CANADIAN DEVELOPMENT REPORT 2011
GLOBAL CHALLENGES:
MULTILATERAL
SOLUTIONS
THE NORTH-SOUTH INSTITUTE
The North-South Institute (NSI), one of Canada’s leading, non-profit, non-partisan and independent think tanks,
is uniquely dedicated to research that reduces poverty, enhances social justice and promotes economic progress in
the developing world. NSI strives to improve people’s lives through knowledge that addresses the global challenges
of the 21st century – from promoting greater government accountability in the provision of basic needs to advancing decent work opportunities; suggesting innovative finance and more effective aid for development; focusing
on fragile and conflict-affected states; and, working to expand the benefits of globalization. For 35 years, NSI has
partnered with researchers in developing countries and actively engages with policymakers and other actors best
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NSI thanks the Canadian International Development Agency for providing a core grant and the International
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Canadian Development Report
1996/97Issued also in French under title: Rapport canadien sur le développement.
Includes bibliographical references.
ISSN 1206-2308
ISBN-10 1-897358-10-5
ISBN-13 978-1-897358-10-8
1. Developing countries-Social conditions-Periodicals.
2. Economic assistance, Canadian-Developing countries-Periodicals.
3. International economic relations-Periodicals.
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CANADIAN DEVELOPMENT REPORT 2011
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CANADIAN DEVELOPMENT REPORT 2011
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CANADIAN DEVELOPMENT REPORT 2011
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CONTENTS
CONTENTS
Abbreviations
3
Foreword
Joseph K. Ingram
7
Multilateralism, the Shifting Global Economic Order, and Development Policy
Danny Leipzigerr
15
Multilateral Development Cooperation: Current Trends and Future Prospects
Shannon Kindornay and Hany Besadaa
35
Multilateral Development Cooperation and the Paris Process – Th
Thee Road
Road to
to Busan
Busa
Bu
san
n
Robert Picciotto
55
Toward a New Development Cooperation Dynamicc
Penny Davies
77
Accountability:
Emerging
Donors
and
Multilaterals
Africa
Representation, Legitimacy and Accountabili
ity
ty:: Em
Emer
ergi
ging
ng D
onoorrs an
on
nd Mu
Mult
ltil
lt
ilat
il
ater
e al
er
alss in A
f ic
fr
ica
ica
Sanusha Naidu
95
Development
Platform
Enhance
Understanding
Using the New Canadian International De
Deve
velo
lopm
pmen
entt Pl
Plat
atfo
at
form
rm
m ttoo En
Enha
hanc
ha
ncce Un
Unde
ders
de
rsta
rs
t nd
ndin
ingg
in
Cooperation
of Multilateral Development Cooperatio
on
Aniket Bhushan and Kate Higgins
115
11
15
page 1
CANADIAN DEVELOPMENT REPORT 2011
page 2
ABBREVIATIONS | BRIDGING THE GULF
CDR 2011 ABBREVIATIONS
ACBF
African Capacity Building Foundation
DCD
AfDB
African Development Bank
AfDF
African Development Fund
DCD/DAC Development Co-operation Directorate/
Development Assistance Committee
AIDS
acquired immune deficiency syndrome
AsDB
Asian Development Bank
AsDF
Asian Development Fund
AU
African Union
BADEA
Arab Bank for Economic Development
in Africa
BASIC
Brazil, South Africa, India and China
BRIC
Brazil, Russia, India and China
BRICS
Brazil, Russia, India, China and
South Africa
ECOSOC Economic and Social Council
(United Nations)
CDI
Commitment to Development Index
(Center for Global Development)
EC
European Commission
ECDPM
CDR
Canadian Development Report
(North-South Institute)
European Centre for Development
Policy Management
ECG
Evaluation Cooperation Group
CGD
Center for Global Development
EU
European Union
CGP
Center for Global Prosperity
FAO
CIDA
Canadian International Development
Agency
Food and Agricultural Organization
(United Nations)
FSAP
Financial Sector Assessment Program
CIDP
Canadian International Development
Platform
FSB
Financial Stability Board
CIVETS
Colombia, Indonesia, Vietnam, Egypt,
Turkey and South Africa
G7
Group of Seven
G8
Group of Eight
G20
Group of Twenty
G-24
Intergovernmental Group of Twenty-Four
G77
Group of 77
GATT
General Agreement on Tariffs and Trade
COMPAS Common Performance Assessment
System
CPA
country programmable aid
CSO
civil society organization
DAC
Development Assistance Committee
Development Co-operation Directorate
DCD/DAC/EFF
Development Co-operation Directorate/
Development Assistance Committee/
Working Party on Aid Effectiveness
DCF
Development Cooperation Forum
(United Nations)
DFID
Department for International
Development (United Kingdom)
DIRCO
Department of International Relations
and Cooperation (South Africa)
page 3
CANADIAN DEVELOPMENT REPORT 2011
GAVI
Global Alliance for Vaccines and
Immunisation
GEF
Global Environment Facility
GDP
gross domestic product
GNI
gross national income
H1N1
influenza A virus subtype
HIV
human immunodeficiency virus
HIV/AIDS human immunodeficiency virus/acquired
immunodeficiency syndrome
HLF
High Level Forum
HLF-3
Third High Level Forum on
Aid Effectiveness
HLF-4
Fourth High Level Forum on
Aid Effectiveness
MfDR
Managing for Development Results
NDF
Nordic Development Fund
NEP
New Economic Power
NGO
non-governmental organization
NSI
North-South Institute
ODA
official development assistance
ODI
Overseas Development Institute
(United Kingdom)
OECD
Organisation for Economic Co-operation
and Development
OECD-DAC Organisation for Economic
Co-operation and DevelopmentDevelopment Assistance Committee
IATI
International Aid Transparency Initiative
IBRD
International Bank for Reconstruction
and Development
OECD-DAC WP-EFF
Organisation for Economic Co-operation
and Development-Development
Assistance Committee, Working Party on
Aid Effectiveness
IBSA
India, Brazil and South Africa
OPEC
IDA
International Development Association
(World Bank)
Organization of Petroleum
Exporting Countries
PWYF
Publish What You Fund
IDB
Inter-American Development Bank
QE2
quantitative easing (second round)
IDB (SF)
Inter-American Development Bank
(Special Fund)
QuODA
IFAD
International Fund for Agricultural
Development
Quality of Official Development
Assistance (Center for Global
Development/Brookings Institution)
SADC
South African Development Community
SDRs
Special Drawing Rights
SSC
South-South Cooperation
SWF
sovereign wealth fund
TAZARA
Tanzania Zambia Railway Authority
UAE
United Arab Emirates
UK
United Kingdom
UN
United Nations
UNAIDS
Joint United Nations Programme
on HIV/AIDS
UNDEF
United Nations Democracy Fund
IFC
International Finance Corporation
(World Bank)
IFI
international financial institution
ILO
International Labour Organization
IMF
International Money Fund
INGO
international non-governmental
organization
IsDB
Islamic Development Bank
MDB
multilateral development bank
MDG
Millennium Development Goal
page 4
ABBREVIATIONS | BRIDGING THE GULF
UNICEF
United Nations Children’s Fund
UNCTAD United Nations Conference on
Trade and Development
UNDP
United Nations Development Programme
UNEG
United Nations Evaluation Group
UNESCO United Nations Educational, Scientific
and Cultural Organization
UNFCCC United Nations Framework Convention
on Climate Change
UNFPA
United Nations Population Fund
UN-HABITAT
United Nations Human
Settlements Programme
UNHCR
United Nations High Commissioner
for Refugees
UNIDO
United Nations Industrial
Development Organization
UNISDR
United Nations International
Strategy for Disaster Reduction
US
United States
VFM
value for money
WB
World Bank
WFP
World Food Programme (United Nations)
WHO
World Health Organization
(United Nations)
WP-EFF
Working Party on Aid Effectiveness
WTO
World Trade Organization
page 5
CANADIAN DEVELOPMENT REPORT 2011
page 6
FOREWORD | BRIDGING THE GULF
FOREWORD
page 7
CANADIAN DEVELOPMENT REPORT 2011
page 8
FOREWORD | BRIDGING THE GULF
FOREWORD
JOSEPH K. INGRAM
I
t has become almost axiomatic for serious analysts
of world affairs to acknowledge that we are
today part of a process of unprecedented global
transformation. This includes tectonic geo-political
power shifts, accelerated technological transformation
raising youth expectations globally and economic
development producing a new global middle class,
intensifying demand for the planet’s natural resources.
While some of the results are positive — reduced
levels of absolute poverty in certain parts of the world
and “Arab springs” in others — on the whole there
is a sense of greater uncertainty and unintended
consequences, especially concerning the impact of this
current period of economic vulnerability.
New risks and opportunities are emerging as different
sets of economic powers assert themselves, and as the
established economies find themselves in a weakened
state. Some observers see these risks as nationally
threatening, needing to be dealt with decisively
through targeted public policies such as stronger
controls on immigration or higher levels of trade
protection. Others see them as more threatening for
“the global commons,” increasingly perceived as being
ill-suited and ill-equipped to deal with these new-order
risks, most of which are economic or developmental
in nature. Prominent among them are climate change
and unregulated financial flows.
Indeed, some observers forebodingly suggest that
rather than entering a world where global problems
can be met more effectively with an emerging and
more manageable Group of Twenty (G20), we have
instead entered a G-Zero world where “there is no
collective security in a globalized economy.”1
International Development Agency (CIDA) to host
a global conference on these issues in June 2011.
The conference, entitled Multilateral Development
Cooperation in a Changing Global Order, was our first
Annual Forum and brought together more than 40
experts from Canada and around the world.
The intent was to produce a set of conclusions
and recommendations that could inform both
Canadian and international public policy with
respect to international development in this changing
global order. From the outset, we felt it vital that
representatives from the emerging economies,
particularly the BRICS, be given prominence.2 We
need to hear from developing nations since the future
of multilaterally supported assistance and our global
economic health will increasingly depend on the extent
to which the new economic powers are prepared to
engage in collective efforts to solve global problems.
We were very much encouraged by the support we
received from Canada’s Department of Foreign Affairs
and International Trade, which expressed particular
interest in the conference’s trade and foreign policy
implications, and from the Aga Khan Foundation
Canada, which was keen to see the results of the
conference given a wide national and international
distribution through the publication of this Canadian
Development Report for 2011. After all, the extent to
which the global public views multilaterals as effective
and legitimate will play a major part in shaping the
future aid development framework.
To better understand the nature of the current global
transformation and its impact on the development
process, especially the multilateral system, The
North-South Institute agreed with the Canadian
The papers commissioned for this volume represent
well the issues addressed and the outcomes produced
during the conference. Written in the lead-up to
the Fourth High Level Forum on Aid Effectiveness
(HLF-4), held in Busan, South Korea, November 30 December 1 2011, the papers offer suggestions to the
international community for improving the overall
1 Ian Bremmer, Nouriel Roubini, “A G Zero World,” Foreign Affairs,
March/April 2011, Vol. 90.
2 Included inter alia were speakers from Brazil, China, India and South
Africa.
page 9
CANADIAN DEVELOPMENT REPORT 2011
effectiveness of international development cooperation.
Though early versions of several papers were released
prior to HLF-4 to ensure that they could inform
discussions in Busan, their recommendations remain
timely and relevant to policymakers preparing to
implement HLF-4 outcomes, in particular the Busan
Partnership for Effective Development Co-operation.
Before introducing the chapters however, it is worth
capturing some of the broader issues and conclusions.
Conference participants agreed that the changing
global order is being dominated by “paradigm shifts”
of unprecedented magnitude and pace. Specifically
mentioned were:
• economic and political power shifts from OECD
countries to the new economic powers emerging
from the so-called developing world;
• the ongoing global financial and economic crisis;
• the growing public debates around the respective
roles of government versus the private sector in
generating sustainable growth;
• demographic changes in today’s developed and
emerging economies affecting prospects for future
economic growth and its distribution;
• the widening income gaps both within and
between countries;
• the unprecedented growth in demand for the
planet’s resources; and
• climate change.
These global shifts are resulting in what George
Washington University Professor Danny Leipziger
refers to as a growing number of perceived “global
negative externalities.” Paradoxically, they are also
producing more inwardly focused policy prescriptions
such as deficit reduction and seeking to shrink
government, especially in many of the OECD’s more
developed economies.
Concurrently, there appears to be decreasing
enthusiasm for dealing with these global negative
externalities through multilateral institutions,
notwithstanding the widely acknowledged
contributions such bodies have made to global stability
and development since the Second World War.
While this flagging enthusiasm for multilateralism
from some of the world’s traditional donors can be
page 10
explained largely by negatively perceived externalities
such as increased outsourcing of jobs and increased
competition from emerging economies, the lack of
enthusiasm among emerging donors is largely based
on a perception that the institutional structures of
multilateral organizations are out-dated, inadequately
representative of their needs and priorities, and do not
reflect the emerging international balance of power.
Leipziger offers compelling suggestions on how to
deal with newly forming and in many respects different
models of development cooperation, including a
stronger and altered role for the World Bank Group.
He also puts forward proposals for resetting the
multilateral architecture in light of diverging views of
development cooperation.
Following Leipziger’s warning of the looming risks
arising from today’s global power shifts, NSI’s
Shannon Kindornay and Hany Besada examine in
greater detail two key issues facing the multilateral
system, namely declining support and how to include
the increasing number of development actors in
global decision-making processes. In response to the
growing proliferation of multilateral organizations
and increasing concerns by traditional donors
with system effectiveness, the authors suggest a
more comprehensive evaluation of the multilateral
development system itself rather than of individual or
groups of institutions. Such an evaluation would serve
as a basis to merge similarly mandated institutions,
phase out those that are underperforming and
improve the overall effectiveness of the remaining
multilateral development system. Overall, this process
would mean significant consolidation and closing
of certain institutions.3 Kindornay and Besada’s
findings are particularly important in light of the
HLF-4 commitment to set common principles and
guidelines for managing joint efforts that would reduce
the proliferation of multilateral, global funds and
programme channels.
With respect to greater inclusion of developing
countries in multilateral aid management, Kindornay
and Besada argue that current suggestions in the
lead-up to the HLF-4 are not sufficiently grounded
in solid research that examines: 1) the feasibility of
various existing and possible arrangements and 2) the
perspectives of various stakeholders. They call for more
3 Other key speakers at the conference concurred, including Ms. Sigrid
Kaag, UN Under-Secretary General.
FOREWORD | BRIDGING THE GULF
research to ensure that the post-Busan aid architecture
is inclusive and effectively addresses the shortcomings
of the current structure. Research-based evidence is
key to the success of the new aid architecture that will
emerge from HLF-4 particularly as new institutional
arrangements meant to oversee commitments made
in Busan are currently being negotiated. HLF4 participants have agreed to finalize these new
arrangements by June 2012.
Kindornay and Besada’s contribution sets the stage
for the following three chapters that look at the
effectiveness of multilateral development institutions
(Picciotto) and the implications for the system of the
emerging donors (Davies and Naidu). London’s King’s
College Professor Robert Picciotto’s contribution
engages critically with the contemporary rationale for
multilateral aid. He probes the dilemmas that need
to be tackled to achieve Paris Declaration objectives,
identifies key findings from recent aid-quality
assessments and draws implications for future aid
allocations.
To reverse the erosion in support for multilaterals,
Picciotto argues that urgent reforms are needed.
The governance systems of multilateral development
institutions need to be more inclusive and better
reflect the changing global order. He also stresses the
need to adopt “harmonized metrics” and independent
evaluations focused on results and development impact.
Picciotto sees the Busan High Level Forum as a
key medium through which the influence of newly
emerging economies and donors can be brought
to both the design and practice of development
cooperation. He also sees it as the institutional vehicle
through which the emerging donors can act as major
stakeholders in one important aspect of a global system.
Although emerging donors have signed on to the Busan
Partnerhsip for Effective Development Co-operation,
what role they will occupy and to what extent they will
engage in international discussions on aid effectiveness
in the post-Busan era still remains to be seen.
Picking up on Picciotto’s hopes for the High Level
Forum, Penny Davies, an independent consultant
associated with Sweden’s development NGO, Diakonia,
identifies how new approaches should be brought into
the design and implementation of a more harmonized
development paradigm. She describes the rise of SouthSouth cooperation and provides an important overview
of the new non-DAC donors and the implications of
their emergence for development cooperation.
In response to the increasing number of development
actors, Davies suggests that a new development
paradigm is necessary that systematically engages civil
society stakeholders, including the private sector, nonDAC donors and parliamentary bodies. At the same
time, she suggests ways in which aid transactions can
be made more transparent, highlighting the absence
of South-South providers from the “International Aid
Transparency Initiative” as a major weakness. While
focusing on potential lessons to be learned from
positive aspects of South-South cooperation, Davies
nonetheless acknowledges that there are still serious
shortcomings in the principles underlying the SouthSouth approach, including apparent incompatibilities
between their emphasis on national sovereignty versus
declared respect for human rights and the environment.
Probing even more deeply into the impact of emerging
donors on the global development-aid architecture,
Sanusha Naidu of the South African Foreign Policy
Initiative starts by asking whether the rise of the
emerging donors reflects the “beginning of the end of
the western-dominated world” and the transformation
of the values and aid principles which that world has
supported since the middle of the last century. Taking
the African continent as a case study, she examines
whether emerging southern power formations,
specifically the BRICS, offer something new in
rendering the multilateral system more equitable in
terms of representation, legitimacy and accountability,
especially on behalf of the low-income and most
marginalized states. As a result of commonalities in
their colonial pasts, she asks whether the BRICS are
promoting collective solutions to new global challenges
or are tending to behave as states have historically
behaved, namely in a relentless pursuit of their
national interests, both economic and political?
Naidu also highlights how the presence of new
donors is affecting the behaviour of the OECD-DAC
members. She concludes, however, that the actions of
the emerging donors have yet to match their rhetoric
of solidarity and mutual interest. In response, Naidu
calls on African governments to recognize their
advantageous position within the new competitive
aid environment and ensure that African interests are
effectively represented in new and old aid relationships.
page 11
CANADIAN DEVELOPMENT REPORT 2011
Finally, the concluding chapter of this year’s
report by NSI’s Aniket Bhushan and Kate Higgins
introduces readers to our new Canadian International
Development Platform (CIDP). The CIDP is a highly
interactive web-enabled data and analytical platform
examining flows between Canada and the developing
world. The CIDP comprises over 30 comprehensive
datasets on international development, including
highly detailed data on aid, trade, investment,
migration and other flows between Canada and
developing countries. What is most innovative about
this platform is that it is a one-stop analytical tool that
allows researchers, the public and policy-makers to
develop substantive outputs based on both publicly
available and customized data sets.
In a time of acute resource stringency, having such a
capacity can assist Canada’s policy-makers in ensuring
that development and foreign policy resources are used
in the most cost-effective way. Combined with CIDA’s
new “Open Data Portal,” which was officially launched
during our June Conference by Canada’s Minister for
International Cooperation, the Honourable Beverly
Oda, as well as Canada’s new membership in the
page 12
International Aid Transparency Initiative, which was
announced in Busan, CIDP will contribute to the
Government of Canada’s broader objective of more
open government and greater transparency.
In the same chapter, using CIDP’s analytical tools,
Bhushan and Higgins provide a comprehensive picture
of multilateral development cooperation within the
changing global order, including a detailed picture of
Canada’s contributions to and through multilateral
institutions. They also examine donor patterns among
other donors, as well as the relative merits and demerits
of multilateral versus bilateral assistance. Their findings
substantiate the views expressed in earlier chapters on
the state of multilateral development in our changing
global order.
We are pleased to offer this free tool for those who
want to improve our understanding of development
assistance in a rapidly changing world. It is only
through such enhanced knowledge that development
cooperation can be revamped in the interests of those
who need it most.
FOREWORD | BRIDGING THE GULF
page 13
CANADIAN DEVELOPMENT REPORT 2011
page 14
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
CHAPTER ONE.
MULTILATERALISM,
THE SHIFTING GLOBAL ECONOMIC ORDER,
AND DEVELOPMENT POLICY
page 15
CANADIAN DEVELOPMENT REPORT 2011
page 16
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
MULTILATERALISM, THE SHIFTING GLOBAL
ECONOMIC ORDER, AND DEVELOPMENT POLICY
DANNY LEIPZIGER
WHY THE FATE OF MULTILATERALISM
IS SO PRECARIOUS
M
ultilateralism is a convenient way of
describing some of the cooperative
arrangements that have characterized
the global economic order in the period following
the Second World War. It has had a very good run,
particularly with respect to economic cooperation
among the more advanced countries. When it comes
to supporting the development aspirations of poorer
countries, multilateralism’s history is imperfect, yet
substantially favourable. How else can one explain
the rise of South Korea, Hong Kong, Taiwan, and
Singapore? How else can one explain the massive
increase in world trade, global value chains and
international capital flows? How else can one explain
the relative lack of international strife in the face of the
emergence of a worldwide oil cartel, massive surpluses
that required recycling, the fall of major currencies like
the pound sterling, and the coordinated depreciation
of the US dollar in the Plaza Accord? We have seen
the General Agreement on Tariffs and Trade (GATT)
formed and transformed into the World Trade
Organization (WTO). We have seen the International
Monetary Fund (IMF) and World Bank created and
then replenished many times over. We have seen the
creation of new institutions in areas of health, regional
development, migration, and justice. While not all
multilaterals are effective, they provide the world order
with a sense of common purpose and cooperation
(Haass 2008; Held and McGrew 2007).
The chinks in multilateralism were of course apparent
from the beginning. However, as long as world trade
and global output were rising at a respectable pace,
many of the stresses could be accommodated. The
gains from trade were large enough to manage the
dislocations. The flows of capital were plentiful enough
so that losses could be borne every decade or so when
a financial crises hit, whether in Latin America, Russia,
East Asia, or Eastern Europe. What has in the end
frayed the edges if not the core of multilateralism was
the synchronous unraveling of financial markets, fed
by excessive liquidity, excessive leverage, and excessive
greed that went unpunished by regulators. This has
led to such a severe global downturn that some of
the fundamental faith in markets and the institutions
meant to oversee them has been shaken — and with it,
faith in multilateral solutions.
Recriminations now fly fast and furiously about
currency wars, predatory exchange rates, and
unbridled liquidity creation. In parallel, and largely
as a consequence, there is considerable talk about
the need for greater government intervention and
for a resetting of national priorities at the expense of
global ones. This is unfortunate since the process of
international integration has increased the importance
of externalities in areas such as trade, health,
migration, capital flows, crime, and corruption. At no
time, therefore, has the need for multilateral solutions
been greater and the appetite for national concessions
been weaker. This is the world in which development
cooperation finds itself in 2011.
This chapter is organized in four parts. Part One
examines the changes in the economic order
emanating from the ongoing economic crisis that
began in 2008. Part Two deals with multilateral
institutions and their emerging challenges, and
provides a frank assessment of their effectiveness and
their prospects. Part Three lays out some fundamental
choices for the global community in coming to
grips with the new economic landscape and its likely
consequences. It stakes out a position based on the
premise that the existing multilateral institutions
and their memberships are not adequately armed
to deal with the spate of potentially negative global
externalities facing the international community.
Part Four provides some insights into the institutions
charged with fostering economic development and
page 17
CANADIAN DEVELOPMENT REPORT 2011
indicates how development cooperation may need to
adapt to the changes in both the landscape and the
political economy of assistance. The conclusion offers
final thoughts for those concerned with the challenge
of “resetting multilateralism.”
PART ONE: HOW THE GLOBAL
LANDSCAPE HAS CHANGED
T
he first decade of this century was characterized
by a dramatically new economic landscape. A
snapshot of the shift in economic power in the
last decade alone as seen in Figure 1 is quite striking.
The speed and magnitude of Chinese economic
ascent is almost without precedent in modern history,
coinciding with a dramatically aging demographic shift
in Japan and Germany, previously the world’s second
and third largest economies. At the same time, the
immediate problems of the eurozone are distracting
the continent from its longer-term challenges and the
United States (US) is mired in a difficult high-debt,
low-growth trap made worse by partisan politics and a
widening mal-distribution of income.
For the advanced countries, the Great Recession could
not have come at a worse time. The 2000–07 period
of cheap money, booming trade, and excess purchasing
in many nations, especially the US, provided fuel
for economic expansion among high-saving, exportoriented countries, while seriously over indebting the
markets in which the New Economic Powers (NEPs)
sell.1 The net result — substantial and unsustainable
imbalances — would have ultimately derailed the
euphoric expansion of the period even without
the housing collapse and consequences of underregulation.
<CE^cNZVg?d^c^c\D:89VhJH
Some observers, such as former IMF Managing
Director Dominique Strauss-Kahn, correctly saw the
culprits as being a combination of imbalances, poor
economic policy choices, and poor oversight, with
disastrous consequences for the global economy and,
even worse, a more constrained set of economic policy
choices going forward (Strauss-Kahn 2011). Some
unrepentant protagonists, such as Alan Greenspan
(2011), who helped fuel the housing market bonfire
with an excessively expansionary monetary policy, are
now unhappy with the idea of financial regulations
that would in any way impede markets. This, despite
the overwhelming evidence that financial markets
FIGURE 1: JOINING THE OECD “RICH CLUB” misbehaved by taking on risks in the fashion predicted
by Joseph Stiglitz (2002), that housing prices were
6000
artificially inflated as warned by Karl Case and Robert
™ Mexico (1994)
Shiller (2003), and that the taxpayers of this, and
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page 18
EZgXVe^iV>cXdbZ^cNZVg?d^c^c\D:89JH
The most dramatic economic shifts stemmed from
phenomena that preceded the crisis, such as China’s
accumulation of reserves, strong export strategy, and
helpful exchange rate, and were then propelled by the
crisis, including an increased global reliance on China
and other NEPs for positive growth while advanced
economies were shrinking (Canuto and Giugale
2010). It is clear that the maintenance of economic
growth in the NEPs was the only counterweight
to the steep declines in output experienced in the
advanced countries in the 2008–10 period. For 2011,
the IMF (2011b) forecasts a global expansion of 4.4
percent with the advanced countries contributing a 2.4
1 As per Leipziger and O’Boyle (2009), NEPs today control 13 percent of
global output and are projected to represent 34 percent by 2030. NEPs include China, India, Brazil, South Korea, Mexico, Russia, Turkey, Indonesia,
and Saudi Arabia.
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
percent growth rate and the NEPs 6.5 percent. And
so the trend continues, with an increasing share of
world income derived from rising world output in the
emerging market economies.
The trend of eventual economic convergence among
countries was long predicted and has been the source
of renewed attention as the rise of China has defied
even the most exuberant expectations. New points
of view on convergence include those of economists
David Romer (2011) and Michael Spence (2011),
each with his own take on the future, yet with a clear
vision that the shifts in economic power are here to
stay. Meanwhile, the World Bank (2005) forecasts the
dual phenomena of increasing convergence between
countries from the so-called North and South along
with increasing divergence among income earners
within both sets of countries. It was expected that
rapidly rising incomes in China or Vietnam would be
accompanied by a sharpening of income disparities
because both Communist-led economies started with
broadly flat distributions. Concerns about these shifts
in the distribution of income are mitigated in part by
the dramatic movement of millions, indeed hundreds
of millions in the case of China, out of abject poverty
in recent decades. What was not so evident, except
to some like Stiglitz, was that globalization would
have such a significant negative impact on the world’s
largest trading nation, the US.
Also unanticipated was the dramatic narrowing of
income distribution in the US, where the top 1 percent
of the distribution that commanded 1 percent of
national income in 1978 ended up obtaining 23.5
percent of national income in 2007, before the crisis
began (Kennickell 2009; Saez 2009). This degree of
income inequality is reminiscent of 1929, the last time
it was as concentrated (White House Task Force on the
Middle Class 2010). This trend is especially worrisome
when combined with post-crisis developments in the
employment picture in the US where job destruction is
far sharper than job creation, and off-shoring continues
to make globalization a prime target of domestic US
political concerns (Blinder 2009). In fact, the Pew
Research Center’s 2008 survey found less than half the
US public believes trade is beneficial compared to 78
percent who viewed it positively less than a decade ago
(Pew Research Center 2008).
Around the world globalization is also under siege,
with Brazilian-led talk of currency wars, a resurgence
of interest in national industrial policies, and warnings
from academics and the IMF that unsustainable
balance of payments imbalances are likely to re-emerge
(Canuto and Leipziger forthcoming; Wheatley 2010;
Wheatley and Garnham 2010). If Dani Rodrik is
correct in suggesting that domestic-led growth needs
to increase at the expense of export-led growth in
order to support effective development strategies,
then globalization is in for further shocks (Spence
and Leipziger 2010). Even the independent Spence
Commission on Growth and Development concluded
in its post-crisis Supplemental Assessment to the Growth
Report that the returns from an export-oriented
strategy would be smaller than before, although it did
not endorse the more activist domestic actions that a
dirigiste industrial policy would imply (Spence and
Leipziger 2010).
Many have opined on the new economic landscape,
beginning with Mohamed El-Erian’s “new normal”
of lower growth, higher debt, and a new equilibrium
in capital markets, and the Rodrik and Arvind
Subramanian (2009) view that capital flows need to
be re-examined for their desirability. In the US, the
experience with aggressive money creation, benignly
known as quantitative easing or QE2 (and its
aftershock in terms of capital outflows that appreciated
other currencies such as the Brazilian real), combined
with large rises in the debt-to-GDP relationship,
have indeed created new challenges. The key question
remains, how will the excessive liquidity be reined in
without raising interest rates and short-circuiting
the recovery?
Meanwhile, there has been concern in emerging
markets about unwanted capital inflows and a
turnaround in IMF policy toward capital import
taxes. Recall that it was the IMF (along with the
US Treasury) that decried the Chilean excess
reserve requirement in the 1990s to deter shortterm flows. Contrast that with the current IMF
posture of tolerance (IMF 2011a) and understanding
toward capital import taxes (Strauss-Kahn 2011).
Financial transaction tax debates are not new;
however, the notion that they would deter capital
flows in today’s integrated financial markets is
questionable, but nevertheless lends credence to
anti-globalization sentiment.
The current focus on short-term policy responses to
disturbing economic news should not distract us from
page 19
CANADIAN DEVELOPMENT REPORT 2011
a longer-term perspective on what has fundamentally
changed. This is especially true for those changes that
are inevitable in direction if not degree that will shape
future policy choices. Among these landscape changers
are climate change, where the issue is only the pace at
which unacceptable climate change will happen, not
whether it will occur. Much has been written about
the issues of growth and climate degradation and
about responsibility and ability to change the speed
of climatic disaster (Mendelsohn 2009; Nordhaus
2007; Stern 2007). Apart from the overwhelming
and intractable issue of shared global responsibility is
the fact that carbon intensity is highest in the fastest
growing economies. Climatic change epitomizes the
kind of global externalities facing nations over the
coming decades.
Less attention has been directed at the issue of
demographic shifts (Spence and Leipziger 2010).
The population declines in Japan and South Korea,
for example, imply tremendous changes in future
output. In the case of Japan, economic forecasts before
the terrible recent 2011 natural disasters showed no
relief from its low-growth trap (see separately Fukao
2010; Ito forthcoming; Yoshino forthcoming; all
share the same pessimistic view). At the same time,
forecasts for South Korea show that in order to avoid
a continued precipitous drop in growth compared to
past levels, dramatic changes in birth rates, women’s
labour participation rates, and retirement ages need to
occur (Ianchovichina and Leipziger 2008). Indeed, the
same demographic phenomenon will ultimately affect
China, exacerbated by the draconian but effective onechild policy and earlier actions that reduced the ratio
of women to men in certain age groups. In Europe, the
issue has been well documented by the Organisation
for Economic Co-operation and Development
(OECD) and others — namely that the drop in
birth rates, if unaccompanied by more welcoming
immigration policies, will depress future growth.
It would appear that most future trends — in
demographics, health, and pension obligations, in
particular — in the advanced economies point to
economic decline (Canuto and Leipziger forthcoming).
Starting with the basics of production as formulated
by Robert Solow, Romer, and others, the factors of
production that remain to be exploited are technology
and innovation. It is for this reason that the work of
Philippe Aghion and others on innovation-led growth
page 20
takes on special significance inasmuch as development
strategies are nuanced by countries’ abilities to
either gain efficiency in existing technologies or gain
superiority by developing new ones (Aghion and
Howitt 1998; Spence and Leipziger 2010). Higher
growth rates may emanate from new innovations
in information and communications technology in
much the same way that the Internet affected so many
sectors (Mann forthcoming). Ironically, however,
many of the gains of information technology that
incentivize global supply chains, new advances in the
service sector, and additional off-shoring also lead to
greater unemployment in the advanced countries,
more pressure against free-trade, and greater concerns
about the direction of industrial policy (Leipziger 2010;
Rodrik 2011). This pervasive trend points to the need
to re-invigorate multilateralism as an antidote to overtly
nationalistic economic policies that are sure to hurt
developing countries.
The outlook for the coming decade will be
characterized by the increasing significance of global
externalities. The global community has become
accustomed to a plethora of positive externalities in the
post-war era such as great gains in openness to trade,
matched by unparalleled increases in trade that enabled
East Asia in particular to grow at lightning speed.
But what we witness now is a greater consequence of
negative spillovers, as seen during the Great Recession
when trade volumes collapsed globally because of
banking problems in a few countries. Similarly for
Europe, the great gains in trade creation due to the
expansion of the eurozone are history, and now the
problems of internal convergence will command
policymakers’ attention as we have seen in the crisis of
Southern Europe.
The speed and consequence of negative spillovers has
prompted the IMF to begin a new monitoring effort
on country spillovers focused on financial risks.2 The
United Nations (UN) and others have attempted to
identify major global risks that produce significant
economic externalities, but they have proven powerless
to create a consensus on action (United Nations
2 The IMF will now take a risk-based approach to financial sector surveillance and will make Financial Sector Assessment Programs (FSAPs)
mandatory parts of Article IV surveillance for members with systemically
important financial sectors. If FSAPs were done for the top 12 financial
sectors, they would include the United States, Canada, Switzerland, China,
Japan, and seven European Union (EU) countries.
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
2009, 2011). Many believe that the only body that
can credibly intercede is the Group of Twenty (G20).
Whether that will come to fruition remains to be seen.
In this difficult environment of increasingly highspeed, negative externalities, it is crucial to examine
how the multilateral institutions charged with dealing
with these phenomena are operating. We know that
the IMF is charged with preventing currency wars.
The Financial Stability Board (FSB) is charged with
preventing regulatory arbitrage. The quasi-moribund
WTO is supposed to help prevent trade wars. Each has
failed in large measure in recent years. The challenge
facing the global community now is whether these or
other institutions that face an increasingly negative
international environment can help prevent worst-case
scenarios involving poor policy outcomes. Finally,
there are the related questions about how the NEPs
can play a more effective role in global governance and
regulatory areas. And what are the consequences for
the poorest countries still left out of the mainstream
and the donors who have pledged to support their
development aspirations?
PART TWO: THE SCORECARD
ON THE MULTILATERALS
F
ar too little credit is given to certain key
multilateral institutions that have helped drive
economic growth, prosperity, and dramatic
development gains in some countries since 1960.
Among them, the World Bank stands out as a source
of data, financing, and intellectual leadership. When it
comes to understanding poverty, income distribution,
and economic growth, the World Bank is the institution
of choice to help analyze trends and prospects. It
has also, depending on the decade, been the most
influential global assessor of trends in social sectors, on
urban development, infrastructure, gender economics,
industrial structure, agriculture, and many other aspects
of development. Those pockets of expertise, however,
have come and gone in the midst of the World Bank’s
internal strategic failures and management lapses.
Nevertheless, if one asks policymakers in South Korea,
China, or Indonesia about the World Bank’s major
contributions, their answers are usually in the realm of
policy advice and institution building.
This is not to downplay the importance of World Bank
and International Finance Corporation (IFC) flows,
which have at times been counter-cyclical, especially
during the oil shocks that spawned adjustment lending
and in the recent Great Recession when precautionary
borrowing from the World Bank tripled lending as
markets became overly skittish and the IMF had yet
to fully reposition itself. The World Bank Group has
essentially three groups of clients: (1) the poorest
countries receiving international development
assistance, which require substantial debt relief granted
through Heavily Indebted Poor Country Initiative3
and Multilateral Debt Relief Initiative4 in addition
to institutional efforts; (2) the lower-middle-income
countries, which benefit from cheaper financing,
investment lending via the World Bank’s International
Competitive Bidding guidelines, and the World Bank’s
guarantee for borrowing elsewhere; and (3) the upper
middle-income countries, which benefit from advisory
work, pilot projects, and other instruments of World
Bank lending and coordination to undertake their own
development programs.
Some would say that the World Bank’s most significant
contributions come in the forms of: (1) data and
analysis; (2) monitoring and validation; (3) financial
innovation; (4) intellectual leadership; and (5)
providing development platforms for others. In the
first category, the World Bank’s published data on
poverty, growth, and per capita income stands out,
while Governance Assessments and Doing Business
rankings epitomize the second rubric. In financial
innovation, one can point to catastrophe bonds, the
Debt Reduction Facility, and local capital market
development. Intellectual leadership is perhaps the
World Bank’s strongest suit; there are myriad examples
starting with its work on income distribution. In terms
of mobilizing and shaping flows from donors, one
may look to the Gender Action Plan, the Governance
Partnership Facility, the Debt Management Facility,
and many others across social sectors.
The package of development lending combined with
analytic advisory work seems to have been the World
Bank’s successful trademark. Unfortunately for the
development agenda, the World Bank is now capital
3 The Heavily Indebted Poor Country Initiative was launched in 1996.
The Initiative’s debt-burden thresholds are adjusted downwards, enabling a
broader group of countries to qualify for larger amounts of debt relief. See
World Bank 2011 for more information.
