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Hany Besada and Shannon Kindornay (editors)

MULTILATERAL DEVELOPMENT COOPERATION IN A CHANGING
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Caroline Kuzemko
THE ENERGY–SECURITY CLIMATE NEXUS
Hans Löfgren and Owain David Williams (editors)
THE NEW POLITICAL ECONOMY OF DRUGS
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Development and Autonomy
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THE POLITICAL ECONOMY OF DIVIDED ISLANDS
Unified Geographies, Multiple Polities
Mark Findlay
CONTEMPORARY CHALLENGES IN REGULATING GLOBAL CRISES
Helen Hawthorne
LEAST DEVELOPED COUNTRIES AND THE WTO
Special Treatment in Trade
Nir Kshetri
CYBERCRIME AND CYBERSECURITY IN THE GLOBAL SOUTH
Kristian Stokke and Olle Törnquist (editors)
DEMOCRATIZATION IN THE GLOBAL SOUTH
The Importance of Transformative Politics
Jeffrey D. Wilson
GOVERNING GLOBAL PRODUCTION
Resource Networks in the Asia-Pacific Steel Industry

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Multilateral Development
Cooperation in a Changing
Global Order
Edited by

Hany Besada and Shannon Kindornay

The North-South Institute, Canada
Editorial matter, selection, introduction and conclusion © Hany Besada and
Shannon Kindornay 2013
Remaining chapters © respective authors 2013
Foreword © Joaquim Alberto Chissano 2013
Foreword © Winston Chandarbhan Dookeran 2013
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Contents

List of Figures and Tables vii

Foreword by Joaquim Alberto Chissano ix
Foreword by Winston Chandarbhan Dookeran xvii
Acknowledgments xxvii
List of Abbreviations and Acronyms xxviii
Notes on Contributors xxxii

Introduction: Multilateralism in an Era of Change 1

Hany Besada and Shannon Kindornay

Part I Multilateral Development Cooperation:

The Current State of Play
1 How Infrastructure Investment Can Advance the Development
Agenda 19
Justin Yifu Lin

2 Reshaping International Institutions to Achieve Millennium

Development Goals 36
Manmohan Agarwal

3 Rethinking the Role of Multilateral Institutions in an

Ever-Changing Aid Architecture 63
Homi Kharas and Michael Blomfield

Part II Cases in Multilateral Development Cooperation:

Old and New Challenges
4 Building Country Capacity for Development Results: How
Does the International Aid Effectiveness Agenda Address the
Capacity Gaps? 89
Franke Toornstra and Frédéric Martin

5 Increasing the Effectiveness of Multilateral and Bilateral Aid:

Lessons from the Global AIDS Response 115
Franklyn Lisk, Pradeep Kakkattil, and Musa Bullaleh

v
vi Contents

6 The Role of the Third Sector as Partners in the Development

Aid System 138
David Felsen and Hany Besada
7 Canada’s Fraying Commitment to Multilateral Development
Cooperation 158
Stephen Brown and Michael Olender
8 Assessing the Relevance of the WTO in International Trade
and Development 189
Pablo Heidrich

Part III Emerging Multilateralisms: Possibilities for the

Twenty-First Century
9 New Donors and Old Practices: The Role of China in the
Multilateral System 215
Arjan de Haan and Ward Warmerdam
10 South-South Cooperation: How Does Gender Equality Factor
in the Emerging Multilateralism? 241
George Kararach, Frannie Léautier, and Towera Luhanga
11 Establishing a Legitimate Development Cooperation
Architecture in the Post-Busan Era 271
Shannon Kindornay and Yiagadeesen Samy
Post-2015 as the Litmus Test for Multilateral Development
Cooperation? 295

Index 297
Figures and Tables

Figures

2.1 Regional poverty distribution, 1990 42

2.2 Regional poverty distribution, 2005 42
2.3 FAO total biennial resources available, 1994–2007 52
2.4 WHO regular budget and voluntary contributions 53
3.1 How multilateral institutions can lower ODA transaction
costs in theory 66
3.2 The reality of intermediating actors in development
assistance 67
3.3 Trends in the number of donor financed activities and
average activity size, 1990–2008 68
3.4 Average project size by donor type in 2010 (2010
US dollars, millions) 69
3.5 Post-tsunami financing-to-need ratios for different parts of
the Aceh province based on 2005 allocations 71
3.6 Major donors’ changes in multilaterals and use of non-core
multilateral lending 79
4.1 Strategies to address the resource gap 105
4.2 Articulation of country-led national strategic framework
and donor-led aid projects at operational level 106
5.1 Resources available for HIV-related programs in low- and
middle-income countries by financing source, 2009 122
5.2 Resources available for HIV/AIDS: Low- and middle-income
countries, 1986–2010 123
5.3 International AIDS assistance: Trends in group of eight and
other donor government assistance, 2002–09 124
5.4 HIV/AIDS financing in 2009 124
7.1 Canadian ODA by type 162
7.2 Multilateral share of total Canadian ODA (gross) 162
7.3 Canadian multilateral ODA by type of agency 164
7.4 Canadian ODA to UN agencies 164
7.5 Canadian ODA to regional development banks 165
7.6 Canadian ODA commitments to the agricultural sector 171
7.7 Canadian ODA to multilateral agricultural organizations
(core) 172
7.8 Canadian contributions to WFP 173
7.9 Canadian ODA commitments to environmental protection 177
8.1 Global trade annual change rate 192

vii
viii List of Figures and Tables

8.2 Geographical distribution of global trade 193

8.3 Composition world trade (in USD billions) 194
10.1 Graphical structure of South-South cooperation 243
10.2 Changing aid environment and effect of new entrants in
aid 244
10.3 Goods imports (BoP, current US$) Sub-Saharan Africa
(developing only) 245
10.4 Listed domestic companies (2001–10) 249
10.5 Countries with declining listed domestic companies
2000–10 250
10.6 Female employment by sector, 2011 (%) 251
10.7 Firms with female participation in ownership (2005–10) 252
10.8 Capacity: Innovation, learning, and gender 255
10.9 Adult literacy achievements across regions for the year 2007 257
10.10 Quality of education and gender (repeaters, primary, female
(percent female enrolment)) 257
10.11 Citizens engaged in decision making 263
10.12 Innovations that transform sectors employing women:
From farm to work 263

Tables

2.1 Regional poverty and malnourishment (% of population) 40

2.2 Regional GDP and its growth 41
2.3 Regional mortality rates 45
2.4 Country ranking by social index and change in social
indicators 47
2.5 Declining importance of aid (aid flows as % of GDP) 49
2.6 Structure of net public and private capital flows, 2000–07 49
2.7 Structure of total capital flows, 2000–07 50
2.8 Composition of aid by sector (% of aid flows) 50
2.9 Sectoral composition of World Bank aid, 2000–10 (% of aid
flows) 51
2.10 FAO total approved regular budget, US$ million 52
2.11 WHO program budget, US$ million 53
3.1 Interpretations of Paris Declaration principles by DAC and
Southern providers 74
3.2 Quality of ODA average Z-score by donor type 75
3.3 Summary of advantages of multilateral vs. bilateral donors 77
3.4 Potential advantages and disadvantages of increased non-core
multilateral ODA 80
8.1 Comparing growth in world trade and GDP 191
Foreword

Changes in the nature of multilateral development cooperation:

Implications for multilateral, bilateral, and emerging donors

Africa’s political and economic landscape is experiencing considerable trans-

formations. We are witnessing major changes associated with constitutional
order, political stability, and democratization. Increasingly, African states
have renounced the culture of unconstitutional changes of government and
single-party rule as well as presidency for life. Multiparty democracy and new
political and constitutional dispensations are now common practice. Many
African leaders have limited their presidential terms of office, and African
leaders are now relinquishing power through democratic elections. Notwith-
standing the changes that are taking place in North Africa, democratization
has taken root in Africa. Media on the continent has assumed its strategic
role in promoting freedom of expression. There are a growing number of
civil society organizations, and the private sector is building strong partner-
ships with governments. Furthermore, multifaceted economic ties among
African countries are increasing, although this quite often occurs through
the informal sector. These changes call for a new architecture in the nature
of development cooperation that should take into account Africa’s changing
political, social, and economic landscape.
Against this background, I discuss a variety of implications arising from
the presence of emerging bilateral and multilateral donors in the developing
South, particularly in the context of a changing and growing Africa. Recent
and historically unprecedented events, including those related to the cur-
rent financial crisis and the emergence of non-traditional donors from the
South, are likely to pose major challenges to contemporary world trade and
international economic relations. Significantly, these global trends call for
the promotion of debate and dialogue on the changes taking place and their
influence on the effectiveness of multilateral development cooperation.
Apart from emerging bilateral donors, a crucial element of these global
trends is the role being played by multilateral development institutions, such
as the United Nations Development Programme (UNDP) and the World Bank
Group – two major global institutions supporting development efforts in the
countries of the South. In discharging their development responsibility in
the South, these global institutions have experienced some shortcomings

This chapter is based on a speech delivered at the 2011 North-South Institute Forum
held in Ottawa, June 20–21, entitled The Future of Multilateral Development Cooperation
in a Changing Global Order.

ix
x Foreword

and a number of challenges, but they have also witnessed a number of

tangible, positive results. There is no doubt that the relationship between
African governments and the foregoing multilateral institutions has changed
and continues to evolve as a result of the ongoing crisis in the global
economy and the structure of international economic relations. Rather sig-
nificantly, the changes that have taken place, including some of the positive
results brought about by the multilateral development institutions, have
had direct implications for development cooperation in the South, partic-
ularly in Africa. Consequently, understanding their involvement is central
to understanding the evolving nature of development cooperation in the
South. It is also central to future cooperation among multilateral, bilateral,
and emerging donors.
Growing income inequality, persistent poverty, and the ongoing financial
crisis necessarily shape the lens through which the world must now examine
global development. The increasingly significant roles played by emerging
donors, as well as transnational issues such as climate change, energy and
food shortages, and the evolving perceptions of private versus public sec-
tor roles in global development are also of great importance. In my view,
these factors constitute the key issues for a new North-South partnership
for African development. They also provide the necessary elements for the
consolidation of South-South relations, particularly in the context of emerg-
ing non-traditional donors such as the BRICS (Brazil, Russia, India, China,
South Africa), and the role they play in Africa’s socio-economic and secu-
rity development. These factors demand a new global mechanism, based on
partnership, in order to redesign the development cooperation architecture
(which encompasses more aid). Though challenging, such an architecture
should incorporate all new actors, and coordinate trade and investment
flows as well as other sources of development finance. It is from within
this framework that I discuss the efficiency of the international development
assistance channeled through multilateral institutions.

Development progress in Africa

Despite several setbacks, African countries are on a path to democratization.
For many years, Africa has been traversing a very difficult political terrain
characterized by coups, counter coups d’état, and low levels of stability that
hinder economic growth. All of this has largely been an issue of gover-
nance, particularly good governance. The basic components of good gov-
ernance include showing respect for the rule of the law, protecting human
rights, addressing inequality, increasing transparency and accountability,
and strengthening democratic institutions. Multilateral development insti-
tutions have tended to remain indifferent to these important components
of good governance and, rather, have focused their efforts on sound macro-
economic management and regulatory reform. In recent years, however,
 Foreword xi

it has become increasingly clear that within the realm of development

cooperation, one cannot separate political issues from economic issues.
Increasingly, the development agenda includes human and people’s rights,
the rule of law, security sector reform, and, above all, democracy and free,
fair, and credible elections. Coups d’état are thus considered aberrations
not only by the affected government but also by the international com-
munity as a whole. Coups undermine sustainable development and place a
significant burden on development cooperation. They are also a source of
conflict, and it is now generally accepted that conflict undermines devel-
opment efforts and hinders development cooperation. In addition, scholars
point to the continued authoritarianism, cronyism, corruption, nepotism,
lack of accountability, political instability, weak state institutions, and weak
legislative bodies and parliaments as being major impediments to imple-
menting a good governance agenda. If the international community wants
to support Africa in addressing its scourge of conflicts and implementing
a good governance agenda then the paradigm of development cooperation
and assistance must attend specifically to these governance issues. Such an
approach requires significant attention to capacity development, including
support for institution building, parliamentarians, and civil society.
Good governance leads to political stability and enhances peace and secu-
rity, both of which are necessary conditions for successful development
cooperation and investment. Consequently, there is a need to understand
the intrinsic links between investment, aid, political stability, peace, and
security. Nonetheless, some multilateral development institutions, as well
as donor countries, have been reluctant to support national, sub-regional, or
regional programs aimed at enhancing peace and security. For example, until
recently, multilateral development institutions and donor countries were
reluctant to become involved in security sector reform as part of the agenda
for good governance. At the same time, other multilateral development insti-
tutions have accepted this paradigm shift, and they are now putting greater
emphasis on political stability through various peace initiatives and security
programs.
While a lot of money is being allocated to peacekeeping missions through
the UN Department of Peacekeeping Operations, and while Africa is one
of the beneficiaries of the peacekeeping program, I contend that such con-
tributions would be even more rewarding if they were geared to building
capacity for such missions to be undertaken by Africans themselves. This
could be done either through regional security arrangements put forward
by the regional economic communities, particularly the Economic Commu-
nity of West African States, or as continental initiatives through the African
Union (AU). Multilateral peacekeeping forces, such as the Early Response
Units that were envisaged by the AU some time ago, should likewise be
encouraged. The AU Continental Early Warning System (CEWS) has become
xii Foreword

an important tool of the AU Commission’s Peace and Security Council. It is

now a major component of the new African Peace and Security Architecture
of the AU Commission.
There is no doubt that the utility of the new security architecture will
be judged by its operational capacity. For example, in troubled spots such
as Somalia, the fundamental problem facing CEWS is lack of resources and
personnel. These forces would aim to separate contending groups and pro-
mote peace and democracy rather than destroying both lives and property.
Efforts should be deployed to train these African forces in the spirit of sol-
idarity and respect for human rights. Equally important is the need for
greater donor coordination and transparency around post-conflict recon-
struction in Africa. This is essential for sustained peace and security on the
continent, but it is critically lacking. In order to better address the chang-
ing nature of development cooperation in Africa, this foreword highlights
the role of development assistance, new development partners, and global
governance.

Development assistance
African economies have been growing and regional organizations, such as
the Regional Economic Communities, have been acting as the engines of
development. The nature of development is also changing, and with it, the
nature of development aid. This is particularly necessary given the number
of emerging donor countries outside the traditional development assistance
countries. It would be misleading to study development cooperation in
Africa without addressing the issue of aid effectiveness and multilateral and
bilateral assistance for the implementation of national development agendas
in recipient countries. These are subjects of common concern for the North
as well as for the South. Most parties to African development agree that all
stakeholders must work together in a more coordinated partnership in order
to implement the global development agenda and change current global
realities. This requires greater dialogue and better understanding among
partners at different levels to ensure that multilateral development coop-
eration results in the promotion of economic progress in Africa and other
developing countries.
I offer an example from Mozambique. In recent years, Mozambique has
established positive relationships with different parties in the field of devel-
opment cooperation in Africa. In particular, it has strengthened its ties with
multilateral development institutions as a complement to bilateral part-
ners. The Government of Mozambique holds regular consultations with UN
agencies to assess progress and identify areas that require improvement.
It is in this context that Mozambique is implementing the UN reform ini-
tiative known as Delivering as One,1 which aims to bring more coherence
to UN intervention in the areas of development, humanitarian assistance,
and the environment. The main purpose of this initiative is to overcome
 Foreword xiii

the current fragmentation of various entities of the UN system, to reduce

transaction costs and apply program savings to the implementation of oper-
ational activities and to improve the predictability of resource allocations
through multiannual budgets. The initiative makes use of a planning and
implementation framework that is aligned with national development goals
and priorities and reflects Maputo’s policy directives.
Mozambique also maintains a positive and cooperative relationship with
various other international financial institutions, such as the World Bank
Group, International Monetary Fund (IMF), African Development Bank
(AfDB), and others. These institutions have served as important national
development partners over the years, mainly through their assistance with
post-conflict reconstruction following Mozambique’s civil war, which had
greatly affected the country’s infrastructure and agriculture development.
Mozambique prefers direct budget support to the government as a form
of development assistance, but also welcomes assistance to sectoral funds,
programs, or projects. The results of these modalities of assistance have so
far been very encouraging, and they should be maintained and consoli-
dated. However, the current process of consultations and reviews needs to
be strengthened in order to facilitate more proactive relations that allow for
ownership of the development process by Mozambique.
Nevertheless, there is room to improve the operations of these multilateral
institutions through greater participation by developing countries in their
management and through an alignment of their actions with the priorities
of African countries. Perhaps African institutions, such as the AfDB, should
assume leadership within the structure of development assistance. Develop-
ment assistance must be anchored in true partnership. It must also transcend
traditional ways of channeling assistance to a development partner. By this
I mean that program countries must not be passive recipients of aid, but
rather active partners in determining the nature of that assistance and devel-
opment targets. Aid must be delivered through broader and more flexible
partnerships that permit national ownership of development efforts and
enable the inclusion of other players, including the private sector and civil
society. Distorted partnerships in the past have meant that application of the
grants and aid across Africa has been inefficient. This has been largely due to
the lack of ownership of the process, delays in grant disbursement, and defi-
cient planning. These account for some of the reasons why international
development assistance has failed to realize food self-sufficiency, capable
institutions, and improved living standards in Africa over the course of the
last 50 years. Africa is currently refocusing its attention on the healthier
management of received support and on building self-reliant food security
programs which will make it possible for the peoples of the continent to
shape their own lives.
With a view to greater ownership by African countries, the purpose and
nature of development aid changes must change. The focus of development
xiv Foreword

assistance must include governance, political stability, climate change and

energy, food security, infrastructure, technology, and sustainable devel-
opment. Never before has the world devoted so many resources and so
much commitment to the issue of climate change. There is no doubt that
climate change will continue to have a devastating impact on Africa’s socio-
economic development. This is particularly disconcerting given that Africa is
the poorest continent, and the one in which the effects of climate change are
proving to be the most severe. Moreover, existing adaptation mechanisms
and resources under the Kyoto Agreement, which were designed to mitigate
the effects of climate change in Africa, and other developing regions, have
been directed at limiting future carbon emissions rather than addressing the
region’s vulnerability to the impacts of climate change. As late as April 2007,
a report by the Intergovernmental Panel on Climate Change (IPCC) warned
that Africa was not acting quickly enough to stem the dire economic and
environmental consequences of greenhouse gas emissions (IPCC 2007). This
report highlights that Africa, like other developing regions, needs the sup-
port of the international community to be able to effectively address climate
change at the national, sub-regional, and regional levels. Technology trans-
fer and climate change mitigation strategies remain important issues in this
regard.

New development partners

The players in international development cooperation are changing. There
are an increasing number of emerging donors, offering more than just
aid to developing countries, and private philanthropic trusts and foun-
dations are playing more prominent roles. The rise of emerging donors
is the result of the shift in major economic centers. BRICS countries are
participating in the construction of infrastructure and investments in min-
eral exploration, mining, industry, and agriculture. I see the role of these
emerging countries as complementary to existing sustainable development
efforts by old donors. Partnerships, such as those between Africa and
China, Africa and India, and Africa and South America, should be encour-
aged. They generate initiatives that address the development priorities of
many African countries in a win-win model. These partnerships reflect
the changes that are taking place in global economic, social, and political
life, where the possibility and role of South-South cooperation is gaining
prominence.
Multilateral and bilateral development cooperation must adjust to the role
of emerging actors in international cooperation, without jeopardizing the
positive trends toward sustainable development in Africa. Indeed, this coop-
eration could add new value to the traditional North-South cooperation in
the form of greater benefits from rapid economic growth in Africa. The par-
ticipation of the private sector and civil society in development efforts could
also prove extremely useful if properly coordinated and harmonized with
 Foreword xv

government action, plans, and programs as well as with the actions and
objectives of other players. Multilateral and bilateral development coopera-
tion must adjust to the role of emerging actors in international cooperation,
without jeopardizing the positive trends toward sustainable development
in Africa. Indeed, this cooperation could add new value to the traditional
North-South cooperation in the form of greater benefits to rapid economic
growth in Africa. The participation of the private sector, non-governmental
organizations (NGOs), civil society, and other international actors in devel-
opment efforts could also prove extremely useful if properly coordinated
and harmonized with government action, plans, and programs as well as
with the actions and objectives of other players. This, however, will require
a sustained dialogue between the aforementioned parties.

Global governance
I agree with those who argue that the new governance structure for the
global economic and financial system must be based on fairness and equity
for all stakeholders, particularly the most vulnerable nations. Poor countries
must have effective representation on decision-making bodies – representa-
tion that may in fact lead to new international governance institutions.
The Group of 77 and China has made it clear that there is a shared belief
among developing countries that it is time for change in the multilateral
development system (UNCTAD 2008, 2).

The current global international architecture for global economic gover-

nance requires fundamental reforms to provide an adequate framework
for dealing with the realities of today’s international economic and
financial relations and to respond to the needs of the vast majority of
poor . . . . There is need for a more inclusive and transparent governance
of global economic relations, with an adequate voice and participation of
developing countries in international economic decision-making.

I believe that this very valid perspective has serious implications for the
future of multilateral development cooperation.
Major reforms in the international system, particularly with respect to
global governance, are required. There is a serious asymmetry in the struc-
ture of global governance and this has to change. If this challenge were
overcome, the pursuit of desirable development-led globalization would
become possible and successful. The reforms demanded would bring more
legitimacy, better representation, and more coherence and accountability to
multilateral institutions. Above all, these reforms would bring real global
development, which will in turn mean better lives and higher standards and
quality of living for everybody. At the same time, developing countries need
xvi Foreword

to consolidate the process of democratization, respect the rule of law, protect

human rights, and ensure the equitable distribution of resources.

Conclusion
There must be more of a focus on peacemaking and peace building in order
to create an environment for development cooperation and the social and
economic transformation of the African continent. Beyond peacekeeping
and post-conflict reconstruction and development, our efforts need to focus
on governance issues, including support of indigenous efforts aimed at
strengthening institutions of democracy, human rights, and respect for the
rule of law.
Notwithstanding the fact that there is a growing skepticism about the
effectiveness of aid, official development assistance remains an important
tool for development cooperation. Obviously, no country has development
on the basis of aid. It cannot substitute national efforts guided by the
demands and aspirations of citizens. In other words, aid should not sub-
stitute peoples’ efforts, but rather support and complement them. Against
this background, there is need for a shift in the aid paradigm and the cre-
ation of a new architecture anchored on a broader vision of development
cooperation that engages the role of various development partners therein.
This demands a redefined and integrative role for old and emerging multi-
lateral and bilateral partners.

His Excellency Joaquim Alberto Chissano

Former President of the Republic of Mozambique

Note
1. Delivering as One is based on five pillars: One Leader, One Programme, One
Budget, One Office, and One Voice, in order to realize concrete results in the
implementation of the Millennium Development Goals.

References
IPCC (Intergovernmental Panel on Climate Change). 2007. Contributing of Work-
ing Group II to the Forth Assessment Report of the Intergovernmental Panel on Climate
Change, 2007. Cambridge, UK: Cambridge University Press.
UNCTAD. 2008. ‘Ministerial Declaration of the Group of 77 and China on the
Occasion of UNCTAD XII’. Available at www.unctad.org/en/docs//td436_en.pdf.
 Foreword xvii

New diplomacy in multilateral development cooperation

The background: A crisis of transition

The modern international system has three main architectural features that
were built in stages, one on top of the other, and which shaped the char-
acter of international diplomacy. These include the development of the
nation-state, alliances among major nation-states (intergovernmental struc-
tures), and formal multilateral systems such as the United Nations. While
the intergovernmental structures are not as dynamic as multilateral bod-
ies have previously been, they will continue to play a critical role in global
decision-making processes informed by the influence of emerging market
and developing states.
The multilateralism of today is more interdependent, connected, and
diverse and seeks to address a broader and deeper scope of global challenges.
In so doing, it places greater emphasis on global trusteeship and stewardship
in defining solutions and undertaking common actions to resolve global
problems. This foreword provides a renewed critique of new diplomacy in
the context of multilateral development cooperation.
For proponents, multilateralism has been a global paradigm based on the
realization by nations that challenges such as security, peacekeeping, dis-
ease control, human rights violations, and pollution, inter alia, are too vast
and complex for any nation or group of nations, no matter how powerful,
to effectively manage on their own (Powell 2003). Consequently, support-
ers of multilateralism contend that multilateral development cooperation is
required to address these issues. As explained by Lindsey Powell (2003, 5–6),
multilateralism is defined by James Caporaso as follows:

as an organizing principle, the institution of multilateralism is distin-

guished from other forms by three properties: indivisibility, general-
ized principles of conduct, and diffuse reciprocity. Indivisibility can be
thought of as the scope (both geographic and functional) over which
costs and benefits are spread . . . . Generalized principles of conduct usually
come in the form of norms exhorting general if not universal modes of
relating to other states, rather than differentiating relations case-by-case
on the basis of individual preferences, situational exigencies, or a priori
particularistic grounds. Diffuse reciprocity adjusts the utilitarian lenses
for the long view, emphasizing that actors expect to benefit in the long
run and over many issues, rather than every time on every issue.

This foreword is based on the Closing Remarks made by Winston Chandarbhan

Dookeran at The North-South Institute’s conference entitled The Future of Multilateral
Development Cooperation in a Changing Global Order, held in Ottawa on June 21, 2011.
Based in Ottawa, Ontario, The North-South Institute is Canada’s oldest independent
policy research institution specializing in international development.
xviii Foreword

Thus, multilateralism – and multilateral institutions in particular – provides

a more democratic means of determining which global issues should be
addressed and how states should address them (Powell 2003). It provides
small states with the opportunity for an alternative system of interstate rela-
tions, where relations based on dominance give way to relations based on
consensus and the rule of law. For this reason, small states have been among
the strongest advocates of multilateralism.
Conversely, critics of multilateralism argue that developing countries are
underrepresented at the bargaining table, while multilateral agreements
call upon them to implement regulatory measures beyond their reason-
able capacity and limit their activities which would facilitate more rapid
economic development (Powell 2003). At the regional level, action based
on a common or coordinated approach versus action based on the will or
dominance of a few actors is emerging as a legitimate area of concern.
Small Island Developing States (SIDS) are particularly vulnerable in the
context of collective reliance as promoted within a multilateral system. The
development of international financial regulations, supervision, risk man-
agement, and the assessment of financial sectors does not support a level
playing field between small and large states. Preferential treatment given to
areas important in some large states, such as mortgages, regional banks, and
hybrid capital, which proved dangerous in the financial crisis, also penal-
izes institutions in small states beyond economic justification. Small, open
economies such as St. Lucia and Tonga proved particularly vulnerable to
this preferential treatment. For example, in the wake of the 2008 financial
crisis, tourist-dependent St. Lucia’s hotels were 80 percent empty during its
peak tourist period in late 2008 and early 2009, while remittances to Tonga
dropped by 15 percent from June 2008 to June 2009 (te Welde 2009, 2).
Additionally, Cambodia witnessed a 50 percent decline in foreign direct
investment in 2009 which has contributed to the loss of 102,527 jobs in the
country (either permanently or temporarily) since September of that year (te
Welde et al. 2009, 5, 26). This is mostly due to the permanent closure of 93
garment and shoe factories; a significant development when one considers
that Cambodia’s garment sector accounts for 83 percent of its total exports
(te Welde et al. 2009, 10).
From the perspective of many developing states, the present multi-
lateral architecture and international approach to development has not
been working in the interest of developing states. Pivotal in this dis-
cussion has been who tailors development, why, and how. In particular,
there is concern that the international architecture, in which the a IMF
and G20 play integral roles, lends itself to a potential contravention of
natural justice where clubs of large countries develop rules for smaller
states to follow without adequate consultation, consideration, or engage-
ment. For more than 60 years, the industrialized global North has led the
push for development of multilateral cooperation. These wealthy developed
 Foreword xix

countries embraced this role and supported the establishment of interna-

tional institutions whose mandate was to support global growth. However,
the agendas are often perceived in the South as another vehicle for the
extension and promotion of Northern national interests. The global South
is not without their share of responsibility; having gained independence
from their colonial masters, many countries remained extremely fragile.
They were either readily caught in a developmental dependency syndrome
or were trapped in insular nationalism. They therefore lacked the structures
that would bring them on level footing with their Northern counterparts
and allow them to participate equally in the multilateral environment.
In the twenty-first century, it had become apparent that this paternalis-
tic development approach led by the North failed to drive growth in the
South. Indeed, the models for economic development being recommended
to lesser-developed countries are now in question as both the United States
and Western Europe face their own growth crises.
Meanwhile, the countries in the semi-periphery have shifted from playing
only a mediating role in the political economy to a more dominant role in
trade and international diplomacy, gradually increasing their political and
economic influence in the world. With the rise of the BRICS (Brazil, Russia,
India, China, and South Africa) and their burgeoning large economies,1 there
is potential for them to be the new leaders in global development. Unfor-
tunately for the rest of the developing world, they have not taken up a
leading position in the multilateral architecture; instead, they appear to seek
their own narrow short-term interests in securing resources and markets for
their own growth in support of nationalistic aims. Despite their unusual
birthing (a group formed through the pronouncement of others rather than
by themselves), the BRICS countries are still emerging powers with differ-
ent ideologies, types of government, and economic specialties. Regardless,
they share a view for the development of a multipolar system where several
countries and blocs will share in global leadership.
For example, Brazil has concentrated on advancing its economic growth
by enacting a hegemonic project promoting national autonomy and South
American regional integration by supporting MERCOSUR, UNASUR, and the
Initiative for the Integration of Regional Infrastructure in South America
(IIRSA), rather than concentrating on distributing aid through the world’s
core multilateral institutions (Burges 2008, 77–8). Brazil, much like China
and India, also gives aid on its own terms. The latter two states have been
accused of resorting to a neo-mercantilist approach to aid provision as they
continue to administer development assistance as a component of their
national trade and investment strategies (Woods 2008, 1218).
China is foremost in this regard, as it regularly employs conditionless
loans, credits, and debt write-offs, special trade arrangements and com-
mercial investments to safeguard its energy security, expand its trading
opportunities, and broker new economic relationships with little regard for
xx Foreword

the human rights records of its partners. This includes, according to Woods
(2008), provision of untied assistance to Sudan, Zimbabwe, and other rogue
states, which better enables them to enact policies that violate human rights
and compromise regional and global security (Woods 2008, 1205, 1207–8).
Because these loans are without condition, recipient states are under no
obligation to implement reforms to closed or dysfunctional economies.
Moreover, like China, India and Brazil do not report their aid provision
to the Organisation for Economic Co-operation and Development (OECD).
It is possible that they may be undermining debt forgiveness initiatives by
providing countries recently relieved of debt by OECD countries with signif-
icant loans that may lead to their reindebtedness. This lack of transparency
and accountability in aid provision stands in contradistinction to the tenets
of the international aid architecture established by OECD Development
Assistance Committee donors (Woods 2008, 1207, 1209).
Clearly, there is a crisis in transition. Who and what institutions will fill
the development leadership vacuum? A space has been created for the small-
and medium-sized countries to step forward.

A new debate: The search for a new diplomacy

There is need for a new diplomacy for the future of multilateral develop-
ment cooperation in a changing global order. Developed countries no longer
possess the economic or ideological high ground to continue to dictate
conditions to developing countries.
Mr. Percival Patterson, former prime minister of Jamaica, in his foreword
to the book Power, Politics and Performance,2 stated the following:

Everywhere there is a growing acceptance that the old and traditional

style of governance is obsolete. But even though the old is no longer
extant, that new order for which we yearn has yet to be established as
a result of constant and cataclysmic changes virtually with each pass-
ing day. Consequently, there is still an ongoing search to create a brand
new paradigm for the exercise of political power and the management of
national economies. To pass the final litmus test, any replacement must
be accountable, responsible, inclusive, open, and transparent or it will not
survive.

As the BRICS continue to make economic strides, so too should their political
perspectives influence global issues. SIDS, which are often the most vulnera-
ble to the outcomes of decisions made by larger entities, also have much to
contribute. The premise of new diplomacy must be based on acceptability,
openness, exchange, respect, inclusion, and equity for the emerging mar-
kets and developing states anchored in development, globalization, and a
multipolar multilateralism.
 Foreword xxi

New diplomacy will not only respond to the rising risks facing multilateral
development cooperation, but also take into account the shifts in the global
political order and the political demands of today. The development agenda
must be enhanced so that trade, as expressed in the Doha Round, becomes
a development issue. As reflected in the United Nations (1987) World Com-
mission Report on Environment and Development, inclusive growth must
also become a major policy objective. New diplomacy is characterized by
three anchors, discussed below.

Drilling down for development

The first anchor has to do with development. The need for a shift in the
development paradigm has been debated many times as the established
frameworks have yet to yield tangible fruit. Yet, what has not been truly
considered is the proposal that all countries must begin ‘drilling down
for development’ if they are to address its associated challenges. In other
words, there is a need to recognize that developmental strategies cannot
be imported and natural entrepreneurship, talent, and capabilities must be
unearthed. Development must be driven internally, through the strength of
the country in question. This requires a strong focus on getting the domestic
agenda right through strong leadership.
The state must deliver on society’s expectations and redress the pressing
issues of inequality within our societies. The new direction must focus on
building capacity and delivering public goods. The old institutions, be they
financial, social, or political structures, may have lost their relevance, and
there is now a call for new models of cooperation between the private and
public sectors as well as civil society. There is also a greater need to bridge
the divide between the formal and informal economies.
Best practices which emerge can be shared with other developing countries
who share similar historical, cultural, and developmental similarities as com-
pared to previous Northern strategies, which are alien to many developing
countries.

Spread and speed of globalization

The second anchor has to do with the dichotomy between globalism and
globalization. Joseph Nye3 (2002) explains that ‘[g]lobalism describes the
reality of being interconnected, while globalization captures the speed at
which these connections increase or decrease’. Building the network of con-
nections is what globalism is all about. This in turn results largely from the
new information revolution underway and the unpredictable opportunities
for development it provides. A speaker at The North-South Institute’s 2011
conference, The Future of Multilateral Development Cooperation in a Changing
Global Order, referred to this notion, calling for an ‘open data architecture
that distinguishes between outputs and outcome’. Development cooperation
xxii Foreword

must respond not only to the speed of globalization but also to the spread
of globalism.

Shrinking scope of multilateralism

Multilateralism is the third feature of the modern international system.
Today, the world is facing a shrinking scope of multilateralism, which is
attributable to three key variables. First, as the number of UN member states
increased from 74 to almost 200 between 1948 and 2010, it has become more
difficult for states to engage in meaningful debates and operate multilateral
institutions efficiently (Van Langenhove 2010, 264). Second, as globaliza-
tion’s benefits and opportunities remain concentrated in the global North,
many states in the South believe that multilateral institutions are unevenly
developed and inimical to the advancement of social conditions within
their jurisdictions (Van Langenhove 2010, 264). Third, as many countries
face fuel shortages, food crises, and financial risks, the domestic politics of
many states are currently preoccupied with short-term concerns and aus-
terity measures rather than long-term multilateral considerations. These
events have resulted in decreased priority and support for development
and multilateralism. This has become even more pronounced as nations
have prioritized their domestic agendas in the aftermath of the 2008 finan-
cial crisis, resulting in falling commitments to development cooperation in
terms of official development assistance. This trend, if not averted, could
adversely affect global development, especially among fragile and vulnerable
economies.
With the decline of multilateralism there is, conversely, now a grow-
ing preference for bilateral arrangements between countries in the North
and South and both among the North and the South. The space for
multilateralism has given way to multi-track diplomacy as nations search
for new political architectures to promote their national interests. This has
become more evident with the presence of BRICS leading the change to a
multipolar world affecting global geopolitical and geoeconomic dynamics.
Thus, the development of bilateral relations between BRICS, the North, and
the world’s emerging and developing states is now of the utmost imperative.
As new spaces for multilateral development cooperation are negoti-
ated, the reinsertion of the notions of development, globalization, and
multilateralism is in need of scholarly work of the kind that has engaged
institutions such as The North-South Institute. Another speaker at the same
North-South Institute conference referred to multi-track diplomacy as ‘smart
multilateralism’ involving all actors simultaneously.

