This collection was collated by Xiuli Xu as teaching material on the Emerging Powers and International Development
course at the Institute of Development Studies
Lecture 3
Aid, Trade and Investment:
From Aid Effectiveness to Development Effectiveness
Source:http://cohd.cau.edu.cn/art/2011/12/10/art_8574_162190.html
Contents
• From aid effectiveness to Development Effectiveness: broader portfolio
of development strategies and policies.
• Differences and commonalities between aid of established donors and
of the BRICS countries: history, principles, modalities, geographic and
sector distribution, scale, etc
• Historical review of aid and business; different perceptions of firms in
development since colonial era
• Aid, trade and investment: public and private link mechanisms
1. From aid effectiveness to Development Effectiveness
broader portfolio of development strategies and policies
Source: http://blog.sina.com.cn/s/blog_86a61ff70100ya3v.html
1. Busan Declaration
BUSAN Partnership for Effective Development
Cooperation
• development co-operation is only part of
the solution... More effective co-operation
should not lead to a reduction in resources for
development... not just development
policies – to enable countries to make full use
of the opportunities presented by
international investment and trade, and to
expand their domestic capital markets.
• take action to facilitate, leverage and
strengthen the impact of diverse sources
of finance to support sustainable and
inclusive development
4/8/2015
2. Differences and commonalities between the aid of established donors
and of the BRICS countries:
history, principles, modalities etc.
Source: http://www.chinacatholic.org;
http://wiki.cnrepair.com ;
http://www.52yixin.com ;
http://61.181.245.61; http://t.sohu.com;
http://edu.cnxianzai.com;
4/8/2015
http://news.msn.soufun.com
Different history and
cultural backgroud: aid
and business in Western
world
2. Differences and commonalities between the aid of established donors
and of the BRICS countries:
history, principles, modalities etc.
Source: http://baike.soso.com; http://gb.cri.cn;
http://news.sohu.com; http://roll.sohu.com
4/8/2015
Different history and cultural background: aid, cooperation and business
in emerging powers, taking China as a case in particular.
2. Differences and commonalities between the aid of established donors
and of the BRICS countries:
history, principles, modalities etc.
• The economic and social
strucuture of these new
donors defines a "dual
position" as developing
countries on the one hand,
• ... and development partners
in their external relations on
the other.
Source: http://www.dgyetong.com
4/8/2015
What did you read from the figure? Implications to emerging
powers and international development regime
Source: Putzel (2013), presentation in CAU,Beijing
Source: Li (2013), presentation
2. Differences and commonalities between aid of established donors and of
the BRICS countries:
history, principles, modalities etc.
•
•
•
•
Institutions and actors
Definitions, volume and composition
Instruments and modalities
rules and standards (western)
a. transparency
b. tied aid and export credits
c. environment and social protections
d. corruption and governance
e. debt
Source: http://www.nipic.com; http://www.tplm123.com
Rules and standard (emereging
powers)
• Aid and export credits
• Win-win, mutural benefits
• No governance conditionality
• Social and Environment standards
Bräutigam, D. (2010). China, Africa and the international aid architecture. African
development bank
Many who comment on the economic cooperation activities by emerging powers and who compare them with
ODA always end up by comparing apples and oranges.
4/8/2015
3. Historical review of aid and business:
different perceptions of firms since colonial era
•
The role of the private sector is traditionally a sensitive and controversial
issue in development studies.
•
After the independence of countries in Africa, Asia and Latin America, when
development studies and theories got a boost, the reality was often one
where large, white-owned private businesses, which had for decades or
centuries enjoyed unfettered support from colonial administrators,
exploited the people and resources of the newly liberated nations.
•
That image of the private sector was solidified by continuation of illicit
activities by quite some multinational companies in the Global South. This
history greatly influenced development practitioners 'gut reactions to' the
private sector
Peter Knorringa (2010):A balancing act: private actors in development process
4/8/2015
3. Historical review of aid and business:
different perceptions of firms since colonial era
•
OECD donors have a long history of using ODA to support exports. As
recently as the mid-1990s, Germany directed 85% of its ODA to
infrastructure projects, rail, and ships that used German firms and technologies
(Evans and Oye 2000: 129). However, although the OECD norms on the use of
foreign aid in officially supported export credits are voluntary, they have
been successful in gradually bringing conformity into a contentious area.
•
Links between aid and exports began to be reduced when, after long negotiations,
the OECD members agreed to the 1978 Arrangement on Officially Supported
Export Credits, and its extension in the 1992 “Helsinki Package”, and recently
a “gentleman’s agreements”.
•
Many years ago, Europe, the U.S., Canada and Japan regularly had trade disputes
concerning tied aid. Tied aid in the context of export credits is considered
somewhat separate from the issue of general tying of aid to domestic goods and
services. It was defined as “aid credits for which the motivation is largely (or
significantly) connected to promoting the sale of goods from the donor
government’s country”.
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Bräutigam, D.
3. Historical review of aid and business:
different perceptions of firms since colonial era
Three stages or mechanisms of linking private
sectors to development and poverty
reduction:
• direct intervention of the firm through
foundations or ethic codes, e.g., fair trade
facilitated by UNCTAD;
• through public private partnership (PPP) to
provide public goods;
• taking CSR as a framework for development
agencies and corporations to work together.
Source: http://finance.mop.com;
4/8/2015
http://www.gemag.com.cn
4. Aid, trade and investment:
public and private link mechanisms
•
aid as bridge of public-private partnership
The orthodox view delinking aid from private capital may rule out the possibility
of public-private partnership where official development assistance can
leverage private funds to support large-scale infrastructure projects.
•
aid as vanguard of FDI
Apart from innovative co-financing mechanisms, aid can also have a vanguard
effect of facilitating FDI into less developed countries (LDCs). The Japanese
government has sought to use aid to facilitate FDI because aid can “transmit tacit
information on the business environment of the recipient country and reduce
country risk with the provision of a quasi government guarantee.”
•
aid as a foothold for linking into global value chains
Aid could enhance learning process by sharing technical and managerial
knowledge in trade to upgrade their industrial structures.
Xu Jiajun(2011)
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