SUMMARY OF DISCUSSIONS
Experts’ Seminar on
The Coherence and Impact of
Rich Countries’ Policies on Developing
Countries
Paris, June 23-24, 2003
25*$1,=('%<7+(2(&''(9(/230(17&(17(5
*29(510(1762)7+(1(7+(5/$1'6$1'6:('(1
:,7+6833257)5207+(
On June 23-24, 2003, the OECD Development Center and the Global
Policy Project convened an expert seminar on the development coherence
and impact of rich countries’ policies.1 Sponsored by the Governments of
Sweden and the Netherlands, the seminar took place at OECD
headquarters. It brought together more than 40 research managers and
policy analysts from seven developing countries and seven developed
countries, civil society organizations, academic institutions, bilateral
donors, multilateral development finance agencies, United Nations
organizations, and the OECD.2
The goals of the seminar were to:
ƒ
Take stock of ongoing and planned policy coherence initiatives and
encourage cooperation among them for greater impact. 3
ƒ
Identify a priority research agenda and promote new research
proposals about the development impact of rich countries’ policies, with a
special effort to foster work by research institutions in developing
countries;
ƒ
Identify appropriate funding strategies and research coordination
arrangements.
Key themes throughout the discussions were the need for coherent policy
reforms in the North, the thematic commonality of policy concerns across
regions, and the importance of regional/country policy and institutional
contexts in determining the impacts of developed country policies on
developing countries. This summary captures the main points made, the
main questions raised in the course of workshop deliberations, and the
research agenda that emerges.
Rich countries dominate the governance of global institutions. Their policies shape aid,
debt reduction, foreign investment, trade, knowledge, migration, and the global
management of natural resources. Certainly the domestic policies and institutions of
developing countries play a critical role in determining how rich-country policies and
policy shifts affect development and poverty. But there is something wrong in a global
system where $2.20 of taxpayers’ money is spent each day on each cow raised in Europe,
while 2.8 billion people around the world live on less than $2 a day. Increasingly, the
public in rich countries recognizes that the responsibility for global poverty reduction is
shared by rich and poor countries alike, while the adoption of Millennium Development
1 The structure and content of the seminar took account of the results of the Global Policy Workshop that
took place in Cairo in January 2003 under the aegis of the Global Development Network Annual
Conference as well as the coherence oriented research of the Center for Global Development that led to the
publication of the Commitment to Development Index in Foreign Policy in May 2003.
2
Participants are listed in the Annex.
3
OECD defines policy coherence for development as “taking account of the needs and interests of
developing countries in the evolution of the global economy. It involves the systematic promotion of
mutually reinforcing policy actions across government departments and agencies, creating synergies
towards achieving the internationally agreed development goals.” OECD is considering producing a
synthesis report on the approaches that developed countries are using to increase the coherence of their
policies toward developing countries.
2
Goal 8—“Develop a global partnership for development” has legitimized the notion that
the purview of development policy extends well beyond aid.
Development advocacy is critically needed so as to amplify the voice of the global poor
in OECD countries. But more research-based evidence is needed too, to frame the policy
debate and provide the impetus for reforms at the country, regional, and global levels.
Data gaps with respect to many policies will have to be filled and a better understanding
of transmission linkages between policies in the north and development results in the
south will have to be secured. Overall, what is at stake is a paradigm shift in thinking
about globalization, and the gradual adaptation of research priorities to the growing
interconnectedness of nations.
Policy coherence
OECD
OECD’s Development Assistance Committee (DAC) coined the term “policy coherence
for development” around 1991 and has worked to promote coherence by its members ever
since, especially since a 2002 request by the ministers for policies to be consistent with
the goals agreed at Monterrey, Doha, and Johannesburg.4
OECD’s Horizontal Program on Policy Coherence for Development provides a
combination of concrete analysis of the impacts of OECD policies in priority areas on
developing countries, policy recommendations—including identification of policy
alternatives—and efforts to build the will for reform, working with NGOs, business
communities, and parliamentarians in OECD member states. It also seeks to provide an
analytical framework for monitoring and evaluation of policy coherence, because MDG 8
specifies the need for mutual accountability of developed and developing countries.
As better information becomes available from research on the various parts of the policy
coherence agenda, it can be discussed by all policy communities concerned and provide a
basis for advocacy to convince OECD member states and their constituents of the benefits
of coherence. Research results must be relevant to policy makers, helping them to design
appropriately coherent policies.
Agriculture and trade are key issues now; others have more lead-time. More
disaggregated analysis is needed, showing how specific developing countries and country
groups are affected by agricultural support in developed countries. Other target policy
areas: governance for development (donor practices), investment and business climate
(anti-corruption, investment incentives, corporate governance), migration policies and
remittance flows, sustainable development, and developed countries’ imposition of
standards that affect trade and investments in developing countries.
4
To address policy coherence issues from a whole-of-government perspective, the annual OECD
ministerial meeting in 2002 called on the OECD to “enhance understanding of the development dimensions
of member country policies and their impacts on developing countries. Analysis should consider trade-offs
and potential synergies across such areas as trade, investment, agriculture, health, education, the
environment and development co-operation, to encourage greater policy coherence in support of the
internationally agreed development goals”. The Monterrey Consensus of March 2002 commits developed
countries both to increased and more effective aid and to policy coherence.
3
The Netherlands
European Union states have legally mandated policy coherence since the 1992 Maastricht
Treaty but most have made rather little practical progress. Now there is a renewed
impetus for policy coherence internationally, with MDG 8 requiring a global partnership
for development; the Monterrey consensus; the Doha Development Agenda; the World
Summit on Sustainable Development (Johannesburg) action program; and the OECD
2002 ministerial statement and action agenda.
