On December 1st, 2011, the World Bank organized a side event in Busan entitled “The New Aid Architecture: Trends and Opportunities” where delegates from Netherlands, China, Russia, Brazil, Gates Foundation and Liberia shared their views on the changing nature of international aid system from three camps—traditional donors, emerging donors, and NGOs. The conventional wisdom in this debate has portrayed a landscape with two polarized claims: (a) emerging donors with “new” ideas and aid instruments have “undermined” norms and standards of the existing aid architecture; (b) emerging donors have brought viable “alternatives” to the DAC-led donor club. Yet such simplistic judgment has masked blurring boundaries between so-called traditional and emerging donors and neglected a more fundamentally transformative potential in aid architecture. To illustrate my argument, I would like to start with a quiz: which of the following quotes is by a Chinese official from the Ministry of Commerce and which by a British Prime Minister? 1. ‘We can spend aid in a catalytic way to unleash the dynamism of African economies, kick-starting growth and development and ultimately helping Africa move off aid altogether.’ 2. ‘We will increase the share of grants to Least Developed Countries (LDCs) and transfer agricultural technology. We will strengthen our efforts to reduce poverty to achieve the MDGs.” An intuitive answer would be that the first is by Chinese and the second by DFID. However, the answer is the other way around. The first is UK Prime Minister David Cameron, speaking in Lagos in July 2011, and the second is Zhu Hong, Deputy Director General of International Department, Ministry of Commerce from China, speaking in Busan Conference, December 2011. Thus, if we define the new features of aid architecture as new actors with new aid instruments, we would fail to do justice to changing mindsets and policies of both camps—traditional and emerging donors. Then what is (or will be potentially) new about the nature of aid architecture? To shed light onto this question, I would like to quote a remark from an African scholar who said: “it would be a shame that the Busan conference ends up with a set of quantitatively defined indictors to coordinate among donors themselves. Such coordination on the international level is often mired in shadow indictors that run the risk of diverting our attention from real engineers of economic transformation.” This has been echoed by the delegate from Liberia, Amara Konneh, Minister of Planning and Economic Affairs, “Liberia is not interested in charity…We want donors to coordinate on the country level to combine their comparative advantages.” The Liberia Minister recommended China work with Brazil and criticised their infrastructure building - which falls short of sustainability despite its efficiency and high quality. The Chinese official responded to this criticism honestly stating that the maintenance of infrastructure has been a “headache” for China’s foreign aid programme and China is eager to learn from the World Bank and other donors on how to make its aid projects more sustainable with lasting effects. The above case suggests that what is new in aid architecture is not merely new financing channels and instruments but also more importantly an increasing momentum of aid coordination on the country level. Aid architecture comes to a new stage where no single organization can define what is best aid practice and marginalize others that differ from mainstream development discourses. It has unleashed both opportunities and challenges that encourage us to take a step forward to move from donor-led aid coordination on the international level to recipient-led aid collaboration on the country-level. Download this memo here

By the time I got to the Bexco Conference Centre, in the morning of the third and last day of the Forum, the outcome document had been finalized, translated, printed and posted on the official website. Arm-twisting, hand-wrangling and last minute negotiations were over, and spirits were high: China, Brazil and India had all agreed to endorse the document. A New Global Partnership for Effective Development Co-operation, the promise of Busan, was born, but only after the introduction of a paragraph in the preamble that makes principles, commitments and actions agreed in the document valid for so-called ‘South-South partners’ only on a voluntary basis. So what is new in the document that will guide aid effectiveness efforts over the next few years? And what is different from previous ones? First, the document rightly recognises that today’s world is very different from the world of Paris in 2005. New actors have taken the global stage, and are affirming their views. Mentions of South-South and Triangular Cooperation are numerous. The Brazilian delegation had a very full agenda of bilateral meetings, with everyone scrambling to collaborate and sign agreements with their cooperation agency. Moreover, the role that foreign aid can play is seen as changing from transformational to ‘catalytic’, ensuring that ever larger alternative sources of development finance are better harnessed to promote development and reduce poverty. Second, as already mentioned, the document talks of ‘shared principles’, similar to those of the Paris Declaration, but ‘differential commitments’ for emerging donors, in an effort to gradually bring China and the others into the donor club. The Chinese, in fact, were conspicuous for their absence. No Chinese government speaker was seen on any panel. And apparently Andrew Mitchell (the UK Secretary of State for International Development) had to fly to Beijing himself to talk the Chinese into endorsing the document. Third, while the Paris Declaration had 12 indicators and specific targets set for 2010, the Busan outcome document contains hardly any specific time-bound commitments except for those related to improving aid transparency. This will seriously limit the degree to which the donor community can be held accountable for any of the promises that are in the document. Finally, and perhaps most importantly, the document calls for the establishment of a new and more inclusive body to oversee the implementation of the document’s commitments at political level, phasing out the role played by the OECD and its Working Party on Aid Effectiveness. This potentially creates the space for a more legitimate and effective arrangement, but the document lacks any detail on what it will look like, simply setting a deadline of June 2012 for its establishment. As I read through the document and wrote down these few thoughts, I was left wondering what this ‘Brave New Aid World’ had to offer poor people in low-income countries… not much, is my disappointed answer. While the outcome of the Busan HLF4 is a good mirror of the ways in which the aid landscape has changed over the past few years, it is long on principles and short on commitments, high on rhetoric and low on accountability. For all those preoccupied with the role that foreign aid can play in fighting poverty, and who used to think of Busan as a hopeful destination, the flight home will be spent focusing on a long ‘to-do’ list to make sure previous efforts don’t go to waste. Welcome to the brave new aid world… Download this memo here  