4 The Multilateral Debt Relief Initiative provides 100 percent relief to a
group of low-income countries on eligible debt from the IMF, the World
Bank’s International Development Association, and the African Development Bank’s Africa Development Fund.
page 21
CANADIAN DEVELOPMENT REPORT 2011
FIGURE 2: SIZE OF WORLD TRADE AT THE
CONCLUSIONS OF GATT/WTO ROUNDS
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constrained. The combination of engorged lending
during the 2008–10 crisis and a reluctance by its
president to seek a fresh capital increase have left the
World Bank limited to a sustainable lending program
of US$15 billion per year. With larger loans now in
fashion, at least for large borrowers like India, Brazil,
and China, this implies that the regional development
banks, which have extra capacity to lend, will become
more popular. Material prepared for the G20 shows
that recent capital increases in regional banks now
render them the most capable of expansion in
lending (G20 2009). With total official development
assistance (ODA) either flat or falling and sovereign
wealth funds (SWFs) concentrating on a few sectors
such as oil and gas and a small number of wealthy or
advanced countries, there is little room for new flows
to those developing countries that are not the favoured
emerging market economies.5 Interestingly, the sheer
size of SWF investments,
5 SWFs that manage perhaps US$3 trillion in assets are said to hold
undiversified, conservative investments in oil and a few sectors via large-cap
firms (Chhaochharia and Laeven 2010).
page 22
largely in safe, developed, or rich countries, dwarfs
ODA by many multiples as seen in Figure 2.
The World Bank’s position as expressed to the G20
seems to be that a small capital increase is needed
to avoid breaching certain prudential risk ratios and
single-borrower limits, but that it is generally satisfied
to have its annual lending capped at US$15 billion,
while regional banks will lend upwards of US$35
billion a year (World Bank 2010). The International
Bank for Reconstruction and Development’s (IBRD)
request for a US$58 billion general capital increase
would not change its sustainable lending levels and is,
by comparison, one-half of the Asian Development
Bank’s recent general capital increase from the World
Bank/IMF Development Committee (World Bank
2010).
Considerable attention has been directed at the World
Bank’s governance, while an insufficient amount
of time has been spent looking at its management.
Similarly with the IMF, there is a fixation on shares
in the World Bank’s Executive Board, although, as
the Zedillo Commission (2009) pointed out, the
World Bank’s governance is less influenced by its
Board than by its shareholders at a distance and by its
management in Washington. In the end, shares only
matter symbolically. Major redirections at the World
Bank, such as its push to decentralize (which has
proven to be exceptionally costly both financially and
in terms of degrading its global knowledge), have been
undertaken with minimal oversight and little regard
for trade-offs. Its overwhelmingly powerful presidents
have had almost cartes blanches to pursue their own
agendas and the Zedillo Commission recommendation
for “report cards” has been delayed until the next
presidency, much as the notion of a non-American
president is only supported in the abstract.
Meanwhile, the WTO and its predecessor, the
GATT, have contributed impressively to the growth
of world trade and the relatively free market access
that has helped the Asian “tigers” (Taiwan, South
Korea, Hong Kong, and Singapore), Asian “cubs”
(Thailand, Malaysia, and other rapidly growing
economies of Southeast Asia), and now the Asian
giant, China, to develop so remarkably. The WTO
has done well in terms of negotiating the elimination
of tariffs, moderately well on non-tariff barriers, well
on admitting new members, and relatively poorly
on services reform and adjudication. The fact that
the Doha Development Round has been stalled for a
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
decade is not the fault of the WTO, but rather
reflects the particular sectoral lobbies in advanced
countries whose potential losses cannot be balanced
by new trade gains because, ironically, the system is
remarkably open.
This is at the strategic level. At the tactical level, Doha
failed because political leaders in the OECD countries
cared too little about the success of the round and
some newly emerging economies felt that they could
show their muscle in Geneva, while at the same time
delay opening their own markets in services and
other areas that were useful in generating balance of
payments surpluses. The net result is a dead Doha
round and perhaps a dying WTO, given the elapsed
time of the round as seen in Figure 3.
The WTO may have a future as the arbiter of trade
disputes, although since those outcomes are “winlose” rather than “win-win,” such a role may not be
popular. In any event, such a role for the WTO would
be possible only if countries saw it in their interests
to have an arbiter rather than deal with trade disputes
bilaterally (Meltzer 2011). And this would occur
only if the NEPs decided to invest in multilateralism.
Unfortunately, the smaller developing countries gain
little from a WTO that adjudicates, given the time and
cost of such actions.
FIGURE 3: SOVEREIGN WEALTH FUNDS
($2.6 TRILLION IN 2009)
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The OECD also has had a good run, especially
on issues where externalities among the advanced
countries needed to be tackled by naming and
shaming. This worked well for the OECD AntiBribery Convention, but only moderately well on antimoney laundering initiatives. Despite a push to expand
its membership, the OECD is losing steam because
representation is too low-level, commitments to action
too halting, and the cohesion of the group has been
diminished both by the politics of the EU and the
divergent interests of potential new members. It is a
club with good data collection and an informed forum
for conversation, but in today’s policy vacuum it is less
of a player than one would hope, the excellent efforts
of its Secretary-General notwithstanding. The OECD’s
Development Assistance Committee (DAC) lacks
focus and is not overtly relevant to the development
agenda. While the OECD can use moral suasion at
times, its lack of enforcement, even in areas such as
illegal cross-border banking, limits its reach.
For its part, the IMF has exhibited a remarkable
resurgence of late, returning to the centre of the
international financial debate under the recent
leadership of Strauss-Kahn after a period of
significantly lower relevance. While some (Bergsten
2007; Stiglitz 2011) would like to see the IMF
become the issuer of a new reserve currency in the
form of Special Drawing Rights (SDRs), an unlikely
occurrence in my view, others are content to see the
IMF provide precautionary access programs when
markets are skittish and play the role of global arbiter
on matters currently covered by the G20. Among the
G20 issues that group is asking the IMF to weigh in
on are assessments of spillover risks of too-big-to-fail
institutions, surveillance of imbalances, cross-border
issues that affect global systemic risks (including
mandatory FSAPs), and the underpinnings for mutual
assessment frameworks of G20 members. This large an
agenda implies quite a comeback for the IMF.
It is no exaggeration to say that some of the success
of the G20, the main multilateral economic forum,
is based on the ability of governments to outsource
work to the IMF and their confidence in the way
the institution was led. The IMF has shaken off its
reputation for attaching unreasonable conditions
to its adjustment programs. Its current position
as the assessor of macroeconomic behaviour and
calibrator of systemic risk is critical for successful
page 23
CANADIAN DEVELOPMENT REPORT 2011
multilateralism going forward. Strauss-Kahn (2011)
admitted that the institution missed major warning
signs on the regulatory front and was politically
incapable of influencing either the US on its twin
fiscal and balance of payments imbalances or China
on its exchange rate, yet he was determined to show a
new face to the international community. This began
with a 180-degree turnaround on the suitability of
capital import taxes, long a taboo at the IMF, and
new analyses aimed at identifying sources of negative
spillovers or risk externalities (IMF 2010).
Going forward, it is clear that the major grouping
that will attempt to steer multilateralism is the G20.
While there are anomalous members of the group due
to historical political accidents and notwithstanding
the fact that the EU has an independent seat despite
its four main member states being present, the group
gains credibility from its expanded membership
when compared to the Group of Eight (G8), for
example6. The G20 benefits from certain countries
that are committed to multilateralism and “punch
above their weight,” such as Australia, Canada, and
the Netherlands. The fact of the matter is that the
G8 is no longer seen as sufficiently representative of
global economic players and, to be frank, has only
infrequently acted boldly (for example, the Multilateral
Debt Relief Initiative of the 2005 Gleneagles Summit
under the presidency of the United Kingdom). The G8
also lacks a follow-up mechanism for implementation
and monitoring and is unconnected to either the
World Bank or IMF, except in special circumstances.
With regard to the latter, the G20 is different — it
relies on the IMF and FSB for implementation and
reporting.
Much has been written about the optimal G grouping.
Famously, World Bank President Robert Zoellick
declared the G2, the US and China, to be the proper
forum to decide international issues. Unfortunately,
however, the world’s two largest economies have
much to disagree about and are unlikely to steer the
international agenda forward. One is hamstrung by
fractious politics and the other by a lack of political
freedom, hardly a felicitous combination. Others,
such as Ian Bremmer and Nouriel Roubini (2011),
6 For some observers, the expansion from Group of Seven to G8 also
lacked realism since Russia is non-compliant with many of the OECD’s
basic principles and lacks advanced-country status on crucial matters of
governance.
page 24
align themselves with the G0 concept, namely that
there is no grouping that can at present effectively
steer the international system in the right direction.
Still others have hope in the BRICS (Brazil, Russia,
India, China, and South Africa), a grouping of
countries with nothing in common except their newly
strengthened economic status and an acronym coined
by Goldman Sachs. The five have little in common
politically and each pursues a fundamentally different
economic strategy. Their recent pronouncement
against the role of the US dollar as the global reserve
currency notwithstanding, they appear unlikely to be
positive global players in the near term for shoring up
multilateralism (Xinhua 2011).
The G20 has scored some successes during the Great
Recession, namely credible pronouncements on
coordinated stimulus packages and following through
on financial regulatory announcements by empowering
the FSB to set new international prudential norms.
It also has boldly empowered the IMF in areas such
as market surveillance, cross-border risk assessments,
and making FSAPs mandatory for some systemically
important countries. This could be a positive step
to emulate in other areas of Article IV surveillance,
for example, if the IMF indeed could enforce
greater discipline vis-à-vis nations that experience
sustained imbalances and/or practice exchange rate
manipulation. That verdict on IMF effectiveness in
these areas is still pending and some doubt exists that
countries like the US, China, Germany, Brazil, or
India will bend to the IMF’s pronouncements. If any
country can ignore the analysis and implications of the
Mutual Assessment Process, for example, the process
will lose its credibility.
The two areas where the G20 has so far lacked resolve
are the trade and development agendas. Despite the
heroic efforts of South Korea at the 2010 G20 Seoul
Summit, no progress was recorded on the Doha round
and the international development agenda remains a
tame one at best with only vague pronouncements and
committees to examine infrastructure constraints and
other basic impediments to development progress.
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
PART THREE: NEW CHALLENGES
FOR MULTILATERALISM AND ITS
ORGANIZATIONS
T
he set of challenges facing the international
community have never been greater. What sets
them apart from similarly robust challenges in
earlier decades is the dramatically diminished ability
of individual countries to shield themselves from the
negative externalities of policy actions or inactions.
Whether it is in the area of health, where Avian flu,
the H1N1 virus, or HIV/AIDS may abound, or in
the area of migration, where countries and institutions
have been proven inadequate in dealing with refugee
problems, let alone illegal immigration, the world
has become smaller if not flat. Drug trafficking has
also proven to be impossible to control and a series of
countries in the Western hemisphere have fallen like
dominoes to drug cartels and violence.
In the arena of banking and financial flows, the recent
economic crisis has shown how cross-border risk
cannot be easily managed and financial contagion can
have disastrous effects. Even as regulation attempts
to play catch-up, new financial instruments are being
developed with untested risks. The issue of excessive
leverage, which the German government attempted
to attack during its G8 presidency in 2007, remains a
concern and even higher new capital requirements are
not sufficiently in line with either risk or the potential
for losses. Moreover, the sharing of losses across
national borders is a complicated matter, as seen by the
recent Icelandic banking collapse.
Governance of illegal flows is a major challenge to
international organizations and the magnitude of flows
is enormous (Reuter and Truman 2004). The amounts
are estimated to total many hundreds of billions of
dollars and measures to control them, such as the UN
Convention against Corruption, are still unsigned by
some countries that house major financial centres.
Even coordinated attempts by the UN Office on Drugs
and Crime and the World Bank under the umbrella
of the Stolen Asset Recovery Initiative are slow to gain
traction. The level of hypocrisy among some countries
is palpable and the lost revenue that could be used for
proper public sector purposes is large, especially —
ironically — in the poorest countries. The UN system
has proven to be particularly impotent when dealing
with many of these cross-border issues and consensus
often eludes the regulators and custodians of the global
commons, be it in the area of whaling, nuclear safety,
pollution, arms shipments, or human trafficking.
In the area of climate change, the record of the
UN is also poor. Some progress has been made in
controlling pollutants, but international agreements
have proven elusive. The UN Secretary-General’s
report on climate change financing (United Nations
2010) claims that an additional US$100 billion will
be needed annually by 2020 to manage climaterelated investments in mitigation and adaptation. The
report would like to see some 30–40 percent of this
amount delivered by multilateral development banks
(MDBs) — regional development banks and the
World Bank — and it argues that a modest increase in
paid-in capital, approximately US$10 billion, could
finance this. While many of the report’s assumptions
are questionable, the basic point that MDBs need
to achieve higher net levels of sustainable lending to
deal with climate-change issues is clear. It appears,
however, that they are not equipped either financially
or technically to address such issues.
Finally, in the area of intellectual property protection
the international community turns a blind eye to
the theft of patents, especially for pharmaceuticals
and new technologies. There is a strong moral case
for cheaper drug prices, but the costs of research and
development are also very real and the theft of patents
to produce generics, often of dubious quality, is a
breach of international law. The fact that many of the
BRICS are the main culprits in the theft of intellectual
property does not augur well for their taking up the
mantle of multilateralism (Rodrik 2011). Many in the
global community would like major new players such
as China to behave like OECD countries and accept
greater responsibilities, but the reality is that many are
still at per capita income levels that make them, as seen
in Figure 4, unlike the newest members of the OECD.
At the same time, the international environment is
fraught with greater negative externalities and fewer
international safeguards. Indeed, the probability of
poor outcomes has increased, whether in climatic
events, cross-border financial crises, or commodity
price shocks. Whether one refers to “black swans,”
“fat-tail” distributions, greater volatility in trends, or
the chaos theory of Benoit Mandelbrot (2004), there
is evidence that the past may not be the most reliable
guide to the future. This is not comforting when taken
in conjunction with Carmen Reinhart and Kenneth
page 25
CANADIAN DEVELOPMENT REPORT 2011
FIGURE 4: DISTRIBUTION OF
ECONOMIC POWER
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Rogoff’s (2009) historical evidence of the very long
recuperation time for major economic variables after
financial crises.
If the chances of economic crises have indeed
increased and the safety valves that might mitigate
the severity of crises have diminished, then
multilateralism is in for a rough ride. If, as I believe
the evidence shows, transmission mechanisms are
more fluid, shocks will be transmitted with greater ease
making the need for new and better global institutions
to deal with them increase.
Meanwhile, others argue that the degree of global
integration has peaked and we are in for a prolonged
period characterized by the resurgence of national
policy (Rodrik 2011; Rodrik and Subramanian 2009).
According to Rodrik (2011), “Democracies have the
right to protect their social arrangements, and when
this right clashes with the requirements of the global
economy, it is the latter that should give way.”
The ability and willingness of countries to put
international demands on the same level as or above
page 26
national demands depends in part on economic
conditions, partly on global civility and in part on the
extent to which national governments have the trust of
their citizenry. A series of arguments can be put forth
suggesting that in many advanced countries all three
phenomena are weaker than in the past. The result,
if these hypotheses are correct, is that multilateralism
will face greater resistance from national politics. I
believe we have begun to see this trend in the US and
increasingly in Europe. Why?
The first reason is because economic conditions
have worsened. Witness, for example, the deteriorating
net worth positions of US households between 2007
and 2009 — two-thirds saw their net worth fall.
According to surveys conducted by the Pew Research
Center between 2001 and 2008, job losses and a sense
of unfair competition from China has undermined
the American public’s support for globalization. The
dramatically increasing inequitable income distribution
over the past 30 years makes it harder to promote
global issues at the expense of national issues. These
deteriorating national trends also limit the traditional
US leadership role and, when combined with
eurocentricity, make it hard to identify new
globalization champions.
Cooperation is fraying within Europe, which has
incurred huge costs to keep the expanded eurozone
intact and to maintain a common currency in the face
of greatly diverging economic conditions among its
members. Bailouts of Greece, Ireland, Portugal, and
Spain have proven costly with eurozone members
running budget surpluses being forced to finance
bailouts for weaker members.
Observers predict continued economic difficulties
as the highly indebted eurozone members lack the
ability to formulate independent monetary policies.
Furthermore, with a fixed exchange rate they must
continually reduce fiscal imbalances without increasing
their export competitiveness. This combination of
fiscal retrenchment and a fixed exchange rate is not a
recipe for growth. Instead, it will continue to produce
unsustainable debt dynamics, further bailouts, and
political stresses in the eurozone.
Overall, growth prospects now are weaker than during
the last decade, although the 2000–08 period had
an unreal characteristic to it brought about by an
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
over-expansionary US monetary policy and an overly
zealous trade and growth trajectory for China. These
twin imbalances allowed Americans to over-consume
and the Chinese to over-save.
Currently, advanced countries are below their potential
growth rates because of fiscal pressures, insufficient
confidence after the Great Recession, and confusing
signals with respect to global monetary policy. Some
fault the US for its excessively expansionary monetary
policy, including particularly quantitative easing. This
use of monetary expansion by the reserve currency
nation has also led to a united call by the BRICS for
the end of US dominance of international liquidity and
a Chinese-led demand for a greater role for the IMF’s
SDRs as a unit of account (Xinhua 2011).
Finally, fiscal pressures have also led to some
retrenchment in bilateral assistance programs,
especially among those donors that have traditionally
been at the forefront of global aid efforts. Whether
the EU will be in a position to continue its ambitious
increase in aid commitments undertaken in the past
decade remains to be seen. Some of the slack has been
taken up by China and other new donors, although
their failure to report transparently is not encouraging.
The track record of new donor adherence to the DAC’s
best practices has been weak. Nevertheless, some aid
recipients welcome the availability of large amounts of
mixed aid credits.
However, these new flows, while large, are clearly at
odds with attempts at aid harmonization and improved
aid effectiveness. Philanthropy as an aid instrument is
a newer phenomenon, although it is largely dedicated
to the health area and can be seen as inconsistent with
overall health sector management and reforms. Much
greater effort is needed to integrate philanthropic
efforts, again often quite large in a particular sector,
with national strategies and implementation capacity.
Health policy cannot be fought one disease at a time,
especially in countries with weak institutions and
human capital.
Thus, a reasonable assessment of the multilateral
situation is that we are experiencing a surfeit of
negative externalities and a paucity of global solutions.
New problems are becoming more severe and older
institutions are not adapting sufficiently to cope with
them. Hence, we are entering a period of major new
challenges to globalization. Indeed, some like Rodrik
(2011) argue that there is an impossible trinity of
globalization, independent national policies, and
democracy.7 He sees a weaker form of globalization
as inevitable since it will collide with national policies
and the politics that underpin them. Whether or
not one takes that pessimistic an outlook, Rodrik is
correct in arguing that strong national governance is
a prerequisite for common global efforts and
their legitimacy.
What is relatively clear is that the path of the
global economy will not be mean-reverting, either
quantitatively or qualitatively. On the latter score,
Rodrik (2011) argues that “National Democracy and
deep globalization are incompatible.” Hence, we can
either aim for a lighter form of globalization in which
domestic policies take precedence or we need to find
better ways of making national and global goals more
complementary.
PART FOUR: IMPLICATIONS FOR
DEVELOPMENT COOPERATION
T
here is no dearth of diagnostics as to what ails
development assistance. The Paris Process has
clearly laid out the inconsistencies of bilateral
aid programs and many of their defects. Efforts toward
harmonization have yielded only modest success. The
EU’s aid targets have added pressure on member states
to increase assistance but have not been matched with
effectiveness measures. The multilateral horizon is
dotted with regional development banks, the World
Bank, vertical funds, and various UN agencies that
in general fail to measure up well in terms of either
effectiveness or impact. There are new players on the
scene such as first-time donors, philanthropists, and
even SWFs. However, the impact of these players is
less than the allocation of resources would imply.
There is now a pressing need to reform the
development assistance constellation. The need arises
from two factors. First, the advanced economies,
including significant traditional donors, are fiscally
strapped and aid budgets will not be increased
— indeed the new mantra is “value for money.”
Second, there are new actors whose policies are still
evolving but who may see the world differently from
7 China would be able to fulfil two of the three legs of Rodrik’s impossible trinity since it has no pretext of democracy and can thus manage its
national and international obligations.
page 27
CANADIAN DEVELOPMENT REPORT 2011
traditional donors. For both reasons, a recalibration
of development cooperation is needed. And such
recalibration must begin with political support.
The support for development cooperation comes from
those who believe in fighting poverty, others who want
to see growth and development to secure the future,
some who wish to give back to the global community
for the aid they have received, and others who
have only political motivations. The IBRD and the
International Development Association have managed
to keep enough of these objectives in the forefront
to sustain support from many quarters. Recently,
however, the situation has changed as many middleincome countries have made impressive economic
strides, while many low-income countries have fallen
further behind in their development struggles despite
massive debt relief. At the same time, some countries
have become aid darlings and others aid orphans.
Aid has in many cases become fragmented on the
supply side, while in a few recipient countries it has
consistently and uncomfortably dominated budgets.
Links between official aid and private sector flows have
never really congealed and attempts, such as parallel
lending (so-called “B Loans” or co-financing) and the
use of guarantees, have not lived up to their promise.
large amounts of aid, committed governments,
and independent coordination. Examples of such
coordinating mechanisms include the Consultative
Group for Indonesia and the donor group for
Vietnam, among others.
The World Bank must be more selective, reducing
its programs and presence in countries that have
neither the political will nor the institutions to make
good use of assistance. There may be many charitable
organizations that can effectively operate in that space,
but the World Bank cannot and should not. Instead,
the World Bank should reposition itself to operate
in: (1) countries that have effective governments and
sufficient governance to utilize global aid; (2) countries
from which it can learn and where it can make a
difference in particular sectors or with particular groups
of the population, even if the country is creditworthy;
(3) sectors that create global externalities, such as
climate change mitigation; (4) innovative sectors that
it is well positioned to assist, such as natural disaster
adaptation; and (5) areas where there are coordination
failures that it can ameliorate or redress.
The rise of the G20 provides a massive political
opportunity for development cooperation. Because
several G20 countries are recent aid recipients and new
donors, the G20 has a broader view of what constitutes
acceptable development assistance. The belief often
espoused by the most generous aid donors that
assistance should directly alleviate poverty, rather than
contribute to broad-based economic growth, is no
longer the dominant sentiment. Indeed, current World
Bank Chief Economist Justin Lin (2010) advocates for
a new structuralist approach that is perilously close to
government-led growth and strong on supporting the
real economy and developing comparative advantages.
Furthermore, the World Bank should close small
offices and retrench. Its decentralization process has
gone far beyond the economical, the efficient, and
the effective. It is now a series of outposts combined
with a group of independent affiliates. These affiliates
dot Africa and Central America, but lack both scale
and expertise to make meaningful contributions. Its
outposts, such as the Jakarta office, receive a large
portion of their annual budget from local donors and
contribute little to the knowledge base at headquarters,
which is problematic because global expertise should
be the World Bank’s raison d’être. Despite many efforts
to revitalize the “knowledge bank,” these efforts have
failed. In this context, the refusal by the World Bank’s
president to deal with internal deterioration has cost it
dearly in terms of expertise.
Much in the way that the G20 has empowered the
IMF to be the lead institution for macroeconomic
considerations and financial risk concerns, the
G20 needs to empower the World Bank to be the
lead agency on development. This may require
changes in the way the World Bank operates, but
such empowerment can also provide it with greater
authority on development coordination. Some of the
most successful assistance programs have involved
The one area in which the G20 could most visibly
empower the World Bank is climate change mitigation
and adaptation. The World Bank’s capital should be
increased — it was an error not to have already moved
more forcefully on this front — and new lending should
be aimed at reducing emissions. The BRICS are among
the most carbon-intensive producers in the world and
other developing countries will follow in that path unless
alternative energy sources are funded and financed.
page 28
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
The World Bank is ideally positioned for this
challenge. It was the international financial institution
of choice during the oil shocks, when adjustment
lending began. It has been the agency charged with
managing debt relief for the poorest countries. It was
called upon to do major financial sector lending in the
aftermath of the Tequila crisis in 1995 and the Russian
default in 1998. Now, its crisis leadership established,
it is the right agency for the climate change agenda.
This mandate will not emanate from the Executive
Board of the World Bank, its Development
Committee, or even its Board of Governors. A new
mandate will require direction from the heads of
state or government of G20 countries. The steps
required after the political commitment to use the
World Bank as the lead climate change financier are
straightforward. Begin with a sizable capital increase
for the World Bank so that its sustainable lending
level is doubled to US$30 billion annually. This
additional lending destined for investments to adapt
infrastructure to climate change mitigation measures
can then deal with this major risk to many developing
countries going forward.
The G20 can give impetus to the World Bank in the
same fashion that it empowered the IMF. A general
capital increase at least as large as that granted the
Asian Development Bank would be the right order of
magnitude. This increase in financial capacity can be
matched with hiring more technically trained staff,
which would increase the World Bank’s knowledge
and expertise. To manage this transition within a fixed
budget, savings could be generated by addressing
the budgetary burden caused by costly and excessive
decentralization.
CONCLUSION: 10 POINTS ABOUT
THE NECESSITY OF REINVESTING IN
MULTILATERALISM
1) The current commitment to multilateralism
falls short of what is needed for globalization to be
successfully maintained. We have many indicators
— international surveys, recent scholarly work, and
editorial commentary — that all point to a lapse in
dedication to the post-war goals for the international
system. The original OECD members and groupings
such as the North Atlantic Treaty Organization and
G8 emerged from a common understanding as to how
the international economy should be shaped. One
can easily blame the originators of the Bretton Woods
system for a failure to sufficiently adapt. However,
there was enough common ground and sufficiently
shared economic benefits to keep the system’s
custodians — primarily the US, Europe, and Japan —
committed to that system. Cohesion continues to fray
and is threatened by the emergence of the NEPs. Many
advanced economies are now either too dependent
on China and other NEPs or too preoccupied with
internal troubles to pay sufficient heed to global
warning signs.
2) The NEPs should invest in multilateralism since
it serves their long-term interests; moreover, their
actions will either reshape or significantly redefine
economic cooperation going forward. It is easy to
complain that the international system is biased against
emerging market countries and others by looking at
how the heads of the Bretton Woods institutions are
chosen or simply looking at voting shares in these
institutions. But the selection of institutional leaders
and voting shares are not, however, real measures
of either influence or economic reality. The current
reality is that the NEPs are drivers of world markets,
global prices, capital flows, and new technologies. That
they are so influential is a measure of their successful
policies and also of the system in which they operate.
If multilateralism is seriously at risk, the future of the
NEPs will be less fortuitous and more fractious — this
does not serve their economic interests well.
3) Development cooperation is more important
than development assistance. However, altered
development paradigms make cooperation even
more vital as the negatives of non-cooperation will
mount. More nationally driven development strategies
and greater inward thinking among both advanced and
emerging market economies will produce detrimental
changes in global trade and capital flows. As a result,
the global economy will grow more slowly as will its
component shares. Even as countries adjust to new
growth poles and new regional trading arrangements,
attention to globalism should be nurtured. The world
economy is too interlinked to avoid the negative
externalities of economic parochialism.
4) The changing economic landscape implies a set
of stronger and altered roles for the World Bank
Group, in particular the IBRD and the IFC. The
empowerment of the IMF by G20 leaders has left
page 29
CANADIAN DEVELOPMENT REPORT 2011
the World Bank Group adrift. The IBRD has ceded
its previous role in financial sector development to
the IMF. The IFC is not a major player in the risk
management arena at a time when this is of increasing
importance to its clients. More generally, as the World
Bank’s Executive Board has pushed it to be more
engaged in fragile states and in the poorest countries,
this has meant that it has also begun to lose its vital
role in the fight against poverty in middle-income
countries, where the majority of the poor reside and
where their chances of escape are highest.
5) To exert leadership in new areas such as climate
change, the World Bank Group requires a new
mandate from the G20, a significant increase in
its capital, and new leadership. Climate change
mitigation and adaptation investment needs dwarf the
current capacity of the World Bank. The decision not
to push for a large capital increase, while the IMF was
refinanced and regional development banks gained
lending space, has left the World Bank Group in a
weak position to take on new and critical challenges.
6) Bilateral assistance needs to be significantly
leveraged to be meaningful and new donors need
to become more transparent. Bilateral aid is highly
fragmented and too often motivated by donor
fetishes. Each donor, even those that mean well, has
its preferred sectors and a list of preferred countries.
Such procedures are antithetical to good development
assistance policy. They create donor darlings and
orphans and programs without context or institutional
underpinnings. Philanthropy also has downsides when
divorced from institutions and national policy. New
donors, often with new ideas and approaches that
may be meritorious, are prone to be less transparent
than the DAC has come to expect, which reduces
effectiveness and creates concerns about new forms of
economic colonialism.
7) Effective donor coordination can produce large
positive externalities and, conversely, uncoordinated
efforts can limit welfare gains. Examples of wellcoordinated donor flows are few, but they have
existed. Indonesia may have set the standard in the
page 30
1970s and 1980s. Vietnam was similarly successful in
the 1990s. In the same way that economic planning
raises the return on individual investments, especially
in infrastructure, coordinated donor efforts are
indispensable, yet difficult for agencies to accept.
Examples of duplication, overlaps and uncoordinated
efforts are unfortunately frequent. Indeed, some
observers argue that multilateral efforts should replace
some bilateral efforts that are too small and isolated to
be effective.
8) A much more serious effort is needed on the
anti-corruption front in order to create credible and
effective institutions for growth and development.
Considerable resources have been devoted to nittygritty efforts on accountability for the use of public
resources (for example, the Public Expenditure
and Financial Accountability Program). However,
progress on larger-scale corruption as reflected in
the UN Convention against Corruption, the Stolen
Asset Recovery Initiative, and multilateral efforts to
identify and address safe havens has not been similarly
successful. The current business-as-usual approach is
simply unacceptable.
9) With regard to globalization, the costs of
retrogression will be high for developing countries,
while the OECD countries and the BRICS can
fend for themselves. Developing countries — not
represented adequately in the G20 and not sufficiently
by the World Bank as an observer to the G20 — will
in the coming years be put to a tougher test as the
global economic climate becomes less hospitable.
ODA is useful, but the key determinant of success will
be the effective operation of the global economy.
10) A lot is riding on the G20, the bulwark against
national policy resurgence and globalization risks.
To be effective, the G20 must be one — but not the
only — element in a revitalization and reinvention of
multilateralism. Countries such as Australia, Canada,
and the Netherlands, which punch above their weight
in international fora, have a crucial role to play in any
effort to restore strength to the multilateral system.
CHAPTER ONE | MULTILATERALISM, THE SHIFTING GLOBAL ECONOMIC ORDER, AND DEVELOPMENT POLICY
Danny Leipziger is Professor of International
Business at George Washington University and
Managing Director of the Growth Dialogue. He is former
Vice President for Poverty Reduction and Economic
Management at the World Bank, a position in which
he oversaw a network of over 700 economists and
professionals. He was also Vice Chair of the Spence
Commission on Growth and Development, a major
international four- year project that resulted in the 2009
Growth Report, and is a frequent commentator in the
media and the press on global economic issues. Prior to
joining the Bank, Dr. Leipziger served in senior positions
at USAID and the U.S. Department of State. He obtained
both MA and PhD degrees in economics from Brown
University. He has published widely on issues related to
development economics and finance, industrial policy, and
banking.
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Cambridge, UK. 712 pp.
Stiglitz, J.E. 2002. Globalization and its discontents.
W. W. Norton & Company, New York, NY, USA.
304 pp.
_____ 2010. Freefall: America, free markets, and the
sinking of the world economy. W. W. Norton &
Company, New York, NY, USA. 361 pp.
_____ 2011. The best alternative to a new global
currency. London Financial Times, 31 March 2011,
http://www.ft.com/intl/cms/s/0/c2215510-5bc411e0-b8e7-00144feab49a.html#axzz1S2PD8Kwn,
cited 14 July 2011.
Strauss-Kahn, D. 2011. Global challenges,
global solutions. Address presented at George
Washington University, Washington, DC, USA.
4 April 2011, http://www.imf.org/external/np/
speeches/2011/040411.htm, cited 14 July 2011.
United Nations. 2009. Report of the Commission
of Experts of the President of the United Nations
General Assembly on reforms of the international
monetary and financial system. United Nations,
New York, NY, USA. Report, 140 pp.
_____ 2010. Report of the secretary-general’s Highlevel Advisory Group on Climate Change Financing.
United Nations, New York, NY, USA. Report, 64 pp.
Wheatley, J. 2010. Brazil ready for more currency
warfare. London Financial Times, 9 Dec. 2010,
http://www.ft.com/intl/cms/s/0/ff6a4556-03c411e0-8c3f-00144feabdc0.html#axzz1S2PD8Kwn,
cited 14 July 2011.
Wheatley, J.; Garnham, P. 2010. Brazil in ‘currency
war’ alert. London Financial Times, 27 Sept. 2010,
http://www.ft.com/intl/cms/s/0/33ff9624-ca4811df-a860-00144feab49a.html#axzz1S2PD8Kwn,
cited July 14.
White House Task Force on the Middle Class. 2010.
Annual report of the White House Task Force on
the Middle Class. White House, Washington, DC,
USA. Report, 43 pp.
World Bank. 2005. Global economic prospects:
trade, regionalism, and development. World Bank,
Washington, DC, USA. Report, 151 pp.
_____ 2010. Review of IBRD and IFC financial
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DC, USA. Last updated 11 April 2011, http://
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_____ 2011. World economic situation and prospects
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CANADIAN DEVELOPMENT REPORT 2011
page 34
CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS
CHAPTER TWO.
MULTILATERAL DEVELOPMENT
COOPERATION: CURRENT TRENDS
AND FUTURE PROSPECTS
page 35
CANADIAN DEVELOPMENT REPORT 2011
page 36
CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS
MULTILATERAL DEVELOPMENT COOPERATION:
CURRENT TRENDS AND FUTURE PROSPECTS
SHANNON KINDORNAY AND HANY BESADA
T
raditionally, multilateral development
institutions like the United Nations (UN)
and the World Bank — institutions whose
aims are to promote and facilitate cooperation among
countries — oversaw and delivered concerted responses
to development challenges alongside their bilateral
and trilateral counterparts.1 However, the landscape
in which development organizations operate has
changed dramatically in the past decade, calling into
question their current role as multilateral development
institutions and their ability to address new, emerging
and evolving global development challenges.
Paradoxically, the ongoing financial, water, food
and fuel crises, the growing inequality between and
within countries, the global population growth and
its impact on natural resources, and the challenge of
climate change — all of which have implications for
development — demonstrate the crucial importance of
multilateral development agencies in dealing with these
“problems without passports” (Picciotto, this volume)
that transcend international borders as well as cultural,
linguistic, religious and ethnic differences. This is
especially true given the intensification of economic
and social interconnectivity among countries. All these
problems require collective solutions. As Picciotto
points out, no one country at a time or one country
acting alone can tackle today’s global challenges.
However, in the midst of the current financial crisis,
many traditional leading nations have turned inwards,
focusing more on their own socioeconomic problems.
Politicians in the North are increasingly required to
demonstrate strong leadership in defending their
1 While earlier occurrences of multilateralism exist, we use the term
multilateral development system to represent the myriad of formal and
informal institutions of varying scope, structure and membership that exist
today. These institutions range from the UN system organizations, such as
the Food and Agricultural Organization (FAO), United Nations Development Programme (UNDP), to the World Trade Organization (WTO),
Organization for Economic Cooperation and Development (OECD),
the International Monetary Fund (IMF), the World Bank, the Group of
Eight (G8)/Group of Twenty (G20), continental organizations, regional
economic communities and regional development banks.
national economies. As a result, the multilateral
development community is facing tri-dimensional
challenges where 1) institutions are ill-equipped
to confront emerging issues;2 2) responses aren’t
proportionate to the size of problems; and 3) the
leading governments behind multilateral development
institutions are focusing inward. While all three
dimensions are consequences of the current global
financial crisis, the future character of these challenges
will necessarily depend on how well the multilateral
development system can respond, evolve and,
ultimately, contribute to resolving global problems
over the medium and long terms.
This chapter critically examines the effectiveness of
the multilateral development cooperation system. In
addition, it provides solutions to important challenges
facing that system and identifies areas for future
research. The chapter is organized in two main sections
to address key issues: 1) declining donor support
for multilateral organizations; and the problem and
extent of multilateral proliferation; and 2) effectively
incorporating new development partners into the
multilateral aid architecture.
To combat these trends, the authors support, in
the first section, that the number of multilateral
organizations be greatly reduced while those that
remain need to better demonstrate their effectiveness
and impact on poverty alleviation to both recipient
countries and donor governments. To do this
transparently and efficiently, the international
community should agree on a standardized multilateral
evaluation and assessment framework that is
universally applied and serves three key functions:
1) identifies areas where redundancy and overlap exist
and mergers among organizations might occur;
2 See Leipziger and Picciotto, this volume, for a range of suggestions on
how reforms might be implemented.
page 37
CANADIAN DEVELOPMENT REPORT 2011
2) assesses the extent to which multilateral
development institutions are contributing to
development goals; and 3) sets a minimum benchmark
for performance, providing a mechanism to phase out
underperforming organizations if they are unable or
unwilling to make the necessary reforms to improve
their effectiveness. Such assessments must take into
consideration the perspectives of developing countries
as beneficiaries of multilateral interventions, along
with their national development priorities when
working with partner multilateral organizations.
The second section examines the future of the
multilateral aid architecture in light of the rise of
new development partners, namely the private sector,
foundations, philanthropists, international nongovernmental organizations and emerging donor
nations. Recognizing the importance of including new
actors in the aid architecture to reduce fragmentation,
improve coordination and deliver effective assistance,
the section then examines strengths and weaknesses
of the various forums that deal with issues relating
to aid and development cooperation in light of their
potential to engage new and old actors.
THE CURRENT MULTILATERAL
DEVELOPMENT COOPERATION SYSTEM
T
he proportion of aid from bilateral donors to
multilateral development institutions through
core contributions is declining (OECD-DAC
2011). According to the draft 2011 DAC Report
on Multilateral Aid, core multilateral contributions
as a share of official development assistance (ODA)
fell from 33 percent in 2001 to 28 percent in 2009.
