The Lithuanian approach to effective knowledge sharing

Visit to BOD Group company Baltic Solar Energy (sustainable energy projects) [Visoriai, suburbs of Vilnius- Mokslinink? str. 6A]

By Linas Linkevičius, Lithuanian Minister of Foreign Affairs

 
Knowledge and expertise sharing is key for the effectiveness of development co-operation.

Today’s development challenges require smart, innovative and creative solutions for successful mobilisation and sustainable use of all resources: public and private, domestic and international. We believe this can be achieved through efficient knowledge and expertise sharing.

Lithuania, like many other European Union Member states, has undergone an impressive period of institutional, economic and social reforms during the last two decades. This transitional period is a great source of ideas, knowledge and methodology. We are ready to share this with any state or society in transition.

Moreover, Lithuanian experts have been actively involved in sharing technical assistance. To give a few examples: up to now, Lithuanian experts have participated in 40 European Union-funded projects in European Union pre-accession and neighboring countries. Lithuanian expertise is provided in the sectors of agriculture, finance, social protection, customs and many others. Within the framework of bilateral projects we are sharing our experience of transition with the governmental institutions of our partner countries. For instance, since 2006, Lithuanian experts have trained over 400 customs officers in Ukraine and Moldova. Our experts also actively assist Georgian municipalities in strategic planning at municipality level, involvement of local communities in decision-making. These are just a few examples where we used our transitional experience. Today we see the potential to expand the geographical scope for our knowledge and expertise sharing.

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Lithuania’s transitional period is a great source of ideas, knowledge and methodology. And we are ready to share it with any state or society in transition.

We know what worked for us. First of all, we had to assure timely transition to democracy and market economy. Lithuania also faced the necessity of establishing a civil service that corresponds with democratic society standards. Moreover, reforms were related to macro-economic stabilisation, trade and foreign exchange, as well as setting legal and institutional frameworks to develop an appropriate level of public services.

Nevertheless, the model of the reforms of one country is not something that can be applied directly to another state. However, the spectrum of transitional experience is wide – transformations took place in every sector, be it public, private or nongovernmental. Therefore, one has the possibility to choose between different best practices for effective development. Analysis and assessment of partner countries’ local needs should provide the basis for proper selection of required expertise and further action. We consider the focus on ownership a very important element as transitional processes should be driven by partner countries themselves.

Finally, peaceful coexistence between countries and societies, democratic political systems with well-functioning and accountable public institutions, the rule of law, an independent judiciary system, a safe environment for investment, and proper trade conditions are all essential preconditions for the further achievement of development goals. This is why we see that sharing of knowledge and transitional experience should be properly elaborated upon in future discussions on the Global Partnership and the Post-2015 development agenda.


LT MinisterLinas Linkevičius is Minister of Foreign Affairs of the Republic of Lithuania.

The New Deal for Fragile States is more necessary than ever

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by Dr Helder da Costa, g7+

 
The tragic series of events that have struck South Sudan and the Central African Republic in recent months are of deep concern to us all. But for the g7+ – the group of post-conflict states that I serve as General Secretary – we have felt these countries’ pain particularly keenly. All g7+ members have recent experience of the kind of instability and bloodshed now rocking South Sudan and CAR. We know first-hand how conflict is ‘development in reverse’, and that a return to conflict can set progress back by decades.

South Sudan and CAR are both pilot countries for the ‘New Deal for engagement in Fragile States’, the landmark agreement endorsed by 44 countries and international organisations in Busan, Korea in 2011. The New Deal sets out to fundamentally change the way the international community works with countries emerging from or at risk of conflict, recognising that these states have been poorly served by dominant aid approaches designed for non-fragile environments.

Some have argued that, two years after it was signed, the concept of the New Deal is in crisis. Immediately following last week’s first Global Partnership for Effective Development Co-operation High-Level Meeting in Mexico – a meeting seeking to shape the aid landscape for the coming decades – now is a good time to reflect on where we have travelled since Busan, and how far we still have to go.

The New Deal is more necessary than ever

If recent events in CAR, South Sudan and elsewhere teach us anything, it is that the principals behind the New Deal are not only sound, but more necessary than ever.

The New Deal calls for peacebuilding and statebuilding objectives to be put at the forefront of international efforts in conflict-affected countries. That means helping these countries and their governments to strengthen security and justice systems, supporting inclusive political settlements and ensuring citizens have access to the jobs and basic services to help re-build their trust in the state. It calls on international aid organisations to ensure that everything they do in these environments serves to reinforce peace and statebuilding.

The New Deal also calls for donors – bilateral aid agencies, UN agencies, and International Financial Institutions – to change their modus operandi in a fundamental way. Operating effectively in countries in danger of falling back into conflict demands risk-taking, speedy action, flexibility, persistence, and even creativity.