To achieve more concrete results will require a further push from member states. The
Policy and Operations Evaluation Department of the Netherlands Ministry of Foreign
Affairs is preparing an analytical framework that EU member states can use to evaluate
adherence to the “three Cs”—coordination, complementarity, and coherence—and their
effects.
Policy coherence initiatives for development need to involve the whole of government,
taking an integrated approach to poverty reduction, beyond aid. In the Netherlands, policy
coherence initiatives are based on three principles:
ƒ
ƒ
ƒ
transparently balance potentially conflicting objectives;
do no harm;
promote synergy between aid policies and other policy areas where possible.
The Dutch approach starts with political impetus from the top. A Policy Coherence Unit
in the Ministry of Foreign Affairs promotes coherence both within the Netherlands’ own
policies and in EU and OECD-level policies. The Unit carries out focused policy research
on the impact of Netherlands, EU, and OECD policies. To promote accountability it
provides reports to Parliament and issues coherence indices and MDG 8 progress reports.
Current concerns include agricultural reform; intellectual property and development;
product standards and market access; and fishery policies.
To improve policies affecting West African cotton, the Unit began with a strategy paper
and then worked at two levels: (1) supporting West African governments in WTO dispute
settlement and in WTO agriculture negotiations and (2) cooperating with NGOs and other
donor agencies.
Sweden
Sweden’s policy coherence initiative has some similarities with the Dutch approach. A
bill of May 2003 requires that policies in all areas be consistent with the goal of
contributing to equitable and sustainable global development. A parliamentary
commission worked for two years to review 40 – 50 years of development experience and
found that all areas of policy affect development outcomes. All nine ministries, including
the Ministry of Finance, were involved in writing the new bill.
The bill takes a rights-based perspective based on the Universal Declaration of Human
Rights and calls for strategies that respond to the needs of the poor. Central areas of focus
are: respect for human rights; democracy and good governance; gender equality;
sustainable use of natural resources and environmental protection; economic growth;
4
social development and social security; conflict management and human security; and
global public goods. Further analysis is needed in areas including global public goods,
migration, conflict prevention, agriculture, and the private sector.
What is needed now is to find ways to operationalize advice and get recommendations
implemented, both domestically in Sweden and in influencing international decision
making. The change in perspective also has organizational implications.
Swedish development cooperation is being restructured around a single objective:
contributing to an environment that supports poor people’s own efforts to improve their
quality of life. Development cooperation is seen as a complement to partner countries’
and counterparts’ own efforts.
Government will report annually to parliament on the implementation of the policy for
global development, and a citizens’ forum is being created to advise ministers and
government organizations.
Other initiatives
Japanese agencies are focusing on issues of policy coherence/incoherence.
The World Bank and the IMF have ongoing initiatives to promote coherence in the
policies of developing and developed countries and international agencies. In
collaboration with the OECD DAC, they produce Global Monitoring Reports on
coherence issues twice a year for the Development Committee.
Additional points from discussion
Political dynamics
Do developed countries have the capacity to ensure coherence, in democratic societies
with vested interests?
In these countries, the trend toward greater coherence in policies is accompanied by
greater rigor in budget structures and techniques and greater public scrutiny of public
spending. These latter trends allow the public to understand better the place of aid in
government policies and operations and the contradictions that arise between aid and
other areas of policy. The increased transparency, with more information at the disposal
of a wider public, may create enough public pressure to achieve greater coherence across
different areas of policy.
Practical difficulties in achieving greater policy coherence include:
ƒ The value placed on vertical coherence within a single field of policy
ƒ Interdependence among policies (not coherence), e.g. among education and
employment and migration
ƒ Lack of incentives for making policies more development-friendly.
5
The specifics of these practical difficulties vary across developed countries. For example,
public opinion in Japan knows aid is not very effective and concludes as a result that aid
should be reduced, not improved or increased.
The achievement of policy coherence for development depends heavily on political will
and political compromise. More systematic knowledge is needed about how to achieve
policy coherence in situations where political interests diverge and the policy decision
making process is not well organized. Part of the research agenda should thus be to
illuminate the political approaches, institutional arrangements, and administrative
procedures and mechanisms that are helpful for achieving coherence. This path of
research would involve two steps:
ƒ Clarify the analytical concept of coherence
ƒ Undertake systematic comparative studies of best practice among rich countries in
achieving coherence. It will be useful to distill comparative lessons from experiences in
the Netherlands and Sweden and also in the UK and Germany.5
An inclusive approach
Competing interests at four levels impede the implementation of policy coherence for
development:
ƒ
ƒ
ƒ
ƒ
Among rich countries
Between developed and developing countries
Among developing countries
Among groups within developing countries
To overcome these problems a top-down approach, focusing on influencing high-level
policy makers in developed countries, is not enough. Within each sector and subsector it
is also necessary to promote coherence among developing countries and among different
interest groups within them (e.g. producers, suppliers, processors, marketers). To support
this approach requires disaggregated analysis of policy impacts at the household level in
specific countries and in groups of countries within specific regions.
From the perspective of developing countries, not much coherence is visible yet in the
policies of developed countries. But where aid donors have defined frameworks for
achieving consistency in their policies, the real impact of their policies will be easier to
evaluate.
Actions needed
ƒ Within in DAC/OECD, and their member countries, peer reviews, donor impact
reviews at the country level and the work of OECD substantive committees provide
useful opportunities for advancing the cause of policy coherence and for stimulating
relevant research and debate.
5
Two OECD papers are useful sources of analytical groundwork. “Building Policy Coherence: Tools and
Tensions”, Occasional Paper 12, Public Management Service, OECD, 1996; and “Improving Policy
Coherence and Integration for Sustainable Development: A Checklist”, Public Management Service,
OECD, 2002.