Meanwhile, earmarked funding3 to multilateral
organizations is the fastest growing component
of ODA, leading to what some are calling the
bilateralization of multilateral aid (OECD-DAC 2011,
p. 4). Earmarked funding increased from US$13.4
billion in 2008 to US$15 billion in 2009, representing
12 percent of total ODA (OECD-DAC 2011, p. 28).
In total, roughly 40 percent, or US$52 billion, of gross
ODA was channelled to and through the multilaterals
in 2009 (OECD-DAC 2011, p. 4).
According to the OECD - Development Assistance
Committee (DAC) (2011, p. 4), there are several
3 Earmarked funding refers to the official development assistance allocated
to multilateral development institutions for a specific purpose.
page 38
reasons why earmarked funding is growing. Donors
can better track results and have a greater say over
how funds are used. As well, such assistance raises the
visibility of donor contributions to their domestic
constituencies (see also Burall 2007; Carlsson 2007;
DFID 2011a).4 Moreover, as donors focus their
efforts on a smaller number of countries as a means
of channelling their development assistance toward
specific and targeted programs, the provision of
multilateral aid allows them to continue working
in different regions with smaller amounts (OECDDAC 2011, p. 4).
Meanwhile, bilateral donors are also pressuring
multilateral organizations to work in fragile, conflictand post-conflict states where they have greater access
and a comparative advantage, owing to their historical
relationships, expertise and perceived neutrality. In
2009, nearly 70 percent of aid allocated for select
countries through multilaterals by bilateral donors
went to fragile states (OECD-DAC 2011, p. 28).
While multilaterals see this phenomenon as the
bilateralization of multilateral aid, bilateral donors see
this as the multilateralization of bilateral aid.
The provision of earmarked aid through multilateral
channels is a worrisome trend because it contributes
to the fragmentation of aid interventions (Picciotto,
this volume). Aid is already highly fragmented —
there are more than 80,000 aid projects annually,
delivered by more than 56 donor countries through
197 bilateral agencies and 263 multilateral agencies
(World Bank 2008; Kharas, Makino, and Jung 2010,
p. 2). Meanwhile, the number of bilateral donors has
increased from five or six in the mid-1940s to some
55 today (World Bank 2008, p. 12).
The average number of bilateral donors per recipient
country has increased from 12 in 1960 to 33 in the
early years of this century (World Bank 2008, p.
ii). The result is a system wherein too many actors
contribute too little (DCD/DAC 2011c, p. 7).
Moreover, the rise of earmarked funding makes it more
difficult for multilateral development organizations to
set their own priorities (Carlsson 2007).
Earmarked funding encourages organizations to carry
out individual programs rather than coordinating
4 For an overview of the theoretical underpinnings as to why donors
choose multilateralism, see Milner and Tingley (2011). They argue that
the principal-agent dilemma best accounts for a state’s relationships with
multilateral institutions.
CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS
with other multilaterals, which sometimes results in
duplication and inefficiency as seen, for example, in
the case of the UN (Carlsson 2007, p. 62). It also
makes it more difficult for recipient governments
to program and implement national development
plans. As pointed out by Helmut Reisen (2010), this
fragmentation seems at odds with the Paris Declaration
on Aid Effectiveness that seeks to limit duplication and
promote harmonization of aid activities.
The problem of declining support for multilateral
development organizations is compounded by their
incredible proliferation. The head of research for the
OECD Development Centre, Reisen (2010), calls
this the “multilateral donor non-system.” Meanwhile,
the system has grown from 15 organizations in
1940 to more than 260 in 2008 (Reisen 2010, pp.
4-5). Between 1971 and 2005, there was a six-fold
increase (Carlsson 2007). As a result, the international
assistance system has become highly fragmented with
too many organizations with overlapping mandates
(Reisen 2010, pp. 5-7; see also Kharas (2011)). Of
the 264 organizations identified through the OECDDAC Creditor Reporting System in 2008, just five
groups of multilaterals accounted for two-thirds of
funding to multilateral agencies (Reisen 2010, p. 8).5
In 2009, 81 percent of core multilateral aid went to
five clusters: the European Development Fund and
European Union (EU) budget;6 the World Bank’s
IDA;7 UN Funds and Programs; the African and Asian
Development Banks; and the the Global Fund to
fight AIDS, Tuberculosis and Malaria (Global Fund)
(OECD-DAC 2011, p. 5). More than 200 multilateral
organizations share the remaining 19 percent. The
international community has expressed concern over
the proliferation of multilateral development agencies,
agreeing at the Third High Level Forum on Aid
Effectiveness in 2008 to think twice before setting up
new ones (Kharas, Makino and Jung 2011, p. 2).
5 The five are the European Commission (EC), the World Bank’s
International Development Association (IDA), the Global Fund, Asian
Development Bank and the African Development Bank.
6 Between 2007 and 2009, 65 percent (US$8 billion) of total DAC EU
members’ ODA to EU institutions came from members’ contributions to
the EU budget, which is overseen by the European Parliament and Council.
7 The IDA offers “interest-free credits and grants for programs that boost
economic growth, reduce inequalities and improve people’s living conditions” to low-income eligible countries (World Bank 2011).
See http://go.worldbank.org/ZRAOR8IWW0.
It is time for the international development
community to further assess the multilateral
development system (rather than individual
multilateral organizations per se), including the
roles and responsibilities of various organizations,
as well as their effectiveness. A large number of
multilateral assessments and evaluations already
exist. Obser (2007) identifies at least eight different
approaches to assessing multilaterals.8 According to
Scott et al. (2008), this proliferation of assessments is
inefficient and no single one can provide a complete
picture of a multilateral’s performance. They suggest
that rather than conducting self-assessments, as the
United Kingdom (UK) recently did (DFID 2011a),
bilateral donors should use their weight on the boards
of multilateral institutions to encourage them to
deliver better assessments and evaluations.
Picciotto (this volume) calls for the creation of
harmonized good-practice standards and peerreview processes focused on the independence and
quality of internal evaluation systems. He adds that
these evaluation tools be implemented across the
multilateral system with the same diligence since
current self-assessments do not focus on accountability
nor adequately demonstrate multilateral agencies’
effectiveness. Picciotto points out that evaluations
require independent verification, suggesting that
current self-evaluations by multilaterals and collective
assessments, such as the Common Performance
Assessment System for multilateral development
banks and the bilateral-donor sponsored Multilateral
Organization Performance Assessment Network,
have not strengthened overall public confidence in
multilateral agencies.
While the suggestions outlined above are useful in
relation to measuring the effectiveness of individual
multilateral organizations, they do not sufficiently
address the proliferation of multilateral development
organizations or the assistance system as a whole.
What is needed is an approach that combines these
suggestions with an overall review of the multilateral
development system.
Drawing on Christiansen and Rogerson (2005),
Picciotto further points out that a “radical redesign
8 See Picciotto (this volume) for a full discussion of recent evaluations and
assessments, including those by the Independent Evaluation of the Paris
Declaration, the Centre for Global Development/Brookings Institute
Quality of ODA assessment and the UK’s Multilateral Aid Review.
page 39
CANADIAN DEVELOPMENT REPORT 2011
[of the multilateral system] would not be a realistic
medium-term goal since existing institutional
arrangements are the result of historical antecedents
and geo-political influences shaped by complex
interactions among states and non-state actors
pursuing diverse goals and responding to multiple
constituencies.” Nevertheless, he favours a phased
consolidation of agencies. However, in order for such
a consolidation to occur, policymakers need to have
a clear understanding of the organizations that exist,
including their mandates, activities, stakeholders, the
political and economic environments in which they
operate, and how effectively they deliver.
In order to reduce duplication and increase the
effectiveness of the system as a whole, the international
community should agree on a transparent standardized
multilateral evaluation and assessment framework that
serves three main functions. The framework should:
• identify overlap, serving as a starting point to
assess the division of labour among multilateral
development institutions and begin discussions on
potential organizational mergers;
• demonstrate how and to what extent multilateral
development institutions contribute to development
results; and
• set a minimum benchmark for performance,
providing a mechanism to phase out
underperforming organizations if they are unable or
unwilling to make the necessary reforms to improve
their effectiveness.
Ideally, this process would encourage greater focus
and specialization within multilateral development
institutions on areas in which they have expertise
and can deliver. It would help reduce fragmentation
and encourage convergence by reducing the number
of multilateral organizations and simplifying their
mandates (BetterAid 2011, p. 5). Clearly, such a
process would generate multilateral winners and
losers, much as the 2011 UK Multilateral Aid Review
has done.9 Some organizations might be forced to
consolidate their efforts or redesign their existing or
planned programs and efforts to better reflect desired
outcomes, while others may have to close their doors
9 For example, “losers” from the recent UK evaluation include UN-HABITAT, UN International Strategy for Disaster Reduction, UN Industrial
Development Organization and the International Labour Organization,
which will either see a large decrease or end to their funding (DFID 2011b,
p. 15).
page 40
for good. The 2010 amalgamation of the UN Division
for the Advancement of Women, the International
Research and Training Institute for the Advancement
of Women, the Office of the Special Adviser on
Gender Issues and Advancement of Women, and the
UN Development Fund for Women into UN Women,
sets a precedent for mergers among similarly mandated
multilateral development institutions, in this case UN
organizations devoted to improving gender equality
and the status of women.
Evaluation and assessment processes are political,
and it is certain that an international review of the
multilateral development system, as outlined above,
would be no exception.10 Such an endeavour would
most certainly encounter challenges in securing
agreement between donors and aid recipients on
the standard evaluation and assessment framework.
Evidence suggests that developing countries are more
concerned with the extent to which multilaterals
support recipient ownership of the development
process. A 2007 study11 conducted by the UK’s
Overseas Development Institute (ODI) indicates
that recipient countries prefer to work with regional
development banks and the UN as opposed to the
World Bank, although latter is often perceived as more
effective (Burall 2007).
These preferences are understandable in light of the
recent UK Multilateral Aid Review findings. Although
the World Bank performed very well overall in this
exercise, reviewers found evidence of its International
Development Association making limited use of
country systems and “working alone on issues that
were not key national priorities” (DFID 2011a, p.
53). They also found that developing countries valued
highly regional development banks as partners, owing
to what they see as a deep commitment by the banks
to their regions (DFID 2011a, p. 53).
Regional development banks with overriding
objectives of promoting development in their respective
regions play a three-fold role of lenders, advisers and
10 The political aspect of evaluations was also a challenge in the Phase 2
Evaluation of the Paris Declaration (Patton and Gornick 2011), which is
the closest comparable evaluation to what is suggested above.
11 The study looked at perceptions from stakeholders in six countries:
Bangladesh, Ghana, India, South Africa, Tanzania and Zambia. It also
examined seven multilateral organizations: the African Development Bank,
Asian Development Bank, EC, the Global Fund, the UNDP, the UN Children’s Fund and the World Bank. Researchers learned the perspectives of
more than 250 recipient business leaders, civil servants, civil society leaders,
government ministers and members of parliaments (Burall 2007, p. 1).
CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS
development partners. These banks provide a range
of products and services that are tailor-made for their
respective regions’ development requirements. In
addition, developing countries tend to feel a greater
level of ownership when aid is delivered through
regional development banks, owing partly to their more
equitable governance structure (Burrall 2007, p. 3;
Griffith-Jones et al. 2008, p. 2). Burrall, for one, found
that respondents in three out of four African countries
preferred to work with the African Development Bank
over the World Bank and the EC, even though they
see it as less effective (2007, p. 3; see also Waythne and
Hedger 2010).
An international review of the multilateral
development system will require tradeoffs between
donors and recipients regarding assessment standards
and indicators. However, if donors are concerned
about recipient country ownership — the first
principle under the Paris Declaration on Aid
Effectiveness —they need to consider how to support
the multilateral partners favoured by developing
countries. This initiative would require the political
will of both donor and recipient countries to take
findings seriously and act upon them in a
coordinated manner.
Regardless of the challenges, the number of multilateral
organizations should be reduced — and the current
environment may provide the necessary impetus for
this reform. With few exceptions, advanced economies
concerned with their own domestic problems are
less willing to allocate scarce resources to aid, while
emerging economies support only the multilateral
development institutions that align with their national
interests (OECD-DAC 2011).
Moreover, emerging donors and the private sector
(discussed later in this chapter) are providing
developing countries with alternatives to traditional
aid modalities, including aid channelled through
multilateral organizations. Indeed, between 1995 and
1998, roughly 80 percent of total aid came from DAC
countries, whereas between 2005 and 2008 DAC
countries contributed two-thirds of total aid (Kharas,
Makino, and Jung 2011, pp. 13-14). As the pool of
development resources grows, the proportion of aid
allocated multilaterally will likely continue to decrease.
Another factor that may provide impetus for reform is
the current international obsession with effectiveness.
In an attempt to show unequivocally that aid works,
the international development community is making
results a key theme in the lead up to the Fourth
High Level Forum on Aid Effectiveness (HLF-4) in
Busan, South Korea to take place in November 2011.
Indeed, declining resources and increasing concern
with effectiveness may provide a fertile ground from
which to launch an international assessment of the
multilateral development system. The point here is not
to suggest that the multilateral development system is
not playing, or will not continue to play an important
role in international development cooperation. Rather,
it is to suggest that the changing international context
provides policymakers with an opportunity to examine
and address the shortcomings of the current system in
order to ensure continued donor support and enhance
its effectiveness.
DEVELOPMENT IN A CHANGING
INTERNATIONAL CONTEXT
T
he development cooperation system is highly
fragmented, involving a range of states and
non-state actors that work alone and/or in
concert through formal and informal channels. In this
context, multilateral development institutions play a
key role in harmonizing and coordinating responses to
global development challenges. However, new actors
are playing increasingly prominent roles. While some
of these new actors are engaging with the multilateral
system, many have chosen not to for various reasons,
raising concerns on how to best include these groups
to ensure coherency and greater aid effectiveness within the international aid and development architecture.
Private sector actors
One major new evolution in the development
cooperation system is that both donors and recipients
are seeing the private sector as a key partner. They
recognize the private sector can provide an engine
for growth, acknowledging the important role it
plays through private-public partnerships and large
philanthropic foundations. The OECD-DAC has also
launched discussions with private sector actors on their
role in achieving greater aid effectiveness12 and plans to
release a statement on this issue at HLF-4.
12 The OECD-DAC held its first informal meeting on the role of the
private sector and aid effectiveness in 2010. See http://www.oecd.org/docu
ment/38/0,3343,en_2649_3236398_45675430_1_1_1_1,00.html. It has
also commissioned a paper on the subject (see Davies 2011).
page 41
CANADIAN DEVELOPMENT REPORT 2011
FIGURE 1 - THE GLOBAL FUND TO FIGHT AIDS, TUBERCULOSIS AND MALARIA
TOTAL CONTRIBUTIONS FOR TOP 25 DONORS, 2000-09 (US$ MILLION)
5000
4000
3000
2000
1000
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Source: The North-South Institute, 2011. Canadian International Development Portal.
In contrast to several decades ago, private sector
actors, including foundations, are making a significant
contribution to assistance. Kharas, Makino and
Jung estimate that private philanthropy has grown
from 1 percent of total aid between 1995 and 1998 to
17 percent between 2005-08 (2011, p. 14). According
to one estimate, total private assistance donations13
in 2008 amounted to US$53 billion, compared with
US$121 billion in official development assistance
(CGP 2010, p. 14).
As part of this shift, private sector actors are providing
money to governments and multilateral agencies for
development projects. The Bill and Melinda Gates
Foundation (Gates Foundation) is probably the most
prominent. As the largest philanthropic grant-giving
organization in the world, the Gates Foundation
supports poverty alleviation and the improvement
of health conditions in developing countries. Since
13 Includes foundations, corporations, private and voluntary organizations,
volunteerism, universities and colleges, and religious organizations.
page 42
1999, it has released a total of US$24.8 billion.14 In
2010 alone, it released US$2.6 billion to more than
100 countries. In 2010, it provided some US$1.9
billion for global health and global development
activities.15 The organization allocates grants to
multilateral institutions such as the UN World Health
Organization and World Food Programme (WFP),
as well as to the Global Fund, regional development
banks and the World Bank.16 Between 2000 and 2011,
the Gates Foundation granted US$550 million to the
14 “Fact Sheet,” Bill & Melinda Gates Foundation (May 2011), accessed at
http://www.gatesfoundation.org/about/Pages/foundation-fact-sheet.aspx.
15 See http://www.gatesfoundation.org/annualreport/2010/Pages/grantspaid-summary.aspx.
16 See http://www.gatesfoundation.org/grants/Pages/search.aspx.
CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS
Global Fund,17 making it the fund’s ninth largest of
more than 50 bilateral and private donors.
Figure 1 depicts the total contributions made to the
Global Fund over the 2000-09 decade by its top 25
donors. It shows that private sector actors, such as
Product Red and Partners18 and Chevron Corporation,
as well as the Gates Foundation, are making a major
contribution to a particular programming area.
According to at least one observer, states and multilateral
agencies do not have the capacity, or in some cases, the
willingness to combat global problems alone. This has
led them to search for partners, resulting:
. . . in a mutual dependency between resourceconstrained multilateral institutions and private
actors who also require partners to execute
projects. Arguably these kinds of partnerships
may not be possible without foundations, which
occupy a unique position within the aid regime
as intermediary institutions straddling state-civil
society divides (Moran 2009, p. 26).
International non-government organizations (NGOs)
International development NGOs are also making
a significant contribution to global development
efforts. At the height of globalization in the late
1990s, NGOs became the preferred vehicles of
development aid. Those years saw a rapid rise of
ever-better financed development NGOs (Ronalds
2010) along with growing taxpayer pressure in donor
countries for governments to show results for money
being spent. As Fowler notes, NGOs were seen as part
of governments’ plans to reach their objectives. “Their
[NGOs’] contribution is seen to lie in an ostensibly
distinct practice in terms of direct operations and
policy contribution, as well as in terms of persuading
(taxpaying) domestic constituencies (and free-market
economic critics) that ‘aid works’ and that the system is
worth keeping and supporting” (Fowler 2000, p. 590).
17 The Global Fund provides grants on a discretionary basis for projects
aimed at the prevention of infection and the treatment and support of persons directly affected by HIV/AIDS, tuberculosis and malaria (http://www.
theglobalfund.org/en/activities/). It provides a good basis for comparison
between private sector actors and bilateral donors in contrast to other multilaterals. Other multilateral organizations address multiple development
challenges, making it difficult to assess how much private sector actors are
contributing to a particular area or issue vis-à-vis bilateral donors.
18 Product Red and Partners include: American Express, Apple, Bugaboo
International, Dell + Windows, GAP, Giorgio Armani, Hallmark, Motorola
Foundation, Motorola Inc. & Partners, Starbucks Coffee, Media Partners
and (RED) Supporters.
As a result, NGOs began to enjoy increasing
access to national government policymakers and
multilateral institution decisionmakers. Northern
governments channelled more and more development
aid through NGOs, displacing traditional government
development institutions in several areas of official
development assistance. While NGOs became crucial
to development aid efforts, multilateral institutions
have also been increasingly working through nongovernmental channels. World Bank figures show
that the proportion of its project funding involving
civil society organizations has risen from 21 percent
in 1990 to 81 percent in 2009 (Hamad and Morton
2011, p. 4).
As budget funding for government agencies
responsible for development aid declined over the
past decade, governments turned increasingly
to NGOs as collaborative partners. Hence, the
development aid sector gradually saw greater
interaction and cooperation among donor
governments, multilateral institutions and the nongovernmental sector. Governments increasingly viewed
NGOs and foundations as part of the development
sector solution. As Bräutigam and Segarra (2007,
p. 173) note, it was an era where “governments and
NGOs [learned] that partnerships can be useful, and
NGOs (in particular) learn[ed] how to engage the
government officials as professionals.”
The international community has seen exponential
growth in the number of NGOs operating internationally, from approximately 985 in 1956 to more
than 21,000 in 2003 (Hamad and Morton 2011, p. 5).
As illustrated in Figure 2, some of these NGOs have
budgets that rival those of smaller OECD donors.
Their growing size and presence has led to greater
pressures on international NGOs to achieve more
concrete results in terms of aid effectiveness and to
become more accountable (Koch 2008).19 Indeed,
NGOs are playing an important role in international
discussions on aid effectiveness and the future of
aid and development cooperation. At the Working
19 See Hammad and Morton 2011 for a discussion of NGO accountability standards and their effectiveness. More broadly, in the lead up to the
HLF-4 in Busan, civil society organizations have launched a participatory
process to develop guidelines relating to their effectiveness through the
Open Forum on CSO Development Effectiveness. See also http://www.
cso-effectiveness.org/.
page 43
CANADIAN DEVELOPMENT REPORT 2011
FIGURE 2 - DAC DONORS AND PROMINENT INTERNATIONAL NGOS LARGEST TO
SMALLEST ODA/PROGRAM EXPENDITURE 2009 (US$ MILLION)
30000
25000
20000
15000
10000
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an
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ah
n D Pla
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nt
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t
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Source: Hamad and Morton 2011
Party on Aid Effectiveness (WP-EFF),20 which
is spearheading efforts for HLF-4, civil society
organizations, including NGOs, are represented by
the BetterAid Coordinating Group.21
Emerging economies
Through the provision of their own brand of
development cooperation, emerging economies
are challenging the Western-dominated aid and
development cooperation agenda, specifically in terms
of what it entails and how it ought to be delivered.
According to Oxford University’s Ngaire Woods
(2008, p. 17), emerging powers are “quietly offering
alternatives to aid-receiving countries . . . introducing
20 The WP-EFF is a multi-stakeholder forum, distinct from but hosted by
the OECD-DAC, that brings together policymakers and aid practitioners
from donor and developing countries, multilateral development agencies and civil society organization representatives. The WP-EFF monitors
progress on implementing the international aid-effectiveness agenda, strives
to improve partnerships between aid actors and serves as the principal
discussion forum on issues related to aid effectiveness (see OECD-DAC
WP-EFF, 2010).
21 Better Aid represents over 700 members from 325 civil society organization and 88 countries. It sits on the Executive Committee of the WP-EFF.
page 44
competitive pressures . . . into the aid market and . . .
weakening the bargaining position of Western donors
in respect of aid-receiving countries.”
These emerging powers — many of whom are large
developing countries with growing economies and
global or regional agendas for influence — do not
necessarily follow the aid practices developed by
Western donors and their multilateral counterparts.
They are instead injecting new ideas about
development cooperation into the international
political discourse under banners such as South-South
cooperation and solidarity.22 They offer partners
comprehensive packages that include aid and non-aid
elements in exchange for access to natural resources
and investment opportunities. Their cooperation also
includes knowledge exchanges; in some cases, countries
22 For a full discussion on the emerging donors and the challenges and
opportunities they present for international development cooperation, see
Davies (this volume). For a historical perspective on the rise of emerging
donors and, in particular, their role in the African context, see Naidu (this
volume).
CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS
participating in South-South cooperation23 may not
even engage in a monetary exchange.
For example, spurred on by the global financial, energy
and food crises, as well as the demand for markets and
natural resources to fuel their burgeoning economies,
leading emerging powers such as the BRICS (Brazil,
Russia, India, China and South Africa) have become
important players in global economic affairs. As well,
these new players have become some of Africa’s most
important development partners over the past decade. 24
To a large extent, their engagement with Africa is
based on the principles enshrined in the Non-Aligned
Movement: mutual nonaggression, mutual respect
for each other’s territorial integrity and sovereignty,
equality and mutual benefits, mutual non-interference
in domestic affairs and peaceful coexistence.
Developing countries see emerging economies’
experiences as valuable, in particular their success
in overcoming development challenges in an
environment similar to what they face today (Kharas,
Makino and Jung 2011, p. 18). Moreover, many of
the emerging economies such as Brazil, China and
India have followed a unique development path
leading to successful results, demonstrating that there
are alternatives to the policies promoted by Western
donors and international financial institutions
embodied in the Washington Consensus (Naidu, this
volume).25,26 Indeed, the international development
23 UN Conference on Trade and Development defines South-South cooperation as “the process, institutions and arrangements designed to promote
political, economic and technical co-operation among developing countries
in pursuit of common development goals (2010, p. 1). ” Zimmermann and
Smith draw a further distinction, describing South-South Development
Co-operation as “developing countries that deliver expertise and financial
support to foster the economic and social welfare of other developing countries,” including countries like Brazil, Chile, China, Egypt, India, Malaysia,
Mexico, South Africa, Thailand and Venezuela as providers (Zimmermann
and Smith 2011, p. 728).
24 The aid programs of China, India, Brazil, Venezuela, Turkey and the
Republic of Korea will soon each surpass US$1 billion annually (Kharas,
Makino and Jung 2011, p. 7). In the case of Africa, China pledged to
increase aid to the continent from about US$2.3 billion in 2006 (Wang
2007, p. 22) to US$10 billion by 2009 (Baldauf 2007).
25 The phrase “Washington Consensus” is often seen as synonymous with
“globalization and neo-liberalism.” It was coined by economist John Williamson to refer to policy advice offered by the Washington-based IMF and
World Bank to Latin American countries in 1989. Broadly, these policies
included deregulation, privatization of national services, trade liberalization
and financial opening.
26 As Birdsall and Fukuyama point out, many developing countries (some
of which we refer to as emerging economies today) lost faith in the Washington Consensus following the financial crises of the 1990s. As a result,
these countries accumulated large foreign currency reserves and regulated
their banking systems, thereby reducing their exposure to foreign financial
markets (2011, p. 46).
community has become increasingly interested in
these alternatives, as evidenced by calls for a PostWashington Consensus (Birdsall and Fukuyama
2011), the return of the developmental state27 (Wade
2010) and ongoing discussion regarding the Beijing
Consensus.28
Among the new ideas and processes contributed by
the emerging economies to development cooperation
are innovative development assistance modalities
like South-South and triangular cooperation.29 They
contribute to increased and more diverse resources for
partner countries to support national development
strategies and have relevant development experiences
to share with other countries. Some even suggest that
their development cooperation model can be seen as
a critique of the neoliberal aid/development paradigm
(Kim and Lightfoot 2011; Naidu, this volume).
Emerging donors represent a heterogeneous group.
Some are new to the aid scene while others are reemerging after a hiatus, such as China (Woods 2008;
Davies, this volume). Their level of engagement
with the multilateral system varies. Some, such as
the new European donors, report their aid figures
to the OECD-DAC’s Creditor Reporting System
and disperse the bulk of their aid through the EC
(Zimmermann and Smith 2011, pp. 725-6). Among
new non-European major donors, Brazil and Russia
make fairly significant aid contributions to multilateral
organizations, while China and India do not
(OECD-DAC 2011, p. 6). Others such as Colombia
and China, for example, have engaged in trilateral
27 See Lin and Monga (2010) for an example of this thinking in practice.
28 Beijing Consensus is a term that represents an alternative economic
development model to the Washington Consensus of market-friendly policies promoted by the Washington-based multilateral institutions, often for
guiding reform in developing countries. The term was first coined by Joshua Cooper Ramo, a former journalist who now lectures at China’s Tsinghua
University. In a May 2004 paper he pointed out that China and India, who
‘most pointedly’ ignored the World Bank- and IMF-championed Washington Consensus, ‘now have records that speak for themselves’. The Beijing
Consensus is skeptical about the benefits of privatization and free trade. It
is often argued that a new “Beijing Consensus” is emerging with distinct
attitudes to development, politics and a shift in the global balance of power.
Critics contend that it is shaped by a strong belief in multilateralism and
national sovereignty, a desire to accumulate the tools of “asymmetric power
projection” and a strong willingness to innovate. It is further argued that
China offers an alternative model to development through a more equitable
paradigm of development that countries in East Asia are following closely.
See Ramo (2004) for more information on the “Beijing Consensus.”
29 Naidu (this volume) points out that trilateral cooperation is an important means by which traditional donors are engaging the new. However,
she argues that this system tends to relegate African countries to the status
of junior partners in contrast to the emerging donors’ rhetoric of mutual
interest, equality and solidarity.
page 45
CANADIAN DEVELOPMENT REPORT 2011
cooperation with multilateral organizations such as the
WFP and the UNDP.30
Meanwhile, the India-Brazil-South Africa Dialogue
Forum, launched in 2003 to support these countries’
attempts to get onto the UN Security Council,
has shifted its attention toward development,
economic reform and cooperation with each other,
and other developing countries and multilateral
organizations. According to one estimate, Brazil
allocates 90 percent of its aid to multilateral
organizations, while South Africa allocates roughly
77 percent (Davies 2010, p. 6).
Nevertheless, some emerging economies continue to
operate at the margins of the multilateral development
cooperation system. Three major Arab donors — the
Gulf states of Saudi Arabia, Kuwait and the United
Arab Emirates — provide the bulk of their aid, nearly
85 percent, bilaterally (Park 2011, pp. 45-46). On
average, emerging donors allocate roughly 18 percent
of their aid multilaterally in comparison to traditional
donors who allocate roughly 30 percent (Davies
2010, p. 6). For their part, multilateral development
institutions have attempted to bring these donors into
the fold by offering them a seat at the table (Perroulaz,
Fioroni and Carbonnier 2010, p. 147; Atwood 2011,
p. 21) and through specialized institutional units
focused on South-South cooperation.31
The reality facing the multilateral development system,
therefore, is that there is a plethora of new and old
development actors, creating opportunities and
challenges for existing players and, most importantly,
developing countries.
What forum to debate global development?
While some cooperation exists between new and old
actors, many of the new ones operate outside the
multilateral development system, increasing the risk
of duplication and overlapping efforts that undermine
overall aid effectiveness. Although these actors bring
new insights and opportunities, they also present a
challenge to those seeking coherence in an already
complex aid architecture. Moreover, new providers of
30 See http://www.oecd.org/dataoecd/62/54/44652734.pdf for a list of
trilateral cooperation projects compiled by the OECD-DAC in 2009.
31 For more information on the UNDP’s Special Unit on South-South
Cooperation see http://ssc.undp.org/. Information on the WP-EFF Task
Team on South-South Cooperation is available at http://www.oecd.org/doc
ument/38/0,3746,en_2649_3236398_44006694_1_1_1_1,00.html
page 46
assistance present a challenge to recipient countries
that must coordinate their interactions with old and
new actors (Davies, this volume). One commentator
has dubbed this menagerie of actors the “aid noodle”
(Kharas 2011), suggesting that the metaphor of a
structured “aid architecture” is no longer fit to order, if
it ever was. Kharas, Makino and Jung have called for
a new aid “ecosystem” since a single-aid architecture
is impossible, given the number of new development
actors. Rather, they suggest establishing a set of
guidelines, responsibilities and accountabilities to shape
interaction among different groups (2011, p. 15).
Nevertheless, there is a need to involve all development
actors in discussions on the future aid and
development architecture.32 New development partners
need to engage with the multilateral system in order
to avoid increased fragmentation or duplication of
efforts. At this point, however, it is unclear where these
discussions should take place to ensure maximum
participation by new and old actors and what
incentives are required to garner their support. Many
are presenting HLF-4 as the appropriate starting point
(Picciotto this volume; Davies this volume; DCD/
DAC 2011; Atwood 2011).
The WP-EFF is hoping to enlarge the tent at the
coming HLF-4 and achieve buy-ins from new
development partners for the OECD-DAC aideffectiveness agenda. DAC Chair Brian J. Atwood
has called for “bigger, better and more inclusive
partnerships,” suggesting that relationships between
new and old actors should be institutionalized, with
mutual respect and mutual accountability at their base
(2011, p. 26). Supporters of this approach believe
that Busan could offer an opportunity to transform
the aid effectiveness agenda into a more widely shared
road map for development. Yet this approach faces
challenges such as how to incorporate the growing
number of new development actors in a way that is
logistically feasible (Atwood 2011, p. 27). Moreover,
while the WP-EFF is technically separate from
the OECD-DAC, its historical antecedents are in
traditional donor preoccupations with aid effectiveness
(Chandy and Kharas 2011).
Meanwhile, some emerging donors have questioned
the legitimacy of the Paris Process that led to the
32 See for example, Picciotto (this volume) and Davies (this volume). See
also the “Policy Arenas” in the Journal of International Development, 23 (5),
2011.
CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS
WP-EFF. According to the Geneva-based South
Centre (2008), many developing and emerging
countries do not see the aid effectiveness agenda
in its current form as being widely endorsed or
even relevant. The Paris Declaration excludes more
than half of all aid to developing countries when
the contributions of private foundations, NGOs,
humanitarian groups and non-DAC donors are taken
into consideration (Kharas and Linn 2008, p. 3), a
proportion that will likely grow further as emerging
economies and private development assistance expands
faster than aid from DAC countries.
Promoting HLF-4 as an opportunity for a new
consensus on development, the Development
Cooperation Directorate (DCD) of the DAC has
suggested that such a “consensus on this scale will
entail some ‘letting-go’ by the DAC and [DAC
members] should proceed with the understanding
that ‘nothing is sacred’,” including the specifics of
the Paris Declaration and its 2008 companion, the
Accra Agenda for Action (emphasis original, DCD/
DAC 2011, p. 4). The DCD has suggested that the
DAC may need to “lose its ‘copyright’ on the Paris
Principles in order to see them taken up at the global
level” (DCD/DAC 2011, p. 4). Nevertheless, Atwood
suggests that the core aid effectiveness principles
should not be forgotten (Atwood 2011, p. 25).
Suggesting that the Paris Process in its current form
provides little incentive for emerging economies’
engagement, Park (2010) argues for the development
of a tiered aid effectiveness system to be considered
in Busan based on three categories of donors. He
classifies them based on their willingness to engage
with Paris principles: 1) traditional DAC-donors who
abide by Paris principles; 2) non-DAC donors willing
to use Paris principles as a guide; and 3) recipients and
providers of assistance for whom more flexible, but
defined principles could be developed (Park 2010).
At this point, it is unclear where trade-offs will need
to be made between old and new actors and on what
principles to achieve the outcomes envisioned above.
The draft of the Busan outcome document refers to
the creation of “a new and inclusive Global Partnership
for Development Effectiveness to oversee and support
the implementation of commitments [made in Busan]
at the political level (DCD/DAC/EFF 2011b, p.
10).” Further, it includes a clause that parties will
agree by June 2012 on the working arrangements and
membership of a multi-stakeholder ministerial steering
committee to oversee the partnership. However, at this
point it is unclear what form the partnership itself will
take (DCD/DAC/EFF 2011b, p. 10).
These suggestions are based on the recommendations
of an informal working group struck by the WP-EFF
to examine possible global governance arrangements,
including where future dialogues might occur and how
monitoring of commitments might be approached
(OECD-DAC EFF 2011, p. 6). There is support
within the WP-EFF for nationally led mechanisms
“with a streamlined and rationalized global structure”
(OECD-DAC EFF 2011, p.6) or what one WP-EFF
civil society representative has dubbed the “global
light, country heavy” approach.33
Following this thinking, the working group
recommended the use of a National Aid Policy that
would articulate recipient country needs and be
monitored annually (DCD/DAC/EFF 2011a). At the
global level, the partnership would draw on existing
development partnerships, such as the International
Health Partnership and the G7+ Group on fragile states
(DCD/DAC/EFF 2011a, p. 6). It would be overseen
by a steering committee responsible for drawing
“together best practices and norms and [seeking]
horizontal linkages to key international processes”
such as the G20 agenda and the UN Development
Cooperation Forum (DCF) (DCD/DAC/EFF 2011a,
p. 7).
The working group further suggests that the WP-EFF
identify the parameters of the steering committee in
more detail, which it suggests should be no larger than
20 to 24 members, selected using objective criteria, to
ensure functionality. The steering committee would
represent both new and old development partners.
The working group adds that monitoring progress
should be provided by a secretariat “that builds on
existing competencies of the DAC secretariat” (DCD/
DAC/EFF 2011a, p. 7). Still, it is unclear that an
architecture that builds on existing institutions
and includes a continued, albeit limited, role for
the OECD-DAC will ensure buy-in from new
development partners.
33 Personal communication with authors. The increasing recognition of
the importance of country context and ownership within the WP-EFF has
prompted some members to express concern about the relevance of global
targets.
page 47
CANADIAN DEVELOPMENT REPORT 2011
Others, for their part, advocate for a stronger
UN role in discussions on aid and development
cooperation, arguing that it is the only legitimate
body to govern the international aid and development
cooperation regime (see, for example, BetterAid 2011;
Glennie 2011). HLF-4 could be a starting point
for transitioning the aid effectiveness regime toward
the UN on the basis of the unexplored division of
tasks between the UN and the WP-EFF (Schulz
2009, p. 2). BetterAid agrees, adding that HLF-4
should be innovative in developing inter-institutional
arrangements between WP-EFF and UN mechanisms
that will begin to construct a new architecture that is
legitimate and inclusive (BetterAid 2011, p. 6).34 The
UN Development Cooperation Forum (UN DCF),
which addresses development cooperation dynamics
beyond aid, may be well placed to take on this role.
The DCF held its first meeting in June 2008 and
has met biennially since. Its mandate is to “exert a
positive influence on the international development
cooperation system . . . and to engage relevant actors
. . . in a dialogue on key policy issues . . . affecting the
quality and impact of development actors” (ECOSOC
2011). Development actors participating in this forum
include bilateral, multilateral, non-governmental and
civil society organizations as well as international
financial institutions, the private sector and developing
country representatives (ECOSOC 2011). For those
concerned with enlarging the tent, the DCF already
encompasses many of the new development partners
discussed above and research suggests that emerging
powers such as South Africa, Brazil, China and India,
as well as developing countries, view the UN as a
legitimate decision-making forum (South Centre
2008).
While this approach may generate a more inclusive
aid and development architecture, doubts remain
about the extent to which DAC donors are willing
to relaunch discussions on aid effectiveness at the
UN level as such a process would greatly reduce their
negotiation power (Schulz 2009, p. 2). Moreover,
notwithstanding the establishment of the Millennium
Development Goals, concerns remain regarding the
34 BetterAid has proposed a Convention on Development Cooperation
that would: 1) draw on existing UN human rights and development treaties, conventions and norms; 2) serve as the basis for an accountable and
legitimate international development cooperation system; and 3) detail new
governance structures that would reduce complexity and clarify lines of
accountability (BetterAid 2011, p. 6-7).
page 48
effectiveness of UN processes to generate international
agreements and ensure commitments are carried out.