SPLM Rally Juba 05/07/11

Genuine statebuilding demands great investments of time, resources and political will, along with a willingness to accept the new risks and uncertainties associated with change. With the New Deal, we will get out of it what we put in.

The tragedy is that – as the signing of the New Deal demonstrates – the ‘better angels’ within development agencies know these things. They know what works. But the systems they work within appear stubbornly resistant to change. Of course when dealing with huge bureaucracies, beholden to cautious taxpayers, implementing reform is difficult. But in the case of the New Deal, behaviour change from aid organisations has thus far been a chimera.

We are in a marathon, not a sprint

So what lessons can we draw from all this? First, we must recognise that the re-orientation of international engagement in post-conflict countries is first and foremost a political process, requiring real political commitment on all sides. To achieve change on the ground, the New Deal must change mind-sets and shift priorities at the very highest levels. Yet since Busan, too often it has been seen as a technocratic exercise; something that can be ‘implemented’ by one or two ministries and their local donors. We need to bring the politics back in. This means building momentum and commitment to change at all levels of society, from the grassroots to the President.

Second, we need to practice ‘strategic patience’, and recognise that some parts of the New Deal are going to take time. We are in a marathon, not a sprint. In particular, generating greater country ownership over the development agenda requires the undoing of years of established practice, the un-silencing of national voices, the resumption of real leadership and accountability by our weakened government institutions, which for years have been beholden to multiple external agendas. Country ownership requires new types of dialogue between donors, government actors and civil society, and deep consultation with our citizens on their priorities and aspirations. Fragile state capacity is by definition smaller than that of our donors. We need more time than our development partners.

Third, donors and international organisations need to resist the urge to do the easy things first. A desire to rush ahead with New Deal processes such as Fragility Assessments and Compacts has arguably resulted in a loss of quality. Processes intended to enable consultation among our citizens have instead tended to be driven by international consultants to fit donor schedules. Meanwhile, the things that donors really have within their power to grant – the changes to their aid and operating policies – have been de-prioritised.

The mistake many New Deal enthusiasts made was to think that any of this was going to be easy. Over-hyped expectations combined with an under-estimation of the difficulties involved, has led many of us to rush to demonstrate technical results rather than slowly working towards real change. We need to remember the maxim “more haste, less speed”.

Genuine statebuilding demands great investments of time, resources and political will, along with a willingness to accept the new risks and uncertainties associated with change. With the New Deal, we will get out of it what we put in.

Two years on from the Busan High Level Forum, we should celebrate the fact that we have started this journey together, reflect on how much further we have to travel, and steel ourselves for the long walk ahead.


DacostaDr. Helder da Costa is General Secretary of the g7+ Secretariat, based in Dili, Timor-Leste.Currently he is representing the g7+ on the Steering Committee of the Global Partnership for Effective Development Co-operation.

A version of this article originally appeared on the Guardian’s  Poverty Matters Blog 

Fostering New Partnerships for an Inclusive Post-2015 Agenda

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By Mark Suzman, Gates Foundation

 
In his 2011 report to the G20 on financing international development for the 21st century, Bill Gates laid out a vision of innovative partnerships built across multiple public and private actors with different competencies applying their unique assets to the shared challenge of improving human lives and livelihoods in the developing world. It is exciting to see this vision built in to both the structure and the agenda for this First High-Level Meeting of the Global Partnership for Effective Development Co-operation held this April 15-16 in Mexico City. The opportunity now is to make it a reality in the way we all work together.

At the heart of this vision must be the domestic resources and leadership of developing countries themselves as the largest and ultimately most sustainable source of finance for key public functions, including provision of basic services and infrastructure. When countries optimise the value of precious natural resources and build more efficient tax systems, and then invest their revenues in human development through the right policies, they are able to accelerate quickly down the path to better health and prosperity and to sustain momentum.

As one of the “new faces” of development finance, the Gates Foundation is also acutely conscious of the continued critical importance of Official Development Assistance (ODA). Donor aid helps fill funding gaps to meet the needs of the poorest, like basic education and health care. It can also help spark new markets for their needs: an area where the private sector does not naturally go. And it fuels R&D that leads to innovations – like vaccines, newer seed varieties and improved sanitation – that are crucial to countries lifting themselves out of poverty.

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As a “new face” of development finance, the Gates Foundation is acutely conscious of the continued critical importance of aid. This helps fill funding gaps to meet the needs of the poorest, like basic education and health care.

In this area of global public goods that matter for all the world’s citizens, there is a major role for properly focused traditional aid. This is why the mere volume of aid means little without equal attention to how aid is given and to whom. It is especially troubling if too little aid flows to countries most in need. While we celebrate the fact that ODA increased in 2013 it is concerning, for example, that a smaller share is in fact going to the Least Developed Countries.