6
ƒ Member states of the OECD and EU need to be challenged to increase the coherence
of their policies and the positions they take in multilateral negotiations. Here political
commitment and political savoir-faire are just as important as the knowledge yielded by
research.
ƒ Developed countries need to pursue coherence not just within the national context but
also in their relationships with the international financial institutions including the World
Bank and IMF, and with UNDP and bilateral agencies of other developed countries.
ƒ Coherence is not an end in itself but a means to better development impact: coherence
can be achieved without poverty reduction impact where agents focus on the same goals
that ignore important needs. Thus efforts to achieve coherence need to be closely tied to
and guided by measures of efficiency and impact.
ƒ There is a big gap in knowledge about how OECD policies really affect developing
countries on the ground. More focused research is needed on impact at the global,
country, and thematic levels.
Impact research
From the Paris discussions both by theme and by region, the following themes emerged
as the top priorities for more research: trade, including trade in services; agriculture;
labor migration; aid; the international financial system; and intellectual property rights.
Within these broad areas, it was emphasized, research should focus on:
ƒ
ƒ
policies that have scope for improvement
policies that have a major impact on developing countries.
Participants emphasized the need to determine the impact of specific policies and their
reform on specific developing countries and on the poor within countries, as well as to
assess how reforms would affect different constituencies in rich countries.
Policies on trade, migration, aid, the environment, and intellectual property rights were
discussed extensively at the January 2003 Cairo workshop and were not featured
specifically in the Paris agenda. However, participants in Paris confirmed the
importance of these themes and raised some additional questions for research on them,
which are noted in this section.
Impact research: thematic
International financial system
The international financial system has major shortcomings in spite of the reforms
undertaken since the Asia crisis. The underlying problem is that the governance of the
system remains weak and in need of external monitoring/standards/review/sanctions.
Lack of representation of developing countries affects the legitimacy of the system and
leads to poor proposals and policies for its reform.
Efforts to reform the international financial architecture need to take a holistic approach if
they are to achieve the necessary internal and external consistency. Developing countries’
concerns will need to be taken into account in setting new standards. It will also be
important to benchmark financial variables against concrete indicators of developments in
7
the real economy—which generates the financial resources for investment. Multilateral
investment agreements need to require transparency and accountability.
Researchers and reformers should be mindful of the interrelationships among trade and
finance issues; for example, GATT/WTO negotiations cover financial services, and the
EU and others have been asking for financial sector liberalization.
Discussions of global financial architecture should not neglect the important potential role
of regional financial architecture. A regional concerted approach can help greatly to limit
financial contagion.
To further the improvement of the global financial system, OECD and the Global Policy
Project should:
ƒ Develop a network of researchers working on global financial and corporate
governance issues, building on existing networks.
ƒ Encourage policy makers to voice privately their views on the governance of the
financial system and to identify specific weaknesses.
ƒ Help develop case studies, give access to information.
ƒ Help sponsor and find funding for research and a conference on global financial
governance.
Issues for research
ƒ What are genuine market failures?
o Why do countries not adopt “first best”? To what extent will greater
competition deliver better outcomes?
o What are the failures in the international financial system? In which area is
there a need for public international intervention in the first place? What
criterion to use? Stability? Growth?
ƒ What is the political economy of reform? Are proposed solutions really aimed at
improving legitimacy? What defines fair international governance?
ƒ What is the balance among private, public, and intermediate arrangements? Soft
versus hard law?
ƒ What is the actual representation of countries in various forums? What are actual
decision making processes in international financial forums such as the World Bank,
IMF, Paris Club?
ƒ What are some policy coordination failures and what can we learn from them?
ƒ What can we learn from experience with other international institutional reforms, such
as EU, regional trade and other agreements: when do they lead to desirable outcomes?
What are possible governance arrangements at the global level?
ƒ In what international areas have we seen productive forms of standard setting,
globally? ISO standards?
ƒ What are the effects on developing countries of developed countries’ laws governing
corporate policies, rules for multinational corporations, and financial disclosure
requirements?
ƒ Capital account management is a legitimate policy tool. What will happen to private
capital flows now that the boom of the 1990s is over?
8
Trade
Effects of reduced trade preferences
The success of the Doha Development Round is the most important task in the
development field today. One element involves the concern of certain least developed
countries and developing countries that multilateral agricultural liberalization and
changes to the ATC may erode their preferences and thus their future economic prospects.
Removing existing trade preferences raises a problem for countries whose capacity and
competitiveness are weak (e.g. many in the Caribbean).
ƒ
ƒ
ƒ
What is the size of this problem?
What interventions can help?
Who will pay?
Role of IFIs in supporting trade reform
The debate on policy coherence for development has focused too little on how the
international financial institutions can support the WTO process. Research is needed to
swiftly identify practical ways for them to do this, and especially to select developing
countries for compensatory finance in compensation for falling export revenues resulting
from the phase-out of MFN tariff preferences.
ƒ What is the potential cost of such compensatory finance?
ƒ Are the existing International Monetary Fund facilities flexible enough to deal with
the problem?
ƒ Is there a way to link this problem created at the WTO and a solution created at the
IMF?
Regional trade agreements
Regional free trade agreements are contentious; they can trigger the liberalization of
member economies in ways that are helpful for generating growth, but they cause
economic distortions.
ƒ What are the welfare gains to developing countries from such regional arrangements
and how do they compare with those from multilateral liberalization?
ƒ Are regional preferential trade agreements undermining progress in multilateral
liberalization?
New market access and supply-side constraints
ƒ Where could developing countries make good use of newly opened access to
developed countries’ markets? Where would they be hampered by supply-side
constraints?
Other trade issues for research
ƒ
Trade in services and tourism.
9
ƒ Tariffs and public finances—trade deals should be evaluated for their impact on
public finances, and to ensure alternative sources of public finance are in place.