Nevertheless, DAC-donors concerned with enlarging
the tent may need to consider a change of venue from
the current OECD-DAC led processes if they are to
achieve buy-in from new development partners.
As these options are debated at HLF-4, it is important
that they be sufficiently grounded in evidence of key
stakeholder perceptions and preferences as well as
a clear understanding of the option’s feasibility. For
example, it is not clear that developing countries want
all aid actors operating under the same banner, namely
the aid effectiveness agenda (Africa Regional Meeting
2010), or if they prefer a new multilateral aid and
development regime to the existing status quo.
While, as pointed out above, research suggests that
emerging economies may be more willing to engage
in processes under UN auspices, it is unclear what
form such engagement might take and under what
terms. Similarly, the incentives for DAC donors to
agree to launching discussions on aid and development
cooperation outside the WP-EFF are not strong,
especially in an environment where these actors are
concerned with effectiveness and results, an area in
which the UN has seen its fair share of criticisms. In
terms of feasibility, it is not clear whether the DCF has
the capacity to deliver on monitoring and evaluation
should it lead on the aid effectiveness agenda. It is
also questionable that the auspices of the UN would
be sufficient to ensure that the agenda is truly shared,
rather than serving as a de facto donor body much
like the WP-EFF. More research is required to gather
evidence on stakeholder perceptions and preferences,
including traditional and new development partners,
regarding the future of the multilateral aid and
development architecture. The goal must be to ensure
that alternatives are desirable, feasible and meet the
needs of the international community. The architecture
that emerges must not only be effective at generating
legitimate agreements on issues relating to aid and
development, but inclusive with a high degree of buyin from new and old development actors.
CHAPTER TWO | MULTILATERAL DEVELOPMENT COOPERATION: CURRENT TRENDS AND FUTURE PROSPECTS
CONCLUSION
D
evelopment today is in a state of flux. The
ongoing financial and food crises, scarcity
of resources, particularly land and water,
and the challenge of climate change demonstrate
the crucial importance of multilateral agencies in
dealing with global problems that can be solved only
through collective and cooperative efforts. Yet the
international landscape is changing. New actors are
(re-)emerging, such as the BRICS and the private
sector, presenting new challenges and opportunities for
multilateral development cooperation. A key concern
has been how to include these new actors in the aid
and development cooperation architecture, which has
been historically dominated by the traditional donors.
Spurred by international calls for aid and development
effectiveness, most notably in the Paris Process,
development agencies are also facing greater pressure to
demonstrate results.
More specifically, the international community
should agree on a transparent and universally applied
standardized multilateral evaluation and assessment
framework to help reduce duplication and increase
the effectiveness of the multilateral development
cooperation system. This framework should:
• identify overlap among organizations in order to
assess the division of labour among multilateral
development institutions and establish the
groundwork for discussions on potential
organizational mergers;
• demonstrate how and to what extent multilateral
development institutions contribute to development
results;
• set a minimum benchmark for performance,
providing a mechanism to phase out
underperforming organizations if they are unable or
unwilling to make the necessary reforms to improve
their effectiveness.
In response to the increasing number of actors
engaging in development cooperation, the
international community has become concerned
with the future aid and development cooperation
architecture in the post-Busan era. While some
useful ideas have been put forward, more research is
required to gather evidence on stakeholder perceptions
and preferences to ensure that the institutional
arrangements that arise are desirable, feasible and meet
the needs of the international community. This is key
to ensuring that any solution found in Busan regarding
the future aid architecture is legitimate and effective
and serves the purpose of achieving greater inclusion.
Shannon Kindornay is a Researcher at The North-South
Institute. Her research in the Global Flows and Decent
Work theme focuses on development cooperation. Her
current research addresses development effectiveness.
Prior to joining NSI, Ms. Kindornay focused on governance
and human rights. She co-authored “The Politics of
Governing Development” to be published in Politics of
Development Encyclopedia (forthcoming) as well as
“Rights-based approaches to development: Implications
for NGOs” (Human Rights Quarterly, forthcoming
2012). Ms. Kindornay has also worked at the Canadian
International Development Agency. She holds a BA in
Global Studies and Political Science from Wilfrid Laurier
University and an MA from Carleton University’s Norman
Paterson School of International Affairs.
Hany Besada heads the Governance of Natural Resources
program at The North-South Institute. Previously, he
was Senior Researcher and Program Leader at the
Centre for International Governance Innovation, Business
in Africa Researcher at the South African Institute of
International Affairs and policy analyst with the South
African Government. He is the editor of Moving Health
Sovereignty: Global Challenge, African Perspective
(Ashgate, forthcoming 2012); Zimbabwe: Picking Up the
Pieces (Palgrave, 2011); Crafting an African Security
Architecture: Addressing Regional Peace and Conflict in
the 21st Century (Ashgate, 2010); and From Civil Strife to
Peace Building: Examining Private Sector Involvement
in West African Reconstruction (WLU Press, 2009). Mr.
Besada holds an MA in international relations from Alliant
International University in San Diego, California.
page 49
CANADIAN DEVELOPMENT REPORT 2011
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CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
CHAPTER THREE
MULTILATERAL DEVELOPMENT
COOPERATION AND THE PARIS PROCESS:
THE ROAD TO BUSAN
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CANADIAN DEVELOPMENT REPORT 2011
page 6
56
CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
MULTILATERAL DEVELOPMENT
COOPERATION AND THE PARIS PROCESS:
THE ROAD TO BUSAN
ROBERT PICCIOTTO
“We cannot reverse the economic predicament of the
poor across the world by withholding from them the
great advantages of contemporary technology, the
well-established efficiency of international trade and
exchange, and the social as well as economic merits of
living in an open society. Rather, the main issue is how
to make good use of the remarkable benefits of economic
intercourse and technological progress in a way that pays
adequate attention to the interests of the deprived and the
underdog” Amartya Sen (2002).
I
n 2005, most aid donor nations and more than
60 developing countries subscribed to the Paris
Declaration on Aid Effectiveness, thus consecrating
a milestone in development history. Three years later,
after follow-up meetings in Rome and Paris, the Third
High Level Forum held in Accra noted that progress
toward Paris Declaration goals had been modest. The
Second Phase evaluation of the Paris Declaration
issued in May 2011 reached similar conclusions
(Wood et al. 2011, pp.19-20).1 Thus, collective efforts
to improve the quality of aid remain highly relevant.
Beyond aid effectiveness, the 2,000 delegates who will
gather in Busan for the Fourth High Level Forum
(HLF-4) must address an overarching challenge: to
reinvigorate donors’ commitment to development
in the wake of financial, food and fuel crises of
unprecedented severity. Industrial democracies’
electorates bruised by severe cuts in domestic programs
have become less inclined to sustain (let alone increase)
foreign aid spending, especially if public doubts persist
as to whether “aid works” (Nye 2011).
In order to mobilize fresh support for development,
new policy directions reflecting public concerns are
urgently needed. The context has changed dramatically
1 Out of 20 intended outcomes tracked by the Paris Declaration Evaluation, the pace and extent of change was rated “moderate to fast” in only
one instance; “moderate” in one instance; “mostly slow/some moderate
(or moderate to fast)” in 11 instances; “mostly slow” in five instances; and
“slow to none” in two instances.
since the Paris Declaration. The centre of gravity of
the global economy has shifted, and the prevailing
North-South model of international relations that
lumps together emerging middle-income economies
with low-income and vulnerable least-developed
countries has become anachronistic. China’s gross
domestic product already exceeds Japan’s (BBC News
2011),2 while Brazil’s is likely to overtake that of
France and the United Kingdom by the middle of this
decade (Elliott 2011).3
Since 2005, new government donors have joined
the fray while global funds and programs involving
private foundations have proliferated. While reliable
data about the volume and terms of aid provided by
the new donors are scarce, a conservative estimate
of aid flows provided by emerging market countries
and private sources (that have not subscribed to the
Paris Declaration) is already US$28–29.5 billion
of aid annually (Prada et al. 2010),4 compared to
US$129 billion of official development aid provided
by Organisation for Economic Co-operation and
Development’s (OECD) Development Assistance
Committee (DAC) donors (DCD-DAC 2010a).
The Busan conference offers a convenient platform
for broadening the aid coalition. The Working Party
on Aid Effectiveness (WP-EFF)5 has the legitimacy
required to forge a new consensus among leaders
2 Japan’s economy was worth US$5.5 trillion at the end of 2010 while
China’s economy was closer to US$5.8 trillion in the same period.
3 This was determined based upon Price Waterhouse Cooper’s projections
using World Bank assumptions about population growth, and increases in
human and physical capital, etc.
4 Based on published reports on international giving by major foundations and corporations, Prada et al. (2010) estimate private aid flows to be
around US$8 billion annually. By contrast, the 2011 Report on Global
Philanthropy and Remittances of the Hudson Centre for Global Prosperity
estimates global financial flows from foundations, corporations, volunteers,
universities and religious organizations at US$53 billion a year (of which
US$38 billion is from the United States).
5 Since its inception in 2003, the WP-EFF has evolved into a global coalition involving 80 participants, including bilateral and multilateral donors,
aid recipients, emerging providers of development assistance, civil society
organizations, global programs, the private sector and parliaments.
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CANADIAN DEVELOPMENT REPORT 2011
of major development assistance agencies, private
foundations and civil society organizations. Most
developing and developed country governments
concerned with development have joined the HLF-4
process. But in the new operating environment,
WP-EFF will have to broaden its reach even beyond
its current broadly based membership.6
Drawing a distinction between country ownership
and government ownership, poverty reduction strategy
paper guidelines prescribed partnership processes
designed to involve civil society and the private sector.
Equally, mutual accountability is central to the Paris
Declaration, which encourages participation of civil
society and the private sector.7
Accordingly, HLF-4 should explore ways of
incorporating the perspectives of new aid donors
in development cooperation as well as encouraging
them to carry a fair burden as major stakeholders of
the global system (Schwab 2011). Within a broader
aid constituency, HLF-4 offers a rare opportunity
to highlight the shared benefits of a reconfigured
development agenda embodying fresh development
goals, new aid allocation protocols and revised policy
directions aimed at enhanced development effectiveness
(Dissanayake 2011).
Setting up elaborate mechanisms for monitoring the
progress of developing countries toward the MDGs,
the Monterrey Consensus consolidated the results
orientation of the development agenda. Along the same
lines, the Paris Declaration emphasized managing
for results and identified indicators of aid quality
applicable to all donors.
THE PARIS DECLARATION AND THE MDGS
T
he Paris Declaration (concluded in 2005)
is fully consistent with the Millennium
Development Goals (MDGs), which were
solemnly endorsed at the United Nations (UN)
Financing for Development Conference in Monterrey,
Mexico in 2002.
By specifying a wide range of socioeconomic
indicators, the MDGs displaced economic growth
as the core objective of development by enshrining a
holistic human development framework adapted to the
circumstances of individual countries. In turn, the
Paris Declaration highlighted that donors should
align their support with partner countries’ priorities
and processes.
By stressing the concept of ownership, the MDGs
shifted the primary focus of responsibility for
development effectiveness to national aid recipients.
Similarly, under the Paris Declaration, donors
undertook to respect the leadership of developing
country governments and to help strengthen their
capacity to exercise it responsibly and efficiently.
6 The recognition that key emerging market countries were not adequately
represented in global policy debates led to the creation of the increasingly
influential G-20 comprised of finance ministers and central bank governors
of 19 countries (Argentina, Australia, Brazil, Canada, China, France,
Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia,
South Africa, Republic of Korea, Turkey, United Kingdom, United States of
America) and the European Union.
page 58
Since 2005, disillusion has set in. Prospects for
securing the extra US$50 billion of aid needed to
reach the MDGs have evaporated (Clemens and Moss
2005). Similarly, the prospects for a development trade
round and a robust global climate change agreement
have faded. The 2008 financial crisis has added to the
gloom. World trade has contracted, foreign investment
flows toward developing countries have declined
and migration opportunities have shrunk (Coricelli
2010). The resulting global economic slowdown is
undermining development prospects: 71 million fewer
people than expected prior to the global economic
meltdown will escape poverty by 2020 (World
Bank 2010).
RENEW THE GLOBAL COMMITMENT TO
DEVELOPMENT COOPERATION
T
he development momentum generated by
the 2005 Gleneagles G8 meeting has been
interrupted. Official aid statistics for 2010
imply a shortfall of about US$19 billion compared
with 2005 promises. Only a little more than US$1
billion of the shortfall can be attributed to lower
than expected gross national income (GNI) levels in
developed countries. The remaining gap simply reflects
inadequate political will (DCD/DAC 2010b). In real terms, current official aid levels are estimated
at 0.33 percent of GNI — less than half the 0.7
percent target pledged by OECD countries in the
1970s (DCD-DAC 2010c). Forward estimates of aid
commitments are even more worrisome. Country
7 This may have discouraged fulsome involvement of countries that insist
on state dominance over the development process (e.g., China).
CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
programmable aid (CPA)8 is planned to grow at a
real rate of 2 percent per year from 2011 to 2013,
compared to 8 percent per year on average over
the past three years (Benn et al. 2010).
For bilateral aid only, the projected increase is
1.3 percent per year. The deceleration will be especially
sharp for low-income countries and for African
nations, where overall CPA is projected to increase at
about 1 percent per year in real terms, compared to a
13 percent annual growth rate in the past three years
(DCD-DAC 2010b).
Restoring confidence in development cooperation over
the long haul will be a tough challenge since hardpressed donors are looking for short-term, quantifiable and
measurable results. Mobilizing broadly based support
for development cooperation is the critical challenge.
In order to succeed, HLF-4 will have to forge a new
development compact. It should focus on tackling the
insecurities of a complex and interconnected global
system felt by people everywhere.
SHIFT THE FOCUS FROM AID
EFFECTIVENESS TO DEVELOPMENT
EFFECTIVENESS
M
ore and better aid matters a great deal,
but the MDGs cannot be reached in an
adverse enabling environment. Non-aid
policies should also be marshalled to contribute to
development. This is the view of DAC Chair J. Brian
Atwood. He has made clear that HLF-4 is about much
more than aid (ECDPM 2011; HLF-4 2011).
The Paris Declaration defined aid effectiveness
pragmatically in terms of aid delivery norms
(ownership, alignment with countries’ development
strategies, harmonization of practices, reduced
transaction costs and fragmentation, increased
predictability and results orientation). Yet aid alone
cannot be expected to deliver on the promise of the
MDGs.
A thematic study on the Paris Declaration has offered
broader definitions of development effectiveness
(Stern et al. 2008). The first describes the intent of
development interventions as “the achievement of
8 CPA is the portion of aid that can be programmed for and by recipient
countries. It excludes humanitarian aid and debt relief, administration
costs, food aid, core non-governmental organization funding and aid not
allocable by country.
sustainable development results related to MDGs that
have country level impacts that have discernible effects
on the lives of the poor” (Stern et al. 2008, p. vii).
The second definition mirrors the broader conception
of development cooperation favoured by civil society
organizations. It focuses on enhancing “the capability
of states and other development actors to transform
societies in order to achieve positive and sustainable
development outcomes for its citizens” (Stern et al.
2008, p. vii).
These conceptions of development effectiveness
emphasize the critical importance of strengthening the
development capacities of beneficiary countries. They
also imply a concern with non-aid policies and their
impact on development and acknowledge that donor
governments have a wide range of non-aid instruments
at their disposal to contribute to development, such as
humanitarian assistance, security arrangements, peace
building, diplomacy, trade, investment, migration and
intellectual property rules. Such policy instruments
can be used to complement (or alternatively to
undermine) aid policies — with major consequences
for development (Lockhart 2004).
Non-aid links have become major mechanisms of
resource transfer. They dwarf the money impact of aid
and create new and powerful connections between
industrialized and developing countries, as well as
among developing countries. For example:
• Developing countries’ exports (about US$5.8
trillion) are about 45 times the level of 2010 official
aid flows (DCD-DAC 2010a; IMF 2011;
WTO 2011).
• Remittances from migrants (US$283 billion) are
2.2 times as large as aid flows (World Bank 2008).9
• Foreign direct investment (US$548 billion) is 4.2
times as large as official aid flows (UNCTAD 2010).
• Royalty and licence fees paid by developing
countries to developed countries (US$27 billion)
are more than one-fifth of official aid flows (World
Bank 2007).
9 Remittance flows to developing countries stood at US$283 billion in
2008, which projected them to dip slightly in 2009 and more than fully
recover in 2010.
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CANADIAN DEVELOPMENT REPORT 2011
• The huge damage to developing countries caused
by climate change as a result of OECD countries’
unsustainable environmental practices is getting
worse, given the rapid growth in emerging market
countries (UNFCCC 2007).
These stubborn facts justify a focus on development
effectiveness rather than merely aid effectiveness.
Such a reconsideration of HLF-4’s mission would
strengthen the links between the Paris Declaration and
the MDGs by acknowledging that policy coherence for
development should be an integral part of development
cooperation strategies (Picciotto 2005). This would
align HLF-4 more closely to MDG8, which aims to
develop a global partnership for development that
commits developed countries not only to provide more
and better quality aid, but also to address international
trade, finance and investment policy constraints that
hinder the achievement of the MDGs.
ADAPT THE DEVELOPMENT PARADIGM TO
TACKLE HUMAN SECURITY ISSUES
R
apidly evolving information and
communication technologies have increased
the flow of ideas, goods, services, capital and
people across borders. But these technologies have
also increased instability, insecurity and illegality
(Naim 2003). Economic and financial shocks are
now transmitted instantly throughout the world. The
cascading disasters that devastated Japan in the wake of
the March 11, 2011 tsunami, including the radioactive
plumes over its stricken nuclear power station, have
disrupted economic activity throughout the world and
roiled international markets.
From the perspective of the poor, the critical role of
development cooperation lies in giving globalization a
human face. Food insecurity, aggravated by misguided
biofuel subsidies, is back on the international agenda:
about 925 million people go to bed hungry every
night, of which 19 million are in developed countries
(Hunger Notes 2011). Developing countries account
for 93 percent of the worldwide burden of disease,
yet account for only 11 percent of global health
spending (Schieber and Maeda 1999).
Given energy-intensive development patterns,
global warming has accelerated with deleterious
page 60
consequences for the least-developed countries. As
the poorest continent, Africa is especially susceptible
to climate change due to its vulnerability and inability
to cope with the physical, human and socioeconomic
consequences of climate extremes. The development
agenda has yet to give prominence to adaptation
mechanisms that would stem the dire economic and
environmental consequences of greenhouse
gas emissions.
In this insecure, fluid and interconnected global
system, the weakest link creates problems for all. This
is illustrated by the concentration of contemporary
warfare in fragile states and the spillover of violence
across borders. In 18 fragile countries, warfare has
prevailed for more than half the past two decades
(Picciotto et al. 2005). Given these trends, it is not
surprising that fragile and conflict-prone countries
have become a key preoccupation for development
cooperation under the High Level Forum
(HLF) process.
A human security agenda would facilitate compliance
with this priority. In Kofi Annan’s words, human
security “encompasses human rights, good governance,
access to education and health care, and ensuring
that each individual has opportunities and choices to
fulfill his or her own potential” (Michaelson 2006).
For Amartya Sen, Co-chair of the Commission for
Human Security, “Human security as an idea fruitfully
supplements the expansionist perspective of human
development by directly paying attention to what are
sometimes called ‘downside risks’” (Ogata and Sen
2003, p. 8).
Such an agenda would have implications for the
division of labour among multilateral and bilateral
agencies by discriminating between risks that are
genuinely transnational in character and those
that can be adopted without affecting other states.
Managing the former category of risks without
excessive bureaucracy by opting for decentralized
implementation and independent verification would
yield considerable benefits in terms of reduced
transaction costs and improved effectiveness. A human
security paradigm for development cooperation would
also put the spotlight on the provision of global and
regional public goods.
CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
ENCOURAGE THE PROVISION OF
GLOBAL AND REGIONAL PUBLIC GOODS
non-territorial and can only be managed through
multilateral action.
L
Still other risks like infectious diseases or itinerant
terrorists can be isolated through border controls. Such
controls create inconvenience and unintended costs
such as a reduction in travel for business and tourism.
If they are not exercised — for example if an infected
passenger or a terrorist originates in (or passes through)
a state that does not exercise effective border controls
— a global pandemic or a spectacularly violent act
may ensue, with far-reaching consequences across
national borders.
inked to a recognition that risk management has
been neglected under the current development
agenda, a review of HLF goals will have to
come to terms with the fact that a host of global and
regional threats induced by massive political, social
and technological change will in the foreseeable future
undermine global poverty reduction prospects unless
enhanced development cooperation tackles such threats.
Hunger, disease, pollution, climate change, financial
instability, regional conflict, international crime
and terrorism do not respect national borders.
These “problems without passports” constitute the
most serious obstacles to equitable and sustainable
development: the problems of some have become the
problems of all. They cannot be tackled one country
at a time or by one country alone. In this context,
the case for multilateralism has been considerably
strengthened: states must join together if they are to
achieve the shared objectives of international peace
and prosperity.
Effective solutions require multilateral cooperation.
In the words of Kofi Annan, “Ours is a world in which
no individual and no country exist in isolation. All of
us live simultaneously in our own communities and in
the world at large” (Annan 2002). Similarly, Richard N.
Haass, president of the Council on Foreign Relations, a
US think tank, says, “we are all multilateralists now (or
at least need to be)” (Haass 2010, p. 9).
The global and regional public goods deficit is due
to the fact that development cooperation today is
highly fragmented while the international economy
is increasingly integrated. This has increased the
complexity of contemporary international relations.
It also underlies the diversity of aid delivery channels
and it explains the messy institutional patchwork of
the aid system.
To be sure, not all development problems require
multilateral solutions. Some of the risks associated
with economic growth (for example, land erosion
in a watershed fully within a country’s borders) are
purely territorial and may have no discernible impact
on other states. They can readily be handled through
projects funded by bilateral donors. But other major
risks such as climate change are inherently
In such circumstances, norm setting and multilateral
action become imperative. No longer can national
approaches adequately address global health pandemics
or deal with the spectrum of contemporary security
threats that range from bioterrorism to climateinduced disasters. More than ever before, leaders and
institutions from around the world are discovering
that any approach to human security necessitates
cooperation across borders.
ADOPT AND MASTER FLEXIBLE
APPROACHES TO MULTILATERALISM
M
ultilateralism takes different forms.
State-centric international conventions
set precise principles of conduct, regulate
governments’ behaviour and coordinate their actions.
But they are open to challenge by a wide range of
influential private and voluntary associations. When
binding comprehensive global agreements come into
conflict with powerful special interests, they often fail
to materialize.
For example, it has not been possible to make
significant progress with respect to agricultural
protectionism, nuclear proliferation, climate change or
the harmonization of national tax regimes. Absent ties
of loyalty, trust and shared values, the larger and more
diverse the group, the harder it becomes to achieve
consensus. Getting all 193 UN members to agree on
what needs to be done, let alone how to do it, is
rarely feasible.
As a result, international conventions are very hard
to design and negotiate and they are not always
complied with since they can restrain freedom of
action and imply a reciprocity that may not be
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CANADIAN DEVELOPMENT REPORT 2011
forthcoming. They also raise expectations, often
unmet, that joint action will yield a rough equivalence
of benefits to all participants (Ruggie 1993).
From this perspective, traditional multilateralism
that imposes universal constraints on governments is
not a panacea. In order to minimize transaction costs
and information asymmetries, the management and
funding of development activities is best left to the
lowest level at which it can be handled efficiently or, in
other words, in line with the principle of subsidiarity.
Partial multilateralism, admittedly a second-best
option, may be the only feasible solution.
Thus, the collective action dilemmas embedded in
classical multilateralism have given rise to a pragmatic
approach to global diplomacy that entails assembling
the smallest number of parties needed to have a
positive impact on a given problem. This is known
as “minilateralism” (Naim 2009). Reliance on this
approach has spread and explains the rise in trust fund
arrangements managed through multilateral agencies
by tailor-made coalitions of states, private interests and
voluntary organizations.
Failing universal agreement on collective norms,
regional multilateralism has flourished while functional
multilateralism has brought together coalitions of
the willing committed to the pursuit of specific
development objectives on a global scale. In parallel,
informal multilateralism has taken the form of ad hoc
and nimble groupings of state and non-state actors
engaged in knowledge sharing and the formulation of
good practice standards.
Flexible networks that bring together coalitions
of governments, private sector representatives and
voluntary groups induce cooperation through
adherence to common goals, principles and practices.
These networks rarely aim at formal agreements. They
consist of voluntary partnership arrangements geared
to the search of collaborative solutions to common
problems and the design of good practice standards.
Collaborative programs that share knowledge and
generate good practice standards have also multiplied.
Some of these programs have been voluntary and based
in the private sector or civil society. Others have been
embedded within intergovernmental organizations.
Still others have been handled by ad hoc coalitions
under the aegis of specialized UN agencies or the
World Bank.
page 62
To connect with these networks, the traditional unitary
state is being transformed into a “disaggregated” state
that allows government officials sufficient latitude to
interact with their counterparts in other countries,
civil society and the private sector (Slaughter 2004).
Thus, the multilateral system is not only an assemblage
of intergovernmental bodies. It also encompasses
international regimes, norms, laws and networks (both
formal and informal) that regulate collective decisionmaking and behaviour.10
Typically, donor countries have financed programs for
global and regional public goods not as core activities
of international agencies, but through ad hoc programs
that they control, thus marginalizing developing
countries. The legitimacy of these arrangements is
somewhat enhanced when multilateral organizations
that combine convening power, policy research
capacity and outreach to developing countries are used
as platforms for program design and administration.
Non-core funding of programs managed by
multilateral institutions amounted to US$14 billion
in 2008, an increase of 27 percent over 2006 (DCDDAC 2010d; OECD-DAC 2008). This trend, if
confirmed over the medium term, will add to the
fragmentation of aid interventions. In this context,
the challenge faced by HLF-4 is to ensure that the
bewildering diversity of development networks and
initiatives complies with Paris Declaration principles.
The legitimacy of these pragmatic coalitions must
also be buttressed. Developing countries should
be adequately represented so that the voices of the
poorest and the weakest are heeded in the oversight
and management of multi-country programs (Lele
and Gerrard 2003). This would also enhance their
development effectiveness since, at country-level,
multi-country collaborative programs are not
sustainable without country ownership and
alignment with partner governments’ processes and
programmatic priorities.
10 Designed to enhance the regular monitoring and sharing of good
practices and the effectiveness of international development cooperation
through standard setting, the High Level Forum on Aid Effectiveness is
itself a multilateral institution. Indeed, the advent of a crowded development scene populated by a diverse cast of actors creates an opportunity for
the High Level Forum to emerge as a linchpin of the emerging development architecture.
CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
INVOLVE ALL DEVELOPMENT ACTORS
I
n sum, pragmatic multilateralism works through
coalitions that fall short of universality. But
the management of globalization is a shared
responsibility that involves all countries and all sectors
of society. National governments are not the only
actors. The private sector, the engine of economic
growth, has been adept at working across borders.
Thus corporate globalization has been instrumental in
shaping trade, investment and financial flows.
Equally, limits to the unbridled pursuit of private
interests have been set by a civic globalization
movement. It has contested the market-driven model,
embraced human rights and operated on a global scale
using the same information and communications
technologies as multinational firms. Indeed, as national
borders have become more porous and the private and
voluntary sectors more influential, governments have
had to resort to public-private partnerships and/or to
playing moderating roles designed to avoid or mitigate
the negative social and environmental effects of foreign
direct investment.
In this new operating environment for aid, the
management of network effects has required formal
or informal agreements between the public, private
and voluntary sectors. Many new players have
appeared on the development scene. Emerging market
countries, private foundations and vertical thematic
funds have joined the fray. While they have offered
new partnership options to developing countries, the
resulting sprawl has contributed to the incoherence
and the administrative burdens that the Paris
Declaration was designed to contain. In particular, the
BRICS (Brazil, Russia, India, China and South Africa)
do not report their aid to the DAC.11 Nor do most
private foundations (DCD-DAC 2010d; DCD-DAC
2011).12
China, a large aid player, used to treat its aid statistics
as a state secret. Recently it has made more data
available and reported that by the end of 2009,
China had provided a total of US$39.59 billion in
11 Nineteen non-DAC donors report their aid to DAC (Cyprus, Czech
Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak
Republic, Slovenia, Iceland, Israel, Liechenstein, Turkey, Chinese Taipei,
Thailand, Kuwait, Saudi Arabia, United Arab Emirates).
12 Beyond the international financial institutions (IFIs), the Regional
Development Banks and the UN agencies, the GAVI Alliance, the Global
Fund to Fight Aids, Tuberculosis and Malaria, the Global Environment
Facility and the Montreal Protocol submit regular reports to the DAC.
aid to foreign countries, including grants of US$16.4
billion; interest-free loans of US$11.82 billion and
concessional loans of US$11.35 billion. Even now
however “finding information on Chinese aid is like
putting together a jigsaw puzzle” (Grimm 2011).
Evidently China does not wish to be perceived as a
member of the rich countries’ club and it is ambivalent
about the DAC standards.
Informed guesses by the US Congress regarding annual
financial transfers from China to the developing
world put the figure at US$25 billion in 2007, mostly
consisting of loans, credit lines and state-sponsored
investment (Kilby 2010), while a Lowy Institute
survey of China’s aid to the Pacific region (consisting
mostly of concessional loans) estimates that it rose
from US$33 million in 2005 to US$200 million
currently (Fifita and Hanson 2011).
Further illustrating the shift toward South-South
cooperation, Brazil, Russia and India have emerged as
significant aid donors on a par with (or even ahead of )
such long-time Western donors as Finland, Ireland or
Portugal. Brazilian aid has been estimated at around
US$1 billion a year (ODI 2010). India allocated about
US$547 million to aid-related activities in 2008,
initially focusing on its own neighbourhood but now
reaching out to Africa (Ramachandran 2010).
A prominent aid recipient in the 1990s, Russia has
quintupled its annual foreign aid budget in four
years — reaching US$500 million (Reuters 2011).
Other significant non-DAC donors include the Czech
Republic, Hungary, Slovakia, Saudi Arabia, South
Africa, Indonesia, Thailand and Venezuela.
Private foundations have contributed to the
diversification of aid channels. But it is difficult to
generalize about them, given the scarcity of official
data about their operations. They seem to have
favoured support to specific and innovative global
or regional initiatives concentrated in the health
and agricultural fields and sought to manage their
operations for results. As is common with vertical aid
programs, they have had difficulty coordinating their
activities with those of sector ministries.
The new donors have adopted less demanding aid
modalities. They have shunned conditionality. They
have been more finely attuned to developing countries’
sensitivities than most traditional donors. But they are
still on a steep learning curve and enduring some of
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CANADIAN DEVELOPMENT REPORT 2011
the same growing pains that traditional donors have
had to face during their formative years. Trilateral
development cooperation that entrusts the execution
of some Western donor aid projects to Southern
contributors has helped in this process
(ECOSOC 2008).
Undoubtedly, aid from non-traditional sources will
continue to grow. The expanded resources, diversity
of perspectives and more flexible approaches to aid
delivery should be welcomed. But the common interest
would be well served if the new actors subscribed to
the Paris Declaration. This would help fill information
gaps and contribute to reduced aid fragmentation and
volatility. It would also require proactive involvement of
non-DAC actors and principled agreement with them
regarding updated development cooperation norms.
MANAGE THE INEVITABLE TENSIONS
AMONG PARIS DECLARATION OBJECTIVES
A
ccording to eminent Harvard economist Dani
Rodrik, the demands of globalization, national
sovereignty and cosmopolitan democracy
are not compatible: it is feasible to design policies
that satisfy two of these criteria but not the third
(Rodrik 2011). For example, Rodrik maintains that
globalization in concert with the protection of national
sovereignty can undermine democracy.
This very conundrum has plagued IFIs policy-based
operations. In pursuit of globalization, they induced
developing countries to adopt market-based principles
of economic management. But the conditionality
attached to such aid often infringed on the sovereignty
of recipient countries by denying them the policy space
they needed to achieve sustainable reforms. Similarly,
developing country governments have often perceived
bilateral aid that favours the sector priorities embedded
in the MDGs as ex ante social conditionality.
Similar tensions between global norms, national policy
prerogatives and public interest concerns explain why
Paris Declaration objectives have proven so hard to
achieve. For example, bilateral aid conceived as an
instrument of commercial promotion or put at the
service of narrow foreign policy objectives has hindered
aid coordination. Conversely, tight aid coordination
by donors in pursuit of harmonization has often been
interpreted as “ganging up” by developing countries,
page 64
thus undercutting alignment with country processes
and priorities.
The advent of state fragility as a key focus of
development has intensified the challenges implicit
in the Paris Declaration (Manning and TrzeciakDuval 2010). For example, increased use of country
systems has been identified as a key objective of
HLF-4. But this is not a realistic option in conflictprone countries that display human rights violations,
gender inequalities and systematic discrimination.
Performance-based aid allocation protocols have
sought to minimize this risk. But they have generated
“aid darlings” and “aid orphans” (Rogerson and
Steensen 2009).
Such dilemmas do not justify aid pessimism. The
risks involved can be managed. Good aid managers
strike sensible trade-offs geared to deliver value for
money even in difficult circumstances. In the social
and development realms, as in business, high rewards
can be secured only by incurring and managing risks.
Authors of prominent best sellers focused on the
failures of aid do not inform their readers about the
robust evidence that confirms that well-managed aid
programs can and do work.13
REVIEW AID ALLOCATIONS
A
id trends suggest that the share of core
multilateral aid in official development assistance
(ODA) is eroding. The relative share of core
funding for multilateral aid is in decline even though
it is still a significant component of development
assistance (US$35 billion out of US$124 billion in
2008). Specifically, the 2010 OECD-DAC Report on
Multilateral Aid shows that in 2008 multilateral aid
accounted for more than 60 percent of total ODA;
bilateral aid through multilateral channels accounted
for about 11 percent and core multilateral aid for about
28 percent, after peaking at 33 percent of total ODA at
the turn of the century (DCD/DAC 2010d).
It is axiomatic that aid resources should be channeled
toward the most effective vehicles. Apart from their
distinctive role in delivering global and regional public
goods, are multilateral development agencies effective aid
channels for country-based programs? Revealing answers
13 Dambisa Moyo’s, Dead Aid, is a paragon of aid pessimism whereas
Roger Riddell’s, Does Foreign Aid Really Work? provides a balanced assessment and demonstrates that well-managed aid works.
CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
can be drawn from the monitoring and evaluation
reports carried out under the aegis of Accra to assess the
progress of the development community toward Paris
Declaration objectives (OECD HLF-3 2008).
In brief, the evidence presented in Table 2 suggests
that HLF-4 should help channel more development
aid through well-managed, transparent and efficient
multilateral agencies. This would enhance aid
predictability, harmonization, coordination and
coherence. It would also ensure that a larger share
of aid is country programmable. Greater use of
judiciously selected multilateral channels would also
strengthen fragile states and set good practice standards
for rich and poor countries alike.
More specifically, the 2006 Survey on Monitoring
the Paris Declaration confirms that major economies
of scale are associated with multilateral development
banks and European Union assistance. Compared
to annual World Bank disbursements of US$8.5
billion to the governments of developing countries,
the European Commission disburses US$4.1 billion
a year, while each of the regional development banks
disburses an average of US$2.3 billion, the UN system
US$2.2 billion and each of the 22 major bilateral
donors an average of US$738 million (OECD 2008).
The diseconomies associated with the limited scale of
most bilateral aid programs imply a major imbalance
in administrative burdens. Paris Declaration evaluation
data show that whereas the World Bank sets up an
average of two project implementation units per
partner country, each bilateral donor on average sets
up three such units for disbursements that are less than
one-tenth of World Bank levels (OECD 2008). The
same survey found that multilateral channels enjoy
significant advantages with respect to other aid quality
indicators (OECD 2008).
Specifically, harmonization indicators measure
the extent to which donor countries coordinate,
simplify procedures and share information to avoid
duplication. Alignment indicators measure the
extent to which donors make use of developing
partner country financial and budget systems and
align technical assistance with capacity development
objectives. Predictability indicators measure the
extent to which aid is disbursed according to agreed
schedules. The indicator on progress with aid untying
measures the extent to which suppliers from individual
donor countries are unfairly favoured.
Based on these indicators, as demonstrated in Table
1, multilateral aid, especially from the World Bank, is
far more compliant with Paris Declaration standards
than overall aid. Of course, such ratings conceal
as much as they reveal since they fail to bring out
the extraordinarily wide range of quality standards
among bilateral and multilateral agencies. Not
all multilateral aid is equally effective: the ratings
show that the multilateral development banks, the
European Commission and the International Fund
for Agricultural Development enjoy a significant
advantage over UN agencies. This said, the indicators
TABLE 1: PARIS DECLARATION INDICATORS (DONOR PERFORMANCE)14
Aid Agency
AfDB
AsDB
IDB
WB
MDBs
EC
IFAD
UN
All multilaterals
All donors
Harmonization
Alignment
Predictability
Aid untying
Total
94
97
126
137
114
142
163
129
127
100
76
102
90
132
100
74
144
54
96
100
86
134
118
123
115
12
64
59
101
100
133
133
133
133
133
133
133
133
133
100
97
117
117
131
116
117
126
94
114
100
14 Source: OECD 2008. See Appendix B: Donor Data. The ratios are based on aggregate indicators for the most recent year available (2007) as follows:
harmonization (indicators 9, 10a and 10b); alignment (indicators 4, 5a and 5b); predictability (indicator 7); aid untying (indicator 8).
page 65
CANADIAN DEVELOPMENT REPORT 2011
do not capture the unique capacity-building and
standard-setting contributions of UN agencies.