The future for development cooperation: A new diplomacy

Uncertain expectations have resulted in donor fatigue or overzealous lend-
ing. A rough ride may be expected in the unruly waters of the new diplomacy
for development cooperation. It has been argued that the political anchor for
 Foreword xxiii

this diplomacy cannot be expected to come from the advanced economies

alone, or indeed the emerging BRICS countries. As a new geopolitical and
geoeconomic world order struggles to emerge, the direction it will take
remains to be seen. One can speculate that the new architecture may become
increasingly integrated and interdependent. Alternatively, one could also
surmise that it will be characterized by more fragmentation and decou-
pling. What is clear is that a new architecture or even a renovated model for
international diplomacy is required. International diplomacy will have to
address limitations of scale (i.e. the mobilization of vast resources to address
crucial collective action problems); information gaps (government officials
now need to cast a much wider net, systematically embedding themselves
in diverse, often informal networks of expertise, no longer able to claim to
be paramount authorities in and of themselves); and coherence (in priorities
and driving coordination).
In this environment, it is unclear whether the G20 will be the anchor
for this new diplomacy. Will it be able to coordinate political commitments
and engage pragmatic coalitions to translate objectives into actionable per-
formance? Regardless of the G20’s role, the process of a new diplomacy has
started with the appointment of the new managing director of the IMF, Ms.
Christine Lagarde in June 2011. Jeffrey Sachs4 had this to say in response to
her nomination:

[T]he defining truth of our time is that the US-led international order –
the one that gave birth to the IMF – is over. The problems in Greece,
Ireland, and Portugal are serious, but Europe can largely manage by itself.
The IMF’s new leader must address longer term and more complex global
challenges . . . The IMF’s main task for the coming years should be to create
a monetary and financial system that causes fewer international shocks –
not to clean up after each debacle.
(Financial Times 2011)

The importance of aligning strategy and systematically tapping the expertise

and resources of relevant states, and in particular, non-state actors, and pro-
moting multipolar multilateralism through the quota system as articulated
by the IMF remains paramount to creating a monetary and financial sys-
tem that will cause fewer international shocks. It also means taking a more
incremental, multifaceted approach that is more amenable to minimizing
risks.
While there is an understandable focus on the world’s most populous
countries, the economic, social, and political success of the world economy
cannot be achieved by ignoring the performance and viability of sovereign
states with small populations. Indeed, the robust economies of the compar-
atively small Asian Tigers provide the Chinese mainland with considerably
more non-financial foreign direct investment than the United States and
xxiv Foreword

Japan combined (US–China Business Council 2011). The new leadership of

the IMF should give credible attention and voice to the economic, mone-
tary, and political challenges confronting small states and their economies.5
Though the improvements made to the lending facilities of the IMF in
the last two years (with the introduction of the Flexible Credit Line, the
Precautionary Credit Line, the Post-Catastrophic Debt Relief Trust, and the
reform of the concessional lending facilities to Low-Income Countries) are
welcome, a gap persists nonetheless, as concessional financing for small
states remains inadequate. Recent developments in the Caribbean and other
regions have revealed the additional fragilities and vulnerabilities of small
states to natural disasters, the collapse of financial institutions, and the
concentration of economic activity within a limited cadre of states. Revoca-
tion of European preferential trade arrangements and the withdrawal of the
CARIFORUM-EC Economic Partnership Agreement serve as cases in point.
These developments have resulted in lost trade for Caribbean states and
have exacerbated economic uncertainty and anxiety in the region (Newstead
2009, 159).
Furthermore, small states particularly need help in financing infrastruc-
ture, yet the criteria of lending by the multinational institutions is better
suited to larger states with capital markets with credit ratings and diversified
private-sector players. The criteria used for long-term and short-term support
pays too much attention to the level of GDP per capita and does not suffi-
ciently account for higher levels of fragility and vulnerability to natural and
economic shocks. Finally, in order to address these issues, a new leadership
position in the IMF focusing on the challenges of small economies may be
required.
The North-South Institute provides a platform to rethink the challenges
ahead of us. As stated throughout the conference, the international land-
scape is changing and new actors are emerging, presenting new challenges
and opportunities for multilateral development cooperation. This currently
operates within an international aid architecture that is being criticized as an
incoherent system where development agencies are facing greater pressure to
demonstrate results.
Perhaps now is the right time to make a declaration for a new com-
mitment of resources and creativity by countries in both the North and
South. This is a declaration for development and development cooperation
in the face of current realities. Moreover, it serves as a call for an action
agenda to further multilateral development cooperation in a changing global
order.

Winston Chandarbhan Dookeran

Minister of Foreign Affairs, Trinidad and Tobago
 Foreword xxv

Notes
1. The BRICs acronym was introduced in a 2001 paper written by Jim O’Neill of
Goldman Sachs. It was coined in response to Brazil, China, India, and Russia’s
anticipated rise in share of global GDP relative to the G7 countries. O’Neill (2001)
called for the restructuring of the G7 and other multilateral forums to better incor-
porate the BRIC economies into the world’s global policymaking architecture. The
BRICs acronym has been rewritten as BRICS since South Africa officially joined the
group in 2011.
2. Power, Politics, and Performance – A Partnership Approach for the Development of
Small States is a monograph by Winston Chandarbhan Dookeran published by Ian
Randle Publishers in Kingston & Miami, April 2012.
3. Joseph Samuel Nye Jr. is the co-founder, along with Robert Keohane, of the
international relations theory of neoliberalism.
4. Jeffrey David Sachs is an American Economist and Director of the Earth Institute
at Columbia University in New York City.
5. This point was made in a letter sent to the IMF by Winston Chandarbhan Dookeran
as Minister of Finance and Chairman of the World Bank Small States Forum.

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Geography 30: 158–73.
Nye, Joseph. 2002. ‘Globalism Versus Globalization’. the Globalist, April 15. Available
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O’Neill, Jim. 2001. Building Better Global Economic BRICs. Global Economics Paper No:
66, New York: Goldman Sachs.
Powell, Lindsey. 2003. ‘In Defense of Multilateralism’. Yale Center for Environ-
mental Law and Policy. Accessed May 5, 2011. Available at http://www.yale.edu/
gegdialogue/docs/dialogue/oct03/papers/Powell.pdf.
Te Welde, Dirk Willem. 2009. ‘The Global Financial Crisis and Developing Coun-
tries: Taking Stock, Taking Action’. Overseas Development Institute Briefing Paper
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download/2822.pdf.
Te Welde, Dirk Willem, Medani M. Ahmed, Getnet Alemu, Lawrence Bategeka,
Massimiliano Cali, Carlos Castel-Branco, Frank Chansa, Shouro Dasgupta, Marta
Foresti, M. Hangi, Lutangu Ingombe, Ashiq Iqbal, Hossein Jalilian, Luis Carlos
Jemio, François Kabuya Kalala, Jodie Keane, Jane Kennan, Towfiqul Islam Khan,
H. B. Lunogelo, Isabella Massa, A. Mbilinyi, Dale Mudenda, Francis, M. Mwega,
Manenga Ndulo, Osvaldo Nina, Rodério Ossemane, Mustafizur Rahman, Glenda
Reyes, Sarah Ssewanyana, and Leni Wild et al. 2009. ‘The Global Financial Cri-
sis and Developing Countries: Phase 2 Synthesis’. Overseas Development Institute
Working Paper 316. Accessed November 6, 2011. Available at http://www.odi.org
.uk/resources/download/4784.pdf.
xxvi Foreword

United Nations. 1987. ‘Report of the World Commission on Environment and Devel-
opment: Our Common Future’. Accessed November 7, 2011. Available at http://
www.un-documents.net/wced-ocf.htm.
US-China Business Council. 2012. ‘Foreign Direct Investment in China, Top 10 Ori-
gins of Non-Financial FDI’. Accessed November 6, 2011. Available at https://www
.uschina.org/statistics/fdi_cumulative.html.
Van Langenhove, Luk. 2010. ‘The Transformation of Multilateralism: Mode 1.0 to
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Acknowledgments

The editors would like to thank Tim Shaw for his guidance, unwavering sup-
port, and encouragement throughout this book project. Special thanks to
Michael Olender and Jeff Willows for their hard work, determination, and
commitment. Their assistance on research and editing was critical to the
success of this book; it could not have been made possible without their
involvement.
The editors would also like to thank Rachel Calleja, Graeme Esau, Elena
Mizrokhi, Mercedes Mueller, Ben O’Bright, and Rachel Savard for their
research assistance and editing work.
Finally, the editors would like to acknowledge fellow colleagues at The
North-South Institute who supported their work in realizing this book
project. The North-South Institute thanks the Canadian International Devel-
opment Agency (CIDA) for its core grant and the International Development
Research Centre (IDRC) for its program and institutional support grant. The
views and opinions expressed in this book do not reflect those of The North-
South Institute, its Board of Directors, CIDA, IDRC, or anyone consulted in
its preparation.

xxvii
Abbreviations and Acronyms

AAA Accra Agenda for Action

ACBF Africa Capacity Building Foundation
ACI Africa Capacity Indicators
ADB Asian Development Bank
AfDB African Development Bank
AIDS Acquired Immune Deficiency Syndrome
AKDN Aga Khan Development Network
AKFC Aga Khan Foundation of Canada
ANC African National Congress
AU African Union
AWDF African Women’s Development Fund
BBC British Broadcasting Corporation
BP Busan Partnership for Effective Development
Co-operation
BRAC Bangladesh Rural Advancement Committee
BRICS Refers to the emerging economies of Brazil, Russia,
India, China, and South Africa
CBC Canadian Broadcasting Corporation
CDDE Capacity Development for Development Effectiveness
CEDAW The Convention on the Elimination of All Forms of
Discrimination against Women
CGIAR Consultative Group for International Agriculture
Research
CGP Center for Global Prosperity
CHAZ Churches Health Association of Zambia
CICC Coalition for the International Criminal Court
CIDA Canadian International Development Agency
CIGAR Consultative Group on International Agricultural
Research
CSOs Civil Society Organizations
CSR Corporate Social Responsibility
DAC Development Assistances Committee
DCD Development Co-operation Directorate
DCF Development Cooperation Forum
DDR Doha Development Round
DFID Department for International Development (UK)
DRC Democratic Republic of Congo
DSB Dispute Settlement Body (WTO)
EAP East Asia and the Pacific

xxviii
 List of Abbreviations and Acronyms xxix

ECOSOC United Nations Economic and Social Council

ECOWAS Economic Community of West African States
EU European Union
FAO Food and Agriculture Organization of the United
Nations
FDI Foreign Direct Investment
FOCAC Sino-Africa Cooperation Forum
g7+ g7 Plus – an organization that monitors and reports
on fragile states
G7 Group of Seven – forum for cooperation on global
economic and financial issues, includes Canada,
France, Italy, Germany, Japan, the US, and the UK
G8 Group of Eight – the G7 as well as Russia
G20 Group of Twenty – 19 countries and the EU
G77 Group of seventy-seven – a caucus organization the
helps developing countries pursue common goals
and develop leverage in UN deliberations
GATT General Agreement on Trade and Tariffs
GDP Gross Domestic Product
GEF Global Environment Facility
GHG Green House Gas
Global Fund Global Fund to Fight AIDS, Tuberculosis, and Malaria
Global Task Team Global Task Team on Improving AIDS Coordination
among Multilateral Institutions and International
Donors
HDI Human Development Index
HDRs Human Development Reports
HIV/AIDS Human Immunodeficiency Virus and Acquired
Immune Deficiency Syndrome
HLF High Level Forum on Aid Effectiveness
HLF3 3rd High Level Forum on Aid Effectiveness
HLF4 4th High Level Forum on Aid Effectiveness
HRW Human Rights Watch
IBSA Brazil-India-South Africa
ICTs Information and Communications Technologies
IDA International Development Association
IDEA-International Institute for Development in Economics and
Administration International Institute
IDGs International Development Goals
IDRC International Development Research Centre
IEG Independent Evaluation Group
IFAD International Fund for Agricultural Research
IFC International Finance Corporation
IHRN International Human Rights Network
ILO International Labour Organization
xxx List of Abbreviations and Acronyms

IMF International Monetary Fund

IOSCPRC Information Office of the State Council of the People’s
Republic of China
IPRCC International Poverty Reduction Centre in China
ISG International CSO Steering Group
ITC International Trade Center
JICA Japanese International Development Agency
LAC Latin America and the Caribbean
M-PESA Mobile-Pesa (Kenyan Currency)
MAP Multi-Country HIV/AIDS Program for Africa (WB)
MOPAM Multilateral Organization Performance Assessment
Network
MDB Multilateral Development Bank
MDGs Millennium Development Goals
MDRI Multilateral Debt Relief Initiative
MFAPRC Ministry of Foreign Affairs of the People’s Republic of
China
MNA Middle East and North Africa
MNCH Maternal, Newborn and Child Health
MOF Ministry of Finance (China)
MOFCOM Ministry of Commerce (China)
MTEFs Medium Term Expenditure Frameworks
NAM Non-Aligned Movement
NAMA Non-Agricultural Market Access
NATO North Atlantic Treaty Organization
NDDs Non-DAC Donors
NEPAD New Economic Partnership for African Development
Agency
NGOs Non-Governmental Organizations
NPOs Non-Profit Organizations
ODA Official Development Assistance
ODI Overseas Development Institute
OECD Organisation for Economic Co-operation and
Development
OIC Organization of the Islamic Conference
PBIG Post-Busan Interim Group
PEPFAR President’s Emergency Plan for AIDS Relief (US)
PPPs Public–Private Partnerships
PRSP Poverty Reduction Strategy Paper
PSSC Partners in South-South Cooperation
QuODA Quality of Official Development Assistance
RBM Results-Based Management
RDBs Regional Development Banks
SA South Asia
 List of Abbreviations and Acronyms xxxi

SASA South America-Africa-South Asia Cooperation

SDGs Sustainable Development Goals
SSA Sub-Saharan Africa
SSC South-South Cooperation
SSDC South-South Development Cooperation
SUSSC Special Unit for South-South Cooperation (UN)
SWFs Sovereign Wealth Funds
TPRM Trade Policy Reviews Mechanism
UK United Kingdom
UN United Nations
UNAIDS The Joint United Nations Programme on HIV/AIDS
UNCTAD United Nations Conference on Trade and Development
UNDESA United Nations Department for Economic and Social
Affairs
UNDG United Nations Development Group
UNDP United Nations Development Programme
UNESCO United Nations Educational, Scientific and Cultural
Organization
UNFCCC United Nations Framework Convention on Climate
Change
UNFPA United Nations Population Fund
UNICEF United Nations Children’s Emergency Fund
UNODC United Nations Office on Drugs and Crime
UNITAID An organization, hosted by the WHO, which purchases
drugs for HIV/AIDS, malaria, and tuberculosis through
innovative financing
US United States of America
VfM Value for Money
WB World Bank
WDI World Development Indicators (WB)
WDR World Development Report
WFP World Food Programme
WHO World Health Organization
WP-EFF Working Party on Aid Effectiveness
WRI World Resources Institute
WRR Wetenschappelijke Raad voor het Regeringsbeleid
(Scientific Council for Government Policy in the
Netherlands)
WTO World Trade Organization
Notes on Contributors

Manmohan Agarwal joined Centre for International Governance Innova-

tion (CIGI) as Senior Visiting Fellow in January 2008. Prior to this, he was
Dean of the School of International Studies and Professor at the Centre
for International Trade and Development at Jawaharlal Nehru University,
India. He has worked for both the World Bank and the International Mon-
etary Fund. He has also been Visiting Professor at the University of Western
Ontario and at the Catholic University of Leuven. He has a long and dis-
tinguished record of expertise in international trade, development, and
economics, as it relates to South Asia, and especially to India. Dr. Agarwal
contributes to CIGI’s various projects related to trade and economic devel-
opment, and he is an integral part of the development of a new group at
CIGI focusing on India.

Hany Besada is Research Specialist at the United Nations High Level Panel
Secretariat for the Post-2015 Development Agenda. He is also Theme Leader
and Senior Researcher at The North-South Institute (NSI) in Ottawa, Canada.
Previously, he was Program Leader and Senior Researcher at the Centre for
International Governance Innovation (CIGI) in Waterloo, Canada, where he
oversaw the Health and Social Governance Program. Prior to that, he was
the Principal Researcher for Business in Africa at the South African Institute
of International Affairs (SAIIA) in Johannesburg, South Africa, and Research
Manager at Africa Business Direct, a trade and investment consulting firm
in Johannesburg. He has worked for the South African Ministry of Local
and Provisional Government, Amnesty International, United Nations Asso-
ciations, the Joan Kroc Institute of Peace and Justice (IPJ), and the Office of
US Senator Dianne Feinstein. He has been editor for a number of volumes,
including Zimbabwe: Picking Up the Pieces (2011) and Crafting an African Secu-
rity Architecture: Addressing Regional Peace and Conflict in the 21st Century
(2010). He is currently pursuing a PhD in Politics and International Studies
at University of Warwick, UK.

Michael Blomfield was a research intern in the Global Economy and Devel-
opment Program at the Brookings Institution, during 2011–12. He holds a
master’s degree in Public Policy from Harvard University’s John F. Kennedy
School of Government and completed his undergraduate studies in Philos-
ophy, Politics, and Economics at the University of Oxford. At the Brookings
Institution, his research focused on aid effectiveness, particularly the path-
ways for scaling up the impact of proven innovations in development
assistance. Before his graduate studies, he worked on health policy for the

xxxii
 Notes on Contributors xxxiii

British Government. His work on community engagement in public health

services has been published by the Smith Institute and the Health Founda-
tion in London, UK, and his research on patterns of irregular migration from
Africa and Asia to the European Union has been published by the Migration
Policy Institute in Washington, DC.

Musa Bullaleh has over ten years of professional experience dealing with
social development with UNAIDS and UNDP, among others. He also has
extensive hands-on experience working in the private sector, NGOs in
Africa, and the Middle East and North Africa. He has undertaken pol-
icy research and programme evaluation related to international develop-
ment cooperation and development effectiveness, including coordination
of UNAIDS engagement and preparation for the 4th High Level Forum
on Aid Effectiveness. Since 2009, he has worked for UNAIDS Geneva
in various capacities, including adviser in the Programme Effectiveness
and Country Support Department. Currently, he is with UN Malawi as
a Human Rights and Gender Equality Adviser. Before joining UNAIDS,
Musa worked for the UNDP as a Programme Analyst and Assistant to
UN Resident Coordinator from 2006 to 2008. Musa holds a bache-
lor’s degree in Economics from Brock University, St. Catharines, Ontario,
Canada, and master’s degree in Government from Harvard University,
Cambridge, USA.

Stephen Brown is Assistant Professor of Political Science at the University of

Ottawa. He is the author of numerous publications on foreign aid, democ-
ratization, political violence, peacebuilding, and transitional justice/rule of
law. His edited volume, Struggling for Effectiveness: CIDA and Canadian Foreign
Aid, was published recently. He has worked for the UNDP for several years
and served as a consultant for several development-related organizations,
including UNDP, the Development Assistance Committee of the OECD, and
the International Development Research Centre.

H. E. Joaquim Alberto Chissano is the former president of the Repub-

lic of Mozambique (1986–2004) and Chairperson of the Joaquim Chissano
Foundation. Prior to serving as president, Chissano was appointed Minis-
ter of Foreign Affairs in June of 1975, following independence. While in
office, Chissano led positive socio-economic reforms, culminating with the
adoption of the 1990 constitution that led Mozambique to the multi-party
system and an open market. Among the many high positions Chissano sub-
sequently held, he was Chairperson of the Southern African Development
Community (SADC) and Chairperson of the African Union. After retiring
from office, he was appointed Envoy of the UN Secretary-General for the
2005 Summit to Review the Implementation of the Millennium Declaration,
as well as Special Envoy of the UN Secretary-General to Guinea-Bissau,
xxxiv Notes on Contributors

and to the LRA-affected areas and from June 2009, as SADC Mediator for
Madagascar. Currently, he is the Chairperson of the Joaquim Chissano Foun-
dation, which aims peace promotion, social and economic development,
and culture, and of the Africa Forum of Former African Heads of State and
Government. He has received the highest awards from many countries and
has received several prizes, including the inaugural Mo Ibrahim Prize for
Achievement in African Leadership in 2007.

Arjan de Haan leads the International Development Research Centre Pro-

gram Supporting Inclusive Growth, managing a team of ten specialists
in Ottawa and regional offices. Before joining International Development
Research Centre, he worked at the Institute of Social Studies in The Hague,
where he convened the MA on Social Policy and led the development of a
new database Indices of Social Development. Prior to that he worked for ten
years at the UK Department for International Development, with positions
in London, India, and China, and he managed the Poverty Research Unit at
the University of Sussex (1996–98). He has published widely and is currently
co-editor of the Canadian Journal of Development Studies. He holds a PhD in
Social History from Erasmus University Rotterdam and an MA in Sociology
from Leiden University (the Netherlands).

Winston Chandarbhan Dookeran has made his mark in the twin Republic
of Trinidad and Tobago as an educator, politician, and public servant. He
is currently the Minister of Foreign Affairs, Member of Parliament, and has
acted as prime minister on several occasions. He is also the founding political
leader of the Congress of the People. His new politics advocated good gover-
nance, consensus building, direct democracy, public integrity, and inclusive
development. For him getting the politics of development right requires
solving the alignment gap between the logic of politics and the logic of eco-
nomics. His distinguished academic career and numerous publications on
economic development have left a remarkable impression on both the local
and international stage. He embodies the new multi-disciplinary statesman –
one who stands for principles above self-interest.

David Felsen currently serves as Executive Director of International Pro-

grams at Saint Leo University in the United States. He earned his bachelor’s
and master’s degrees from McGill University in Montreal, Canada, and
earned his doctorate from Oxford University, UK. In 2009, he co-edited the
volume, Immigration: A Documentary and Reference Guide (Greenwood/ABC
Clio). His research interests include Latin American politics, European pol-
itics, comparative immigration policy, and NGOs. Previously, he taught
at Alliant International University in San Diego, Temple University in
Philadelphia, and Tecnologico de Monterrey (ITESM) in Mexico. He has also
 Notes on Contributors xxxv

been a visiting fellow at LUISS University’s School of Government in Rome

and a visiting scholar at Harvard’s Kennedy School of Government and at
the University of Bologna.

Pablo Heidrich is a senior researcher with the Governance of Natural

Resources program at The North-South Institute (NSI). Previously, he worked
for the Latin American Trade Network on regionalism, energy and infrastruc-
ture integration and South American economic policies. He did his graduate
studies in International Politics and Development Economics at the Latin
American Faculty of Social Sciences (Argentina), Tsukuba University (Japan),
and the University of Southern California. His current research at NSI is on
commodities and employment, policy responses to high energy and food
prices, and the economic impact of Canadian mining in Latin America.

Pradeep Kakkattil is currently Chief of Aid Effectiveness and Country

Capacities with UNAIDS, Geneva, and oversees UNAIDS’ strategic engage-
ment and support to countries in mobilizing, allocating, and optimally
utilizing resources to reduce new infections, AIDS-related deaths, and dis-
crimination. In this role, he has helped establish innovative instruments
for scaling up technical support and capacity development through promo-
tion of a south-south approach. He has led UNAIDS work around country
ownership, efficiency, effectiveness, and sustainability of the AIDS response.
He works closely with country partners, the Global Fund and PEPFAR, key
donors to the AIDS response, toward strengthening harmonization and
alignment and national coordination in support of the Three Ones. Prior
to working with UNAIDS, Pradeep worked with DFID in India and played
a lead role in scaling up support to India’s HIV prevention programs. He
has also worked as a journalist with the print and electronic media. He
has recently relocated to Bangkok as the Deputy Regional Director at the
UNAIDS Regional Support Team for Asia and the Pacific.

George Kararach is a political economist from Uganda and currently at

the African Development Institute at the African Development Bank (AfDB)
in Tunis, Tunisia. Prior to joining the AfDB, he was the Knowledge Man-
agement Expert (Economic and Financial Management) in the Knowledge,
Evaluation and Learning Department at The African Capacity Building Foun-
dation. He holds a PhD in Economics from Leeds University, UK. He has
held many appointments as an academic and development specialist: lec-
turing at Leeds, Middlesex, and Luton Universities and also worked as Policy
Analyst for UNICEF and Program Development Consultant for UNDP. He
was also appointed Senior Research Fellow (Macroeconomics) at Economic
Policy Research Centre (Uganda). He has written articles on monetary and
fiscal policies, monitoring and evaluation systems, education and health
xxxvi Notes on Contributors

financing, social accounting matrices, political business cycles, civil soci-

ety, and the politics of economic reform in Africa. He recently published
Macroeconomic Policy and the Political Limits of Reforms in Developing Coun-
tries (Africa Research and Resource Forum, 2011) and Rethinking Development
Challenges for Public Policy: Issues from Contemporary Africa (with K. Hanson
and T. Shaw in 2012).

Homi Kharas is Senior Fellow in Global Economy and Development at

The Brookings Institution in Washington, DC, a Non-Resident Fellow of
the OECD Development Center, and a member of the National Economic
Advisory Council to the Malaysian prime minister. He was a member of the
Working Group for the Commission on Growth and Development, chaired
by Professor A. Michael Spence. Previously, he served as Chief Economist
for the World Bank’s East Asia and Pacific region and as Director for Poverty
Reduction and Economic Management, Finance and Private Sector Develop-
ment, responsible for the Bank’s advice on structural and economic policies,
fiscal issues, debt, trade, governance, and financial markets. In 1990–91, he
was a Senior Partner with Jeff Sachs and Associates, advising governments
in Eastern Europe and the Soviet Union on transition. His research interests
are now focused on global trends, East Asian growth and development, and
international aid for the poorest countries. He holds a PhD in Economics
from Harvard University.

Shannon Kindornay’s research with the Governance for Equitable Growth

program at The North-South Institute (NSI) focuses on development coop-
eration, governance of the aid architecture, aid effectiveness, and aid and
the private sector. She leads NSI’s work on development cooperation. Prior
to joining NSI, Kindornay worked on human rights, governance, and trade
and development. Her recent publications include Investing in the ‘Business’
of Development – Donor Approaches to Engaging the Private Sector (with Fraser
Reilly-King, 2013) and Rights Based Approaches to Development: Implications
for NGOs (with James Ron and Charli Carpenter) (Human Rights Quarterly,
34 (2): 2012). Previously she worked at the Canadian International Develop-
ment Agency. She holds an MA from Carleton University’s Norman Paterson
School of International Affairs and a BA in Global Studies and Political
Science, from Wilfrid Laurier University.

Frannie Léautier is Executive Secretary of the African Capacity Building

Foundation. A Tanzanian national, she served in various capacities at the
World Bank from 1992 to 2007, including as vice president of the World
Bank and Head of the World Bank Institute (2001–07), and Chief of Staff to
the former President of the World Bank (2000–01). From 2007 to 2009, she
was Managing Partner at The Fezembat Group, a company focused on risk
management and leadership development. She holds a PhD in Infrastructure
 Notes on Contributors xxxvii

Systems (MIT, 1990). She is also a graduate of the Harvard University Exec-
utive Development Program. She has published a number of articles in
economic journals and magazines and edited three books, including Cities in
a Globalizing World (2006). She is currently Founding Editor for the Journal
of Infrastructure Systems, Advisory Board Member for the MIT Open Course
Ware, and Secretary of the Board for the Nelson Mandela Institute for Sci-
ence and Technology in Africa. She is a charter member of the Advisory
Board for EuropEFE and a founding board member for the Africa Institute
for Governing with Integrity.

Justin Yifu Lin is professor and honorary dean, National School of Develop-
ment, Peking University. He was Senior Vice President and Chief Economist
of the World Bank, 2008–12. In this position, he guided the Bank’s intellec-
tual leadership and played a key role in shaping the institution’s economic
research agenda. Prior to this, he served for 15 years as Founding Direc-
tor and Professor of the China Centre for Economic Research (CCER) at
Peking University. He is the author of 23 books, including The Quest for
Prosperity: How Developing Economies Can Take Off (2012) and New Struc-
tural Economics: A Framework for Rethinking Development and Policy (2012).
He is a deputy of China’s People’s Congress and Vice Chairman of the
All-China Federation of Industry and Commerce. He has served on several
national and international committees: International Food Policy Research
Institute Steering Committee, UN Millennium Task Force on Hunger, Emi-
nent Persons Group of the Asian Development Bank, National Committee
on United States–China Relations, Global Agenda Council on the Interna-
tional Monetary System, Reinventing Bretton Woods Committee, and the
Hong Kong–US Business Council. He is Corresponding Fellow of the British
Academy and Fellow of the Academy of Sciences for Developing World.

Franklyn Lisk is Professorial Research Fellow and Development Economist

at the Centre for the Study of Globalisation and Regionalisation (CSGR),
University of Warwick, UK, and Associate Research Fellow at the African
Studies Centre at Bradford University, UK. He was Professor at the Africa
Centre for HIV/AIDS Management at Stellenbosch, South Africa, 2005–06.
Prior to that he was Founding Director of the ILO Programme on HIV/AIDS
and the World of Work in Geneva, as well as ILO Global Coordinator within
the UNAIDS co-sponsorship framework, 2001–05. He has done consultan-
cies on HIV/AIDS impacts and responses for UNAIDS, UNDP, WHO, the
African Development Bank, the African Union, DANIDA, and DFID and
is currently a member of the Global Fund’s Technical Review Panel. His
recent publications include Global Institutions and the HIV/AIDS Epidemic:
Responding to an International Crisis (2010) and Governance of HIV/AIDS:
Making Participation and Accountability Count (2009, co-edited with Sophie
Harman).
xxxviii Notes on Contributors

Towera Luhanga is Program Officer at the Africa Capacity Building Foun-

dation (ACBF) in the Eastern and Southern Africa Operations Department.
She is a sociologist with over 15 years of work experience in develop-
ment and program management, specifically in civil society and gender.
As Program Officer, she has managed ACBF-funded programs in Botswana,
Kenya, Lesotho, Namibia, South Africa, Swaziland, Zambia, and Zimbabwe.
She is also a member of the Core Team for ACBF ACI Report 2012. Prior
to joining ACBF, she worked for the Canadian International Development
Agency, Malawi office, as Manager for the Gender Fund aimed at build-
ing capacity of Government and Civil Society to promote gender equality
and empowerment of women. She also spent two years as Social Science
Researcher for the TB Equity Project in the National TB Program of Min-
istry of Health in Malawi. She also worked for Plan International and
Program Coordinator.

Frédéric Martin co-founded in 1997 the Institute for Development in Eco-

nomics and Administration (IDEA International) and is currently one of two
co-presidents of the Institute. He holds a PhD in Agricultural Economics
from Michigan State University, USA. He has 27 years of professional experi-
ence in around 30 industrialized and developing countries. His work relates
to supporting governments and the public sector in implementing results-
based management, in particular through strategic planning, budgeting for
results, public finance reform, and results-based monitoring and evaluation.
He taught for 18 years at University Laval, Quebec, where he was Professor
and Chair, International Development. He is also a board member of the
International Development Evaluation Association (IDEAS).

Michael Olender holds an MA in International Affairs from the Norman

Paterson School of International Affairs at Carleton University. His research
interests include international political economy, governance and policy
processes, financial and sovereign debt crises, intellectual history, and inter-
national relations theory. His latest work on the euro crisis was published in
Carleton University’s Review of European and Russian Affairs. He has worked
as an analyst and editor in federal government, embassy, central bank, and
independent think tank settings. He recently served as a consultant for The
North-South Institute.

Yiagadeesen Samy is Associate Professor and the MA Program Supervisor

at the Norman Paterson School of International Affairs, Carleton Univer-
sity, and Research Associate with The North-South Institute, both in Ottawa,
Canada. He holds a PhD in Economics from the University of Ottawa. He is
the author and co-author of several peer-reviewed articles and book chapters
in edited volumes on various issues such as trade and labor standards, the
political economy of foreign direct investment, state fragility, and small
 Notes on Contributors xxxix

island developing states. He is currently working on state fragility and its

implications for aid allocation, aid and taxation, and income inequality.

Franke Toornstra joined the IDEA International Institute as Vice Presi-

dent and Director in September 2010. He obtained a master’s degree in
Agricultural Sciences with a specialization in rural engineering and water
management from Wageningen University, the Netherlands. He has 25
years of professional experience in international development, and worked
in academia, as a consultant, and as a senior officer for the Netherlands
Ministry of Foreign Affairs and the World Bank. His areas of specialization are
public sector reform, aid effectiveness and effective aid management, pro-
gram and project implementation, and leadership and change management
as cross-sector field. He has worked and lived in many countries worldwide
and is currently based in Quebec City, Canada.