ƒ Textiles—how will least developed countries be affected by the ending of Multifiber
Arrangement quotas? Will China’s exports displace those of other countries?
ƒ What will supplies of genetically modified food do to world prices; could they drive
low-income country food producers out of business?
ƒ Non-tariff barriers impose significant costs on developing countries, yet factual
information about their magnitude and economic costs is scarce, preventing proactive
multilateral rule setting and remedial action by developing countries and donors. More
needs to be known about the effects of anti-dumping provisions applied as a protective
measure for domestic industries.
Agriculture
ƒ Deeper understanding is required of the implications of policy reforms in rich
countries, whether through preferential trading arrangements or multilateral liberalization
efforts, on different groups of developing countries.
ƒ Food aid, export support, and anti-dumping actions require empirical research.
ƒ Proposals for flexibility and transitional periods, including through special and
differential treatment, need thorough analysis of their implications and consequences for
all.
Migration
ƒ Too little is known about patterns of migration, skilled versus unskilled migration,
and the economic effects of unskilled labor migration. Better understanding if also needed
of the scope, destination, delivery mechanisms, and impacts of financial remittances on
return migration and more productive investment.
ƒ How would freer mobility of low-skilled workers affect poverty in poor countries?
ƒ Would more liberal migration policies in developed countries have a beneficial
trickle-down effect on really poor people in developing countries?
ƒ What roles are played by visa policies, and by social security taxes on temporary
migrants?
ƒ What are the links between trade and labor migration?
Intellectual property rights
Knowledge and information policies are critical to development. There is a case for
treating knowledge as a global public good.
ƒ What is the impact of TRIPs in developing countries?
ƒ Is change in TRIPs politically feasible?
ƒ What would be the effects of changing TRIPs?
Developing countries’ policies
Developing countries are not merely the hapless victims of policy inconsistency in
developed countries. Much depends on their own policies. For example, they can use
countervailing duties to protect their agriculture against subsidized EU farm exports, or
they can conclude fishery agreements to avoid the risk of overfishing. Hence research on
impact should not neglect developing countries’ own policies, and the search for ways to
10
improve policy coherence should also focus on the interests, structures, and conditions in
developing countries that encourage policy incoherence.
Other themes for impact research
ƒ Arms control and trade, drugs, and money laundering have important destabilizing
effects on developing countries. What can developed countries do to mitigate or prevent
adverse effects, including in failed states?
Impact research: regional
East Asia
Major development issues and concerns in East Asia are:
ƒ Achieving sustained recovery from financial crisis
ƒ Managing globalization
ƒ The “China challenge”, and competitiveness
ƒ Narrowing the development gap among ASEAN members
ƒ Narrowing the digital divide between and within countries
ƒ Role of government vs. market in development
ƒ Role of international institutions (the IFIs and WTO are being severely criticized in
much of the region).
Rich country policies are of key importance in the following areas:
ƒ Trade: strengthening countries’ negotiating capacity for the Doha Round, and
negotiating regional and bilateral free trade agreements (East Asia is the last region of the
world to embark on such agreements; it is now catching up with the rest of the world).
ƒ Labor migration: economic, social, and political dimensions.
ƒ Aid: adequacy and effectiveness of ODA for the poorer countries.
ƒ Finance: preventing repeat of financial crisis; improving FDI inflows.
ƒ Intellectual property: protecting and developing intellectual property.
ƒ Environment: cross-border environmental pollution and regional cooperation.
Issues for research
Trade, migration, and FDI are the most relevant policy vectors for study. Research
projects already underway within the East Asian Research Network address the social
impact of the Asian financial crisis; indicators and analyses of vulnerability to economic
crises; and income distribution in East Asia. Under consideration are projects on the
social dimensions of cross-border migration; politics, institutions, and economic
management; and regional and bilateral free trade agreements.
New country case studies would be useful in the following areas:
ƒ Regional free trade agreements between a developed and a developing region, to
examine the impact of regional free trade agreements. This research would include a
comparative study of the ASEAN-Japan FTA and the ASEAN-China FTA. It would
11
study the motivations of contracting parties, their treatment of sensitive sectors, and their
trade facilitation and development measures. It would identify winners and losers and
analyze the political effects of the agreements. CGE modeling should be used to measure
dynamic effects.
ƒ Labor migration and its impact on sending countries, to examine the case for East
Asian regional cooperation and regulation of labor flows. This research would analyze
types and motivations of labor migration; receiving countries’ policies (selective
liberalization, legal and social protection); and benefits and costs for sending countries.
Countries to cover: China, Indonesia, and the Philippines. Both macro- and microanalysis should be used.
ƒ FDI in China, Indonesia, and Malaysia, to provide lessons on how to maximize the
positive impact of foreign direct investment on host country growth and poverty
reduction. China is the world’s largest recipient of FDI. Indonesia should be studied to
illuminate the role of FDI in resource development; and Malaysia, to shed light on FDI
and distributional policies. Determinants of FDI flows could be seen as source-country
policies (for example on corruption, labor standards, environmental standards); host
country economic environment and policies (macroeconomic environment, facilitation
measures, fiscal incentive performance requirements); and decisions by transnational
corporations (e.g. seeking markets, efficiency, and resources).
A study of Japan’s domestic reforms and their impact on Japan’s economic strength may
also be useful: it would show where there is scope for adapting policies so as to benefit
developing countries as well as Japan itself. Agriculture and labor immigration are
important issues in Japan today—agricultural policy affects ASEAN countries and
Japan’s import of migrants affects the Philippines and Thailand.