“We are united by a new partnership that is broader and more inclusive than ever before, founded on shared principles, common goals and differential commitments for effective international development.” I quote from the outcome document of HLF4 on Aid Effectiveness. Forging a more inclusive global development partnership was the key message in the closing ceremony. During the Busan conference, each participant could get a sense of such “inclusiveness” by constantly making a hard choice among various programmes that took place at the same time. Busan was a multi-actor and multi-issue event. It gave a more open and inclusive space for diverse actors (representatives of developing and developed countries, of civil society, private, parliamentary, local and regional organizations, of multilateral and aid organizations) and various issues (climate finance, fragile states, disaster resilience, etc.). The world has changed towards a more diversified landscape of development cooperation in an age of scarcity and uncertainty. Moving forward in a collaborative way entails the spirit of tolerance and mutual understanding. Too often we witness resolute shifts based on aspirational principles in the field of international development. While these principles have merits in their own right, they are often framed in a black-and-white dichotomy. Adherents of their respective principles often implicitly indicate any deviation is undesirable. “Transparency” has become such an aspirational term, and “catalytic aid for economic transformation” is another example. In principle, transparency and accountability should go hand in hand. With the initiation of the International Aid Transparency Initiative (IATI), we might see a trend towards using aid data as a commodity for various purposes. It may enable a burgeoning industry. Then it raises the question of how to manage these data in a responsible way and how we can learn from other fields to avoid unintended counterproductive consequences. To tackle these questions, we need to move beyond aspirations to allow room for experimentation. It would refocus our attention on the enabling environment where concrete policies are not based on good-intentioned principles but context-specific evidence. By the same token, “catalytic aid for economic transformation” is another aspirational principle to call for self-reliant development through transformative aid. Such a principle often links itself with certain aid instruments and modalities. It has been put forward to redress the limitation of single-minded pursuit of basic-needs approach to poverty reduction. However, if we go to extremes to seek a resolute shift to a catalytic aid allocation principle, we may fall into the trap of fashionable trends. One way out of this dilemma is to open up space for innovative experimentation of how to achieve synergies between public and private financial resources. The answer is not ready made. Thus, it is not enough and even undesirable to come up with a blueprint with clear indicators to urge an agenda shift. We all come with shared aspiration for a better world in the shared planet. For this to happen, it is insufficient and even counterproductive to merely base our action on good-intentioned principles. What we truly need is the space for mutual recognition and innovative experimentation to get rid of development orthodox. So when we left Busan, we should not only ask ourselves whether one particular principle is unfulfilled or not but also whether we genuinely engage and understand positions of others that differ from ours. Moving forward, we hope to see a dynamic momentum for experimentation on the country level rather than a set of straight-jacket standards that stifle alternative viable paths to effective development cooperation. Download this memo here

GEG held a panel debate on: 'Emerging Donors in the International Aid System: What Kind of Global Partnership?' on 8 February 2012 with Richard Carey (former Director of the Development Co-Operation Directorate, OECD), Professor Xiaoyun Li (Dean of the College of Humanities and Development, China Agricultural University), and Richard Manning (Former Chair of the OECD Development Assistance Committee. Read the summary here.

In the opening ceremony and following-up side events in Busan HLF4, there is a recurring theme from speakers that aid is not charity but investment. I will list a few examples for this claim.

Aid is not charity, but smart investment (that benefits both donors and recipients).