Ward Warmerdam is a PhD candidate at the International Institute of Social

Studies (ISS), The Hague. His research focuses on China’s engagement with
Africa, the lessons from China’s own development experience, and how
these inform China’s aid principles and practices. He has conducted field-
work in Uganda surveying Chinese companies in Kampala and surrounding
areas. His current political research on Chinese aid investigates elements of
the Paris Declaration and their relation to Chinese aid principles and prac-
tices. Before starting his PhD, he lived in China for ten years running his
own consultancy and language institute. His aim is contribute to more self-
reflective policy research and learning from the concepts and experiences of
non-Western academics, practitioners, and policymakers. Along with three
colleagues, he is establishing the EPANetwork (www.epanetwork.nl) to coor-
dinate emerging powers and Africa research in Belgium and the Netherlands
and to bring the perspectives of emerging powers and Africans into a more
prominent position in the research and policymaking of these two countries.
Introduction: Multilateralism
in an Era of Change
Hany Besada and Shannon Kindornay

Context

Traditionally, multilateral institutions like the United Nations, the World

Bank and the International Monetary Fund – institutions that promote and
facilitate cooperation among countries – oversaw and delivered concerted
responses to development challenges. Founded some 65 years ago follow-
ing the Second World War, these institutions mark an international site for
collective development efforts and are responsible for overseeing 40 percent
of official development assistance (ODA) worldwide. However, the rapidly
changing landscape in which development takes place is calling the future
of multilateral development cooperation into question.
Development today is in a state of flux. The international environment,
which continues to be defined by financial and food crises, a scarcity of
resources – particularly land and water – and the challenges of climate
change, demonstrates the crucial importance of multilateral agencies as
mechanisms and sites for dealing with global problems that require collec-
tive efforts by all nations. However, as new and (re)emerging actors, such
as the BRICS (Brazil, Russia, India, China, and South Africa), and the pri-
vate sector continue to alter the international landscape, new challenges
and opportunities for multilateral development cooperation have begun to
emerge, including the need to modernize the international aid architec-
ture and reduce fragmentation, explore new models for development, and
improve representativeness of multilateral development agencies to better
reflect new geopolitical realities.
Foregrounding these developments is an international aid architecture
that is being criticized as overlapping and incoherent in dealing with the
changing global economic and political landscape. Indeed, with the rapid
proliferation of multilateral agencies, which have grown from 15 insti-
tutions in 1940 to over 260 in 2008, fears of fragmentation within the
current system have generated attention from academics and policymakers
alike (Reisen 2009, 4–5; Chapter 3, this volume). While the proliferation of

1
2 Introduction: Multilateralism in an Era of Change

multilateral organizations should be an area of concern in its own right,

the rise of new actors in development, such as emerging donors, private
foundations, and mega-non-governmental organizations, exacerbates this
problem.
Concerns of fragmentation have also followed the rising proportion of
earmarked funding channeled through multilateral agencies. Indeed, core
contributions to multilateral agencies as a share of ODA, which have fallen
from 33 percent in 2001 to 28 percent in 2009, are increasingly being
replaced by a system of ‘flag planting’ and the subsequent ‘bilateralization’
of multilateral spending (OECD-DAC 2011, 4). Earmarked spending, which
is essentially funding restricted by bilateral donors for specific purposes, grew
to 12 percent of total ODA in 2009 (OECD-DAC 2011, 28), exacerbating frag-
mentation in the multilateral system. While the overall share of multilateral
aid is not increasing,1 donors are placing more and more pressure on the
multilateral system to deliver tangible results, especially in countries where
bilateral donors are exiting or are less able to intervene (OECD-DAC 2011).
However, according to at least one assessment, multilateral institutions con-
tinue to perform better than their bilateral counterparts in terms of their
quality of aid (Birdsall and Kharas 2010).
Amidst troubling trends in aid allocation and the proliferation of mul-
tilateral agencies, a sense of urgency has developed surrounding the need
to reform the role of various multilateral organizations within the aid sys-
tem. Indeed, the financial crisis of 2008 and its aftermath has led to a
questioning of dominant (western) understandings of how successful devel-
opment ought to be achieved, as heard in calls for the Post-Washington
Consensus2 (Birdsall and Fukuyama), the return of the developmental state3
(Wade 2010), and ongoing debates regarding the Beijing Consensus.4 While
developing countries, academics, and civil society groups have questioned
and challenged the dominance of key multilateral institutions, notably the
World Bank, on their monopoly over developmental ideas that tend to
privilege neoliberal and technocratic solutions to the inherently political
problems of development (Stone 2003; Plehwe 2007), the recent financial
crisis has prompted a questioning of the old status quo by policymakers
throughout the Western world. With concerns surrounding whether the
policies championed by these institutions actually helped or hindered the
objective of increasing living standards for recipient countries, the call for
reform is louder than ever.
Notably, critiques of traditional multilateral agencies have been linked to
larger concerns over developing-country representation and power within
key multilateral institutions, as the prevailing governance structures, which
are based in historical economic weight, have given Western countries con-
trol over decision-making processes.5 As emerging economies – for example,
Brazil, Russia, India, China, and South Africa (the so-called BRICS) and
the N-11 countries6 (Wilson and Stupnytska 2007) – continue to gain real
 Hany Besada and Shannon Kindornay 3

and perceived power, long-standing debates on inclusion, representation,

and legitimacy within the multilateral system have become more relevant
than ever.
However, even as emerging economies increase their financial contribu-
tions to multilateral systems, with funding from Southern partners to the
World Bank’s International Development Association (IDA) tripling from
$381 million7 in the 2003–05 financial period to $926 million in 2009–11,
IDA pledges from non-DAC donors compose a mere 4.15 percent of total
IDA funding, providing non-DAC donors with a minority stake in IDA affairs
(Davies 2010, 6; OEDC-DAC 2011, 33). While the rise in non-DAC contri-
butions to IDA funding suggests that non-DAC countries seek involvement
in the multilateral development system, the degree to which emerging
economies will continue to engage with global institutions in the absence of
meaningful reform, specifically regarding IMF and World Bank voting rights
and representation in the UN Security Council, remains questionable (Heine
2010; Naidu 2012).
While emerging economies continue to seek representation within estab-
lished multilateral institutions, many have also sought to increase legitimacy
and representation via alternate mechanisms. United under an agenda for
a multilateral architecture based on perceived common national interests
and equal and fair treatment, developing countries have pursued spaces
free of Western influence. In finance, regional development banks’ man-
agement structures have afforded developing countries a greater say in
decision-making processes8 enhancing real and perceived ownership over
regional development spending for member countries (Burall 2007; Griffith-
Jones et al. 2008). Indeed, the African Development Bank has committed
to strengthening African ownership over development efforts as part of its
aid-effectiveness agenda, making ownership and stakeholder participation
central components of the design and implementation of bank-supported
programming (Pennarz et al. 2011). At the same time, multilateral spaces,
notably the G77 plus China, the Africa Economic Community,9 and, more
recently groupings such as IBSA (India-Brazil-South Africa), have become
sites for developing countries to challenge the outdated governance system
prevalent in many multilateral agencies and pursue a development architec-
ture that is ‘more transparent, accountable, participatory and responsive to
the needs of developing countries’ (Africa Regional Meeting 2010, 2).
Emerging economies have also been accused of weakening the bargain-
ing power of Northern donors through providing alternatives to traditional
Western practices of aid giving. Emerging powers are increasingly offering
alternate sources of finance, views, and wisdom to development coopera-
tion that subtly challenges Western aid practices (Woods 2008; Walz and
Ramachandran 2011). The provision of South-South cooperation (SSC) by
emerging economies goes well beyond aid. It includes embracing coopera-
tion through experience sharing, trade, investment, technology distribution,
4 Introduction: Multilateralism in an Era of Change

and skill transfer. United by shared experiences, emerging powers are provid-
ing SSC under a banner of solidarity and mutual benefit, designing programs
and broader development initiatives that reject practices of conditionality
and seek to limit involvement in recipient country policies (Woods 2008).
For some, the non-interventionist approach adopted by emerging pow-
ers threatens to undercut prior progress toward increasing international
standards and raises concerns that emerging donors’ support of ‘rogue’
states may encourage fiscal irresponsibility and slow reform (Manning 2006;
Naim 2007). Additionally, emerging donors appear unwilling to engage with
Western aid institutions, notably the OECD, favoring separate models of
aid giving that emphasize South-South forms of development cooperation
(Walz and Ramachandran 2011). While there is little evidence to suggest
that emerging donors are overtly trying to overturn the current multilateral
development system, the alternatives to ineffective and outdated practices of
aid giving offered by emerging economies may pose serious challenges to the
prevailing logic that underpins the current multilateral aid regime (Woods
2008).
It is important to note, however, that patterns of aid giving and partic-
ipation in multilateral development cooperation varies between emerging
donors. According to one estimate, South Africa and Brazil allocate 77 and
90 percent of their respective aid flows through multilateral institutions,
while in 2009 Arab donors provided a mere 5 percent of aid flows through
multilateral channels (Davies 2010, 6; Walz and Ramachandran 2011, 13).
On average, Southern donors channel 18 percent of aid flows through multi-
lateral institutions, a number that remains well below the average 30 percent
contributed by DAC donors (Davies 2010, 6). In this sense, while aid from
emerging economies appears to be growing, lagging growth in contribu-
tions to the multilateral system suggests that new donors remain somewhat
marginal in the traditional multilateral development community.
In addition to the rise of emerging economies, the private sector and
NGOs are playing an increasing role in multilateral development coopera-
tion. According to one estimate, total private donations10 in 2008 amounted
to $53 billion, compared with $121 billion in ODA (CGP 2010, 6). Kharas,
Makino, and Jung estimate that private philanthropy has grown from 1 per-
cent of total aid over 1995–98 to 17 percent between 2005 and 2008 (2011,
14). While donors and recipients are looking to the private sector as an
engine for growth and potential for development partners, there remain
concerns that the proliferation of public–private partnerships may under-
mine the role of the state as the primary provider of essential goods and
services (Kwakkenbos 2012).
At the same time, NGOs are increasingly forming a ‘third sector’ of devel-
opment cooperation. Through learning to engage in broadening networks
and cooperative arrangements in novel ways, NGO’s have furthered their
influence with governments, multilateral institutions, the private sector,
 Hany Besada and Shannon Kindornay 5

and civil society actors, becoming new champions of development as a

result of the sheer capacity and resources available to many NGOs. How-
ever, the role of NGOs as development actors has been met with criticism
from those who question both the spending and funding practices of these
agencies. NGOs, aid organizations, and development institutions have long
been described as tools used for ‘Northern’ foreign policy aims (Shivji 2007).
The proliferation of NGOs, which has partly been driven by increased fund-
ing from governments and multilateral institutions, has increased the risk
that larger NGOs will become dependent on the donor governments that
provide the bulk of NGO funding. In cases where NGOs rely heavily on
government resources to maintain operational viability, it becomes possible
that the reliance on funding from donor governments may serve to influ-
ence NGO operations and potentially threaten the political independence
of NGO efforts.
Although the proliferation of new actors in development has raised fears
of increased fragmentation and the duplication of efforts within the multi-
lateral system, the emergence of new actors has simultaneously been hailed
for creating competitive pressure within the aid system, offering recipi-
ent countries alternatives to previously monopolistic forms of development
cooperation (Woods 2008). While more choice within the development sys-
tem may serve to increase country ownership over future development
practices, multilateral institutions have attempted to limit the challenges
of increasing development actors. This has been done by engaging new
actors in international development discourses through the establishment
of various centers and programs on SSC in attempts to promote inclusion
(Perroulaz, Fioroni, and Carbonnier 2010, 147; Davies 2012). As SSC contin-
ues to grow while aid from traditional donors slows, SSC may play a larger
role in facilitating inclusive and cooperative spaces for development outside
of the traditional multilateral sphere.
Another example of this attempt to engage emerging development actors
can be seen in the opening up of the OECD-DAC-hosted international
discussions on aid effectiveness. The 4th High Level Forum on Aid Effec-
tiveness (HLF4) was held in Busan, South Korea, in 2011. A key goal of the
event was to engage emerging donors on the OECD-DAC aid-effectiveness
agenda. Indeed, supporters of this agenda believed that Busan could offer
a good opportunity to develop DAC-outlined goals into a more widely
supported agenda for development cooperation, bringing emerging pow-
ers, civil society, and the private sector into the fold. The result of Busan
was the establishment of the Global Partnership for Effective Develop-
ment Co-operation (Global Partnership), which, at the time of writing, is
set to include participation by traditional and emerging donors, develop-
ing countries, civil society actors, and the private sector. The extent to
which providers of SSC will take on a leadership role within this emerging
multilateral partnership remains to be seen.
6 Introduction: Multilateralism in an Era of Change

Contents

Given the current environment, a broad-ranging analysis on the future of

multilateral development cooperation is very timely. While other recent
volumes have effectively examined the changing aid landscape and its impli-
cations for development, notably Kharas, Makino, and Jung’s Catalyzing
Development: A New Vision for Aid (2011), this volume focuses much more
squarely on the traditional multilateral system and emerging forms of devel-
opment cooperation, multilateral and otherwise. It offers a critical exami-
nation of key issues within the multilateral development system, namely
its fragmentation and effectiveness, declining support of the multilateral
development institutions, and ongoing questions relating to the legitimacy
of multilateral development institutions and international decision-making
processes. It looks at the context in which multilateral development coop-
eration is occurring, characterized by low growth in developed countries,
increasing complexity as a result of emerging actors and shared global issues,
and persistent long-standing challenges at country level, including the need
for more capacity development, country ownership, and better-quality aid.
A number of important themes arise from the chapters in this volume.
The first is that development cooperation is becoming increasingly charac-
terized by competition at the institutional, financial, and ideational levels.
Old and new institutionalized multilateral forms of SSC are emerging and/or
gaining prominence as developing countries look toward one another for
development solutions. Increasing sources of development finance, includ-
ing private and public flows from old and new development partners, mean
that developing countries have a larger number of options in the partner-
ships they select. While this also means they face greater challenges in
managing development resources (Davies 2010), developing countries also
have more options, which, in theory, should afford them greater owner-
ship over the development agenda through partnerships that better reflect
their preferences. Finally, competition over ideas is rising. As Blomfield and
Kharas point out, multilateral institutions no longer have a monopoly on
development knowledge. New ideas and innovations for achieving devel-
opment results are coming from NGOs, social enterprises and the private
sector, emerging economies, and governments and people in developing
countries.
Secondly, despite the increasingly competitive environment, multilateral
institutions still have an important role to play. Lisk, Kakkitil, and Bullaleh
show how multilateral processes and institutions have played a key role in
improving coordination in the fight against HIV/AIDS. Lin sees a role for
multilaterals in working with the private sector to help finance infrastructure
needs in developing countries. Blomfield and Kharas insist that traditional
multilaterals have a role to play in collaborating with emerging donors to
facilitate knowledge exchange and more effective SSC.
 Hany Besada and Shannon Kindornay 7

At the same time, declining support for the multilateral development

system cannot be ignored. Traditional donors have reduced their funding
contributions and are increasingly using multilaterals to pursue bilateral aid
agendas (Chapters 3 and 7). These trends have occurred in the face of numer-
ous studies suggesting that multilateral development institutions fair best
in delivering effective aid, and have undermined capacities in some mul-
tilateral development institutions (Chapter 2). It also seems unlikely that
providers of SSC will fill the funding gaps. As discussed earlier, some sug-
gest that this may be owing to the fact that multilateral institutions have
yet to successfully enact the necessary reforms to improve their governance
and decision-making processes to better account for developing-country
priorities. Conversely, de Haan and Warmerdam point out that emerging
economies have yet to challenge the existing system (see also Naidu 2012).
Nevertheless, these trends to do not bode well for the future of multilat-
eral development agencies who risk becoming increasingly underfunded,
instrumentalized by old donors, and less relevant for developing countries
as new development partners emerge, including Southern-based multilateral
institutions.
Despite these challenges, the existing frameworks for improving devel-
opment cooperation – particularly the provision of aid – matter, and are
likely to continue to matter in the future. The continued importance of aid
effectiveness is a prominent theme throughout the volume. Nearly all of the
chapters make reference to the five principles agreed to in the 2005 Paris
Declaration on Aid Effectiveness. While increasing sources of financing are
emerging as a result of the role being played by providers of SSC and the pri-
vate sector in development, aid remains an important source of financing for
many developing countries, notably in sub-Saharan Africa. There is recogni-
tion that while international discussions on aid effectiveness have not been
fully inclusive to date, they have been successful in changing the behav-
iors of traditional aid donors and recipients, albeit to an uneven extent.
In some key areas, such as reducing aid-transaction costs through donor
alignment with developing-country priorities and harmonization among
donors, results have been dismal. As Blomfield and Kharas point out, pro-
liferation of aid actors, particularly multilateral institutions, has actually
worsened. At the same time, Toornstra and Martin show that international
discussions on aid effectiveness have garnered significant support for key
issues relating to capacity development and country ownership, offering a
new modus operandi for donor–recipient relations. Nevertheless, while many
aid actors move forward on the international aid-effectiveness agenda, and
in particular, the outcomes of HLF4, the legitimacy of this agenda continues
to be called into question owing to its historic domination by members of
the OECD-DAC.
This book is divided into three parts – Multilateral Development
Cooperation: The Current State of Play; Cases in Multilateral Development
8 Introduction: Multilateralism in an Era of Change

Cooperation: Old and New Challenges; and Emerging Multilateralisms: Pos-

sibilities for the Twenty-First Century. The first part provides context on
the current state of multilateral development cooperation. The chapters
address important challenges, namely the continued low-growth environ-
ment globally and its implications for development (Chapter 1); progress on
the Millennium Development Goals (MDGs) and the role of the multilaterals
in their achievement (Chapter 2); and the increasing complexity within
international development cooperation architecture and the implications
for the multilateral development system (Chapter 3).
Part II highlights case studies in multilateral development cooperation.
They present a mix of perspectives on the utility of different forms of mul-
tilateral development cooperation. Some multilateral processes have been
successful in garnering international attention for key issues like improving
the quality of aid and promoting capacity development (Chapter 4). The case
study on international efforts to combat HIV/AIDS shows the value of mul-
tilateral institutions in coordinating development efforts (Chapter 5). Felson
and Besada look at the increasing role of NGOs in development, recognizing
their role in influencing and partnering with multilateral development agen-
cies (Chapter 6). As mentioned earlier, multilateral institutions are becoming
increasingly instrumentalized by traditional donors who are providing sup-
port for specific projects, rather than supporting their core operations. This
trend can even be seen by countries that have historically been staunch sup-
porters of multilateralism, such as Brown and Olender show in the case
of Canada (Chapter 7). Finally, in the realm of trade and development,
Heidrich shows that the relevance of multilateral institutions going forward
will depend on their ability to reinvent themselves to meet current needs
(Chapter 8).
The final part looks at emerging forms of multilateralism and the poten-
tial of emerging development partners to work together. In their review of
China’s approach to development cooperation, de Haan and Warmerdam
show that differences between old and new providers of development
assistance, and their implications for collaboration, may be overstated
(Chapter 9). They identify a number of ways in which China is engaging
with the multilateral system and see great potential for future collaboration
between old and new development partners. The remaining two chapters
look at emerging forms of multilateralism. Kararach, Léautier, and Luhanga
examine multilateral forms of SSC and their prospects in addressing key
development challenges with a particular focus on achieving gender equal-
ity. The final chapter examines the global partnership that emerged from
Busan. The authors examine its prospects for engaging a broad range of
development partners and for becoming a legitimate multilateral forum for
global discussions on aid and development cooperation.
The following section provides a detailed overview of the contents in each
of the three parts.
 Hany Besada and Shannon Kindornay 9

Multilateral development cooperation: The current state of play

With only two years remaining to deliver on the MDGs and prospects for
country-level growth low, Justin Lin argues that the world needs a growth-
lifting strategy. In the first chapter, he shows that country-level economic
growth will be needed to improve the prospects of positive change for the
world’s poor, suggesting that states should focus specifically on infrastruc-
ture investments. This will require them to make the best use of existing
resources in a cost-effective manner as well as create partnerships within the
international community.
According to Lin, targeting infrastructure is a win-win situation, as it
would not only create jobs and expand local economies but it can fur-
ther generate demand in developing markets for capital goods produced
in high-income states, as well as encouraging the growth of private invest-
ment. Direct funding for infrastructure will increase trade prospects for both
advanced and developing states. The success of such a global infrastructure
investment initiative will hinge upon several key factors: the application
of bottleneck-releasing projects; the attraction of private-sector financing to
close budget gaps; and government-level implementation of an appropri-
ate macroeconomic and institutional environment to support development.
In order to achieve the MDGs, the creation of ambitious and pragmatic
infrastructure plans will, indeed, be needed as a critical support strategy
for future global growth and prosperity. Multilateral organizations and the
broader international community could play an important role in assist-
ing developing countries to address these concerns through the provision
of financial and technical assistance.
In the second chapter, Agarwal looks at the progress in meeting the MDGs.
Generally, there are two routes to their achievement – economic growth and
targeted social programs. While there has been some significant progress
made toward meeting the MDGs (most notably in East Asia and the Pacific
region), both routes to further progress are currently difficult and make
the prospects of accomplishing the MDGs bleak. A weakened global econ-
omy makes the prospect of rapid economic growth more unlikely, which
in turn will also affect poor countries’ social progress. With respect to spe-
cial targeted programs, declining international aid and a limited role for
UN agencies and the broader multilateral system make this route less effec-
tive as a means to meet the MDGs. Agarwal concludes by saying that SSC
offers some hope, but it is not enough to replace the recent decline in
traditional aid.
In Chapter 3, Blomfield and Kharas indicate that the emergence of
vertical and earmarked trust funds, privately funded NGOs, and SSC poses
a challenge to the role of traditional multilateral institutions within the
current global aid architecture. The emergence of new fields of coopera-
tion has produced a fragmented, overlapping operating environment that
10 Introduction: Multilateralism in an Era of Change

can be rectified by reinvigorating the role of large, traditional multilaterals

such as the World Bank’s International Development Association and
regional banks. Blomfield and Kharas argue that the pursuit of multilateral
cooperation promises to lower transaction costs, improve donor coordina-
tion, and maximize the percentage of aid funding available to recipient
countries for implementation purposes. This is due to the ability of tradi-
tional multilaterals to capture economies of scale, limit competition over
small aid projects, improve coordination between recipient and donor coun-
tries, leverage a wealth of operational knowledge, and fundamentally, reduce
burdens on recipient countries. However, new trends toward ‘flag-planting’
by bilateral donors and poor ODA quality rooted in diffuse ownership
structures among UN agencies have threatened to limit the effectiveness
of efforts toward comprehensive multilateral cooperation by forwarding
a fragmented approach to aid provision. In response to these troubling
trends, Blomfield and Kharas suggest that traditional multilaterals can
reassert their positions within the global aid architecture by collaborating
with emerging donors to facilitate knowledge exchange and more effective
South-South cooperation by corollary. In doing so, they suggest that tradi-
tional multilaterals could meaningfully contribute to development efforts
while satisfying the Paris Declaration commitment to recipient-country
ownership.
Cases in multilateral development cooperation:
Old and new challenges
In Chapter 4, Toornstra and Martin examine a number of important issues
under the aid-effectiveness agenda, including country ownership and donor
alignment and harmonization, from a capacity-development perspective.
They show that, at the multilateral level, international discussions on aid
effectiveness have recognized the importance of capacity development and
sought to address key constraints faced by developing countries. The authors
assess the current state of progress on implementation of aid-effectiveness
commitments and find that progress has been uneven. Toornstra and Martin
identify three capacity gaps that remain in developing countries – resource,
policy, and implementation gaps – and look at the extent to which the HLF4
made further progress in establishing commitments to capacity develop-
ment. They find that though capacity development is mentioned a number
of times in the outcome document, concrete, monitorable commitments
at the global level were limited. Nevertheless, participants in Busan agreed
to track their progress at country level, which presents an opportunity
for developing countries to address capacity gaps in their development
plans and incorporate key lessons learned and best practices. Toornstra and
Martin suggest ways in which the capacity gaps at country level can be
addressed.
Similarly against the backdrop of aid effectiveness, Chapter 5 provides
a case study of funding trends through bilateral and multilateral channels
 Hany Besada and Shannon Kindornay 11

for HIV/AIDS. Since its identification over 30 years ago, HIV has infected
an estimated total of 65 million people worldwide, with the Joint United
Nations Programme on HIV/AIDS reporting that at the end of 2010 approx-
imately 34 million people were actively living with the disease and an
additional 1.8 million AIDS-related deaths occurred globally during the same
year. Yet despite the significant number of new cases identified everyday –
and the challenge it poses to national development and international
cooperation – AIDS funding from institutions, states, and private organi-
zations was reduced for the first time in 2010, evidencing an ‘AIDS fatigue’
in development assistance programs. Against this background, in Chapter 9
Lisk, Kakkattil, and Bullaleh examine trends in the provision of AIDS
funding. Using the examples of high-level fora and international organiza-
tions’ initiatives, this chapter emphasizes strategies for making ODA more
effective, integrated, and coordinated, highlighting the role of multilateral
institutions in this context.
In Chapter 6 Felsen and Besada argue that today a more networked and
interconnected world has produced NGOs that communicate through new
channels with national governments and multilateral institutions, placing
them in an integral position to deliver and implement a global commitment
to ‘bottom up’ development. Despite their position, however, NGOs have
received considerably less attention from scholars than the public or pri-
vate sectors, largely owing to the third sector’s lack of conceptual clarity and
its poorly understood and weakly institutionalized relationship with states
and multilaterals. As such, in an attempt to facilitate a better understand-
ing of the different roles NGOs undertake in development aid processes, this
chapter argues for a new, parsimonious typology of NGO collaboration and
engagement through three distinct categories: capacity champions, policy
champions, and grassroots champions. By using specific case examples, it
is underscored that this new classification scheme of NGO engagement can
positively contribute to the determination of which stakeholder partnerships
are appropriate for realizing specific development-aid projects, as well as how
these organizations can be appropriately incorporated into contemporary
global governance structures to ensure their accountability, efficiency, and
effectiveness.
Brown and Olender’s chapter analyzes Canada’s changing contribution
to multilateral development agencies since the year 2000. Looking through
the three areas of maternal, newborn, and child health; food security; and
climate change, the analysis finds that Canada has increasingly acted in nar-
row, short-term self-interest. The government pursued maternal, newborn,
and child health issues for electoral self-interest; it focused food security con-
tributions on countries of self-interest; and, in responding to climate change,
the government contributed its fair share, but was guilty of free-riding and
shifting responsibility to developing countries. In general, Canada’s mone-
tary contributions to multilaterals over 2000–10 declined as a proportion of
Canadian aid in comparison to levels during the 1980s and 1990s, a finding
12 Introduction: Multilateralism in an Era of Change

that coincides with larger global trends. Canada’s increasing preference

for earmarked funding to multilateral institutions undermines multilateral
efforts by promoting the bilateralization of multilateral aid.
In the following chapter, Heidrich analyzes the relevance of the WTO in
international trade and, consequently, international development. The
WTO’s mandate is trade liberalization; however, extensive trade liber-
alization has occurred over the past few decades due mostly to other
factors, including higher per capita incomes in developing countries,
greater telecommunications technology, and heightened commodity prices.
In addition, the very nature of international trade has changed greatly since
the creation of the GATT – the precursor to the WTO – which has made the
institution less relevant. In order to pursue its mandate of free trade, the
WTO does trade negotiations, dispute settlement, trade policy monitoring,
and technical assistance. The WTO’s work in these four areas is mostly of use
to developed countries and has provided little benefit to developing nations.
The WTO could become more relevant to international trade and developing
countries if it focused capacity-building efforts on how to position develop-
ing nations best in global production chains and if it grew into a forum
for global economic policy debate; however, this is unlikely to happen as it
would require new leadership and deep systemic changes.

Emerging multilateralisms: Possibilities for the twenty-first century

Chapter 9 by de Haan and Warmerdam analyzes the old and new approaches
in delivering aid, using China as the main case study. In doing so, three
main arguments are made. First, China’s approach to international devel-
opment is not as unique and exceptional as it is often made out to be.
Second, the apparently distinct elements in Chinese aid are related to the
new donor’s domestic experiences, similar to traditional donors. Third, old
and new donors’ approaches to aid can complement one another and offer
opportunities for mutual learning. There is much concern over the emerging
Beijing Consensus threatening Western thinking; however, as China con-
tinues to grow in global influence, its approach will be seen as less and
less exceptional, providing a base for the expansion of mutual learning via
multilateral and bilateral channels.
In Chapter 10, Kararach, Léautier, and Luhanga conclude that as the
Global South begins to emerge as a large market for trade and economic
partnerships, there is a need for providers of SSC to incorporate gender-
specific issues into their multilateral partnerships. They highlight the need
for attention to gender in economic dimensions of SSC; knowledge shar-
ing and innovation; democracy, gender, and human rights promotion; and
addressing human trafficking. They argue that there is a critical need to
evaluate the utility of multilateral forms of SSC to better leverage African
development and remove the barriers to collaboration by women. There has
been a systematic failure to institute gender-sensitive strategies and practices.
 Hany Besada and Shannon Kindornay 13

This results in issues for women and girls being lost beneath the folds of SSC.
Capacity development is key to interfacing SSC with gender issues, ensuring
not only the equitable advancement of partnership building, democratic tra-
ditions, and global interdependence, but also finally addressing the most
apparent critique of SSC whereby participation is expanded to ensure that
the voices of women are heard.
The final chapter looks at the new multilateral partnership that emerged
from the 2011 HLF4. The global partnership is designed to oversee and
ensure accountability for the implementation of HLF4 commitments at
the political level. Following HLF4, members of the international commu-
nity met to finalize its governing structure and the framework that would
monitor commitments at the global level. The Post-Busan Interim Group
identified four core functions for the global partnership if it is to be effective:
maintain and strengthen political momentum for efficient and meaningful
development co-operation; ensure accountability for implementing Busan
commitments; facilitate knowledge exchange and sharing of lessons learned;
and support the implementation of Busan commitments at the state level.
Kindornay and Samy examine proposed changes to the post-Busan gover-
nance structure and provide an analytical framework to assess the merits
of and the challenges in establishing a legitimate governance mechanism
for the development cooperation architecture. With the aid agenda becom-
ing increasingly complex and incoherent, it is argued that the success of
Busan in establishing the global partnership and making it truly global will
depend on the extent to which stakeholders see the governance mecha-
nism as legitimate in terms of inclusivity, representation, ownership, and
effectiveness.

Notes
1. Total earmarked and core contributions to multilateral organizations account for
40 percent of gross ODA (OECD-DAC 2011, 4). Chandy and Kharas suggest that
international institutions are under resourced because international development
is a global public good, which tend to be under resourced (2011, 741). On the
issue of declining contributions, see also Picciotto (2012).
2. The shift toward a greater focus on social sectors in the 1990s and 2000s was
also dubbed the post-Washington Consensus when the World Bank and the IMF
softened their hardline on neoliberal policy conditionalities (Soederberg 2004).
As Birdsall and Fukuyama point out, many developing countries (some of which
we might refer to as emerging economies today) had already begun to lose 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, 46).
3. See Lin and Monga (2010) for an example of this thinking in practice.
4. It is often argued that that a new ‘Beijing Consensus’ is emerging with dis-
tinct attitudes to development, politics and a shift in the global balance of
14 Introduction: Multilateralism in an Era of Change

power. Critics contend that it is shaped by a strong belief in multilateralism and

sovereignty, a desire to accumulate the tools of ‘asymmetric power projection’ and
strong willingness to innovate. It is further argued that China offers an alterna-
tive model to development through a more equitable paradigm of development
that countries from in East Asia are closely following. See Ramo (2004) for more
information on the ‘Beijing Consensus’.
5. Recall that these institutions were established in the late-1940s when most devel-
oping countries were still colonies of the very same countries that created the
IFIs, designed them so that control remained in their hands, and used them as
one more instrument in their confrontation with a rival superpower.
6. South Korea, Turkey, Mexico, Indonesia, Iran, Pakistan, Philippines, Egypt,
Nigeria, Bangladesh, and Vietnam. They were identified by Goldman Sachs
investment bank back in 2005 as having a high potential of becoming, along
with the BRICS, the world’s largest economies in the twenty-first century. The
bank chose these states, all with promising outlooks for investment and future
growth.
7. All figures in US dollars.
8. This is to varying degrees. As Carrasco et al. (2008) point out, RDBs do not escape
the same criticisms often leveled at other multilateral development banks.
9. The 1980 Lagos Plan of Action envisaged the African Economic Community
(AEC) and categorized the African continent into five regional areas: North Africa,
West Africa, South Africa, East Africa, and Central Africa. The aim of the AEC is to
promote economic, social, and cultural development; African economic integra-
tion in order to increase self-sufficiency and endogenous development; and create
a framework for development and mobilization of human resources and material.
Within this framework, there are eight regional economic communities covering
Africa’s five regions: Southern African Development Community (SADC), Com-
munity of Eastern and Southern African States (COMESA), Economic Community
of West African States (ECOWAS), the Economic Community of Central African
States (ECCAS/CEEAC), and the Arab Maghreb Union (AMU/UMA). Other active
regional economic communities include the Intergovernmental Authority on
Development (IGAD), the Central African Economic and Monetary Community
(CEMAC), East African Community (EAC), and the West African Economic and
Monetary Union (WAEMU/UEMOA). African scholars acknowledge that the small
size and populations of African countries as well as their inaccessibility to ports
necessities interstate economic cooperation and eventual integration for coun-
tries’ economic development and growth. Fostering African economic, political,
and security cooperation and integration constitutes an important principle of
pan-Africanism which is enshrined in the African Union Charter.
10. Includes foundations, corporation, private and voluntary organizations, volun-
teerism, universities and colleges, and religious organizations.

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Part I
Multilateral Development
Cooperation: The Current
State of Play
1
How Infrastructure Investment Can
Advance the Development Agenda
Justin Yifu Lin

Introduction

Only two years remain to deliver on the Millennium Development Goals

(MDGs). Progress on the goals has been mixed at best and varies significantly
across goals and countries (Chapter 2, this volume). Currently, several MDGs
are unlikely to be attained either globally or by a majority of countries, with
lagging progress most apparent in low-income countries.1 Take the reduc-
tion of extreme poverty, for example. The number of extreme poor (those
living on less than $1.252 a day) has fallen from about 1.8 billion in 1990 to
1.4 billion in 2005 – that is, from 42 percent of the population to 25 percent
(Chen and Ravallion 2008). Though this global progress is considerable, it
masks stark differences across countries as it is largely driven by successes
in China. In many countries, extreme poverty has either fallen slowly or
worsened.3
Economic growth is needed to improve development outcomes and put
the MDGs within reach. A quick glance at regional growth rates illustrates
this point. Annual real gross domestic product (GDP) growth in sub-Saharan
Africa averaged approximately 2.6 percent between 1990 (the benchmark
year for the MDGs) and 2005. During this period, the share of people living
in extreme poverty dropped from 58 percent to 51 percent, a difference of
only 7 percentage points. In contrast, the East Asia and Pacific region grew
7.8 percent per year on average during the same period, and poverty levels
plummeted from 55 percent of the population to 17 percent, a reduction of
38 percentage points (Chen and Ravallion 2008). Beyond these simple statis-
tics, convincing empirical evidence exists that suggests growth is good for

Chapter prepared for the session ‘New Partners in Multilateral Development Cooper-
ation: Implications for Financing’ at the International Forum on Multilateral Devel-
opment Cooperation Effectiveness organized by The North-South Institute in Ottawa,
Canada, on June 20, 2011.

19
20 Multilateral Development Cooperation

the poor (Dollar and Kraay 2002). Using a large sample of 92 countries and
a time period spanning four decades, the authors find that average incomes
of people living in the bottom quintile rise proportionately with average
incomes in a country. A recent paper by the World Bank (2010) finds that
growth alone accounts for 30–40 percent of past variations on the MDG indi-
cators across countries and time. Similarly, Roemer and Kay Gugerty (1997)
show that an increase in the rate of GDP growth translates into a direct
one-for-one increase in the rate of growth of average incomes of the poorest
40 percent of the population.4
As a result of the recent financial crisis, the anemic global recovery, and the
financial turmoil in Europe, near-term global growth projections have been
revised downward. Global growth, which between 2006 and 2008 averaged
3.1 percent in real terms, is estimated to remain below 2.8 percent in 2011
(World Bank 2011d). Going forward, growth prospects in many advanced
economies are likely to face strong headwinds as these countries struggle
with high debt levels, financial turmoil, and a crisis of confidence. If these
adverse conditions become more severe – and in the absence of an effec-
tive policy response – growth performance in advanced economies could
be further weakened, with serious consequences for developing countries.
This could trigger a vicious cycle, because in today’s interconnected world,
growth in developing countries is increasingly necessary to sustain a global
recovery. It is projected that in the coming years more than one-half of
global growth will emanate from developing countries (The World Bank
2011d). A slowdown of growth in developing countries could have negative
feedback effects on advanced economies.
What the world needs now is a growth-lifting strategy. Such a strategy
would need to include advanced economies, whose growth prospects are
projected to remain anemic, as well as developing countries, which are
increasingly important drivers of world growth. It could focus on improving
green technology, education, or research and development, but as argued
below, under the current economic circumstances, a key focus should be on
infrastructure investments, specifically targeted infrastructure investments
that can significantly contribute to growth. In the short run, infrastructure
investment can not only create jobs and growth in the local economy, but
generate demand for capital goods produced in high-income countries and
thus jobs and growth there as well. In the long run, it raises a country’s
output by enhancing productivity, increasing private capital formation (by
raising expected returns on private investments as the marginal produc-
tivity of inputs increases or transaction costs decline), and facilitating the
exploitation of agglomeration economies. A global infrastructure initiative
that scales up bottleneck-releasing infrastructure investments in some core
advanced economies, as well as in the developing world, could be such a
growth-lifting solution. The successful implementation of a global infras-
tructure investment initiative in developing countries hinges upon two key
 Justin Yifu Lin 21

factors. First, countries will have to make the best of existing resources
by implementing the right bottleneck-releasing projects in a cost-effective
manner. Second, developing countries will need to raise the funds neces-
sary to close the infrastructure-financing gap. The international community,
and multilateral organizations in particular, could play an important role
in assisting countries overcome these constraints through targeted financial
resources and technical assistance.