Engaging the private sector – especially around concrete initiatives such as GAVI and The Global Fund – has proven highly effective to leverage their understanding of markets to bring new products at an affordable price to those who would otherwise be left out of the innovation chain: mobile savings, new seeds and lower-cost drugs. The private sector’s relentless focus on outcomes and results can also provide a useful discipline to the development sector.

And philanthropic organisations like the foundation – though limited in resources compared to governments and business – have the flexibility to experiment since they do not have to be cautious with public revenue or restrained by market constraints. They can invest in new ways that catalyse the engagement of other funders.

Middle income countries like China, Brazil, India, South Africa and Mexico now have a crucial and unique role to play in development: they can draw on their own recent experience of tackling poverty and can also tap into a large talent pool of well-educated scientists and engineers who are able to innovate in relevant ways.

This unique combination did not exist in the previously binary landscape of donor and recipient. The popularity of “triangular partnerships” among these rapidly growing countries, traditional donors, and poorer countries may be a sign of what’s to come, as countries work together to exploit their comparative advantages to their mutual benefit. The Gates Foundation is proud to be working with all of these countries in areas ranging from vaccine development and financing to agricultural research, to help bring these lessons to poorer nations following them on the path to greater prosperity.

The Global Partnership is a unique opportunity to draw on the strengths of this diverse and dynamic universe of partners and show what inclusive, multi-stakeholder partnerships can accomplish. Fostering a flexible and modern problem-solving approach will be particularly important to map out how the post-2015 development agenda will be financed and implemented.

The foundation believes that finishing the job on the Millennium Development Goals (MDGs) should remain a core part of the post-2015 framework, and that both ODA and countries’ own domestic resources will be a key source of finance for critical human needs. But the wider ambitions of fostering a socially inclusive and environmentally sustainable development path will only be achieved with and through the engagement of the private sector, government, and especially citizens themselves. This meeting of the Global Partnership for Effective Development Co-operation is a key step to help us get there.


SuzmanBioMark Suzman is the Gates Foundation’s President of Global Policy, Advocacy, and Country Programs, leading a team that helps build strategic relationships with governments, NGOs and other key partners to increase awareness, action, and resources devoted to global development and health priorities. He also oversees the foundation’s regional offices and strategic presence in Europe, Africa, China, and India.

Improve Aid Effectiveness

United Nations Organization Mission in Democratic Republic of Congo

By Homi Kharas, Brookings Institution

 
The multiple stakeholders gathered at the first high-level meeting of the Global Partnership for Effective Development Co-operation have clearly stated their intention to engineer “a paradigm shift from aid effectiveness to effective development co-operation”. By this, they mean that there are many ways to support development other than official development assistance (ODA), and that aid has different characteristics depending on its source and destination. Philanthropists, emerging market economies, and private business groups are now delivering substantial amounts of aid across the world, and are delivering this aid to support local governments and businesses and poor households as well as the national governments of developing countries. With more actors in development co-operation, there are more risks that programmes can become fragmented, unevenly implemented or otherwise incoherent with each other. The difficulties in achieving effective co-ordination and co-operation across aid providers can rise exponentially as the number and scope of activities goes up.

This is why it is so important to have multi-stakeholder meetings to agree on principles and modalities of delivering aid so that their actions are at a minimum co-ordinated, meaning they do not interfere with or jeopardize others’ activities, and at best co-operative, meaning jointly planned and implemented in a coherent programme. The Global Partnership seeks to promote both co-ordination and co-operation.

There is good news to report. Most importantly, despite the massive budgetary and financial pressures caused by the Great Recession, aid appears to be at record levels. The group of developed country members of the Development Assistance Committee (DAC) have raised gross ODA to over $150 billion in 2013, and, while statistics are less reliable, there are indications that aid from other countries has also increased. Private philanthropy, foundation giving and business development co-operation also appear robust.

There is further good news on the consensus among development partners that recipient governments should take the lead in the co-ordination and co-operation of aid activities, and that all providers of development assistance should participate in country-led co-ordination mechanisms and mutual accountability reviews.

But there is less good news on how this agreement in theory is playing out in practice. The Brookings Institution and the Center for Global Development have been jointly monitoring the quality of official development assistance through QuODA since 2008. We are just completing our third review, based on new data released as part of the monitoring exercise undertaken for this first Global Partnership meeting. In this review, we compare donor aid practices in 2008 with those in 2012 across four dimensions of aid effectiveness. Maximising efficiency is about how aid is disbursed across countries, and the division of labour among donors on their support to specific countries and sectors. Fostering institutions is about the degree to which donors are really prepared to put partners in the driver’s seat, by using country systems and respecting country priorities. Reducing burden is about lowering fragmentation and co-ordinating better across donors. Transparency and learning is about making available details on aid activities and harnessing the power of evaluation to improve impact.