--Ban Ki-moon, Secretary-General of the United Nations

Aid is more than a mere charity, but mutual investment. Aid as investment helps to enable recipient countries stand on equal footing.

--H.E. Paul Kagme, President of the Republic of Rwanda

Focusing on aid (as charity) loses a bigger development picture. For aid to be effective, it must be additional to investment and trade.

-- Désiré Vencatachellum, Director of the Development Research Department, African Development Bank

At first glance, the above statements appear to convey an identical message that aid is not charity but investment. On a closer scrutiny, however, it reveals that different actors seek to use the same term of “investment” that carries different meanings for different audiences.

Firstly, investment is used metaphorically by donor agencies to convince their domestic constituencies that development assistance is beneficial for both donors and recipients. Donors can benefit from aid not only because shared growth can stimulate employment in donor countries in the short term but also because stable and secure international environment serves long-term donors’ self-enlightening interests. Especially, in the economic downturn after financial crisis, aid as charity could not gain adequate domestic support due to budgetary constraints. Hence, donors have to find new ways to justify their aid budget to convince their voters to win political support by arguing that aid is investment for the future.

Secondly, mutual investment can also be used by recipient countries to criticise the prevailing de-politicised technical view of development assistance in an effort to voice their discontent of unequal power relationship. Aid as charity often comes with lecturing to induce recipient countries to accept policy conditionality. In sharp contrast, “mutual investment” has normative aspiration from recipient countries that both parties are equal partners and that the terms of development cooperation are negotiated by taking into account concerns of both sides. Although numerous empirical research has shown that conditionality does not work in reality, there is still a large gap between the rhetoric of ownership and practice of ex-ante or ex-post conditionality. In Busan, delegates from recipient countries have been very vocal in opposing political conditionality. “Aid should not be tied to political progress, because you can never purchase democracy.” “I don’t like conditionality, because it is not flexible. As fragile states, we have to move fast enough to tackle the problems with our own solutions, but conditionality constrains our hands.” (Emilia Pires, Minister of Finance, Timor-Leste) “Money never buys reform.” (Tertius Zongo, Former Prime Minister and former Minister of Finance, Burkina Faso) Hence, aid as mutual investment has been a vision for recipient countries to refute “good-intentioned” justification of political conditionality based on unequal power relationship.

Last but not least, aid as investment for mutual benefits has been used by emerging donors to distinguish their aid philosophy from the mainstream charity account. From their perspective, aid should be put into a broader toolbox for economic engagement. Based on their own domestic development experiences, they highlight “the additionality of aid” that aid cannot be effective unless it is additional to other primary financial resources. Otherwise, it runs risk of falling into the trap of aid dependence. Aid can be used as a catalyst to attract FDI to help a country to achieve self-sustaining development. That’s why we hear the aspiration from recipient countries that “we want dignity rather than dependence” and that “aid should eliminate poverty and create prosperity.” That’s why the President of Rwanda remarked in the opening ceremony that “we should talk about aid effectiveness together with trade and investment.”

To conclude, whether this heralds a paradigm shift remains to be seen. The field of development cooperation never falls short of catchphrases. It would be of little use if the so-called shift in paradigm is no more than changes in wording. What we really need is a progressive and evolutionary improvement based on empirical evidence on what works and what does not work in practice.

Download this GEG memo here.

Despite the cold, wind and rain outside the BEXCO Conference Centre, the celebrity line-up for the Opening Ceremony of the HLF4 tried their best to get delegates excited about the importance of the event and of its outcomes for the future of foreign aid and development. Ban Ki Moon of the UN and Angel Gurria of the OECD both emphasized the need for donors to do more and do better, given the less than encouraging results of the Paris Declaration Monitoring Survey released earlier this year. The need for emerging donors to "step up" and recognize that with more influence comes more responsibility, was another recurring theme. The experience of host country South Korea from war-ravaged, impoverished country 50 years ago to OECD member and donor nowadays, was time and again indicated as an example to follow. But my favourite speeches were delivered by Rwanda's president, Kagame, who eloquently showed donors' failure to deliver on their promises, and accused them for their "unending questioning that no answer can fully satisfy", and US Secretary of State Hillary Clinton, who was quite honest about some of the political realities that donors face, and called for increased mutual responsibility in aid relationships, in which both sides take the necessary steps to make aid work better. While sherpas continue to work at the draft Outcome Document, plenary sessions called Building Blocks were meant to push for more far reaching commitments from sub-sets of actors. I've been working on preparing the BB session on transparency for a few months, and it went quite well. All speakers, including Swedish Development Minister Gunilla Carlsson and Sri Mulyani Indrawati, former Finance Minister of Indonesia and now at the World Bank, agreed with the need to link and deepen both aid and budget transparency, in order to promote better accountability and results. What went missing in the rush to give space to the following session, was a clear sense of next steps, and of how this rhetorical commitment can be monitored and followed up on. I made a note to make sure we don't let this drop off the agenda... This GEG Memo can be downloaded here.

