Director, OECD Development Centre
(www.oecd.org/dev)
University of Bern
17 October 2005
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The bumpy road to the 2005 UN World
Summit
Shifting paradigms of development cooperation
The present “consensus” model
Competing practices
A smoother road ahead?
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Development is back on the agenda
Major commitments on aid volumes and delivery:
 total ODA up by $50b in real terms by 2010 (over
70% of this from EU donors)
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Paris Declaration on Aid Effectiveness (March 2005)
A fragile consensus on policy coherence for development (Monterrey, 2002)
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But diversity in both visions and practice reflects competing approaches to global governance
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Incoherent practices mean development impacts are harder to achieve
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The development co-operation system needs to cope with and reconcile differences
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The Golden Age: Investment & Infrastructure
(1950 – 1973)
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Critical bottlenecks
Capital availability
Inadequate financing
Unequal exchange
Market failures
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Policy priorities
Infrastructure projects
Resource transfers: 0.7%
ODA/GNI target
Price stabilisation schemes
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From basic needs to the Washington Consensus
(1973 – 1992)
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Critical bottlenecks
Rural poverty
Financial sustainability
Macroeconomic management
Government failures
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Policy priorities
Development programmes for rural poor
Basic needs agenda
Structural adjustment lending
(1979)
Washington Consensus (1989)
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Poverty Reduction and the MDGs
(1992 – … 2005?)
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Critical bottlenecks
Local capacity for poverty reduction
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Policy priorities
Debt alleviation: HIPC Initiative (1996, 1999)
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PRSPs (1999)
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Governance and
Corruption
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Poverty reduction and the MDGs (2000)
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Financial and debt crises
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Global financial instability
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Inclusion in global system
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Higher volumes of development finance:
Monterrey (2002), Gleneagles (2005)
Policy coherence for Development: Doha (2001)
EU Communication (2005)
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The Paris Aid Effectiveness Agenda (2005)
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Enhancing aid effectiveness by:
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Strengthening country ownership
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Aligning donor country strategies with recipient systems through sectorbased approaches and increased budget support
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Harmonising donor practices through common arrangements at country level
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Managing for results: aligning with partner country performance assessment and results-oriented reporting
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Monitoring progress through 12 performance-based indicators
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Mutual accountability through transparent financial management
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(Source: DCD/DAC/EFF(2005)20)
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1.
2.
3.
4.
Priority setting
Implementation & allocation procedures
Monitoring and evaluation options
The development finance architecture
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1. Priority Setting in Practice
Actors
•A multiple donor-driven process (bi- and multilaterals)
•BWI dominance in policy selection
•Weakened and uncoordinated UN agencies
•Private institutions and multinational companies
Effects
Policy process
•Normative one-size-fits-all approaches
•Insufficient harmonisation of bilateral donors
•Mismatch with local conditions and needs
•Diverse minimum eligibility criteria
•Selectivity
•Lack of policy coherence across relevant policy domains
•Lack of voice and ownership
•Limited participation of local stakeholders
•Aid-dependency syndrome
•Diffused political responsibility
•Weakened credibility of domestic institutions
•Aid darlings and aid orphans
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2. Implementation in Practice
Effects
Actors
•A multitude of operating actors
•Volatile and unpredictable financing
•High transaction and coordination costs on the ground
•Inefficient use of resources
Policy process
•Improved but limited donor harmonisation
•Short-term disbursements
•Differentiated conditionality
•Plethora of donor-driven projects, policies and practices
•Multitude of funding mechanisms and instruments
•Parallel processes
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3. Monitoring and Evaluation in Practice
Actors
•Donor-side experts
•Evaluation units within donor institutions
•DAC monitoring
Policy process
•Monitoring of inputs
•Limited use of objectives outcome indicators
•Limited peer reviews
Effects
•Limited monitoring capacity
•Low accountability (on donor and recipient sides)
•Lack of transparent operations
•No arbitration mechanisms
•No internal learning by doing
•Limited international sharing of best practices
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4. Development Finance Architecture
Actors
•Competition among US / EU
/ Japan
•New actors
Effects
•No focal governance points
•UN under reform
•IFIs in transition
•Leading recipient countries
•Failed states
•DAC’s balancing act
•New patterns of dependency
•Erosion of legitimacy
Policy process
•Disconnected global, regional, national and local processes & programmes
•Scale-up of aid (Gleneagles communiqué)
•Dispersed innovative sources of financing (e.g. IFF, airline tax proposal)
•Differentiated partnerships
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Summit “Outcome Document” (para. 22)
“…We resolve:
(a) To adopt, by 2006, and implement comprehensive national development strategies to achieve the internationally agreed development goals and objectives, including the
Millennium Development Goals…”
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1.
Face reality: diverse preferences of donors and capacities of recipients
2.
Enable those who can to lead: capable recipient governments and local accountable institutions
3.
Provide incentives for participative and reform processes
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4.
Harmonise through programmes alignment around achievable, short-term, sectoral and regional
5.
Finance programmes through appropriate pooling of diverse resources (e.g. ODA, public and private funds) via budget
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6.
Promote contractual relationships where possible
7.
Develop mutual transparency and accountability through independent and evaluation mechanisms monitoring
8.
Reward positive outcomes through performance-based conditionality
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9.
Develop differentiated for failed states engagement strategies
10.
Mobilise stakeholders for a more coherent and accountable development finance architecture
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In dealing with the multiple and complex problems of development, we have learnt that we must be deaf, like Ulysses, to the seductive chant of the unique paradigm.
Albert Hirschman (1995)
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