Adult Education Programmes in IndiaWhile it is encouraging to see the Global Partnership adapting its mandate to an evolving world, it is also important not to lose sight of very practical targets that the aid effectiveness agenda has promoted and where considerable work remains to be done.

We find a mixed track record of improvements. There has been good progress on fostering institutions. The share of aid going to areas identified as priorities for development by residents of developing countries has doubled. The use of parallel project implementation units has halved. Aid is being recorded on budgets and operational strategies of recipients have improved. But there is very little change in the use of country financial and procurement management systems.

There is also far more transparency and learning today about the nature and scope of aid activities. For example, 230 organisations have published on the International Aid Transparency Initiative’s registry and there is more detailed and comprehensive reporting to the Creditor Reporting System of the DAC. But there is less evidence that this more widely available data is being used to improve the effectiveness of aid or to build stronger accountability. Published information should be useable for average citizens, not only for data experts.

More disappointing is the lack of progress on maximizing efficiency or reducing burden. Over the four-year time frame we studied, there has been no shift in reallocating aid to poor countries, or to better governed countries. The share of aid going to sub-Saharan Africa has not gone up despite the improved absorptive capacity in many countries there. Administrative costs of delivering aid are going up, not down. There is no evidence of a better division of labour across donors, despite a strong commitment to do so. The predictability of aid has declined in tandem with unpredictability in budget environments in developed countries. There has been no progress in untying the last remnants of aid. The average size of aid activities continues to fall, and there has been no increase in the use of the multilateral system, which has the potential to bring donors together in more co-operative and co-ordinated programmes.

In other words, while it is encouraging to see the Global Partnership adapting its mandate to an evolving world, it is also important not to lose sight of very practical targets that the aid effectiveness agenda has promoted and where considerable work remains to be done. Donor rhetoric has improved considerably, but donor practices lag behind. The underlying values of keeping true to commitments, implementing as well as articulating, and co-ordination to help national development strategies, are the core of effective development co-operation.


kharash_bioHomi Kharas is Deputy Director for the Global Economy and Development programme at the Brookings Institution. His books include “Getting to Scale: How to Bring Development Solutions to Millions of Poor People” and “Catalyzing Development: A New Vision for Aid.”

Why the Mexico Global Partnership meeting matters

An interview with Juan Manuel Valle Pereña Executive Director of the Mexican International Development Cooperation Agency (AMEXCID)

“Mexico is a country that understands the kinds of challenges that many others are now facing. So, we feel that we have a role to play in making everyone conscious that we have to work together and that we are willing to help other countries in their own development processes,” said Juan Manuel Valle Pereña, Executive Director of the Mexican International Development Cooperation Agency (AMEXCID) ahead of the first High-Level Meeting of the Global Partnership for Effective Development Co-operation, which Mexico is hosting.

As the meeting was set to kick off on Tuesday, April 15, Mr. Pereña urged provider and recipient country governments, businesses and civil society to work together on crucial development issues including progress on effective development co-operation, domestic resource mobilisation, South-South co-operation and knowledge sharing, the role of middle income countries and business as a partner in development.

“The next steps that can be taken with the Global Partnership are crucial elements for the post-2015 development agenda,” he said.

Ending Extreme Poverty with a New Model of Development

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By Dr. Rajiv Shah, U.S. Agency for International Development Administrator

 
Tonight, 860 million people will go to sleep hungry. This year, 6.6 million children will die before their 5th birthday. And every day, 1.1 billion people around the world—more than the population of North and South America combined—live in extreme poverty on just a dollar-and-a-quarter a day.

Even after adjusting for the relative price of local commodities, this is a desperately meager sum. With it, families must make daily choices among food, medicine, housing, and education.

We know it doesn’t have to be this way. For the first time in history, we stand within reach of a world that was simply once unimaginable: a world without extreme poverty.

From 1990 to 2010, the number of children in school rose to nearly 90 percent, and around two billion people gained access to clean water. Child mortality rates have fallen by 47 percent and poverty rates by 52 percent. In 2005, for the first time on record, poverty rates began falling in every region of the world, including Africa.

We now have a clear roadmap out of extreme poverty that is driven by broad-based economic growth and transparent democratic governance. With the deadline for the Millennium Development Goals drawing near—and conversations on the Post-2015 Development Agenda well underway—the global community has an opportunity to pioneer a new model of development and shape an inclusive, results-driven agenda that will end extreme poverty.

Equal WorkThe Busan High-Level Forum on Aid Effectiveness has built a strong foundation for this effort—tapping into the capabilities of governments, foundations, companies, and civil society organisations to solve the world’s greatest development challenges.

