how and why two specific development agencies,

the United States Agency for International Development (USAID) and the Swedish

International Development Cooperation Agency (Sida) engage in public-‐private

4

partnerships (PPPs). PPPs within foreign aid are seen as hybrid governance forms

where the political powers of non-‐state actors are extended. In PPPs non-‐state actors

are directly affecting political decisions like agenda setting, policy formulation and

implementation, and co-‐govern together with state actors. The PPPs can range from

loose forms of cooperation to legally binding contracts when implemented (Schäferhoff

et al. 2009).

The goal is to find how and why the United States (US) and Sweden’s development

agencies engage in PPPs. Also, the thesis will discuss similarities and differences

between USAID and Sida’s PPPs. Both agencies have recently initiated private sector

development policies. Sida initiated its policy in 2003, but did not start to work seriously

with the program until 2012 (Sida, 2013), whereas USAID initiated its policy in 2001,

and has been actively engaged in PPPs ever since (Dewar, 2008). Both initiatives

challenge companies to develop products, services and business models that can

contribute to poverty reduction and reduce climate change together with the

development agencies.

1.2 Research Question

The research problem of the thesis emanates from the observation that even though

PPPs are increasing in popularity, little information exists on how development agencies

relate to the phenomenon of PPPs. According to Schäferhoff et al. international PPPs

form a research field that is still in an early stage (2009:468). Since these initiatives are

relatively new they have not yet been examined in depth, which is one reason for why

increased scrutiny is warranted. Also, there has been a considerable increase in the use

of PPPs during the latest decade (Lick and Hamlin, 2012) making it a heated topic in

need of more research. Another puzzle examined in this thesis is that even though

USAID and Sida are relatively similar aid agencies, both being western aid agencies in

the top rank of foreign aid (Toal, 2013), they have different approaches when it comes to

working with the private sector. To guide this research paper and to solve the research

problem the following question is used:

5

• How and why do USAID and Sida engage in PPPs?

Finding the answer to this question will also guide the paper in when trying to explain

the differences between USAID and Sida’s PPPs. In order to answer the question “how”

the thesis describes the overall framework and rules governing USAID’s and Sida’s PPPs

within the dimensions of “context”, “actors” and “governance structure”. Also, the

answers to the question “how” and “why” PPPs emerged will be discussed using three

different rational choice perspectives taken from Schäferhoff et al.’s article:

“Transnational Public-‐Private Partnerships in International Relations: Making Sense of

Concepts, Research Frameworks, and Results” (2009). The findings of the thesis will be

of importance both to research scholars, professionals in the development sector and

personnel in the private sector.

There are three main arguments of the thesis. First, USAID started engaging in PPPs due

to the realization of the USAID of there being a governance gap in developing co-‐

operation between its ability to promote growth and the ability of the private sector to

do the same. In Sida’s case PPPs emerged because of outer pressure. Second, both USAID

and Sida’s PPPs were initiated when overlapping preferences were at hand between the

development agencies and the private sector. Third, the compliance level of the PPPs in

USAID is lower than in the PPPs of Sida.

This study is both politically and socially relevant. It contributes to political science by

investigating how government institutions can work together with private companies.

This study is socially relevant since it tries to increase knowledge in how to manage

poverty reduction. Also, cooperation is the key in international relations and is

important for the reduction of poverty. Furthermore, this topic is relevant due to the

increasing global influence of both small and multinational corporations in general and

due to development agencies attempt to use these corporations to obtain development

objectives more specifically.

The thesis is structured as follows; next section provides background and a discussion of

previous literature in order to contribute to a better understanding of the topic, the

following section focuses on the theoretical approach applied in the thesis. Thereafter, a

6

thorough explanation of the method used is presented, followed by an introduction of

the data used. The next section consists of the analysis of the data, followed by a

discussion and conclusion. The last section includes a reference list.

2. Background and Previous Literature

2.1 USAID and the GDA

The USAID’s model for PPPs is called the Global Development Alliances (GDA). It was

established in 2001 by former Secretary of State, Colin Powell in order to underpin a

“fundamental reorientation” of how the US’s development programmes were shaped

and how they related to development partners (USAID, 2013). The GDA is supposed to

help improve the social and economic state of affairs in poor countries as well as to

expand USAID’s development impact. Until today the program has formed over 1700

alliances together with the private sector (USAID, 2013).

2.2 Sida and the B4D

In the case of Sweden, the government recently realized that the private sector had to be

better included in the development agenda. In 2012 Sida adopted a Business For

Development (B4D) program encouraging further partnership with the private sector.

Before the B4D-‐program little work was done by Sida to include the private sector in its

work although the agency had some collaborations together with private parties. Today

this has changed and business is one major actor within innovation, investments and

growth according to Sida. Using these drivers, Sida now wants to reduce poverty

through developing the collaboration with Swedish companies (Sida, 2013).

2.3 PPP as a Mechanism for Development

7

Researchers, governments, businesses, and the press have often emphasized PPPs as a

measure, which holds the potential of increasing sustainable development (Flinders,

2005; Hertzberg and Wright, 2005; Mullin, 2002). The following section thus considers

PPPs from a foreign aid and theoretical perspective.

The definition of a PPP used in this thesis is taken from the OECD, according to which a

PPP is:

An agreement between the government and one or more private partners

to which the private partners deliver the service in such a manner that the

service delivery objectives of the government are aligned with the profit

objectives of the private partners and where the effectiveness of the

alignment depends on a sufficient transfer of risk to the private partners

(2008:17).

PPPs develop through the recognition that many ongoing problems cannot be solved

using the old mechanisms of government. According to the OECD, it is likely that the use

of PPPs will keep on growing (2013). PPPs can include either legally formalized forms or

less formalized forms of cooperation between public and private partners. PPPs might

appear when partners identify that they will increase net benefits and decrease

governance costs when reaching a partnership (Sagalyn, 2007; Mullin, 2002; Newman

and Verpraet, 1999). Furthermore, PPPs are considered an adequate instrument when

confronting public development problems where unilateral approaches have failed or

provide unsatisfactory results (Stadtler, 2012). In order to render the collaboration

successful, partners have to decide on shared goals, rules, standard operating

procedures, and the division of tasks, risks, and responsibilities (Bryson et al. 2006).

2.4 Previous Literature

A range of previous literature has dealt with the phenomenon of PPPs. This section focus

on what has been written on PPPs within the field of foreign aid. One assessment study

discusses the conditions under which partnerships within development activities work

or do not work (Houghton, 2010). Other economic articles discuss the importance of

8

PPPs in boosting economic development (Conrad, 2012) or how partnerships between

the private and the public sector should be managed (Stadtler, 2012). These articles

show that little research has been done about why PPPs emerge in development work.

This thesis seeks to diminish this research gap trying to gain a deeper understanding of

PPPs within foreign aid.

Even though not much research has been conducted on PPPs within foreign aid more

research has been done on PPPs within other fields. For example, Andonova studied

PPPs within the environmental field. Similar to this thesis, Andonova seeks the answer

to why international organization partner with non-‐state actors. Andonova’s findings

show that international organizations engage in PPPs because of external pressure and

agency autonomy (Andonova, 2010). Including the research done by Andonova,

Schäferhoff et al. have summarized different studies done on transnational PPPs

exploring why PPPs emerge, under what conditions they are effective, and under what

conditions they are legitimate (2009). It is in Schäferhoff et al.’s article the foundation

for this thesis’s theoretical perspective is found. Throughout this thesis some

weaknesses of current research mentioned in Schäferhoff et al. will be addressed. As

stated by Schäferhoff et al. “more empirical research is necessary to further specify the

conditions under which PPPs emerge” (2009:469). Also, Whelan states ”future research

needs to acknowledge that states continue to be actors of considerable importance with

regard to the creation and maintenance of Political Corporate Social Responsibility

(CSR) activities and initiatives at the national and global levels” (2012:728). Lastly,

Witte and Deng stress the importance of giving attention to the questions of why

partnerships emerge (2005).

Since the previous literature is limited this thesis will fill a research gap by contributing

to the literature, within the field of development, on the use of PPPs in development

work. This study will also contribute to knowledge of how USAID and Sida differ in their

use of PPPs. The research aims at contributing to the field of political science,

development studies and rational choice theory.

