TOP13 Crisis of Development Cooperation

• Classical aid in the form of ODA won’t be sufficent to achieve SDGs

• Definition of ODA (offical developemnt aid) is not appropriate anymore as it is too narrow and doesn’t capture adequately the reality

  • many donors, large and small

  • new models for financung development are often based on neo-liberak thinking

  • China is providing an alternative model, mainyl channeling infrastructure and financial development aid

Conceptualising best practice by the following criterias

1. Agency transparency: inclusive access to information about the operations of an agency e.g. China doesn’t publish any figures about its development activities

2. Minimal overhead costs: Huge agencies often need/use a lot of the aid funds for their bureaucracy, monitoring and hiring and high billing experts e.g. UN agencies

   • e.g. through; ratio of administraive costs to ODA

   • BUT very low overheads is not necesserily better as their is a need of structure and high salaries in this sector

3. Specialisation vs. fragmentation of aid: development policies often perform fragmented, agencies are splitting their budget among a large number of recipents and sectors

   • Problem: potential loss of effectiveness as there are countries and sectors that are “double” funded

4. Delivery to more effective channels:

   • Problematic field e.g. tied aid (contractually agreed/forced to spent a certain amount on the donor countries goods or services e.g. China), Food aid: higher income countries export their excess and floods the domestic market which leads to increasing competition and decreasing prices, TA: funding forces to hire consultants from the donor country BETTER

5. Aid is better, when allocations to less corrupt, more democratically free, poor countires (those in need)

   • USA: non-selectivity may reflect aid as foreign policy tool

• definition by OECD 1972 to conceptualise aid

• South-South cooperation; often other models of development aid: based on principles of solidarity, mutual respects, mutual benefit and no interventions in domestic affairs

  • e.g. China’s development policies

VS.

• North-South Cooperation: ODA (mainly)

  • flows to countries and territories

  • Benefiting recipients and multilateral development institutions are defined by OECD DAC list

    • provided by offical agencies or executive agencies

    • World Bank data on per capita income

    • based on western values: targeting economic development and welfare

    • usually has a concessional character (grant element is included

• Problem: development aid is experiencing a shift as the number of actors increased significantly and the measures have changed and ODA is no longer covering all the activities of the ODA donor

  • especially South-South-Cooperation is not covered by it

  • equity investment, export credits, long-term non-concessioanl loand CHINA

Normally

• aid aims to improve living conditions in poor countries

• DAC ODA definition leaves out that aid of donors also include other objectives such as intrinsic motivation to push own policy desires

  • asymmetrical balanc of power in aid relationships that is often manifested through the measure (e.g. TA with consultants from the donor country or tied aid)

Beyond aid

• includes the decreasing role of aid relative to other contributions to development

• Decreaing opportunity to shape policy through aid as the high number of aid actors decreases the weight of a specific partner

Four dimensions in which “beyond aid” differs from normal ODA

1. Proliferation of aid actors: SSC, Private actors (NGOs, church-based, private charities)

2. Proliferation of Finance sources and mechanisms: development finance targets the leveraging of private capital flow ( public-private partnership based on matching fun models)

3. Regulation: International regimes increasingly define the framework of development (e.g. climate change); fostering trade especially access to markets and migration are more important than aid for achieving SDGs

4. Knowledge: implicit knowledge of working in local contexts has become more relevant; knowledge generation, transmission, and use gain importance (development as a learning process)

Mobilising private capital

• positve as the public sector doesn’t have the means to achieve the SDGs

• Mobilising private capital also means supporting development of private entrepreneurship which is good for economic growth, decent labour, income generation

• PPP de-risks investments as the governmantal funds acts as a guarentee and enables other eco-system donor to invest too (leveraging private capital)

• Blended finans as a new measure of the huge development banks especially IFC, FMO and Proparco

BUT

• financialisation goes hand in hand with marketisation and capitalism

• fostering private sector also fostery property rights and trickle-down is often not working, increases unequal distribution

• Countries can become dependent on foreign financing (e.g. Lewis-Modell dual economy; economic growth and capital accumulation can stop as soon as the foreign means are withdrawn)

• hard to decide

• Global problems can only address through global cooperation

• COVID-19 has also shown that many countries have no chance in the competition for scarce goods

  • Distribution of scarce goods is managed by asymmetric power and those in need or without any capacities fall behind

    • vaccination

• Security: peace keeping vs peace building, also UN misssions or foreign military that should help can’t be seen as an exclusively effective tool, in the past it happened that those mission increased potential vor violence

  • Ruanda

  • Afghanistan

• BUT developing countries are often not the predictor of the global challenges

• Environment and poverty alleviation often related with trade-offs e.g. cement industry is a high-emitter BUT countries need cement for building infrastructure and also this creates labour