Through this new model of development, USAID is forging high-impact partnerships to harness innovation and scale meaningful results to end extreme poverty. This month, we launched the U.S. Global Development Lab, a hub of creative design and high-impact collaboration that is setting a new standard for development. Together with 32 cornerstone partners, the Lab will bring innovators and entrepreneurs from across the public and private sectors to answer the world’s most pressing development challenges through science and technology.

Earlier this year, through our Development Credit Authority, USAID partnered with GE and Kenya Commercial Bank to help health care providers buy life-saving healthcare equipment, including portable ultrasound devices and Magnetic Resonance Imagingmachines. For the first time ever, our private sector partner is covering the cost of the loan guarantee—making this program virtually costless for the taxpayer.

President Obama’s Power Africa initiative is another great example.

For most of the world, electricity allows businesses to flourish, clinics to store vaccines, and students to study long after dark. But for more than 600 million people in Sub-Saharan Africa, these opportunities simply do not exist. Power Africa encourages countries to make energy sector reforms—while connecting entrepreneurs to investment opportunities that are created by those reforms themselves.

Less than a year since launching, more than 5,500 mega-watts of power projects have been planned—putting us more than halfway towards the initiative’s goal of expanding electricity to 20 million homes and businesses. Just recently, we celebrated three local engineers who are lighting up Africa with solar-powered generators and pay-as-you-go power home meters.

Increasingly, the best ideas aren’t just coming from development professionals who have been in the field for three decades. They are also coming from scientists, inventors, and entrepreneurs around the world. That is why we launched the Grand Challenges for Development and created the Development Innovation Ventures fund—to enable problem-solvers to test their game-changing idea, whether it’s a mobile technology that boosts hospital efficiency or a $10 device that prevents the leading cause of maternal mortality.

A few years ago, we were lucky if we got half-a-dozen proposals in response to our solicitations. So far, these new kinds of open competitions have received more than 6,000 applicants—each with the potential to transform development. Even better, 70 percent of proposals are from inventors who we’ve never worked with before.

We look forward to strengthening this new model of development at the first High-Level Meeting of the Global Partnership for Effective Development Co-operation. Whether we work for a government agency or small local organisation, each of us can expand our emphasis on partnership and innovation. Each of us can deepen our focus on rigorous evaluation and scalable results. Working together, we can throw open the doors of development and engage millions of people in our mission to unlock a brighter future for all.


ShahBioDr. Rajiv Shah is Administrator of the U.S. Agency for International Development. Previously, he served as undersecretary for research, education and economics, and as chief scientist at the U.S. Department of Agriculture. Before that, Shah served for seven years with the Bill & Melinda Gates Foundation, including as director of agricultural development in the Global Development Program, and as director of strategic opportunities.

Bangladesh on effective development co-operation

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An interview with Mohammad Mejbahuddin, Bangladesh Ministry of Finance

 
Q) What progress has Bangladesh seen on making development co-operation more effective?
 
Through discussion and mutual exchange of ideas we are pushing forward effective development co-operation in Bangladesh. In 2010, we signed a Joint Co-operation Strategy with our development partners specifying areas for intervention to implement international aid effectiveness agreements in Bangladesh. The strategy aims to reduce aid fragmentation, increase national ownership and concentrate efforts to align with national systems.

We have a very strong co-ordination platform from which we pursue effective development co-operation, with 18 working groups operating in different sectors, each headed jointly by a development partner and a senior government official.

We also have a results framework for our Five Year Plan that gives government and development partners the chance to assess alignment, performance and results, and ensures accountability for all parties.

These successes are worth celebrating, but there are still challenges. More aid needs to be untied, especially for grants. Some partners have not yet fully aligned with our national systems. Transparency is also an issue, with not all aid appearing in budgets yet.

We are gradually working to overcome such problems and on the whole we are moving in the right direction. There is no lack of goodwill from both the government and development partners to move even further forward on effective development co-operation.

Q) What are the Asia Pacific region’s priorities for the Global Partnership’s High-Level Meeting in Mexico?

Representatives from Asia-Pacific governments, civil society and business gathered to discuss their vision for more effective development co-operation at a Global Partnership consultation in Seoul on March 10-11. Countries reviewed their progress in making development co-operation more effective and discussed common solutions to shared development challenges. They also voiced their top priorities for the Global Partnership’s first High Level Meeting to be held in Mexico City on April 15-16.

We had very interesting discussions and I think a few key issues emerged to take to Mexico from the region:

Firstly, representatives from countries in our region think that the question of the quantity of aid going to developing countries is still very important. At the same time, how aid is delivered is no less important. We want to see that commitments made earlier in Monterrey, Paris, Accra, and in Busan are all met.

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South-South co-operation needs a further boost on this continent. Asia is a region with great South-South potential if you look at geographic coverage and the number of initiatives already undertaken.