9

3. Theoretical Framework

3.1 Approaches within Rational Choice Theory

As indicated by Schäferhoff et al. international relations theories can be successfully

applied to PPPs when conducting a theory-‐based comparative research (2009:452).

Taken from Schäferhoff et al. this thesis uses three already established approaches

within rational choice institutionalism theory that seek to explain why PPPs emerge in

an international context. These three approaches are useful when exploring why PPPs

have emerged in USAID and Sida. Previously neo-‐Gramscian and constructivist theories

have been used to account for the emergence of PPPs (Schäferhoff et al. 2009) however;

empirical research supporting their arguments is presently limited making it difficult to

apply them to this thesis. On the contrary the majority of work refers to rational

approaches, which claims to “provide a grand theoretical framework for designing

human institutions” (Schofield, 1996:189). Rational choice institutionalism theory is

also applied in this thesis.

Rational choice institutionalism is a strand deriving from new institutionalism (Peters,

2005). According to Peters, an institution is a structural feature of the society and/or

polity. There are both informal structures, like interacting organizations or shared

norms, and formal structures, like legislature or a legal framework (ibid). According to

Peters:

An institution transcends individuals to involve groups of individuals in

some sort of patterned interactions that are predictable, based upon

specific relationships among actors (2005:18).

Furthermore, to be an institution the patterned actions also needs to have some stability

over time, constrain the behavior of its members and include some shared values and

meaning among the members of the institution (Peters, 2005).

The rational choice approach in new institutionalism applies both to individual behavior

and collective decision-‐making. The rational choice approach assumes that institutions

10

are means to aggregate the preferences of the persons who embrace them. The behavior

of the people inside the institutions is directed by rules and incentives instead of norms

and values (Peters, 2005). Furthermore, rational choice institutionalism assumes that

actors are egoistic wanting to pursue their own interests (Abott, 2008). Within the

institutions a rational action involves utility maximization meaning that actors choose

the option that best serve their objectives (Green and Shapiro, 1994). Also, actors

maximize the expected value of their own payoff (ibid). This could be seen as

contradictory to why actors engage in foreign aid but this is not the case. The

phenomena could be explained from a rational choice institutional perspective as

including a degree of altruism in the actor’s preference function or by seeing the actor

wanting to elevate a normative goal (ibid). In this thesis the PPPs within the

development agencies will be seen as institutions and used as the focus of the analysis.

Deriving from rational choice institutionalism theory this thesis focus on the most

important arguments mentioned in Schäferhoff et al. The arguments will guide this

thesis in answering why PPPs emerge. Following a presentation of the arguments and

their theoretical background is given.

3.1.1 Solving Governance Gaps

The first argument within rational choice institutionalism theory in Schäferhoff et al.’s

article is: “PPPs are purposefully created by rational actors who are interested in solving

complex trans boundary problems” (Schäferhoff et al. 2009:456). This is a functionalist

explanation that considers governments and multinational corporations that previously

have been incapable of addressing global challenges developing from globalization in its

most efficient way. In trying to battle these challenges they initiate PPPs that

successfully fill governance gaps through effective governance solutions (Reinicke and

Deng, 2000; Reinicke and Witte, 2000; Nelson, 2002). Governance gaps could be solved

through the use of PPPs since they can reduce transaction costs, help pooling resources,

and help mediate disputes (Abott, 2008).

In this argument the governance gaps could be seen as market failures where

transactions are expensive to carry out. Examples of problems causing market failure

11

could for example be risks in democratic institutions, political liberalization and

technological change (Reinicke and Deng, 2000). In trying to solve these governance

gaps it is the rational choice of the development agencies to try to reduce the failure

within the market; hence, starting to work with private companies trying to solve

current market problems. Moreover, PPPs could act as bridges between producers and

markets making markets where they are deficient and extending markets where they

are not living up to expectations (Reinicke and Deng, 2000). When solving the

governance gap the reward is a healthy society where social, political and economical

factors are improved, hence the rational choice for USAID and Sida would be to enhance

the work in solving governance gaps.

Although this is an argument appropriate for this thesis it should be used with caution

since other authors have contested it. For example some studies have found that PPPs

were not formed to help close governance gaps but to increase the interests of actors

(Andonova and Levy, 2003; Hoering, 2003). Other criticism towards this argument could

for example be that some development agencies might benefit from an inefficient status

quo, in which the agency only search for profit maximization. This is not the case of

USAID and Sida since they are democratic western aid agencies stating that their

objective is to help reduce poverty. Since diminishing poverty is the agencies’ ultimate

goal neither of the agencies would benefit from an inefficient status quo, in which no

help would be given.

3.1.2 Overlapping Preferences

The second important argument is “PPPs will be formed when the interests of actors

overlap, and each of them can expect benefits” (Schäferhoff et al. 2009:456). This

approach predicts that rational actors will form partnerships to promote their interests

when their preferences coincide. According to this approach PPPs are not necessarily

established to diminish governance gaps, but that PPPs are institutions where rational

actors try to gain unobtainable resources they would not otherwise have (Tesner, 2002).

Furthermore, development agencies cooperate with the private sector in the delivery of

services, which encompass the public interests. Private interests could be based in

economic or political opportunism. According to rational choice institutionalism USAID

12

and Sida could be seen as self-‐interested maximizers who uses strategic calculus and

institutions as the outcome of rational thinking (Peters, 2005). It would be the rational

choice for USAID and Sida to engage in cooperation with the private sector since the

gains and preferences are enhanced. For example, USAID and Sida might be increasingly

confronted with difficulties related to highly technical issues in which they lack

knowledge, while business could help USAID and Sida develop these skills.

One criticism towards the second argument could be that even though the public and

private sector might have overlapping preferences there is a chance of that the

prisoner’s dilemma would occur, in which one of the partners might not benefit from a

collaboration. Even though there is a small chance that the prisoner’s dilemma would

occur USAID and Sida have made the rational action in establishing guiding rules and

principles in how a partnership should be managed. Because of the established

guidelines the prisoner’s dilemma is avoided and both partners preferences will be

enhanced. The connection to the prisoner’s dilemma and compliance level is further

developed in the following argument.

3.1.3 Compliance Level

The last argument states “PPPs are based on diverse institutional designs, ranging from

loose cooperation to highly formalized initiatives that rely on precise rules, strong

obligations, and compliance mechanisms to further the goal attained to partnerships”

(Schäferhoff et al. 2009:457). This argument is brought up by Schäferhoff et al. to

explain why diverging institutional forms of PPPs develop, which cannot be explained by

the previous arguments (Reinicke and Witte, 2000). This argument implies that there

are different levels for collaboration. Some form a more severe form of shared action

problems, since actors have incentives for desertion. Furthermore, agencies that deal

with problems deriving from collaboration are predicted to be relatively formalized

(Hasenclever et al. 1997). This argument is connected to rational choice institutionalism

since the more problems that might occur within collaboration the more rules need to

be established to avoid these problems. Here, the problem of prisoner’s dilemma is

diminished. The more formalized institutions the easier it will be to avoid the prisoner’s

dilemma in partner collaborations. These arguments are situation-‐structural in nature,

13

which stress that different institutional solutions occur depending on what problems the

cooperation will face (ibid).

The rational choice institutionalism theory is used for this thesis since it helps provide

interesting insights into how institutions and the behavior of individuals within those

structures behave. To understand why the institutions of PPPs have emerged in USAID

and Sida the three rational choice approaches will help understand the phenomena.

Following, the methodology section is presented explaining how the answer to the

research question is established.

4. Methodology

4.1 Comparative Cross-‐National Case Study

This thesis is a comparative, cross-‐national case study. The data will be studied in a

qualitative manner since it focuses on the broader context (Bryman, 2008). The

comparative design was used since it “implies that we can understand social phenomena

better when they are compared in relation to two or more meaningfully contrasting

cases” (Bryman, 2008:58). The cases are USAID and Sida’s initiatives in partnering with

the private sector called the GDA and B4D, which are the units of analysis. Moreover, the

case study approach was used since it is a good starting point, identifying important

features of possible relationships. It also provides an opportunity to conduct an

intensive examination of the case (Bryman, 2008).

