University of Antwerp
The history of development
cooperation
Hasselt University
Interdisciplinary Course North-South
Crossing borders
16 February 2011
Robrecht Renard
University of Antwerp
Outline
1.
2.
3.
4.
5.
The history of aid: the money
The history of aid: the ideas
Too many aid deliverers
Donor collective action problems
Conclusion
• slide 2
University of Antwerp
ODA in value and as share of GNI
140,000
0.60%
120,000
0.50%
0.40%
80,000
0.30%
60,000
0.20%
40,000
20,000
Stalled promise yet steady
increase in volumes
Post-colonial
adjustment
New found
optimism?
Aid
fatigue
0
0.10%
0.00%
2008
2006
2004
2002
2000
1998
1996
share of GNI (right axis)
1994
1992
1990
1988
1986
• slide 3
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
value (left axis)
as percentage of donor GNI
billion US $ (2008 constant prices)
100,000
University of Antwerp
• slide 4
University of Antwerp
• slide 5
University of Antwerp
2. The history of aid: the ideas
period
preferred aid
modality
major constraint
addressed
19601980
projects
- physical capital
- human capital
bypass
19802000
policy based
support
- macroeconomic
policies
bully
2000-
budget
support
- ownership
- governance
- good donorship
engage
• slide 6
donor attitude
to partner
government
University of Antwerp
The 2005 Paris declaration
1. Ownership
(Partner country)
2. Alignment
Partner sets
the agenda
Aligning with
partner’s
agenda
(Donor-Partner)
Using partner
systems
3. Harmonisation
(Donor-Donor)
Establishing
common
arrangements
Simplifying procedures
Sharing
information
mutual accountability
7• slide 7
University of Antwerp
3. Too many aid deliverers
taxes
ODA
budget
• slide 8
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3. Too many aid deliverers
taxes
ODA
budget
bilateral aid
• slide 9
multilateral aid
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3. Too many aid deliverers
taxes
private
donations
ODA
budget
bilateral aid
multilateral aid
private aid
• slide 10
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3. Too many aid deliverers
taxes
private
donations
capital
market
ODA
budget
bilateral aid
multilateral aid
private aid
• slide 11
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3. Too many aid deliverers
taxes
ODA
budget
bilateral aid
private
donations
Sources of aid
Deliverers of aid
private aid
• slide 12
capital
market
multilateral aid
University of Antwerp
4. Donor collective action problems
• Excessive number of aid deliverers
– signals a failure to collaborate
– problem aggravated by what follows:
•
•
•
•
•
Principal-agent relationship
Samaritan’s dilemma
Warm glow effects
Missing feedback loops
Donors in pursuit of too many goals
• slide 14
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Me principal, you agent
• Recipient governments often are not pursuing
development in their countries
– this is not a question of individual morality
– but a question of institutional incentives
• Aid is more and more being directed towards
countries that are badly governed
– well-governed countries manage well without aid
• Principal-agent theory
– requires strong principal who can sanction the agent
– but aid sanctions do not hurt the right people
• slide 15
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The Samaritan’s Dilemma (J. Buchanan)
Recipient
High Effort
Low Effort
No Help
2,2
1,1
Help
4,3
3,4
Samaritan
• slide 16
University of Antwerp
Samaritan dilemma
• If Samaritan is strongly motivated to help,
recipient is in the more powerful position, and
bad Nash equilibrium results
– governments receiving food aid disregard agriculture
– villagers do not maintain donor-funded infrastructure
• Through a credible strategy of withdrawal
(conditionality), a tough Samaritan may avoid
the bad equilibrium occurring
• Another effective strategy for the smart
Samaritan may be to organize aid tournaments
(selectivity)
• slide 17
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Warm glow
• People feel good simply from the act of giving,
irrespective of the results obtained
– not to be confused with altruism
• Although warm glow is a powerful incentive for
international solidarity, it can hamper collective
action
– donors prefer tangible (photographs) and ‘attributable’
results (projects), even if this contributes to donor
fragmentation
– Northern citizens bypass intermediaries (NGOs) in order to
increase the warm glow, even if this reduces effectiveness
(transaction costs for delivery and supervision)
• slide 18
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Missing feedback loop
• Makes public opinion easily manipulated
• Gives undue importance to pressure groups
– NGOs
– universities
– private sector (aid tying)
• Suggests an increased role for Parliament
– provided it is better informed than public opinion
– provided it does not only listen to pressure groups
• slide 19
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Donors in pursuit of too many goals
• Development
– technocratic: econonomic growth, health, education,…
– political: democracy
• Global public goods
–
–
–
–
climate change
distress migration
drug trafficking
contagious diseases
• Non-developmental selfish donor interests
– commercial interests (aid tying)
– geo-political interests
– security interests
• slide 20
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Direct effects
Donor
managed
project aid
• productivity of the
project itself
Budget
support
• general productivity
of the public sector
• slide 21
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Donor
managed
project aid
Direct effects
Indirect effects
• productivity of the
project itself
• know-how transfer
• pilot function
• transaction costs
• weakening of public
sector (donor-driven priority
setting, poaching of recurrent
resources and staff)
Budget
support
• slide 22
• general productivity
of the public sector
• strengthening of the
public sector (TA, policy
dialogue, conditionalities)
University of Antwerp
Donor
managed
project aid
Direct effects
Indirect effects
• productivity of the
project itself
• know-how transfer
• pilot function
• transaction costs
• weakening of public
sector (donor-driven priority
setting, poaching of recurrent
resources and staff)
Budget
support
• slide 23
• general productivity
of the public sector
• strengthening of the
public sector (TA, policy
dialogue, conditionalities)
University of Antwerp
Conclusions
• High hopes of the aid approach that is
advocated in the 2005 Paris Declaration are not
being fulfilled
– good principles
– but naïve about incentives of major actors
• But there is no brilliant new aid paradigm
looming over the horizon
– this is still the best game in town
• slide 24
University of Antwerp
Thank you
robrecht.renard@ua.ac.be
http://www.ua.ac.be/dev/bos