 

Secondly, we need to find out how closely we can link this Global Partnership with the post-2015 development discussion now being held in different regions. Given the wide gamut of development challenges expected to come under the purview of the post-2015 development agenda, it will be critical to enhance mobilisation of domestic resources as well as the supply of Official Development Assistance (ODA) and investment in less developed countries.

Thirdly, we see that South-South co-operation needs a further boost on this continent. Asia is a region with great South-South potential if you look at geographic coverage and the number of initiatives already undertaken. But we need a strong policy environment, institutional capacities and strong political commitment to drive this agenda forward. This is especially important given that South-South co-operation will greatly compliment traditional North-South co-operation.

Finally, I would like to add that policy coherence between development areas such as aid, trade, climate, migration and technology transfer is extremely important to bring about better results. In some cases, our partners are pursuing policies that are not in line with other policies. For example, many aim to support developing countries through aid policies and by working to provide 0.7% of Gross National Income as aid. On the other hand, policies in other areas work at cross-purposes to this agenda. Take trade policy. Some policies give preferential access to certain markets, creating an uneven playing field for trade between countries, which can contradict development co-operation.

We also need policy coherence related to worker migration, which can be an important form of development cooperation. Legal, time-bound selective migration programmes for low skilled workers can bring resources to poor countries many times higher than those which ODA and other traditional support can provide. Clearly, policy coherence is an area worth exploring.


BangladeshbioMohammad Mejbahuddin is Secretary of the Economic Relations Division, Bangladesh Ministry of Finance, and Chair of the Asia-Pacific Development Effectiveness Facility (AP-DEF) Steering Committee.

The private sector is the driver of development

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By Daniel Runde, Center for Strategic and International Studies

 
The international consensus is that the private sector is the central driver of development. The private sector needs clear rules of the game, security, rule of law, low corruption and property rights to flourish. This simple truth has begun to permeate UN conferences and other large development conferences.

At the Center for Strategic and International Studies we have been looking at this phenomenon for almost four years. We convened a broad bi-partisan commission to look at international development, carrying out a series of reviews of public-private partnerships, strengthening development finance capabilities, the intersection of good governance and growth, the power of supply chains, the costs of corruption to the private sector, and the need to strengthen trade and investment links. We also reviewed the changing needs and interests of middle income countries and how donors should think differently about them.

All of this work led us to conclude three big ideas for the United States and other donors. Firstly, broad-based, economic growth should be the central organising principle for U.S. development policy. Secondly, U.S. development resources and tools should be used to strategically leverage the private sector in promoting development outcomes. Thirdly, wider and more effective U.S. engagement in developing countries should be facilitated by using our trade and finance tools more cohesively.

One example of an international agreement where the private sector has taken on a far more central role has been the negotiations around the post-2015 round of development goals. These follow on from the Millennium Development Goals (MDGs) adopted by the UN General Assembly in the year 2000. The goals were simple, easily measureable, and inspirational.

The MDGs are a successful example of UN norm setting. Much progress on their accomplishment has been achieved through the success of China, India, and a number of other developing countries who have seen incredible economic growth in the last 15 years. Some of the success has also come from policies adopted by these countries, supported by foreign assistance. Donor governments and multilateral agencies have also either programmed their monies around these goals or have used them to justify spending decisions to varying degrees on their support for the MDGs. So although the goals themselves and the UN itself has not necessarily driven the progress, the UN successfully framed a challenge in a way that through the power of attraction or the power of soft coercion convinced others to align their work around the MDGs.

If the UN Goals are the “how,” the Busan Process is the “what” and is another example where the private sector is front and center in the discussions. Since 2011, this has evolved into the Global Partnership for Effective Development Co-operation. Delegates will meet in Mexico City next week to assess progress since Busan and commit to the new partnership. One interesting thing about the ongoing work of the Busan process has been the increased focus on the private sector in these deliberations and how to encourage investment, partner with them, and better understand how others can support what private enterprise does best.

Many multinationals have also changed how they look at development for the simple reason that their futures are tied to the success and prosperity of developing countries. As they search for new markets and develop new global supply chains they have become engaged in the business of development. A simple measure of this is the fact that foreign direct investment from traditional donor countries is now massively larger than Official Development Assistance (ODA). For example, U.S. ODA to developing countries is approximately $32 billion while its FDI is roughly ten times this number. At the same time, shareholder activism, a competitive global labor market, and increased expectations in communities where companies work have put additional pressure on companies to help solve a variety of problems. What was once a Corporate Social Responsibility conversation has evolved into a discussion about risk management and core business issues often centered around “social license to operate.” As one business leader puts it, “we had better be at the table or we are going to be served up for dinner.”

The benefit to this engagement is simple. 

