A History of International
Development Policy
By Robert Sauder
The plan for today
• Introduction – who are we and what do we
want to learn?
• A quick stroll through quite complex material.
There were many actors and many contexts in
play over the past fifty years.
• Periodic opportunities to engage instead
listening to the ‘talking head’
Primary themes of the session
International development policy:
• Has moved from simple to complex models
• Features a series of failed experiments and
slow learning
• Fads visible at every stage
• Current situation represents several dramatic
shifts from the past
Historical Frame: four main stages
1. Post-war and de-colonization era:
modernization and industrialization 1940s ‘60s
2. Humanization and a focus on poverty 1970s
3. Neoliberalism, re-structuring and transition
1980s and ‘90s
4. Millennium Development Goals, Paris and
Accra and beyond
Post script: what about today?
Post-war and de-colonization era – the Modernization and
industrialization period 1940s - ‘60s
Key features of the historical era:
• Reconstruction after world war II
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World Bank and IMF established at Bretton Woods Conference 1944
United Nations officially created in 1945
Universal Declaration of Human Rights adopted in 1948
Cold war heats up – spheres of influence drawn
Re-drawing of borders in late colonial era
Birth of EU economic and political arrangements
Canadian International Development Agency (CIDA) created in 1968
• Booming economy in the West
– Modern industrial technological growth
– Scientism
• Civil rights movement and democratization
– Multiple independence and anti-colonial movements
The stages of growth
Key features of development policy thinking:
• Modern management and science will do it
– Technical assistance and agricultural extension
– Large role for planning
• Nationalist elites and rise of statism to build
institutions
• Large role for Western aid funds and expertise
• Tied aid policies are common
• Need to move beyond colonialism but acceptance
of foreign policy interests as a basis for aid
Modernization Theory
• Linear stages of development
Typical programs
• Bilateral loans and grants
• Agricultural extension
• Volunteer Sending: PeaceCorps and CUSO were
both established in 1961
• Financing for infrastructure projects
o Canada focused on transportion and power
generation
o Canadian aid was focused on Commonwealth
Carribean, Commonwealth Africa and Francophone
Africa
• Food and commodity aid
Activity: debate about tied aid
Be it resolved: tied aid is an effective
development strategy that brings advantages to
both the donor and the recipient.
Classic arguments on tied aid
Advantages for Donor
Country
• Supports producers and
increases export revenue
of donor country
• Donor country has more
control over content,
quality and
manufacturing of aid
• Builds long term
industrial relationships
Disadvantages for Recipient
Country
• Discourages local economic
growth and can devalues
commodities
• Not cost effective
• Restrict choice for recipient
country
• Ownership of aid is solely
in control of donor country
• Often results in
inappropriate technologies
e.g. tractors that can’t be
maintained
2. Humanization and a focus on poverty, the
1970s
Key features of the historical era:
• Rapid de-colonization but cold war even
hotter
• Fragile and captured states common
• Growing liberalism in the West
– Leftist as opposed to socialist
– Cultural relativism and rejection of Western
dominance
• Oil price rise and economic contraction
Whose voice is being heard?
Key features of development policy thinking:
• Dependency theory – centre vs. periphery; aid as
imperialism
• Growth interest in local context – PRA
• Appropriate technology
• Need for long-term investment in capacity and
social services – a human needs focus
• Goal of 0.7 % of GNI as aid
• Concern about brain drain
• Rural poverty as the key challenge
Dependency Theory
• Core vs. Periphery
Typical programs
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Bilateral loans and grants
Technical assistance
Rural development
Cooperatives and networks
Capacity development
Activity: discussion on the value of
including local voices
• What are the main challenges in listening to
and empowering local views on development?
• Are local views sufficient to move the
development agenda forward?