Pacific island countries (PICs)
The poor development record of Pacific Island countries is due as much to factors beyond
their control as it is to their own policy failings. Rich country policies impact heavily on
the PICs, whose small size and their isolation from major markets exposes them more
than many other developing countries to shocks from abroad. To facilitate the
development of these island nations requires a much better understanding of the impact of
developed countries’ policies. A severe problem is the extent to which aid rewards rentseeking behavior and encourages poor governance. Rich countries should give aid to
reduce poverty and accelerate development, not to buy UN votes or get access to natural
resources for their firms. And more pressure is needed for good governance in these
countries.
Issues for research
ƒ Causes of the fiscal imprudence observed in PICs.
ƒ Reasons for the heavy bias in the PICs toward aid and debt finance rather than foreign
direct investment.
ƒ How to combine economic efficiency with political feasibility for successful reforms.
ƒ How to facilitate PICs’ access to global markets, to better integrate their economies
within a single architecture for trade with larger countries. A country case study would be
helpful to explain why aid has failed to promote export-driven growth.
12
ƒ Impact of rich-country policies on nation building, particularly on the development of
local civil society as the crucial basis for effective governance. For aid to be more
successful in PICs, better understanding of the social/cultural/institutional context is
needed.
ƒ Appropriateness of public sector reform and of structural adjustment and financial and
trade policy reforms backed by aid.
ƒ Environmental effects of developed countries’ policies on small island states.
ƒ Issues in managing a global common: the Pacific Ocean and its marine resources.
South Asia
In South Asia a common perception is that the globalization agenda is set by vested
interests and powerful groups in rich countries, and that the latter try to impose their
preferred policies on poor countries. As a result, even policies that are good for the poor
get discredited when advocated by developed countries’ agencies.
Issues for research
Research is needed to provide a balanced perspective, especially on:
Trade
The effects of liberalization undertaken to date need rigorous quantitative research.
ƒ What is the impact on the poor of external liberalization by developing countries?
ƒ Much past research on these effects has posited that markets are undistorted, so its
results can be misleading. Studies need to take account of relevant distortions in domestic
policy (including minimum wage laws, controls on firing/retrenchment etc).
ƒ What are the costs to OECD consumers and the benefits to the poor from liberalizing
rich countries’ trade, including phasing out tariff peaks on labor-intensive manufactures?
Migration and labor mobility
ƒ The costs and benefits of migration in source and destination countries.
ƒ The nature of visa and other restrictions.
ƒ The current and future demographics of sending and receiving countries, and the
likely evolution of supply and demand balances for important skills.
Labor laws and standards
ƒ Health and safety issues, child labor.
ƒ Legal rights, including contract enforcement and the role of trade unions and other
groups in improving workers’ rights.
ƒ Economic controls, including minimum wage laws and exit restrictions.
ƒ Evolution of labor laws and standards in developed countries.
ƒ Effects of laws and standards on poor.
Aid
ƒ Country case studies on the effects of aid could encourage a necessary rethinking by
the global community of the geographic allocation of aid, targeting it more closely to
where the poor are. For example, two thirds of India’s poor are in the middle of the
country; a state-by-state approach to allocating aid may not be the best way to reach them.
13
Intellectual property
ƒ Property right or common heritage.
ƒ Patents and their cost and benefits for societies at different levels of development;
possibilities for dual patents that meet the needs of developing countries and developed
countries simultaneously.
ƒ Survey of literature and existing research on patents.
ƒ Benefits of patents through their effects on innovation.
ƒ Effects on economic growth of tightening intellectual property laws or their
enforcement.
Environment
ƒ From the standpoint of the poor, global public goods are easily seen as luxury goods.
The poor are more concerned with the supply of local public goods—e.g. clean drinking
water and clean air, forest products. At the national level policy makers face tradeoffs, for
example between preserving rare animal species or reducing chronic hunger.
ƒ Based on global consumer sovereignty, research should estimate the income elasticity
of demand for global public goods at different national income levels, and estimate the
benefits to citizens in high- and low/middle-income countries. With this information, the
costs of supplying/safeguarding global public goods can be allocated accordingly.
Middle East and North Africa
The points made on trade and migration apply equally to MENA countries.
Agriculture
The European Commission recently adopted a package of proposals to reform the
Common Agricultural Policy. Direct subsidies will continue to play an essential role in
supporting farm incomes in EU countries but will do so without distorting trade. The
proposed framework will improve the long-term coherence between the CAP and the
Doha Development Agenda and is expected to improve market opportunities for some
MENA countries’ exports. However, it will also affect the economic growth of MENA
countries by raising the international prices for many agricultural products of which they
are net importers. MENA’s labor markets are affected more by liberalization of
agricultural trade than of industrial trade.
The Kuwait Institute for Scientific Research has proposed a study of how reforms in the
CAP would affect differently situated countries in MENA, especially Algeria, Egypt, and
Tunisia. A regional dynamic computable general equilibrium model is being used to
consider the effects of different CAP reform scenarios on different groups within the
populations of these countries. This research would provide helpful information about the
knock-on effects of shifts in relative prices and how they trace through to producers and
consumers. Already the results show that poverty will increase as a result of the CAP
reform as now proposed.
Africa
For sub-Saharan Africa, developed country policies are the most constraining in
agriculture and trade. Note that access to markets is vitally important to many developing
countries but missing from MDG 8.
14
OECD (Sahel and West Africa Club jointly with the AGR/WME Directorate) is taking a
regional approach to analyzing impacts in agriculture, trade, and development policy, and
focusing on key subsectors or commodities (e.g. rice, cotton, or sugar in West Africa). To
do such impact studies in areas such as West Africa requires preliminary work on
methodology and data issues. For example:
ƒ How to take account of porous borders and unrecorded cross-border flows of goods,
people?
ƒ Certain commodities have better data than others (e.g. for West Africa, data on rice
and cotton are better than data on meat/livestock).
ƒ What methodologies exist to trace impacts of policies from the international to the
national and local levels?
ƒ How can we effectively combine quantitative data with qualitative and case study data
to arrive at relatively reliable impact analysis?