MEXICO-UN-2010 ANNUAL REPORT-GIMPACKCompanies bring technology, global supply chains, and often best practice in terms of training. They bring their increasingly sophisticated corporate voluntarism, world class standards, investment capital and jobs, as well as much smaller amounts of corporate philanthropy.

As delegates meet to review current agreements and consider new ones, the private sector offers many things, but businesses should not be seen simply as an “ATM” for ODA shortfalls nor do they want to supplant local governments — it is in their interest to have well governed and functioning societies so that they do not have to step in and directly deliver public goods that are the realm of the state.

This is also an opportunity for governments and ODA to strengthen rule of law, property rights, fighting corruption, and ensure that people and local companies are participating in the formal sector — read paying taxes (hopefully at levels that do not discourage investment, savings and economic growth) and getting good or improving public services in return. ODA should also continue its push to improve the business enabling environment including supporting education so that citizens can participate in the global economy, a functioning state with defined roles, including a state that is able to provide security and enforce laws.


RundeBioDaniel Runde is director of the Project on Prosperity and Development and holds the William A. Schreyer Chair in Global Analysis at Center for Strategic and International Studies. He formerly served in leadership positions at the World Bank Group and the US Agency for International Development.

Boosting economic development: real aid to the Private Sector

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By Clare Coffey, ActionAid UK Programme Policy Manager

 
Right now, the development community is busy readying itself for the Global Partnership High Level Meeting in Mexico this month. Conversations there promise to range widely, but how best to use increasingly pressured aid budgets is sure to be high on the agenda both for donor and partner countries, as well as for the myriad of non-state actors who will be present.

The most effective use of aid will of course be subject to much debate well beyond Mexico. Should aid’s primary purpose be to support the delivery of essential public services to improve people’s lives in countries that simply do not have the money to do this themselves? Or should it be used to help countries grow wealthier and transform economically in ways that reduce poverty and inequality? Or perhaps we should use aid for both service delivery and catalysing economic development, with the question being to find an appropriate balance between the two?

These are decisions that should rightly be taken by partner countries themselves, in accordance with the now long established principles of country ownership and inclusive development partnerships. But in reality, evolving donor ‘fashions’ still very much colour the picture.

The current darling of many donor agencies is to channel increasing amounts of aid to economic development and to or through the private sector. In terms of securing long term development, it is widely accepted that economic growth is central but not sufficient – it is the type of growth that ultimately matters to promoting equality and reducing poverty levels. Indeed, according to a recent IMF paper, lower net inequality is robustly correlated with faster and more durable growth. In line with that view, it is critical that economic growth generates more government revenues that are then shared out, notably through taxes, and that a broad range of people participate directly in that economic growth through decent and well paid employment.

BusinessQuote2The role of states and the private sector is clearly critical here, with recipient countries needing to define and shape the quality and direction of growth so that it meets agreed social, economic and environmental objectives.

This is done using a carefully tailored set of economic and industrial regulation and subsidies, including but by no means limited to aid.

So as donors look at targeting increased aid at the private sector as an engine of economic development, it is important that they do so on the basis of clearly defined national strategies and using country systems and local procurement. Any donor targeting of aid to the private sector should be based on clear evidence that this spending not only will generate development results but that these will be truly developmental and transformational, helping to diversify economies away from heavy dependence on agriculture and informal sectors. They should also consider the opportunity cost of aid going to the private sector, given the likely implications in terms of reduced spending on other areas such as essential services. Critically, they should also assess whether aid is actually the best policy tool available for the partner country to promote economic development at all.

Unfortunately, it seems that donors are all too often pursuing other priorities in their support of the private sector. There are particular concerns that donors are using aid to benefit their own companies, either directly funding investments or by using aid to smooth the way for investors by securing greater access to resources or to markets. The G8 New Alliance, which seeks global investment in food security, is a case in point. Under this initiative, some African governments have committed to changing seed, land and tax laws to become more favourable to private investors. The promotion of aid to leverage private finance for the delivery of essential public services including health and education is also concerning, given growing evidence of the impact this can have for poor and marginalised communities.

Development agencies face many difficult questions in times of economic austerity, so it is more vital than ever that the international community meeting in Mexico next week is a chance to explore some of these openly and critically, and based on evidence of what works in the best interests of partner countries. The ultimate goal being that Official Development Assistance continues to deliver the best ‘bang for the buck’, reflecting the priorities and choices of partner countries themselves, and delivered in ways that supports country systems and local procurement.


CoffeybioClare Coffey is programme policy manager for ActionAid UK responsible for overseeing ActionAid UK’s research and policy analysis on a range of issues, including aid, the private sector and land. She can be contacted at clare.coffey@actionaid.org.