3. Neoliberalism and re-structuring 1980 – 90s
Key features of the historical era:
• Economic slowing and shocks
• Potential collapse of states due to debt
• Cold war reaches crescendo
• Increased control of global economic
institutions World Bank, IMF etc
• G8 as a political factor in development
Tensions between neo-liberal and
progressive approaches
Key features of development policy thinking:
• World systems theory, post-modernism and globalization
• Bloated public sector institutions vs. classic development theory
• Rise of national development planning
• Emergence of global coalitions on key challenges e.g. HIV/AIDS,
vaccines, etc
• Corporate social responsibility
• Recognition of key role of gender
• Civil society and non-government organizations seen as key
development actors
• Rights based approaches
• Systems model e.g. health
• Micro credit – Grameen Bank
Typical programs
• Implementation of “Washington Consensus”:
fiscal discipline, reduced public spending, open
markets, trade liberalization
• Structural Adjustment programs: World Bank
loans to developing countries under condition of
government reform
• Microfinancing
• Continued investments in social services like
education and health
• Use of non-government organizations (NGOs) in
many domains of development
Structural Adjustment Programs
Typical stabilization policies comprise:
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balance of payments deficits reduction through currency devaluation
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budget deficit reduction through higher taxes and lower government spending, also known as austerity
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restructuring foreign debts
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monetary policy to finance government deficits (usually in the form of loans from central banks)
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raising food prices to cut the burden of subsidies
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raising the price of public services
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cutting wages
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decrementing domestic credit.
Long-term adjustment policies usually include:
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liberalization of markets to guarantee a price mechanism
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privatization, of all or part of state-owned enterprises
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creating new financial institutions
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improving governance and fighting corruption
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enhancing the rights of foreign investors vis-à-vis national laws
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focusing economic output on direct export and resource extraction
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increasing the stability of investment (by supplementing foreign direct investment with the opening of
domestic stock markets).
Criticisms:
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Sovereignty, privatization, austerity
History of the Grameen bank
In 1976 Professor Muhammad Yunus launched an action research project to examine the
possibility of designing a credit delivery system to provide banking services targeted at the rural
poor. The Grameen Bank Project (Grameen means "rural" or "village" in Bangla language) came
into operation with the goal of extending banking facilities to poor men and women:
• eliminate the exploitation of the poor by money lenders;
• create opportunities for self-employment for the vast multitude of unemployed people in rural
Bangladesh;
• bring the disadvantaged, mostly the women from the poorest households, within the fold of an
organizational format which they can
• understand and manage by themselves; and
• reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous
circle of "low income, injection of credit, investment, more income, more savings, more
investment, more income".
Today Grameen Bank is owned by the rural poor whom it serves. Borrowers of the Bank own 90%
of its shares, while the remaining 10% is owned by the government. The repayment rate is very
high.
Micro Credit – a powerful innovation
Throughout 15-year history of the Grameen Foundation:
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9.4 Million of the world's poor have been helped by our MFI partners, enabling them to begin their
journey out of poverty.
More than 1.2 Million new borrowers have received microloans because of our Growth Guarantees
program.
$225 Million in local currency has been leveraged through the Growth Guarantees program to
support microfinance programs for 28 poverty-focused organizations in 13 countries .
More than 200,000 poor, rural farmers have been helped by more than 1,100 Community
Knowledge Workers (CKWs) in Uganda.
22% higher prices were earned by farmers who had access to a CKW, compared with those who
didn't, while these farmers' knowledge levels rose by 17%.
Leaders of over 270 anti-poverty program have improved their strategy for meeting the needs of
the poor by turning to real, objective poverty data from the Progress out of Poverty Index®, a simple
poverty measurement tool available in 46 countries.
More Than 100,000 hours have been contributed by more than 700 Bankers without Borders®
volunteers in 600 projects worldwide -- a contribution of in-kind services worth $5.5 million.
Activity: what are the disadvantages of using NGOs?
NGOs have been put forward as an alternative to bilateral (donor
to government) aid for several reasons:
• Motivated to do social good in a particular sphere
• Strong local connections and cultural credibility
• More trustworthy than potentially corrupt or inefficient
governments
• More cost-effective (cheaper) and can be held accountable to
donors
• NGOs can act in consortia to achieve higher impact
BUT are NGOs the magic bullet?
3B: 1990s – donor fatigue but signs of transition to new
models
• ODA peaked in 1992 at a high of $17 billion and then fell to $12
billion in 1999
• SAPs were replaced by Poverty Reduction Strategies, which aimed
at reversing the negative effects of a decade of Structural
Adjustment on welfare and social conditions. Many African
countries embarked on at least two generations of PRSPs, mostly to
ensure eligibility for debt relief.