Impact research: global
Index of Development Commitment
The Center for Global Development is now working on the second edition of its
commitment to development index (CDI)6 It is intended largely as a communications tool
to educate and inspire action; it is targeted at the media, policy makers in developed
countries, and researchers. The CDI is designed to measure policies, not their outcomes or
impacts.
Actual index values should not be taken as seriously as countries’ rankings—which show
that countries that have the most potential to help, or the greatest potential impact on
development, actually make the least effort.
Issues for research
Work on building the index thus far has raised the following research issues:
Weights
ƒ What are the magnitudes of aggregate effects in each area covered by the Index?
ƒ What do people in developing countries see as the most important policy areas?
Trade
ƒ To what extent do preferential trade schemes for developing countries benefit the
poor?
ƒ What are the impacts on poverty of developed countries’ agricultural protection, crop
by crop?
ƒ What are the effects of very high import tariffs (e.g. presumably a 400 percent tariff is
not twice as damaging as a 200 percent tariff)?
Migration
ƒ What are the costs and benefits of brain drain?
6
Contact droodman@cgdev.org or mclemens@cgdev.org
15
ƒ What are the impacts of legal and illegal labor migration? Do they differ?
ƒ What is the value of policies that facilitate migrant remittances?
ƒ Some laws restricting migration are not rigorously enforced. What is the importance
of tacit aspects of enforcement vs. formal policies toward migration?
Aid
ƒ What are the costs of poor coordination among donors? How should these costs be
measured?
ƒ Are poverty reduction strategy papers (PRSPs) a suitable basis for measuring
harmonization of aid efforts? Do they really foster aid coordination and improve aid
effectiveness?
Foreign investment
ƒ Which rich-country policies most affect capital flows to/from developing countries?
Banking transparency laws? Tax information sharing treaties? Anti-corruption laws?
Intellectual property rights
ƒ What are the costs to developing countries of developed countries’ aggressive
protection of IPRs? (IPRs are not currently featured in the Index).
Environment
ƒ Which sectors and regions are most at risk from global environmental change?
ƒ How can environmental costs and risks be quantified?
ƒ What additional domains of environmental policy, not yet featured in the Index, affect
developing countries?
Security
ƒ When has rich-country military aid or intervention helped/hurt development?
ƒ What are the effects on welfare in developing countries of arms sales and transfers,
and of small arms production and export?
Methodological issues
ƒ How best to quantify such variables as donor coordination, migration policy, IPR
policy?
ƒ How should developed country policies be defined—where does one draw the line?
What about tax treaties? UN cooperation, and policies pursued by IMF and World Bank?
ƒ How best to quantify the impact of developed countries’ policies? For example:
o From individual rich countries to all developing countries (impact on
developing countries of a change in US policy)
o From groups of rich countries to a specific developing country (impact on
Mali of policy changes in different rich countries)
o Between individual rich and individual developing countries (impact on
Mali of change in US policy).
o Time series (Mali before and after a developed-country policy change).
o Cross section (raises issues of how to choose control countries).
o Analytic narrative (may be idiosyncratic).
16
Proposed Global Policy Research Program—Sussex University and Institute
of Development Studies
This proposed research program will look at the impact of a limited menu of developed
countries’ policies on a limited number of developing countries. It is designed to provide
the factual and analytical information to turn MDG 8 into an operational tool to reduce
world poverty. The research will identify winners and losers, define feasible reform
sequences, and encourage reconsideration of current policies in the light of hard evidence.
The study will concentrate initially on three policy vectors, analyzing their impact
through case studies in six developing countries. The principal yardstick for assessing
policies will be reducing extreme poverty. Because different policy vectors interact with
one another, studies will look at the effects of developed countries’ policies as a package,
rather than trying to trace the effects of individual policies as independent entities. Studies
will look at aggregate impacts—the effects of policies of rich countries as a group on
poor countries as a group—but will also look at individual country-to-country relations to
get a good understanding of impacts, variations in impact from case to case, and the
causal processes at work.
The program will be interdisciplinary, international, and collaborative, and developing
country researchers will have an important influence on the choice of topics to be
researched.
Policy research studies
Trade
ƒ Regulations, standards, certification: how do they affect the poor?
ƒ Agricultural reform, tracing the effects down to poor households. How would certain
reforms affect typical households?
ƒ Effects of preferential trade agreements.
ƒ Costs to developing countries of participating in the world trading system.
Migration
ƒ Recruitment of skilled labor—is the brain drain beneficial or not?
ƒ Return of rejected asylum seekers and refugees
ƒ What are the costs of illegal migration and who bears them? Is legalization of illegal
migration (or tightening up of restrictions) helpful or harmful?
Aid
ƒ Aid allocations across sectors, themes, and countries; transactions costs,
fragmentation, coordination and compliance with DAC principles of effective aid.
ƒ Learning, knowledge dissemination, and capacity building. Is aid in the right form to
develop needed capacity in developing countries?
ƒ Facilitation. Does aid facilitate the access of developing countries to world
commerce?
Country impact studies
The six developing countries for initial study will be selected to represent a range of
regions, size, development level, poverty incidence, policy quality, and institutional
strength. The research will gauge their exposure and responsiveness to developed country
17
policies. Researchers in developing countries will select issues for study and identify
interactions, based on evidence from current and past policies. A set of common scenarios
will be examined in all the countries studied.
UN Millennium Project
Ten thematic task forces are at work to develop an operational framework that will allow
all developing countries to meet the MDGs by 2015. Their final recommendations are due
in mid-2005.7 Themes covered are: poverty and economic development; hunger;
education and gender issues; child and maternal health; HIV/AIDS, TB, Malaria, and
access to essential medicines; environmental sustainability; water and sanitation;
improving the lives of slum dwellers; global trading system; and science, technology, and
innovation. Each task force looks at the impact of developed countries’ existing policies
in the area in question, and assesses what national and international policies are needed
for developing countries to achieve the MDGs.