Other reports confirm the overall finding that
multilateral agencies are “doing things right” more
often than bilateral agencies. Thus, according to an
authoritative 2010 review of multilateral assistance,
multilateral aid is far less fragmented than bilateral
aid: its concentration ratio is 75 percent versus 57
percent for bilateral aid (DCD/DAC 2010d). The
same review concludes that multilaterals allocate a
larger share of their aid to low-income countries (55
percent versus 33 percent in 2008) and to fragile states
(66 percent versus 64 percent in 2008). They also
deliver a higher proportion of CPA than the bilateral
agencies (92 percent versus 53 percent over the past
five years). Finally, they react more quickly to financial
crises through counter-cyclical assistance (DCD/DAC
2010d).15
Similarly, with respect to aid quality, a welldocumented joint Brookings and Center for Global
Development (CGD) report, the Quality of Official
Development Assistance Assessment, shows that, on
average, multilateral aid does significantly better
15 This report highlighted economies of scale, lower unit costs, political
neutrality and provision of public goods as additional benefits of multilateral aid.
than bilateral aid in maximizing efficiency, fostering
institutions and reducing administrative burdens
(Table 2).
Multilaterals only fall short on transparency — with
the exception of the largest two multilateral donors
(the World Bank and the European Commission),
which rate well on this indicator. The Brookings/CGD
report also indicates that vertical funds (Global Fund,
International Fund for Agricultural Development) do
better in maximizing efficiency given their specialized
staff, while horizontal country-based institutions such
as the multilateral development banks do better in
fostering domestic institutions, given their proven
ability to adapt to country circumstances.
To be sure, aggregate Brookings/CGD statistics do not
tell the whole story: multilaterals are not invariably
more effective than bilateral agencies or vertical funds.
For instance, Ireland ranks first in fostering institutions
(as well as first in overall effectiveness, in a tie with the
World Bank), while Australia ranks first in transparency
and learning and the Global Fund ranks first in
maximizing efficiency (Birdsall and Kharas 2010).
While the World Bank and the European Commission
respectively rank first and second on the Brookings/
CGD league table (Birdsall and Kharas 2010),
four bilateral donors (Ireland, United Kingdom,
Netherlands and Finland)
TABLE 2: QUALITY OF DEVELOPMENT ASSISTANCE RANKINGS16
Aid agency
Efficiency
Institutions
Admin. burden Transparency
AfDB (AfDF)
AsDB (AsDF)
IDB (SF)
World Bank (IDA)
EC
IFAD
UN
2
3
5
9
11
4
15
4
3
8
2
12
20
28
12
10
3
2
9
1
24
25
29
31
5
2
23
16
10.8
11.3
11.8
4.5
8.5
12.0
20.8
Aggregate rankings
Bilateral
Multilateral
Vertical
Horizontal (country-based)
19.4
6.3
2.5
6.0
17.4
11.9
19.0
5.8
18.4
9.0
6.0
7.2
15.4
17.6
16.5
18.4
17.7
11.2
11.0
9.4
Source: Birdsall and Kharas, 2010
16 See p. 25 of the Brookings/CGD Report. See Birdsall and Kharas (2010, p. 25). The report ranked 31 agencies.
page 66
Average
CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
TABLE 3: VALUE FOR MONEY RATINGS OF SELECTED MULTILATERAL AID ORGANIZATIONS17
Agency
AfDB
AsDB
IDB
WB (IDA)
IFAD
EC Budget
UNDP
WHO
FAO
UNESCO
UNICEF
ILO
UNIDO
WFP
UNHCR
Development
Objectives
2.8
2.8
2.3
3.2
3.0
2.7
3.0
2.8
2.7
2.3
3.3
2.2
1.8
3.2
3.2
Results
Orientation
2.0
3.0
2.7
2.0
3.0
2.0
2.0
2.0
2.0
1.0
3.0
2.0
2.0
3.0
4.0
Managerial
Strength
3.0
3.3
3.0
3.0
2.3
2.3
2.3
2.0
2.0
1.7
2.7
1.7
1.7
2.7
3.0
Partnership Transparency
3.0
3.0
3.0
2.0
3.0
3.0
3.0
3.0
3.0
2.0
3.0
3.0
3.0
3.0
2.0
4.0
3.0
3.0
3.0
3.0
3.0
3.0
2.0
1.0
2.0
2.0
2.0
2.0
2.0
2.0
VFM
Good
Very good
Adequate
Very good
Good
Adequate
Good
Adequate
Poor
Poor
Very good
Poor
Poor
Good
Good
Source: DFID (2011)
17 The ratings are derived from Annex 6. Development objectives averages ratings for role in meeting international and UK aid objectives, fragile contexts,
gender, climate, and poverty focus. Managerial strength averages performance management, financial management and cost consciousness. Also rated but not
displayed in the table is the “likelihood of positive change.”
as well as the Global Fund are among the best
performers and outclass the regional development
banks and the International Fund for Agricultural
Development.
Finally, a World Bank research paper synthesizes the
findings of major studies on aid quality and puts
forward an overall index for 11 multilateral institutions
and 27 bilateral institutions. Once again, multilateral
donors (score: 0.51) led by the Asian Development
Bank and the World Bank draw a far better aggregate
mean score than the bilateral donors considered as
a group (-0.20). However, a few bilateral donors
(Denmark, Ireland and the Netherlands) outrank
the African Development Bank, the Inter-American
Development Bank and the International Fund for
Agricultural Development, while the UN (-0.48) trails
behind most DAC donors (Knack et al. 2010).
Table 3 also shows that performance among
multilateral donors varies. The data are drawn from
a comprehensive and transparent multilateral aid
review recently carried out by the UK Department for
International Development (DFID). The vertical funds
and multi-country collaborative programs funded by
DFID deliver good or very good value for money.
The multilateral development banks also do relatively
well. Less impressive are the ratings awarded to UN
agencies. Out of 21 UN agencies rated by DFID, only
UNICEF is rated as very good while seven are rated
as good, six as adequate and nine as poor. Some UN
agencies are doing sterling work, others are not and
the UN development system as a whole is in dire need
of reform. To sum up, available evidence confirms
that there is considerable variation in the effectiveness
of multilateral agencies, but it is equally clear that
most bilateral aid agencies are less effective than most
multilateral agencies.
ENCOURAGE MULTILATERAL REFORM
T
he WP-EFF that manages the HLF process
combines effectiveness and inclusiveness
(Killen and Rogerson 2010). It is the
appropriate forum for coordinating the aid reform
agendas of the three main clusters of development
actors — the IFIs, financial institutions, the UN
agencies and the OECD-DAC donors’
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CANADIAN DEVELOPMENT REPORT 2011
network.18 Its focus on ownership, harmonization and
mutual accountability should be sustained and extended to the new donors.19
Conversely, the weight of emerging market countries
should be reflected in multilateral governance. Gradual
streamlining of the aid architecture and oversight of
institutional reforms should become explicit aims of
the HLF-4 process. Furthermore, the process should
promote enlightened multilateral agency leadership
focused sharply on increased legitimacy, transparency,
responsiveness and efficiency. To ensure a level playing
field, independent monitoring of how individual
agencies tackle internal obstacles to aid effectiveness
should be based on common results-based metrics.
The current multilateral aid architecture is exceedingly
complex. But a radical redesign would not be a
realistic medium-term goal since existing institutional
arrangements are the result of historical antecedents
and geo-political influences shaped by complex
interactions among states and non-state actors
pursuing diverse goals and responding to multiple
constituencies (Christiansen and Rogerson 2005).
A phased consolidation of aid agencies should
nevertheless be encouraged and reform efforts
should be focused on the UN and the multilateral
development banks, given their prominence in the
development arena.
The UN’s inclusive membership is a precious asset,
given the need for inclusiveness in development
cooperation referred to above. It enjoys a superior
ability to get close to developing country governments,
engage in technical cooperation activities and advocate
for human rights. The “one country, one vote” feature
of its development governance is prized by developing
countries, but it is also a major drawback to aid
effectiveness, given the gridlock in decision-making
that frequently plagues the General Assembly, which
oversees UN development activities.
18 The Executive Committee consists of around 25 members. The Chair(s)
and Vice-Chairs of the Working Party and the DAC Chair (ex officio)
coordinate the Working Party clusters. Other members are chosen on the
basis of geographical representation and balanced participation between
donors (bilateral and multilateral) and developing countries (aid-receiving
and recipient/donors). The civil society is also represented on the Executive
Committee.
19 The second phase evaluation of the Paris Declaration relied on six HQ
bilateral aid studies and a single multilateral aid study complemented, by
six bilateral aid and one multilateral aid updates. Looking ahead, more
comprehensive coverage and greater transparency regarding the performance of individual donors would be desirable.
page 68
The unwieldy UN development system consists of
17 specialized agencies, eight functional commissions,
five regional commissions and 16 organizations
and programs. It is wracked by duplication and
undermined by archaic management processes.
It cannot even be called a system since it is an
assemblage of loosely interacting groups. Given their
separate mandates and their autonomous governance
arrangements, the specialized agencies operate
autonomously without much interaction with the
UN Secretariat or with one another.
Unless systemic reform takes place and is supported
by powerful members, including the large emerging
market countries, the share of aid resources flowing
through UN agencies will continue to decline. In
time this may jeopardize the the role of the UN in the
security sector, as a platform for global and regional
goods delivery and as a norm setter.
To achieve synergy and effectiveness, the global and
country roles of the organization need to be connected
far more intimately. This would help to: (i) enhance
knowledge transfer across themes and regions; (ii)
relate the advocacy role of the organization to country
realities; and (iii) overcome the “silo culture” that
stands in the way of achieving the MDGs. Systemwide knowledge networks would help reach across
institutional boundaries within and outside the UN.
They would also facilitate sharing of good practices
and help close the gap between the UN’s normative
and analytical role and its country operations.
At a global level, the UN should adopt a development
paradigm that embraces human security and gives the
same emphasis to MDG8 (that points North) as to
MDGs 1—7 (that point South). At the country level,
the time has come to go beyond process reforms under
the One UN initiative by formally upgrading the
resident coordinator position and strengthening his/
her authority over the operations of all UN agencies on
the ground. In parallel, the UN superstructure would
be realigned under a Deputy Secretary-General of
Security, Development and Human Rights.
The IFIs’ strong executives and their corporate
management cultures help them deliver results. They
link research and practice somewhat better than other
organizations. They enjoy considerable economies
of scale. They are better shielded from the shifting
winds of international power politics. But they are less
CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
responsive to local needs and evoke the metaphor
of big tankers which cannot shift course in a
nimble fashion.
Hence the IFIs need reform too. Their internal
processes are complex, cumbersome and timeconsuming. They still tend to adopt blueprint and
technocratic approaches shaped by orthodox economic
doctrines whereas bilateral and civil society actors
are frequently more adaptable. Most of all, their
legitimacy is undermined by a voting structure that no
longer reflects the relative size and importance of their
member countries and by archaic methods of selecting
chief executives that give more weight to nationality
than to competency.
FILL THE EVALUATION GAP
W
ithout the discipline of the ballot box,
the use of more tax proceeds for
multilateral aid must be fully justified
to skeptical industrial countries’ electorates. Paris
Declaration tenets (alignment, harmonization, mutual
accountability, untying of aid, etc.) imply less direct
control by individual donor governments over aid
funds as well as looser connections with the national
interest of donor countries.
Hence, increased contributions to multilateral
institutions cannot be taken for granted. Contributions
hinge in large part on verification of the soundness of
their institutions’ governance structures, the validity
of their policy prescriptions and transparent proof that
multilateral funding delivers results by doing the right
things and doing them right.
This is why filling the monitoring and evaluation gap
facing multilateral aid agencies is a compelling priority
for HLF-4. Paradoxically, the 2010 OECD-DAC Report
on Multilateral Aid supports the DAC Evaluation
Network’s proposed joint assessments of multilateral
agency effectiveness. Its dubious premise is that “a shift
towards self-reporting by multilaterals would be a way
to apply the Paris Declaration Principles of ‘ownership’
and ‘alignment’ to their funding” (DCD/DAC 2010d,
p. 87).
In other words, the initiative proposes to rely on
existing desk reviews and available monitoring
and evaluation data so as to avoid duplication and
minimize evaluation fatigue. Yet, self-evaluation that
is not buttressed by independent verification would
lack credibility.
Public trust in the governance structures of multilateral
agencies, the quality of their management and the
development impact of their interventions should be
nurtured. This implies credible evaluation systems.
While good practice standards and peer review
processes focused on the independence and quality of
internal evaluation systems exist, they have not been
harmonized or implemented with the same diligence
across the multilateral system.20
Current self-assessments by multilateral agencies do
not aim at accountability and fail to attest to the
adequacy of multilateral agencies’ effectiveness in a
sufficiently rigorous manner. Thus, the Common
Performance Assessment System (COMPAS) was
designed in 2005 as a framework through which
the multilateral development banks track their own
capacities to manage for development results.
As a self-reporting exercise, COMPAS is explicitly
restricted for use as a corporate learning instrument
(MfDR 2010). As such, it provides opportunities for
the participating institutions to share information and
promote good practices.21 Similarly, the Multilateral
Organisation Performance Assessment Network has
not aimed at formal evaluations. Instead, it uses 70
indicators of interest to donors that relate to strategic
management, operational management, relationship
management and knowledge management
(AsDB 2011).
Responsiveness to donors’ concerns has been sought
either from ad hoc reviews carried out by individual
donors or by collective donors’ reviews connected
to periodic replenishment exercises. The former
approach cannot be replicated by all donors, given
the prohibitive transaction costs and administrative
burdens implied by a proliferation of bilateral reviews.
Notwithstanding some hard-hitting and objective
evaluations, the latter collective review approach has
done little to strengthen overall public confidence in
20 In particular, the Evaluation Cooperation Group has issued Good
Practice Standards on Independence of International Financial Institutions’
Central Evaluation Departments and the UN Evaluation Group has issued
norms and standards for evaluation in the UN system.
21 Examples include the African Development Bank, Asian Development
Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, International Fund for Agricultural Development,
Islamic Development Bank Group and the World Bank Group.
page 69
CANADIAN DEVELOPMENT REPORT 2011
multilateral agencies since the results have not been
widely disseminated and have failed to comply with
consistent standards of evaluation, independence
and quality.
The lack of consistent, resilient and objective external
evaluations of multilateral agencies should therefore
be a matter of considerable concern. Specifically,
the HLF-4 process should aim at strengthening its
own capacity to oversee the evaluation systems of
aid agencies and take the lead in commissioning
cross-cutting independent evaluations of the overall
development architecture.
In sum, to enhance the legitimacy and credibility
of oversight mechanisms, there is no satisfactory
substitute for the harmonization of monitoring and
evaluation standards across multilateral agencies.
Objective assessments of multilateral agencies’
compliance and periodic verification that their
corporate performance is up to scratch and that their
development results are adequate should be a major
focus of HLF-4.
For example, HLF-4 might task independent
evaluators with the duty of designing evaluation
standards for multilateral institutions that combine
sound self-evaluation methods with rigorous
independent evaluation processes that will reliably
attest to the quality of self-evaluation. Special attention
should be paid to the evaluation of trust fund
programs since the resources flowing through them are
growing, and they have largely escaped systematic and
independent evaluation.
Methodological rigour would not be sufficient to
ensure credibility of evaluations. The design of
evaluation governance to guarantee independence,
objectivity and “value added” are of equal importance.
Independent assessment of self-evaluation, as well as of
transparency and oversight of self-evaluation standards,
are basic features of sound governance. These
principles would lead to organizational solutions that
combine self-evaluation with independent evaluation.
The foundations for an overarching approach to
comprehensive and independent evaluations of the
multilateral system would best be grounded in good
practice standards of the Evaluation Cooperation
Group (ECG) for the multilateral development
page 70
banks,22 and informed by the agreed norms and
standards of the UN Evaluation Group (UNEG).23
Adequate coverage of activities funded by DAC and
non-DAC donors, foundations and the voluntary
sector should also be promoted so that all development
initiatives are judged according to the same standards.
Last but not least, credible evaluation of multilateral
interventions would imply a serious effort to involve
developing countries in the process. This also
implies a major commitment to evaluation capacity
development from donors. As well, it would call for
ad hoc joint-evaluation governance arrangements
that give substantive control to developing country
governments, organizations and citizens.
CONCLUSION
T
he principles of the 2005 Paris Declaration
remain highly relevant for development
cooperation. However, the overall operating
environment has changed. Given the growing
importance of non-aid factors, the HLF’s dominant
paradigm should shift from aid effectiveness to
development effectiveness.
WP-EFF is uniquely placed to oversee coordination
of the aid effectiveness agendas of the three main
clusters of official development actors — the IFIs, the
UN agencies and the OECD-DAC donors’ network.
It should also reach out to new donors and ensure
that the ad hoc coalitions charged with the delivery of
global and regional public goods and policy standard
setting comply with Paris Declaration principles.
A reversal of the erosion of core multilateral funding to
reflect development performance should be an explicit
goal of the HLF process since the economies of scale
and country orientation associated with multilateral
development banks and European Union development
22 The ECG was established by the heads of evaluation of the multilateral
development banks in 1996 to: (i) strengthen the use of evaluation for
greater development effectiveness and accountability; (ii) share lessons from
evaluations and contribute to their dissemination; (iii) harmonize performance indicators and evaluation methodologies and approaches; and (iv)
enhance evaluation professionalism within the multilateral development
banks; (v) collaborate with the heads of evaluation units of bilateral and
multilateral development organizations, and (vi) facilitate the involvement
of borrowing member countries in evaluation and build their evaluative
capacities.
23 The UNEG is a professional network that brings together the units
responsible for evaluation in the UN system, including the specialized agencies, funds, programs and affiliated organizations. The UNEG currently has
45 such members, is chaired by the UNDP, and is supported by an Executive Secretary and the UNEG Secretariat.
CHAPTER THREE | MULTILATERAL DEVELOPMENT COOPERATION AND THE PARIS PROCESS: THE ROAD TO BUSAN
initiatives mean that multilateral aid
has been demonstrably more effective than most
bilateral aid. However, not all multilateral institutions
rank high on available rating tables that common
and reliable metrics should be designed to guide
resource allocation.
It is equally clear that HLF-4 should induce
multilateral agencies to reform. The UN should be
pressed to undertake the restructuring needed to
achieve greater value for money while the multilateral
development banks should realign their voting
structures, adopt nimbler operational procedures and
improve their relationship management.
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CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC
CHAPTER FOUR
TOWARD A NEW DEVELOPMENT
COOPERATION DYNAMIC
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CANADIAN DEVELOPMENT REPORT 2011
page 78
CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC
TOWARD A NEW DEVELOPMENT
COOPERATION DYNAMIC
PENNY DAVIES
I
nternational development cooperation is going
through major transitions just as the need to address global development challenges — from eradicating poverty to making equitable sustainable development a reality for all people — is gaining urgency.
Recent years have witnessed an increase in the
number of actors providing various types of
development assistance, as well as new types of
modalities, channels and partnerships for development.
As a result, the global development cooperation
landscape and so-called “aid architecture” have become
more diverse. Most notably, there has been an increase
in activities and funding from sovereign bilateral
assistance providers outside of the Organisation for
Economic Co-operation and Development’s (OECD)
Development Assistance Committee (DAC), a
reflection of changes in global economic and political
power dynamics. These include countries with very
different experiences of aid and approaches to providing
assistance. Some have long histories of providing
assistance while others are new or re-engaging. Some
are both assistance providers and recipients, or were so
until recently. Some of these countries are making use
of DAC definitions and standards as a reference point
while others provide assistance under the framework
of South-South Cooperation (SSC)n within and across
geographical regions.
Regardless, it is clear that these heterogeneous nonDAC countries are playing and will continue to play
an even more central role in delivering assistance
to and engaging in partnerships with developing
countries. New forms of cooperation and models are
emerging, all at once complementing, challenging and
providing alternatives to DAC donor practices and
the multilateral institutions DAC donors traditionally
dominate at a time when there is increased pressure to
demonstrate tangible development results.
This dynamic highlights the need for new thinking and
restructuring of international, and multilateral dialogue
on aid and development cooperation to include and
reflect the practices and experiences of all development
cooperation partners. Furthermore, this dynamic
underscores the need for multilateral cooperation and
sharing of lessons learned to maximize the benefits of
diversity and ensure a common strategy for combating
poverty and addressing the crises and challenges of
this century. While some steps have been taken in this
regard, further action is needed. The Fourth High
Level Forum on Aid Effectiveness (HLF-4) in Busan
(29 November – 1 December 2011) provides a key
opportunity to form a new consensus on development
cooperation on a multilateral level that is inclusive and
capable of addressing the tasks ahead.
PROVIDERS OF ASSISTANCE BEYOND
“THE USUAL SUSPECTS”: WHO ARE
WE TALKING ABOUT?
S
overeign bilateral development assistance providers beyond the membership of the DAC are often
referred to as “non-DAC donors” or “non-DAC
providers of assistance,” “emerging donors” or even
“new donors.” However, these labels are all unsatisfactory. Several of the countries in question have longstanding histories of providing various types of assistance. For example, China’s and India’s assistance dates
back to the 1950s, Arab donors have provided substantial assistance over the past decades and Russia is
re-emerging rather than emerging as a donor. By using
the DAC as a reference point, these actors are defined
by what they are not, rather than by what they are
—“non-DAC” has the connotation of separating those
that are outside from those that are inside the club.
Furthermore, some non-DAC members such as the
new European Union (EU) member states use DAC
standards as a reference point, which makes the DAC/
non-DAC distinction less relevant. Finally, several
countries, including Brazil, China, India and South
Africa, are reluctant to refer to themselves as donors,
page 79
CANADIAN DEVELOPMENT REPORT 2011
and do not describe their cooperation in terms of
donor-recipient relationships. Rather, they consider
themselves as engaging in partnerships of mutual
benefit within the framework of SSC.
This terminological challenge is more than a matter
of semantics and points to the need to find better ways
of capturing the increasingly diverse forms of, and
partners engaged in, development cooperation. The
heterogeneity of these providers makes it questionable
to refer to them as a group and raises the question of
how best to describe providers of assistance in ways
that actually enhance the understanding of their roles
and activities. Previous categorizations, including
that of donor/recipient or developing/developed
countries, are clearly non-applicable, outmoded or
interchangeable. While recognizing its limitations, the
term “non-DAC providers of assistance” is used in this
paper when referring to the heterogeneous group of
countries that are not members of the DAC and that
provide various types of assistance.
Current analyses divide providers of assistance
outside the DAC into different overarching (sometimes
overlapping) categories based on their political
affiliations and characteristics. The categorization of
these countries also depends on which institutional
perspective informs the analysis. Twenty countries
outside the DAC report their official development
assistance (ODA) to the DAC. OECD-DAC statistics
divide these countries into three categories: OECD
non-DAC; Arab countries; and “other” donors
(OECD-DAC 2011). At times, analyses also single out
EU members (some of which are OECD members), or
the BRICS countries — Brazil, Russia, India, China
and South Africa1 — as major providers of assistance
and as emerging political and economic powerhouses.
Southern providers of assistance engaging in SSC are
often treated as a separate category (UN ECOSOC
2008).
An article by OECD Development Co-operation
Directorate staff members introduces the
categorizations “emerging donors,” “providers of
South-South Development Cooperation” and
“Arab donors” based on their different features
(Zimmermann and Smith 2011). Emerging donors
are countries that model their expanding aid programs
1 At the end of 2010, South Africa was invited to become the fifth member
of the BRICS adding the ‘S’ to the former BRIC acronym. South Africa
attended the third BRICS Summit held in April 2011 as a full member.
page 80
on those of DAC donors. This group consists mainly
of the 12 newest EU members,2 but also includes
countries with more long-standing cooperation
programs such as Israel, Russia and Turkey. In contrast,
Arab donors like Kuwait, Saudi Arabia and the
United Arab Emirates, who have delivered substantial
assistance for more than three decades, often have
different approaches to development assistance from
those used by most DAC donors. They have their own
coordination group, light administrative structures for
aid and allocate almost all of their assistance bilaterally.
Finally, providers of South-South development
cooperation include middle-income countries and
emerging economies, many of which are also aid
recipients. These providers do not refer to themselves
as donors, and they base their assistance on key
principles within the framework of SSC.
There are differences between the respective groups and
individual non-DAC countries in terms of what Kim
and Lightfoot (2011) call the “DAC-ability of donors,”
referring to their public willingness to adhere to DAC
standards. The principles and approaches of assistance
within the SSC framework are distinct from those
applied by DAC donors. Although much attention has
been paid to SSC of late, its principles date back to the
1955 Bandung Conference that pointed to the need
for developing countries to reduce their dependence
on industrialized countries, including through the
provision of technical assistance to one another. The
conference provided inspiration for various SouthSouth alliances and the subsequent formation of the
Non-Aligned Movement in 1961. This was followed
in 1978 by the Buenos Aires Plan of Action, adopted
at the United Nations (UN) Conference on Technical
Cooperation among Developing Countries, which
provided further guidance for SSC
(UNCTAD 2010, pp.7-9).
Since then, various conferences and multilateral
initiatives on SSC have taken place within different
fora. In 2009, the High Level United Nations
Conference on South-South Cooperation was
convened in Nairobi. The same year, the Group of
Seventy-Seven (G77) plus China, a leading voice
of developing countries, adopted a Ministerial
Declaration that puts forward guiding principles
for SSC (UNCTAD 2010, p. 8). The OECD-DAC
2 These are Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Romania, Slovakia and Slovenia.
CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC
Working Party on Aid Effectiveness (WP-EFF) now
hosts the Task Team on South-South Co-operation,
which played a key role in bringing about the 2010
High Level Event on South-South Cooperation and
Capacity Development in Colombia. This conference
resulted in the so-called Bogota Statement Towards
Effective and Inclusive Development Partnerships to
enhance the practice of SSC. In sum, SSC frameworks
have generated a range of multilateral initiatives, that
complement existing structures and which build upon
the principles established in the 1950s.
Key guiding principles for providing assistance within
the SSC framework include solidarity, mutual respect,
mutual benefit and non-interference in the internal
affairs of partners. Countries providing assistance
within the SSC framework claim to attach no policy
conditions to their assistance, in contrast with DAC
donor and international financial institution (IFI)
practices. The mutual benefit principle reflects how
the interests of the assistance provider are also seen as
important in the partnership.
Furthermore, South-South development assistance
is not distinguished from and is often mixed with
other types of financial flows, including investments
and non-concessional loans. The concept of SouthSouth development cooperation is sometimes used to
separate the specific development dimension of SSC,
although according to the G77 plus China, SSC is
itself “a development agenda” (UNCTAD 2008, p.8).
While key differences exist — such as the emphasis
on non-interference of Southern providers versus the
conditionality practices of DAC donors — there is
shared interest in ensuring that development assistance,
in its various forms, contributes to the achievement
of partner country development objectives and the
Millennium Development Goals (MDGs). However,
a key challenge is that the international discussions on
development cooperation, including those surrounding
the Paris Declaration on Aid Effectiveness, have until
recently been dominated by DAC donors, resulting in
a lack of ownership of the declaration and its principles
by non-DAC members.
Yet, it is clear that many non-DAC providers of
assistance support principles similar to those of
the Paris Declaration, including strengthening
partner country ownership (Davies 2008). However,
interpretations of how to implement them might
differ from DAC donor practices. It can be argued, as
phrased by Abdel-Malek (2009, p.5), one of the Chairs
of the WP-EFF, that “we have to rid ourselves of the
counterproductive discussion that stresses differences
between the Paris Declaration principles and SouthSouth Cooperation practices,” and that “efforts should
focus on identifying how each approach can benefit
from the distinct advantages of the other.”
Calls and initiatives for further dialogue, experience
sharing and cooperation among different providers of
assistance are now being made. However, such calls
raise questions regarding the willingness of all actors
to learn from each other and of the inclusiveness of
international and multilateral fora where development
cooperation is discussed.
ASSESSING VOLUMES OF ASSISTANCE HOW MUCH ARE WE TALKING ABOUT?
T
he increase in volumes of assistance from nonDAC development assistance providers has
generated a lot of attention. However, assessing
volumes of assistance is difficult as several non-DAC
assistance providers do not systematically collect or
transparently report figures in a detailed and disaggregated manner. Furthermore, there is no globally agreed
upon definition of what counts as aid. For non-DAC
countries, the DAC definition of ODA does not
necessarily serve as a relevant reference point. Many
non-DAC providers of assistance operate within the
frameworks of SSC and/or triangular cooperation, and
data to measure these modalities is particularly scarce.
South-South Development Cooperation assistance is
often delivered in package deals and includes other
financial flows, some of which would be ODA-eligible
and others not, according to DAC criteria.
However, several non-DAC members do report their
assistance to the DAC. In 2008, total reported ODA
from non-DAC countries amounted to US$9.5 billion
in net figures. This is a steady increase since 2003
when the amount was US$3.4 billion, reflecting both
a growth in volumes of assistance from individual
donors as well as a rise in the number of countries
reporting to the DAC (Davies 2010, pp.4-5).3 In
2009, the amount was down, however, to US$6.7
billion. In terms of volume of assistance, Saudi Arabia
3 The figures in Davies are based on the OECD-DAC 2009 and 2010
Development Co-operation Reports.
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CANADIAN DEVELOPMENT REPORT 2011
stands out among non-DAC countries with an
ODA of just over US$3 billion in 2009
(OECD-DAC 2011).4
For the countries that do not systematically disclose
their figures, estimates often vary due to data
constraints and different interpretations of what counts
as aid. According to Zimmermann and Smith, the
estimated total gross development cooperation flows
from bilateral providers beyond the DAC amounted
to almost US$11 billion in 2009, the equivalent of
around eight percent of global gross ODA in the same
year (Zimmermann and Smith 2011, p.724).
This US$11 billion comprises the assistance from
the 20 countries that currently report their annual
ODA to the DAC, plus estimates for the BRICS
countries based on various government sources.5 China
is the heavyweight among the BRICS with an annual
estimated aid budget of US$1,947 million followed
by Russia at US$785 million, India US$488 million,
Brazil US$362 million and South Africa
US$109 million.
However, China also illustrates the challenge of
comparing aid data with that of DAC ODA. A
breakdown of Chinese development assistance, taking
into account debt relief (included in DAC ODA), puts
it at US$3 billion in 2007 (Brautigam 2009, p.169).
As suggested earlier, volumes of assistance for nonDAC donors are difficult to assess, and analyses of
figures change as reporting gets more sophisticated and
transparent. Figures of external analyses also frequently
vary due to methodological differences. A general
conclusion is that development assistance from nonDAC countries on an aggregate level is comparatively
low, albeit on the rise, although in certain sectors or
countries it can constitute the main bulk of assistance.
The importance of development assistance
providers beyond the DAC does not lie primarily
in the volume but rather in the way in which this
assistance transforms international and multilateral
4 As of January 2010, South Korea is a member of the DAC and is no
longer included in non-DAC donor ODA statistics provided by the DAC.
South Korea has also been omitted from the 2009 statistics and from earlier
years as well in OECD-DAC (2011), hence resulting in a discrepancy
compared with the figures for 2009 and earlier as presented in the 2009
and 2010 Development Co-operation Reports.
5 The estimate assumes that figures for individual countries’ development
cooperation programs are consistent with the definition of ODA. The figures are, however, likely to be even higher given that active providers within
the framework of SSC, such as Chile, Colombia, Egypt, Malaysia, Mexico
and Venezuela, are not included.
page 82
development cooperation by contributing new ideas
and modalities, as well as increasing the options
available to partner countries. This diversity brings
both challenges and opportunities.
OPPORTUNITIES AND CHALLENGES
Opportunities
Increased and more diverse resources for
development
The increased engagement of more development
partners means greater resources are often available for
partner countries to pursue their national development
strategies and the MDGs. This is significant, given
that many DAC donors are failing to meet their aid
commitments and the financial and climate crises have
put additional pressure on scarce public resources.
While the financial meltdown may affect SSC
negatively, the deterioration of the global economy
has also resulted in renewed opportunities for SSC as
developing countries look to one another as well as to
innovative cooperation mechanisms to respond to the
crises (UN General Assembly 2009).
The diversity of resources also generates more
options and increases leverage of partner countries
when negotiating with donors. Southern providers of
assistance to some extent complement the efforts of
DAC donors and multilateral institutions, particularly
in terms of focus on infrastructure and productive
sectors (Davies 2010).
Relevant development experiences
and lessons to share
Assistance within the SSC framework from “fellow
developing countries” is valued by partner countries,
as they both face similar challenges and have relevant
insights to share based on their own efforts to reduce
poverty. Furthermore, several non-DAC countries were
until recently, or are still, recipients of aid. Therefore,
they are also well placed to draw on their experiences
as aid recipients, and have lessons to share about
managing incoming aid.
CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC
Innovative development assistance modalities
and efficient partnerships
The diversity of partners engaged in development
assistance has brought innovative cooperation
modalities to the fore in the form of SSC and
triangular cooperation; North-South-South as well
as South-South-South (UN ECOSOC 2008). These
modalities have gained increased recognition as
effective contributors to development. For example,
SSC and knowledge exchange have become part of the
work programs of multilateral institutions.
Compared with DAC donor and IFIs approaches,
SSC is valued by partner countries for being less
bureaucratic and less donor driven, as well as more
responsive to country priorities with few or no policy
conditions attached. Assistance is often highly flexible
and assistance providers are often quicker in processing
and disbursing assistance. Partner countries have
expressed the view that traditional donors could learn
more from these positive aspects (Davies 2008).
Challenges
Lack of transparency and sharing of information
Partner countries, civil society organizations and
donors (DAC and non-DAC) see the lack of
transparency regarding volumes, types and terms
of assistance of some non-DAC providers as a key
challenge. SSC agreements are often made at the
highest political level, bypassing aid management
systems in partner countries. The resulting lack of
transparency inhibits broad-based ownership and the
possibility for citizens to engage in the development
process and hold their governments to account. It has
also made it difficult to conduct impact assessments
of these engagements and led to misunderstandings.
Furthermore, lack of transparency constitutes an
obstacle to coordination of assistance among different
providers (Davies 2008).
Challenges in adhering to social and environmental
standards and aid-effectiveness principles
Concerns have been expressed by civil society
organizations, multilateral organizations and others
that SSC agreements do not sufficiently take into
account social and environmental standards. At
times, rapid and low-cost assistance takes place at the
expense of wider development concerns without prior
adequate environmental and social-impact assessments.
In particular, concerns have been put forward in
relation to the impact of infrastructure projects on
the environment and local communities.6 Governance
and corruption are also concerns when assistance is
provided to countries where accountability frameworks
are weak and where reforms to address these problems
are lacking (G24 Secretariat 2008, p.18).
On the question of aid effectiveness and progress
on the Paris Declaration and the Accra Agenda for
Action, performance of non-DAC countries varies
(similar to DAC donors). Tied aid is often a concern
as non-DAC project assistance, with a few exceptions,
is almost always tied to the purchase of goods and
services. However, some of the drawbacks of tied aid,
such as higher costs for the recipients, are not always
applicable to “Southern assistance,” which tends to be
cost effective and can also involve skills transfers. That
said, there are also examples of projects that do not
involve local contractors, including turnkey projects,
and that inhibit the transfer of skills (UN ECOSOC
2008; G24 Secretariat 2008). Another concern is
that in SSC partnerships there is little involvement
of non-government actors, bypassing input from
parliamentarians and civil society, a trend that runs
counter to the Paris agenda and detracts from broadbased national ownership and mutual accountability
(UNCTAD 2010, p. 27; UN 2010, p. 36; The Reality
of Aid 2010).
The proliferation of partners poses challenges
for partner country management
Although increased choice in partners presents
a key opportunity for developing countries to
pursue national development priorities, strategic
management of these diverse actors can pose a
challenge — particularly where national capacity is
weak. Depending on how well assistance is aligned
with national systems or coordinated at the country
level, this proliferation can lead to higher transaction
costs, for example, in the form of a plethora of
reporting requirements. Evidence suggests that there
is little coordination between Southern providers of
assistance and DAC donors. Likewise, providers of
assistance within SSC frameworks, like many DAC
donors, have a tendency to set up their own structures
for engagement and delivering assistance with little
6 For further information, see UN ECOSOC (2008), The Reality of Aid
(2010) and UN (2010).
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CANADIAN DEVELOPMENT REPORT 2011
multilateral cooperation (UNCTAD 2010 p. 27; UN
2010 p. 35; UN ECOSOC 2008 p. 34).
These challenges are also applicable to assistance
from multilateral development banks as well as from
DAC donors, many of whom have more experience
engaging in development cooperation than some
capacity constrained non-DAC countries. To assess
the impact of aid and development assistance in
terms of development outcomes is a key challenge
for all. To make the most of their opportunities,
partner countries need to carefully negotiate with
all development partners, compare the various
options available and consider what impact they will
have on development objectives such as social and
environmental targets and debt levels (G24 Secretariat
2008, p.17).
RESHAPING GLOBAL DEVELOPMENT
COOPERATION — TOWARD GREATER
INCLUSIVENESS?
T
he surge of activities from non-DAC development assistance providers is often described as
challenging so-called established donors and
the multilateral institutions they traditionally dominate. As described by Woods (2008, p. 17), “emerging donors” are triggering a silent revolution, “quietly
offering alternatives to aid-receiving countries” and
thereby “introducing competitive pressures into the
existing system.”
This challenge comes at a time when the established
international development cooperation system is facing a legitimacy crisis. After a series of high-profile
commitments (including unfulfilled ones like those
made at the Group of Eight [G8] Gleneagles Summit
in 2005), DAC donors and multilateral agencies face
increased pressures to demonstrate results, and skeptics
are making their voices increasingly heard, questioning
the accomplishments of aid over past decades.
In the wake of the financial crisis, there are also
concerns that donors are increasingly focusing on
short-term results in their pursuit of value-for-money
and national interests at the expense of championing
aid-effectiveness principles of ownership and mutual
accountability. According to Zimmermann and Smith
(2011, p. 733): “The emergence of alternative models
of development, sources of development finance and
modalities for development co-operation has only
page 84
served to intensify this legitimacy crisis. If they are to
maintain their relevance, established donors will need
to grasp the rise of other providers of co-operation as
a major opportunity.” This, in turn, means opening up
dialogue and decision-making processes.