The thesis concentrates on the overall framework of rules and regulations that USAID

and Sida apply to their respective PPPs. Only the management of partnerships with

private companies will be examined. The GDA and B4D initiatives will be compared with

regard to three key dimensions that are relevant to the analysis of development

cooperation; “context”, “actors” and “governance structure” The dimensions are used by

the European Commission when assessing sectorial development programs and

constitute the most recent and up to date tool available (EC, 2008). This framework has

14

previously been used to evaluate work of the EU’s development agency, EuropeAid. It

has neither been used on USAID nor Sida making it unbiased towards these agencies.

This type of analysis is useful in trying to explain why reforms, such as the PPP

initiatives, have been implemented, which also makes it connected to the theoretical

arguments previously presented (DFID, 2009). First, the “context” framework will

mainly help to explain if the agencies have been trying to solve any type of governance

gap. Second, the “actors” framework is useful when trying to elaborate if there are any

overlapping preferences. Third, the “governance structure” framework will mainly help

to indicate the compliance level within the PPPs.

The relevance of the framework is not limited to EU development cooperation. There is

nothing in this framework that is clearly linked to EU treaties, institutions or policies. On

the contrary the dimensions can be generalized and shed light on development

cooperation outside the EU as well. No other framework that is better suited to the

purpose of this essay has been found. By comparing how Sida and USAID conduct PPPs

along the three dimensions, important insights with regard to private sector

engagement in development cooperation could be gained.

The framework suits the purpose of this thesis, with some adjustments, since it points at

concrete aspects that have to be studied. Thereby it facilitates the comparisons by

making the analysis more concrete, manageable and understandable. The following

section contains a brief introduction to the case selection and data used. Last, the

operationalization is presented to facilitate the understanding of the method used.

4.2 Case Selection

The cases studied in this thesis, the GDA and the B4D-‐program, were chosen with the

purposive sample method since the method entails an attempt to gain a good

correspondence between the research question and sampling (Bryman, 2008). The goal

of the thesis is to find the difference in USAID and Sida’s PPP programs, the GDA and the

B4D, and therefore the purposive sample method was used. The purposive sample

method was used due to the study’s aim of finding the similarities and differences in

15

how and why USAID and Sida work with PPPs (Bryman, 2008). USAID and Sida were

chosen because, both USAID and Sida are western aid agencies in the top rank. Also,

both agencies had recently initiated PPP-‐programs.

4.3. Data

The data consists of the overall framework rules and principles for the PPP programs

from USAID and Sida. The primary sources used are official documents published on

USAID and Sida’s respective webpages, both in terms of official documents describing

the programmes and reports produced by hired consultants. The documents relates to

the basic rules and regulations for the PPP program of the respective agency. The time

frame looked at is from 2000-‐2013. First of all, the thesis analyzes the management

within the GDA and B4D. When specific PPPs are used they include private companies

and not, for example, non-‐governmental organizations. Therefore, data was taken from

the section were USAID and Sida described their collaboration with the private sector,

mainly the web pages for the GDA-‐initiative and the B4D-‐initiative. These governmental

agencies’ web pages are all seen as reliable sources. When sufficient information were

not found on the agencies’ official web pages the OECD DAC Peer Reviews of USAID and

Sida were used as a complementary source.

Since a majority of the data is taken from governmental sources the possibility of bias in

the documents exists. Therefore, credibility of the sources is to some extent questioned.

On the other hand, biases could enhance the findings of this study shedding more light

on the agencies’ differences. Therefore, bias is not seen as a major problem within the

thesis. One factor that is seen as a problem is the issue of representation. Only a limited

sample of official documents have been studied in this thesis making it difficult to

determine whether the result would have been different if time would have permitted

an examination of all official USAID and Sida documents. Due to this restriction, further

research is needed on examining how the agencies are conducting their PPP-‐programs.

4.4 Operationalization

16

The framework focuses on the three specific dimensions: “context”, “actors”, and

“governance structure”. The dimensions are studied within a specific sector. In this

thesis the sector is defined as the PPP-‐initiatives the GDA, and the B4D.

Each dimension brings up a set of questions, which will be answered later in the thesis.

Also, each dimensions help explain why USAID and Sida became engaged in PPPs. In the

following diagram the link between dimensions, theoretical arguments and questions

asked are shown.

Dimension Theoretical argument Questions asked

Context

Solving governance gap

Overlapping preferences

What is the history of the

sector? What political

attention does the sector get?

Actors

Overlapping preferences

Solving governance gap

Compliance level

Who are the stakeholders in

the sector? What are their

respective roles and

responsibilities, their

interests and incentives for

maintaining the status quo, or

for change?

Governance structure

Compliance level

Solving governance gaps

What are the sector’s core

principles? How does the

governance structure look

within the sector?

Finding the answers to these questions will give a holistic view of how the GDA and the

B4D-‐program work. Also, three steps are used when trying to find the answers to the

previous questions. The first step analyzes the context. The second step maps the actors.

17

The third step assesses the governance structure. After assessing these three steps a

combination of the relationships between them will help to move beyond the static

picture and the answers will make it possible to assess why USAID and Sida started

working with PPPs. The framework helps showing clearer results on how the two PPP-‐

initiatives studied differentiates at different levels. The reliability of this method is

relatively high. The results of the study will be consistent if the same cases are used at

the moment. On the other hand, the results could be different if the study would be

conducted some years after this study since USAID and Sida’s working methods usually

changes over time. Also, the time frame only encompasses the years of 2000-‐2013. If

data before 2000 would have been collected the findings might have been different.

Another problem with the method could be the inappropriateness of the results to be

generalized to other development agencies. That findings cannot be generalized affects

external validity (Bryman, 2008), however, this study does not aim to provide generable

answers, it aims at finding important features that later can be additionally researched

with the aim of finding generable answerers.

5. Empirical Analysis

This thesis proceeds as follows. First the GDA and the B4D-‐program will be studied

through the dimension of “context”. Within the dimension of “context” there are two

sub-‐aspects; the history of the PPP-‐programs and how much political attention the PPP-‐

programs get. Second, the PPP-‐programs will be studied through the dimension of

“actors” mapping their roles and responsibilities. Last the dimension of “governance

structure” within the PPP-‐programs is studied. After each dimension an analysis is

presented mapping the differences between the USAID and Sida’s PPP-‐programs as well

as addressing the three theoretical arguments taken from Schäferhoff et al.

5.1 Context

18

5.1.1 The History of the GDA from 2000 Until Today

In the 1970s 70 percent of the foreign aid from the US to the developing world derived

from USAID and 30 percent were from the private sector. In the beginning of year 2000

there had been a significant shift making the majority of resources from the US to the

developing world coming from the private sector. Recognizing this shift, USAID initiated

the Global Development Alliance (GDA) in 2001 to encourage PPPs with companies,

NGOs, foundations, and others (Clapp-‐Wincek, 2004). Furthermore, the GDA was

initiated to link the rapidly expanding stream of private funding to the US (ibid).

The GDA was developed due to the recognition of the importance of the private sector,

which in 2000, accounted for more than 80 percent of the overall (beyond Official

Development Assistance) financing from the US to the developing world. USAID’s surge

for global actors derived from liberalized trade policies and an increase in information

technology (Lawson, 2011).

This alliance would broaden USAID’s reach and create new ways for USAID to

implement foreign assistance. The Secretary of State, Colin Powell, stated that the GDA

would be “a new strategic orientation for USAID” and a new Business Model for the 21st

century (USAID, 2013). Before the GDA USAID had a long history of working in

partnerships with NGOs, foundations, and international organizations, but private sector

companies were previously under-‐valued. In the beginning of the PPPs focus was more

on charity and private philanthropy. Today focus is more on core business interests of

private firms and the firms’ sustainability work (USAID, 2013). Today, the GDA is seen as

creating more effective funding in development cooperation since it “creates a bigger

pie” for development assistance (USAID, 2013:2). Because of budget constraints the

112th Congress had means of withstanding the development agenda while lessening

development aid levels through PPPs (Lawson, 2011).

5.1.2 The History of the B4D-‐program from 2000 Until Today

19

Billing et al. states that the role of the business sector in Swedish development

collaboration has until recently been relatively minor (2012:17). During 2000-‐2004 the

Sida support for private sector development was evaluated. The findings of the

evaluation were that the support for private sector development had been significantly

larger than officially recorded. This was mainly due to interventions made in other

sectors (e.g. health or agriculture) that were not recognized as PPPs. The report also

found that a lot of attention was given to macro-‐economic and governance aspects in

Sida’s work while the main factor, the development of a business sector, were largely

absent. The evaluation confirmed that individual contribution to the private sector and

support to business development was not addressed comprehensibly by Sida (Sida,

2005).