The landscape of international development is changing with more actors, more ideas and more voices from different cultural, regional, and historical backgrounds. Are there emerging Asian approaches to development cooperation? If so, what are the key features that distinguish it from the mainstream DAC donors? Has it challenged or complemented the current prevailing approach? The side event in the HLF4 on “Emerging Asian Approaches to Development Cooperation” tackled the above questions. Panellists from China, India, Vietnam and South Korea shared their views on what they mean by “Asian approaches” (Detailed information for speakers can be found at the end of the report). “The consensus on development cooperation forged by OECD-DAC has been challenged by emerging non-Western donors.” Dr. Oh-Seok Hyun, President of Korea Development Institute, started his opening remark. The four panellists took a step forward to give meaning to the term of “Asian approaches” from their respective national perspectives. Key points can be summarized as follows: Development Paradigms: Endowment VS. Bootstrapping Perspective Dr. Wonhyuk Lim from South Korea argued that Asian donors take a bootstrapping perspective of capacity development that differs substantially from DAC donors’ endowment perspective. Endowment perspective has two core elements: (a) economies lacking “appropriate endowments” (cultural values, “good” institutions, etc.) cannot grow; (b) the state should focus on getting the institutional framework right and then get out of the way letting market forces and individuals play the game. In sharp contrast, bootstrapping approach embraced by Asian donors maintains that initiating growth does not require state-of-the-art institutions. Hence, the challenge is not so much to get growth to start by adopting big-bang reforms, as it to sustain it by devising search networks to detect and mitigate constraints as they emerge. Priorities in Development: Which Comes First, Economic Growth or Social Sectors? Professor Li Xiaoyun from China believes that China’s domestic development experiences have informed its own approach to foreign aid programmes in Africa. In the past three decades, China has dramatically reduced poverty by building infrastructure that has built up its own dynamics of development. For this to happen, China has developed its own features of infrastructure building, such as the capacity of long-term planning, co-financing mechanism, and decentralized system of maintenance. Therefore, China believes infrastructure plays a key role in poverty reduction and economic transformation. In contrast, he thought that DAC donors put more emphasis on basic need approach by channelling aid into the social sectors like education, health, and so on. Self-Reliance: Moving Beyond Charity Panellists all highlighted that Asian approaches regard aid as “mutual cooperation” rather than charity. It is demand-driven rather than supply-driven. It aims to achieve self-reliant development rather than trapping in aid dependence. As argued by Dr. Sachin Chaturvedi from India, “The crux of SSC is self-reliance and self-help can effectively work only when the recipient countries have clear ideas on goal setting, decision-making, and decision-implementation.” Echoing this point on self-reliance, Dr. Lim from South Korea highlighted that “Korea became a successful aid recipient only after it started its export-oriented industrialization in the 1960s.” From the above brief summary, we can see that the term of “Asian approaches” is in the making. It moves the debate beyond “non-DAC donors” (a vague term defined by what emerging donors are not) to proactively voice their perspectives with collaborative efforts among themselves. Such discussion is welcome in a sense that it brings diversity in development thinking and practices that enables recipient countries to have more choices. But it runs the risk of making a dichotomous claim that neglects the diversity within Asian donors and contested opinions within DAC donor club. It may lead us to spend too much time in emphasizing differences rhetorically rather than in exploring what works and what doesn’t empirically. Therefore, the key point here is not to argue whether Asian approaches are superior to the assumed existing consensus of DAC donors (in fact, the nature of development cooperation is very contested among DAC donors) or whether basic-need approach should give way to Asian approaches to development cooperation aimed to move beyond charity. Such competitive mindset gets us nowhere. What matters is mutual learning between donors with the purpose of more effectivene development cooperation. Hence, the question is not about who moves closer to whom but about what approaches move closer to development effectiveness based on empirical evidence. Panellists: Prof. LI Xiaoyu, China Agriculture University Dr. Sachin Chaturvedi, Research and Information System for Developing Countries Mr. Dang Huy Dong, Deputy Minister of Planning and Investment, Vietnam Dr. Wonhyuk Lim, Korean Development Institute Download this memo here:

GEG's Paolo de Renzio debates cash-on-delivery aid with the folks from the Center for Global Development at the World Education Blog: Cash on delivery: linking aid to results - Nancy Birdsall, William D. Savedoff and Ayah Mahgoub (CGD); The problem with cash-on-delivery aid - Paolo de Renzio (GEG); What Is the Counterfactual for COD Aid? - William Savedoff and Nancy Birdsall.  For the background, see CGD's Cash on Delivery aid initiative and commentary  by GEG's Paolo de Renzio and Ngaire Woods - The Trouble with Cash on Delivery Aid - discussing the effects of COD aid on recipient country governments. For more, see CGD's Cash on Delivery aid initiative and commentary  by GEG's Paolo de Renzio and Ngaire Woods - The Trouble with Cash on Delivery Aid - discussing the effects of COD aid on recipient country governments. Over at the Guardian, Kevin Watkins argues that lives are being lost needlessly because of an aid system that favours crisis response over prevention in Too little, too late for Niger.

In a new GEG Brief, David Stuckler and Sanjay Basu provide a guide to understanding the empirical evidence behind the aid debate and show why it is important to exercise caution in extrapolating policy advice from such data. Both the critics of aid, as well as its proponents, rely upon a limited pool of evidence concerning aid’s effectiveness.  Their interpretations of this evidence, argue Stuckler and Basu, suffer from a series of well-known statistical fallacies and misunderstandings about the limitations of global aid data. Download Six Concerns about Data in the (Dead) Aid Debate and to read more, visit GEG's Guide to the (Dead) Aid Debate.

The World Bank must address governance and accountability questions, declared Douglas Alexander, UK Secretary of State for International Development in a public lecture at the LSE last week. Emphasising the Bank's centrality to global action on the most difficult global development challenges, the Minister laid out the UK's three priorities for World Bank reform: 1) agreement on voting reform, to give the poorest a greater voice; 2) moving staff out of Washington to improve the organisation’s delivery on the front line; and 3) forging a new compact between shareholders and management in which each is held to account for the highest performance. Read the speech at DFID's website and for more, see GEG's World Bank Reform resources.

Stop aid. Increase aid. Reform aid. The debate about aid and its effectiveness (or lack thereof) received new impetus when Dambisa Moyo, former World Bank and Goldman Sachs economist, proclaimed that aid to Africa simply doesn’t work in her book Dead Aid. In our new GEG Guide we survey the  aid debate, looking beyond Moyo and other well-known contributors to also include voices from the margins. You'll find our aid 'must reads' as well as links to the GEG blog series on the aid debate. Read more in the GEG Guide to the (Dead) Aid Debate.

In advance of the First Global Ministerial Meeting on Road Traffic Safety hosted by the Russian Government in Moscow, Kevin Watkins and Devi Sridhar have published a report outlining why now is the critical time for action. As Lord Robertson says in the forward to the report, 'This briefing paper provides conference delegates with powerful arguments for why road safety must become a development and health priority'. To read more, download the full report. Details of the press release are available at the FIA Foundation.

People in developing countries are suffering disproportionately from this global financial crisis, and international institutions have a long way to go to ensure the financing and mechanisms of assistance that can address this development emergency, writes Professor Ngaire Woods in a policy briefing commissioned by the European Parliament. In many developing countries, what is being crushed and reversed is hard-won progress towards reducing poverty, hunger, and child mortality, and towards increasing primary education, gender parity, access to safe water and sanitation - in short, progress towards the Millennium Development Goals. In this policy briefing, Woods evaluates the responses to the crisis by the IMF, World Bank, G20, and the European Union, and provides a series of recommendations for strengthening the international financial and aid architecture so that it can better respond to the urgent needs of developing countries in deep crisis. Read the full briefing paper here.

A review of the book 'The Politics of Aid: African Strategies for Dealing with Donors' edited by Lindsay Whitfield was published on the website of Foreign Affairs. The book review by Nicolas van de Walle, discusses two books: ''The Politics of Aid: African Strategies for Dealing with Donors' edited by Lindsay Whitfield and the 'Smart Aid for African Development' by Richard Joseph and Alexandra Gillies. In the review, it is argued that these books eschew the broad generalizations and provocative anecdotes that mark most books about aid and instead describe the great variance in outcomes across the continent. Read the book review in full here.

Senior Research Fellow Kevin Watkins writes on the Guardian's Comment is Free that the tragedy of Africa's huge maternal death toll, too often obscured by pop star adoptions, needs urgent donor action.  Over at Propsect Magazine, Kevin critiques the 'Dead Aid' argument in his review of Dambisa Moyo's new book.