Implications for advanced economies

Infrastructure investments in advanced economies could mitigate some of

the post-crisis economic ills these countries currently face. Persistent excess
capacity,5 combined with the weak balance sheets of governments and finan-
cial institutions, hold back aggregate private-sector investment, job creation,
and household demand, fueling a crisis of confidence that leads to plum-
meting stock markets and widening spreads of continental Europe’s highly
indebted economies. The average public debt-to-GDP ratio in Group of
Seven (G7) countries breached the 100 percent mark in 2010, raising con-
cerns about the stability of global financial markets. Without growth – and
thus less revenue and higher social spending needs – it will be nearly infea-
sible for citizens and governments to put debt ratios on a declining path.
The combination of excess capacity, low returns on investment, high risk,
and low growth in advanced economies has been referred to as the ‘New
Normal’ (PIMCO 2009). Fears have increased that this ‘New Normal’ will
become entrenched, and that several advanced countries will face a lost
decade with severe economic and social consequences, such as sustained
high unemployment, lack of opportunities for young people, and rising
poverty rates.
Under these circumstances, several advanced economies, including the
United States (US) and some core European countries, would need to increase
and sustain aggregate demand by investing in jobs and boosting the man-
ufacturing sector to upend the vicious cycle of excess capacity and weak
balance sheets.6 Increased employment will lead to increased consumption
and the improved health of financial institutions, as, for example, the num-
ber of non-performing loans declines. Over time, demand for housing will
pick up and excess capacity in the housing sector will be absorbed.
For the private sector, good investment opportunities are hard to find
when factories continue to carry spare capacity and homes and office build-
ings remain vacant. Since the private sector is not poised to lead this process,
governments will have to play a proactive role in creating jobs and increas-
ing demand. Infrastructure investment is one area in which the government
can play such a role. Infrastructure investments can create jobs, increase
demand for manufactured goods, and improve competitiveness.7 For the
US, it has been estimated that $1 billion in new investment spending on
22 Multilateral Development Cooperation

transportation, schools, water systems, and energy could create 18,000 jobs
(Heintz et al. 2009), of which about 40 percent would be in construction and
10 percent in manufacturing – the two sectors hit the hardest by the reces-
sion of 2008–09. In addition, sustaining the manufacturing sector, which has
been on a secular decline in the US and several European economies, will be
important to maintain large-scale employment opportunities, particularly in
capital-intensive sectors where labor productivity levels are consistent with
the income levels of advanced countries.8 Maintaining infrastructure invest-
ment is also important in order to keep advanced countries competitive and
avoid further external imbalances in the future.
Given high debt levels, however, the fiscal space for government-financed
public investment is limited in many advanced economies. Governments
have to make more out of less. In particular, they should focus on bottleneck-
releasing infrastructure investments that maximize economic returns and
generate user fees. If debt-financed infrastructure investments are solely
repaid through additional tax revenues generated by these investments,
amortization of the investment is likely to be prolonged even if its growth
impact is high.9 Therefore, governments should implement innovative
financing mechanisms using public-sector resources to leverage long-term
private sector financing.10 Some governments have already taken steps in
this direction. For example, the Obama administration has backed the cre-
ation of a National Infrastructure Reinvestment Bank,11 which could issue
infrastructure bonds, provide subsidies to qualified infrastructure projects,
and issue loan guarantees to state or local governments. President Obama
suggested that loans made by this bank would be matched by private-sector
investments and that each project would generate its own revenues to help
ensure repayment of the loan.12 Europe is considering the implementation of
a new European 2020 Project Bond Initiative, which would use public guar-
antees to leverage private-sector financing from non-traditional investors,
such as pension funds (European Commission 2011). This initiative proposes
to invest 1.5–2.0 trillion euros (approximately $2.0–2.7 trillion) in Europe’s
infrastructure over the period 2011–20.
Opportunities for investing in bottleneck-releasing infrastructure invest-
ments are relatively limited within the borders of advanced economies,
which tend to have rather well-developed infrastructure capital stocks.
Advanced countries should therefore look beyond their own borders and
seek ways to scale up infrastructure investments in developing countries,
where infrastructure investments can be truly transformative and growth
dividends are likely to be high. In an interconnected world, infrastructure
investment in developing countries will increase demand for capital goods
produced in advanced countries, generating jobs and growth, and creating a
win-win solution for both developing and advanced countries, as discussed
below.
 Justin Yifu Lin 23

Implications for developing countries

Infrastructure shortfalls in the developing world are staggering and impinge

on the daily lives of millions of people. In Africa, more than 70 percent
of households had no access to electricity and only 33 percent of rural
households had access to an all-weather road in 2006 (International Road
Federation 2010). Lack of infrastructure is also likely to significantly affect
health and education outcomes (Agenor and Moreno-Dodson 2006). The
construction of all-weather roads in Morocco increased school attendance by
girls from 28 percent to 68 percent between 1985 and 1995, as the road con-
struction significantly freed women’s time. Another major gain in women’s
welfare stemming from better-quality roads was the introduction of butane
for cooking and heating.13 In addition, the number of visits to hospitals and
health centers doubled (World Bank 1996). Similarly, studies have shown
that improved water supply and sanitation can significantly reduce diarrheal
morbidity, which causes the death of 1.8 million people every year (WHO
2004).
Lack of infrastructure also renders firms less competitive. Many businesses
are never started, because the required infrastructure services are not avail-
able.14 Nowhere is this more apparent than in sub-Saharan Africa, where
per capita electricity consumption averages only 124 kilowatt-hours per
year,15 hardly enough to power one light bulb per person for six hours a
day (Foster and Briceño-Garmendia 2010). Firms in Benin, Burkina Faso,
the Gambia, Madagascar, Mozambique, Niger, and Senegal spend more than
10 percent of their total costs on energy, whereas the cost of energy is only
3 percent of total costs in China. Losses from power failure alone amounted
to 10 percent of sales for the median Tanzanian firms compared to only
1 percent for the median Chinese firm (Eifert et al. 2005). Furthermore,
many people in sub-Saharan Africa lack access to domestic and global mar-
kets (World Bank 2009). About two-thirds of the population of sub-Saharan
Africa lives in rural areas, many countries are landlocked, and it is the
region with the lowest road density in the world. Not surprisingly, transport
costs are high, representing about 16 percent of firms’ indirect costs (Iarossi
2009).
Going forward, the demand for infrastructure services is likely to increase
further in developing countries. GDP per capita of developing countries is
expected to grow at more than 5 percent in the medium term, increasing
the demand for infrastructure services (World Bank 2011d). Moreover, the
world’s population is projected to approach nine billion by 2050 and an
increasing number of people is expected to move to cities. As a result, the
world’s building stock is projected to double by 2050, necessitating further
improvements to electricity, water, sanitation, and transportation systems
(World Bank 2011c).
24 Multilateral Development Cooperation

Infrastructure investments are also of high importance for developing

countries because they can facilitate the process of structural transformation.
Economic development in any country is a process of continuous techno-
logical innovation, industrial upgrading and diversification, and structural
transformation. At the outset of economic development, countries often
start with more than 85 percent of the population being engaged in agri-
culture and income levels are low. At this agrarian stage, farmers primarily
produce for their own consumption and the need for infrastructure ser-
vices is limited. When the production shifts to manufacturing, economies
of scale become larger, and producers will mostly mass-produce for the
broader market rather than for individual use. As market range expands,
infrastructure will enable entrepreneurs to get their goods and services to
market in a secure and timely manner and facilitate the movement of work-
ers to the most suitable jobs (see Lin 2011). In addition, with global climate
change and increasingly intense natural disasters, adequate infrastructure
is needed more than ever to support sustainable development by mini-
mizing vulnerability to natural disasters and promoting reliance on public
transportation.
Empirical studies confirm that infrastructure investment has a large effect
on growth in developing countries. Calderón and Servén (2010a) estimate
that, on average, annual growth among developing countries increased by
1.6 percent in 2001–05 compared to 1991–95 as a result of infrastructure
developments. This effect was particularly large in South Asia, reaching
2.7 percent per year. Calderón and Servén (2010b) find that if low-income
countries in sub-Saharan Africa were to develop infrastructure at the same
rate as Indonesia, the growth of West African low-income countries would
rise by 1.7 percent per year. If African economies would halve the gap
between their level of infrastructure and the average level of infrastructure
in Pakistan or India, low-income countries in Central Africa would grow on
average by an additional 2.2 percentage points per year and East and West
African countries by an additional 1.6 percentage points. Similarly, if each
Latin American country were to match the average level of infrastructure
present in middle-income countries, such as Turkey or Bulgaria outside the
region, growth in Latin America would rise approximately by 2 percentage
points per year (Calderón and Servén 2010b).
The benefits of infrastructure investment are particularly apparent when
examining the Chinese development experience. Between 1990 and 2005,
China invested approximately $600 billion to upgrade its road system. The
centerpiece of this investment was the 41,000km National Expressway Net-
work, which was designed with the intention of connecting all larger cities
with more than 200,000 inhabitants. Only the 75,000km US Interstate High-
way System exceeds its length. Roberts et al. (2010) show that aggregate
Chinese real income was approximately 6 percent higher than it would have
been in 2007 if the Expressway Network had not been built.
 Justin Yifu Lin 25

Global implications of scaling up infrastructure investments

in developing countries

Infrastructure investments in developing countries would also benefit

advanced economies. Building power stations, roads, and ports, for exam-
ple, requires capital goods, many of which are produced in advanced
economies. In fact, about 70 percent of capital goods in low-income coun-
tries are sourced from high-income countries. Research has also shown
that investing in infrastructure increases trade prospects for both devel-
oping and advanced countries. In general, a $1 increase in investment in
developing countries is accompanied by a 50 percent increase in imports
and a $0.35 increase in exports from high-income countries.16 It is esti-
mated that the entire infrastructure gap – that is, the gap between projected
available resources and estimated financing needs – in the developing
world exceeds $500 billion annually. Based on the above estimates, clos-
ing the infrastructure gap would correspond to an increase in demand
for capital goods imports to the order of $250 billion, of which about
$175 billion would be sourced from high-income countries. This corre-
sponds to about 7 percent of total capital goods exports from high-income
countries in 2010.
Increasing infrastructure investment in developing countries could sup-
port a virtuous, self-reinforcing cycle and lift global growth. As discussed in
more detailed below, infrastructure investments in developing countries can
significantly enhance domestic growth. It is likely that demand for imports,
many of which are produced in high-income countries, will continue to
increase further, solidifying the role that developing countries are playing as
key drivers of global growth. In the first quarter of 2011, demand from devel-
oping countries was responsible for more than 50 percent of the increase
in total global import volumes, largely benefitting high-income countries,
whose exports were expanding at an annualized rate of 15 percent (World
Bank 2011b).

Implementing a global infrastructure initiative

The success of a global infrastructure investment initiative will hinge upon

several key factors. First, countries will have to make the best of existing
resources by implementing the right bottleneck-releasing projects cost-
effectively. Second, following the example of recent infrastructure-financing
initiatives in advanced economics, such as the US Infrastructure Bank and
the Europe 2020 Project Bond Initiative, developing countries should use
existing resources to attract additional private-sector financing to close the
financing gap. Third, governments will need to implement an appropriate
macroeconomic and institutional environment to support the infrastructure
initiative.
26 Multilateral Development Cooperation

Infrastructure projects can be transformational in developing countries,

but selecting the right bottleneck-releasing projects requires very specific
know-how that is not always available in developing countries. Cross-
country empirical evidence confirms that the quality of project selection and
implementation plays a crucial role in determining the return on investment
and ultimately its growth dividend (see Esfahani and Ramirez 2003). A newly
developed Public Investment Management Index (Dabla-Norris et al. 2011)
finds that overall public investment efficiency tends to be particularly low in
low-income countries for project appraisal and selection, both of which are
key for identifying bottleneck-releasing investments.
The international community could help developing countries by pro-
viding targeted financial resources and technical assistance. Identifying the
right projects often requires significant resources for project selection and
preparation. Developing a project ideally requires an array of institutional,
legal, social, environmental, financial, regulatory, and engineering studies.
These studies tend to be costly, particularly for complex projects. For exam-
ple, project preparation costs for the Nam Theun 2 Hydropower Project in
Lao PDR amounted to $124 million, or 9 percent of the total investment of
$1.4 billion. By one estimate, bringing Africa’s key transformational projects
to a stage where they could actually attract investors (public or private)
would require some $500 million (Foster and Briceño-Garmendia 2010).
Many project preparation funds exist, but they are fragmented. Both gov-
ernments and the private sector are reluctant to allocate substantial resources
upfront for project preparation activities.
Some new initiatives are underway to address these shortcomings.
In November 2010, the World Bank Group launched the Infrastructure
Finance Center of Excellence, which aims to leverage Singapore’s exper-
tise in urban development and financing and the World Bank’s global
development knowledge and operational experience to attract more private
capital for public infrastructure projects throughout the East Asia region.
The center provides tailored technical assistance to governments on project
identification, preparation, and marketing, and assists client governments
in securing project preparation funds via third-party facilities (World Bank
2011a). In addition, in the context of Group of 20 (G20) meetings, the
Multilateral Development Banks have developed the Infrastructure Action
Plan that proposes concrete actions to improve project preparation, develop
regional projects, and help countries to improve spending efficiency (MDB
Working Group on Infrastructure 2011).
Second, governments could use existing resources to attract additional
financing, particularly from the private sector, for infrastructure develop-
ment. These resources could include official development assistance (ODA)
and domestic public financing. ODA plays an important role in financing
investment in low-income countries, representing only about 35 percent
of new capital spending. It is therefore important to find ways to further
 Justin Yifu Lin 27

leverage its catalytic role to attract private investors. On the contrary, in

many middle-income countries, infrastructure investments are financed by
the public sector to a large extent (Foster and Briceño-Garmendia 2010).
While private-sector financing of infrastructure projects in developing
countries has been increasing in recent years, the amount of total financ-
ing going to infrastructure investments is small at a global scale. Take the
example of Sovereign Wealth Funds (SWFs), which were estimated to hold
more than $3.2 trillion in financial assets at the end of 2008 (Klitzing
et al. 2010). The Emerging Markets Private Equity Association estimates
that SWFs allocated approximately 18 percent of their portfolios to non-
domestic emerging market investments, only a small portion of which was
allocated to infrastructure.17 Moreover, private-sector financing in develop-
ing countries is heavily concentrated in a few countries and in one sector –
telecommunications.
The private sector generally engages in infrastructure financing through
public-private partnerships (PPPs), which are established through a long-
term contract between a government and private investor, bundling invest-
ment and service provision into a single long-term contract. The investor,
usually a group of private investors, finances and manages the construction
of the project, and maintains and operates it over the time of the contract
(usually 20–30 years) before transferring the assets to the government. Over
the duration of the project, the investor receives a stream of payments as
compensation, such as user fees or government payments.
Since infrastructure assets are illiquid, upfront capital financing is large,
and repayments often take decades, PPPs entail significant risks for the
investor. These risks include higher-than-projected projects costs; shortfalls
in projected revenues (for example, if the demand for the infrastructure
services and user fees are lower than projected); exchange-rate risks if infras-
tructure financing is provided in foreign currency and user fees are paid in
domestic currency; force majeure; and political and regulatory risks. It is
therefore not surprising that private-sector involvement in infrastructure
projects in developing countries is limited.18
Several mechanisms exist that can diversify some of these risks and make
investments in developing countries more attractive. Government guaran-
tees can insure against project-related risks, such as a shortfall in demand;
however, they are unlikely to mitigate investors’ perception of governmen-
tal risk, such as policy reversal, regulatory failure, and concerns about the
creditworthiness of the government. Multilateral institutions and donors
are likely to be better positioned to assume these risks. The World Bank has
increasingly made use of guarantees to catalyze private finance by mitigat-
ing the risk of default by governments. As of March 2010, it had approved
36 guarantees, totaling $3.8 billion in 28 countries (World Bank 2010). The
Multilateral Investment Guarantee Agency, the arm of The World Bank that
provides political risk insurance for foreign investments, recently adapted its
28 Multilateral Development Cooperation

products and expanded the potential applications of its guarantees in order

to facilitate the underwriting of infrastructure projects.
Even more promising than guarantees that diversify risks is the possibility
of actually reducing risks. This can span a wide range of actions, includ-
ing improving a country’s regulatory framework and implementing sound
macroeconomic policy. In economies with high country risk, investors in
infrastructure projects are often asking for real returns on equity to the order
of 20 percent or more and a country risk premium of up to 5 percent on
debt (Klein 2005). Similarly, Guasch (2004) shows that regulatory risks to
investments in Latin America can add up to 6 percent of the cost of capi-
tal. Analyzing credit spreads of infrastructure bonds, Dailami and Hauswald
(2003) find that projects located in host countries with a stronger legal
framework have lower funding costs and tighter spreads. Only sustained
macroeconomic stability will earn the desired investment grade rating that
is essential to attract large institutional investors at attractive prices. Mul-
tilateral institutions and bilateral agencies could play an important role by
building capacity and supporting improvements in this regard.19
Public-private partnerships can help governments overcome temporary
budget constraints, but they do not necessarily provide additional finan-
cial resources. PPPs change the timing of government disbursements and
revenues, but they have little impact on the government’s inter-temporal
budget constraint20 unless they increase the efficiency of the investment
(Engel et al. 2010). There exists some empirical evidence that private man-
agement has been more efficient than public management (Guasch 2004;
Foster and Briceño-Garmendia 2010), but at the same time, the cost of
private-sector funds can be higher than under pure public provision (Engel
et al. 2010).
Furthermore, PPPs can impose significant fiscal risks if not managed care-
fully. PPPs often include contingent liabilities in the form of minimum
revenue, foreign-exchange guarantees to private investments or commit-
ments from the government to acquire the service from the private holder
should demand fall short of projections, leaving the public sector with the
same liabilities and risks as it would have had in the absence of the PPP
(see Calderón and Servén 2010a). Moreover, clear accounting standards for
PPPs are often unavailable, and infrastructure spending related to PPPs is
often moved off the budget and the related debt off the government’s bal-
ance sheet, creating contingent liabilities for the government (Engel et al.
2010). The costs that arise can be significant. Calderón and Servén (2010a)
cite the example of Colombia, where government guarantees led to fiscal
costs that were 50 percent higher than the investment supplied by the pri-
vate sector. The authors conclude that credible hard budget constraints on
service providers, a comprehensive regulatory framework, and independent
regulatory and supervisory bodies are important to contain the fiscal risks
associated with PPPs.
 Justin Yifu Lin 29

In general, it is important to keep in mind that how infrastruc-

ture investment is financed will significantly affect its growth impact.
First, if infrastructure financing leads to a crowding out of private-sector
investment – whether through ‘excessive’ levels of taxation, deficits, or
debt – its impact on growth will be diminished. Second, the ability of the
government to capture at least part of the marginal product of infrastructure,
either through taxes or user fees, will determine how the investment affects
the country’s fiscal sustainability outlook. For example, if the tax adminis-
tration is weak and fiscal revenues capture only a small fraction of the extra
income, even projects with high-growth impacts will weaken government
financing. The collection of user fees, on the other hand, may pose signif-
icant challenges, especially in low-income countries where the population
is poor and administrative capacities weak. Third, government finances will
also be affected by the cost of borrowing, which depends on the type of
financing, the government’s level of debt, and the risk perception of the
investors. Debt relief under the Heavily Indebted Poor Countries and the
Multilateral Debt Relief Initiative substantially reduced debt-burden indi-
cators in many low-income countries and enabled them to access capital
markets, albeit often at a high cost. Prudent macroeconomic policy, a stable
political environment, and good debt-management policies could be help-
ful in improving the costs of borrowing. Lastly, public infrastructure is likely
to have the largest economic impact when combined with other forms of
productive investment, such as in human capital (Adam and Bevan 2005).
The government’s role goes beyond the realm of fiscal and macroeconomic
policy, however. First, as discussed above, choosing the right projects and
implementing them in a cost-effective manner will be key for maximizing
economic returns. Second, a strong institutional context and good policies
are important for maximizing the growth impacts of public investment.
Inefficiencies or corruption can lead to unfinished roads to nowhere or
incomplete bridges. Pritchett (2000) mentions the example of two steel mills,
one built in South Korea and the other in Nigeria, both of which cost bil-
lions of dollars. While the mill in Korea became a serious competitor in
world markets, the mill in Nigeria, which cost over $4 billion, was never
finished to its planned capacity. Third, as a result of decentralization waves
in many developing countries, revenue and expenditure assignments related
to infrastructure spending have been pushed to lower levels of government,
requiring a comprehensive alignment of fiscal responsibilities, accountabil-
ities, and, in some cases, supportive transfer mechanisms to ensure an
adequate level of infrastructure provision. Fourth, recent detailed country
work by the World Bank shows that efficiency gains in infrastructure can
be significant. The World Bank (2011a) estimates that more than 11 per-
cent of electricity and about 24–50 percent of water is unaccounted for in
developing countries. In Africa, as much as $17 billion out of an overall
spending need of about $93 billion could be met if existing resources would
30 Multilateral Development Cooperation

be used more effectively. Steps to enhance efficiency include safeguarding

maintenance spending, improving the performance of utilities and other ser-
vice providers, addressing deficiency in public expenditure frameworks, and
modernizing administrative and regulatory frameworks (Foster and Briceño-
Garmendia 2010). Fifth, regional integration can significantly help reduce
infrastructure costs and improve access to regional and global markets. Ben-
efits from exploiting large economies of scale in ports, airports, or power
generation and transmission could be reaped through enhanced regional
cooperation (World Bank 2009). For example, in Africa, regional power
trading could reduce energy costs by $2 billion and carbon emissions by
70 million tons annually (Foster and Briceño-Garmendia 2010). Sixth, infras-
tructure investments should be environmentally sustainable because they
have the potential to cause significant environmental damage. Fossil-fuel
energy generation, for example, can create emissions that contribute to acid
rain and global warming. Irrigation works can lead to overuse of water, land
degradation, and water pollution. In total, the environmental costs associ-
ated with infrastructure investments have been estimated to reach between
4 percent and 8 percent of GDP for some developing countries (World Bank
2007). Supporting environmentally sustainable infrastructure investment
could significantly reduce these costs. Innovative infrastructure financing
should take these factors into consideration.

Conclusion

A global infrastructure investment initiative would be a win-win for the

world. It would boost growth and reduce poverty in developing countries
and rejuvenate advanced economies by increasing the demand for their
capital goods exports and creating much-needed jobs. The US and several
high-income European countries are facing the challenge of creating jobs
and boosting demand or being stuck in the ‘New Normal’ – a protracted
period of high unemployment, high risks, and low growth. Yet because debt
levels are high, their scope for fiscal stimulus is constrained. These govern-
ments should invest in bottleneck-releasing projects that create jobs in the
short term and raise growth in the medium term. If projects are well cho-
sen and generate user fees, they could be self-financing. However, if excess
capacity continues to persist, firms could start scrapping equipment – and if
unemployment spells continue to increase, the unemployed will find it even
more difficult to return to work. This would further depress growth. The lack
of growth is perhaps the largest threat to higher debt burden in the future.
However, because bottleneck-releasing infrastructure investments abound
in developing countries, a global infrastructure investment should focus on
scaling up infrastructure investments in the developing world. For devel-
oping countries, infrastructure investment can be a powerful vehicle for
transforming their economies, enabling their businesses to work unimpeded
 Justin Yifu Lin 31

without electricity shortages, communicate freely, expand their markets,

and, ultimately, climb the technological ladder. But its benefits do not stop
there. Scaling up infrastructure investment in developing countries would
generate much-needed manufacturing jobs in advanced countries, raise their
exports, reduce excess capacity, and support growth. Such a global infrastruc-
ture initiative could also lead to new partnerships across countries, bringing
together global experts on infrastructure investment and financing, as, for
example, in the Infrastructure Finance Center of Excellence in Singapore.
In November 2010, the G20 committed to boost and sustain global
demand through ‘investment in infrastructure to address bottlenecks and
enhance growth potential’.21 They also highlighted the importance of focus-
ing on concrete measures to reach the MDGs – the benchmarks that the
international community has set to eradicate extreme poverty. As part of
that, the G20 highlighted the importance of ‘making a tangible and sig-
nificant difference in people’s lives, including through the development of
infrastructure in developing countries’.22 The Action Plan of the Multilateral
Development Banks proposes concrete actions for infrastructure develop-
ment (MDB Working Group on Infrastructure 2011). This is an important
step forward. Now is the time to develop ambitious, pragmatic plans that
will allow us to build the roads, ports, railways, and power plants needed to
support future global growth and prosperity.

Acknowledgments

I would like to thank Doerte Doemeland for her help in preparing this
chapter.

Notes
1. Clemens et al. (2007) argue that the MDGs were too ambitious from the start,
while Easterly (2008) emphasizes that it is important to highlight the progress
that has been made with respect to the MDGs.
2. All figures in US dollars.
3. The number of people living below $1.25 a day declined in China from 683 mil-
lion to 208 million people between 1990 and 2005. If China is excluded, the total
number of people living in poverty globally actually increased during this time
period (Chen and Ravallion 2008).
4. Still, while there seems on average empirical support that growth is good for
the poor, these averages conceal a large variation in country-specific experiences
(see Overseas Development Institute 2010). Brazil, for example, made significant
progress in reducing the proportion of the population in poverty from 17 percent
to 8 percent between 1981 and 2005, although growth averaged only 1 percent
during this period (Ravallion 2009). To the contrary, Uganda grew at an average
of 2.5 percent a year between 2000 and 2003, but poverty actually increased by
3.8 percent over the same period (Bourguignon et al. 2008).
32 Multilateral Development Cooperation

5. Output gaps in advanced economies remain large and are projected to close only
gradually. Industrial production in the US has still not caught up with pre-crisis
levels (see, for example, http://www.federalreserve.gov/releases/g17/current/).
As of August 2011, industrial production levels in about half of the OECD coun-
tries remain below end-2006 levels. Among the G7 countries, only Germany is
now producing more than in 2006. http://stats.oecd.org/OECDStat_Metadata/
ShowMetadata.ashx?Dataset= MEI_REAL&ShowOnWeb= true&Lang=en.
6. These efforts would need to be combined with structural reforms that remove
existing barriers to growth. The effects of structural reforms may take time to
materialize despite their importance to boost productivity.
7. Infrastructure in this context could also refer to investments in green technolo-
gies, which also have the potential to create jobs, including in manufacturing.
8. See Spence (2011) for a discussion.
9. For Brazil, Ferreira and Araujo (2008) find that a debt-financed increase in the
infrastructure stock of 1 percent of GDP in one year would have effectively
paid for itself through tax revenues after 20 years. This simulation result is very
sensitive to changes in key assumptions, such as the interest rate on govern-
ment debt, the rate of tax collection, and the depreciation of the infrastructure
stock.
10. The economic uncertainties have prompted many long-term investors, such
as pension funds, sovereign wealth funds, and life insurers, to look for new
opportunities for long-term investment. Infrastructure projects require long-term
financing. Traditionally, however, the private sector’s role has been limited, thus
governments need to play a role in making infrastructure projects, such as roads
and water systems, more attractive to private-sector financiers.
11. For more information, see http://www.govtrack.us/congress/bill.xpd?bill=
h112-3259.
12. http://www.whitehouse.gov/blog/2011/11/03/five-facts-about-national-
infrastructure-bank.
13. Before road improvements, women had to spend an average of two hours per
day collecting and carrying wood for fuel. Butane gas, used extensively in urban
areas, did not reach the rural areas due to the high transport and distribution
costs. Initially, a bottle of butane cost 20 Dh; following improvement of the road,
the price dropped considerably, to as low as 11 Dh, making it affordable for many
families (World Bank 1996).
14. Using data from Uganda, Reinikka and Svensson (1999) found that unreliable
provision of electricity is a significant deterrent to investment.
15. Excluding South Africa.
16. Based on 2008 trade data from WITS/COMTRADE.
17. Examples include the China-Africa Development Fund, an equity fund that
invests in Chinese enterprises with operations in Africa, which reportedly
invested nearly $540 million in 27 projects in Africa that were expected to lead to
total investments of $3.6 billion in 2010. The Qatar Investment Authority plans
to invest $400 million in infrastructure in South Africa (Klitzing et al. 2010).
However, these funds tend to have very conservative risk-taking strategies.
18. In low-income countries, demand for infrastructure services may simply not be
high enough to attract private investors, particularly in sub-Saharan Africa where
population density is low. As a result, private investment in power, water, or
railways has been very limited (Foster and Briceño-Garmendia 2010).
 Justin Yifu Lin 33

19. Toornstra and Martin (Chapter 4, this volume) make a similar point in their
examination of ongoing capacity gaps in developing countries.
20. With a PPP, the current government can forego the investment outlays, which
can be significant for infrastructure projects. In turn, the government relinquishes
either user fees or future tax revenues.
21. From the G20 Seoul Summit Communiqué (November 2010). The G20 also cre-
ated a High-Level Panel for Infrastructure Investment to explore options for
scaling up public and private infrastructure financing. The report of the panel
will be submitted in fall 2011.
22. G20 Seoul Summit Communiqué (November 2010).

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2
Reshaping International Institutions
to Achieve Millennium
Development Goals
Manmohan Agarwal

Introduction

The analysis in this chapter highlights the importance of the Millennium

Development Goals (MDGs), the progress in their achievement, and the
constraints to their fulfillment. The first section discusses the process by
which the goals were developed. It explores the philosophical and economic
underpinnings which resulted in the goals such as shifts from macro sta-
bility policies, the changing priorities of donors, and a focus on the social
conditions of development. The second section analyzes the progress that
has been made in achieving the MDGs. There are, broadly speaking, two
routes to achieving the MDGs: rapid economic growth that raises people’s
expectations and provides the resources needed to meet these aspirations; or
implementing special programs geared to improving the delivery of services
to the poor.1 Analysis shows that either route will be difficult due to the
current international economic environment. Prospects for growth in the
developed countries are poor for the next few years (IMF 2012; World Bank
2012; Chapter 1, this volume). A traditional export-oriented development
policy that can spur economic growth in developing countries is unlikely
to succeed. Even though progress on the MDGs seems to have been lim-
ited, particularly in the poorest regions, caution should be taken in drawing
conclusions as data is often inadequate.
The third section develops an index of social achievement and relates it to
economic growth. This is important because, as the United Nations Devel-
opment Programme (UNDP) has stressed in its Human Development Reports
(HDRs), there are poor countries with a good social record and rich countries

This work is part of the research undertaken under an Ontario Research Fund project.

36
 Manmohan Agarwal 37

with a poor social record.2 While these exceptions exist, in general, the index
shows a strong relation between economic growth and social progress.3
The fourth section discusses aid which is traditionally seen as provid-
ing resources for higher investment. Aid has been declining in importance,
whether measured as a percentage of gross domestic product (GDP) or
against investment or imports. Furthermore, less aid is being channeled
for direct production purposes or for infrastructure; therefore its ability to
raise investment levels and economic growth has been eroded. Aid can also
fund the special programs geared to the needs of the deprived. However,
there has not been a significant increase in aid for social purposes.4 Donor
governments have not provided the increased resources necessary to help
developing countries meet the targets. Given the trends and the budgetary
problems facing most donor countries it is unlikely that sufficient amounts
of aid will be raised. Thus aid is not serving to help achieve the MDGs.
Considering this, the final section discusses the role of other external
actors in helping to achieve the MDGs, namely United Nation (UN) agen-
cies and providers of South-South cooperation. The UN agencies examined
lack the capacity to play a significant role in achieving the MDGs and it is
unlikely South-South cooperation can fill the aid gap, though it has poten-
tial. This situation implies that developing countries will need to rely more
on their own resources, and use their internal and external resources more
effectively. In order to achieve this, developing countries may require tech-
nical assistance to build capacity. In the past, relevant UN agencies provided
technical assistance. However, changes in how these agencies operate have
eroded their ability to deliver. Consequently, the operations of relevant UN
agencies would need to be reoriented in order to assist developing countries
to utilize their own resources and achieve the MDGs. The chapter concludes
with some observations on the usefulness of the MDGs.

The genesis of the Millennium Development Goals

Many strands came together to form the adoption of the UN Millennium

Declaration and the subsequent acceptance of eight MDGs.5 The three main
strands were the economic situation of developing countries since the 1980s,
the changing priorities of donor nations and the 1990s UN summits on
social development.
The first strand arose from the consequences of the debt crisis which
started in 1982 and affected many developing countries, particularly the
middle-income ones.6 The crisis turned the attention of policymakers in
Latin America and the Caribbean (LAC) and Sub-Saharan Africa (SSA) toward
achieving macro stability – considered by the International Monetary Fund
(IMF) and the World Bank as a necessary condition for growth. Yet, the
1980s and 1990s saw stagnation in the economies of LAC and SSA, as
per capita incomes grew by only 0.7 percent a year in LAC and declined
38 Multilateral Development Cooperation

0.8 percent a year in SSA. By the end of the 1980s, dissatisfaction with the
Washington Consensus7 was growing and analysts believed the policies dam-
aged education and health outcomes and resulted in the deterioration of
other public services. The analysts called for a shift away from macro stabi-
lization toward policies that would improve the human condition (Desai
2007) – a so-called adjustment with a human face (Cornia et al. 1988).8
Furthermore, while hyperinflation continued to damage economic growth,
the relation between macro stability and growth was unclear and the con-
cept remained ill-defined. For instance, between 1965–73 and 1974–82, East
Asia and the Pacific (EAP) had the highest and second highest inflation rate
among developing country regions and also had the fastest growing GDP
(Agarwal 2008). Likewise, throughout much of the 1960s and 1970s, South
Korea had a higher inflation rate than India, but faster growth.
A second strand toward the MDGs was bureaucratic competition. In a
post-Cold War environment aid from DAC donors was decreasing and
ministers and bureaucrats in international development agencies found
themselves increasingly marginalized from their national priorities (Hulme
2007). As a result, the lead in international development was taken over by
the World Bank. Within the UN, the UNDP, in particular, sought to recover
the prominent role the UN had played in development debates during the
1980s.9 Stress on MDGs would mean greater involvement of UN agencies,
particularly those dealing with education, health, and child welfare.
The final strand leading to the MDGs was a framework for social goals
which emerged from the UN during the 1990s through their conferences and
reports. In 1990, UNDP published its first HDR which ranked countries on
their level of social development (Hulme 2007) using the Human Develop-
ment Index (HDI)10 – a measurement based on welfare concepts developed
by Amartya Sen (1980, 1985, 1989).11 During the same year, the World Bank’s
World Development Report (WDR) returned to the theme of poverty reduc-
tion for the first time in many years (Hulme 2007).12 Throughout the 1990s,
the UN also organized conferences which reaffirmed the global commitment
to issues such as gender equality, and deepened understandings of the mul-
tidimensional elements of poverty and the function of time-bound goals
(Hulme 2007).13 Later, the policy recommendations that came from these
conferences were taken and refined by the Development Assistance Commit-
tee (DAC) of the Organisation for Economic Co-operation and Development
(OECD), becoming their International Development Goals (IDGs).14 By the
end of the decade, the UN would in turn transform the IDGs into the MDGs
of the entire world (Hulme and Fukuda-Parr 2009).15
In negotiating the MDGs, it was necessary that the eight goals share a
common vision of material well-being, freedom and equity (Fukuda-Parr
2004). It was also believed that they should have indicators that can be
monitored;16 although the 8th goal, which addresses global partnership
and the provision of aid to help achieve the MDGs, has no quantifiable,
 Manmohan Agarwal 39

time-bound indicators (Fukuda-Parr 2004). The compromises necessary for

reaching agreement on the MDGs often disappointed groups, particularly
non-governmental organizations (NGOs) whose issues were either dropped
or not given enough prominence (Hulme and Fukuda-Parr 2009). Never-
theless, the MDGs also served as an instrument for mobilizing support and
resources (Fukuda-Parr 2004; Desai 2007). While the social conditions rep-
resented in the UN Millennium Declaration were the result of three strands
that came together – the failure of structural adjustments, bureaucratic inter-
ests and the elaboration of new concepts of welfare – the social conditions
represented in the eight MDGs were the result of political negotiations at the
OECD and then the UN (Hulme and Fukuda-Parr 2009).

Progress in meeting the Millennium Development Goals

For the discussion on progress in meeting the MDGs, this section explores
select indicators that relate to the measurement of HDI. These include
poverty and hunger, as set out in MDG 1; education, which spans across
MDGs 2 and 3; and child and maternal health which is covered by MDGs 4
and 5, respectively. When evaluating the progress on meeting the MDGs
it is important to note that although the MDGs sought to provide mea-
surable goals, particular goals and indicators were actually chosen as the
result of a political process and compromises (Hulme 2007). Furthermore,
the appropriate and reliable data needed to measure the indicators is not
available for all goals. For instance, few African countries register births and
deaths, and health-related data often comes from various household sur-
veys that sometimes provide conflicting data (Attaran 2005).17 In addition,
when baseline data is unavailable it is difficult to measure progress, and ques-
tions about success and failure become matters of judgment. For instance,
without proper data on births and deaths during childbirth it is not possi-
ble to accurately judge whether the goal of reducing maternal mortality has
been met.