It was not until the end of 2000 that Sida, at the same time as the Paris Declaration was

established promoting more effective foreign aid, did start working with the private

sector seriously (Resare, 2011). In 2004 Sida adopted a new Private Sector Development

Policy based on the report called “Making markets work for the poor”. At this stage Sida

gave greater recognition to the importance of macro-‐economic stability and market

effectiveness. On the other hand, Sida policy has to depart from the perspective of the

poor. The role of the donors was not widely mentioned. Support for individual firms

could be given where clear positive externalities were possible (Billing et al. 2012).

In recent years the “Making markets work for the poor” has been evaluated and refined,

focusing more on private companies. In 2012 the B4D-‐inititative was established that

could be seen as a more serious attempt in starting to work with the private sector.

5.1.3 Political Attention Given to the GDA

To begin with, USAID’s annual letter written by President Obama and the Administrator

of the Agency for International Development, Rajiv Shah, in 2013 is studied. In the

annual letter the USAID PPP-‐initiative is mentioned ten times in the document, which

contains 28 pages. The PPP initiative is used to show the positive results that USAID has

achieved through the program. Also, the private sector is mentioned as an important

partner for USAID and as an engine of growth and development. Furthermore, it is

20

stated that private sector partners have been encouraged to put more energy into

designing more solutions to the remote rural communities (USAID, 2013a). Also, the

Obama administration stated in the 2010 Quadrennial Diplomacy and Development

Review that:

…private sector partners can add value to our missions through their

resources, their capacity to establish presence in places we cannot, through

the technologies, networks, and contacts they can tap, and through their

specialized expertise or knowledge (USAID, 2010:68).

Additionally, at the G8 Summit in Maryland 2012 President Obama initiated a public-‐

private partnership program called “New Alliances for Food, Security and Nutrition”

indicating its importance for the president. The alliance include the G8 nations, African

partner countries and private sector partners, which together aim to help lifting 50

million people in Sub-‐Saharan Africa out of poverty within the next 10 years (Feed the

Future, 2012).

5.1.4 Political Attention Given to B4D

Every year the government releases its annual letter of appropriation to Sida. The letter

is a major guideline of how Sida should govern its work the following year, setting out

the objectives Sida should achieve. Also, the budget allocation is presented (UD, 2012).

The B4D program is mentioned in the first page of the letter from 2013. In the first page

there is a paragraph about which priorities Sida should give extra attention to during the

following year. There are six specific projects that are highlighted. One of these projects

is the partnership with the private sector through the B4D program (UD, 2012). This

proves that the government clearly wants to invest more time and money into the B4D

program during 2013. Furthermore, the importance of the private sector is also

presented in the annual letter of appropriation from 2012 as an important priority,

although the B4D program is not mentioned. Also, when looking at all the letters of

appropriation after 2007 the importance of the private sector is only highlighted in the

latest two letters (Sida, 2013). Thus, there seem to have been a clear and recent shift

towards giving more political attention to Sida’s co-‐operation with the private sector.

21

Another important document, “Sweden’s Policy for Global Development”, also written by

the Swedish Government, highlights the importance of the private sector. For example it

states:

In general, Swedish enterprises have a good reputation for social and

environmental responsibility. Sweden will help promote better knowledge

of and compliance with universal codes of conduct and other instruments,

such as the UN Global Compact and OECD guidelines for multinational

enterprises, through regular dialogue with representatives of the

governments, business sectors and civil societies of our partner countries

(2007:25).

In the policy guidelines it is clearly stated that Sida should use CSR as a natural part of

its engagement with the private sector in partner countries. Also, the paragraph ends

with stating that Sida will work closely with Swedish enterprises to increase bilateral

cooperation on social and environmental responsibility (Swedish Government, 2007).

Furthermore, in the policy guidelines one main goal is to increase the investment

climate in developing countries that benefits both local business development and

Swedish business interests. To reach this goal the government intends to, for example:

encourage CSR by promoting the principles embodied in the UN Global Compact and the

OECD guidelines for multinational enterprises, promote a closer partnership towards

Swedish corporations to make full use of the initiative, experience, and expertise, and

improve the conditions for the collaboration between Sida and the Swedish business

sector, without however, forgetting the Swedish principles of non-‐tied aid (Swedish

Government, 2007).

5.2 Analysis of Context

5.2.1 Governance Gap

22

The history of the GDA and B4D from the year of 2000 and onwards point at important

differences. As mentioned, USAID initiated the GDA, in 2001, while Sida has not been

very clear with regards to when it started focusing on working with the private sector.

Wanting to set a global standard USAID was amongst the first to initiate PPPs within

development (Reinicke and Witte, 2000). USAID clearly mentions in 2001 that the GDA

will collaborate with companies, while Sida recognize somewhere after 2004 that it

would be good to work with the private sector, but they do not mention distinctly how

to do it until 2012. Comparing USAID to Sida, Sida is catching up through its B4D-‐

program.

To understand the differences within the development programs an analysis of why the

programs where initiated is needed. Moving into the theoretical argument that PPPs

occur to minimize governance gaps this could clearly be seen within the GDA. When the

GDA was initiated USAID realized the importance of the increasing power of the private

sector for obtaining development objectives. This indicate that USAID might have

initiated the GDA because of an operational governance gap where USAID found

themselves lacking the information, knowledge and tools needed to respond to the

complexity within the liberalizing, technologizing and globalizing world. As mentioned

before, 80 percent of the financing from the US came from corporations in the beginning

of the millennia and USAID wanted to develop a strategy made for the 21st century as

stated by Colin Powell. Clearly, the increasing preference of MNCs made USAID

emphasize the work with them. Therefore, the conclusion is drawn that the GDA could

have been initiated because of the gap in developing co-‐operation between USAID’s

ability to promote growth and the ability of the private sector to do the same

In the case of Sida, it is more difficult to find proof of Sida wanting to close a governance

gap regarding MNCs since they initiated their program later than the US. It might be that

Sida wants to increase Swedish companies’ CSR work and that Sida found a lack of

sustainability efforts outside of Sweden since Sida states that they want to spread the

UN Global Compact guidelines and the OECD guidelines for multinational enterprises.

Sida might see a benefit in increasing the business climate towards more

implementation of CSR.

23

Furthermore, Sida might have wanted to align with pressure from other development

agencies and NGOs. For example Sida started working more with PPPs after they had

signed the Paris Declaration. In other words, this thesis point more towards that Sida

increased its work with PPPs due to outside pressure from the international

development community. As stated by Resare Sida followed the international

development trend called the “Private Turn of Aid” when implementing PPPs taking

inspiration from the US and Great Britain (2011).


As mentioned by USAID there are positive preferences that increase when USAID

partner with the private sector. For example, development objectives could easier be

reached through increased resources, better risk sharing and increased funding. It is the

rational choice of the USAID to increase its development objectives. As was proposed in

the 111th Congress USAID should focus on aid efficiency and effectiveness (Lawson,

2011). Because of the budget constraints PPPs reduce costs for USAID making decreased

costs a preference for them. Also, as stated in USAID’s annual letter of 2013, the

partnerships together with the private sector help USAID reach new places,

technologies, networks and knowledge. It is clear that USAID sees a lot of different

preferences coming with the GDA.

One preference that could be seen both within the GDA and the B4D is the preference of

sustaining the development work after the development help has been initiated. In other

words, USAID and Sida see a better future for their implementation strategy together

with companies when participating in PPPs. Here, both USAID and Sida increase the self-‐

sustaining of their programs by focusing on core business interests and making

sustainability profitable. This behavior will increase the likelihood that the initiatives

will continue after the end of government aid.

Another preference brought up both by the US and Sweden is seen within the

commercial dimension, where the countries want to make new developing markets

where they are lacking. As stated by Reinicke and Witte global public policy networks,

like PPPs, can help bridge the gap between demand and supply (2000). In this case the

24

demand would be the private companies seeking to increase their global market. The

development agencies also want to reach the poor in developing markets seeing

potential in partnering with corporations.

As mentioned in the context of political attention given to PPPs in Sida, Sida did not

mention private companies in the Letter of Appropriation until after 2005. This

indicates that there were no preferences for Sida towards the business sector until after

2005. The same pattern might be seen for USAID but since the time frame for this thesis

only is from 2000-‐2013 other research is needed finding out when the overlapping

preferences started in the case of USAID.