There are various signs of how existing development
cooperation fora are giving recognition to the diverse
players and modalities and how these players are
claiming space in global policy-making on development cooperation. The Third High Level Forum on
Aid Effectiveness that took place in Accra, Ghana, in
September 2008 took an important step in this regard
by acknowledging the contributions of all development actors, “in particular the role of middle-income
countries as both providers and recipients of aid.”
Furthermore, recognition was given to “the importance
and particularities of South-South Co-operation” and
acknowledgement was made in the Accra Agenda for
Action that “we can learn from the experiences of
developing countries” (OECD 2005/2008). As mentioned, the 2010 High Level Event on South-South
Cooperation and Capacity Development was a further
manifestation of how developing countries are actively
shaping development cooperation policies and practices and how a new type of multilateral cooperation
is taking form.
The DAC — the so-called traditional donor’s club
— is pursuing dialogues with development assistance
providers outside its membership to enhance mutual learning and collaboration. In the run-up to the
HLF-4, the DAC endorsed a statement “Welcoming
new partnerships in international development cooperation,” acknowledging the role played by major
nations beyond its membership in contributing to the
MDGs. The DAC, in the same April 2011 statement,
endorsed the forging of new relationships, mutual
learning and cooperation “without requiring acceptance of the norms and rules required of DAC member states” (DAC 2011). This statement signals the
eagerness of DAC members to work more closely with
other providers of assistance. Interestingly, as part of
the DAC discussions ahead of the HLF-4, recognition
exists that in order to reach an inclusive agreement on
aid and development, some “letting go” by the DAC
is needed. For example, in a document on the political roadmap to Busan, submitted for discussion at the
DAC Senior Level Meeting in April 2011, it is suggested that the DAC must be prepared to lose its copyright
CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC
on the Paris principles and that a change in language
is needed to respect the development traditions of all
groups (DCD/DAC 2011, p. 4).
The increased activities of non-DAC assistance
providers are a direct reflection of shifts in global
economic and political power and a trend toward a
multipolar world order. Developing countries and
so-called emerging powers are claiming space in
global policy-making on development issues, among
others. The replacement of the G8 with the Group of
Twenty (G20) as the main body for global economic
policy coordination in the wake of the financial crisis
and the adoption in November 2010 of the “G20
Seoul Development Consensus for Shared Growth”
can be seen as game-changers in this regard. The
Seoul consensus reflects and gives recognition to the
principles and perspectives that are of importance to
countries providing development assistance within the
SSC framework.
Meanwhile within the G20, the BRICS countries have
played a role in pushing for reform of the Bretton
Woods Institutions, traditionally dominated by DAC
donors (Sidiropoulos 2011). This has resulted in an
increase in voting shares for emerging economies, thus
boosting their incentive to engage with and contribute
financially to these multilateral institutions.
While much focus has been placed on the BRICS, a
third wave of development actors in the form of the
so-called CIVETS countries (Colombia, Indonesia,
Vietnam, Egypt, Turkey and South Africa) also wants
to engage in the global governance of development
cooperation (Schulz 2010). CIVETS are active in SSC
and are, according to Schulz (2010), especially suited
for triangular cooperation with traditional donors as
they generally acknowledge the standards developed
by the DAC. While neglected in the past, multilateral
institutions are becoming more aware of the specific
contributions these countries can make in delivering
development solutions. These countries were key drivers behind making South-South knowledge exchange a
policy and an operational tool for multilateral players,
including the World Bank and specialized UN agencies
(Schulz 2010, p. 4).
There is much optimism that South-South knowledge
exchange can transform the development cooperation
agenda. According to the UN Conference on
Trade and Development (UNCTAD) (2011, p. 2),
“strengthening South-South economic and political
relations can give a significant contribution towards
global convergence within a development-led process
of globalization.” Indeed, as demonstrated earlier
in this chapter, developing countries are playing an
active part in reshaping international and multilateral
development cooperation. However, concerns remain
regarding the extent to which an inclusive global
development agenda is in the making.
While the G20, accounting for two-thirds of the
world’s population, is more inclusive than the G8, it
still excludes the UN’s remaining 173 member states,
including the poorest countries. There are questions
as to what extent these poorest countries and civil
society actors with a global justice agenda will be
able to engage and influence the G20 and to what
extent the G20 will implement concrete action to
address global development challenges. Moreover, it
is unclear to what extent the new economically and
politically influential developing countries, notably
the BRICS, will champion the development interests
of all developing countries and to what extent they
will include “the entire South” in their efforts and
partnerships (Senona 2010).
Despite some reforms to the Bretton Woods
Institutions, there is still a pressing need to strengthen
the voices and votes of developing countries. One
flagrant example of how the post-Second World War
power structures linger on in today’s multilateral
system is the selection processes for the heads of the
World Bank and the International Monetary Fund
(IMF), which remain in the hands of traditional
Western powers.
Meanwhile, although the DAC is making efforts
to open its doors and cooperate with countries beyond
its membership, many developing countries still view
it as a traditional donors’ club. Furthermore, although
the global development architecture is meant to
meet the needs of the poorest countries, “it does not
explicitly build on the collective will of their citizens”
who “at best have to hope that international powerbrokers have their interest at heart when they decide
on development issues” (Killen and Rogerson 2010,
p. 2). In addition, there are power imbalances between
recipients and providers of aid as well as between
partners in SSC, which play out above the heads
of citizens.
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CANADIAN DEVELOPMENT REPORT 2011
From a different perspective,the surge of non-DAC
assistance providers and SSC is complicating an
already complex institutional sprawl of multilateral
and other development cooperation bodies. These
fora often overlap and weigh inclusiveness and
effectiveness differently — two difficult principles to
balance. (Killen and Rogerson 2010). As a result, some
observers suggest that the international community
is facing “an institutional vacuum” when it comes to
discussing the way forward for the global governance
of development (Schulz 2010, p. 2). Clarification
of mandates and how to make best use of synergies
among different institutions are needed to prevent
a stalemate in multilateralism and achieve, through
collective action, effective and tangible development
results and contribute to meeting the MDGs and then
some. The upcoming HLF-4 in Busan offers one such
opportunity.
As part of such international restructuring, existing
institutions need to better incorporate the experiences
and modalities of the heterogeneous actors beyond
DAC-donors. This means more than just inviting
and making room in the tent. All development actors
must also reflect upon whether the tent is still fit for
the purpose and allow space for new ideas and mutual
learning beyond business as usual.
Multilateral cooperation has a history of going
through changes and restructuring, and this should
be seen as an opportunity. Most important, the needs
and interests of those people who are the intended
beneficiaries of development assistance should inform
to a greater extent the future direction of development
cooperation. This is what inclusiveness should mean.
WAYS FORWARD
Enhance collective multilateral action and broadbased participation in partnerships
The global aid and development architecture
suffers from “systemic inefficiencies created by too
many actors contributing too little” (DCD/DAC
2011, p. 7). There is a worrisome trend of donors
planting their flag on unilateral contributions, as part
of their efforts to demonstrate results to their own
taxpayers. A spirit of collective multilateral action
and a subsequent willingness to collaborate and pool
resources is needed to counter this trend. The increased
engagement of non-DAC providers of assistance and
page 86
the resulting increase in complexity calls for further
collaboration to ensure complementarity and to
harmonize aid at the national level based on partner
country development plans. However, coordination
should not diminish diversity; rather, it should
make the most of the comparative advantages of
different providers.
The current lack of progress on coordination and
cooperation among DAC donors raises questions
about the prospects for accomplishing these goals
among an even wider set of providers. There are
many challenges for moving from words to action.
Triangular cooperation has been identified as one
way to combine the respective strengths of different
development partners, and such partnerships
are evolving between DAC and South-South
Development Cooperation partners.7 However, such
joint efforts are still marginal and more financing and
support of triangular cooperation should be explored.
For example, DAC donors could increasingly support
and make resources available for triangular cooperation
by channelling resources to Southern partners who,
in turn, could share their relevant expertise with other
developing countries.
Multilateral organizations can play a role in
bringing different stakeholders together around such
partnerships to facilitate and institutionalize lessons
learned, data gathered and how to make triangular
cooperation effective.8 For triangular cooperation to
have a positive contribution, it is vital that partner
countries are the drivers, and that they set the agenda
based on national democratic development priorities
that strengthen broad-based national ownership.
There is a need to prevent donors ganging up, setting
priorities and dividing tasks among themselves rather
than engaging with local stakeholders and actors when
deciding their strategies. Likewise, there is a need to be
aware of power relations in all partnerships — SouthSouth as well as North-South.
Furthermore, development partnerships should involve
civil society organizations that have an important
role to play in putting forward suggestions based on
7 Triangular cooperation is encouraged in the Accra Agenda for Action,
Paragraph 19b. The China-DAC Study Group is one example of triangular
mutual learning among DAC donors, African countries and China. The
India, Brazil and South Africa (IBSA) initiative is another example of
South-South-South triangular cooperation.
8 Yamashiro Fordelone (2009) provides an overview of triangular cooperation, its merits and challenges.
CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC
their first-hand experience of what the impacts are
of development cooperation and other policies on
poor people and the environment. In this context,
civil society organizations have raised concerns
that South-South Development Cooperation has
almost exclusively been limited to government-togovernment affairs with little opportunity for civil
society organizations or parliamentarians to engage
(The Reality of Aid 2010). Broad-based participation
in development partnerships is a prerequisite for
sustainable multilateral collaboration.
Increase transparency and the
sharing of information
All actors engaged in providing assistance
should transparently share information on the
volumes, types and terms of assistance provided.
Information should be available on who does what
at the country level. Such transparency remains a key
challenge, as described above, for many South-South
Development Cooperation providers, but also for
several DAC donors.
Transparency is essential to ensure national
ownership of development plans and accountability
of governments to the people on both sides of a
partnership. Making information available on terms
and volumes of assistance in a predictable manner
enables the integration of assistance into national
planning tools and budgets at the country level. In
the context of enhancing multilateral cooperation,
information sharing is a prerequisite for mutual
learning on how to best achieve development
outcomes and for drawing on each partner’s
comparative advantages.
The demand for transparency in development
cooperation is frequently made. Partner countries have
called on all development partners to make public
the types of financing provided, including the terms
of loans. This request was, for example, expressed by
partner countries at the regional consultations ahead
of the Accra High Level Forum on Aid Effectiveness
(HLF-3) (Davies 2008) and is brought up in a report
by the Group of Twenty-Four Secretariat (2008),
among others.
Transparency does not, however, necessarily mean that
non-DAC providers of assistance need to apply the
DAC’s definition of ODA and its reporting standards,
which could be politically sensitive. The key issue is to
commit to transparent reporting, regardless of what
definition of aid is applied or how the reporting is done.
There are some signs of commitments toward increased
transparency on the part of non-DAC and DAC
donors alike. One example is the International Aid
Transparency Initiative (IATI), which aims to make
information about aid spending easier to find, use
and compare. However, to date, this initiative does
not include South-South Development Cooperation
providers. The case for improved measurement,
monitoring and transparency of SSC has also been
made, for example, in the Bogotá Statement (Steering
Committee, High Level Event on South-South
Cooperation and Capacity Development 2010).
Looking ahead, transparency commitments need to
be put into practice and should not be limited to aid
partnerships. Transparency is equally vital in all types of
cooperation to ensure accountability towards citizens.
Engage in genuine mutual learning
for development results
There is widespread agreement that aid and
development cooperation dialogues and initiatives
need to incorporate the diverse experiences of all
actors, rather than only those of DAC donors who
have traditionally dominated these discussions.
The need for mutual learning between and among
actors is also recognized. In November 2010, G20
leaders requested that the Task Team on SSC and
the UN Development Programme “recommend how
knowledge-sharing activity, including North-South,
South-South, and triangular cooperation, can be scaled
up” (G20 2010).
On a practical level, mechanisms and initiatives for
mutual learning at the global and country levels are
needed to enhance development results. DAC donors
should, in accordance with the recommendations of
the Accra Agenda for Action, learn from the positive
aspects of SSC that are appreciated by partner
countries. Likewise, those who are scaling up their
assistance should incorporate lessons learned from
multilateral and bilateral agencies that have more
experience enhancing aid effectiveness and addressing
challenges related to data gathering, reporting,
monitoring and evaluation of development outcomes.
However, mutual learning is not a technical fix. There
needs to be openness and a genuine will to learn
from each other and to critically assess one’s own
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CANADIAN DEVELOPMENT REPORT 2011
principles and strategies based on lessons learned
from the experiences of different actors, not least
from local communities and citizens. Mutual learning
can be a challenge, also among DAC donors whose
aid programs, as pointed out by Chandy and Kharas
(2011, p. 747), tend to “reflect each country’s own
experiences, much more than they do common
lessons.” They add that there is also a reluctance to
learn from recipient governments at times.
As demonstrated, there are differences in approaches
between South-South Development Cooperation
assistance providers and DAC donors that are sources
of tension. Most notably the non-interference vis-à-vis
the conditionality approach of providing assistance.
SSC is based on the principle of non-interference.
Southern providers claim not to attach policy
conditions to their assistance,9 while DAC donors
and international financial institutions continue to
apply conditionality when providing loans and grants.
Both approaches have been criticized from different
perspectives — conditionality for overriding national
democratic ownership and non-interference for
disregarding social and environmental standards and
perspectives beyond those of governments, including
those of civil society.
Donors have committed to limit and “change the
nature of conditionality to support ownership” in
the context of the Paris Declaration and the Accra
Agenda for Action, although progress has been slow
and the commitment itself is vague. The international
community has recognized the non-interference
principle in the context of SSC in the final draft of
the Accra Agenda for Action (OECD 2005/2008).
However, there is a lack of clarity on what noninterference means and how it relates to widely agreed
upon social and environmental standards.
The Reality of Aid Network, a global network of
civil society organizations, argues that “respect for
national sovereignty should not mean ignoring gross
human rights violations, environmental destruction,
corruption and blatant abuse of power in partner
countries” (The Reality of Aid 2010, p. 17). In a
report assessing SSC, the network expresses concerns
based on a number of cases, but at the same time it
9 Tied aid, applied by many Southern providers of assistance in their
projects, can however be described as a conditionality, albeit different from
the kind of conditions applied by DAC donors that stipulate policy reforms
to take place in the recipient countries.
page 88
states that these concerns should not lead to attaching
conditionalities to development assistance. Rather,
it argues that human rights “are obligations assumed
by all governments and should therefore inform their
dialogue and agreements on international cooperation”
(The Reality of Aid 2010, p. 17).
Looking ahead, there is a need to build a common
understanding on how to strengthen ownership in
development partnerships beyond the limitations
of both conditionality and non-interference. DAC
donors and international financial institutions need to
end their practice of conditionality, which overrides
national democratic ownership. Those who apply the
non-interference principle need to ensure that they
do not disregard the interests and rights of citizens,
particularly in situations where governments do not act
in the best interests of their population.
Such rethinking requires an openness and
willingness to learn from past mistakes and to find
common ground based on joint interests in achieving
development results. Multilateral cooperation can
play a bridging role in creating mutual understanding,
starting with joint cooperation on a more practical
level in the form of concrete projects that could,
in turn, facilitate overcoming eventual differences
between actors. Multilateral institutions that bring
together different actors and are seen as legitimate
by those involved could provide a starting point
for such cooperation.
Put policy coherence for development into practice
and deliver on aid targets
According to DAC donor discourse and current views
on best practice, aid should be separated from trade
and foreign direct investment flows (UN 2010, p. 3).
It should also be free from the national interests of the
provider, although this is far from always the case in
practice. This separation is challenged by SSC, which
bundles different flows and explicitly builds on the
principle of mutual benefit for both partners.
These differences in practices frequently result in
misunderstandings. Often outsider debates and DAC
donor politicians criticize aid from Southern providers,
most notably China, for being driven by self-interest,
in comparison with DAC donor aid. This is a gross
misconception as DAC donor aid is often politicized
CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC
despite its stated objective of poverty reduction.10
Moreover, such discourse compares DAC donor
activities with all of China’s engagement in and with
developing countries. A relevant comparison would
look at a similar package of DAC donor policies,
including official flows, trade and investments, etc.
vis-à-vis developing countries. It would then become
clear that both the policies of Southern providers of
assistance, including China, and those of DAC donor
countries have varying impacts across aid and non-aid
contributions to poverty eradication and sustainable
development. It is critical to recognize this reality and
avoid sweeping generalizations as well as one-sided
criticisms that employ double standards.11
Despite different approaches, there is widespread
recognition that coherent policies are needed for
development across sectors that affect developing
countries, as well as on the global level between
different policy agendas. This implies that all policies
should support development objectives. Aid, even
when it is effective, cannot by itself end poverty. This
insight has yet to be translated into practice as the
objectives of aid are undermined by non-aid policies,
or the absence of policies, in the same countries and
institutions that provide aid. One flagrant example
of policy incoherence is the fact that no effective
measures have yet been taken to combat the annual
illicit financial outflows from developing countries
that amount to approximately 10 times global ODA.
Tax evasion and avoidance in the commercial sector
constitute the largest part of these illicit outflows,
facilitated by tax havens (Kar and Curcio 2011).
Furthermore, there are other numerous policies of
rich countries that undermine the intended positive
impacts of their aid. For example, export subsidies
undermine local production in developing countries,
investment agreements often conflict with the
rights of citizens and unsustainable production and
consumption patterns undermine a necessary shift
toward low/zero-carbon economies to combat climate
change. The list goes on.
Addressing global challenges or “problems without
passport” (Picciotto, this volume), require multilateral
10 For example, see Oxfam (2011) on how aid is politicized in crises and
conflicts and AidWatch (2011) for a critical scrutiny of EU members’
ODA.
11 Brautigam. (2011) provides a good overview of the myths about China’s
assistance. She also identifies the double standards in the debate about
China’s engagement and cooperation with Africa.
cooperation. However, there are several constraints
to such comprehensive global agreements and, as
Picciotto argues, “partial multilateralism, while a
second best, is sometimes the only feasible solution.”
However, this might only be effective for addressing
some problems, as many global challenges, such as
climate change, require truly collective global action.
Meanwhile, the absence of agreements on these issues
should not provide an excuse for individual countries
and stakeholders to take no action; instead, they
should lead by example and take necessary first steps.
Although there are many depressing examples of
policy incoherence, coherent multilateral cooperation
for development that explores the synergies of
different policies and actors has the potential to
maximize development results. The current shift in
discourse from aid to development effectiveness, which
recognizes the need to put aid into a broader picture
while still fulfilling the commitments made to enhance
aid effectiveness, might provide an opportunity
moving forward. However, it should be noted that
there is some confusion as to what this actually means
in practice. Regardless, there is an urgent need to
move from rhetoric to action on policy coherence
for development in all international and multilateral
cooperation. To make this shift, methodologies
for assessing policy coherence for development are
needed at different levels. Providers of assistance could
cooperate within different multilateral frameworks on
this issue as part of their joint efforts toward the targets
of the MDGs and beyond.
It should be underlined that the current focus on
development effectiveness and policy coherence should
not distract from delivering on aid commitments.
There might be a danger that development actors will
jump on the bandwagon of broadening the aid agenda
as a way of diverting attention from unfulfilled aid
commitments and targets. The fact that aid resources
promised at the 2005 G8 Gleneagles Summit have
not yet materialized and that aid levels remain far
below the 1970s UN target of rich countries providing
0.7 percent of their gross national income is eroding
confidence in donor policies. The 2011 Evaluation
of the Paris Declaration points at some worrisome
underperformance on the part of donors who have
made less progress and effort in implementing aid
effectiveness than developing countries. As well, the
findings of the 2011 Survey on Monitoring the Paris
page 89
CANADIAN DEVELOPMENT REPORT 2011
Declaration reveal that only one of 13 targets have
been met.12 These documents highlight the necessity
of speeding up performance on the Paris agenda to
avoid disillusionment and boost confidence in the
multilateral development cooperation process.
CONCLUSION
T
he heterogeneous group of non-DAC
providers of assistance are bringing new forms
of cooperation, ideas and models that complement, challenge and provide alternatives to DAC
donor practices and the multilateral institutions traditionally dominated by them. This new dynamic brings
opportunities and challenges. It highlights the need
for new thinking and restructuring of international, including multilateral, dialogues on aid and development
cooperation so that they become more inclusive of
all development cooperation partners. There are now
various signs of how existing development cooperation
fora are giving recognition to the diversity of players
and modalities, and how these players are claiming
space in global policy-making on development cooperation. However, concerns remain regarding the extent
to which an inclusive global development agenda is
in the making. Old post-Second World War power
structures linger in the multilateral system, and there
are questions as to what extent the emerging powers
within the G20, most notably the BRICS, are pushing
a development agenda.
At the same time, we are facing an increasingly
complex institutional sprawl of multilateral and other
development cooperation bodies. Clarifications of
mandates and how to make best use of synergies
12 See Ellmers/Eurodad (2011) for commentary on the two documents.
page 90
among different institutions are needed to prevent
a stalemate in multilateralism. As part of this
restructuring, existing institutions need to better
incorporate the experiences and modalities of the
heterogeneous actors beyond DAC donors. The
HLF-4 in Busan offers one such opportunity.
Most importantly, to ensure fair and sustainable
development, the needs and interests of the people
who development assistance is intended to benefit
should, to a greater extent, inform decisions on the
future direction of development cooperation and
other policies.
Penny Davies works as an independent consultant on
development finance issues and is also Senior Policy
Advisor to Swedish NGO Diakonia. She specializes in the
changing development cooperation landscape, so-called
“emerging donors,” China-Africa relations and the role
of the private sector in aid. Her reports and articles have
been published by the OECD, the World Bank and the
UNDP. She works closely with the pan-European Network
on Debt and Development (Eurodad) where she chaired
the Board for five years. She is a frequent speaker at
international conferences.
Ms. Davies holds a master’s degree in Political Science
from Uppsala University and has studied at the University
of Salamanca.
Previous employment includes Vice Director, Centre
for Environment and Development Studies at Uppsala
University and the Swedish University of Agricultural
Sciences in Sweden, and Project Manager for a “Concerted
Action on Environmental Communication,” part of DG
Research of the European Commission.
CHAPTER FOUR | TOWARD A NEW DEVELOPMENT COOPERATION DYNAMIC
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CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA
CHAPTER FIVE
REPRESENTATION, LEGITIMACY AND
ACCOUNTABILITY: EMERGING DONORS
AND MULTILATERALS IN AFRICA
page 95
CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA
REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY:
EMERGING DONORS AND MULTILATERALS IN AFRICA
SANUSHA NAIDU1
T
he recent changing dynamics of the political
and economic global architecture have had
considerable impact on international relations
theory and development cooperation scholarship. At
the centre of current normative and epistemological
debates is the preoccupation by most scholars, policymakers and development practitioners with the
juxtaposition of the unilateral versus the multilateral
character of the international order. What makes this
current phase of the evolving global system significant
is the rise of the Global South1 and, more importantly,
the South’s primary state actors that are the lead drivers
in pushing for a substantive transformation of the
global agenda.2
In the 20th century, the overall hierarchical structure
of international institutions reflected a set of values
and norms that governed interstate relations and
promoted a good governance framework. This
framework is now being challenged by a new set of
impulses based on the simple logic that nothing is
static and everything is cyclical. The latter issue has
been explicitly expounded by Paul Kennedy3 in his
seminal book The Rise and Fall of the Great Powers.
He (1987) astutely argues that the rise and decline of
states, especially those that are seen as hegemons or
significant actors in shaping the international military
and economic architecture, can have a corresponding
and profound impact on the global architecture.
1 Global South refers to developing countries in contrast to the industrialized countries of the North.
2 There is an emerging view that the rise of the Global South will significantly shape and influence the discourse on development as well as how
development cooperation is administered. Commentators have made the
general assumption that the rise of the Global South through state alliance
networks like BRICS and IBSA impact the global agenda in two ways.
First, it is assumed that these emerging markets will have a profound effect
on the distribution of power and resources in the global economy. Secondly,
it is also expected that these emerging actors, especially the BRICS countries, can offer an alternative development paradigm for other developing
countries in the South.
3 Kennedy is Director of International Security Studies at Yale University.
But more importantly, what Kennedy’s magnum
opus provides is important insights into how such
shifts in the international order open opportunities for
those states that have been lurking in the shadows to
fill gaps in power vacuums that arise when the world
order transitions.
Given the current unprecedented historical
restructuring of the international system, we are
witnessing such a transition in the making. This
shift is underlined by the increasing move toward
multipolarity where the global distribution of power
is fragmented, and it is unclear where authority and
governance reside or who actually enforces the rules
of the international order. This leads to a set of critical
questions around what constitutes the new global
architecture and whether or not the Western-centric
world is being challenged by the rise of the South.
Consider, for example, the plethora of academics
who are now asking, like Dirk Messner4 (2011, p. 1),
whether we are being confronted by “the beginning of
the end of the Western-dominated world order” with
the rise of China and India.
The answer to this question provokes a critical
appraisal of the various emerging power blocs and
alternative geographical centres of influence. The
pluralistic nature of the contemporary world order
represents a constellation of interests and prompts
speculation about whether the new actors or (re-)
emerging states, individually or collectively through
multilateral networks and institutions, will change the
status quo through their rising influence. Or, will they
maintain the existing global framework by working
within the system and extracting benefits aligned to
their domestic and international ambitions?
In short, what has become a preoccupation in the
discourse on the rise of the South and the role of
emerging actors like China, India, Brazil and South
4 Messner is Director of the German Development Institute in Bonn.
page 97
CANADIAN DEVELOPMENT REPORT 2011
Africa is their impact on the institutional governance
framework of the international system. It is becoming
imperative to ask the following questions: Do new
Southern formations like BRICS,5 BASIC6 and
IBSA7 offer something different in making the
international governance system more equitable in
terms of legitimacy, representation and accountability,
especially in increasing the voice of marginalized states
in the developing world? Or will the behaviour of the
states that lead these Southern multilaterals become
conformist and reflect the way states have always
behaved on the international stage based on their
national interests?
These questions, it must be borne in mind, are being
shaped by an emerging perspective among scholars
and commentators in the North and the South who
argue that countries like China and India are going
to replicate a new elite club of hegemons that will
serve their parochial ambitions. For now, China and
India have remained cautious and continue to placate
the South with platitudes that they share common
difficulties because they are still developing countries.8
Perhaps what underlines this fascination with the
emerging actors from the South is the search for a
new coterie of potentially powerful countries that can
stabilize the rules-based international system in the
face of the waning Western-dominated world order. In
whatever way these new actors may direct their focus
and synchronize their place in the international system,
it has become increasingly clear that their actions have
impacts on the continent’s international relations.
The North’s engagement with the South provides
African governments with a new momentum to
assuage the way Western donors have sought to define
and disburse development cooperation. Western
5 BRIC refers to the grouping of Brazil, Russia, India and China that, due
to their economic growth, may redefine the international economic architecture. In 2010, China invited South Africa into the grouping to create
BRICS, provoking debate about its economic suitability despite the desire
to have an African voice at the table.
6 BASIC is a coalition that emerged during the 2009 United Nations
Climate Change Conference in Copenhagen. It consists of Brazil, South
Africa, India and China. Its goal is to ensure the industrialized states of the
North shoulder more responsibility in meeting climate change targets.
7 IBSA is a trilateral cooperation agreement among India, Brazil and South
Africa. Formed in 2003, IBSA addresses social development issues within
their respective countries and supports social stability initiatives within the
South.
8 For China’s white paper on Africa, see Ministry of Foreign Affairs of the
People’s Republic of China (2006). For insight into India’s Africa policy, see
India Africa Connect (2011).
page 98
perspectives, which frequently prompt African
frustration, come from two mutually reinforcing
points of view. On the one hand, there is a sense of
deep-seated burden by former colonial powers that
feel that they have a moral duty and justification to
intervene, given Africa’s poor integration into the
global economy. Here the delivery of aid has an ethical
justification (Easterly 2006).
On the other hand are notions of self-fulfilling
prophecy that Africa represents a passive, voiceless
space in which Western thought and philosophy
offers the best path to rehabilitate the continent’s
ills and prevent its self-destruction. Projects like
the Millennium Development Goals, the United
Kingdom’s Commission for Africa, the Africa Action
Plan under the Group of Eight (G8),9 and the African
Growth and Opportunity Act in the United States
(US) have become frameworks for engaging with the
continent in the 21st century.
Seemingly, then, the emergence of new donors
becomes a somewhat less interventionist engagement,
which in the view of African countries creates the
space for doing things differently and having access
to alternative sources of development finance that
are easily available without undertaking the stringent
conditionalities10 normally attached to Western donors’
development cooperation.
For their part, Organisation for Economic Cooperation and Development (OECD) donors consider
the moral value of being transparent and accountable
to the social development needs of the poor, vulnerable
and economically marginalized in African societies as
a significant benchmark in measuring the effectiveness
9 The Africa Action Plan was informally instituted in 2001 when the G8
industrialized countries pledged to double aid by 2010 to US$50 billion,
to support Africa’s socioeconomic development. At the same time, the G8
committed to doubling aid to Africa as part of addressing the continent’s
urgent socioeconomic needs. It was under Canadian leadership at the
following year’s Kananaskis G8 meeting that the Africa Action Plan was
formally adopted. Meanwhile, Canada independently set up a $500 million
Canada Fund for Africa to support the objectives of the New Partnership
for Africa’s Development and the G8 Africa Action Plan, in addition to its
own bilateral commitments to the continent.
10 There are two schools of thought in the debate around emerging donors
and conditionality. The first argues that engagements with emerging donors
are less rigid and more flexible because they do not insist that recipient
governments undertake any political and/or governance reform, contrary to
the Western model of interference in domestic affairs. The second school of
thought is more critical. It argues that the emerging donors conspire with
illegitimate and corrupt regimes based on their self-interests. Yet there are
situations where the emerging donors place loan conditions in their technical assistance packages. For instance, Export-Import Bank of India loans
for African technical assistance contain clauses that most materials must be
sourced from Indian companies.
CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA
of development assistance. As a result, OECD donors
view the emerging donors as perhaps undermining
the framework for how aid should be judiciously
disbursed. Moreover, the presence of emerging donors
unsettles attempts by OECD donors to demand
compliance from African governments to respect
the development rights of their citizens through aid
disbursements.
In this regard, OECD donors have developed Joint Assistance Strategy groups within recipient countries to
ensure that their development cooperation has a tangible impact on the lives of ordinary people. Yet, one of
the criticisms of the emerging donors is that they tend
to operate outside of this country-level multilateral
donor grouping. Not only does this complicate the coordination of development assistance, but it results in
a lack of clarity about how development cooperation
conforms to the effectiveness framework.
In light of the above considerations, this chapter
sets out to explore some of the salient issues that
characterize the debate on the role of (re-)emerging
donors in the African landscape. Indeed, this African
landscape represents an important factor in issues such
as aid effectiveness, accountability, transparency and
donor coordination.
Donors have not yet made adequate progress in
aligning their official development assistance (ODA)
with national development priorities, untying aid and
harmonizing their own policies and procedures at the
country level. As a result, some developing country
governments receive large amounts of aid, possibly
even more than they can absorb, while others suffer
from serious underfunding.
ODA continues to be volatile for individual countries.
According to some analyses, it is as volatile as private
capital flows for developing countries. Some suggest
that the role and performance of traditional donors
have neither lived up to the expectations of African
recipient countries nor had the desired development
impact (see Tandon 2009). As a result, the African
landscape has been identified as a special context,
with its myriad of development challenges. Here, the
dichotomy between the development cooperation
experience of the OECD donors and
what the emerging donors can deliver for the
continent’s development needs can be examined (see
Naidu et al. 2009).
For purposes of narrowing the expansive emerging
powers discourse, this chapter will focus on the
BRICS multilateral as the basis for assessing how
emerging donors are performing in Africa. More
importantly, choosing the BRICS forum as the unit
of analysis conforms to some of the contemporary
views that identify this grouping as the G8 of the
South and as the main driver in promoting SouthSouth cooperation (see Unnikrishnan and Saran
2010). It should also be remembered that two of
the BRICS countries, China and India, have been
widely recognized as having a strategic impact on the
future trajectory of the international system. For these
reasons, the BRICS multilateral serves as a critical
platform for examination, particularly because there
is also an overarching, though debatable, view both in
Africa and outside of the continent that the BRICS
(perhaps with the exception of South Africa) do not
carry any historical, political and/or colonial baggage
of exploitation.
In consideration of the above nuances, this chapter
will draw on a comparative analysis of development
cooperation in Africa. In particular, it will focus
attention on the sensitivities of whether the BRICS
provide an acceptable platform of representation,
legitimacy and accountability in respect of their
perceived role as development partners. The underlying
premise of this chapter is to understand the extent to
which the emerging donors enhance the dynamics
of representation, legitimacy and accountability by
enabling recipient countries to have ownership of the
development process.
There is also the view that the emerging donors,
particularly the BRICS, enhance the prospects of
representation and legitimacy for the South through
their inclusion in multilateral organizations like the
World Bank and the International Monetary Fund
(IMF). This view is supported by the notion that the
emergence of the BRICS represents a clear advantage
for the Global South. The promotion of the South’s
interests by these emerging economies aids the
promotion of their own interests. Their growing power
permits them to exercise increasing influence within
multilateral organizations. These intertwining facets of representation, legitimacy
and accountability, and the way they influence the
behaviour of the BRICS as development partners,
lead to a subset of questions regarding whether these
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CANADIAN DEVELOPMENT REPORT 2011
actors advance their own representation and legitimacy
within multilaterals through the banner of SouthSouth cooperation. For these reasons, how the BRICS
advances ownership of the development process by
recipient countries cannot be separated from their
own representation and legitimacy in multilateral
organizations. These are mutually interdependent
issues for the BRICS — enabling recipient countries
to have control and ownership over the development
processes is anchored by the legitimacy that recipient
countries give the BRICS as representative and
accountable actors in multilateral development
organizations. And herein lies the dilemma for the
BRICS and recipient countries: to what extent will
the BRICS be accountable in their own development
cooperation as emerging donors in multilateral
institutions? Will it be according to the benchmarks
set by the OECD donors? Or will the BRICS set up
their own accountability mechanism that holds them
more responsible to the Global South?
This focus of the aid discourse is particularly relevant
for African states since they have become ardent
supporters of the view that development cooperation
with the BRICS represents an alternative development
consensus that promotes mutual respect, partnerships
and benefits.
HISTORY OF MULTILATERAL
COOPERATION IN AFRICA: THE RISE OF
THE (RE-)EMERGING ACTORS
A
frica’s development cooperation experience
with the new actors has often been perceived
as contradictory and sometimes unbalanced in
comparison to its relations with traditional donors.11
In this view, the 21st century represents a new set of
arrangements that is redefining the continent’s identity
and position in the international arena (see Tandon
2009). At the same time, African confidence and influence are growing as the continent becomes a significant source for minerals thus presenting trade and
investment opportunities.
11 This assertion is accompanied by the view that Africa’s development
cooperation experience with Western donors has often been asymmetrical. This has subsequently resulted in competing schools of thought that
characterize donor assistance from the North’s rich industrialized countries
as either undermining the development process in Africa or, more benignly,
offering critical resources for redressing Africa’s poverty and uneven growth.
page 100
With a resurgent Africa, the imagery of the “hopeless
continent” (The Economist 2000) is giving way to a
more popular rhetoric that is challenging the freemarket approach of the Washington Consensus.
Conveyed through media agencies and think
tanks, the Western reaction to the emergence of
new donors on the African landscape is informed
by the perceived threat that the emerging donors
represent to the global disbursement of development
cooperation,12 namely that they fall outside the
established moral code of conduct. Moreover, these
emerging donors are considered to be junior partners
because of the lack of clarity that characterizes their
development cooperation.
While the development cooperation debate in Africa
centres on the efficacy of the assistance disbursed by
emerging donors, it has also exposed the presumption
that the emerging donors are new players in Africa’s
development cooperation. To be precise, the historical
footprint of the new actors in Africa is a moot
point. For instance, in the cases of China and India,
development cooperation in Africa is based on the
foundation of their historical dealings with newly
independent African states (see Liu 2010;
Bhattacharya 2010).
The principles of non-alignment and South-South
cooperation have become pillars in how the South
and, in particular, China and India, have shaped their
engagement with Africa. Certainly, the support that
Beijing and New Delhi demonstrate toward Africa
is determined by their respective leadership stances
against imperialism, colonialism, racism and all forms
of foreign aggression. From this perspective, the
principles of development cooperation were anchored
along the lines of mutual respect, non-interference,
and the norms of equality, partnership and harmony.
The fact that the emerging donors’ history was
distinguished by a similar trajectory of external
domination and interference in domestic affairs has
meant that any form of engagement with Africa
would be nestled under the rubric of creating a just
world by erasing the wrongs of the past. This was
12 It must be recognized that the disbursement of development cooperation by emerging donors is a mix of monetary and non-monetary aid.
According to Dorothy McCormick (2008, p. 79): “Monetary aid includes
grants and concessionary loans. Non-monetary aid includes debt relief,
‘free’ or low-cost technical assistance, access to scholarships or training
programmes, tariff exemptions and outright gifts of buildings, equipment,
or other capital goods.”
CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA
BOX 1: THE EIGHT PRINCIPLES GOVERNING CHINA’S AID FLOWS
1. The Chinese Government always bases itself on the principle of equality and mutual benefit in providing
aid to other countries. It never regards such aid as a kind of unilateral alms but as something mutual.
2. In providing aid to other countries, the Chinese Government strictly respects the sovereignty of the
recipient countries, and never attaches any conditions or asks for any privileges.
3. China provides economic aid in the form of interest-free or low-interest loans and extends the time limit
for repayment when necessary so as to lighten the burden of the recipient countries as far as possible.
4. In providing aid to other countries, the purpose of the Chinese Government is not to make the recipient
countries dependent on China but to help them embark step by step on the road of self-reliance and
independent economic development.
5. The Chinese Government tries its best to help the recipient countries build projects that require less
investment while yielding quicker results, so that the recipient governments may increase their income
and accumulate wealth.