Poverty, hunger, and malnourishment

MDG 1 includes the targets of reducing both extreme poverty and hunger
by one-half. An indicator for extreme poverty is the proportion of people
with a per capita income of less than a dollar a day at purchasing power par-
ity.18 Indicators for hunger are the proportion of children under five who are
underweight and the proportion of people with inadequate levels of dietary
energy. Although hunger is difficult to define it should cover those who are
unable to function according to Sen’s concept (1985). The UN definition
encompasses both food insecurity and nutritional insecurity (UN Millen-
nium Project 2005a) and states that food insecurity exists when people do
not have physical and economic access to sufficient, safe, nutritious, and
culturally acceptable food to meet their dietary needs and lead an active and
40 Multilateral Development Cooperation

healthy life (FAO 1996). Food insecurity can be chronic or acute. Chronic
food insecurity occurs when people are unable to access sufficient, safe, and
nutritious food over long periods, such that it becomes their normal condi-
tion; and acute food insecurity occurs when the lack of access is short-term,
usually caused by shocks such as drought or war. There is much more data
and analysis on the issue of poverty than on hunger and malnourishment.
Poverty levels were comparable in EAP, South Asia (SA), and SSA in 1990.
Progress since has been very different in these three regions. The goal of
halving poverty is likely to be met as the poverty ratio in developing coun-
tries has declined from 46 percent in 1990 to 27 percent in 2005 (UN 2011).
However, this progress is almost entirely because of the performance in EAP,
or more specifically, countries in East Asia where poverty has declined from
60 percent to 16 percent and South East Asia where the poverty had declined
from 39 percent to 19 percent. While it is likely that LAC and the Middle East
and North Africa (MNA) could reach their targets it is unlikely that SA and
SSA will reach theirs.
Between 1990 and 2005, poverty in LAC and MNA had only declined by 28
percent and 16 percent, respectively (Table 2.1). The poverty targets for these
regions would require that 2.5 percent of the population or 14.3 million
people in LAC, and 1.6 percent or 5.3 million in MNA, need to be lifted out
of poverty. A transfer of income of $6,524 million19 or 0.16 percent of GDP
in LAC, and $2418 million or 0.26 percent in MNA, would be needed to
raise them above the poverty level. These amounts compare to tax revenues
of about 25 percent of GDP. Because of the small number of poor in LAC,
and negligible amounts in MNA, welfare schemes could help these regions
reach their targets.
In SA the poverty ratio had declined by 22 percent between 1990 and 2005
(Table 2.1), or only about 1.3 percent a year, despite its rapid growth of per

Table 2.1 Regional poverty and malnourishment

(% of population)

Poverty Malnourishment

1990 2005 2000 2008

EAPa 54.7 16.8 12.4 11.9

LAC 11.3 8.2 34.2 31.7
MNA 4.3 3.6 n.d. 12.2
SA 51.7 40.3 43.0 41.0
SSA 57.6 50.9 28.3 25.2

Source: Generated by author using data from the World Bank

(2011a and 2011b).
a This region as used by the World Bank covers East Asia and

South East Asia.

 Manmohan Agarwal 41

Table 2.2 Regional GDP and its growth

GDP per capita: GDP growth rate:

2005 (US$) 1990–2005 (% per year)

EAP 1,630 8.5

LAC 4,045 3.0
MNA 2,198 3.9
SA 692 5.9
SSA 746 3.1

Source: Generated by author using data from the World Bank

(2007a).

capita incomes of over 4 percent a year. Relative to its rapid growth, the
extent of poverty reduction in SA was limited. Poverty reduction in SA was
less than in LAC, even though SA’s GDP grew almost twice as fast – an annual
average of 5.9 percent against LAC’s 3.0 percent during the 15-year period
(Table 2.2). If progress continues at this rate, and this is by no means certain
as the world economy is slowing,20 the poverty ratio will be 32.9 percent
in 2015, for a total decline of 36 percent, short of the 50 percent target.
However, the National Rural Employment Scheme which was implemented
in India in 2006 may contribute toward the country reaching the poverty
target.21 The scheme, which employs poor people in the rural areas for up to
100 days a year at the minimum wage,22 might have contributed to a faster
reduction of the poverty ratio, which will impact figures for the region, but
data is not available yet.
In SSA poverty reduction has been even slower at approximately 12 per-
cent during the same 15 years (Table 2.1).23 Although SSA’s growth in GDP
had accelerated from an annual average of 2.5 percent during 1990–2000 to
4.5 percent during 2001–05 and 5.3 percent in 2006–07, due to the finan-
cial crisis it has slowed to 3.5 percent in 2008–09 (World Bank 2011a). This
reduction in growth has increased poverty levels to almost 53.5 percent (FAO
2010a) and makes the task of poverty reduction more difficult.
These trends in poverty reduction have resulted in a significant shift in
the location of the poor. In 1990, almost half of the poor resided in EAP,
a third in SA, and less than a sixth in SSA (Figure 2.1). However, by 2005
SA had almost half the world’s poor, SSA had over a quarter, and EAP had
less than a quarter (Figure 2.2). The significant reduction in poverty in the
EAP has meant that poverty is now mainly a problem in SA and SSA. Yet,
growth in SSA is likely to slow and be much lower than in SA, so poverty
may become even more concentrated in the region. This has implications on
poverty-reduction strategies and means that welfare measures alone cannot
lift the poor in SA and SSA out of poverty. Poverty reduction in these regions
will have to depend on economic growth. Nevertheless, prospects indicate
42 Multilateral Development Cooperation

1990
Population living below $ 1.25 a day = 1818.45 mil

Sub-Saharan
South Asia Africa 16%
32%
Middle East and North
Africa 1%
East Asia and Pacific
48%
Latin America
and Caribbean 3%
Europe and Central Asia 0%

Figure 2.1 Regional poverty distribution, 1990

Source: Author generating using data from the World Bank (2005).

2005
Population living below $ 1.25 a day = 1373.69 mil

Sub-Saharan
Africa 28%
South Asia
44%
East Asia and
Pacific 23%

Middle East and North Europe and Central

Africa 1% Asia 1%
Latin America
and Caribbean 3%

Figure 2.2 Regional poverty distribution, 2005

Source: Author generated using data from the World Bank (2005).

slow growth as the economic crisis results in decreased demand for exports
in developed countries, resulting in slower growth in GDP, and a slowing
in the rate of poverty reduction.24 It is uncertain whether quantitative or
qualitative increases in aid can compensate for the slowdown in growth.
While there has been some progress in reducing poverty there does not
seem to have been significant progress in the reduction of hunger, measured
by either the proportion of underweight children or the proportion of people
with inadequate dietary energy. Not only has there been little improvement
in malnutrition – the percentage of children under five years of age who
fall two standard deviations below the World Health Organization (WHO)
 Manmohan Agarwal 43

growth standards and median weight (Table 2.1) – but there seems to be lit-
tle relation between the reduction of malnourishment and poverty, a subject
that merits further research. Even in EAP, a region with rapid growth and
which has already reached its 2015 target for poverty reduction, there has
been only a 4 percent reduction in malnourishment. On the other hand,
the largest reduction in malnutrition – almost 11 percent – has been in
SSA, the region which has experienced the least amount of poverty reduc-
tion. Another anomalous feature is that LAC, which has a relatively small
proportion of the population living in poverty, has among the worst lev-
els of malnourishment (Table 2.1). Despite the limited success in reducing
malnutrition, because the base levels were low in EAP and MNA, the imple-
mentation of special programs that target the nutrition of small children,
such as feeding programs, school meals, or providing advice for prena-
tal and lactating mothers, may still go a long way toward meeting the
targets.25
There has also been limited progress in the reduction of the number of
hungry – those who fall short of their necessary dietary energy requirements.
The number of hungry, which had declined between 1969–71 and 1995–97
from about 875 million to 775 million, has since increased to 925 million
in 2008 (FAO 2010a). As a result, the proportion of the population that was
hungry, which had declined from 20 percent in 1990–92 to 16 percent in
2000–02, has stagnated at 2002 levels (UN 2011). The Food and Agriculture
Organization (FAO) of the United Nations (FAO 2010a) estimates that the
financial crisis and rise in food prices of 2008 increased the number of the
hungry by 100 million.
The lack of progress in reducing hunger and malnourishment, despite
rapid economic growth, has brought about increased interest in analyzing
the mechanisms that lead to better food consumption. It is necessary to
explore both the supply- and demand-side aspects of why people do not
eat adequately even when they are economically able to or have adequate
access to food. Improving food security, while reducing poverty, can be
achieved by increasing the growth rate of agricultural output. For exam-
ple, the slowdown in the growth of agricultural output in SA, particularly
India, is often blamed for the small reduction in poverty and the contin-
uing high levels of malnutrition. The slowdown in India, which has been
particularly severe for cereals, has seen the per capita production decline
from 197 kg in 1999–2000 to 176 kg in 2009–10.26 Similarly, agricultural
output in SSA declined through much of the 1980s and 1990s, and has only
started growing in recent years, albeit slowly. If the output increase can come
from small farms this would also increase the access of the poor to food.27
While the slow growth in agricultural output in SA and SSA may explain
the limited reduction in malnutrition levels, it does not explain the limited
progress in regions with high rates of growth of agricultural output, such
as EAP and LAC – another issue for further research. It may be that special
44 Multilateral Development Cooperation

feeding programs targeted toward children are needed to make a dent in

malnourishment.28

Education
There are basically two goals in the area of education: MDG 3’s universal
primary education and MDG 4’s target of eliminating gender disparities in
educational attainment. The relevant indicators are net enrolment rates and
the ratio of males to females at the primary, secondary, and tertiary levels.
Aggregate level enrolment rates in primary education have increased from
82 percent in 1999 to 89 percent in 2009, although progress slowed to just 2
percentage points between 2004 and 2009 (UN 2011). At the regional level,
SSA has made the most progress with an increase from 58 percent in 1998–99
to 76 percent in 2008–09, an increase of 18 percentage points. SA and North
Africa have also experienced a large increase of 12 and 8 percentage points,
respectively. Meanwhile, the other regions, which already had high enrol-
ment rates, have experienced an increase of only 1 percentage point during
the past decade (UN 2011).
Considerable progress has also been made in achieving gender parity in
enrolments. Gender parity in primary education has increased from a ratio
of 91 girls for every 100 boys in 1998–99 to 96 girls in 2008–09. At the
regional level, SSA and Western Asia have ratios in the low 90s, while the
other regions have ratios in the mid to high 90s, and East Asia is over 100.
The gap in secondary and tertiary education has also been narrowed, with
enrolment ratios of 96 and 97, respectively, similar to primary education lev-
els, whereas in 1998–99 gender disparity was greatest at the higher levels of
education. For example, the 1998–99 secondary enrolment ratio was 88 per
100 and tertiary enrolment was 82 (UN 2011). Even though considerable
progress has been made, gender disparities remain large at secondary and
tertiary levels in SSA, SA, and West Asia.

Child and maternal health

The target for MDG 4 is to reduce childhood mortality rates by two-thirds.
Its indicators are infant and under-five mortality rates, and the proportion of
children under the age of one that are immunized against measles. The target
for MDG 5 is to reduce maternal mortality rates by three-fourths, and its
indicators are maternal mortality rates and the proportion of births attended
by skilled health personnel. This discussion will only concentrate on infant,
under-five and maternal mortality rates.
Child and maternal mortality rates have fallen steadily between 1990 and
2005 and they appear to have continued falling (UN 2011) (Table 2.3). EAP
and MNA are likely to reach the targets for all mortality reductions. LAC is
only likely to reach the target for reduction in child mortality. SA and SSA,
both of which have high mortality rates, are unlikely to reach either target.
Of the two goals, reducing child mortality is easier to tackle as it can be easier
 Manmohan Agarwal 45

Table 2.3 Regional mortality rates

Infanta Under-fivea Maternalb

Ratio % Ratio % Ratio %

1990 2005 Changec 1990 2005 Changec 1990 2005 Changec

EAP 41.3 25.6 38.0 54.7 31.7 42.6 200 100 50.0
LAC 41.9 22.3 46.8 52.5 26.8 49.0 140 91 35.0
MNA 57.2 32.3 43.5 75.6 39.8 47.3 210 98 53.3
SA 89.1 61.1 31.4 124.9 81.3 34.9 610 330 35.9
SSA 109.5 88.3 19.4 180.8 143.0 20.9 870 710 18.4

Source: Generated by author using data from the World Bank (2011a, 2011b).
a Ratio is per 1000 live births; MDG target is reduction of 66 percent.
b Ratio is per 100,000 live births. MDG target is reduction of 75 percent.
c Denotes the percentage of change in mortality rates between 1990 and 2005.

dealt with by specific interventions. Progress in reducing child mortality has

been attributed to the reduction in diarrheal-related and vaccine-preventable
deaths. Although other causes, such as acute respiratory infection, have
shown little reduction, some analysts believe that until recently deaths from
malaria, especially in SSA, had increased (UN 2005b). It is more difficult to
deal with the problem of maternal mortality, as it stems from many fac-
tors. Being ready to rectify any of the problems that may arise requires more
advanced systems (UN 2005b).
The slow progress in reducing maternal mortality in some regions is due
to the method of operation of the health systems which impedes tech-
nical interventions that could prevent diagnosis or treat life-threatening
conditions (UN 2005b). These barriers arise both on the side of the donors
and developing-country governments. Where targeted interventions, such
as inoculation against specific diseases are available, considerable progress
in reducing mortality rates has been made. However, success has been lim-
ited when the entire health system has to be mobilized. Improving the
entire health delivery system, while more difficult, would be more effec-
tive in reducing mortality rates in each case. For example, since maternal
deaths can occur from a number of failures the entire system has to be
geared toward rectifying several particular shortcomings. Nevertheless, gov-
ernments have neglected such holistic solutions and have found it easier to
concentrate on tackling specific diseases. What is most effective is good pri-
mary health care (UN 2005b). Faced with inefficient public health systems
in developing countries, donors have favored a market-based approach to
delivering health services. The Commission on Macroeconomics and Health
(WHO 2001) estimated that a basic package of primary health care would
cost $34 per capita/yr. It would be difficult for an individual to finance such
a level of care expenses as this compares with an actual expenditure of $1–10
46 Multilateral Development Cooperation

per capita in the poorest countries of SSA (UN 2005b). Furthermore, given
the international poverty line, this would imply that 10 percent or more of
an individual’s income would be spent on health.
Overall, progress regarding poverty, hunger, education, and child and
maternal health has been made at various levels depending on the region.
Major strides have been made by the countries in the EAP region and these
countries are likely to achieve their MDG targets. Progress in LAC and
MNA has been more limited, but because their initial starting point was rel-
atively good, targeted special programs could help them meet their MDG
targets. The costs of these programs are small compared to their budgets and
GDPs; rendering them affordable to the countries of these two regions. The
major problems are in SA and SSA, where the numbers are much larger and
targeted programs may not be affordable, particularly for poorer countries
with low tax to GDP ratios. These countries will have to depend on a combi-
nation of economic growth and special programs, the traditional recipe for
improving social welfare (Bhagwati 1966). Prospects for SSA are particularly
harsh, as most of the world’s least developed countries and vulnerable states
are found there.

Economic performance and social progress

This section relates the findings from an analysis of economic and social
progress in selected developing countries (Agarwal and Samanta 2006). The
authors selected, on the basis of availability of data, a sample of 31 large
developing economies from the different developing country regions and
examined their MDG indicators for 1990 and 2000.29 There were 4 countries
from MNA, 4 from SA, 5 from EAP, 7 from LAC, and 11 from SSA. The indi-
cators were aggregated into one overall social index and the countries were
ranked by this index.30 Agarwal and Samanta also calculated another index
based on the change in indicators between 1990 and 2000 (Table 2.4).
Countries in LAC were the highest ranked by the social index, followed
by those in EAP and MNA. Those in SA and SSA were at the bottom. The
correlation between country rankings in 1990 and 2000 was high at 0.98,
being more than five times the standard deviation of 0.18 for 31 observa-
tions (Kendall and Stuart 1969, vol. 2). Only Bangladesh and Tunisia raised
their ranks substantially, by three and six positions, respectively. Conversely,
Burundi, Sri Lanka, and South Africa substantially dropped in rank by three
places each. The rankings by the change in social achievement between
1990 and 2000 show the same disparity between regions, with 9 of the
10 worst-ranked countries being from SSA. However, there are some posi-
tive changes in rankings among SSA countries, with Mali being number one
in terms of social indicators. In general, however, the ranking changes for
social indicators were highly correlated with those observed in the change
 Manmohan Agarwal 47

Table 2.4 Country ranking by social index and change in social indicators

Rank Social index Change in social

indicators
1990 2000

1 Argentina Uruguay Mali

2 Uruguay Argentina Colombia
3 Chile Malaysia Bolivia
4 Malaysia Chile Malaysia
5 Colombia Colombia Sri Lanka
6 Sri Lanka Mexico Mexico
7 Mexico Brazil Chile
8 Brazil Tunisia Philippines
9 Thailand Sri Lanka Indonesia
10 Philippines Thailand Tunisia
11 China China Uruguay
12 South Africa Philippines Brazil
13 Indonesia Indonesia Thailand
14 Tunisia Iran, Islamic Republic Bangladesh
15 Iran, Islamic Republic Bolivia Morocco
16 Bolivia South Africa Iran, Islamic Republic
17 Kenya Egypt, Arab Republic Egypt, Arab Republic
18 Egypt, Arab Republic Morocco Ghana
19 Cameroon Kenya Argentina
20 Ghana Cameroon China
21 Morocco Ghana India
22 Tanzania Bangladesh Nigeria
23 Zambia India South Africa
24 India Tanzania Uganda
25 Bangladesh Zambia Tanzania
26 Nigeria Pakistan Senegal
27 Burundi Nigeria Pakistan
28 Pakistan Uganda Zambia
29 Uganda Senegal Burundi
30 Senegal Burundi Cameroon
31 Mali Mali Kenya

Source: Generated by author using data from the World Bank (2005, 2007b).

in social index from 1990 to 2000. The correlation between a country’s rank-
ing on the social indices and the change in social index between 1990 and
2000 was 0.54, which is three times the standard deviation. This implies that
countries with better initial indicators made the most social progress.
Next, the relation between social achievements and the economic situa-
tion, measured by GDP per capita income and growth in per capita income,
was analyzed. The correlation between the ranks by social index and rank
by GDP was 0.41 in 1990 and 0.59 in 2000. The rank correlation between
48 Multilateral Development Cooperation

the social index and per capita income was very high at 0.9, meaning richer
countries perform better on the social front.31 When countries were ranked
by growth in per capita income between 1990 and 2000, the rank correlation
between the social index in 1990 and growth over the period 1990–2000 was
very low, being only 0.21; barely more than the standard deviation. The rank
correlation between growth per capita in the period 1990 and 2000 and the
social index in 2000 was higher at 0.33, which is significant at the 10 per-
cent level. The correlation between the growth in per capita income and the
change in the social indicators is even higher at 0.43, which is more than
twice the standard deviation.
This analysis suggests that overall economic growth seems to lead to bet-
ter social performance than the other way around, and therefore the poor
prospects for growth over the next few years do not bode well for substantial
progress in achieving the MDG goals.

International institutions and the Millennium

Development Goals

This section explores the role of multilateral, regional, and bilateral institu-
tions in the achievement of the MDGs. It first discusses the extent to which
traditional aid, which influences growth rates and social sectors, can help
the achievement of the MDGs. The second part follows with a discussion
of UN agency operations that can affect the performance of the MDGs. UN
agencies set standards for the social sectors, suggest strategies and policies
to achieve better outcomes, provide technical assistance, and build capacity
for the delivery of social services. After recognizing the declining role of aid
and limited ability of UN agencies, this section concludes by analyzing how
South-South cooperation can affect the achievement of the MDGs.

Aid
The World Bank, regional development banks, and bilateral aid agencies
affect progress toward achievement of the MDGs through aid. Tradition-
ally the rationale has been that aid would raise investment levels, and that
that this was important given that savings in developing countries were
inadequate to finance a high level of investment (Rosenstein-Rodan 1943;
Nurkse 1953; Lewis 1954; Rostow 1960). Later, the so-called two gap models
(Chenery and Bruno 1962; Chenery and Strout 1966) stressed that develop-
ing countries did not produce capital goods. As a result, raising investment
required importing capital goods. In turn, it was argued that aid flows should
be geared to the level of imports needed to maintain a high investment
level.
However, the importance of aid has declined and its nature has changed
over the years. Aid flows as a percentage of developing-country GDP have
declined significantly (Table 2.5); and only remain substantial in SSA. Aid
 Manmohan Agarwal 49

Table 2.5 Declining importance of aid (aid flows as %

of GDP)

Region 1982–90 1991–2000 2001–05 2007

EAP 0.7 0.5 0.8 0.2

LAC 0.5 0.3 0.3 0.2
SA 1.4 1.2 0.9 0.7
SSA 6.1 5.5 5.4 4.5

Note: MNA is excluded from the table since economic aid is not
significant in the region.
Source: Generated by author using data from the World Bank,
Global Development Finance (1997, 2007a, 2008).

flows have also declined as a proportion of imports. These means the

capacity of aid flows to finance imports of capital goods needed for invest-
ment and gross capital formation has diminished thereby decreasing the
importance of aid in raising investment levels (Agarwal and Lele 2012).
However, it is more significant that aid has declined in relation to pri-
vate capital flows (Tables 2.6 and 2.7). This is important as private capital
inflows, which raise the growth rate, are unlikely to flow to the social sectors
where rates of return are usually low.32 Net flows from official creditors have
been negative during 2000–07, and flows from the World Bank have been
almost zero. Developing countries have had to depend on private capital
(Table 2.6). The increasing dependence on private capital is a feature of all
the regions (Table 2.7). Another significant development is that private capi-
tal flows have not been needed to finance current account deficits,33 as most
developing countries have run surpluses or very small deficits. This favor-
able current account situation has resulted from better export performance

Table 2.6 Structure of net public and private capital flows, 2000–07

% of public and private

capital flows

2001–05 2006–06

Net private flows 104.9 103.9

Net equity flows 73.7 61.4
Net Foreign Direct Investment (FDI) 64.0 48.0
Net debt flows 26.3 38.6
Official creditors −4.9 −3.9
World Bank 0.7 0.2

Source: Generated by author using data from the World Bank, Global Devel-
opment Finance (1997, 2007a, 2008).
50 Multilateral Development Cooperation

Table 2.7 Structure of total capital flows, 2000–07

% of total capital flows

EAP LAC SA SSA

Net private flows 103.9 108.6 88.4 95.4

Net equity flows 79.4 89.6 54.8 79.2
Net FDI flows 62.6 78.7 28.6 55.1
Official creditors −3.9 −8.3 3.1 4.6
World Bank −0.7 −1.2 2.4 7.7

Source: Generated by author using data from the World Bank, Global
Development Finance (1997, 2007a, 2008).

and the increasing inflows of remittances (World Bank 2009). Remittances

as a percentage of GDP have roughly tripled between 1990 and 2007 (World
Bank 2009). The importance of remittances can be seen in SSA where the
deficit of trade in goods and services as a percentage of GDP increased by 5
percent, yet the current account deficit only worsened by one (Agarwal and
Lele 2012).
The sectoral composition of aid from the traditional donors has also
changed. A considerably smaller portion of aid is channeled to produc-
tive purposes in sectors such as agriculture, industry, and infrastructure
(Table 2.8). More aid has also been going to humanitarian projects and debt
relief.34 While there is an increase in aid going to social sectors, only a small
part is going to health and education, as most goes to general aid for civil
society. Although more World Bank aid is channeled toward the productive
sectors (Table 2.9), the total amount of aid, as seen in Tables 2.6 and 2.7, has
been declining.

Table 2.8 Composition of aid by sector (% of aid flows)

1983–90 1991–2000 2001–05 2006–08

Social sectors 24.8 27.7 32.9 37.8

Infrastructure 18.8 20.1 12.6 12.6
Production 17.2 10.8 6.2 5.8
Agriculture 10.5 7.3 3.9 3.9
Environment n.d. 1.2 1.9 3.4
Commodity assistance 5.6 2.6 1.7 1.2
Humanitarian aid 1.8 5.0 6.8 7.4
Debt relief 6.6 8.8 18.2 13.9
Administrative costs 3.4 4.7 5.1 4.8
Support to NGOs 1.8 1.4 2.7 2.6
Refugees in donor countries n.d. 1.2 2.2 2.1

Source: Generated by author using data from OECD (2010).

 Manmohan Agarwal 51

Table 2.9 Sectoral composition of World Bank aid, 2000–10 (% of aid flows)

EAP LAC MNA SA SSA

Education 7.0 9.2 9.0 10.8 8.6

Energy, mining 11.1 3.9 11.6 13.7 14.4
Finance 5.4 12.9 13.8 8.8 3.1
Health, social sectors 7.0 17.0 5.9 10.5 14.6
Industry and trade 3.4 4.8 6.4 5.0 4.3
Information, communications 0.3 0.6 2.5 0.7 0.9
Law, public administration 16.9 28.0 14.1 17.8 24.9
Transportation 26.7 12.6 13.0 19.3 14.0
Water, sanitation 15.6 7.0 15.2 4.4 7.6

Source: Generated by author using data from the World Bank (2010).

These trends suggest that aid is not going to play an important role in
raising the rate of growth. Furthermore, the composition of aid is not very
favorable toward achievement of the MDGs.35 An important issue regarding
the composition of aid is funding for agriculture, as agricultural devel-
opment can have substantial effects on poverty and hunger, particularly
smallholder agriculture. Within agriculture it is important to concentrate
on agricultural research in order to better utilize available resources. It is
here that the role of the Consultative Group for International Agriculture
Research (CGIAR) is important.36
Agricultural research and the dissemination of CGIAR results had been
instrumental in raising agricultural productivity and output particularly in
the 1970s and 1980s; the so-called Green Revolution. But funding for the
CGIAR remained almost constant in real terms between 1979 and 2007, and
like UN agencies, its share of unrestricted funding has decreased from over
80 percent in 1988 to under 40 percent in 2010.37 Research is needed to raise
agricultural productivity, whose growth has diminished in recent years.38
Furthermore, it is important to reverse the trend of declining investment,
particularly public sector investment, in agriculture. Agricultural growth is
key to raising nutritional standards and tackling poverty, which is more
severe in rural areas.

United Nations agencies

The operation of UN agencies can be important for achievement of the
MDGs. The FAO and the WHO play particularly important roles in these
efforts. The FAO is involved in raising the agricultural productivity necessary
for reducing poverty and hunger,39 while the WHO is involved in decreasing
morbidity and mortality rates.
The resources available to UN agencies have been waning. While there
has been a nominal increase in the FAO budget, it has declined in real
52 Multilateral Development Cooperation

terms (Table 2.10; Figure 2.3). Similarly, in recent years the WHO regular
budget funds have remained constant in nominal terms, and only voluntary
contributions have increased (Table 2.11; Figure 2.4). This lack of funding
has resulted in a deterioration of capacity, decreased numbers of technically
qualified staff and a loss in institutional memory. The lack of funding has
also led to an inability to prepare and implement long-term plans.40
However, the fundamental issue limiting the effectiveness of the UN
agencies is a lack of consensus on what their role should be; of which inad-
equate funding is merely a symptom. For instance, from the beginning of

Table 2.10 FAO total approved regular budget, US$ million

2000–01 2002–03 2004–05 2006–07 2008–09 2010–11

Budget 650 651.8 749.1 765.7 929.8 1000.5

Source: FAO, The Director General’s Medium Term Plan, 2010–13, and Program of Work and
Budget, 2010–11 Report (2010b).

$1,300,000
$1,227,785

$1,170,000

$996,465
$1,140,000
(in US$ ’000 at constant 1994 prices)

$893,274
$910,000 $852,404 $846,218 $841,709

$780,000
$673,114
Funds

$650,000 $616,190
$590,860 $585,188 $586,700
$542,218 $522,662
$620,000
$554,671

$390,000 $352,078
$273,750 $260,317 $275,004
$238,308
$260,000
$150,767
$241,062 $234,659 $177,058
$130,000
$54,500 $44,448 $28,665 $26,154 $24,858 $24,487 $18,321
$28,198
$0
1994−95 1996−97 1998−99 2000−01 2002−03 2004−05 2006−07
Biennium

Net appropriation
Regular program non-project income under financial regulation 6.7
Extra-budgetary funds for non-emergency activities
Extra-budgetary funds for emergencies
Total resources, excluding emergencies

Figure 2.3 FAO total biennial resources available, 1994–2007

Source: CC-IEE (2007, Figure 7.1).
 Manmohan Agarwal 53

Table 2.11 WHO program budget, US$ million

2000–01 2002–03 2004–05 2006–07 2008–09 2010–11

Regular budget funds 842.6 855.6 880.1 915.3 958.8 943.8

Voluntary contribution 1,097.0 1,380.5 1,944.0 2,398.1 3,268.6 3,596.1
Total budget 1,939.6 2,236.1 2,824.1 3,313.4 4,227.4 4,539.9

Note: The above table has been built up through the financial statements of different years.
Source: Generated by author using data from WHO (2012, 2010, 2008, 2004).

WHO: voluntary contribution and regular budget

(Biennium Program Budget) (US$ million) (2000–01/2010–11)

5000

4500

4000

3500

3000
US$ million

2500

2000

1500

1000

500

0
2000–01 2002–03 2004–05 2006–07 2008–09 2010–11

Regular budget financing Voluntary contribution

Figure 2.4 WHO regular budget and voluntary contributions

Source: www.who.int/gb/.

international cooperation on health matters, there have been differences on

two central issues (Lee 2009). First, should individual communicable diseases
be targeted, or should the international community deal with the broader
social factors that affect health outcomes? Second, should international
cooperation be limited to defining diseases, establishing guidelines and
conducting surveillance of diseases, or should cooperation include action
54 Multilateral Development Cooperation

to tackle health problems in individual countries? These differences have

limited the mandate of the WHO to making research and policy recom-
mendations, and impede it from implementing them. For example, the
WHO sets standards for child inoculation, but it is the national govern-
ments, sometimes assisted by the United Nations Children’s Fund, that
effectuate them.
This limited mandate also makes it difficult to evaluate the WHO’s contri-
bution to improved health outcomes. Since donors want to see quantifiable
results, the difficulty in demonstrating the WHO’s effectiveness results in
smaller contributions to its regular budget funds. When specific tasks are
important to donors, they channel funds through the extra budgetary funds
instead. For instance, the National Institutes of Health system in the US gave
$10 million for malaria and $1 billion for HIV/AIDS. Another problem result-
ing from inappropriate evaluation mechanisms is that important programs,
such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, are obliged
to be located outside the WHO.
The implication of these trends for international institutions is that
developing countries have to depend increasingly on their own resources,
whether financial or technical, in order to achieve the MDGs. One possibility
that may help fill the gap is South-South cooperation.

South-South cooperation
South-South cooperation has been increasing,41 and governments in devel-
oping countries have been putting more of an institutional structure on
their cooperation. For instance, the India-Brazil South Africa (IBSA) Dialogue
Forum has been set up to facilitate cooperation between the three countries,
but they are also cooperating to provide financing and technical assistance to
projects in developing countries (Agarwal et al. 2010). Governments of many
emerging economies – including Brazil, China, India, and South Korea – are
providing other developing countries with aid. They are also encouraging
their companies to invest in developing countries and are providing fund-
ing for such investments.42 Developing countries are also entering into joint
ventures for technology development. This has been the case in Brazil with
the establishment of joint research facilities in Africa. Nevertheless, the total
amount of aid that is being channeled to developing countries by the emerg-
ing economies is still small. In addition, the repayment conditions for much
of the capital flows do not qualify as aid according to the DAC definition.43
It is unlikely that the limited quantity of aid given by emerging donors,
particularly with its small grant element, will have much impact on raising
growth rates in developing countries.
However, South-South cooperation still has a number of positive fea-
tures. Trade and investment relations among developing countries have
been increasing (Agarwal 2012; Chapter 10, this volume). Since developed
countries are expected to grow slowly in the next few years, increased South-
South cooperation is a way to improve the international division of labor
 Manmohan Agarwal 55

and benefit from specialization. Many emerging donor investments are in

the production sectors of other developing countries, and are often tied
to generating products for the domestic market of the investing country.
Consequently, South-South cooperation is not likely to create the repayment
problems characteristic of aid from traditional donors.
Furthermore, there seems to be more technology-creating and capacity-
development elements in South-South cooperation. Most South-South
projects are in the area of agriculture, education, and health. Examples
of these collaborative projects include the Cotton 4 Project, a partnership
between Brazil, Mali, Burkina Faso, Benin, and Chad to promote sustainable
cotton development; Cape Verde’s fund to rehabilitate two health centers
in Covoada; and Guinea-Bissau’s ‘Development of Agriculture and Live-
stock’ Fund which improves agricultural yield through the distribution of
improved seeds and the training of farmers on issues such as water man-
agement and control. Programs implemented in the IBSA countries, such
as Bolsa Familia in Brazil and the National Rural Employment Guarantee
Scheme in India, have also been successful in improving the social condi-
tions of the poor (Agarwal et al. 2010). These programs show that involving
civil society in the design and implementation of social services is an effec-
tive method to deliver services to the poor, something that has been a major
weakness in developing countries.

Conclusion

Economic growth is critical for achieving the MDGs. Developing countries

had been growing rapidly in the years before the financial crisis based in part
on greater integration with the world economy. However, the slowdown in
growth in the developed countries means that trade and financial relations
from these countries are unlikely to provide the impetus for rapid growth
in the future. Aid from the traditional donors is also likely to grow slowly,
and UN agencies are limited in their capacity-building role. Although South-
South cooperation in trade, investment and technology has been increasing,
the financial aspects of South-South cooperation cannot replace the aid from
traditional donors. Capital for investment, whether for growth or for social
programs, is also likely to be limited. Nonetheless, South-South coopera-
tion can help to build capacity to improve the delivery of services to the
poor. While the current international environment is not very conducive
to achieving the MDGs, further increases in South-South cooperation could
help. As pointed out by Toornstra and Martin (Chapter 4, this volume),
it will also be necessary for developing countries to improve their gover-
nance systems, which limit their ability to deliver social programs to target
groups.
Finally, it is important to note that developing countries were never partic-
ularly enthused by the concept of the MDGs.44 They agreed to the exercise, as
least in part, because they hoped for the transfer of more resources. Whether
56 Multilateral Development Cooperation

there will be enough support for continuation of the MDGs beyond 2015 is
an open question. Support from developing countries will likely depend on
the extent to which they are meaningfully involved in the establishment of
the post-2015 framework.

Acknowledgments

I would like to thank the participants at the conference for helpful com-
ments. In particular, I would like to thank Tim Shaw, Hany Besada, and
Shannon Kindornay for comments on an earlier draft. The usual disclaimers
apply.