5.3 Actors

Looking at how Sida and USAID recognize the companies that they are collaborating

with in the GDA and the B4D-‐program could shed important light on the agencies’

differences within their programs. When trying to analyze the theoretical arguments

taken from Schäferhoff et al. actors can prevail interesting facts. Due to the importance

of actors, the following part will present how the GDA and B4D relate to their partners.

5.3.1 GDA Actors

The GDA is designed to benefit from the growing presence of multinational companies in

developing countries through formal partnerships marked by shared objectives, mutual

contribution to resources, and risk sharing (Lawson, 2011). According to USAID’s web

page a GDAs must involve one or more private sector organizations or actors. In the

GDA, organizations and actors in the private sector could be: private businesses, financial

institutions, entrepreneurs, venture capitalists, investors, foundations and philanthropists.

Since 2001 USAID has worked with over 1700 individual partners making it hard to map

every single one of them, because of the broad scope (USAID, 2013a).

Examples of actors engaged in an ongoing GDA project with USAID are Unilever, the Bill

and Melinda Gates Foundation and UNICEF. They work together to increase hand

25

washing with soap in Uganda, Kenya, Tanzania, Senegal and Benin. This project’s goal is

to eliminate viruses and infection amongst the people (Sida, 2009). Other companies

that have been working with USAID are Olam International, Cisco, Root Capital, MTV-‐

EXIT, MIT and Laerdal Medical (USAID, 2013).

If a partnership is going to be successful it is important to have a clear understanding of

the roles and responsibilities of each partner. USAID has stated clearly in the document

“Roles of Partners in Alliances” each partner’s function (USAID, 2013d). The functions of

the USAID alliance partners within the GDA program is that they should bring significant

new resources, ideas, technologies, and/or partners to development activities.

Successful partnerships should mobilize private sector contribution, both cash and in-‐

kind resources, on at least a one-‐to-‐one basis (USAID, 2013b).

The GDA-‐model makes the USAID achieve more work than they would have managed by

working alone. Moreover, the companies seek other interests. For example, Unilever

want to increase community organization and new approaches to marketing by

partnering with USAID (USAID, 2013e). Incentives for all partners participating in the

GDA are that risks, responsibilities and rewards are shared and therefore making the

partnership more profitable. Other aspects in which both partners prosper are

increased impact, reach, efficiency, and effectiveness of the respective investments in

developing countries.

Furthermore, the private sector is able to leverage USAID’s expertise, assets and

working relationships in a way that enlarge business success and fosters the broader

economic growth (USAID, 2013c). In conclusion, the three main incentives companies

have in partnering with the USAID are to access technical expertise, strengthen

stakeholder network, and reduce financial burdens (BSR, 2013).

5.3.2 B4D Actors

The most important actors within the Swedish PPP are the private sector companies and

Sida, representing the public sector. The actors gain a lot in partnering with each other

when trying to reach the goal to solve development problems. There are three main

26

forms of partnerships identified: financial partnerships, partnerships based on

expertise, and partnerships based on market. The third most important actor is the civil

society (recipient countries), being the major feature within the development process.

Mainly, a tri-‐sector partnership is allocated, including an alliance between an NGO, a for-‐

profit company, and a bilateral donor (Runde et al. 2013).

One company that Sida has been working with from 2011-‐2012 is Scania. Together with

Sida, Scania established a vocational training school in Iraq with a focus on

transportation. Other companies Sida has been working with are Accenture, Löfbergs

Lila, Abba Seafood, Tetra Pak, Indiska and KappAhl (Sida, 2013).

In May 2013 Sida held a meeting together with 20 leading Swedish companies where

partnerships were initiated. Some of the companies attending were H&M, Ericsson,

Volvo and IKEA. The companies made an alliance with Sida stating that they together

will contribute to sustainable development and to diminish poverty. According to Sida’s

Director General, Charlotte Petri Gornitzka, the companies should be role models and

show other companies how to reduce poverty (Sida, 2013). To conclude, the meeting

recognized that Swedish companies are increasingly important when it comes to

sustainable development, although, it seems uncertain how they are suppose to

participate and make a change.

By working with the private sector Sida wants to meet the great global challenges, such

as poverty, environmental deterioration and climate change. Also, Sida is keen to

achieve the Millennium Development Goals. Since Sida cannot do this by themselves

they want companies to fill the untapped potential in achieving the development goals.

Through working with the private sector Sida wants to mobilize resources and

encourage companies to develop new approaches within their core business to improve

the lives of people living in poverty. The last interest of Sida is to encourage businesses

to create a sustainable and inclusive business venture.

Sida is also making it clear that the private sector collaboration is not about promoting

Swedish business. Instead it is a collaboration to encourage development that would not

otherwise have taken place within the private sector because of the commercial risks.

27

The collaboration should always combat poverty (Sida, 2013a). The idea of the

partnership is not to foster business for its own sake. For Sida there is a strategic

importance to reach intelligent partnerships, including the business sector. The

collaboration should be based on frameworks that go hand in hand with Sida’s

development goals. These goals are usually consistent with serious corporation’s

sustainability plans (Sida, 2013b).

The business sector is important in the partnership with Sida since it offers

development solutions when traditional sources of capital and energy for development

are shrinking. Within the B4D-‐program corporate partners provide funding, market

access, access to technology, supply chain power and/or intangible benefits. Sometimes

donor companies could also offer a valuable brand and also give marketing

opportunities (Runde et al. 2013).

5.4 Analysis of Actors


It is clear that the GDA-‐program has been in force much longer than the B4D-‐program.

Under the GDA USAID has worked with more than 1700 individual partners while Sida

has just started working with 20 companies last May and it is hard to find how many

partners that Sida has been working with before last May. Again, this proves that Sida

recently has recognized the importance of the private sector within aid development

while USAID recognized the companies’ importance already in the beginning of the

millennium. Again this proves that USAID early on identified a governance gap between

its own ability to promote development and the ability of private companies to

contribute to fulfillment of the objective, while Sida probably was more forced by

outside pressure to work through PPPs.


28

The agencies are almost the same in one respect, their stated goal with working

alongside corporations. Both state that the goal is to more effectively reach higher

sustainable development more effectively through new resources, ideas and

technologies. These are the clear preferences of both agencies. For example Sida use

Scania to easier reach mechanics in Iraq. This shows that federal aid like USAID and Sida

often have a wide expertise within development work but often lack specialized

industry knowledge the private sector has.

5.4.3 Level of Compliance

Differences exist in the agencies viewpoint of how the companies are perceived. For

example, Sida makes it clear that partnerships with companies are not used as

promoting business but to encourage development that would not have occurred due to

the commercial risk. This indicates that Sida needs to put more pressure on the

companies they are working with. Sida does not want to be seen as a platform where

businesses can flourish and increase their profits but a platform where companies can

help Sida to work with poverty reduction.

At the same time USAID stress, according to them, the positive aspects, like reducing

operating costs, increased sales and increased brand awareness, for companies that

want to partner with USAID while Sida does not mention this. It seems as if USAID sees

company profits as something positive, while Sida views profits as a sensitive matter.

Since the GDA is seen as more pro business than the B4D the GDA seems to have a lower

level of recruitment for compliance than the B4D. This argument is strengthened

through the statements from Sida saying that business needs to be serious and comply

with Sida’s development goals through the company’s sustainability plan.

5.5 Governance Structure

The following part of the thesis takes a closer look at how USAID and Sida manage their

PPPs. The guiding principles and governance structure will mostly increase the

29

understanding of the development agencies’ compliance level explaining how the PPPs

are managed. Also, the argument of preferences overlapping is discussed.

5.5.1 Guiding Principles of the GDA

There are seven key principles guiding the alliance between USAID and the private

sector. The principles are based on the core themes of trust, equity, competencies,

inclusivity, partnership alignment, mutual benefits, and transparency. The following

table contains the most relevant principles for GDA cooperation.

Principle dimension Explanation

Trust Trust is an essential foundation enabling

partners to work together despite individual

alliance organizations' differing interest,

motivations, cultures, values, and

infrastructures. Trust is also fundamental to

building a fruitful relationship with

communities an alliance is trying to work with

or in.