6. The Chinese Government provides the best-quality equipment and material of its own manufacture at
international market prices. If the equipment and material provided by the Chinese Government are not
up to the agreed specifications and quality, the Chinese Government undertakes to replace them.
7. In providing any technical assistance, the Chinese Government will see to it that the personnel of the
recipient country fully master such technique.
8. The experts dispatched by China to help in construction in the recipient countries will have the same
standard of living as the experts of the recipient country. The Chinese experts are not allowed to make any
special demands and enjoy any special amenities.
Source: Speech by Premier Zhou Enlai, Accra, Ghana, 15 January 1964, quoted in Naidu and Herman (2009)
explicitly illustrated by the need to strengthen the
position of the South vis-à-vis the North, particularly
in terms of redressing forms of dependency, unequal
power relations and trade imbalances. Consider the
example of the eight principles governing China’s
aid flows, unveiled in a speech delivered by former
Premier Zhou Enlai during a state visit to Ghana in
1964 (see Box 1 above) and still officially endorsed
today. They accentuate the importance of, inter alia,
mutual benefit, equitable partnerships and respect for
sovereignty (see Naidu and Herman 2009).
Undoubtedly, the shared history of exploitation
and oppression prompted the emerging donors to
advocate for a South that is ideologically separate from
traditional Western donors. As a result, the projects
through which emerging donors engage African states
have been anchored in initiatives that underpin a
sentiment of people-to-people exchange. For instance,
Chinese leadership still identifies one of its biggest
flagship projects, the 1,860-kilometre TAZARA
Railway linking Zambia to the Tanzanian coast, as a
symbol of development cooperation in Africa.13
13 This is not to suggest that China’s assistance in other areas, especially
health care, is not as significant as the TAZARA project. Over the past four
decades, more than 20,000 Chinese doctors have worked in more than
50 countries across Africa, treating some 180 million people. What makes
the TAZARA project significant is that Beijing was able to provide the
necessary financial and technical resources at a time when Western agencies
refused to do so.
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CANADIAN DEVELOPMENT REPORT 2011
In this regard, Chris Alden (2007, p. 11) notes that it
is the historical features14 of Chinese overseas development assistance that “interestingly… [today reflect]
many of the aspects of Beijing’s current approach to
African relations, [especially] the impulses and decisions of that era.” In this way, Beijing plays the legitimacy card with African partners by invoking the sense
that it has always been a friend to Africa based on good
faith and in times of need. Consider, for example, former Chinese Ambassador to South Africa Liu Guijin’s
words: “That’s why all through history China never
occupied an inch of African land and never put a finger
in the slave trade” (Guijin 2006, p. 3).
Similarly, India also interprets its development
cooperation through a historical lens and within the
context of assisting recipient countries to find the right
path toward sustainable development and prosperity.
Guided by former Prime Minister Jawaharlal Nehru’s
principles of equality, mutual benefit and anti-racism,
India’s historical development cooperation model
advocated a “New International Economic Order”
that promoted the self-sufficiency of African states.
By focusing on strengthening Africa’s human resource
capacity, New Delhi was confident that non-alignment
could be achieved through technical assistance,
including scholarships and training programs.
Unfortunately, and despite their noble intentions,
the countries of the South (including China and
India) could not remain disassociated from Cold War
dynamics. Eventually, the South became aligned to
either the capitalist or communist bloc. The dilemma
for most Southern countries was that limited resources
meant they could not be significant development
partners for each other. The outcome was that the
emerging donors themselves became recipients
of substantial development assistance packages
from the traditional donors and relied on these aid
disbursements to grow their economies and become
globally competitive.
In the African context, the situation was more
complex. Some Northern donors were directly aligned
to internal political power and leadership struggles and
the maintenance of minority regimes. This was clearly
evident in the case of apartheid South Africa. In fact,
the country’s identity during the Cold War was one of
a pariah state trying to ensure its survival.
14 For a historical account of China’s engagements in Africa, see Snow
(1988).
page 102
However, it was the close alignment to the West’s
proxy wars against the Soviet Bloc in African states15
that strengthened the hand of the apartheid state.
From this perspective, South Africa’s historical
connection to the rest of Africa is ambiguous and
fragmented. Yet apartheid South Africa nevertheless
attempted to offer in development assistance to certain
African countries, albeit for different reasons. In fact,
South Africa used aid16 to secure allies in the United
Nations (UN) General Assembly who could belie
the international consensus on the apartheid state
and possibly counteract decisions taken against the
white minority regime. But this did not always yield
satisfying outcomes, and the international community
generally viewed the apartheid state’s development
cooperation as negligible and largely ineffectual.
The traditional donors first tied development
assistance in Africa to the traction of the Cold War.
But as the Cold War détente became more obvious
in the mid- to late-1980s, traditional donors revised
their assistance first toward their own development
projects and later to rectifying socioeconomic
imbalances. More importantly, it was the ideal of
how aid disbursements should be implemented that
became what post-colonial scholars like Edward Said
and Frantz Fanon, among others, described as the
“mirror in which the West defines itself ” (Dunn and
Shaw 2001, p. 3). Thus, the adoption of initiatives
like the IMF/World Bank Poverty Reduction Strategy
Papers were aimed at instilling a moral rejuvenation in
Africa’s development agenda that amounted to a sense
of saving the continent from the scourges of human
poverty and deprivation.
Such policies were based on the belief that aid
disbursements were being misappropriated. As a
result, traditional donors demanded greater fiscal
and democratic transparency and reforms to ensure
accountability. It was not a coincidence that the
triumph of capitalism over communism ushered in
a post-Cold War phase where the conditionalities of
good governance were seen as the representative,
15 For how the apartheid state benefited from Western support and the
arms trade to contain the spread of communism in Southern Africa, see
Hanlon (1986).
16 As much as apartheid South Africa was a pariah state, some African
countries like Botswana, Lesotho and Malawi saw the benefits of economic
engagements as well as feared the regime’s military might. For more on apartheid history and external relations, see South African History Online (2011).
CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA
legitimate and transparent way to infuse a sense of
morality and acceptance into a shifting global order.
Michela Wrong captures the impact of this post-Cold
War shift on the relationship between Western donors
and African recipients. She (2009, p.184) argues that:
In the early years, donors carefully steered clear
of what were known as “governance issues” .
. . Raising the issue in the prickly era when
memories of colonial injustices were still sharp
was deemed intolerable interference in a nation’s
sovereign affairs. The World Bank and IMF’s
raison d’être, their members argued, was to
fight poverty, not corruption — which was a
political, not an economic issue. … But with
the passage of time came the growing realization
that financial transparency, human rights and
institutional checks and balances mattered more
to the quest of prosperity than had previously
been recognized.
Wrong (2009, p.185) adds:
And so as the OECD donors and the [G8]
industrialized countries continued to push for
alignment between aid and transparency, the
framework of engagement between traditional
donors and recipient African countries became
strained, not least because the “cynical realities
of the Cold War … [which allowed for the] …
support for disreputable African regimes could
no longer be justified”.
WHY DO AFRICAN NATIONS FIND THE
(RE)-EMERGING DONORS ATTRACTIVE?
T
he African attraction to emerging donors is,
in this author’s view, intrinsically linked to an
ideational perspective that these new donors
offer a somewhat different trajectory of relations in
their development cooperation. Of course, this belief
is anchored by the shared historical experience and a
willingness to confront traditional Western donors.
The new donors are seen as less patronizing and more
sympathetic to the plight of the developing world in
general and Africa in particular.
While there are attempts to quantify how much aid
the (re-)emerging donors disburse to the developing
world, the total amount still remains unclear.17
Most mainstream policy-makers from the traditional
donors, however, are preoccupied with the way the
new donors go about implementing and executing
their development cooperation. In Africa, comparisons
in donor approaches have led to notions that the
emerging development partners are less cumbersome
in the delivery of development aid packages and,
more importantly, do not prescribe how the money
should be spent (see Amin 2009; Davies et al. 2008;
Tandon 2008).
Views on how developing countries perceive traditional
donors in contrast to emerging donors touch at the
core issue of the current debate on development
cooperation — who owns the aid funds? Samir Amin
and Yash Tandon18 suggest that the arrival of Southern
donors has been the catalyst in restructuring the
global aid architecture, especially for Sub-Saharan
Africa. But they are also critical of the frameworks
that govern the contemporary aid environment on
effectiveness, transparency and accountability. These
criteria, according to Amin (2009, p. 60), are heavily
biased toward the process “inscribed by the triad (USCanada-Australia, Europe and Japan).” Amin (2009,
p. 60) further exemplifies this point by arguing that
non-Western development partners “who themselves
are donors have with absolute legitimacy refused to
associate themselves with the ‘donors club’ proposed
by the [Paris] Declaration.” But as Penny Davies (this
volume) highlights, this perception seems to be out of
sync with what is happening in practice, suggesting
that some emerging donors are more engaged than
others with their Western counterparts in donor
coordination initiatives.
This compartmentalization of the new donors as
distinct actors perhaps oversimplifies their behaviour
and needs to be examined in context of their interests
and rising power status within the South. The bottom
line is how these (re-)emerging donors identify
themselves as development actors and to what extent
their behaviour shapes and influences a more equitable
global environment on development cooperation
and impacts multilateralism in Africa. The insights
17 Quantifying disbursements of development assistance from the emerging donors, notably the BRICS, to African partners is compromised by the
lack of transparency in figures.
18 Amin, one of the leading African socialist scholars, is Director of the
Third World Forum in Dakar. Tandon, also considered to be a leading
African scholar, is the former Director of the South Centre in Geneva.
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CANADIAN DEVELOPMENT REPORT 2011
into these vexing issues can be found in the way that
development cooperation is defined and interpreted
by the emerging donors.
AID GIVER VERSUS
DEVELOPMENT PARTNER?19
A
t the very outset, it must clearly be stated that
the (re-)emerging donors from the South are
uncomfortable with the term donor. In their
lexicon, the word implies an unequal dependency relationship. It further conjures up the image of the giver
being more powerful and dominating the receiver. As
much as this may reflect the sobering realities of the
global distribution of economic power during and
after the Cold War, labelling the emerging actors of the
South as donors does not fit with the overall impression they want to make to the outside world, especially
in their relations with fellow Southern states.
Therefore, alignment to the historical rhetoric provides
a common identity characterized by oppression that
finds an easy resonance within the African landscape
and makes it easier for these emerging actors to
portray their development cooperation relationships
as partnerships. By emphasizing that they are still
developing countries, the emerging donors are able
to create the sense that they share the same ideals of
working together toward the same development goals.
In this way, these new actors have managed to create
the image that their brand of development cooperation
with Africa is not about saving the continent but
rather based on a mature and equitable form of
mutual dependency and engagement. This symbiotic
relationship is captured by terminology that invokes
the notion that Africa’s development is inherently
attached to the emerging partners’ own development
agenda. As a result, the values that these emerging
actors espouse are embedded in mutual benefits, winwin partnerships and equity that are tactfully defined
in their development cooperation relationships as a
positive sum game (Lundsgaarde 2011).
To this end, the emerging actors’ development
cooperation framework displays a set of uniform
principles that include:
19 The use of the term development partner is aimed at creating a sense of
equality between the emerging donors and recipient countries. Emerging donors prefer partnership since it strengthens the view that they are
not creating a dependency relationship between themselves and recipient
countries.
page 104
■
a historical alignment;
■
equality among donors and recipients;
■
ownership over the development process and selfreliance;
■
respect for national sovereignty; and
■
non-conditionality.
This approach enables recipient states to identify
emerging donors as partners in their development
and, more importantly, avoids the construction of
us-and-them scenarios. Meanwhile, the engagement
between OECD donors and new development
partners is beginning to intensify with dialogue around
trilateral cooperation in Africa and coordinating joint
strategies with reference to the Paris Declaration
on Aid Effectiveness.20 As this dialogue deepens,
understanding the impact of multilateralism on the
future of Africa’s development cooperation architecture
will be crucial in evaluating how a growing relationship
between the traditional donors and new development
partners may benefit Africa’s industrial capacity and
integration into the global economy. But will it lead to
greater representation, legitimacy and accountability
over the development process?
SHARED DESTINIES, SHARED CHALLENGES
T
he fact that the new development partners represent a renewal of South-South cooperation is
seen as “break[ing] the monopoly upon which
the supremacy of the [Western aid] triad rests (Amin
2009, p. 74).” Even so, the issue at hand is not really
whether they can break the monopoly, but rather do
the new development actors want to? In other words,
are these emerging actors status quo players or revisionist powers?
As Amin (2009, p. 64) reminds us, “Aid policies, the
choice of beneficiaries, the forms of intervention, and
their immediate apparent objectives are inseparable
from geo-political objectives.” In this regard, the
rational actor model chosen by the new development
20 In terms of the Paris Declaration on Aid Effectiveness, one avenue where
the traditional and emerging donors are seen to being working together is
through trilateral relationship development cooperation. For instance, the
EU-China-Africa trilateral has emerged as part of the development dialogue
with the EU-China summits and as a participant in,[ok?] joint development projects in Africa. More recently, US President Barack Obama’s 2010
visit to India highlighted the importance of food security cooperation
between Washington and New Delhi and Africa.
CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA
players should not be romanticized. Instead, it should
be remembered that these new development partners
are bound by their own domestic priorities.
Indeed, the fact that the new developing partners are
in the midst of their own industrial rise means that
Africa’s importance is linked with how the continent
contributes to their industrialization. At present,
the emerging development partners have recognized
that access to resources forms an integral part of
their partnership with Africa. At the same time,
they are mindful of the sensitivities related to the
extractive sector. Even though the new donors want
to distinguish themselves as helping to create enabling
conditions for Africa’s own development and selfsufficiency, they are cautious about being labelled with
the same brush as the traditional Western donors.
Yet in assessing whether they are different, Erik
Lundsgaarde (2011, p. 3) highlights that:
Development cooperation activities of the
new actors cover a broad spectrum of activities,
including funding infrastructure, which has been
perceived as an area of neglect among traditional
donors, and investments in social sectors where
OECD donors have been very active in
recent years.
Perhaps, however, it is P.K. Sinha’s (2010, p. 93)
analysis of India’s development cooperation that
best sums up the major emerging development
partners’ footprint in Africa: “It can be said that
Indian development cooperation, which started out
with the principle of South-South cooperation and
mutual benefits, is now focused on promoting India’s
strategic and commercial interests in Africa.” From
this perspective, the dilemma for the new development
partners is to reconcile their own national development
interests with Africa’s development needs. This means
that the emerging donors must convince African actors
that they are going to leverage their global influence
and push for the reconstruction of the international
structures of powers that govern the global aid
architecture.
By supporting the equitable redistribution of power,
these new donors have identified themselves as the
representative voice of the Global South. As well, they
have positioned themselves as entitled to seats at the
high table in international financial institutions like
the World Bank and the IMF.21
The standpoints of new development partners
support this sense of legitimacy. Whether it is India’s
lead at the Doha Development Round of the World
Trade Organization or South Africa co-chairing the
Development Working Group at the Group of Twenty,
these emerging development partners are beginning
to demand accountability and transparency in the
relations between North and South.
Most of these new development partners are free of
the political and economic baggage that distinguishes
Western donors’ historical entanglements with
Africa. This makes them appear to be ideal partners
and provides them with a reputation that they are
better placed to redefine the practices of development
cooperation.
But is this a realistic reflection of the new development
partners? Can we assume that their behaviour will
actually intersect with Africa’s development agenda
and assist in strengthening the continent’s ownership
of its development processes? Is it plausible that
emerging donor will exert pressure within multilateral
organizations in the interests of Africa and the Global
South? Or will their national domestic interests and
foreign economic ambitions overwhelm the pledges
of South-South cooperation and mutual benefit?
Will the new actors indeed become the beacon of
representation, legitimacy and accountability in their
development cooperation? Or are they seeking their
own legitimacy, representation and respect from the
traditional donors?
These and other pertinent questions must be answered
before it can be assumed that these new development
actors can create an alternative platform that promotes
the influence and engagement for Africa and the
Global South.
The following set of challenges raises a set of important
inquiries for African governments and civil society
21 There are mixed views about whether the emerging donors have lived up
to the expectations of representing the interests of Africa or, more broadly,
the Global South through their representation in international forums. Part
of the criticism is that emerging donors have used seats at the UN Security
Council to forward their self-interests. Mzukisi Qobo (2011, p. 12) questions whether these donors have the capacity and will to transform existing
global institutions to “construct a new framework of global governance that
bequeaths humanity with better standards and outcomes, which fundamentally improves the existing Western paradigms, affirms human dignity and
allows for expression of man’s highest desire for liberty.”
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CANADIAN DEVELOPMENT REPORT 2011
actors engaged in scholarly and policy debates on
understanding emerging actors’ roles and the new
dimensions that they bring to Africa’s development
cooperation.
First, emerging actors are just that — emerging. It is
still too early to predict with any certainty that these
new actors will have a significant role in reordering the
established practices of development cooperation. At
the moment, the euphoria surrounding the presence of
these new actors in the African landscape is in response
to a relationship with the traditional donors that has
been fragmented and uneven. From this vantage point,
commentators see the new development partners’
engagement with African states through the prism
of overconfidence.
These emerging actors appear to be touching the right
pulse points and setting new impulses when it comes
to how they navigate their relationships with African
countries.22 However, it remains doubtful that these
actors are working in a coordinated, cohesive group
like the OECD’s Development Assistance Committee
(DAC) donors.
This leads to a second issue, namely that even among
the emerging donors there are differing degrees of
consensus. A case in point is the recent race for the
top job at the IMF. While the BRICS countries
argued that the IMF management should reflect the
changing dynamics of global power and influence,
they did not utilize their leverage with an eagerness
that demonstrated seriousness about restructuring.
In fact, even as the name of a possible African
candidate, Trevor Manuel,23 was made public, the
BRICS countries, excluding South Africa, were ready
to support and endorse the French nominee and
successful candidate, Christine Lagarde.
push for greater developing country ownership over
the way development cooperation is implemented.
In fact, the IMF debacle was perhaps the first litmus
test for the emerging actors to illustrate whether their
own geostrategic interests will override the broader
rhetoric of South-South cooperation. Moreover, it also
implies that Africa’s own position within multilateral
organizations does not warrant special attention
in spite of how these new donors package their
development assistance for the continent.
Even South Africa’s own position in the debate on the
IMF top job was incongruent with those of its BRICS
partners. To be precise, Pretoria did not have a clear
position regarding whether the next IMF boss should
be from the South, let alone an African.
Third is the question of whether the emerging actors
are willing to change the status quo for a global
development policy that is inclusive and counters the
prevailing Western-centric model. It would appear at
a cursory level that this is the intended goal. But again
the impact will be felt only in the policy prescriptions
that these emerging actors enact. In this regard, it
seems that each of the emerging actors is more willing
to engage on its own with the DAC through trilateral
cooperation that once again confines Africa to a junior
partner in engagements.
This lack of cohesion demonstrates that while the
BRICS countries would like to be heard as the
voice of the poor and marginalized from the Global
South, they have not always been willing to push for
real change. Their inertia regarding the gentleman’s
agreement between the US and European Union (EU)
over the top positions at the IMF and the World Bank
has not sent a strong signal that they are willing to
The soft power capacities of these emerging actors
make them seem less invasive in the domestic affairs of
recipient countries. However, this does not mean that
emerging powers will avoid similar challenges that face
Western donors, especially when public opinion calls
them to account for supporting illegitimate regimes
or when their economic interests become threatened
(Kragelund 2008). The fragility of the African
continent, prone to political instability and/or flagrant
regime changes, will likely test these new actors as they
seek to deal with these crises and their own economic
ambitions. This is especially relevant as domestic
public opinion prompts awkward questions about
the value of development assistance to African states
in the face of growing social development problems.
See Box 2 on South Africa’s development cooperation
with Africa.
22 For insights into the tensions and criticisms levelled against emerging
donors, see Naidu (2011).
23 Manuel was South Africa’s minister of finance from 1996 to 2009.
While the traditional Western donors have formulated
a strategic framework to harmonize their aid
effectiveness, the new donors in comparison seem to
lack clarity of purpose. This means that as much as the
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CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA
BOX 2: SOUTH AFRICA’S DEVELOPMENT COOPERATION WITH AFRICA
S
outh Africa’s development cooperation with its continental neighbours is more than just a development agenda. It signifies post-apartheid South Africa’s attempt at legitimacy in lieu of its predecessor’s
tumultuous relationship with African states. Elizabeth Sidiropoulos (2010, p. 1) argues that Pretoria’s
development cooperation is “encapsulated in its African agenda … driven first by the necessity of the new
democratic government to re-integrate [South Africa] into Africa (i.e., to return the country to its African
identity) and second by the aversion to the apartheid government’s destabilizing ‘hard power’ policies that it
wielded in the region.”
This approach is sustained by South Africa’s belief that it can share its experience with transition toward
stability. It is also motivated by what it sees as a moral responsibility to enable conditions of peace, security
and development in other African countries. This sense of duty is informed by Pretoria’s Africa policy, which
is intrinsically linked to the view that a stable Africa is critical to South Africa’s own development needs. The
primary focus of the Africa policy is to strengthen the continent’s multilateral organizations like the African
Union (AU), forge strategic partnerships with African counterparts to consolidate and empower the African
agenda within international multilateral organizations like the UN, and improve the capacities and institutional foundations of regional economic development communities like the South African Development
Community (SADC) for regional development.
South Africa’s development assistance is a small fraction of the government’s expenditure, constituting about
1 percent of gross national income (Grimm 2011) and is mostly multilateral, aimed at regional organizations
like the AU, SADC and South African Customs Union.
The core focus of South Africa’s assistance is to fund projects aligned with “the promotion of democracy and
governance, the prevention and resolution of conflict, social and economic development and integration,
humanitarian assistance and human resource development (DIRCO 2011).”
South Africa wants to eschew any reference to its apartheid baggage and, therefore, like its BRICS partners,
insists that its development cooperation with the continent should be seen in the context of partnership and
without political conditions. Yet this has not always been well received by other actors in Africa.
For one thing, South Africa is still viewed with suspicion by its African neighbours. Whether this has to do
with its apartheid past or the impression that post-apartheid South Africa has not changed its spots, many
African countries doubt whether Pretoria genuinely speaks with an African voice. This lack of confidence
makes it difficult for Pretoria to position itself as a legitimate development partner. This difficulty is further
entrenched by South Africa’s membership in multilateral development cooperation agencies that other African governments are not comfortable with.
As a result, South Africa’s development cooperation is somehow caught between a rock and a hard place.
As much as Pretoria is trying to counter “accusations that its development cooperation masks an underlying
commercial and self-interested political agenda” (Sidiropoulos 2010, p. 1), its African National Congressled government is in a precarious situation as it attempts to justify to its electorate why it needs to launch a
development agency1 when it faces economic and social challenges at home.2
1 Some of the criticisms levelled against the South African Development Partnership Agency, which is to be launched in April 2012, revolve around
whether South Africa is punching above its weight. At a technical level, there is confusion with regard to how the South African government aims to
capitalize the agency. While it is understood that the African Renaissance Fund budget will be administered under the agency, there is also talk that
the agency will have an initial budget of approximately US$360 million to US$480 million. It would seem that part of this start-up capital, according to the director-general of the Department of International Relations and Cooperation, will be drawn from donations made by three (unnamed)
traditional donors “that have committed to equally match funding for... the agency. This raises concerns about the independence of the agency’s
mandate and the fact that it contradicts Pretoria’s assurances that it will pursue an autonomous foreign policy as highlighted in the recently released
South African Foreign Policy White Paper. ” (See also Fabricus 2011.) This is not withstanding other issues focusing on capacity building, efficacy in
monitoring and evaluating impact, and political sensitivities.
2 See National Planning Commission (2011) for an overview of South Africa’s development challenges.
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CANADIAN DEVELOPMENT REPORT 2011
new donors may be seen as pushing for a multilateral
order that represents and repositions the South, the
fact of the matter is that their framework is built
mainly around rhetoric and platitudes. To what extent
this framework will lead to greater representation,
legitimacy and transparency for which African partners
can hold new donors accountable is yet another
challenge particular to the region.
However, it would appear that there is a hierarchy
in the way that African states engage with the new
development partners. This can be seen in African
states differing relations with South Africa as a
development actor and with, inter alia, China, India
or Brazil. Clearly, South Africa’s turbulent history with
the continent creates divisiveness when developing a
coherent development framework with the BRICS
partners. As a result, African partners’ abilities to assert
ownership of the development process is weakened,
reinforcing an asymmetrical relationship with the
emerging actors that is contrary to the rhetoric of
South-South cooperation.
Finally, consideration must be given to the weakness of
the current global financial architecture. With the US
and EU economies still reeling from the effects of the
2008–09 financial crisis, the state of global financial
markets cannot be ignored. Given that the markets
of most emerging donors are tied to the US dollar,
tighter fiscal control by Western donors and judicious
spending of foreign reserves may result. This could
lead to more streamlined development cooperation
disbursements from traditional donors to Africa,
thereby leaving the continent vulnerable to becoming
dependent on the emerging market donors as an
alternative source of funds.
WHERE TO FROM HERE?
A
s much as the emerging actors are beginning to
grapple with their own identities as development partners, there is also increasing pressure
on them to demonstrate their resolve as responsible
stakeholders. The OECD considers the new development partners to be critical actors. In this way, the
Paris Declaration on Aid Effectiveness can create important benefits for recipients, especially African states.
Currently, the aid effectiveness framework embodied
in the Paris Declaration is seen as a significant way in
which the new development partners can leverage their
page 108
diplomacy and legitimacy with African actors vis-à-vis
the traditional Western donors. This shift signals that
traditional Western donors are identifying trilateral
cooperation as the most appropriate form of engagement around a development cooperation framework
for representation, legitimacy and accountability.
To make this work, African governments also
need to exercise their own leverage and make their
new development partners accountable to a set of
benchmarks particular to the African landscape. Not
only will this ensure that African recipients own
the accountability process, but it will show where
African governments can do better with the emerging
actors after determining where they have failed with
traditional Western donors.
One area where such a new best practice can be
tested is around the climate change discourse.
African recipients should invite the emerging donors
to become part of African climate change interventions
and demonstrate how they are going to compensate
African countries for the environmental impacts that
their trade and investment patterns will have on
Africa. The result could become a benchmark for
traditional donors.
CONCLUSION
A
t the beginning of this chapter, a set of questions was asked about what new impulses the
emerging donors bring to Africa’s development cooperation landscape and how these should
be interpreted vis-à-vis the goals of representation,
legitimacy and accountability. The answers, so far, are
that the emerging actors do not exhibit a new form of
development assistance behaviour. However, the new
actors have clearly entered Africa’s aid architecture,
often behaving in ways that mimic the behaviour of
traditional donors. Specifically, there are parallels in favouring national businesses when it comes to projects,
tying export credits to the use of services and goods
from donor countries, and bringing in large teams of
consultants to advise on programs.
The impact of the new development partners has
been to increase African governments’ leverage visà-vis the traditional Western donors. No longer are
African governments compelled to be junior partners
in the donor-recipient relationship. But at the same
CHAPTER FIVE | REPRESENTATION, LEGITIMACY AND ACCOUNTABILITY: EMERGING DONORS AND MULTILATERALS IN AFRICA
time African governments fail to realize that they do
not have to be muted partners with emerging actors.
This is where African leaders need to find the right
mix in their responses to all of their development
partners. There is no room for double standards and
differentiating modes of diplomacy toward existing
and emerging actors. All development partners must
be held accountable to the same standards and rules.
As much as the emerging actors may be seen
as alternative development partners for African
governments and to provide much-needed assistance
for their infrastructural needs, Africa needs to see its
role in this relationship as less of a recipient and more
of a strategic partner with valuable assets. While the
high demand for raw materials has pushed Africa into
the volatile global commodity price cycle, this is shortterm and not sustainable. As before, Africa runs the
risk of relying on export markets for revenue, a strategy
that will backfire when raw material prices fall, which
will undoubtedly compromise social spending on antipoverty programs.
Africa needs to take ownership of and manage the
aid flows it receives. The starting point should be at
a country level in dealings with the Joint Assistance
Strategy group.24 At present, the emerging actors
seem reluctant to even come to a consensus about
development cooperation. But as Western donors seek
more alignment with the emerging powers around aid
harmonization, African governments, regional blocs,
and continental institutions like the AU need to seize
the opportunity to promote continental development
projects. To this end, African governments can insist
that new actors which are signatories to the Paris
Declaration on Aid Effectiveness and have experience
as aid recipients, deliver on their promises.
The emerging actors have set in motion a new
competition with traditional donors that are scurrying
to retain their traditional spheres of influence and
upping their own aid packages to Africa. However,
African stakeholders need to remember that the new
development partners will to continue to be driven by
their national interests. Moreover, African recipients
must not fall into the trap of thinking that the
emerging actors are more legitimate, transparent, and
24 Joint Assistance Strategy Group is a collaborative undertaking by OECD
donors to coordinate support for a recipient’s development strategy. This
group meets to ensure that there is no overlap and that assistance supports
the recipient country’s vision for development. It enables development
partners to formalize cooperation and agreements with recipient countries.
accountable in their interactions by mere virtue of a
shared historical experience and common development
challenges.
Thus, if Africa wants the emerging actors to
demonstrate an effective development assistance
relationship, then African states — perhaps through
the AU — need to develop their own set of conditions
that underwrite how development cooperation
should be delivered to individual countries. To do
this, Africa must recognize that its leverage from
its valuable resources can also be used against the
emerging actors. African states could demand more
openness in how the new development partners engage
with them, specifically making information and
transactions related to development assistance more
freely available. China, for example, could be held
accountable to former Premier Zhou’s eight principles
that still publicly underpin its development assistance.
Finally, civil society networks must be enabled and
strengthened so that a broader policy monitoring
environment can be developed.
African governments and civil society actors need to
recognize that despite a perceived focus on SouthSouth cooperation with new development partners,
the African continent’s interests may not always
be represented by these emerging actors within
multilateral organizations. Perhaps the first step for
African nations standing up for their interests is to
acknowledge that the emerging actors are becoming
competitive powers that want to project their own
interests. Such considerations are important if the
new development partners are slow to reconcile their
new global profile with the increasing need to become
responsible international stakeholders.
Sanusha Naidu is a Senior Researcher with the Africa
and Global South unit in the Democracy, Governance
and Service Delivery Programme at the Human Sciences
Research Council. Prior to joining the HSRC, she was
the Research Director of the China/Emerging Powers in
Africa initiative based with Fahamu and before that she
was a research fellow at the Centre for Chinese Studies
at Stellenbosch University. Ms. Naidu holds a MA in
International Relations from Staffordshire University in the
UK. Her current research focus is on the Emerging Powers
in Africa, especially the footprint of China and India, and
the pending issues that arise with regard to governance,
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CANADIAN DEVELOPMENT REPORT 2011
socio-economic development and the continent’s response
in terms of the engagement. She has published widely on
the topic including in journals like the Review of Political
Economy, Politikon. She is also co-editor of two books
on China in Africa: African and Chinese Perspectives on
China in Africa (Fahamu/Pambazuka Press: 2010) and
Crouching Tiger; Hidden Dragon: Africa and China (Centre
for Conflict Resolution: UKZN Press: 2008). She has also
been interviewed by and quoted in international news
agencies including Reuters, IPS News, AP, BBC, Aljazeera,
LA Times, and the International Tribune Herald.
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page 114
CHAPTER SIX
USING THE NEW CANADIAN
INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL
DEVELOPMENT COOPERATION
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CANADIAN DEVELOPMENT REPORT 2011
CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
USING THE NEW CANADIAN INTERNATIONAL
DEVELOPMENT PLATFORM TO ENHANCE
UNDERSTANDING OF MULTILATERAL
DEVELOPMENT COOPERATION
ANIKET BHUSHAN AND KATE HIGGINS
T
he North-South Institute (NSI) began
publishing the Canadian Development
Report (CDR) in 1996. Global Challenges:
Multilateral Solutions, the 13th edition of the CDR,
marks an important change to one of its most popular
components — the statistical annex.
The CDR’s statistical annex is the only “one-stop shop”
for comprehensive data on Canada’s relationship with
developing countries, including figures on aid, trade,
investment and migration. Since the CDR’s inception,
NSI has compiled, analyzed and presented this data
in the CDR’s statistical annex. The annex has been an
invaluable tool for researchers, students, policy analysts
and civil society organizations in Canada and around
the world.
Until now, the contents of the annex have only been
available in print, PDF, or on CD-ROM. To bring this
vast store of information to a wider audience in a free,
easy-to-use and interactive manner, NSI is pleased to
be launching the Canadian International Development
Platform (CIDP).
The CIDP is a highly interactive web-enabled data
and analytical platform for presenting flows between
Canada and the developing world. Like the CDR,
the CIDP includes data on aid, trade, investment and
migration.1 In addition, the CIDP covers a wide range
of new data points and indicators. Use of the CIDP
is free and available through the NSI’s website (www.
nsi-ins.ca). Users can select specific issues they want
to explore and determine the depth and breadth of
their analysis. Customized outputs can be generated
by the user and downloaded in a range of formats such
as charts, cross-tabs, maps or Microsoft Excel files.
Researchers can draw on the CIDP to analyze critical
development questions in an evidence-based and
interactive way. In addition, the CIDP can be used for
1 Currently, the CIDP covers years only from 2000 for some data points.
on-demand customized analysis using parts of our
primary dataset, our new data or both.
This chapter formally introduces the platform. To
demonstrate how the platform can support research
and analysis, we have used the CIDP to perform an
analysis of multilateral development cooperation.
Following this introduction, the second section
provides context on the need for the CIDP by briefly
discussing the demand for increased transparency on
aid. The third section provides information on data
currently covered by the platform, how the platform
compares with information provided in past CDRs
and the sorts of questions that can be addressed using
the platform. An illustration using the CIDA’s 20
countries of focus is also included.2 Similarly, the last
section shows how the CIDP can be used to enhance
our understanding of multilateral development
cooperation.
THE CIDP CONTEXT: OPEN GOVERNMENT,
TRANSPARENCY AND ACCOUNTABILITY
Canada’s Open Government initiative
There are welcome signs that Canadian politicians
and policymakers are taking “open government”
seriously. The 3 June 2011 Speech from the Throne
recognized accountability as a key pillar of the current
government. Earlier that year in March, the Treasury
Board launched a government-wide open data portal.3
And in September 2011, Canada joined the Open
Government Partnership — a new multilateral
2 As part of its Aid Effectiveness Agenda, the Government of Canada
announced in 2009 that it will be focusing 80 percent of bilateral resources
in 20 countries. These 20 countries were chosen based on their real needs,
their capacity to benefit from aid and their alignment with Canadian
foreign policy priorities. The countries are: Bolivia, Colombia, Haiti,
Honduras, Peru, Afghanistan, Bangladesh, Indonesia, Pakistan, Vietnam,
Ukraine, West Bank and Gaza, Ethiopia, Ghana, Mali, Mozambique, Senegal, Sudan, Tanzania and one regional program (Caribbean).
3 See for instance: http://www.tbs-sct.gc.ca/media/nr-cp/2011/0317a-eng.asp
and the portal at www.data.gc.ca.
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CANADIAN DEVELOPMENT REPORT 2011
initiative that aims to secure concrete commitments
from governments to promote transparency, empower
citizens, fight corruption and harness new technologies
to strengthen governance.4
In the area of international development, Minister of
International Cooperation Beverley J. Oda launched
the Canadian International Development Agency’s
(CIDA) new Open Data portal in June 2011 at NSI’s
Ottawa conference on the future of multilateral
development cooperation. CIDA’s Open Data portal
provides information on where and how foreign aid
contributions are spent.5
Canada’s international assistance now exceeds $5
billion annually. This represents an aid expenditure
of approximately $150 per Canadian citizen per
year. But there is little awareness among the general
public about where this money is spent and what is
achieved as a result of these efforts. This situation is
not unique to Canada. This suggests that there is a
need for governments to be more transparent about
their spending choices on aid and other types of public
expenditure. Making data and information publicly
available and easily accessible can help governments
achieve this. NSI’s CIDP contributes to these
broad efforts.
Global efforts on aid transparency,
accountability and data access
In the lead-up to the Fourth High Level Forum on
Aid Effectiveness to be held in Busan, South Korea
in November, it is worth reflecting on the recent
developments in aid transparency, accountability and
data access. These developments can be categorized as
either demand-side initiatives, which call for greater
access to aid data, or supply-side initiatives, which
prescribe that efforts made by aid agencies and others
to be more transparent and accountable.
Perhaps the most prominent demand-side initiative is
the International Aid Transparency Initiative (IATI).
IATI is a multi-stakeholder effort that includes donors
(such as the World Bank and the United Nations
[UN] Development Programme), partner countries
and civil society organizations and aims to implement
4 See: http//www.opengovpartnership.org/about.
5 See: http//acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/eng/FRA511112638-L57. The new Official Development Assistance Accountability
Act is also noteworthy as it has accelerated the delivery of aggregate and
detailed reports.
page 118
the transparency commitments made in the 2008
Accra Agenda for Action.6 IATI has developed and
agreed on common, open, international guidelines for
publishing information on aid spending. The IATI
standard comprises three components: an activity
standard designed to report details of individual aid
activities; an organizational standard for reporting
total future budgets and forward planning; and a new
set of code lists that make both sets of information
comparable across reporting institutions. The goal is
to make the information useful to all stakeholders,
especially in developing countries. This involves
presenting the information in simpler and easy-tounderstand formats. To date, 20 organizations have
signed on to IATI. These include the World Bank,the
United Kingdom’s Department for International
Development and the African Development Bank,
among others.
Other demand-side initiatives include the Center for
Global Development’s Commitment to Development
Index (CDI) and Quality of Official Development
Assistance Assessment, the latter of which is jointly
produced with the Brookings Institution. These
indices track and rate the performance of bilateral
and multilateral aid agencies on various dimensions
including transparency, efficiency, support for
institutions in recipient countries and cut transaction
costs, as well as overall commitment to development or
policy coherence beyond aid (including areas such as
trade, investment and immigration as is the case in the
CDI). Another effort is the UK-based Publish What
You Fund (PWYF) campaign that advocates for aid
transparency and has developed an Aid Transparency
Assessment tool. More on each of these below.