The project focuses particularly on countries that appear furthest from meeting the
MDGs. It recognizes the joint responsibilities of developing countries and developed
countries and seeks to define the operational responsibilities of each actor so that existing
international policy frameworks (for example PRSPs, PRGF, World Bank country
assistance strategies, and UN development assistance frameworks) can become better
aligned with the MDGs.
Questions being addressed include:
ƒ Mapping official development assistance to the MDGs.
ƒ Are existing donor policies consistent with meeting the MDGs at scale?
ƒ Funding of global public goods, including research.
ƒ Suitable methods for assessing the impact of trade policies on developing countries
(for example, assessing the impact on households in net food-import countries of
removing developed countries’ agricultural export subsidies).
Points from discussion
Need for cross-country studies of impact
The Center for Global Development, Sussex, and UN Millennium Project programs all
assume that developed country policies produce identifiable outputs and identifiable
impacts. All show fatigue with cross-country approaches to understanding the effects of
policies. Certainly we need to look at the interactions that take place within developing
countries, but the country case study approach poses the challenge of how to derive
generalizable results. To get generalizable results, cross-country evidence is needed to
balance local initiative in defining topics for research. Cross-country studies would have
an especially high payoff in:
Trade
ƒ Services trade
ƒ Institutional reform, including rules for foreign investment and trade, and the effects
of private standards on access to developed countries’ markets.
7
Interim outputs: Human Development Report 2003; interim task force reports, late 2003; interim project
report, mid-2004. www.unmillenniumproject.org or Guido Schmidt-Traub.
18
ƒ How do developed countries’ policies affect incentives for nontraditional economic
activities, especially in the poorest countries? How to promote the
generation/regeneration of the modern economy in these countries?
Migration
ƒ Better data on magnitudes of migration flows, both legal and illegal. Even small
investments in better cross-country data would be very useful.8
ƒ Household data on remittances, to illuminate remittance flows and their uses and
effects. Remittances, formal and informal, have a big impact on poverty but are rarely
recorded in an identifiable way in household surveys.
ƒ How could managed as opposed to prohibited migration into developed countries help
poor countries?
Aid
ƒ Cross-country studies are needed of the effects on aid-recipient countries of
harmonization and coordination of aid, and of the costs of failure to harmonize.
ƒ Are vertically integrated programs more successful than horizontal programs in
promoting the attainment of the MDGs? What is the role of country strategy?
Need for a balanced view
The development policy debate remains marked by intellectual division. The basic
recommendation of “market liberalism” is that the best thing rich countries can do to
promote development is to undertake additional market liberalization. But the
development agenda is really much more complex. As well as some market liberalization,
it requires us to think about the rules in force and the building of capacities and
capabilities in developing countries. Viewed from this alternative perspective, rich
countries must ask: (1) How they can help developing countries build their institutional
capacities and capabilities, and (2) How they can facilitate a process of domestic demandled growth.9
The market liberalism paradigm carries two dangers. First, it is probably too politically
contentious to succeed. Second, political failure will encourage the myth that
development has stalled because of inadequate market liberalization.
The very strong reliance on markets that typified the Washington Consensus does not
take into account the structural changes that developing countries need to make to take
advantage of better market opportunities. Developing countries need more policy space,
and assistance for capacity building, so that they can take advantage of new opportunities
from changes in developed countries’ policies. Aid plays a critical role here; aid donors
should transmit experience in how to manage, teach about best practices, and help
countries set up responsive, efficient, and flexible government structures.
8
The World Bank has been studying this and has data on recorded migrants from 40 countries—but for
double that number of countries information is insufficient; IMF has good data on formal remittances.
9
For example, corruption is a core development problem. A very important area in which developed
countries’ policies can have a impact on the poor in poor countries is through taking the rents out of
corruption. Various measures exist for doing this, including improving business transparency by requiring
firms to “publish what they pay”, notably in the mineral extraction industries.
19
Research approaches
Impacts vary according to developing countries’ own policies and characteristics and
among socioeconomic groups within developing countries. Research should mainly take
the form of case studies of the impact of specific policies of developed countries on
specific developing countries and on poverty groups within them.10 Such a bottom-up
approach to research is the most practical way to derive policy-relevant messages. But it
will be vital to select topics and areas carefully, with an eye to producing generalizable
findings and broadly applicable lessons. Case studies should identify the specific
impediments to growth, development, and poverty reduction in individual countries or
regions and analyze their causal relationship to developed countries’ policies. Simulating
recommended policy changes by developed countries and tracing through their
implications will be useful.
Studies should also be undertaken within OECD countries to further the coherence
agenda of OECD and individual OECD countries.
To tap synergies, policy coherence work in the North needs to be connected with impact
research in the South.
Impacts need to be analyzed within a political economy perspective, taking account of
incentives in both developed and developing countries and recognizing the importance of
social history and culture. Studies need to identify winners and losers in both developed
and developing countries.
A key part of the endeavor should be to quantify “units of pain vs. units of gain”, and to
identify where they take effect. Such information makes it possible to pose policy choices
in terms of tradeoffs.
Different goals may lead to different policy recommendations. Before framing
recommendations for change in developed countries’ policies, researchers need to decide
what they want to see happen for the poor—better income growth? Bigger shares of
national incomes?
If the results of policy studies are to be accepted by people who can act on them,
coalitions for such studies need to be built carefully in advance.
Reforms must be seen as beneficial for important constituents within the developed
countries or they will not be implemented.
Partnerships will be key to successful research. Coalitions of researchers and research
institutions in developed/developing countries need to be built for this purpose.