Equity Equity implies that each partner is equally

welcome and important to an alliance. Global

Development Alliances are created on the

precept that each partner is of equal value to

an alliance.

Partnership alignment Each partner should come together to jointly

define an alliance's objectives according to

overlapping interests and agendas.

Mutual benefit Healthy alliances will work toward achieving

specific benefits for each partner over and

above the common benefits to all partners. If

each partner in an alliance is expected to

30

contribute to the alliance, they should also be

entitled to benefit from it.

(USAID, 2013)

5.5.2 Guiding Principles of the B4D

For the B4D-‐initiative there are ten guiding principles. The following table introduces

the principles studied in this thesis.

Principle dimension Explanation

A social problem and an area of

developmental improvement as the point

of departure.

Projects should be anchored in defined

problems and needs in partner countries, and

not be driven by company’s supply desires.

The scope of such problem solving and

benefits to the partner countries should be the

key justification for support by Sida.

Country strategy and sector alignment. The project should be within the parameters

of the country’s existing national policies, e.g.

Poverty Reduction Strategies. Preferably, the

PPP should be focused on the key sectors

defined in Sida’s development assistance in

line with the Paris agenda but is not limited to

these sectors.

Rights based approach. The project shall align with a rights-‐based

approach, strengthening key principles such

as participation, transparency and

accountability. Operations should support and

complement existing local democratic and

institutional management systems rather than

be contra productive to these.

31

Scaling-‐up potential. PPPs which potentially can have considerable

scale effect, and a greater impact i.e. through

replication elsewhere, will be given priority.

Market creation, not distortions. The PPP is designed and shall be conducted in

a way, which does not imply subsidies to

individual enterprises. It should trigger

market creation rather than imply market

distortions. Thus, the support should be

provided neutral to different existing or

potential market players, not favoring one

company over another.

Corporate Social Responsibility (CSR). Assurances that business is conducted

under high social and environmental

standards and is complying with

international conventions and standards

including environmental and climate

sustainability. Environmental impact

assessment for the business venture is

mandatory as for all Sida engagement.

(Sida, 2013)

5.5.3 Governance in the GDA

Usually a GDA is conducted within one country and implemented at the mission level.

Most partnerships last for three years (70 percent) and have about five partners (70

percent) (USAID 2013c).

32

Figure 1: How the GDA Model Works (USAID, 2013)

To recognize what a GDA-‐partnership is USAID established the following criteria: at

least 1:1 leverage (cash and in-‐kind) of USAID resources; common goals defined for all

partners; jointly defined solution to a social or economic development problem; non-‐

traditional resource partners (companies, foundations, etc.); shared resources, risks and

results; and innovative, sustainable approaches to development (USAID, 2013f).

When USAID is partnering with a private actor the activity is run by the operating unit in

charge for achieving the development objectives of the particular activity. It could, for

example, be a field mission or an office, either a regional or technical office with

operational responsibilities. It is uncommon that USAID work directly with the alliances.

Instead USAID provides limited oversight and support. USAID clearly states that

attention must be paid to governance, monitoring, evaluation and reporting in all GDA

cases (USAID, 2006).

The basic governance structure in an alliance is established in a Memorandum of

understanding (MOU) and/or procurement instrument. A MOU is a non-‐obligating and

legally non-‐binding signed document that labels the intents of the alliance members. The

document addresses a shared development challenge. It is of importance that clear

agreements are established. At a minimum the agreement should include: roles and

responsibilities of the different actors and their relevant supporting unit, frequency of

33

meetings, decision-‐making processes, participants, working-‐groups, outreach to

stakeholders, monitoring systems, and how to resolve differences (USAID, 2006).

Following, on USAID’s web page clear instructions are presented that include a step-‐by-‐

step explanation to how a company becomes a partner with USAID. To become a partner

the company needs to send in an application to the GDA-‐program (USAID, 2013f).

5.5.4 Governance in the B4D-‐Program

Within Sida’s framework the definition of B4D is as follows:

Schemes of business development undertaken by international or national

companies, or partnerships of communities, local firms, governments and

donors led by such companies, that exploit a company’s core business

model with the intention of securing payoffs in terms of profits and local

economic development”. The unique feature of such schemes is that Sida

provides direct assistance to individual companies, or to partnerships led

by such companies, on the understanding that the interests of the agency

and the company coincide (Sida, 2009:2).

One key to reach Sida’s goals is to use communication and competence development

both within Sida and in companies. To reach a functioning partnership Sida has

developed a B4D-‐toolbox seen in the picture below.

34

Figure 2: The B4D-‐Toolbox (Sida, 2013)

To become a partner with Sida a representative from the company needs to send in a

document to Sida called a Concept note. The Concept note should include basic

information about the company’s project, for example, project name, applicants, sector,

budget and time span. If the undertaking is found relevant based on the Concept note, a

full application should be submitted including a more detailed plan of the project (Sida,

2013). Furthermore, most of the B4D-‐projects that have been initiated by Sida are

handled by external organizations like for example other institutions, private companies

or other business organizations. This is because Sida does not have enough resources to

handle all the projects (Resare, 2011).

5.6 Analysis of Governance Structure


First, the core principles will be analyzed. It is clear that the core principles when

building the PPPs are different in USAID and Sida. USAID’s core principles are not as

specific as Sida’s and the agencies principles focus on different key dimensions. To start

B4D Toolbox

Health

Climate, Environment

Human security

Human rights

Education

Infrastructure ICT

Private sector development, Trade

35

with the thesis looks at whether any governance gaps can be prevailed within the core

principles. The principles of the GDA are too vague to indicate if any governance gaps

existed while developing them. On the other hand, it is clearer shown in the historical

and political context. On the other hand governance gap indications can be found within

the principles of the B4D. In the B4D Sida states that the partnership needs to solve

problems in partner countries indicating that this is of importance to Sida and without

the partnerships this would have been done in a less efficient manner. Also, Sida state

that partnerships should have a scaling up potential making partnerships replicable in

other markets. This indicate that Sida’s B4D might have evolved because of the previous

functional demand for effective governance solutions. On the other hand, Sida also state

that PPPs should be in line with the Paris agenda. Again, outer pressure could also have

been a reason for why Sida initiated the B4D since they mention the Paris agenda as a

main model.


When looking at the different actors’ interests which could overlap not much is stated in

the core principles of Sida. On the contrary USAID perceive partnership alignment and

mutual benefit as important aspects of a PPP. Here USAID find it important that all

partners involved should expect benefits when partnering with USAID. The overlapping

preferences in the GDA are for example clearly shown in Figure 1 where the alliance

opportunity is revealed.

5.6.3 Level of Compliance

When looking at USAID and Sida’s governance structures they are relatively similar and

well developed. Both institutions present clear guidelines for companies that want to

start a partnership with the agency. Remarkably, the differences within the GDA and

B4D prevail when studying the programs guiding principles.

By looking at the core principles of the PPP-‐programs it is clear that Sida uses stricter

compliance mechanisms than USAID. For example Sida put pressure on the importance

36

of CSR and the rights-‐based approach, and that work should always align with the

receiving country’s existing national policies. At the same time USAID does not mention

as specific compliance regulates as Sida. Instead the GDA focus more on trust implying

that trust is more important than formal rules. This shows that Sida relies on more

formalized institutional forms of partnerships than USAID. This could indicate that Sida

is expecting more collaboration problems since they include mechanisms to prevent

defection in their core principles. Also, USAID focus more on trust, which makes their

compliance level less strict.

Fourth, Sida mentions CSR as an important working method in PPPs while USAID does

not mention it. This could show that Sida looks more at sustainable development while

USAID sees the profits of the corporations instead. For example, one of the GDA’s core

principles include that each partner in a GDA should be perceived as equally important.

In other words, Sida views development in a bigger social context while USAID mostly

sees development from the perspective of the private sector.

The above analysis of the actors shows that Sida clearly state that B4D should not act as

business promoter. This could collide with one of their principles that states that: “We

should avoid acting as a market disruptor, but not hesitate to act as a market developer,

which sometimes includes that bad companies withdraw from the market and that good

companies flourish”. This would indicate that Sida would not mind acting as a business

promoter as long as Sida’s overall objectives was met. Also, they are both not very active

in the PPP when it has been initiated. Both use external partners to implement and run

the projects. In this regard Sida leans towards becoming more similar to USAID, which

does state that they should act as business promoters. In this case both agencies might

have more similar compliance levels than previously believed.