Notes
1. See Bhagwati (1966).
2. See UNDP (1990).
3. It has long been recognized that per capita income is an inadequate indicator of
economic welfare. But most alternative indicators are highly correlated with per
capita GDP and so do not provide independent information. For a theoretical
discussion of the difficulties in making welfare comparisons based on per capita
income, see Hicks (1946).
4. Aid is usually provided to finance the foreign exchange component of a project
and this is very small for social projects. It has proven easier to develop support
for aid to fight communicable diseases.
5. The United Nations Millennium Declaration that was adopted by the UN General
Assembly on September 8, 2000; see http://www.un.org/millennium/declaration/
ares552e.pdf. The eight MDG goals, their targets, and indicators were agreed
to a year later in the secretary-general’s Road Map towards the Implementation of
the MDGs; see http://www.un.org/documents/ga/docs/56/a56326.pdf. The MDGs
seek to address poverty and hunger, gender equality, education, child and mater-
nal health, HIV/AIDS, environmental sustainability, and to establish a global
partnership for development.
6. For a discussion of the causes of the crisis and its consequences see Sachs
(1989–91).
7. Macro stability and fiscal management were part of the Washington Consensus
which expressed the conditions which needed to be established for growth to
occur, see Williamson (1989).
8. The interplay of growth and poverty as objectives of policy has a fascinating his-
tory. The UN stressed that growth was an instrument for reducing poverty; a
sentiment echoed by Prime Minister Nehru in the preface to India’s First Five
Year Plan. See also Bhagwati (1966).
9. The UN agencies had been in the forefront of development policy debates in the
1950s particularly Prebisch’s work on the declining terms of trade for primary
commodities and therefore the need for industrialization. UN agencies had also
been active in devising the tools for development planning. In the 1970s, United
Nations Conference on Trade and Development had been in the forefront of
debates about a New International Economic Order (Bhagwati and Ruggie 1984).
10. HDI is an indicator that measures health, education and standard of living. Orig-
inally, HDI used the indicators of life expectancy, a combination of gross school
 Manmohan Agarwal 57

enrolment and adult literacy rates, as well as GDP; however since 2011, the
dimension of education is a combination of mean and expected years of school-
ing, and standard of living is measured by gross national income (GNI). See http://
hdr.undp.org/en/statistics/hdi/.
11. He continued to refine this concept through the 1990s (Sen 1999).
12. McNamara had established poverty reduction as a major goal for the World Bank
in his 1974 speech at the annual meetings in Nairobi. This was the first time that
poverty reduction was given priority by the Bretton Woods institutions. However,
it had slipped into the background before being resurrected in the 1990 WDR
(Yusuf 2009).
13. The 1990 UN World Summit for Children in New York became a model for future
summits as it resulted in commitments by governments to improve the condition
of children as well as provide greater financial resources (Bradford 2002). In 1990
there was also a conference on Education for All in Jomtien; and UNCTAD held
the Second UN Conference on the Least Developed Countries in Paris. In 1992
the FAO held the International Conference on Nutrition held in Rome; and The
Earth Summit which linked sustainable development with the environment was
held in Rio de Janeiro. The World Conference on Human Rights in Vienna was
held in 1993; and the International Conference on Population and Development
was held in Cairo in 1994. By 1995 a World Summit on Social Development
in Copenhagen and the Fourth World Conference on Women in Beijing were
held; and 1996 saw the Habitat II Conference in Istanbul and The World Food
Summit in Rome. International NGOs played an important role in these UN
summits. For instance, the International Coalition on Women’s Health played
an important role in mobilizing support at the Cairo conference on Population
and Development.
14. See Hulme (2007) for a discussion of the process by which some goals espoused
by the conferences were included in the IDGs and were relegated to either an
inferior status or ignored altogether.
15. The US was ambivalent to many of the goals adopted in the IDGs and the MDGs.
Many NGOs believed that important aspects of the social condition had been
neglected and developing countries were lukewarm in their acceptance of the
MDGs. Also see Hulme (2007) for details of the negotiation process.
16. They reflect a general trend toward accountability and selection of monitorable
goals of aid. However, this created a conflict in that aspects of development that
are not quantifiable are neglected.
17. For instance, MDG 6 pledges to halve the incidence of malaria. This overlaps and
partly conflicts with the 1998 goal of Rollback Malaria, which aimed to halve
malaria–related mortality by 2010 and again by 2015. But in 2005, WHO and
United Nations Children’s Fund said it is too soon to say whether incidence of
malaria has increased or decreased since 2000 (Attaran 2005).
18. The dollar a day standard was revised to $1.25 based on more recent data. This
international poverty line is different from national poverty lines which are
determined by national governments.
19. All figures in US dollars.
20. The Indian GDP grew at over 9 percent in 2007 and a similar rate in 2010. But
since the first quarter of 2011 the economy has been progressively slowing, with
growth rate in each quarter being less than in the previous quarter (Government
of India 2011a).
21. There are no major evaluations or analyses of the scheme. But Jean Dreze has
written a series of articles in the newspaper Hindu, see National Employment
58 Multilateral Development Cooperation

Guarantee in Action, September 12, 2006; Long Road to Employment Guar-

antee, 2 August. http://www.hindu.com/2007/08/02/stories/2007080254241300
.htm; Corruption in NREGA: Myths and Reality, January 22, 2008, The
Hindu, http://www.hindu.com/2008/01/22/stories/2008012254901000.htm. The
data on amounts spent and person days of labour created is available in the Eco-
nomic Survey, an annual publication of the Ministry of Finance, Government of
India. Information is also available in the annual reports of the Ministry of Rural
Development, Government of India which implements the scheme.
22. 52.6 million households found employment under the scheme in 2009–10,
and 41 million until December 2010 for the fiscal year 2010–11. This means
1450 million person days of employment were created (Government of India
2011b).
23. Much of the poverty reduction has occurred after 1995 when GDP started grow-
ing whereas earlier GDP had been declining and the poverty ratio had been
increasing.
24. See various issues of the World Economic Outlook published by the IMF and the
Global Economic Prospects and Global Development Finance published by the World
Bank.
25. Even though the very young children may not be in school, if they have older
sibling who get fed in school, this tends to improve their nutritional status too.
26. Domestic production in 1965–66 was supplemented by food aid from the US,
which was about 10 percent of domestic production (Lele and Agarwal 1991).
27. See Johnston and Mellor (1961) for an analysis of agricultural growth and its
relation to poverty reduction.
28. Brazil has been successful in improving a number of social indicators such as
education attainment and health status because of its familia bolsa program.
29. The indicators used for constructing the index were in the areas of poverty
and hunger, primary education, women’s equality in education, and child
mortality.
30. A common method used for aggregation is to add the ranks according to the
different indicators. This is the method used in the calculation of the HDI. But the
method used by Agarwal and Samanta is based on principal component analysis
developed by Nagar and Basu (2002).
31. The higher correlation of the social index with per capita income than with
GDP suggests that size does not give any advantage in achieving good social
conditions.
32. Cross country studies on the sources of growth find that FDI is more effective
than domestic investment (Barro and Sala-i-Martin 2003).
33. Traditional analysis had foreign capital inflows raising the rate of investment
above what it would have been if only national savings were available. The cur-
rent account deficit reflected the excess of investment over domestic savings. The
higher investments in turn would raise the growth rate. But more recently, for-
eign capital inflows have not resulted in higher investment rates. They have been
used to raise the foreign exchange reserves of the countries.
34. The amount going as debt relief, though it could free resources for investment,
tends to inflate the amount of aid as it includes interest charges and penalties
which are arbitrary and often excessive (Kharas 2007).
35. Very little of the money coming from the non-DAC donors is aid. The grant ele-
ment is very small and most of it is more like supplier’s credit. Similarly there
are questions about the sustainability of aid from private sources. Aid has been
 Manmohan Agarwal 59

provided particularly for vaccines for a period of time and then the private aid
graduates out and developing countries find it difficult to replace the aid.
36. The CGIAR was set up in 1971 at the initiative of the World Bank to help in the
development and spread of new agricultural technologies.
37. Funding is of two kinds. Unrestricted can be used by the agency for any purpose
while restricted can be used only for purposes indicated by the donor.
38. Canada, however, as noted by Brown and Olender (Chapter 7, this volume), has
increased its contributions to multilateral agencies, including the CGIAR as part
of its food security strategy. However, a significant proportion of this funding has
been restricted.
39. For a discussion of the different international institutions dealing with agriculture
see Shaw (2009).
40. See Lee (2009) for a discussion of this study and other aspects of the governance
of the WHO. See Blomfield and Kharas (Chapter 3, this volume) for a general
discussion of declining flows to multilateral development institutions.
41. See Agarwal (2012).
42. See Agarwal (2012) for a discussion of these trends in FDI. See de Haan and
Warmerdam (Chapter 9, this volume) for the case of China.
43. Aid is defined in terms of its grant element, namely the extent of concession in
relation to a commercial transaction. The extent of concessionality of the flows
from emerging economies is very small.
44. There has been considerable debate as to whether the MDGs are appropriate for
SSA (Herbert 2007).

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3
Rethinking the Role of Multilateral
Institutions in an Ever-Changing
Aid Architecture
Homi Kharas and Michael Blomfield

Introduction

The international aid architecture is the set of rules and institutions

underpinning the framework through which aid flows to developing coun-
tries. Multilateral institutions have long been a central pillar of this aid
architecture. However, the proliferation of multilaterals has contributed to
an increasingly fragmented system containing numerous agencies with over-
lapping mandates. New forms of multilateralism, such as vertical funds and
earmarked trust funds, are increasing in prominence, while core funding to
the traditional multilateral institutions makes up a declining share of total
development assistance. At the same time, new modalities of assistance are
emerging with the growth of privately funded non-governmental organiza-
tions (NGOs) and South-South development cooperation that largely bypass
multilaterals. Development knowledge is also shifting from a phase in which
technical expertise was invested in a relatively small number of institutions
to a phase in which information can readily be transmitted across the globe,
enabling new actors to innovate and disseminate their experiences. The
knowledge advantage held by multilaterals has shrunk as more emphasis
is placed on the practical ‘how to’ of development. This is a topic on which
developing country governments, with actual implementation experience in
this area, can have strengths relative to multilaterals that have invested in
understanding the ‘what to do’ of development.
Historically, the central rationale for creating multilateral agencies has
been the idea that single agencies could act as intermediaries between donor
countries and partner countries, thereby providing a coherent framework
for allocating development assistance. Greater fragmentation of donors in
the aid architecture can increase the time and resources that donors and
recipients expend in negotiating and monitoring assistance packages, rather
than for development purposes. A greater number of donors complicate

63
64 Multilateral Development Cooperation

the integration of projects and funding integral to ensuring that aid flows
to the projects and programs that will have the greatest impact on devel-
opment outcomes. In this context, it is easy to see why providing funds
through multilateral agencies appears to offer advantages over bilateral
systems of Official Development Assistance (ODA) through streamlined
and coordinated assistance, evaluations, and institutional learning. As new
developments shake this traditional conception of multilaterals, the time is
ripe for a re-conceptualization of their role in the aid architecture.
This chapter reviews the core comparative advantages of multilaterals and
examines where they add greatest value to the global aid system in the
twenty-first century. It studies the rationale for multilaterals in theory and
the empirical evidence on whether their advantages are being exploited in
practice. Four dimensions of multilateral effectiveness are reviewed: frag-
mentation, economies of scale, coordination, and norms and knowledge.
In light of the evidence on multilaterals’ effectiveness and comparative
advantages, the chapter concludes by examining recent trends in develop-
ment assistance and their implications for the role of multilaterals in the
future aid architecture. It suggests that the desire for planning, coordination,
and harmonization that has driven the approach to multilaterals in the past
should give way to a new emphasis on competition among multilaterals,
which will innovate and shape the development agenda.

Donor fragmentation

In principle, an aid architecture containing a small number of multilateral

agencies to mediate assistance offers a more coordinated system with lower
transaction costs in delivering ODA than a fragmented system of bilateral
relationships between donor and partner countries. These transaction costs
matter to aid effectiveness. Expending more money, time, effort, and other
resources in negotiating and monitoring specific aid packages diminishes the
availability of these for the projects on the ground that can have develop-
ment impact.1 In the words of Steve Radelet, the current chief economist of
United States Agency for International Development, these transaction costs
have meant:

[M]anaging aid flows from many different donors is a huge challenge

for recipient countries, since different donors usually insist on using
their own unique processes for initiating, implementing, and moni-
toring projects. Recipients can be overwhelmed by requirements for
multiple project audits, environmental assessments, procurement reports,
financial statements, and project updates.
(2006, 15)

This is particularly pertinent for countries with low institutional capacity.

These countries typically receive aid in the smallest packages, yet they have
 Homi Kharas and Michael Blomfield 65

the least capacity to absorb the transaction costs generated by shifting insti-
tutional focus from implementation to transactions with donor agencies
(IDA 2007). The direct costs increase with the number of donors and are
inversely related to the size of each package of ODA if total ODA is constant.
Sundberg and Gelb (2006) have suggested that ‘as much as half of
senior bureaucrats’ time in African countries is taken up in dealing with
requirements of the aid system and visiting bilateral and multilateral dele-
gations’ (Sundberg and Gelb 2006). The opportunity cost for senior officials
to focus on these requirements is extremely high for recipient countries.
Indeed, several countries – including Ghana, Kenya, Mozambique, and
Tanzania – have recently sought to create a ‘quiet time’ by asking donors
to avoid missions during particular periods to allow these officials to focus
on important domestic tasks such as budget preparation. There are indi-
rect transaction costs to recipient countries in addition to the direct costs
of the resources diverted away from domestic policies and implementing
projects toward managing ODA administrative requirements. The indirect
costs are experienced as the project implementation units financed by
donors attract skilled workers away from the recipient country’s public
sector where such skills are often in short supply (Acharya et al. 2006,
10).
In theory, channeling development assistance through multilateral insti-
tutions promises lower transaction costs. If governments in rich countries
direct ODA through multilateral institutions, they should be able to pro-
vide assistance at a larger scale than if the governments each funded their
own projects in partner countries. This should, theoretically, lower the trans-
action costs associated with each dollar of ODA and increase the fraction
of resources used for implementation purposes. Moreover, not only should
increasing the scale of ODA lower transaction costs, but if ODA is received
by a country from fewer donors (with coherent standards for initiating,
implementing, and monitoring projects), it should prove far less taxing on
developing countries’ institutional capacity than the myriad requirements
normally requested from multiple donors. Figure 3.1 demonstrates the the-
oretical lower transaction costs from intermediation of ODA by multilateral
institutions.
If all donors have their own set of requirements associated with similar
transaction costs, then the relationship between transaction costs and the
number of donors can be conceptualized as follows:

Global Transaction Costs = f (Number of Donors × Number of Recipients)

This is a simplified model, as not all donors provide ODA to all countries and
the number of projects in each country and sector varies leading to different
transaction costs. However, it serves to show how increasing the number of
donors and recipients increases the transaction costs and resources lost from
implementing projects for development purposes.
66 Multilateral Development Cooperation

Multilateral institutions
Rich governments Poor governments

Rich individuals Poor individuals

Figure 3.1 How multilateral institutions can lower ODA transaction costs in theory
Source: Adapted from Kharas (2007).

If all aid flows through multilateral institutions as an intermediary,

building on Figure 3.1, we see that

Global Transaction Costs =

f (Number of Multilaterals × (Number of Donors + Number of Recipients))

Therefore, multilaterals ought to lower global transaction costs if the number

of multilaterals is small compared to the number of recipients and bilateral
donors. This mathematically expresses the intuition underlying Figure 3.1.
That is, if a multilateral institution intermediates donor and recipient coun-
try relationships, each donor country only has transaction costs with each
multilateral rather than each recipient. Likewise, each recipient incurs only
transaction costs associated with the multilateral institution and not each
donor. This model also shows that as the number of donor and/or recipient
countries increases, the benefits of lower transaction costs from mediation
through multilaterals ought to increase as well.2
In reality, however, the picture is very different. The number of multilat-
eral institutions now exceeds the number of donor and recipient countries
combined due to the proliferation of multilateral institutions, with ver-
tical funds becoming particularly prominent in the global aid landscape
over recent years. There are now 212 multilateral institutions and 21 inter-
national public-private partnerships that intermediate ODA from donor
countries, although only about one-quarter of these are large on-lenders
or on-granters of funds (OECD/DCD/DAC 2011).3 The remainder undertake
technical cooperation work, setting global norms and standards in a large
number of specialized development areas. In the simplified model above,
 Homi Kharas and Michael Blomfield 67

Rich governments Poor governments

Multilateral
institutions

Vertical
funds

Private
NGOs

Rich individuals Poor individuals

Figure 3.2 The reality of intermediating actors in development assistance

Source: Adapted from Kharas (2007).

this means that global transaction costs have actually increased as a matter
of practice through the presence of multilaterals as intermediating agen-
cies. Furthermore, new multilateral agencies are being created at a rapid
rate, with an average of approximately four new agencies created annu-
ally since 1990 (OECD 2009). This has alarmed donors who have called
for a policy of ‘thinking twice’ before creating new agencies (World Bank
2008, 4). Nonetheless, this principle has often been ignored in practice; cre-
ating agencies has been perceived as a means to respond to prominent global
challenges. In the field of climate change alone, about ten multilateral funds
have been created since 2000.
Figure 3.2 demonstrates how the changing landscape of multilateral insti-
tutions and the emergence of other organizations – including privately
funded NGOs and new bilateral donor countries – have increased the
complexity of the global aid system with the potential to increase trans-
action costs and lower coherence due to the number of intermediating
actors.

Economies of scale

At the same time as the number of actors in the global aid architecture
and the number of funded activities is increasing, we are also witnessing
a decrease in the average size of activities (shown in Figure 3.3). Indeed,
the Organisation for Economic Co-operation and Development (OECD)
estimates that 50 percent of aid relationships account for only 5 percent
of ODA by volume (OECD 2011).
68 Multilateral Development Cooperation

$ million Number

80,000
6
Average project size 70,000
(left axis) Project count
5
(right axis) 60,000
4 50,000

3 40,000

30,000
2
20,000
1
10,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Figure 3.3 Trends in the number of donor financed activities and average activity size,
1990–2008
Source: Fengler and Kharas (2011, 4) based on AidData, excluding donors that have not reported
project-level data for 2008.

The trend lines shown in Figure 3.3 highlight the risk that small devel-
opment activities, which do not yield economies of scale, could raise
transaction costs and detract from the development impact of each dollar of
ODA. Small activities are not intrinsically bad for development impact. They
can be a useful means to innovate, try out new ideas that offer promise for
scaling up, or catalyze development processes in isolated communities where
small amounts of funding can have a major impact. Nonetheless, small ini-
tiatives increase transaction costs and may prevent economies of scale being
reached, thereby limiting the impact of ODA on development outcomes.
Multilateral institutions tend to fund larger projects than members of the
OECD’s Development Assistance Committee (DAC), especially the large tra-
ditional multilaterals such as International Development Association (IDA)
and the regional development banks (see Figure 3.4). These institutions can
undertake larger projects and better pool finances for programmatic pur-
poses. Although larger-scale funding is not necessarily always better, it can
allow greater economies of scale to be realized and lower the transaction
costs that can arise from fragmentation. Additionally, it can enable larger –
potentially transformative – projects to be undertaken. Traditional donors
with fragmented funding streams across and within countries are frequently
not able to fund such large-scale initiatives. As the United Kingdom’s (UK)
Department for International Development (DFID), widely acknowledged as
one of the world’s leading bilateral donor agencies, noted in its review of
 Homi Kharas and Michael Blomfield 69

70.00 64.25
60.00

50.00

40.00

30.00
20.59 19.59
20.00 14.16
10.00 6.18 4.08
0.00
World Bank Regional EU Institutions Vertical Funds UN Funds and DAC Traditional
(IDA) Development Programs Donors
Banks

Figure 3.4 Average project size by donor type in 2010 (2010 US dollars, millions)
Source: Generated by authors using OECD International Development Statistics (2012).

multilateral aid, ‘through its size and reach, IDA can have a transformational
effect that individual national donors cannot match’ (DFID 2011, 25).
Multilateral institutions with larger resources – both in capital and
knowledge – are also better placed than bilateral donors to strategically
plan projects at the global level to maximize the efficiency with which
ODA generates development impact.
Empirical research by Knack and Rahman (2004) provides further evidence
to the claim that economies of scale and strategic approaches to ODA have
advantages over a system in which multiple small donors fund projects. The
authors found evidence which suggests,

competitive donor practices, where there are many small donors and no
dominant donor, erode administrative capacity in recipient country gov-
ernments. In their need to show results, donors each act to maximize
performance of their own projects, and shirk on provision of the public
sector human and organizational infrastructure essential for the coun-
try’s overall long-term development . . . Informal tests of reverse causality
strongly indicate that causation runs from fragmentation to lower
quality.
(Knack and Rahman 2004, 24)

The increased severity of aid fragmentation across donors resulted in a

greater decline in the bureaucratic quality of the recipient country. Knack
and Rahman suggest that major multilateral institutions, such as IDA, are
better placed to take a strategic approach to delivering results by limiting
the number and the intensity of competition over small projects.
The OECD’s research on fragmentation in the aid system also highlights
the prevalence of multiple donors that provide relatively low amounts of aid
70 Multilateral Development Cooperation

to recipient countries. The OECD calculates a concentration ratio to gauge

the significance of a donor’s relations to the partner countries to which they
provide ODA. The ratio measures the number of recipient countries with
which a donor has a significant aid relationship as a percentage of the total
number of countries with which it has an aid relationship.4 The higher a
donor’s concentration ratio, the less fragmented its aid portfolio. The most
recent concentration ratio statistics, for the year 2009, show that multilateral
institutions scored higher than bilateral donors, meaning that they had less
fragmented aid portfolios (OECD 2011). Ten of the 21 multilaterals in the
OECD review had concentration ratios of 70 percent or higher, compared
to 5 of the 23 DAC members reviewed. The multilaterals with the lowest
concentration ratios tended to be global programs or United Nations (UN)
agencies with specific thematic mandates, which necessitate investments in
one sector across numerous countries.

Coordinating assistance

Research by IDA has identified that the average number of donors per coun-
try rose from 12 in the 1960s to 33 during the 2001–05 period. The increased
fragmentation of aid channels at the country level has seen the number of
countries with over 40 active donors present increase from 0 to 31 since
1990 (IDA 2007, 19). The researchers conclude that ‘the combination of
more bilateral donors and of an increasing number of multilateral chan-
nels has led to an increasingly crowded aid scene’ (IDA 2007, 19). Similarly,
in advance of the 4th High Level Forum on Aid Effectiveness (HLF4), the
OECD identified that ‘the average donor was present in 71 out of 152 ODA-
eligible countries in 2009’ (OECD 2011, 5). DAC members were present in
73 partner countries on average, and multilateral agencies were present in
69 countries (OECD 2011, 5). The increased number of donors and prolifer-
ation of aid channels in recipient countries causes significant inefficiencies
in the global aid system. The OECD has estimated that the total transaction
costs due to fragmentation and poor coordination in the global aid system
could reach $5 billion5 per year (Killen and Rogerson 2010, 1). Beyond the
resources that are lost to unnecessary duplications and transaction costs,
insufficient coordination leads agencies to allocate resources inefficiently
because donors generally make decisions unilaterally and pay little attention
to the allocation decisions of other donors.
A prime example of inefficient ODA allocation can be found in the devel-
opment assistance provided to the Aceh province in Indonesia following the
2004 tsunami. Masyrafah and McKeon (2008) found large imbalances in the
amount of available financing compared to the needs by geographic district
in Aceh (see Figure 3.5). Although funding was highest in the areas that
had been hardest hit by the tsunami (around the provincial capital of Banda
Aceh), there was an over-allocation of resources to these areas by donors that
 Homi Kharas and Michael Blomfield 71

Figure 3.5 Post-tsunami financing-to-need ratios for different parts of the Aceh
province based on 2005 allocations
Source: Masyrafah and McKeon (2008, 34).

left other areas with significant unmet needs. Each individual donor’s deci-
sion to send resources to the areas that had been most severely affected did
not yield the optimal allocation of development assistance across the region.
The development impact of ODA in Aceh was increased only with the help
of a strong coordinating body that encouraged a reallocation of assistance
from areas where needs were being met to other areas.
This example illustrates the wider problem of allocating aid efficiently in
the current aid architecture. At the micro level, poor coordination can lead
to inefficient allocations with numerous organizations focusing on a hand-
ful of areas or sectors and leaving other needs unmet. At the macro level,
coordination failures can be one of the key factors that give rise to ‘aid dar-
lings’ and ‘aid orphans’ in which the marginal dollar of ODA does not go
to the country in which it could have the greatest marginal development
impact.
A small number of multilateral agencies would clearly have an advantage
in sharing information and coordinating funding activities to overcome the
problem of inefficient resource allocation. This was a core part of the ratio-
nale behind the development of the global aid architecture in the 1950s
and the 1960s. New multilateral arrangements were created to overcome
coordination problems and other challenges that emerged in the context
of myriad national programs that formed part of the global aid architecture.
For example, the DAC was established as a forum for donors to coordinate
objectives and procedures in development assistance, and IDA was created
to provide concessional loans to fund projects conducive to development.
72 Multilateral Development Cooperation

The Paris Declaration on Aid Effectiveness, endorsed in 2005, sought

to counter the problems associated with fragmented donor interventions.
Five principles formed the core of the declaration: partner country own-
ership; alignment of development partners with country-led strategies;
harmonization of activities among development partners to avoid ineffi-
cient duplication; managing resources for development results; and mutual
accountability for performance. Among these principles, promoting country
ownership has advanced the farthest. Alignment and harmonization have
progressed, although more unevenly, and there has been limited achieve-
ment of the goals of better management for development results and mutual
accountability for performance. Evaluations of progress on the Paris Dec-
laration show mixed results on efficiency improvements; the gains appear
to have been made where strong country systems have enabled partners to
handle more strategic support at the sector level (Wood et al. 2011, 10). The
more effective partnerships appear to have enhanced the strategic dialogue
on aid between donors, partners, and other stakeholders, thereby moving
collaboration beyond the technical management of aid. Interestingly, the
multilateral institutions focused on specific sectors were often less integrated
with other donors and country processes, but in a number of instances,
delivering stronger development results (Wood et al. 2011).

Development knowledge and international aid norms

Setting global development principles and standards is an intrinsically multi-

lateral effort given the myriad donors and recipients in the international aid
architecture. The Bretton Woods institutions and the UN agencies lie at the
heart of the twentieth century’s global development architecture. Alongside
the DAC, they have helped shape the development landscape by promoting
international norms and standards for ODA.
The World Bank, in particular, has historically been a leader in pioneering
new ways of conceptualizing development. The agency has also built up an
arsenal of development expertise over the years. Basic needs development
strategies, poverty assessments, poverty reduction strategy papers, structural
reforms, environmental and social standards, export orientations, and gov-
ernance and institutional reforms are some of the areas in which the World
Bank introduced new concepts that became central to the international aid
system. However, in recent years, there has been a dramatic growth of new
actors in academia, the private sector, the NGOs, and developing economies
pioneering innovations for development.
The Poverty Action Lab at the Massachusetts Institute of Technology has
championed the use of randomized trials to advance knowledge on cost-
effective public policies in development, and has undertaken more than 315
evaluations. The International Growth Centre’s network, funded by DFID
 Homi Kharas and Michael Blomfield 73

and directed by leading researchers from the London School of Economics

and Oxford University, supports more than 200 research projects across a
range of key development challenges including governance and state capac-
ity, human capital development, agriculture, firm capabilities, infrastructure,
finance, and macroeconomic policy.6 Organizations such as Bangladesh
Rural Advancement Committee (BRAC) and Kiva have identified new tech-
niques for bringing finance to millions of the world’s poor.7 Other NGOs
are developing new consultative processes that highlight the voices of ben-
eficiaries of aid on the ground. New technologies, such as the $100 laptop
and portable water purification devices, offer new ways to address certain
development challenges and provide large-scale solutions.8 The private sec-
tor and social entrepreneurs have also pioneered new delivery models that
generate value at the bottom of the pyramid, demonstrated in examples such
as M-PESA in Kenya.9 Successful development experiments in some devel-
oping countries have inspired other nations: for example, conditional cash
transfers from Latin America and rural development projects from China
are among the 100 case studies of development successes that were collated
for the 2004 Shanghai Poverty Conference and that have now been widely
emulated elsewhere.
The leading multilaterals – and the World Bank in particular – still rep-
resent a significant repository of information and knowledge generated by
their evaluations. Vertical funds, a popular new form of multilateral agency,
also offer promise for developing specialized knowledge about sectoral initia-
tives that can inform future activities and be used to scale up innovations.
Nonetheless, multilateral institutions no longer come close to having the
type of monopoly on ideas that they once had. Today’s international devel-
opment context allows new actors to easily launch development programs,
pioneer new techniques, and rapidly disseminate information on a global
scale.
As new private NGOs and emerging economy donors have increased
in prominence and new multilateral agencies have been established to
fill perceived gaps and needs, the all-purpose traditional multilaterals are
no longer as preeminent in shaping global aid. The increase in new modal-
ities of aid challenges the role of multilaterals as a neutral party that can
foster global norms and standards for development, or at least a subset
of norms acceptable to the major advanced country donors. These private
NGOs and Southern donors are often not as well linked into the mul-
tilateral architecture as the traditional donor countries. Many emerging
Southern donors have quite different interpretations of the broad the-
matic principles in the aid architecture to DAC countries that helped shape
them (see Table 3.1). At HLF4 some tensions arose between DAC coun-
tries and the Southern providers regarding the responsibilities in ensuring
aid effectiveness such as commitments to transparency and mechanisms
74 Multilateral Development Cooperation

Table 3.1 Interpretations of Paris Declaration principles by DAC and Southern

providers

Paris principles DAC members Southern providers

Ownership National development strategy Ministers/senior officials

(or PRSP), built up from
technical discussions, outlines
priority areas for donors.
Alignment Use and strengthen recipient
institutions and procedures,
where feasible. Tying of aid
discouraged.
Harmonization Use common arrangements to
minimize burden on recipients.
Multilateralization of aid
encouraged in all instances.
Managing for Use recipient-led performance
results assessment frameworks
and support results-based
budgeting. Promote
international best practices.
Mutual Make aid transparent and hold
accountability each other accountable to Paris
commitments via targets and
indicators.
articulate specific projects for
cooperation through high-level
political dialogue
Delivery of turnkey projects in
short run; capacity building as a
long-term strategy.
Minimize burden by avoiding
cumbersome bureaucratic
processes altogether. Occasional
use of multilateral system where
judged to be in interest.
Focus on delivering aid quickly
and at low cost. Use own
development experiences and
‘how-to’ knowledge.
Ensure that aid is mutually
beneficial. Agree to fully respect
each other’s sovereignty and
eschew policy conditionality.

Source: Park (2011, 53).

of coordination. Ultimately, all participants endorsed the outcome docu-

ment after mutually acceptable language was found that recognized the
principle of common, but differentiated, responsibilities. This was the major
success of HLF4. However, the conference also epitomized the difficulties
in creating a multilateral partnership at the global level consisting of dif-
ferent actors engaged in various bilateral cooperation agreements, many
of which may have competing national interests. As Kindornay and Samy
(Chapter 11, this volume) show, these challenges persisted during negotia-
tions over the working arrangements of multilateral partnership agreed to
at HLF4.

Evidence of the effectiveness of multilateral institutions

Multilateral institutions are generally rated highly by independent evalua-

tions comparing the effectiveness of their assistance and their use of good
practices. The QuODA review of the quality of development assistance by
the Brookings Institution and the Center for Global Development ranks the
 Homi Kharas and Michael Blomfield 75

Table 3.2 Quality of ODA average Z-score by donor type

Donor Type Maximizing Fostering Reducing Transparency

efficiency institutions burden and learning

Bilateral −0.16 −0.05 −0.11 −0.07

Multilateral 0.61 0.03 0.37 0.18

Note: Zero represents the mean score for donor performance in each category.
Source: Birdsall et al. (2011, 2).

practices of leading multilateral and bilateral donors across four dimensions:

maximizing the efficiency of ODA; fostering institutions in partner coun-
tries; reducing the burden of recipients; and transparency and learning. The
results show that multilateral institutions10 compare favorably to bilateral
donors (see Table 3.2).11 Collectively, multilateral institutions have above-
average ODA quality and outperform bilateral donors on each indicator.
The multilaterals in the review perform particularly strongly on maximiz-
ing ODA efficiency and reducing burdens on recipients (Birdsall et al. 2011).
High rates of country programmable aid and avoidance of fragmentation
are two of the key drivers of multilaterals’ high scores compared with bilat-
eral donors in the maximizing efficiency and reducing burden sections,
respectively.
In particular, IDA ranks as one of the top institutions – bilateral or
multilateral – in the review. It is the only donor that ranks in the top
20 percent of donors in all four themes, and is in the top three donors in
three of the four sections. The UN agencies are weaker across the board.
They are in the bottom half of donors for all four themes, thereby dragging
down the average score of the multilaterals shown in the table above.
These results are broadly confirmed by other reviews of donor perfor-
mance. A recent evaluation of multilateral and bilateral donors’ practices by
William Easterly and Claudia Williamson found that eight of the ten non-
UN multilaterals reviewed scored above the median of the sample. These
multilaterals performed especially well on avoiding fragmentation and its
associated burdens compared to bilateral donors. The authors suggest that
the high levels of fragmentation and absence of specialization in coun-
tries/sectors in the contemporary aid system forfeits significant potential
gains (Easterly and Williamson 2011, 23). The UN agencies also perform
poorly in this analysis, ranking significantly lower than other multilateral
institutions and bilateral donors, as in the QuODA evaluation. Easterly and
Williamson conclude that their data accords with three common perceptions
of different organizations’ practices:

(1) the UN is relatively spendthrift and unaccountable, partly predicted

by its very diffuse ownership; (2) the bilaterals’ differential failing is their
76 Multilateral Development Cooperation

‘plant the flag’ syndrome that causes excessive aid fragmentation; and
(3) the multilaterals’ less diffuse ownership than the UN agencies correctly
predicts better performance than the latter.
(2011, 45)

Knack et al. (2010) identify similar themes in a review of 38 multilateral

and bilateral donors. The authors rank each organization according to its
selectivity in targeting aid to the poorest people, aligning assistance with
country systems, harmonization at the country level, and specialization to
target assistance with less fragmentation. This study reinforces the argument
of better performance among multilaterals than bilateral donors. The aver-
age position of multilateral institutions is 11th, twice as high as the average
for bilateral donors.12 In particular, the World Bank and the regional develop-
ment banks rank highly; the UN system again rated poorly with the notable
exception of IFAD, which is ranked in the top quintile of agencies (Knack
et al. 2010).
In 2011, DFID undertook a review of multilateral institutions receiving
British funding in order to identify the value for money provided by each
institution for future funding decisions (DFID 2011). DFID evaluated the
institutions on their contributions to development objectives and organiza-
tional strengths. The multilateral development banks are identified as being
critical to international objectives, although they are weak when operating
in fragile contexts and promoting gender equality, as are numerous other
types of multilateral institutions. In particular, IDA is identified as having
an important comparative advantage from the breadth and quality of its
technical knowledge, expertise, and global reach. The more recently estab-
lished vertical funds, as a group of institutions, score highly in the DFID
review for their critical role in meeting international objectives, focus on
poor countries, and transparency and accountability. Similar to multilat-
eral development banks, the vertical funds’ weaknesses center on working in
fragile contexts and gender issues. In this review, the UN agencies were again
deemed to be performing poorly, especially on indicators relating to their
financial and strategic management and their contribution to development
results.
These evaluations suggest that multilaterals do a good job of ensuring
ODA effectiveness compared to bilateral donors. Studies have also identified
particularly strongly performing multilaterals. Across a range of evalua-
tions, IDA and the multilateral development banks in Africa and Asia are
applauded for their strong achievements and comparative advantages in
maximizing the development impact of aid from their specialization and
scale. Table 3.3 shows some of the key areas for ensuring effective develop-
ment assistance and identifies the comparative advantages of multilateral
institutions compared to bilateral donor agencies.
 Homi Kharas and Michael Blomfield 77

Table 3.3 Summary of advantages of multilateral vs. bilateral donors

Multilateral Why/why not?

advantage?

Fragmentation No Multilateral intermediation through

of assistance few agencies should be able to limit
fragmentation, but the current aid
architecture no longer supports this
model because there are too many
multilaterals.
Economies of Yes, for IDA and IDA and the Regional Development Banks
scale the Regional take on more large-scale projects than
Development Banks bilateral donors.
Coordinating Yes IDA has a strong field presence in partner
aid activities countries and delegates more staff and
authority to missions than other agencies.
This enables it to support partner
countries in coordinating assistance
from donors, for example, through
poverty reduction strategy formulation,
multidonor trust funds and other
mechanisms.
Knowledge and Yes, but not as Setting global standards and norms
aid norms strong now as in requires multilateral cooperation, almost
the past by definition. The World Bank has been
very successful in promoting new
thinking in development, but there are
increasingly other actors testing and
disseminating new ideas.

Whither multilateralism?