• Human Development Report and Human Development Index
• Heavily Indebted Poor Countries Initiative
• Changing the model from aid to cooperation
• Education for All – 1990
• Rio conference on climate change – 1992
• UN Women Conference in Beijing, rights of the girl child – 1995
• Rights-based development model
OECD Trends in Official Development
Assistance
- Totals for Development Assistance Committee of OECD
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Very few countries have
met the 0.7% target
In 2013, Canada spent
0.27% of its GNI on ODA
Looking at all dimensions of development
The Human Development Index (HDI) is a composite index that measures the
average achievements in a country in three basic dimensions of human
development:
• a long and healthy life – as measured by life expectancy at birth
• knowledge – as measured by mean years of schooling and expected years of schooling for
primary, secondary and tertiary schools
• a decent standard of living – as measured by Gross National Income (GNI) per capita in
purchasing power parity (PPP) US dollars.
Education for All
• The Education for All movement is a global commitment to provide
quality basic education for all children, youth and adults. The
movement was launched at the World Conference on Education for
All in 1990 by UNESCO, UNDP, UNICEF and the World Bank.
Participants endorsed an 'expanded vision of learning' and pledged
to universalize primary education and massively reduce illiteracy by
the end of the decade.
• Ten years later, with many countries far from having reached this
goal, the international community met again in Dakar, Senegal, and
affirmed their commitment to achieving Education for All by the
year 2015. They identified six key education goals which aim to
meet the learning needs of all children, youth and adults by 2015.
• As of 2014, still 75 million children not in school
Activity: discussion of education for all
(EFA) as a development strategy
• Is universal primary education sufficient for
development to happen?
• How should we measure quality of education?
4. Millennium Development Goals, Paris and Accra
Key features of the historical era:
• Continuing democratization
– Many states making the transition to majority rule
– Arab spring
• Rise of a multi-pole power structure
– BRICS, especially China
• New calls for better global governance but no obvious
replacement visible to the UN
• Neo-cold war emerging e.g. Ukraine, Syria, South Asia
• Food insecurity
• Economic shocks e.g. Finance crisis in 2008
• Climate change concerns become prominent
Aid effectiveness and governance are primary concerns
Key features of development policy thinking:
• Continued belief in focus and global collective action
– GAVI – the Vaccine Alliance
– IAVI – International AIDS Vaccine Initiative
• New agenda for evidence
– Randomized controlled trials
– Systematic reviews and impact evaluations
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Targets and metrics
OECD no longer dominant in development thinking
New concerns about fragile and conflict-affected states
Neo-statist model returns
Millenium Development Goals
MDGs progress to date – the example
of Africa (2013 report)
On track: MDG 2 – Achieve universal primary education; MDG 3 – Promote gender equality and
empower women; MDG 6 – Combat HIV/AIDS, TB, malaria and other diseases; and MDG 8 – Global
partnership for development.
Off track: MDG 1 – Eradicate extreme poverty and hunger; MDG 4 – Reduce child mortality; MDG 5 –
Improve maternal health; and MDG 7 – Ensure environmental sustainability. Yet, some countries
recorded appreciable progress.
Importantly, the report argues that Africa must put structures in place to sustain its development well
beyond the MDG timeline.
Highlights
• Poverty reduction lags behind growth
• Inequality is undermining efforts to reduce poverty
• Attending primary school is becoming the norm, but the quality of education remains a challenge
• Progress toward gender parity is encouraging
• Despite good progress, Africa still has the greatest burden of child and maternal deaths
• Africa has halted the spread of HIV/AIDS, tuberculosis and malaria
• Mixed progress on ensuring environmental sustainability
• Food insecurity is a recurring challenge
What is the Paris Declaration?
• 1. Ownership: Developing countries set their own strategies for
poverty reduction, improve their institutions and tackle corruption.
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2. Alignment: Donor countries align behind these objectives and use
local systems.
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3. Harmonisation: Donor countries coordinate, simplify procedures
and share information to avoid duplication.
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4. Results: Developing countries and donors shift focus to
development results and results get measured.
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5. Mutual accountability: Donors and partners are accountable for
development results.
What is the Accra Action Agenda?
• Ownership: Countries have more say over their
development processes through wider participation in
development policy formulation, stronger leadership on aid
co-ordination and more use of country systems for aid
delivery.
• Inclusive partnerships: All partners - including donors in the
OECD Development Assistance Committee and developing
countries, as well as other donors, foundations and civil
society - participate fully.