6. Conclusion

With Schäferhoff et al.’s (2010) arguments from rational choice theory to why PPPs are

formed it was possible to find the answers to why and how USAID and Sida engage with

37

the private sector. The study’s goal was to find how and why the US and Sweden’s

development agencies engage in PPPs and to find the differences and similarities when

comparing the GDA and the B4D-‐program. The findings indicate that the GDA and the

B4D are similar in the aspects of why they are working with the private sector, which is

with regards to the overlapping preferences both agencies distinguish. For example both

agencies recognize that working with private companies will help them reach higher

sustainable development through new resources, concepts and technologies.

Furthermore, the findings also point at important differences. For example, the rational

choice explanation of development agencies partnering with companies because of

trying to solve governance gaps is more applicable to USAID than Sida. USAID clearly

identified a governance gap between what business could do for development and what

USAID could do for development. This is because USAID was in the fore run in creating

the GDA while Sida started working with the private sector later. One explanation to

why Sida became engaged in the B4D could be because of outside pressure from

international development agencies, or that they experienced the governance gap later

than USAID. For example, Sida mention the Paris declaration as a main inspiration for

their program. As stated by Mitchell-‐Weaver and Manning, international organizations

are possible entrepreneurs of PPPs when stimulated by external pressure (1991). Since,

this argument is not further explored in this thesis, future research is needed to

elaborate on why Sida started working with the B4D.

Lastly, the agencies differentiate in how they are managing their PPP-‐programs. For

example, Sida has a higher compliance level in their program than USAID since Sida put

more weight on formalized rules. An example of this could be that Sida focus more on

CSR guidelines while USAID focus more on trust. In accordance to Schäferhoff et al.’s

argument Sida might use more rules because of their perception of a higher risk for the

prisoner’s dilemma.

Rational choice institutionalism clearly helps in trying to assess how and why USAID and

Sida engage in PPPs as the agencies are seen as rational actors developing through

different institutions. On the other hand rational choice institutionalism fails in

explaining why Sida started to use PPPs with regards to trying to solve a governance

38

gap. In future studies different mimicking theories could be used elaborating on the

influence Sida has gotten from other foreign aid trends. Moreover, future research could

also focus on studying other development agencies to be able to generalize the findings

and also focus on why USAID and Sida are different in their work when collaborating

with the business sector. Future studies are also needed in how effective development

aid is when working with the private sector and how legitimate this work is.

To conclude, USAID is engaging in PPPs because of the recognition of the governance

gap in how business could work for development and how USAID could work to reduce

poverty and because of overlapping preferences in working with the private sector. Sida

does also engage in PPPs because of overlapping preferences but it is more difficult to

distinguishing the governance gap in the case of Sida. Also, Sida has a higher compliance

level in their work with PPPs while USAID has a lower compliance level than Sida.

7. References

Abott, K. (2008). Enriching Rational Choice Institutionalism for the Study of

International Law. University of Illinois Law Review. Vol 2008 No. 1.

Andonova, L. (2010). Public-‐Private Partnerships for the Earth: Politics and Patterns of

Hybrid Authority in the Multilateral System. Global Environmental Politics. May, Vol. 10

Issue 2, p25-‐53. 29p.

Andonova, B., and Marc, L. (2003). Franchising Global Governance: Making Sense of the

Johannesburg Type II Partnerships. Yearbook of International Co-‐Operation on

Environment and Development, edited by O.S. Stokke and Ø.B. Thommessen. London:

Earthscan Publishing.

Billing, A., Forslind, M., and Metell Cueva, K. (2012). Swedish Development Cooperation

and the Private Sector -‐ The role of business in poverty alleviation and the role of donors

39

in promoting private sector contributions to development. School of Global Studies,

University of Gothenburg.

Bryman, A. (2008) Social Research Methods. Oxford University Press. New York

Bryson, J. M., Crosby B. C., and Stone M. (2006). The Design and Implementation of

Cross-‐Sector Collaborations: Propositions from the Literature. Public Administration

Review, Special Issue, 44-‐55.

BSR (Business for a Better World). (2013). Partnering with USAID: A Guide for

Companies. Pdf available at:

<http://bsr.org/reports/BSR_Partnering_with_USAID_Guide.pdf> Accessed: 25

November 2013.

Busan Conference, 4th High Level Forum on Aid Effectiveness. (2011). Busan Document

for Effective Development Cooperation. Final Outcome Document, 1 December 2011, Pdf

available at: <http://www.oecd.org/dac/effectiveness/49650173.pdf> Accessed: 28

December 2013.

Clapp-‐Wincek, C. (2004). Assessment of USAID’s Global Development Alliance. U.S. Agency

for International Development Bureau for Policy and Program Coordination, Pdf

available at: <http://www.oecd.org/derec/unitedstates/36141679.pdf> Accessed: 30

December 2013.

Conrad, C. (2012). Economic Development Public-‐Private Partnerships–How They

Deliver Value to Businesses. Journal of State Taxation. Jan/Feb, Vol. 30 Issue 2, p13-‐57.

DFID. (2009). Political Economy Analysis -‐ How To Note. A DFID practice paper, Pdf

available at: <http://www.gsdrc.org/docs/open/PO58.pdf> Accessed: 15 November

2013.

Dewar, T. (2008). Evaluating Global Development Alliances: An Analysis of USAID’s Public-‐

Private Partnerships for Development. GDA office, USAID, Pdf available at:

40

<http://www.usaid.gov/sites/default/files/documents/1880/GDA_Evaluation_reforma

tted_10.29.08.pdf> Accessed: 25 November 2013.

European Commission. (2008). Analysing and Addressing Governance in Sector

Operations. Tools and Methods Series, Reference Document No 4. EuroAid, Luxemburg:

Office for Official Publications of the European Communities

Feed the Future. (2012). Food Security at the U.N. General Assembly. The US

Government’s Global Hunger and Food Security Initiative, Web page available at:

<http://feedthefuture.gov/article/unga2012> Accessed: 15 December 2013.

Flinders M. (2005). The politics of public-‐private partnerships. British Journal of Politics

and International Relations, 7, 215–239.

Geddes, M. (2005). Neoliberalism and Local Governance – Cross-‐Narional Perspectives

and Speculations. Policy Studies, Vol. 26.

Green, D., Shapiro, I. (1994) Pathologies of Rational Choice Theory: A Critique of

Applications in Political Science. Yale University Press, Hartford, CT, USA.

Hertzberg B., and Wright, A. (2005). Competitive partnerships: Building and maintaining

public-‐private dialogue to improve the investment climate. Multilateral Investment

Guarantee Agency (MIGA), World Bank.

Hasenclever, A., Peter, M., and Rittberger, V. (1997). Theories of International

Regimes. Cambridge, MA: Cambridge University Press.

Hoering, U. (2003). Panacea PPP. Public Private Partnerships in German Development

Cooperation. Executive Summary. Berlin: WEED.

Houghton, J. (2010). Negotiating the Global and the Local: Evaluating Development

Through Public–Private Partnerships in Durban, South Africa. Springer Science+Business

Media B.V.

41

Lawson, M. (2011). Foreign Assistance: Public-‐Private Partnerships. Congressional

Research Service, 7-‐5700.

Lick D., Hamlin, R. (2012). Public-‐Private Parnterships for Promotion of Cross-‐Border

Trade and Transportation. Canada-‐United States Law Journal, Vol. 37, No. I, 171-‐206.

Lindahl, C. (2009) Business for Development: En Kartläggning av Svenskt B4D och Några

Tankar Kring ett Meta Program. 31 Maj

Mitchell-‐Weaver, C. and Manning, B. (1991). Public-‐Private Partnership in Third World

Development: A Conceptual Overview. Studies in Comparative International

Development, Winter 1991-‐92, Vol. 26, No. 4, 45-‐67.

Mullin, S.P. (2002). Public-‐private partnerships and state and local economic

development: leveraging private investment. Reviews of Economic Development

Literature and Practice, No. 16. Econsult. Pdf available at:

<http//www.eda.gov/pdf/econsult_final.pdf> Accessed: 5 December 2013.

Nelson, J. (2002). Building Partnerships: Cooperation between the United Nations System

and the Private Sector. New York: United Nations Department of Public Information.