A network should be set up to share news of proposed and ongoing work and to
disseminate results.
10
Such as a study of the effects of the Everything but Arms Initiative on Bangladesh, being carried out by
the Center for Policy Dialogue, Bangladesh, or—possibly—a study of the public health impact of the TRIPs
agreement in one country or several.
20
Relevance depends on shaping research to policy agendas. In particular, it will be worth
seeking the views of developing countries’ trade negotiators at Geneva on how research
could best help them. But research should not only be tied to ongoing or immediately
upcoming negotiations; broader-ranging studies with a long-term perspective are also
needed.
Next steps
Participants’ views converge substantially on the issues that need research: the main
vectors of trade, agriculture, migration, foreign investment, intellectual property,
environment, and security. Also aid, but aid considered in the light of interplay with these
others, and in order to widen the policy space of poor countries. Both cross-country and
individual country study proposals are being developed.
A more powerful impact on the policy-making communities in OECD countries would be
achieved if fragmentation is avoided and a comprehensive program of coordinated impact
studies is launched. Based on the results of the expert seminar, methodological
refinements and organizational details will be added following a workshop that the Center
for Global Development and the Global Development Network propose to host in
Washington DC in October 2003.
Next a specific research proposal will be finalized, costed, and submitted to the
Governing Body of the Global Development Network for endorsement, prior to its
submission to potential donors.
___________________
summary of discussions 070603
07-07-2003 5:37 PM
21
Annex: Participants
Mr. Ibi AJAYI
Professor of Economics, University of
Ibadan
Nigeria
Dr. Siow Yue CHIA
Regional Coordinator, East Asian
Development Network
Singapore Institute of International Affairs
Singapore
Mr. Yilmaz AKYÜZ
Director, Division on Globalization and
Development Strategies
UNCTAD
Mr. Stijn CLAESSENS
Professor, University of Amsterdam Finance
Group
Netherlands
Mr. Haidari AMANI
Executive Director, Economic and Social
Research Foundation
Tanzania
Dr. Michael CLEMENS
Research Fellow, Center for Global
Development
United States
Dr. Guido ASHOFF
German Development Institute (DIE)
Germany
Mr. Kaoru HAYASHI
Deputy Director General, JBIC Institute,
Japan Bank for International Cooperation
Japan
Ms Regula BABLER
Deputy Head, Development Policy Division,
Swiss Agency for Development and
Cooperation
Switzerland
Mr. Jeremy HEIMANS
Millennium Project Manager, Australian
National University
Australia
Mr. Anders BERLIN
Dg Relations Exterieures, Unit Economic
Analysis
European Commission
Belgium
Mr. Tariq BANURI
Senior Research Director, Tellus Institute
United States
Mr. Keith BEZANSON
Director, Institute of Development Studies
United Kingdom
Dr. Debapriya BHATTACHARYA
Executive Director, Centre for Policy
Dialogue (CPD)
Bangladesh
Dr. Satish CHAND
Fellow, National Center for Development
Studies, Australian National University
Australia
Mr. Mohamed CHEMINGUI
Research Scientist, Kuwait Institute for
Scientific Research
Kuwait
Mr. Ulrich HIEMENZ
Head of Research and Deputy Director,
OECD
Development Centre
France
Mr. Torgny HOLMGREN
Head Secretary, Ministry for Foreign Affairs
Department for Global Development Issues,
Expert Group on Development Issues
Sweden
Mr. Otto GENEE
Managing Director, Ministry of Foreign
Affairs DGIS Coherence Unit
Netherlands
Mr. Masahiro KAWAI
President, Ministry of Finance Policy
Research Institute
Japan
Mr. Hirohisa KOHAMA
Professor of Economics, University of
Shizouka
Japan
Mr. Sanjaya LALL
Professor of Development Economics,
Oxford University International Development
Centre, United Kingdom
22
Ms. Krista NAPOLA
Programme Officer, Department for
Coordination of Development Policy,
Ministry for Foreign Affairs
Finland
Mr. François PACQUEMENT
Director of Policy Studies, Agence francaise
de développement
France
Mr. John PAGE
Director, Poverty Reduction, World Bank
United States
Mr. Thomas I. PALLEY
Director, Open Society Institute
Globalization Reform Project
United States
Mr. Robert PHILLPOT
Postdoctoral Fellow, Australian National
University
National Centre for Development Studies
Australia
Mr. Robert PICCIOTTO
Director, Global Policy Project
United Kingdom
Mr. Zia QUERESHI
Senior Advisor, Global Monitoring
World Bank
United States
Mr. Luis RAPPOPORT
Professor, University of Bologna
Argentina
Mr. David ROODMAN
Research Associate, Center for Global
Development
United States
Mr. Gary SAMPSON
Senior Counsellor, World Trade
Organisation (WTO)
Switzerland
Mr. Guido SCHMIDT-TRAUB
Project Officer, UN Millennium Project
United States
Mr. Bio Goura SOULE
Chargé de recherché, Laboratoire d'Analyse
Régionale et d'Expertise Sociale
Benin
Mr. Lyn SQUIRE
Director, Global Development Network
United States
Ms. Yuki TOKOYAMA
Economist, JBIC Institute, Japan Bank for
International Cooperation
Japan
Mrs. Alexandra TRZECIAK-DUVAL
Project Head, OECD General Secretariat
France
Mr. Robert D. VAN DEN BERG
Director, Policy and Operations Evaluation
Department, Ministry of Foreign Affairs
Netherlands
Mr. Arvind VIRMANI
Director and Chief Executive, Indian Council
for Research on International Economic
Relations
India
Mr. Vangelis VITALIS
Chief Adviser, OECD General Secretariat
France
Mr. Alan. L. WINTERS
Professor of Economics, University of
Sussex
United Kingdom
23