In spite of the evidence discussed above that suggests multilateral institu-

tions have a crucial role as channels of aid that can maximize its effectiveness
and impact, their core programs comprise a declining share of global devel-
opment assistance. While donors do use multilateral channels, considerable
amounts of money are now being allocated to trust funds administered by
multilaterals (so-called non-core programs) that are earmarked by donors
for specific purposes, rather than for core multilateral programs. In doing
this, donors seek to take advantage of some multilateral advantages, such as
scale economies, knowledge, and reducing the burden on recipients, while
ignoring other possible benefits such as maximizing efficiency.
The share of gross core multilateral ODA provided by the DAC countries
as a share of overall ODA declined from 33 percent in 2001 to 28 percent in
78 Multilateral Development Cooperation

2009 (OECD 2011, 26). This decrease is even more dramatic if contributions
from the European Union – which functions as both a multilateral orga-
nization and a bilateral donor that contributes to multilateral institutions
in its own right – are excluded. In this case, core multilateral contribu-
tions declined to below 20 percent of total ODA from DAC members in
2009 – a decrease in share by one-fifth since the beginning of that decade
(OECD 2011, 5). The sums of ODA channeled through multilaterals fell in
spite of the recognition by the OECD that independent assessments give
‘multilaterals a clear edge when it comes to matching aid with partners’
national priorities, supplying more predictable aid, and providing high levels
of sector-specific specialization’ (OECD 2011, 10).
If multilaterals perform well, and particularly strong multilaterals are iden-
tifiable, why are donors not funding these institutions to leverage their
advantages and to maximize development impact? Over the course of the
decade (1998–2008), IDA – widely recognized in a range of evaluations
as one of the highest performing development organizations, bilateral or
multilateral – has seen its share of global ODA decline by half from 7 percent
to approximately 3.5 percent. With an overall decline in the prominence
of multilateral funding, there has been a trend among DAC countries to
increase bilateral aid channeled through multilateral agencies for specific
bilateral programs. The OECD’s reviews of multilateral aid shows that non-
core multilateral aid increased by more than 40 percent from $10.6 billion
to $15 billion over 2006–09, far more than the overall increases in ODA dur-
ing this period (OECD 2008, 30). Figure 3.6 shows that donors who chose
to allocate multilateral funding through non-core programs also tended to
decrease their core multilateral funding in the decade before 2008.
This ‘bilateralization’ of multilateral aid offers bilateral donors the capac-
ity to more easily track the results of their ODA compared to traditional
multilateral funding and to increase the visibility of their aid to audiences
in domestic and partner countries. Interestingly, about 70 percent of the
bilateral ODA channeled through multilateral institutions in 2009 was des-
tined for fragile states (OECD 2011, 28), which might reflect bilateral donors’
awareness of their own deficiencies when operating in fragile states. Numer-
ous DAC members have also started to focus their bilateral efforts more on
a few selected priority partner countries. The OECD’s review of multilat-
eral aid highlighted several positive and negative implications of the trend
of increasingly bilateralized multilateral aid efforts from the perspective of
different types of actors in the global aid system (see Table 3.4).
Other new forms of multilateralism also represent a significant shift in the
traditional aid architecture. The number of vertical funds – multilateral orga-
nizations focused on a single development theme or global public good – has
dramatically increased in recent years. These allow donors to choose which
multilaterals to support based on their area of focus and sidestep the tradi-
tional multilateral actors, which tend to have a more general development
 Homi Kharas and Michael Blomfield 79

0.2
DAC average = 0.27

France
Percentage point change in share of

0.1
multilateral lending, 1998−2008

Portugal

Belgium
Luxembourg Canada
Germany Japan Sweden 2008 non-core share of multilateral aid
0 Korea
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
Netherlands
Italy Finland New Zealand Norway
Denmark Switzerland
United Kingdom Spain
Austria Ireland
Greece
−0.1 Australia

United States

−0.2

Figure 3.6 Major donors’ changes in multilaterals and use of non-core multilateral
lending

orientation or are often deemed ineffective as in the case of numerous UN

agencies. Nonetheless, the development of sector-focused multilaterals has
not yielded a new aid architecture led by specialized multilateral agencies
with comparative advantages in their area of focus. As new vertical funds
have emerged, traditional multilateral institutions and bilateral donors have
not scaled back their own efforts. In fact, in many sectors numerous vertical
funds have emerged with potential for overlap. This trend risks contributing
to more fragmentation in the global aid system, and thereby undermin-
ing the gains from specialization. The OECD’s report on multilateral aid in
advance of HLF4 emphasized a key question – whether the benefits from
greater choice of multilaterals and specialization in knowledge and funding
are greater than the costs from increased fragmentation in the global aid
system (OECD 2011, 10).
The proliferation of multilateral organizations and the increased desire to
leverage multilaterals’ comparative advantages by using multilateral chan-
nels for bilateral aid challenges donors to evaluate their portfolio of alloca-
tions to multilateral institutions. This offers an opportunity for competition
between multilateral institutions based on their efficiency in generating
development results. DAC countries identify perceived comparative advan-
tages and results in performance assessments, such as the Multilateral Orga-
nization Performance Assessment Network and the Common Performance
Assessment System, as key information for determining allocation decisions
80 Multilateral Development Cooperation

Table 3.4 Potential advantages and disadvantages of increased non-core

multilateral ODA

Advantages Disadvantages

Partner • The trust fund steering • The trust fund steering

country committees may offer more committee may offer
representative governance less representative
arrangements for partner governance
countries than the organization’s arrangements for
board. partner countries than
• Enhanced harmonization among the organization’s
donors, particularly if parallel board.
bilateral initiatives are replaced. • Lines of accountability
in disbursement may
be blurred.
Multilateral • Increased overall resource • Governance is
organization envelope for the organization. hollowed out and
• Multi-donor funds are preferable bypasses board
to multiple parallel bilateral decisions.
initiatives. • Transaction costs are
• Preferable to the creation of a increased compared to
new organization for specific, core funding.
critical and time-bound • May conflict with the
initiatives. organization’s core
policies or strategies.
Bilateral • Ability to focus on specific • Core contributions
donor sectors, regions, and countries from donors may
where multilaterals have more subsidize the
expertise or a stronger presence. administrative costs of
• Can make the donor’s others’ trust funds.
ODA more visible than core
contributions to multilaterals.
• Can circumvent the
organization’s board and other
processes that may be onerous
from the donor’s perspective.

Source: OECD (2011, 29).

to multilaterals (OECD 2011, 12). The UK has gone further by carrying out a
full assessment of the performance, comparative advantages, and organiza-
tional strengths of 43 multilateral institutions that receive British funding
(DFID 2011). This assessment was specifically designed to inform future
funding decisions to ensure that the UK government receives the greatest
value for money on its development priorities in aid allocation decisions.
Beyond the trend among the DAC countries of using multilaterals, the
emergence of other donors has challenged the traditional aid architecture.
Between 1992 and 2008, two-thirds of the increase in total development
 Homi Kharas and Michael Blomfield 81

assistance came from NGOs and non-DAC bilateral donors. Traditional

ODA from DAC countries now represents 63 percent of total development
assistance, down from 95 percent in 1992 (Fengler and Kharas 2011, 2).
There are now thousands of privately funded international NGOs active in
the global aid landscape and perhaps hundreds of thousands of civil society
organizations in developing countries. The volume of aid from non-DAC
bilateral donors and private sources of funding will soon rival that of tradi-
tional aid from the rich countries in the DAC (Fengler and Kharas 2011, 3).
Many multilateral institutions do not have significant representation from
key Southern countries that are at the forefront of South-South coopera-
tion and strategic links with privately funded NGOs and businesses are often
limited.
Multilateral institutions could play an important role in facilitating
more effective South-South cooperation. The framework for exchanging
knowledge remains underdeveloped and many recipient countries have
more experience working with traditional donor structures. Better engage-
ment of emerging donors in multilateral institutions could further facil-
itate the exchange of knowledge and connect the supply of coopera-
tion with demand for such partnerships among other Southern coun-
tries. As a global public good with significant underinvestment, this is
an opportunity for multilateral institutions to connect information to
and from development practitioners around the world. The World Bank
Institute has developed a South-South exchange as a platform to meet
this demand for knowledge. The institute is supported by a dedicated
multidonor trust fund that includes five middle-income countries among
its nine funders. However, more could be done to connect the supply
and demand for Southern actors to engage in development cooperation
initiatives.
Ultimately, it is clear that the traditional roles of multilateral institutions
in the global aid architecture have been irrevocably challenged. The ratio-
nale that underpinned multilateral approaches to aid, and the creation of
institutions such as IDA five decades ago, centered on the premises of equi-
table burden sharing across donors, reduced transaction costs by pooling
resources into larger country programs, and an acquired critical mass of
development professionals to share global knowledge and expertise (Kharas
2010, 57). This raison d’être has largely disappeared with the emergence of
new donors and highly specialized multilaterals and new actors pioneering
development ideas and advancing knowledge outside of the traditional aid
architecture. Additionally, many of the key contemporary challenges in the
global aid landscape are in areas where the traditional multilateral institu-
tions have not demonstrated significant comparative advantages such as
providing effective development assistance in fragile states and financing
efforts to address climate change.
Nonetheless, many of the high-performing multilaterals, such as IDA and
the development banks, have significant advantages in delivering aid
82 Multilateral Development Cooperation

efficiently, reaching economies of scale in assistance and mobilizing

institutional knowledge to inform future initiatives. The challenge for
policymakers lies in determining how to best leverage these strengths in
the contemporary aid architecture. With the range of actors operating in
any given country, information sharing and decentralized coordination are
critical to maximizing development impact. The goals of a decentralized
information sharing and coordination strategy are to achieve scalability
of projects, predictability of aid flows, efficient division of labor, and low
transaction costs (Fengler and Kharas 2011, 6). As Fengler and Kharas note,

if donors are given information on what projects are achieving notable

outcomes, they will be able to pool their resources to scale up those
projects to reach more people. Projects that duplicate each other’s efforts
will be identified and adapted to reflect a more logical division of labor,
either by splitting up different stages of the work or by operating in
different geographic areas.
(2011, 7)

In many ways, the upside of multilateral coordination would be to cap-

ture better information sharing and coordination among donors. Preventing
wasteful duplication, lowering transaction costs, collecting and diffusing
knowledge, and pursuing activities at scale were core to the rationale
behind the development of the pillar multilateral institutions. Capturing
these advantages in a more dynamic environment with new actors beyond
the traditional donors and new ways to share information necessitates
fresh approaches at the country level. Initiatives led by recipient coun-
tries are needed, in which country development strategies and reliable open
information on government and donor-financed projects form a basis for
coordinated interaction with the range of donors active in a country. In such
a world, multilateral institutions become just one among a number of alter-
native development agencies competing with each other for influence and
resources. The recipient countries then are placed in the driver’s seat when it
comes to determining whether programs offered by multilaterals meet their
needs or not. In this way, the future of each multilateral would be deter-
mined by its ability to add value when compared to other development
agencies, whether multilateral or bilateral.

Notes
1. See Toornstra and Martin (Chapter 4, this volume) for a discussion on transaction
costs in the context of the international aid effectiveness agenda.
2. For example, when there is no multilateral intermediation, the increase in trans-
action costs of a new donor is a function of the number of recipient countries.
Whereas this will be a function of the number of multilateral institutions if the
 Homi Kharas and Michael Blomfield 83

new donor uses multilateral intermediation. Similarly, if there is a new recipi-

ent country the increase in transaction costs will be a function of the number
of donors absent multilateral intermediation, but a function of the number of
multilaterals with multilateral intermediation.
3. This number does not include donor-funded trust funds in multilaterals that
number in the thousands.
4. A significant relationship is defined as one in which a donor either (1) provides a
higher share of aid to the partner country than the donor’s overall share of global
aid; or (2) is among the largest donors that cumulatively account for at least
90 percent of the partner country’s aid. The relationship is defined as insignificant
if neither of the above criteria is met.
5. All figures in US dollars.
6. Further information on the Poverty Action Lab can be found on its website
(http://www.povertyactionlab.org/), including details of its methodology and
project evaluation reports. Further information on the International Growth
Centre’s research and outcomes can be found at http://www.theigc.org/.
7. Information on BRAC’s operational modalities and reports from its research
and evaluation division can be found at http://www.brac.net/ and http://www
.bracresearch.org/. See http://www.kiva.org/about for more information on Kiva’s
operations.
8. See the One Laptop Per Child website at www.laptop.org for further informa-
tion on the development of the $100 laptop program, and the Vestergaard-
Frandsen LifeStraw website at http://www.vestergaard-frandsen.com/lifestraw
for further information on one of the leading portable water purification
devices.
9. See G. Demombynes and A. Thegeya, Kenya’s Mobile Revolution and the Promise
of Mobile Savings, World Bank Policy Research Working Paper 5988, 2012, for
a discussion of M-PESA’s impact in Kenya. More information on M-PESA can
be found on the Safaricom website at http://www.safaricom.co.ke/index.php?
id=250.
10. The multilaterals included in the review are AfDF; AsDF; EC; GFATM; IDA; IDB
(Special); IFAD; and select UN agencies.
11. This is the average position of each agency type, not including the European
Union in either category. Although the EU is a multilateral organization, it
functions more like a bilateral donor and, for example, sits as a member of
the DAC.
12. This is the average position excluding the European Union from the calculation.

References
Acharya, Arnab, Ana Fuzzo de Lima, and Mick Moore. 2006. ‘Proliferation and Frag-
mentation: Transaction Costs and the Value of Aid’. Journal of Development Studies
42: 1–21.
Department for International Development. 2011. ‘Multilateral Aid Review: Ensur-
ing Maximum Value for UK Aid through Multilateral Organizations’. DFID. 03
N/A. Accessed March 13, 2012. Available at http://www.dfid.gov.uk/Documents/
publications1/mar/multilateral_aid_review.pdf.
Easterly, William, and Claudia Williamson. 2011. ‘Rhetoric Versus Reality: The Best
and Worst of Aid Agency Practices’. World Development 39: 1930–49.
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International Development Association. 2007. ‘Aid Architecture: An Overview of

the Trends in Official Development Assistance Flows, Chapter 4’. International
Development Association. 02 N/A. Accessed March 13, 2012. Available at http://
siteresources.worldbank.org/IDA/Resources/Seminar%20PDFs/73449-11725259764
05/3492866-1172527584498/Aidarchitecture.pdf.
Kharas, Homi, Birdsall Nancy, and Rita Perakis. 2011. ‘Measuring the Quality of Aid:
QuODA Second Edition’. The Brookings Institution and Centre for Global Develop-
ment. 11/12 29-1. Accessed March 12, 2012. Available at http://www.cgdev.org/files/
1425642_file_Birdsall_Kharas_Perakis_Busan_QuODA_FINAL.pdf.
Kharas, Homi, and Fengler Wolfgang. 2011. ‘Delivering Aid Differently – Lessons from
the Field’. World Bank – Economic Premise. 2 N/A. Accessed March 13, 2012. Available
at http://siteresources.worldbank.org/INTPREMNET/Resources/EP49.pdf.
Kharas, Homi. 2010. ‘Rethinking the Roles of Multilaterals in the Global Aid Archi-
tecture’. The 2010 Brookings Blum Roundtable Policy Briefs. Accessed March 13,
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development_aid/09_development_aid_kharas2.pdf.
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Quality in Aid Recipients’. World Bank. 1. Accessed March 13, 2012. Avail-
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4700790-1217425866038/AAA-4-SEPTEMBER-FINAL-16h00.pdf.
Part II
Cases in Multilateral
Development Cooperation:
Old and New Challenges
4
Building Country Capacity for
Development Results: How Does the
International Aid Effectiveness
Agenda Address the Capacity Gaps?
Franke Toornstra and Frédéric Martin

Introduction

The international aid architecture is experiencing significant changes

characterized by a decrease in the importance of traditional multilateral and
bilateral donors and the emergence of South-South cooperation providers
such as Brazil and China and private philanthropic funds such as the Bill &
Melinda Gates Foundation.1 In this context, the importance of strengthen-
ing national systems and institutions in recipient countries is greater than
ever to ensure that recipient countries are able to make the most of the new
opportunities presented by the increasing sources of development financ-
ing available (Davies 2010). A challenge for old and emerging development
actors is to enable governments in recipient countries to own the develop-
ment process in terms of creating effective development strategies, reforming
legal and regulatory frameworks, efficiently delivering public services, and
implementing results-based monitoring and evaluation of public programs
in a consistent and coordinated way.
At the multilateral level, the recent 4th High Level Forum on Aid Effec-
tiveness (HLF4), held in Busan, South Korea in 2011, sought to address some
of these ownership challenges and bring new development actors into inter-
national discussions on aid effectiveness through the establishment shared
principles between new and emerging development actors (Chapter 11, this
volume).2 This chapter provides a global analysis of progress on aid effec-
tiveness from a capacity-development perspective. In this context, it focuses
on a number of important issues under the aid effectiveness agenda, namely
country ownership and donor alignment and harmonization. It shows that
at the multilateral level, international discussions on aid effectiveness have
recognized the importance of capacity development and sought to address
key constraints faced by developing countries. However, progress on meeting

89
90 Cases in Multilateral Development Cooperation

aid-effectiveness principles has been limited. The chapter then identifies

three capacity gaps that remain in developing countries – resource, policy,
and implementation gaps – and looks at the extent to which HLF4 made
further progress on garnering international support for and commitments
to capacity development. It finds that though capacity development is men-
tioned a number of times in the outcome document, concrete, monitorable
commitments at the global level were limited. Nevertheless, participants in
Busan agreed to track their progress at the country level through inclusive,
country-owned monitoring and evaluation frameworks based on national
development priorities. This shift presents an opportunity for developing
countries to address capacity gaps in their development plans and incor-
porate key lessons learned and best practices. As such, the chapter suggests
important solutions to addressing capacity gaps before concluding.
The chapter is based on a review of international aid-effectiveness discus-
sions and the experiences of the authors who are development practitioners
with experience in training, capacity development, and institutional and
public-sector reforms.

Improving aid effectiveness

International discussions on aid effectiveness have dealt with key challenges

to improving the quality of aid and supporting capacity development such
as country ownership, aid transaction costs, and fostering results.
In 2003, more than 40 multilateral and bilateral development institutions
and 28 recipient countries agreed to the Rome Declaration on Harmoniza-
tion, which sought to harmonize their efforts which were also to be adapted
to country context (OECD 2003). It recognized that the ‘totality and wide
variety of donor requirements and processes for preparing, delivering, and
monitoring development assistance are generating unproductive transac-
tion costs, and drawing down the limited capacity of partner countries’
(OECD 2003, 1). In 2005, over 100 countries endorsed the Paris Declara-
tion on Aid Effectiveness, which established five aid effectiveness princi-
ples: (1) country ownership; (2) alignment; (3) harmonization; (4) mutual
accountability; and (5) managing for results (OECD 2011b). These com-
mitments were strengthened and deepened in 2008 at the 3rd High Level
Forum on Aid Effectiveness, which resulted in the Accra Agenda for Action
(OECD 2011c).
In the lead up to Accra, the 2008 Survey on Monitoring the Paris Declaration
revealed that donors needed to better align with countries’ national poli-
cies and make greater efforts to change their internal procedures to accept
country systems for project implementation (OECD 2008a, 38). At the same
time, recipient countries were challenged to strengthen their capacities, fight
corruption, and improve internal accountability mechanisms by increasing
the involvement of democratic institutions and civil society (OECD 2008a,
38–47). Recognizing that there had been insufficient progress since 2005
 Franke Toornstra and Frédéric Martin 91

(OECD 2008a, 2008b; Wood et al. 2008), participants in Accra agreed to

accelerate their efforts, strengthen broad-based country ownership, improve
the predictability of aid, and develop more inclusive partnerships, including
with civil society, foundations, and providers of South-South cooperation.
In Accra, country ownership of development strategies and programs,
as well as the use of countries’ financial management and procurement
mechanisms and regulations, were at the center of discussions. Civil soci-
ety organizations (CSOs) called for a greater role in international discussions
on aid effectiveness, arguing that the Paris Declaration understood owner-
ship largely in terms of the state (ISG 2008). As such, inclusive development
and civic accountability were important themes in Accra. This led to com-
mitments by donors and recipients to allow a more active role for CSOs and
parliaments in aid planning and monitoring (OECD 2011c). The concept
of ownership was broadened. In addition, donors and recipients recognized
a need to improve recipient-country capacities to lead and manage devel-
opment if ownership and alignment commitments from Paris were to be
realized (OECD 2011c, 16). Recipient countries agreed to systematically iden-
tify areas where capacity strengthening was needed at national, sub-national,
sectoral, and thematic levels and design strategies to this end. For their part,
donors agreed to support demand-driven capacity development and jointly
select and manage technical cooperation with recipient countries (OECD
2011c, 16).
Despite these commitments, the 2011 monitoring report on progress in
implementing the Paris Declaration revealed that only 1 of the 13 targets set
in Paris had been met (coordinated technical assistance on capacity build-
ing) (OECD 2011a). Substantial progress had been made on ‘sound national
development strategies’ with the number in place having tripled since 2005
(OECD 2011a, 16). Similarly a quarter of recipient countries surveyed in
2005 had high-quality results-oriented frameworks in place. A 2011 study on
ownership and accountability published by the Organisation for Economic
Co-operation and Development (OECD) found that ownership had not been
fully inclusive at country level and recognized ongoing capacity challenges
of different stakeholders to engage in national level development processes
(OECD 2011f). This finding was corroborated by CSOs in the 2011 Reality of
Aid Report, Democratic Ownership and Development Effectiveness. The report,
based on case studies from 32 countries, found that ongoing challenges exist
in terms of establishing the right institutional, legal, and policy space for
inclusive country ownership (Tomlinson 2011).
At HLF4 commitments to ownership were further deepened. Members
of the international community agreed that ownership of development
priorities by recipient countries is a foundational block of effective devel-
opment cooperation (HLF4 2011, 3). It recognized that ‘partnerships for
development can only succeed if they are led by recipient countries, imple-
menting approaches that are tailored to country-specific situations and
needs’ (HLF4 2011, 3). In addition, Busan stressed the importance of effective
92 Cases in Multilateral Development Cooperation

institutions and policies for sustainable development and the need to

build recipient-country capacity to improve institutional performance (HLF4
2011, 9). It also reaffirmed commitments made in Accra to promote the
provision of South-South technical cooperation (OECD 2011c) by includ-
ing commitments on scaling up and making greater use of South-South
and triangular cooperation3 (HLF4 2011, 10). This move reflected increasing
recognition in international aid-effectiveness discussions of the role South-
South cooperation can play in supporting capacity development (Steering
Committee 2010).4 An important result of Busan was the broadening of
the international aid-effectiveness agenda from a process led by the OECD
Development Assistance Committee (OECD-DAC) to a Global Partnership
for Effective Development Cooperation that includes old and emerging
actors (Chapter 11, this volume).
In addition to ownership, the aid-effectiveness agenda has also sought to
address aid-transaction costs. In the aid context, transaction costs refer to
the administrative, procedural, and negotiation activities needed to develop
and manage a project or program5 – or as articulated by Vandeninden, ‘all
costs implied by the aid management’ (2007, 8). As Blomfield and Kharas
(Chapter 3, this volume) point out, the expenditure of money, time, and
effort to negotiate and monitor specific aid packages diminishes the avail-
ability of these resources for projects on the ground, and uses country
capacity in an ineffective way. The complexity of the international aid archi-
tecture and its myriad of aid actors increase transaction costs for aid donors
and recipients (Acharya et al. 2006; IDA 2008; Lawson 2009; Chapter 3, this
volume).
The emerging role of foundations, providers of South-South cooperation,
and large non-governmental organizations in development has increased
the potential of higher transaction costs6 (Davies 2012; Chapter 3, this vol-
ume). Private philanthropic funds and oil-producing countries’ sovereign
wealth funds have become important sources of capital for developing
countries, particularly in Africa, with their own ways of engaging with devel-
oping countries. Emerging countries such as Brazil, China, and India provide
development cooperation based on principles of South-South cooperation,
which vary from those of traditional donors (Davies 2012; Chapter 11, this
volume). They include an emphasis on non-interference, sovereignty, non-
conditionality, and mutual benefit and interest.7 While some suggest that
these differences are not insurmountable to collaboration and indeed that
complementarities exist between DAC donors and South-South cooperation
providers in practice (Chapter 9, this volume), the challenge recipient coun-
tries face to coordinating an increasing number of donors remains. When
each donor has its own set of procedures for supervision, control, auditing,
and evaluation, transaction costs are high. This is particularly concerning
given that a 2008 IDA study found transaction costs are higher in countries
that have lower institutional capacity (IDA 2008, 20).
 Franke Toornstra and Frédéric Martin 93

Efforts under the international aid-effectiveness agenda demonstrate the

growing awareness among donor agencies and, in particular, multilateral
organizations, that high aid-transaction costs are avoidable (Lawson 2009,
4). As discussed above, the 2003 Rome Declaration on Harmonization rec-
ognized the high transaction costs experienced by recipient countries as a
result of the variety of donors that exist and their requirements for part-
nership. The necessity of reducing the transaction costs of aid delivery was
similarly highlighted in Paris Declaration on Aid Effectiveness.8 The Paris
Declaration sought to establish a more effective aid delivery system, affirm-
ing commitments made in Rome to harmonize aid, eliminate duplication
of efforts, and reform and simplify donor policies and procedures (OECD
2011c). It also included commitments by donors to align their aid to coun-
try priorities and increase their use of country systems. These efforts were
based on an understanding that developing countries’ already-limited capac-
ities were being stretched further in their attempts to meet the partnership
requirements of various donors.
In practical terms, donors agreed to implement action plans on harmo-
nization; make use of common arrangements at country level for planning,
funding, monitoring, and evaluation; and work to reduce separate and dupli-
cate missions to the field (OECD 2011c, 6).9 These commitments were, in
turn, monitored by two indicators – use of common arrangements or pro-
cedures as measured by the percentage of aid provided as program-based
approaches and the use of shared analysis, measured by the percentage
of field missions and/or country-analytic work jointly carried out (OECD
2011c, 10). Commitments on alignment included supporting overall devel-
opment strategies, drawing conditions from developing countries’ own
priorities, making use of joint performance assessment frameworks, and
channeling aid through strengthened country systems (OECD 2011c). For
developing countries, the alignment indicators focused on the reliability of
country systems as measured by public financial management and national
procurement systems. Donor performance was measured against the amount
of aid flows aligned to national priorities, their use of country public finan-
cial management and procurement systems, reductions in the use of project
implementation units,10 and the proportion of technical assistance deliv-
ered through coordinated programs consistent with national development
strategies (OECD 2011c).
In addition to the commitments outlined above, Accra donors agreed
to improve their division of labor at international, national, and sectoral
levels. In a sense, this commitment served as an alternative to donor har-
monization. Rather than focus efforts predominantly on simplifying and
harmonizing efforts, donors agreed to better focus their efforts (i.e. reduce
the number of sectors in which they work, for example) based on a division
of labor among them.
94 Cases in Multilateral Development Cooperation

The aid-effectiveness agenda stresses the importance of harmonized and

streamlined aid-delivery procedures to reduce transaction costs and favors
approaches where donors align their aid with country programs and use
country financial management and procurement systems to implement aid
programs. In principle, budget support is the form of aid that carries the least
transaction costs. As discussed below, it also has the potential to support
capacity development.

Progress in aid effectiveness: Factoring in capacity

Uneven progress has been made on the aid-effectiveness agenda. There

has been improved performance on country ownership; however, overall
OECD’s 2011 evaluation report on implementation of the Paris Declaration
revealed limited results. An examination of progress on implementing aid
effectiveness from the perspective of country capacity is useful for under-
standing the lack of results. Despite the fact that roughly a quarter of
official development assistance, more than US$15 billion, goes to techni-
cal cooperation per year (OECD 2006), the independent evaluation of the
Paris Declaration found that capacity development remains one of the most
important constraints for recipient countries (Wood et al. 2011, xiv).
In 2006, the OECD released a good practice note on capacity develop-
ment.11 The OECD defines (2006, 12) capacity as the ‘the ability of people,
organisations and society as a whole to manage their affairs successfully’
and capacity development as ‘the process whereby people, organisations and
society as a whole unleash, strengthen, create, adapt and maintain capacity
over time’. The OECD identifies three levels of analysis in capacity devel-
opment – individual, organization, and enabling environment (OECD 2006;
see also Fukuda-Parr et al. 2002). It recognizes that capacity development is
about much more than technical processes involving the transfer of knowl-
edge; attention must be given to the broader social and political context
in which capacity building takes place (OECD 2006, 15). It depends on
the quality of organizations in which individuals work and the enabling
environment – the structures of power and influence and the institutions –
in which organizations are embedded (OECD 2006, 7).
In a multi-year study on capacity development, the European Centre for
Development Policy Management, a think tank based in the Netherlands,
identified five core capabilities (Brinkerhoff with Morgan 2010, 3). These
include capability to: (1) commit and engage whereby actors mobilize
resources, make space for independent action, gain support, plan, and decide
on activities; (2) carry out technical, service delivery, and logistical tasks;
(3) relate and attract support; (4) adapt and self-renew plans and operations
based on monitoring of progress and outcomes; and (5) balance diversity
and coherence in short- and long-term strategies and visions. In the anal-
ysis that follows, the authors examine capacity gaps in terms of resources,
 Franke Toornstra and Frédéric Martin 95

policy, and implementation. This analysis broadly touches on the aspects of

capacity development described above and discusses remaining challenges
in these areas. Before turning to this discussion however, the authors exam-
ine progress made on ownership and reducing transaction costs under the
aid-effectiveness agenda with a focus on capacity constraints.

Country ownership
Stress on country ownership reinforces a leading role for recipient countries’
institutions in formulating economic policies and planning, negotiating the
division of labor between donors, and using foreign technical assistance,
which leads to a better alignment of aid according to a recipient country’s
priorities. Consecutive High Level Fora have emphasized that aid cannot
be effective without investing in recipient countries’ institutions. Institu-
tional strengthening and capacity development are necessary prerequisites
for results-based aid and will, at the same time, make better use of a recipient
country’s fiscal resources (OECD 2008a, 38–47).
Reforms represent an important part of the aid-effectiveness agenda,
relying on recipient countries’ institutions to provide political will and lead-
ership, public sectors that are able to manage change, and CSOs that demand
transparency and accountability (Castel-Branco 2008; OECD 2011f). Aid fos-
ters credible reforms when they are formulated and implemented by recipi-
ent country institutions and supported by beneficiaries. It has the potential
to stimulate the establishment of effective institutions and regulations, as
well as a performance-based culture in the public sector.
While the aid-effectiveness agenda stresses that country ownership is the
cornerstone for effective and sustainable development (OECD 2008b, 34),
this principle is based on an assumption that developing countries have a
significant-enough level of capacity (including desire) to design and imple-
ment their own development strategies and that donors are willing to
support such strategies (Buiter 2007; Castel-Branco 2008; Faust 2010; Booth
2011). It is based on an understanding that development should be country
driven and supported by donors who enable developing countries to exer-
cise leadership and provide them the tools necessary to implement credible
strategies and achieve realistic results (OECD 2008b, 34–6). The Paris Decla-
ration recognizes the importance of building capacity of developing coun-
tries to own their development strategies. Nevertheless, developing-country
capacities remain limited, creating a challenge for national ownership.
In addition donors have difficulty allowing recipient countries to take
ownership of development policies and strategies. Despite recognition that
policy conditions have been an ineffective means to change developing-
country behavior, donors continue to make use of conditions in their aid in
an attempt to ensure that each aid dollar is effectively used for development
purposes (Buiter 2007; Castel-Branco 2008; OECD 2009). This issue is exac-
erbated by donors’ tendency to use aid as an instrument to pursue political,
96 Cases in Multilateral Development Cooperation

economic, and cultural objectives (Tandon 2008). The use of conditions

however, is contrary to the basic principle of ownership in the aid effec-
tiveness agenda because it undermines the ability of developing countries to
establish their own policies.12 At the same time, donors have a legitimate
concern in ensuring that their aid dollars are effectively used, especially
given that donors are accountable to their own governments and citizens,
and in the instance of multilateral institutions, their shareholders.
This tension between donor interests and developing-country capacities
was highlighted in the 2011 independent evaluation of the Paris Declara-
tion (Wood et al. 2011). Despite improvements by recipient countries in
the establishment of national development plans, priorities, and procedures
(OECD 2008a, 36), Wood et al. (2011, 24) found that that donors were
still making limited use of country systems and procedures. Some donors
explained that this tendency is mainly because of a ‘continuing lack of con-
fidence by donors in [country systems] and/or concerns about prevailing
levels of corruption, as well as concerns that country systems can be slower
and more cumbersome than those of donors’ (Wood et al. 2011, 24). The
emphasis on building effective institutions in Busan reflects this reality.
Donors and recipients need to agree on common goals and a practical
way to organize mutual accountability, an area where progress has been
limited (Egan 2008), but with potential to enable developing countries to
have greater ownership over development processes (OECD n.d.; Steer et al.
2009). Of the 36 countries examined in the Paris Declaration’s 2005 baseline
monitoring survey, only 12 had adopted and used the necessary instruments
for mutual accountability, such as joint aid-monitoring mechanisms and
public-aid databases. In 2007, only 13 out of 55 countries (including the 36
examined in the baseline survey) used those mechanisms, indicating hardly
any progress at all (OECD 2008b, 96). Mutual accountability allows for the
negotiation of a shared agenda and definitions of common values and the
strengthening of cooperation, but it is difficult to operationalize because
donors are reluctant to be fully transparent with regard to their aid flows
and do not like to be assessed by recipient countries (Egan 2008).
Ensuring mutual accountability is further challenged by lagging progress
on meeting Paris Declaration commitments to results.13 Monitoring capaci-
ties in recipient countries have indeed improved, but they do not meet the
agreed target: 19 percent of recipient countries surveyed in 2005 were using
results-oriented frameworks and the percentage of countries that had taken
steps to improve results-oriented frameworks rose from 42 percent in 2005
to 56 percent in 2007 (OECD 2008b, 86–7).
Despite these challenges, country ownership has advanced since the Paris
conference. From 2005 to 2007, the percentage of surveyed countries par-
ticipating in the monitoring survey that had taken action toward putting
in place operational development strategies increased from 56 percent to
67 percent (OECD 2008a, 36). Countries that have operational strategies
 Franke Toornstra and Frédéric Martin 97

in place increased from 8 percent to 13 percent during the same period.

More than half of recipient countries surveyed have taken steps in develop-
ing results-oriented frameworks, although the number of countries surveyed
that possess largely developed results-oriented frameworks only increased
from 3 percent to 5 percent, insufficient to reach the 2010 Paris Declaration
targets (OECD 2008a, 36). Donors recognize improvements on ownership
by recipient countries and are beginning to align their aid with the develop-
ment strategies of these countries, though their efforts have been limited to
date (Wood et al. 2011).

Alignment, harmonization, and reducing transaction costs

An effective way for donors to reduce transaction costs and effectively deliver
aid is to increasingly make use of budget support and sector program support
(UNDESA 2010). This is because these aid modalities increase country owner-
ship and accountability of government to parliament and citizens, accelerate
disbursement speed and aid predictability, improve public financial manage-
ment, reduce marginal transaction costs of scaling up by ensuring a smaller
proportion of aid is spent on administration, and are a no greater risk of
corruption than other types of aid (UNDESA 2010, 15).14
Over 2001–06, general budget support and sector program support rose
from 8 percent of total ODA commitments to 11 percent (IDA 2008, vii; 8).
Between 2006 and 2008 budget support doubled, however, it still repre-
sented only 3 percent of ODA gross disbursements (UNDESA 2010, 14). The
2008 Paris Declaration monitoring survey showed that progress has been
made at the sectoral level, particularly with respect to the increased share of
sector budget support, which has fostered the strengthening of sector insti-
tutions (OECD 2008b). Nevertheless, the report also stated that progress had
been slower than expected (OECD 2008b). Apart from sector budget sup-
port, multidonor baskets exist for sector project support, but many donors
still prefer a distinctive channel for their aid because of the need for visibility
and the political wish to see results closely linked to their own aid programs
(OECD 2008b, 72–4). There are also administrative obstacles and costs asso-
ciated with the creation of common aid frameworks, since each donor has
specific reporting requirements.
The 2011 survey on the Paris Declaration found that little or no progress
had been made on donor harmonization since 2008, and as mentioned,
there has been limited progress on donor use of country systems (OECD
2011a, 63). Indeed, as Blomfield and Kharas (Chapter 3, this volume) point
out, the proliferation of donors has gotten worse, particularly with the cre-
ation of new multilateral agencies, and the average size of activities has
decreased, meaning that developing countries are dealing with more donors
offering smaller funding amounts for activities.
Despite the lack of progress, the growing use of program-based aid,
which includes budget support, sector-wide approaches,15 and Medium
98 Cases in Multilateral Development Cooperation

Term Expenditure Frameworks16 enables more effective coordination at the

sectoral level (OECD 2008b, 108–10). Collaboration between recipient gov-
ernments and donors usually takes place in recipient government–donor
agency working groups that plan strategies and program activities. These
working groups generally function better at the sectoral level, where they
focus on concrete projects, compared to the national level, where they focus
on policies and strategies.