Newman P., and Verpraet G. (1999) The impacts of partnership on governance:

conclusions from recent European research. Regional Studies, 33(5), 487–491.

OECD. (2008). Public-‐Private Partnerships: In Pursuit of Risk Sharing and Value for

Money. OECD Publishing, PDF available at: <http://www.oecd-‐

ilibrary.org/docserver/download/4208041e.pdf?expires=1395743778&id=id&accnam

e=ocid195437a&checksum=C62EEC56ECED0947508D981BE9B317D2> Accessed: 5

February 2014.

Peters, B. G. (2005). Institutional theory in political science: the "new institutionalism". 2.

ed., London : Continuum.

42

Reinicke, H., and Deng, F. (2000). Critical Choices: The United Nations Networks, and the

Future of Global Governance. Ottawa: International Development Research Centre.

Reinicke, H., and Witte, J. (2000). Interdependence, Globalization, and Sover-‐ eignty: The

Role of Non-‐Binding International Legal Accords. In Commitment and Compliance. The

Role of Non-‐Binding Norms in the International System, edited by D. Shelton. Oxford:

Oxford University Press.

Resare, N. (2011). Det privata närings-‐livet som förmedlare av svenskt bistånd – en

kartläggning. Diakonias och svenska kyrkans internationella arbetes slutsatser och

rekommendationer, Rapport 4, Årgång 2.

Richter, J. (2003). ‘We the Peoples’’ Or ‘‘We the Corporations’’? Geneva: IBFAN-‐GIFA.

Runde, D., Zargarian, A. (2013). The Future of Public-‐Private Partnerships: Strengthening

a Powerful Instrument for Global Development. CSIS, Web page available at:

<http://csis.org/publication/future-‐public-‐private-‐partnerships-‐strengthening-‐

powerful-‐instrument-‐global-‐development> Accessed: 17 December 2013.

Sagalyn L. (2007). Public/Private development: lessons from history, research and

practice. Journal of the American Planning Association, 73(1), 7–22.

Schäferhoff M., Campe S., Kaan C. (2009). Transnational Public-‐Private Partnerships in

International Relations: Making Sense of Concepts, Research Frameworks, and Results.

International Studies Review, 11, 451–474.

Schofield, N. (1996). ‘ Rational Choice and Political Economy’ In The Rational Choice

Controversy. ed. J. Freidman, 189-‐212. New Haven: Yale University Press.

Sida. (2002). “Good Governance” Division for Democratic Governance. Pdf available at:

<http://www.sida.se/Publications/Import/pdf/sv/Good-‐Governance_762.pdf>

Accessed: 10 December 2013.

43

Sida. (2005). Support for Private Sector Development: Summary and Synthesis of Three

Sida Evaluations. Sida Studies in Evaluation 03/05. Danielsson.

Sida. (2007). Public Finance Management in Development Co-‐operation – A Handbook for

Sida Staff. Department for Policy and Methodology.

Sida. (2009). Support to “Business for Development (B4D): A Review of New Approaches

and Donor Agency Experiences. Pdf available at:

<http://www.sida.se/Global/Partners/Procurements/Adam%20Smith,%20B4D,%20M

ay%202009.pdf> Accessed: 15 December 2013.

Sida. (2013). Collaboration with the private sector. Web page available at:

<http://www.sida.se/English/Partners/Private-‐sector/> Accessed: 15 November 2013.

Sidaa. (2013). “Frequently Asked Questions” Private Sector Cooperation and ICT. Web page

available at: <http://www.sida.se/English/Partners/Private-‐sector/Frequently-‐asked-‐

questions/> Accessed: 15 December 2013.

Sidab. (2013). Svenska företag i unikt initiativ för hållbar global utveckling.

Pressmeddelande, Article available at: <http://www.sida.se/Svenska/Kontakta-‐

oss/For-‐medier/Pressmeddelanden/Arkiv-‐2013/Pressmeddelanden-‐2013/Svenska-‐

foretag-‐i-‐unikt-‐initiativ-‐for-‐hallbar-‐global-‐utveckling-‐/> Accessed: 2 January 2014.

Stadtler, L. (2012). Designing public-‐private partnerships for development.

M@n@gement, 15(1), 77-‐100.

Swedish Governmental Document. (2007). Sweden’s Policy for Global Development.

Government Communication Skr. 2007/08:89 Pdf available at:

<http://www.government.se/content/1/c6/11/32/83/778a0c48.pdf> Accessed: 2

December 2013.

44

Tesner, S. (with the collaboration of Georg Kell). (2000). The United Nations and

Business: A Partnership Recovered. New York: St. Martin’s Press.

Toal, R. (2013). Top 10 Largest Donors of Foreign Aid in the World. Funds for NGOs, Web

page available at: <http://www.fundsforngos.org/article-‐contributions/top-‐10-‐largest-‐

donors-‐foreign-‐aid-‐world/> Accessed: 25 March 2014.

UD. (2012). Regleringsbrev för budgetåret 2013 avseende Styrelsen för internationellt

utvecklingssamarbete. Styrelsen för internationellt utvecklingssamarbete, Pdf available

at:

<http://www.sida.se/Global/About%20Sida/Regleringsbrev/Regleringsbrev_2013_My

ndighet_Styrelsen_f%C3%B6r_internationellt_utvecklingssamarbete.pdf> Accessed: 2

December 2013.

UN. (2004). Unleashing Entrepreneurship – Making Business Work for the Poor. Pdf

available at: <http://web.undp.org/cpsd/documents/report/english/fullreport.pdf>

Accessed: 5 December 2013

USAID. (2010). Leading Through Civilian Power the first Quadrennial Diplomacy and

Development Review. USAID, Pdf available at:

<http://www.state.gov/documents/organization/153108.pdf > Accessed: January 23

2014.

USAID. (2013). GDA History. US Agency for International Development, Web page

available at: <http://www.usaid.gov/gda/gda-‐history> Accessed: 25 November 2013.

USAID. (2013). Global Development Alliance Conceptual Framework. USAID/GDA, Pdf

available at: <file:///Users/stinaahnlid/Downloads/GDA-‐

concptualFramwork_PDABT767.pdf> Accessed: 15 March 2014.

USAIDa. (2013). Annual Letter. Pdf available at:

<http://pdf.usaid.gov/pdf_docs/pdacw323.pdf> Accessed: 25 November 2013.

45

USAIDb. (2013). Global Development Alliance Annual Program Statement. US Agency for

International Development, Web page available at: <http://www.usaid.gov/work-‐

usaid/get-‐grant-‐or-‐contract/opportunities-‐funding/global-‐development-‐alliance-‐

annual-‐program> Accessed: 6 December 2013.

USAIDc. (2013). FY2013 Global Development Alliance (GDA) Annual Program Statement

(APS). US Agency for International Development, Pdf available at:

http://www.usaid.gov/sites/default/files/documents/1880/2013_GDA_APS.pdf

Accessed: 25 November 2013.

USAIDd. (2013). Roles of Partners in Alliances. US Agency for International Development,

Pdf available at:

<http://www.usaid.gov/sites/default/files/documents/1880/Roles_of_Partners_in_Alli

ances.pdf> Accessed: 25 November 2013.

USAIDe. (2013). Build a partnership with us. US Agency for International Development,

Web page available at: <http://www.usaid.gov/partnership-‐opportunities/build-‐

partnership-‐us> Accessed 3 January 2014.

USAIDf. (2013). Global Development Alliance. US Agency for International Development,

Web page available at: <http://www.usaid.gov/gda> Accessed: 17 November 2013.

Whelan, G. (2012). The Political Perspective of Corporate Social Responsibility: A Critical

Research Agenda. Business Ethics Quarterly, 22:4 pp. 709-‐737.

World Bank. (2005) A Better Investment Climate for Everybody. Pdf available at:

<http://siteresources.worldbank.org/INTWDR2005/Resources/complete_report.pdf>

Accessed: 5 December 2013.

de Wildt, M., Elliott, D., Hitchins, R. (2006). Making Markets Work for the Poor -‐

Comparative Approaches to Private Sector Development. The Springfield Centre

46

Zammit, A. (2003). Development at Risk: Rethinking UN-‐Business Partnerships. Geneva:

The South Centre and UNRISD.

Political Science Bachelor Thesis Stina Ahnlid

Documents

Transcript of Political Science Bachelor Thesis Stina Ahnlid