• Delivering results: Aid is focused on real and measurable
impact on development.
• Capacity development - to build the ability of countries to
manage their own future - also lies at the heart of the AAA.
Canada’s ODA Accountability Act
• The ODA Accountability Act came into force on
June 28, 2008
• It ensures that Canadian aid is focused on poverty
reduction and consistent with aid effectiveness
principles
• Under the Act, ODA must:
1. Contribute to poverty reduction;
2. Take into account the perspectives of the poor;
3. Be consistent with international human rights
standards
Post script: what about today?
• Development landscape is changing dramatically
– Business arrangements vs. Aid
– Acceptance of private sector roles – P3s, Development Finance
Insitutions
– Increased focus on income inequality and inequality of opportunity
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Post-2015 discourse is very active
Global Partnership emerges: OECD DAC/UNDP share secretariat
The new philanthropy – Foundations playing large roles
New definitions of Official Development Assistance under
discussion – what is concessional finance?
• New interest in innovation for development purposes
– Grand Challenges model
– Advance market commitment
• Discourse around ‘Dead Aid’
A new picture of financial flows
– Foreign direct investment and remittances dwarf
aid flows
Migration is changing significantly – 2013 flows
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South - South: 82.3 (36%)
South - North: 81.9 (35%)
North – South 13.7 (6%)
North – North: 53.7 (23%)
Humanitarian Assistance
• Humanitarian Assistance remains a vital aspect of
development
• Recent emphasis on encouraging disaster resilience;
the ability for communities to manage shocks and
stresses without weakening their prospects for longterm development
• There are currently 102 million people who require
humanitarian assistance and five emergencies that are
classified as L3 for being at the highest emergency
level: Syria, Iraq, Central African Republic, South Sudan
and Phillippines (Typhoon Haiyan)
Cooperatives – new partnerships with the private sector
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The Global Development Co-operative (GDC) was launched in New York in November 2011
and aims to support co-operative businesses in developing countries by raising USD 50m to
provide access to low cost loans for capital and infrastructure projects.
The GDC has been developed by the UK’s The Co-operative Bank – part of the world’s largest
consumer co-operative - and the Alliance.
Amongst those who have already pledged their financial support for the initiative include the
All China Federation of Supply and Marketing Co-operatives, Credit Cooperatif of France, SOK
Corporation from Finland and IFFCO of India. Mid-Counties Co-operative as well as The Cooperative Bank from the UK who have also pledged their support.
The Bottom Billion – Paul Collier, 2007
Development traps
The book suggests that, whereas the majority of the 5-billion people in
the "developing world" are getting richer at an unprecedented rate,
a group of countries (mostly in Africa and Central Asia but with a
smattering elsewhere) are stuck and that development assistance
should be focused heavily on them. These countries typically suffer
from one or more development traps.
The Conflict Trap: Civil wars (with an estimated average cost of $64bn
each) and coups incur large economic costs to a country.
The Natural Resource Trap: Countries that are rich in natural resources
are paradoxically usually worse off than countries that are not.
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Resources make conflict for the resources more likely.
Natural resources mean that a government does not have to tax its
citizens resulting in less financial accountability for the government.
Dutch disease: where a country's other industries become less
competitive as a result of currency valuation due to the revenue raised
from the resource.
Landlocked with Bad Neighbours: Poor landlocked countries with poor
neighbours find it almost impossible to tap into world economic
growth.
Bad Governance in a Small Country: Terrible governance and policies
can destroy an economy.
New in Canada - DFATD
• CIDA was merged into the Department of Foreign Affairs and
Trade in 2013 to form the Department of Foreign Affairs,
Trade and Development (DFATD)
• The development portion of the department targets 80% of
its ODA on 25 focus countries
• It is focused on five priority areas:
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Sustaining sustainable economic growth
Increasing food security
Securing the future of children and youth
Advancing democracy
Promoting stability and security
Conclusion: development policy is organic and ever-evolving.
Many development ideas were decades in the making:
• Global responses to humanitarian disasters
– We are the World 1985 for Africa relief >>> Haiti earthquake
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Volunteer sending and technical assistance
Support for developing world research capacity
Cooperatives
Public private partnerships on infrastructure
National ownership of development
There are many positive achievements but remember how
difficult development is to do