At least partly in response to these calls for greater
transparency and accountability, donors have initiated
a number of supply-side measures that seek to
present aid information in a more comprehensive and
accessible manner. Notable recent initiatives include
the World Bank’s Mapping for Results, which provides
an interactive and user-friendly detailed view of World
Bank programs. This follows the World Bank’s highly
publicized efforts at “democratizing development
6 These include steps such as making use of country systems, publicizing
all conditions linked to disbursement, providing timely information on
commitments and disbursements, etc. However, these were calibrated to
individual country plans.
CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
data,” which includes making its World Development
Indicators database publicly available at no cost.
A number of bilateral donors are also bolstering their
efforts. In addition to CIDA’s new Open Data portal,
the United States (US) has developed a website (www.
foreignassistance.gov) on American aid while Sweden
has launched a similar site (www.openaid.se). The
US and Swedish initiatives both involve web-based
interactive data platforms that aim to provide a
comprehensive picture of each country’s international
assistance efforts.
While these initiatives clearly represent progress
toward more transparency, accountability and access,
there is much more that can be done. Three areas in
particular require greater attention. First, steps should
be taken to improve the comparability and consistency
of data across reporting institutions. Second, more
information on the results of aid programs and
projects must be made available. Third, users of the
information need to be cognizant of the importance
of interpreting the data correctly. While increased
availability of aid data is a positive trend, the danger is
that the data may be misinterpreted.
UNDERSTANDING CANADA’S
ENGAGEMENT WITH THE DEVELOPING
WORLD: THE CANADIAN INTERNATIONAL
DEVELOPMENT PLATFORM
The CIDP’s datasets
The CIDP is divided into two datasets. The first
(primary) dataset comprises data that NSI has been
compiling for its statistical annexes since 1996. It
includes detailed information on aid, trade, investment
and migration flows between Canada and developing
countries. NSI will continue to update this dataset
using a format and framework similar to those used in
previous CDRs.
The second dataset includes indicators that are
incorporated into the CIDP in response to NSI’s
research and analytical needs. These include a range
of income and multidimensional poverty measures
such as the World Bank’s $2-a-day measure, the
Multidimensional Poverty Index and the Social
and Economic Rights Fulfillment Index. It also
incorporates governance and other indicators such as
the Freedom House Index, Transparency
International’s Corruption Perceptions Index and the
State Fragility Index. Box 1 includes a list of key data
covered in both of the CIDP’s datasets.
Using the data provided through the CIDP, users can
answer a range of questions on Canada’s engagement
with developing countries. This can be demonstrated
using CIDA’s 20 countries of focus. For example, the
CIDP can answer the follow questions:
• How much aid has Canada disbursed to the CIDA’s
20 countries between 2000 and 2010?
• What type of aid — bilateral or multilateral — is
most important for the CIDA’s 20 countries?
• Which Canadian departments and agencies are
involved in providing assistance? And at the
project level, which sectors are most important for
Canadian assistance?
• What is the total volume of trade, breakdown of
exports and imports and trade balance over time?
• How have CIDA’s 20 countries been performing
on growth, poverty and inequality?
• Are there particular social sectors that are lagging?
• How do the countries perform on governance
measures, such as corruption?
The CIDP brings together a vast amount of
information on CIDA’s 20 countries of focus in
one place and in an interactive, fast and easy-to-use
manner via development dashboards.7 The first image
(Figure 1)is of the user interface, or dashboard index.
The index page typically includes a short description of
the topic, details on navigation and other instructions
that make the information easily accessible.
7 Dashboards, charts and other visuals presented here are snapshots of
live online views, and as such, intended purely as illustration. For the
actual data or views please see the CIDP portal page via www.nsi-ins.ca
to be launched in early 2012. For all data sources please see the CIDP
portal page.
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CANADIAN DEVELOPMENT REPORT 2011
BOX 1: KEY DATA COVERED BY THE CIDP: MORE THAN 30 COMPREHENSIVE
DATASETS ON INTERNATIONAL DEVELOPMENT
Below is a list of key data points and indicators covered by the CIDP. This is not an exhaustive list since
the platform is always evolving, as new data, features and analyses become available. The four key areas
the CIDP tracks for Canada are aid, trade, investment (including debt) and migration. Each area comprises
several data sources, indicators and variables. A complete list can be found in the CIDP technical document
on NSI’s website.
Aid: Includes detailed data on Canadian aid flows, disaggregated into bilateral and multilateral and Official
Development Assistance (ODA) qualifying flows from all departments and agencies. Information can be
sorted by country recipient, type of aid and department involved, among other options. This area also
includes highly detailed project-level data on all Canadian-funded projects and programs in developing
countries. Sector-wise (e.g., health, education, infrastructure, etc.) breakdown of aid at the general level as
well as project level. It also includes Development Assistance Committee (DAC) data other than ODA (e.g.,
other official flows). Breakdowns into sector-wise components, including administrative costs, refugee costs,
etc., are also included. Overall net aid received from all sources from recipient country perspective.
Trade: Includes detailed information on Canadian exports to developing countries, as well as imports from
developing countries (all countries, including advanced, encompassed for comparisons). This area also
includes balance-of-trade data as well as data on tariff revenue collected and applied rates. Product-wise
breakdown for all developing countries’ exports and imports is under development.
Investment: Includes aggregate data on Canadian direct investment abroad, foreign direct investment in
Canada and stock values. Data on concessional and non-concessional outstanding debt balances. Portfolio
flows (debt and equity) under development, but currently available at the aggregate level.
Migration: Includes detailed data on migration to Canada, countries of origin, type of migration
(permanent, temporary), all available subgroups (such as refugees and, foreign students). Also available by
province (in some cases city) of settlement.
Poverty: Includes range of poverty measures from standard headcounts and the World Bank’s $1- or $2-per
day measure to indices such as the Multidimensional Poverty Index, Social and Economic Rights Fulfillment
Index, Human Development Index, Gender-related Development Index, employment statistics and others.
Demographic: Captures range of demographic information including population, population growth,
male/female ratios, fertility, urbanization rates, dependency ratios and more.
Governance: Includes broad range of indices from World Bank’s Worldwide Governance Indicators and
Country Policy Institutional Assessment to Transparency International’s Corruption Perceptions Index,
Freedom House Index, the Database of Political Institutions, the Ibrahim Index of African Governance, the
World Bank’s Doing Business project, The World Economic Forum’s Competitiveness Report and others.
Country characteristics: Area ranges from classification systems (e.g., following the World Bank lending
system, regional groupings, etc.) to basic economic indicators (GDP, GDP per capita, growth rates, etc.) to
social indicators (Millennium Development Goals progress, health, education and nutrition) to financial
flows (private financial flows, remittances, export earnings, investment) and public revenue and expenditure
(tax/GDP ratio, tax rates, public expenditure rates on health, education, etc.).
Customized datasets: The platform allows flexibility to plug in new data in a range of formats. Analysis of
new data alongside existing data points can then be performed. For instance, data generated in the course of
NSI research, fieldwork or other surveys is periodically inputted to generate custom outputs. For an example
of a customized dataset, see the set created for multilateral development cooperation discussed in detail below.
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CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
FIGURE 1 - SCREENSHOT OF CIDP USER INTERFACE (DASHBOARD)
The CIDP begins to convey useful information when
the user simply places the cursor on one of the circles
(which represent the amount of aid in a particular year
from Canada to the particular country). For instance,
Figure 2 shows the total Canadian aid to Haiti in
2009-10 without having to perform any operations.
The on-mouse-over mark invites the user to click for
more details. Following this instruction takes the user
to a further set of options that allow more detailed
analysis. There are two options provided to make
navigation simple. A box below the map provides
direct links to a set of suggested topics (and
descriptive questions that suggest what sorts of
information are available). A list of countries on the
right hand side allows the user to explore individual
countries in more detail.
If, for instance, the user is interested in exploring aid to
Haiti in more detail, with less than a couple of clicks
the user is able to switch to a much more detailed view
(Figure 3). In addition to the total amount of aid to
Haiti, the trend over time and detailed breakdown
across all departments and agencies becomes visible.
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 2 - CIDP DASHBOARD DISPLAYING TOTAL CANADIAN AID TO HAITI 2009-10
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CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
FIGURE 3 - CIDP DASHBOARD DISPLAYING DETAILED VIEW OF TOTAL
CANADIAN AID TO HAITI 2009-10
Aid is only one of many important facets of Canada’s
engagement with Haiti. Should the user want to look
at trade flows, in a few clicks (using similar navigation
options), the user is able to plot bilateral trade patterns
and disaggregate total trade into exports and imports
(Figure 4). In a future iteration (available currently for
a select group of countries), simply clicking on one
or more of the bars representing imports and exports
breaks the aggregate figures into individual products.
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 4 - CIDP DASHBOARD DISPLAYING TRADE FLOWS BETWEEN CANADA AND HAITI 2009-10
The custom dashboard in Figure 4, discussed here as
an illustration, allows the user to navigate across aid,
trade and other financial flows to draw comparisons.
It also allows the user to track governance indicators
that demonstrate how a country has been doing on
governance, whether political and civil liberties are
increasing and whether corruption is declining. It
also flags key demographic indicators and provides
information on security and state fragility, helping address
questions such as whether or not the security situation in
the recipient country is jeopardizing the ability of state
and non-state actors to deliver basic services.
Important differences between the CDR’s statistical
annex and the CIDP
While indicators included in past CDR statistical
annexes will continue to be updated, there are some
differences in format, organization and presentation
between the annex and the CIDP.
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Cross-section (yearly update) versus time-series:
Past CDR statistical annexes have provided data for
one year only. Typically, this has been the year prior to
the edition of the report. The CIDP provides timeseries coverage. For instance, its Canadian aid data
covers the period 2000-10.
Country classification system: Past CDR statistical
annexes relied on multiple country classification
systems. For example, in some cases the regional
classification of the World Bank was used, whereas
for Canadian data the CIDA regional classification
was used. These two classification systems can be
quite different.8 The CIDP has standardized country
classification, relying only on the World Bank system.
As well as being the most comprehensive approach,
8 Canadian sources divide Africa into Sub-Saharan Africa and North
Africa or Maghreb. Asia is not divided. World Bank sources divide Africa
into Sub-Saharan Africa and one region known as Middle East and North
Africa. Asia is divided into South Asia and East Asia.
CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
this helps organize data under new fields such as
income level and lending category.
Presets versus user-defined aggregations and custom
calculations: Past CDR statistical annexes included
preset group aggregates such as totals or averages for the
Low Income Country group. The CIDP includes these
preset options, but also allows users to define their own
criteria for groupings. Users are also easily able to plot
simple custom calculations (e.g., percent change in an
indicator over a defined period of time), whereas in the
past such comparators were pre-selected.
Tabs (covering flows and indicators separately) and
dashboards (combining a range of flows, indicators
and data-sources around a theme or narrative):
Tabs (covering flows and indicators separately) and
dashboards (combining a range of flows, indicators
and data sources around a theme or narrative) come
closest to the long reference tables, charts and graphs
in the CDR’s statistical annex, but add several new
functionalities. Tabs are individual sheets that are
organized by topic. Typically, each tab will be linked
to one primary data source. A flow, such as aid, which
has many data sources, may be divided into multiple
tabs. For instance, NSI’s aid data includes detailed
information on Canada, as well as comparative data
from the Organization for Economic Co-operation
and Development (OECD)-DAC, which helps situate
Canada among other large donor countries. In this
case, the data would be organized into two different
tabs. Information in different currencies, or different
bases (current versus constant dollar values), may be
kept in different tabs to avoid confusion. Dashboards
are customized views of the larger dataset. A dashboard
may bring together different indicators to cover a
particular region or group of countries. For instance,
a dashboard may look at the evolving political and
economic situation in a particular region. The CIDP
enables us to pull together data on Canadian flows to
the countries in this region, covering for example type
and quantity of aid, imports, exports and balance of
trade, overseas investment by Canadian companies in
these countries, and migration patterns from countries
in that region to Canada. The flows and trends can be
presented in interlinked charts, tables and maps.
New data sources and analyses across indicators: As
already mentioned, the CIDP offers a broader range
of indicators and data sources than previous CDR
statistical annexes. Because the CIDP is an interactive
online platform that links multiple sources, it allows
users to undertake analyses across indicators. The user
is able to perform a range of analyses from simple
correlations (yielding R-square and other statistical
estimates including significance) to more complex
multivariate analyses. Previously, this would have been
very time consuming (if not impossible), given the
static nature of past CDR data.
MULTILATERAL DEVELOPMENT
COOPERATION IN A CHANGING GLOBAL
ORDER: USING THE CIDP TO ENHANCE
UNDERSTANDING AND ANALYSIS9
T
hrough the CIDP, researchers can compile
detailed disaggregated information on
multilateral development cooperation, which
together provides a comprehensive picture of trends,
patterns and key developments. The multilateral data
also help situate Canada’s use of multilateral channels
compared to other DAC donors.
This section shows how the CIDP can be used to
explore major trends and patterns in multilateral
development cooperation. First, the CIDP presents a
general analysis of the proportion of the aid disbursed
by major DAC donors that is multilateral, and how
this has evolved over time in comparison to bilateral aid
flows. Next, multilateral contributions are disaggregated
into the major types of organizations (e.g., the regional
development banks, UN system, World Bank) and
it is shown how donor country contributions to
various multilateral institutions can be examined and
compared.
A key question is whether multilateral aid is more
predictable than other forms of assistance. A relatively
simple way of answering this is by tracking the gap
between commitments and disbursements for bilateral
and multilateral ODA. Once again the user is able
to easily and quickly select, explore and compare the
differentials across DAC-reporting donors. This section
also reflects on the volatility of aid relative to other
financial flows such as private flows.
The next set of data focuses on Canada’s contributions to
multilateral organizations. It covers highly disaggregated
data on contributions to the major institutions, in some
9 Data used for all charts, graphs and discussion were drawn directly from
the CIDP and are available online. For the original data source, consult the
CIDP technical document also online on the portal homepage.
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 5: DAC DONOR CONTRIBUTIONS TO MULTILATERAL INSTITUTIONS 1960-2010
cases down to the level of the implementing agency.
Users, for instance, are able to see how much Canada
provides as core support relative to responsive and
directive funding, for a range of institutions. The dataset
provides these data for the top 20 institutions that
received Canadian funding (2000-10).
This section provides a great picture of donor
contributions to multilaterals, and in the case of
Canada, a detailed view of which institutions the
country has been supporting and the types of funding.
However, this is only one side of the coin. It is also
beneficial to look at which project, programs or other
initiatives the major multilateral institutions have been
funding, and in which countries. The CIDP provides
this view and lets the user select and compare either
from the perspective of a multilateral institution, of a
receiving country, or by project/activity type or sector.
Together Figures 6 and 7 provide a comprehensive
picture of multilateral development cooperation in
a changing global order. Finally, the CIDP brings
together data rating the performance of multilateral
institutions. These paint further contextual
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information in order to better assess how these
institutions contribute to effective development.
DAC donors’ multilateral aid: how does Canada compare?
The total reported aid for all DAC donors in 2010
reached approximately US$140 billion (in constant
2008 terms). The majority of this aid is classified as
bilateral. Indeed, in 2010 more than US$100 billion
was disbursed as bilateral aid. The United States (US)
remains the largest aid donor in dollar terms. However,
it is interesting to note differences among the largest
bilateral and multilateral donors.10 While the US is the
largest donor in bilateral terms (nearly US$26 billion
in 2010), the largest multilateral donors in overall
dollar terms were France (US$5.4 billion), Germany
(US$4.9 billion) and the UK (US$4.7 billion).11
Canada ranks ninth out of the 23 DAC donors on
overall aid and ninth on bilateral aid. On multilateral
aid it ranks 10th. Figure 5 below provides a snapshot
10 Note that DAC multilateral aid covers only ODA conforming grants
and capital subscriptions to multilateral institutions. In most cases, donors
channel additional (bilateral) aid through multilateral channels and specialized institutions.
11 This is primarily because contributions to European Union (EU)
institutions are classified as multilateral aid.
CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
of how DAC donor contributions to multilateral
institutions have evolved since 1960.
The CIDP allows users to compare individual
DAC country multilateral contributions in detail.
Among the categories are: EU Institutions, Global
Environment Facility, Heavily Indebted Poor
Countries, the World Bank International Development
Association (debt forgiveness), Montreal Protocol,
other agencies, Regional Development Banks, UN
agencies, World Bank group, and World Bank
FIGURE 6: WORLD BANK IDA
CONTRIBUTIONS, 2000-10
International Development Association (IDA). As
Figure 6 below shows, World Bank IDA contributions
have been growing since 2000, especially since the
funds can be used as a countercyclical tool during
the recent global financial crisis. The US remains one
of the most important funders of IDA, the World
Bank’s lending window aimed at the poorest and
most vulnerable countries. Contrastingly, as Figure 7
shows, contributions to UN agencies (including by the
US) are declining. Given their relative size, Sweden,
FIGURE 7: UN CONTRIBUTIONS, 2000-10
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 8: CANADIAN MULTILATERAL CONTRIBUTIONS, 1960-2009
Norway, the Netherlands and Japan are important
contributors to the UN.
What can the CIDP indicate about Canada’s
contributions to multilateral institutions?
Figure 8 provides an overview of Canadian multilateral
contributions, as noted by the OECD. While World
Bank IDA and the UN agencies remain important, the
share of multilateral contributions going to regional
development banks has recently increased.
The CIDP allows fast and easy comparison across
indicators and donors and allows the user to generate
simple trends. Figure 9 compares Canada’s multilateral
aid share with selected other major donors. This
illustrates that Canada’s multilateral share of aid has
been stable in recent years, though it has declined since
the 1980s. France’s multilateral share of aid has grown
the fastest, while the UK and Germany are rebounding
to past levels.
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FIGURE 9: MULTILATERAL SHARE OF
AID FOR SELECTED DONORS, 1980-2008
CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
Commitments versus disbursements: multilateral
and bilateral aid
Is multilateral aid more predictable than bilateral aid?
A straightforward way of assessing this is by comparing
the gap between commitments and net disbursements
by DAC donors, as well as aggregate groupings (such
as the Group of 7). As Figure 10 shows, the gap
between bilateral aid commitments and disbursements
is much higher than the gap between multilateral
commitments and disbursements for all DAC donors
combined.12
12 Despite common definitions and standards, donors have different conventions when it comes to reporting on commitments. This analysis only
provides a useful general picture. For a more detailed account, individual
donor conventions should be taken into consideration. For instance,
OECD-DAC figures presented here are not based on in-year but rather
project-level commitments. Therefore, they are inherently prone to spikes
in some years. The fact that some donors have less spikes could well be
because they are overly prudent in reporting project commitments or they
simply report the same values for commitments and disbursements.
Using the CIDP, users can identify whether this
pattern is replicated for individual donors. In the
case of Canada, while the pattern is similar, the gap
between bilateral commitments and disbursements is
less severe than for the DAC as a whole.
There are, of course, outliers. In the cases of
the Netherlands, Norway, Sweden and the UK,
commitments and disbursements tend to track
fairly closely. At the other end of the spectrum,
Japan is a clear outlier, with a large gap between
commitments and net disbursements on the bilateral
side, but a much more predictable (and much smaller)
multilateral aid share.
FIGURE 10: COMMITMENT DISBURSEMENT GAP: BILATERAL VS. MULTILATERAL
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 10 (CONTINUED)
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CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
FIGURE 11: CANADA MULTILATERAL AID DASHBOARD, 2000-10
Canada’s multilateral assistance (2000-10)
OECD-DAC multilateral aid comprises mainly
grant and direct capital contributions by DAC
donors to the major multilateral (DAC-reporting)
institutions. However, bilateral donors often use
multilateral channels, such as specialized institutions
like the Global Fund to Fight AIDS, Tuberculosis and
Malaria (Global Fund), to direct large amounts of
their bilateral aid. Therefore, there can be substantial
differences between contributions to multilateral
institutions and aid channelled through multilateral
institutions.
Figure 11 charts the evolution of Canada’s multilateral
aid channelled through all multilateral institutions
over the past decade.13 Canada has increasingly used
13 Figures are for CIDA aid. Other departments may channel more ODAqualifying financial flows through multilateral channels not mentioned
here. However, since CIDA accounts for the vast majority of aid, this is the
most accurate picture of Canada’s use of multilateral aid channels.
multilateral aid channels to deliver aid. Aid
channelled through multilateral institutions increased
from $900 million to nearly $2 billion between
2000-01 and 2009-10. The international financial
institutions (IFIs) — including the regional
development banks, multilateral development
institutions and humanitarian assistance institutions
— are the multilateral channels that Canada uses
most prominently. In addition, Canada is an
important contributor to the Commonwealth
and the Francophonie.
From this aggregate level, the CIDP allows the user
to peer further into the data. For instance, users may
be interested in knowing which institutions among
these groups received the largest amount of Canadian
aid. Using the CIDP, users can break down groups,
such as IFIs, multilateral development institutions and
humanitarian institutions, to conduct more granular
analysis.
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 12: CIDA MULTILATERAL AID DASHBOARD, 2000-10: INTERNATIONAL FINANCIAL,
MULTILATERAL DEVELOPMENT AND HUMANITARIAN INSTITUTIONS
Figure 12 above shows that IFIs are the main
multilateral channel for Canadian assistance, with
approximately $900 million channelled through
them in 2009-10. This is followed by multilateral
development institutions ($430 million) and
humanitarian institutions ($400 million). Figures 13
through 15 provide a breakdown for each group.
Among IFIs, the World Bank14 ($540million),
followed by the African Development Bank ($118
million), Asian Development Bank ($74 million) and
the International Fund for Agricultural Development
($50 million) are the main channels for Canadian
multilateral aid.
14 The World Bank figures include large multi-donor trust funds such as
the Global Agriculture and Food Security Program, Advance Market Commitments and major components of Canada’s work in Afghanistan such as
the National Solidarity Program and the Afghanistan Reconstruction Task
Force, as well as Canada’s contribution to the Global Fund.
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CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
FIGURE 13: CIDA MULTILATERAL AID DASHBOARD 2000-10: IFIS
Among multilateral development institutions, UN
Children’s Fund (UNICEF), UN Development
Programme (UNDP) and the Consultative Group
on International Agricultural Research are the major
recipients of Canadian assistance. The UN World Food
Programme (WFP) ($305 million) is by far the largest
recipient among humanitarian institutions.
FIGURE 14: CIDA MULTILATERAL AID DASHBOARD 2000-10: MULTILATERAL
DEVELOPMENT INSTITUTIONS
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 15: CIDA MULTILATERAL AID DASHBOARD, 2000-10: HUMANITARIAN INSTITUTIONS
Figure 16 lists the top 20 multilateral institutions
that Canada used to channel assistance over the past
decade, with their associated trends. CIDP users have
a high level of interactivity within this set of tabs and
dashboards. For instance, users can compare totals
by highlighting individual trend lines to make them
more prominent. Table amounts associated with the
selection automatically turn bold, and the user can
drill further down to more detailed levels. This is
illustrated in Figure 17 using UNICEF as the example.
FIGURE 16: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA
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CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
The dashboard highlights the trends for UNICEF.
The user can select UNICEF by using a builtin highlighting option, which shows the selected
series more prominently and marks a graph line
with numerical values. Notice that in the top lefthand corner, the UNICEF total for 2009-10 has
automatically been highlighted by the program.
Aggregate figures for disbursements to (and through)
multilateral institutions provide only a general picture.
The dataset in Figure 17 is also able to divide the
aggregate amount into its three main components:
core (core support provided by Canada to that
institution for hard costs and other operational
expenses); responsive (funding specifically requested by
the institution to meet mutually defined development
goals or targets); and directive (funding channelled
by Canada through a particular institution due to its
particular expertise).
Including these components in the analysis provides
a much better sense of the spike clearly visible for
UNICEF in 2004-05. Over the past decade, UNICEF
has tended to be Canada’s third largest multilateral
channel. However in 2004-05, Canadian funding
to and through UNICEF witnessed a sharp break
(increase) from the trend. Disaggregating this trend
in the CIDP — in the bottom left-hand corner of
Figure 17 — shows that the reason for this spike is that
Canada released a large amount (likely for multiple
years) in core funding to UNICEF.
The disaggregation also shows that while core and
directive funding have remained constant (with
the mentioned exception), the growth in Canadian
disbursement to UNICEF is driven primarily by
responsive funding, or funding requested and allocated
by the institution as per mutually agreed priorities.
The CIDP user is able to carry out this simple
disaggregation for Canada’s top 20 multilateral
channels. Below are some examples from the World
Bank, WFP and the UNDP.
FIGURE 17: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA (UNICEF)
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 18: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA (WORLD BANK GROUP)1
FIGURE 19: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA (WFP)
1 Note: figures presented for World Bank group here are inflated as they include contributions to the Global Fund (see footnote 14). Actual breakdown for
World Bank group (2010) is as follows: $67.9 million (core), $3.2 million (directive) and $330 million (responsive).
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CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
FIGURE 20: TOP 20 MULTILATERAL INSTITUTIONS FOR CIDA (UNDP)
The CIDP also enables the user to go beyond
disaggregation of funding type. Output data
enables the user to analyze the types of programs,
projects or initiatives funded by Canada, covering
data on channels, countries, regions, partners and
implementing institutions. For instance, Figure 21
covers Canadian multilateral assistance channelled to
and through humanitarian multilaterals. As shown
in the analysis, total Canadian assistance channelled
through multilateral institutions was approximately
$400 million in 2009-10, with three-quarters of this
amount ($300 million) being responsive funding for
the WFP.
Figure 22 provides data on, for example, institutions
working with the WFP or on different WFP projects
and programs.
FIGURE 21: ASSISTANCE CHANNELLED THROUGH HUMANITARIAN MULTILATERALS
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 22: ASSISTANCE CHANNELLED THROUGH HUMANITARIAN MULTILATERALS
(DETAILS FOR WFP)
By focusing on Canada’s assistance to all WFP
programs, the user can see that Haiti earthquake
relief, the Purchase for Progress initiative, initiatives
in Sudan, core funding for the WFP itself and
assistance for internally displaced persons in Pakistan
accounted for some 70 percent of Canada’s total WFP
contribution in 2009-10. This analysis can be easily
replicated for all other multilaterals in the dataset.
Mapping global multilateral aid
The CIDP also enables users to analyze multilateral aid
beyond Canadian contributions. Data on all projects
and initiatives undertaken by selected multilaterals is
captured by the CIDP. Box 2 outlines the multilateral
institutions that the CIDP covers. Detailed projectlevel information for each of these is available through
the platform.
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The CIDP makes this information available
through a different but linked dataset in the same userfriendly manner as described earlier. For example, the
CIDP includes data on the Global Fund — one of the
largest vertical multilateral funds.
In a few simple steps, the CIDP allows the user to
browse very large Global Fund project databases. The
CIDP generates tables and charts, and Global Fund
commitments can be plotted on an automatically
generated map.
Figure 23 below maps Global Fund commitments in
2008 and provides a country-level breakdown. As can
be seen both from the map and the table, some of the
largest commitments are in East Africa.
CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
BOX 2: PROJECT LEVEL INFORMATION FOR MAJOR MULTILATERAL INSTITUTIONS IN CIDP
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
African Capacity Building Foundation
African Development Bank
African Development Fund
Arab Fund for Economic and
Social Development
Asian Development Bank
Asian Development Fund
Arab Bank for Economic
Development in Africa
Andean Development Corporation
Caribbean Development Bank
European Bank for Reconstruction and
Development
European Communities
Fast Track Initiative (IMF)
GAVI Alliance
Global Environment Fund
Global Fund to Fight AIDS,
Tuberculosis and Malaria
Inter-American Development Bank
International Bank for Reconstruction
and Development
International Development Association
19. International Fund for Agricultural
Development
20. International Monetary Fund
21. Islamic Development Bank
22. North American Development Bank
23. Nordic Development Fund
24. Nigeria Trust Fund
25. Organization of Petroleum Exporting Countries
26. Joint UN Programme on HIV/AIDS
27. UN Democracy Fund
28. UN Development Programme
29. UN Economic Commission for Europe
30. UN Economic and Social Commission
for Asia and the Pacific
31. UN Economic and Social Commission
for Western Asia
32. UN Population Fund
33. UN Children’s Fund
34. World Bank Carbon Finance Unit
35. World Bank International Finance Corporation
36. World Bank Managed Trust Funds
37. World Trade Organization
38. World Trade Organization International
Trade Centre (WTO)
FIGURE 23: GLOBAL FUND COMMITMENTS IN 2008
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CANADIAN DEVELOPMENT REPORT 2011
FIGURE 24: GLOBAL FUND COMMITMENTS IN 2008 (DETAIL)
It is possible to drill down further into this data by, for
example, comparing projects for three of the largest
East African recipients: Uganda, Ethiopia and Rwanda.
From this general level, by clicking the drill-down
options (hover over a category such as “Multilateral
Donor” in the table and click “+” sign), the user is able
to look further into projects and initiatives delivered
by the Global Fund.
As Figure 24 above shows, while control of sexually
transmitted diseases, including HIV, was the main
focus in all three countries, in Uganda a large amount
FIGURE 25: GLOBAL FUND COMMITMENTS IN 2008 (UGANDA)
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CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
of resources was also committed toward infectious and
parasitic disease control. The user is able to select the
project subgroups to delve deeper into the data (see
Figure 25 for an example exploring all Uganda projects
in 2008).
Rather than taking the institution as the starting
point in the analysis, the user can begin with a
country, region or sector. Using Uganda as the
example in Figure 26 below, one sees that IDA, the
European Commission, African Development Bank,
African Development Fund and International Finance
Corporation are other major multilateral institutions
in addition to the Global Fund that operate in
Uganda. The CIDP provides this data for all countries
and all major multilateral institutions.
Assessing multilateral performance:
QuODA, PWYF, Easterly and Pfutze
Assessing the performance of multilateral institutions
and comparing them to bilateral donors is not
a straightforward task. Results depend on data
availability and methods employed. That said,
three recent studies help assess the performance of
multilaterals in at least two areas of interest: efficiency
and effectiveness (including reducing burden on
recipient countries, fostering institutions, getting
value for money and minimizing ineffective
channels) and transparency (from international
standards like the IATI and the DAC Creditor
Reporting System to assessing behaviour by recipient
governments and civil society). The Quality of
Official Development Assistance (QuODA) assessment
developed by the Center for Global Development
and Brookings Institution, the Aid Transparency
Assessment developed by PWYF and “Where Does the
Money Go? Best and Worst Practices in Foreign Aid,”
a 2008 working paper by William Easterly and Tobias
Pfutze, provide a good set of performance indicators.15
QuODA utilizes some of the most comprehensive
measures of efficiency, including share of total
allocation to poor countries, allocation to wellgoverned countries, administrative costs and support
for public goods. Here multilaterals fare well. Six
out of the top nine performers are multilateral —
Global Fund (1), African Development Fund (2),
Asian Development Fund (3), International Fund for
Agricultural Development (IFAD) (4), Inter-American
Development Bank (IADB) Special Fund (5) and
IDA (9).
15 QuODA covers 38 institutions, of which 15 are multilateral donors;
PWYF covers 30 institutions of which eight are multilaterals, including
vertical funds; Easterly et al. cover 48 institutions and agencies of which 17
are multilateral.
FIGURE 26: MAJOR MULTILATERAL INSTITUTIONS IN UGANDA
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CANADIAN DEVELOPMENT REPORT 2011
QuODA also measures the extent to which
donors support local institutions by, for example,
allocating aid to recipient priorities, avoiding use
of implementation channels that weaken local
institutional capacity, recording aid in recipient
budgets and using recipient financial management and
procurement systems. Here the multilaterals have a
mixed record. IDA (2), the Asian Development Fund
(3) and African Development Fund (4) perform the
best, while the UN agencies do not fare well. The best
performers in reducing the administrative burden on
partner countries are IFAD (1), IDA (2) and IADB (3)
while other UN agencies again do not fare well.
Low overhead costs can be another indicator of
efficiency. In the Easterly and Pfutze assessment the
bilateral donors fare better on this indicator. Italy,
Norway, Japan, Portugal, and Australia have the lowest
overhead costs, whereas WFP, UNDP, UN High
Commissioner for Refugees, Global environment
facility (GEF) and the International Monetary Fund’s
Structural Adjustment Facility (SAF) and Enhanced
Structural Adjustment Facility (ESAF) have the
highest. This is further corroborated by the QuODA
measure, which defines costs per dollar of country
programmable aid.
Easterly and Pfutze attempt to quantify the
effectiveness of the use of aid channels by netting
out the share of aid that goes to tied aid, food aid
and technical assistance. This is similar to one of the
QuODA sub-indicators on efficiency and effectiveness.
IDA (1), African Development Bank (1), Asian
Development Bank (1), UNICEF (1) and IADB (2)
perform the best (all tied, with the exception of IADB)
at avoiding ineffective aid channels, whereas the UN
WFP and UN Population Fund perform the worst.
While all three studies cover transparency, PWYF
provides the most comprehensive assessment. It focuses
on three areas — “commitment to aid transparency,”
“transparency of aid to recipient governments” and
“transparency of aid to civil society.” On PWYF’s
composite measure, seven multilaterals are in the top
half with World Bank (1), European Commission
(EC) (4), Asian Development Bank (6), Global Fund
(9), African Development Bank (10) and IADB (11)
performing particularly well.
QuODA, which measures transparency along similar
lines, rates EC (2) and IDA (5) highest, while IADB
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and Asian Development Bank rank lower. In
the Easterly and Pfutze measurement, which
assesses the extent to which donors are transparent
about operating costs, World Bank IDA (1), Asian
Development Bank (2), African Development Bank
(4) and IADB (7) perform well, whereas UN Global
Environment Fund, UN Population Fund, Nordic
Development Fund and IFAD have the lowest scores.
While each of these studies has limitations, together
they provide a useful general picture of how
multilateral institutions are contributing to effective
development. In summary, three points can be made.
First, on the set of measures discussed here with
emphasis on efficiency and effectiveness of aid delivery,
as well as in regard to transparency, multilateral
institutions in general tend to perform better than
bilateral donors (see also Picciotto, this volume).
Second, while the multilaterals perform better than
bilateral donors on a host of efficiency indicators,
their overhead costs are higher per dollar of aid
delivered. And third, while transparency seems a
more difficult area to rate objectively, multilateral
institutions on the whole fare better on average than
the bilateral (with notable exceptions like the UK,
Nordics and Australia). The World Bank and IDA
in particular consistently rate amongst the highest
across a host of indicators and sources and across most
major categories (transparency and efficiency
and effectiveness).
CONCLUSION
This chapter demonstrates how the CIDP can be used
to enhance understanding of multilateral development
cooperation. The CIDP can help determine how
Canada compares with other DAC donors in its use
of multilateral aid channels, which multilaterals are
most important for Canada and what sorts of aid are
channelled through them. As well, the CIDP platform
can be used to delve deeper into the types of project
and programs different multilateral institutions have
been supporting and where they are carried out.
Anyone interested in international development,
especially Canada’s relationship with developing
countries, will find the CIDP useful. The platform is
the only “one-stop shop” for accurate, comprehensive
and up-to-date information on aid, trade, investment,
debt, migration and other flows between Canada and
CHAPTER SIX | USING THE NEW CANADIAN INTERNATIONAL DEVELOPMENT PLATFORM
TO ENHANCE UNDERSTANDING OF MULTILATERAL DEVELOPMENT COOPERATION
developing countries. Interactivity is at the CIDP’s
heart. The user is able to interact with the data on a
fast and easy-to-use web-enabled platform that does
not require software downloads or plug-ins.
Policymakers and senior analysts will find the CIDP
particularly valuable and engaging. Students and
researchers will find it a useful resource for statistical
information and analysis. Civil society organizations
may find important information and reference
material to bolster messaging and advocacy campaigns.
Those in the media with an interest in development,
trade, investment and other facets of the relationship
between Canada and the developing world will find it
a useful reference and resource.
The platform is constantly evolving, with new data and
other information added continually. The CIDP team
is keenly interested in hearing feedback from users and
is open to new ideas and suggestions for improvement.
The CIDP is also available for customized analyses.
Its software and tools can be used to track and report
on external (offline) data sources and run customized
reports and analyses.
Throughout 2012, NSI will be conducting a series of
interactive training events based on the CIDP. These
sessions are ideal for researchers, students, analysts,
civil society representatives and media personnel
interested in development issues. During these halfday sessions, users will be introduced to the platform,
shown examples of what information is available and
what sorts of research needs the CIDP can meet.
Aniket Bhushan is a Senior Researcher at The NorthSouth Institute (NSI). His research with the Governance for
Equitable Growth program focuses on domestic resource
mobilization in Sub-Saharan Africa, financial sector policy,
governance reform of the international financial system
and the relationship between growth and socio-economic
outcomes. His previous work focused on trade and health
policy. Mr. Bhushan leads NSI’s work on the Canadian
International Development Platform (CIDP), a data and
analytical platform on Canada’s engagement with the
developing world. Mr. Bhushan has completed studies in
commerce (B.Com, Mumbai University, India), political
science (BA, University of Windsor, Canada), and political
science and international affairs (MA, Carleton
University, Canada).
Kate Higgins is a Senior Reseearcher at NSI and leads the
Governance for Equitable Growth program. Her research
interests include economic growth, trade, inequality,
wealth redistribution and poverty dynamics. She also has
a keen interest in the political economy of development.
Ms. Higgins has worked extensively on global development
frameworks, such as the UN Millennium Development
Goals and the post-2015 development framework.
Previously, she was a Research Fellow at the Overseas
Development Institute in London and an officer with the
Australian Agency for International Development (AusAID).
She holds an M Phil in Development Studies from the
University of Oxford, and a B Ec. (Social Sciences) from
the University of Sydney.
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The North-South Institute
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Telephone: (613) 241-3535
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Email: [email protected]
Website: www.nsi-ins.ca
The North-South Institute thanks the Canadian International
Development Agency for its core grant and the International
Development Research Centre for its program and institutional
support grant to NSI.