A view from the Asia Pacific on effective development co-operation

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By Tom Beloe, UNDP Asia-Pacific Regional Centre for Development Effectiveness

 
If the Global Partnership looks at the “how “of the post-2015’s “what” – what does this mean for the Asia-Pacific region?

Next week, participants from every sector and region of the world will come together in Mexico to reflect on the world’s progress in development effectiveness, and discuss tangible ways to link this with the emerging post-2015 agenda.

As the world’s most populous and diverse region it is important that perspectives from Asia-Pacific are well represented. The Asia-Pacific Development Effectiveness Facility is to launch a report to bridge countries’ efforts on this ahead of next week’s High-Level Meeting of the Global Partnership for Effective Development Co-operation.

The Asia-Pacific Effective Development Co-operation Report covers vital issues including progress on previous commitments, resources for development, South-South co-operation, knowledge sharing and business’ growing role in development.

Early results from a global survey on progress since the 2011 Busan Partnership Agreement for Effective Development Co-operation show the 15 Asia-Pacific countries taking part have made greatest progress on improving aid predictability and mutual accountability. However, this varies across countries and untying aid has also shown mixed results. Aid on budgets and gender equality also need further progress.

Meanwhile, traditional aid accounts for a declining share of development finance. Official Development Assistance to Asia-Pacific fell from 16% of international flows in 1990, to 4% in 2011. Foreign direct investment and remittances grew roughly ten-fold over this period, and lending has also grown rapidly. However, many countries in the region still see aid as very important. For example, the Papua New Guinea government is actively encouraging providers to invest more co-operation in economic sectors. Rather than devaluing traditional forms of development co-operation, such as aid, these trends challenge us to articulate its added-value in an increasingly complex and diverse landscape.

Mobilising domestic resources is critical to the success of the post-2015 development agenda, and there is still some way to go. Government resources equate to less than $1,000 per person when relative living costs are taken into account for 15 countries in the region, home to some 2.1 billion people. Natural resources can hugely boost development finance, but revenue streams are unpredictable and good management requires strong institutions. Huge volumes of illicit finance also flow out of Asia Pacific each year, from larger economies such as India and Indonesia, as well as others including Thailand, Viet Nam, Bangladesh and Papua New Guinea.

Tax avoidance drains domestic resources. Though the international community talks about supporting developing countries to raise domestic revenues and mobilise resources, less than 1% of aid went to this in 2011.

Middle income countries in the Asia Pacific are home to over 660 million people living on less than $1.25 a day, that’s some 57% of the global total.

MATERNAL & INFANT MORTALITY IN DEVELOPING COUNTRIESHowever, the middle income classification is determined entirely by countries’ average income – ignoring other aspects of development, whether economic, social or environmental.

The classification also masks huge sub-national disparities. If Indian states were independent countries, 11 would be in the top 20 countries with the highest numbers of people living in poverty. Yet, average incomes in India as a whole have passed the $1,035 ‘middle-income’ threshold – a meagre $3 a day on average.

These classifications urgently need revision and providers of development co-operation must look beyond reductionist measures to the challenges faced by complex and diverse middle income countries.

Many Asia Pacific countries see themselves in transition. Some are emerging providers of co-operation, but many still have strong demand for development co-operation, highlighting the various valuable roles it can continue to play.

South-South and triangular co-operation in the region is also growing as countries such as China, India, Indonesia and Thailand continue to provide development co-operation. Others, such as Papua New Guinea, have the longer-term goal of becoming a provider. Different initiatives are underway in these countries to strengthen policies and institutions with oversight of development co-operation.

Many countries in the region are actively sharing and receiving knowledge. Indonesia, for example, has shared its experience of rebuilding after the 2004 tsunami with other countries, such as Haiti, in the aftermath of natural disaster. Indonesia has also learned from others’ experience, for example basing its Program Keluarga Harapan (Family Hope Programme) cash transfer programme on Brazil’s Bolsa Familia.

Finally, the scale and growth of the private sector highlights the potential benefits of mobilising private resources for greater development effectiveness. Business is increasingly recognised as a fundamental partner in holistic development, with a lot of experimenting on different ways of bringing it together with other partners. It is important to maintain transparency and development effectiveness principles in such work.

Going into greater detail of realities on the ground in Asia-Pacific countries, the Asia-Pacific Effective Development Co-operation Report will capture their diverse experiences, challenges and positions for valuable discussion on effective development co-operation in Mexico.


tom_beloe_jpgTom Beloe is Governance, Climate Change Finance and Development Effectiveness adviser at the UNDP Asia-Pacific Regional Centre and Asia-Pacific Regional Development Effectiveness Facility (AP-DEF) Secretariat.

Watch him speak further on development effectiveness at the Global Partnership’s Asia Pacific Consultation in Seoul on March 10, 2014, here.

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