Identifying capacity gaps

The Paris Declaration monitoring surveys and evaluation report make clear
that in order to achieve the targets of the aid-effectiveness agenda, strength-
ening recipient countries’ capacities is key (OECD 2008b). Yet, a number of
capacity gaps continue in recipient countries at the individual, institutional,
and systemic levels. Capacity development reaches beyond the provision
of training, equipment, and technical assistance, and includes institutional
reforms and strengthening at the policy and decision-making levels. Rein-
forcing capacity must also involve parliaments and civil society, as well as
the private sector (OECD 2006, 14), all of which are key actors with respect
to inclusive, sustainable development.17
Capacity gaps prevent recipient-country governments and public sector
institutions to adequately design, fund, implement, monitor, and evaluate
public policies and services. The section that follows identifies three types of
capacity gaps: resource gap, policy gap, and implementation gap. Capacity
gaps are context-specific; hence the following discussion does not address all
situations. However, the issues raised in this section, which draws from the
authors experiences, are commonly encountered.

Resource gap
The resource gap is a significant obstacle to better aid effectiveness. Donors’
aid flows fluctuate over time depending on spending priorities, interna-
tional commitments, and budget constraints. Overall, ODA rose over the
last decade, with a strong increase between 2004 and 2005 when it increased
by 28 percent (OECD 2011d). At the Group of Eight’s Gleneagles Summit
and the United Nations’ Millennium +5 Summit in 2005, donors made spe-
cific pledges to increase their net ODA levels by 2010. Overall ODA remained
at the same level until 2008, when it increased by 16 percent compared to
2007 (OECD 2011d). However, the economic and financial crisis in devel-
oped countries, which started in mid-2008, hindered further increases in aid
flows because governments were under strong pressure to cut budgets follow-
ing massive stimulus campaigns designed to stave off the worst of the crisis.
In 2011, ODA flows from OECD-DAC donors reached US$133.5 billion. Six-
teen donors reduced their aid spending in 2011 due to fiscal constraints
relating to the crisis (UNDESA 2012, 8).
 Franke Toornstra and Frédéric Martin 99

However, other sources of development financing exist. Funding from

private foundations and emerging countries’ for development is on the
rise, though these figures are still significantly smaller than ODA com-
mitments. The 2012 Hudson Institute Index for Global Philanthropy and
Remittances estimates that total philanthropic giving to developing coun-
tries was approximately US$56 billion in 2010 (CGP 2012, 5). While esti-
mates vary, Zimmerman and Smith (2011, 724) suggest that aid flows from
Brazil, China, India, Russia, South Africa, and the 20 non-DAC donors that
report to the DAC were nearly US$11 billion in 2009. Aid-dependent coun-
tries have more choice when looking for sources of development financing.
As such, it is likely that they will be inclined to turn toward the donors or
other sources of financing that do not require conditionality and align with
their policies (Woods 2008).
In addition, developing countries have increasing access to finance as a
result of higher levels of remittances, trade, and foreign direct investment.
Remittances are growing from people working outside their country of ori-
gin. Remittances from OECD-DAC countries increased by 9 percent in 2010
to US$190 billion, up from US$174 billion in 2009 (CGP 2012, 5). Foreign
direct investment in developing countries and trade revenues largely super-
sede aid flows. Private investment from DAC countries moving to developing
countries increased 117 percent from 2004 to 2005, increased 65 percent
from 2006 to 2007, fell 58 percent in 2008, and then saw an upward trend
after 2008 (OECD 2011e).
Notwithstanding the lively international debate on whether aid is crowd-
ing out fiscal discipline and delaying necessary fiscal policy reforms to
generate more tax revenues18 (Moyo 2009), aid flows are still important to
many countries with structural inabilities to generate enough revenue to pay
for much-needed public services (CIDP 2012).
Fragile states devastated by conflicts depend on aid due to political
and economic institutional deficiencies. Many poor countries, particularly
in sub-Saharan Africa, are – and will remain – dependent on aid in the
short term. However, experience has repeatedly demonstrated that better-
managed institutions can loosen countries’ budget constraints and attract
more aid and foreign investment (Burnside and Dollar 1997). Some of the
poorest countries – examples include Burkina Faso, the Democratic Republic
of the Congo, and Tanzania – are increasingly maximizing rents from natural
resources as a means to expand foreign exchange reserves. Other countries,
such as Kenya, have been successful in reducing their reliance on aid by
stimulating the private sector and mobilizing tax revenues. Private-sector
development and valorization of natural resources are allowing certain coun-
tries to move away from aid dependence. Hence, financial resources are not
necessarily a binding constraint on development in the medium term.
Apart from financial resources, human resources represent a major obsta-
cle to development and aid effectiveness (Brinkerhoff with Morgan 2010).
100 Cases in Multilateral Development Cooperation

In many countries, public sector experiences shortages of skilled personnel.

The pool of skilled professionals available for public service is constrained
by the limited supply of high-quality, modern public administration edu-
cation and the even more limited capacity to pay for quality education.
The national public administration and finance schools in francophone
Africa, for instance, have long suffered from insufficient budgets.19 Rela-
tively unattractive remuneration packages and working conditions in the
public sector contribute to high personnel turnover and the flight of some of
the best people to the private sector. Donors and multilateral organizations
inadvertently contribute to this problem by hiring qualified public servants
from the poorest countries (Acharya et al. 2006, 10). The large majority of
development projects include professional training activities, but they do
not necessarily focus on the right target groups and they are not always
relevant to the situations faced by civil servants.
Many institutions are faced with other capacity gaps. Their limited
capacities to propose, fund, implement, monitor, adapt, and assess aid
projects – what Brinkerhoff and Morgan (2010) refer to broadly as five core
capabilities – may come from a number of factors other than the afore-
mentioned financial and human resource gaps. For example, institutional
capacity gaps may result from an unclear definition of roles and responsi-
bilities, incongruence between institutional and individual incentives, and
lack of knowledge management systems, what the OECD (2006) refers to
as enabling environment. Complex regulations for public institutions, par-
ticularly in countries with francophone cultures, and financial constraints
imposed by finance ministries or the International Monetary Fund com-
pound internal difficulties. Problems can also be exacerbated by institutional
constraints resulting from public service ministries and trade unions that
resist credible civil service reforms.

Policy gap
Multilateral organizations and experts, especially economists, often point to
the policy gap as a key constraint for recipient countries, though progress
has been made by these countries to control their development agendas.
According to the 2011 Africa Capacity Indicators study, 73 percent of sur-
veyed countries benefit from an appropriate policy environment for aid
(ACBF 2011, 14). Additionally, partnering for capacity development is high
or very high in 50 percent of those countries (ACBF 2011, 17). The same
percentage of countries has institutionalized mechanisms for stakeholder
participation in setting governments’ capacity-development agendas (ACBF
2011, 141). In terms of accountability and transparency, good practices are
emerging because steps have been taken to involve civil society in public
affairs through public hearings, participatory planning, and representation
in national and provincial or state parliaments. In 77 percent of surveyed
countries, civil society participation in developing capacity-development
 Franke Toornstra and Frédéric Martin 101

agendas is above average, but participation levels are not the same across
countries (ACBF 2011, 96).
Strategic plans are being developed at the national and sectoral levels.
The quality of sector plans has improved in the health, education, agri-
culture, and transportation sectors. Project planning has improved over the
years, and most projects now go through the filter of an ex ante evaluation
study and have baseline data and a logical framework matrix. However, in
a number of cases, the quality of these results frameworks is low, reflecting
difficulties in articulating a clear chain of results for the project.
Despite these successes, there are still major challenges that reduce coun-
tries’ capacities to design and implement adequate development policies.
One issue is the relative disconnect between strategies at national and
sectoral levels on one hand and the multitude of projects conducted on the
other. Reviews of public expenditures often reveal that projects are not neces-
sarily responding to the priorities set by the governments’ national develop-
ment plans and Accelerated Growth and Poverty Reduction Strategies (Foster
et al. 2003).
Another policy capacity issue is the feedback loop. Countries often face
limited capacity to disseminate and make use of monitoring and evaluation
results for accountability and feeding back into the policymaking process.
Many countries produce monitoring reports and a number of evaluations
of aid projects. However, this work too often reflects a need to comply with
donor requirements in order to obtain continued financing rather than a real
culture of monitoring and evaluation with an objective of building learning
organizations. Evaluation is still largely perceived as a threat by institution
and individuals carrying out aid projects. Too many evaluations remain
donor-driven, and too few are used for designing better national public poli-
cies, programs, and projects. Paradoxically, the push for more monitoring
and evaluation has led to a proliferation of uncoordinated monitoring and
evaluation systems and related information systems, which results in dupli-
cation and inconsistency of information, an excessive burden of work on
civil servants and further confusion for policymakers.

Implementation gap
Notwithstanding the importance of resource and policy gaps in specific
countries, the biggest capacity challenge is the implementation gap, which
is a weakness in recipient countries to effectively adsorb aid money and
implement good programs and projects leading to results. Progress in imple-
menting the aid-effectiveness agenda has been notable, but still largely
insufficient in order to achieve set targets. In particular, there has been
a shift away from project implementation units toward a greater use of
government or mixed structures. Historically, project implementation units
provided easier implementation and monitoring of donor-financed projects,
but failed to have a long-term impact on capacity building and institutional
102 Cases in Multilateral Development Cooperation

development. Their proliferation has contributed to the complex and ever-

changing institutional arrangements for project implementation. Moreover,
project implementation units undermined national structures by drawing
the best national resources through attractive remuneration packages and
working conditions. Using government structures has facilitated adminis-
trative and operational coordination that makes this approach, rather than
project implementation units, more likely to provide sustainable results
(World Bank 2005, 8–10).
However, there remains a serious implementation gap that commands a
renewed political commitment. On the donor side, there is still a need to
make aid more accessible, since commitments have not always been fulfilled.
The challenge for donors is to make longer, more credible and stable com-
mitments for medium-term fiscal sustainability while taking into account
variable aid flows and commodity prices in the short term. Indeed, a key
commitment made in Accra by donors was to improve the predictability of
aid (OECD 2011c), which they reaffirmed in Busan (HLF4 2011).
On the recipient side, one major issue has been absorption capacity. The
apparent paradox is that the poorer the country, the lower the absorption
capacity and the higher the need. At the end of every fiscal year, a coun-
try such as the Central African Republic sends back a significant share of
unused aid money. Recipients have difficulties proposing and managing aid
projects that respect donor norms. This means that if recipients are unable
to propose and manage projects that are acceptable to donors, funding must
be returned. At the same time, the government has trouble paying its civil
service and provides very limited public services to a very poor popula-
tion; if more effectively managed, this aid money could be well spent. Aid
absorption depends on the availability and quality of investment propos-
als, which can be low in a number of cases. The consequences of investing
too much or too quickly can lead to a decrease in quality spending and/or
negative distortion effects (ODI 2005, 1). The Africa Capacity Indicators
study shows that even when processes and the environment are sufficient
for capacity development, national capacities remain low, mainly due to
the lack of political will for credible reforms (ACBF 2011, 224–5). Addition-
ally, improvements in the environment enable capacity development at the
organizational level; however, this is less pronounced at the individual level
(ACBF 2011, 226–7).

Did Busan address the capacity gaps?

In the lead up to Busan, developing countries made it clear that capacity

development was one of their priorities. In March 2011, 70 representatives
from the North and South met in Cairo for a workshop on capacity devel-
opment as part of preparations for Busan. The workshop led to the Cairo
Consensus on Capacity Development, which marked ‘a shift in an approach
which is demand-driven and results focused, owned by the country, and
 Franke Toornstra and Frédéric Martin 103

which builds on existing capacity’ (emphasis original, OECD et al. 2011).

The consensus stated that capacity development should be at the heart of
development efforts. It recognized the importance of developing country
leadership for development efforts. It also stated that capacity development
should be used strategically, building on existing capacities and with the
aim of achieving short-, medium-, and long-term results, and strengthening
accountability.
An online consultation of members of the Working Party on Aid Effective-
ness (WP-EFF) prior to HLF4 ranked capacity development second in terms
of priority areas of discussion (WP-EFF 2011a). Referring to the Cairo Consen-
sus, the Partner Country Caucus in the WP-EFF also identified institutional
and human resource capacity development as persistent challenges despite
aid allocations in these areas (WP-EFF 2011b). Capacity development and
increased use of country systems were also highlighted as key priorities by
Asian and African countries in their respective position statements in the
lead up to HLF4 (Africa Platform 2011; CDDE 2011, 2). African countries
explained that ‘overall, capacity development is the core vehicle to actual-
ize the Continent’s exit strategy from Aid and take full control of its agenda
for development’ (Africa Platform 2011, 6). In their vision for peacebuilding
and statebuilding, the g7+ group of fragile states20 also emphasized capacity
development as a key priority (OECD 2010).
The Busan outcome document refers to capacity development in a num-
ber of areas and in broad terms; it speaks of the capacity gaps outlined
above in general terms. The number of references to capacity suggests that
developing countries were successful in garnering commitments on one of
their key priority areas. The Busan outcome document identifies enhanc-
ing developing countries’ capacities as an important results focus (HLF4,
2011). In addition, it commits donors to make use of country-led results
frameworks where initiated by developing countries and, importantly, make
use of country systems as the default option. Partners agreed that the use and
strengthening of country systems should be placed within an overall con-
text of national capacity development (HLF4 2011, 5). Partners also agreed
to support developing countries’ efforts and plans to strengthen institutions
in ways that manage rather than avoid risk. There is, however, an important
caveat, namely that donors and developing countries also agreed to jointly
assess country systems and on the basis of these results, donors will decide
the extent to which they can use country systems (this being the effective
notwithstanding clause for donors). In instances where they choose not to,
donors agreed to indicate the reason for none-use and what must be done to
move forward (HLF4 2011, 5).
Despite the large number of references to capacity-development issues
and use and strengthening country systems, no concrete, monitorable
commitments were actually made that specifically address capacity develop-
ment. In fact, following HLF4 the OECD-DAC Development Co-operation
Directorate (DCD) compiled a list of the key commitments and actions
104 Cases in Multilateral Development Cooperation

agreed to in Busan. Capacity development is mentioned twice, under com-

mitments made to voluntary initiatives outside the main outcome document
focusing on building statistical capacity and improving transparency (DCD-
DAC 2011). In the proposed monitoring framework that resulted, there is
no target on capacity development. This is in contrast to Paris commit-
ments, which included the target of strengthening capacity through coordi-
nated technical assistance support based on developing-country strategies.21
In establishing the proposed set of global indicators for Busan, developing
countries argued that the indicator assessing public financial management
systems should incorporate capacity development efforts (OECD 2012).
However, the current proposed indicator remains the same as what was used
under Paris22 (OECD 2012).
The heavy emphasis in Busan on supporting country-led development
efforts and monitoring and results frameworks, though, may provide an
important avenue through which developing countries can define, monitor,
and assess progress on capacity development. At the time of writing however,
it is unclear how these efforts at county level are playing out. As developing
countries and their partners take forward their commitments from Busan
at country level, an opportunity exists to address the three capacity gaps
discussed above. The following section highlights lessons learned and best
practices that could be incorporated at country level.

Addressing the capacity gaps

Strategies to address each of the three capacity gaps outlined below are
based on lessons learned and best practices from the experiences of the Insti-
tute for Development in Economics and Administration (IDEA International
Institute)23 since its establishment in 1997.

Resource gap
More aid may be one of the solutions for some poor countries, but it is
not the panacea to fill the resource gap. Other measures can be much more
relevant for aid effectiveness, some of which are at the level of donors and
others at the level of a recipient country’s government. Figure 4.1 illustrates
some of these measures; however, a tailor-made mix is the most effective
way to deal with a specific country’s needs.
Better predictability of aid flows and multi-annual donor commitments
would facilitate the elaboration of credible Medium Term Expenditure
Frameworks (MTEFs) in recipient countries. It would enable countries to
more effectively plan their public revenues and spending and implement
plans without recurrent cuts during the course of the fiscal year. It is
also important for recipient-country governments to effectively enforce
agreed-upon reforms, particularly in their financial systems, hence creating
 Franke Toornstra and Frédéric Martin 105

Donors Government

• Apply in the field what head Walk the talk • Enforcing commitment on reforms to
offices have agreed upon build up credibility and attract potential
resource commitments and funding
allocation mechanisms

• Medium-term commitments Budget for results • Medium-term budgetary framework to

matching MTEF align budgets on results with a medium
-term perspective

• Risk management strategy in Capture risk • Risk management strategy in terms of

terms of resource availability resource mobilization

• Reporting on results Demonstrate results • Credible financial systems and data on

results

• Test innovative joint funding Mobilize other funds • Fiscal policy reform to increase national
schemes with various actors revenues
(donors, government, PPPs)

Figure 4.1 Strategies to address the resource gap

Source: Generated by authors.

more trust in their relationship with donors. Commitments in Busan to

country-led inclusive partnerships offer an opportunity to this end.
Drawn from international companies and financial institutions, risk man-
agement strategies have recently gained ground in the field of development
cooperation. Risks at the country, sectoral, and project level should be
assessed as part of project and program planning, leading to measures drawn
to prevent, mitigate, and compensate risks. This would enable donors and
recipient countries to move away from a crisis-to-crisis management style to
a smoother implementation and adaptive management of aid projects with
better chances of success. Such an approach would also coincide with Busan
commitments to improve risk management.
An important condition for credibility is the demonstration of results. This
means, among other measures, improving the quality of financial informa-
tion systems, and regular and documented reporting on results. Experience
has shown that a poor country or public institution can mobilize a much
larger pool of resources when it demonstrates its ability to manage them
properly and deliver results. In the 1990s under strong leadership, the Benin
Ministry of Environment and the Protection of Nature was able to signifi-
cantly increase its resources and aid projects using this strategy, as one of the
authors experienced when he worked in Benin during that period.
Apart from international funding sources, many developing countries are
taking measures to promote medium-term fiscal revenues through growth
106 Cases in Multilateral Development Cooperation

policies, by simplifying private-sector regulations and taxation policies, mak-

ing them more attractive for domestic and foreign investment, and by
fighting corruption and closing loopholes. They are also insisting on proper
tax collection. Throughout recent years, multilateral agencies and bilateral
donors have provided considerable technical assistance to improve the busi-
ness climate in recipient countries and strengthen macroeconomic stability,
illustrated by the relative resilience of Africa and Latin America to the
global financial crisis. Concerted efforts to support effective institutions in
developing countries will be key to this success.

Policy gap
Several avenues are available to address the relative inconsistency
between strategic and operational frameworks in developing countries (see
Figure 4.2). Not one of those avenues provides a perfect solution to fill the
policy gap, but they certainly make a strong contribution together.
Better strategic and operational planning is one avenue. The more coun-
tries are able to define their strategic framework, the better donors can align
their aid projects with these frameworks, either by financing certain projects
and programs on the national, sectoral, or local level, which are part of
a country’s program architecture, or by directly financing to the country’s
budget. Driven first by the structural adjustment programs in the 1980s and
1990s, and then by the Millennium Development Goals debate, a lot has
been done – not in the least by multilateral organizations – to strengthen
the ability of countries to define policies, plan, and program. For exam-
ple, the World Bank has moved from budget support in the framework of
adjustment programs with conditionality to development policy lending, in

National strategic
planning

National operational
planning
Feeding back
Programs and Programs and evaluation
Program Results-based results into
project execution project
architecture budgeting planning and
and monitoring evaluation
budgeting

Donors’ projects Budget support

Figure 4.2 Articulation of country-led national strategic framework and donor-led aid
projects at operational level
Source: Generated by authors.
 Franke Toornstra and Frédéric Martin 107

which disbursement triggers are taken from the recipient government’s own
policies.
A second avenue to address policy gaps is the introduction of sector pro-
grams in the planning and organizational framework of sector ministries.
A sector program, such as a national primary education investment project
focused on the entire sector, addresses this gap. This is because its high-level
objectives are easier to relate to strategic objectives and targets, and also
because a sector-wide program consistently structures several institutional
public service delivery activities. In the case of a public investment program,
this would be primary education services offered in public schools, as well as
a number of investment projects that contribute to enhancing the quantity
and quality of the public service offered – in this case, teachers’ capacity or
education infrastructures.
A third avenue is budgeting for results through the implementation
of MTEFs that provide a consistent framework to assign spending as a
function of government priorities while respecting the set budget enve-
lope. The medium-term nature of the exercise and its revolving hori-
zon provide an attractive, consistent way to plan and adjust investment
and operating budgets, thereby contributing to better articulation of aid-
financed investment projects with government-financed current expendi-
tures. On the revenue side, more and more countries are developing an
overall Medium Term Budgeting Framework, including a Medium Term Fis-
cal Framework. They are also developing a series of Sector MTEFs (one
per sector) on the spending side. Countries such as Benin, Burkina Faso,
Mozambique, Senegal, and Uganda have been using Sector MTEFs for many
years.
A fourth avenue to address policy gaps is the design or revision of poli-
cies on planning, budgeting, management, monitoring, and evaluation to
clarify goals, roles, responsibilities, and minimum obligations on the part of
all stakeholders. For example, the government of Uganda has made signifi-
cant progress in designing and adopting such laws. Most recently, in 2009,
it established an evaluation policy. Complete with evaluation guidelines,
the policy helps clarify the follow-up procedure to an evaluation so that
its results are fed back into the policymaking process.

Implementation gap
As argued above, implementation is probably the main capacity-
development issue, and it directly relates to the capacity of a country
to effectively absorb financial resources for economic development and
improved public services. Implementation capacity can be strengthened by a
process in which legal, administrative, and organizational reforms are com-
bined with training of actors in these processes, both at the policy and
decision-making levels, and at the operational level. Reforms need to have
a focus on results and should be accompanied by measures to improve the
108 Cases in Multilateral Development Cooperation

performance of public-sector personnel. A recent evaluation of the World

Bank’s public-sector reform projects by the Independent Evaluation Group
(IEG) shows that such initiatives only succeed if there are champions to lead
reforms and change agents inside and outside the public administration
(IEG 2008). Projects that only focus on comprehensive administrative and
institutional reforms tend to fail. Leadership, incentives, building on avail-
able internal capacity, use of change agents, strategic communication, and
training are important conditions for the success of public-sector reforms.
Strategic communication is crucial to mobilize support for reforms within
and outside the civil service with the parliament, beneficiaries, non-
governmental organizations, trade unions, auditing institutions, and the
private sector. Reform- and capacity-building projects need to be accom-
panied by communication actions to build momentum for reform, reduce
resistance to change, and progressively build up confidence among partners.
As an institute that provides advisory services and training, IDEA-
International has learned that the traditional ‘transfer of technology’ model
for training is not effective. Practitioners now prefer to talk about ‘learning
programs’ rather than ‘training programs’. The content of such programs
should start on the basis of participants’ knowledge, valorize their experi-
ence and skills, and align with the best practices relevant to their personal
situation. Participatory approaches to training are most effective because
they oblige interveners to remain close to participants’ realities. IDEA facil-
itates knowledge transfers between Northern and Southern educational
institutions, based on a mutual learning approach.
It is difficult for trained individuals to become change agents once back
in their organizations if they are alone. In order for them to be successful
change agents, trained individuals need to be part of a like-minded group
and assisted in applying lessons learned. Mobilization techniques, network
development, and coaching are important methods to strengthen the results
of learning programs. Strengthening capacity for development results needs
to go beyond the level of training into the field of actual support to change
management, where monitoring and evaluation is crucial.
A stepwise approach with a roadmap helps to pursue reforms and a learn-
ing plan helps to align training programs with needs. Yet, both financing
donors and the leaders of reforms and learning programs need to be able
to pilot the stepwise approach with flexibility, while capturing opportuni-
ties and addressing threats. According to the spirit of the aid-effectiveness
agenda (‘mutual accountability’), donors need to become development
partners in these reforms and change processes. Knowledge and skills are
becoming increasingly important development factors, a message better
understood by multilateral organizations than bilateral donors, many of
which are generally reducing the number experts on staff. Knowledge
and learning is one of the six priority themes set by departing World
Bank President Zoellick for his tenure (2007–12) (Guha 2007). In prac-
tice, IDEA International Institute has seen capacity building in donor
 Franke Toornstra and Frédéric Martin 109

institutions improve the donor–recipient country dialogue on reforms and

support developing countries to increase their absorption and implementa-
tion capacities.

Conclusion

This chapter looked at progress on aid effectiveness from a capacity-

development perspective with a particular focus on country ownership and
donor alignment and harmonization. It showed how attention to capac-
ity issues evolved over time under this agenda and stressed improving
capacities in developing countries as means to enhance aid quality. Despite
limited progress on meeting aid-effectiveness targets, implementation of the
aid effectiveness agenda has resulted in the increased capacities of recip-
ient countries at the strategic and policy levels, in better budgeting and
management of public finances.
Nevertheless, the chapter identified three capacity gaps that continue to
hinder development progress relating to financial and human resources, pol-
icymaking, and implementation. Though developing countries are receiv-
ing increasing sources of development finance, their capacity to channel
these resources through good and credible public projects and programs to
generate results is still relatively limited.
While HLF4 did not include monitorable global commitments on capac-
ity development, the focus on country-level processes presents an important
opportunity to address remaining capacity gaps. Supporting implementa-
tion capacity needs to receive more attention than it has to date and should
be systematically defined as a key objective of aid programs. Donor organiza-
tions should support credible avenues for results-oriented change and accept
using the country institutions that are built in this way.

Acknowledgments

The authors want to thank Manehe Gueye, trainee at the IDEA International
Institute, for his support in the research for this chapter.

Notes
1. A number of scholars have documented these changes. See, for example,
Blomfield and Kharas (Chapter 3, this volume); Kindornay and Samy (Chapter 11,
this volume); Kharas et al. (2011); Kindornay and Besada (2012); and Zimmerman
and Smith (2011).
2. As Kindornay and Samy point out, the international aid effectiveness agenda was
historically dominated by donors from the OECD-DAC.
3. Triangular cooperation generally refers to instances where Northern donors
support development partnerships between two Southern partners.
110 Cases in Multilateral Development Cooperation

4. In March 2010, a High Level Event on South-South Cooperation and Capacity

Development was held in Bogotá, which highlighted the need to promote
South-South cooperation and implement best practices based on the case stories
presented at the conference.
5. See Vandeninden (2007) for a full discussion on aid transaction costs, including
a typology of these costs.
6. See Kindornay and Besada (2012) and Acharya et al. (2006) for useful overviews
of these trends. See Blomfield and Kharas (Chapter 3, this volume) for a useful
illustration of the changing development landscape, which has the potential to
substantially increase transaction costs.
7. See de Haan and Warmerdam (Chapter 9, this volume) for a useful case study
on China’s provision of South-South cooperation. See also Blomfield and Kharas
for differences in how providers of South-South cooperation providers and DAC
donors interpret Paris Declaration principles.
8. Specifically, the Paris Declaration committed donors to untie aid and improve
their division of labour (OECD 2011c).
9. Donors also agreed to harmonize their efforts in fragile states and their
approaches to environmental assessment.
10. Project implementation units are structures created with well-paid consultants
and their own procedures to implement donor projects, which function outside
the direct responsibility of a government and outside government implementa-
tion mechanisms.
11. This chapter does not provide a full review of the literature on capacity devel-
opment but rather focuses on how international agreements on aid effectiveness
have addressed important capacity issues and gaps. See Fukuda-Parr et al. (2002),
for example, for a review.
12. See OECD (2009) for a historic overview of donor conditionalities.
13. The target for this commitment is to reduce by one-third the gap of coun-
tries without transparent and monitorable results frameworks included in their
strategies by 2011.
14. See also Dom (2007).
15. The sector-wide approach is a way to plan development projects in line with
the strategy of the sector (for instance, the education or health sectors), harmo-
nized with other projects, focused on results, and using the capacity of key public
institutions in the sector.
16. A Medium Term Expenditure Framework is a multi-annual budget to implement
a strategy – either a national or sector strategy – and is organized according to
the results framework of the strategy. The instrument is flexible and permits the
adjustment of a budget when needed.
17. Indeed, as noted by Tomlinson (2011), capacity-building needs in developing
countries extend far beyond the state. See Rwangombwa (2008) for an overview
of capacity gaps in Rwanda.
18. See Hansen and Tarp (2000) for a historical review of this debate. They find a
robust relationship between aid and growth, either alone or in combination with
a policy variable.
19. Authors’ personal experience. The World Bank (2010) also conducted a study
on broad trends in financing for higher education in Africa, demonstrating the
ongoing human and financial resource gaps that exist.
20. The g7+ is a country-owned-and-led global mechanism that provides a fragile
states perspective on fragility and works to monitor and report on challenges
faced by fragile states. See http://www.g7plus.org/.
 Franke Toornstra and Frédéric Martin 111

21. The Paris indicator on reducing parallel implementation units was also tied to
improving country capacity.
22. The Paris indicator was based on the World Bank’s Country Policy and Institu-
tional Assessment. It made use of the indicator that measures the quality of a
developing country’s budget and financial management system.
23. IDEA International contributes to improving performance in the public sector
by supporting national and sub-national governments and public institutions in
the implementation of Results-Based Management and with innovative solutions
to promote the quality of public services. IDEA is an international network of
regional offices and country representations. The Institute operates in five conti-
nents and offers a range of consulting services, training programs, and decision
support solutions.

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5
Increasing the Effectiveness of
Multilateral and Bilateral Aid: Lessons
from the Global AIDS Response
Franklyn Lisk, Pradeep Kakkattil, and Musa Bullaleh

Introduction

Since acquired immune deficiency syndrome (AIDS) was first diagnosed

over 30 years ago, the human immunodeficiency virus (HIV) – the virus
that causes the disease – has spread rapidly around the world. An esti-
mated 65 million people worldwide have been infected with HIV so far,
and a total of nearly 30 million have died from AIDS-related illnesses
(UNAIDS 2010). According to the latest Joint United Nations Programme on
HIV/AIDS (UNAIDS) report on the global AIDS situation, at the end of 2010
an estimated 34 million people were living with HIV worldwide (UNAIDS
2011b). This reflects both new infections and the significant expansion of
treatment – antiretroviral therapy – which is contributing to reduction in
AIDS-related deaths. In 2010, there were an estimated 2.6 million new infec-
tions and about 1.8 million AIDS-related deaths globally; over 7000 persons
worldwide are infected each day with HIV and nearly 5000 die daily due
to AIDS. The majority of those who have been infected with HIV, as well
as those who have died from AIDS-related illnesses, are in the developing
regions and particularly in sub-Saharan Africa (SSA) in some of the poorest
countries.1
Although significant progress and steady gains have been made in the
fight against AIDS over the past decade, particularly in terms of stabilizing
the spread of the epidemic in the worst-affected regions and in expanding
treatment in low- and middle-income countries,2 the epidemic remains a
major challenge for national development and international cooperation,
against the background of some worrying trends and implications (WHO
2011). The number of new infections continues to outpace the number of
people receiving treatment. As of 2010, international funding for AIDS was
down for the first time in the epidemic’s history, and there are worrying
signs that donor governments – confronted with the impact of the global

115
116 Cases in Multilateral Development Cooperation

financial crisis and a range of competing spending priorities – are showing

tendency toward ‘AIDS fatigue’ in their development-assistance programs.
AIDS remains one of history’s worst pandemics, and the impact of the HIV
epidemic expands beyond the domain of public health with wider economic
implications and social consequences and even national security concerns.
Financing a sustained response to the global AIDS pandemic in low-
and middle-income countries has emerged as a major development chal-
lenge. AIDS financing is crucial to the response and covers the whole
range of interventions – prevention, treatment, and care, support services,
vaccine research, and product development. Money for the global AIDS
response comes mostly from international donors, through bilateral aid and
contributions to specific multilateral institutions, as well as from private phi-
lanthropies and domestic sources. The establishment of UNAIDS in 1996
provided an institutional arrangement for coordinating the United Nations
(UN) system-wide resource-mobilization efforts to respond to the HIV/AIDS
pandemic globally, while the launch of the World Bank’s Multi-Country
HIV/AIDS Program for Africa (MAP) in 2000 was the first major global financ-
ing channel for the global response. AIDS financing was given a very big
boost in the early years of the new millennium, first, by the creation of the
Global Fund to Fight AIDS, Tuberculosis and Malaria (hereafter referred to
as the Global Fund) in 20023 and, soon after, with the enactment by the
US Congress of the bill establishing the President’s Emergency Plan for AIDS
Relief (PEPFAR) in 2003. Financial resources available to low- and middle-
income countries to fight AIDS experienced a huge upsurge throughout the
decade. In 2009, investments on the global AIDS response reached a record
high of $15.9 billion4 as compared to the $3.2 billion that was available in
2002 and less than $300 million in 1996.5
Early funding initiatives directed at HIV/AIDS were mainly for making
money available to control the spread of the epidemic as a matter of urgency.
With little success in this regard, attention was later shifted toward making
money available for treatment of AIDS sufferers. Presently, the emphasis of
AIDS financing is on managing money required for scaling up the global
response. The effect of the global financial crisis has led to a flattening in
the larger trend in overall official development assistance (ODA), which has
consequently affected financing of the global AIDS response over the past
couple of years. Hence, the issue of the effectiveness of aid flows has become
crucial to the global AIDS response, in terms of the need to spend money
that is available more efficiently and where it can make the most impact on
a lasting and sustainable basis. This focus on aid effectiveness also coincides
with a major shift in the global aid architecture: historically, decisions on
the giving of aid were driven by the judgment of donors on how best to
help those in need; the provision of aid over the past decade has also given
greater consideration to the voice and needs of recipient partner countries,
 Franklyn Lisk et al. 117

in terms of their rights to development and equitable participation in the

global economic system based on the principles of ‘shared responsibility and
mutual accountability’.
This chapter presents and analyzes trends and major ‘events’ in AIDS
financing through bilateral and multilateral channels and their impact on
the global response to the pandemic. This is done against the background of
the evolving global aid architecture and new forms of international develop-
ment cooperation and partnerships in both the public and private spheres.
The chapter begins with an overview of the changing global aid landscape
and efforts by the international donor community and partner countries
to improve the effectiveness of aid through commitments made and agree-
ments reached at a series of high-level international conferences driven by
the Organisation for Economic Co-operation and Development (OECD) and
supported by the UN. This is followed by an analysis of trends in global
financial flows from various sources available for HIV/AIDS responses in
low- and middle-income countries over the past two decades. In the light
of the current ‘belt-tightening’ by major donors, an assessment of aid effec-
tiveness in relation to the global AIDS response is undertaken; this is done
mainly from the perspective of the role and contribution of the UN sys-
tem response led by UNAIDS. The new UNAIDS strategy for 2011–15, which
includes specific guidelines for improving the effectiveness of AIDS financ-
ing at the country level, provides the operational framework for the analysis.
Furthermore, the chapter makes use of the UNAIDS model of inter-agency
collaboration at both global and country levels to assess aid effectiveness, in
terms of impact on the overall development process. This example of linking
aid to improved development outcomes serves as a template for introducing
the notion of development effectiveness into the analysis of AIDS financing in
a changing global order.

The changing global aid landscape and quest

for aid effectiveness

There have been four High Level Fora on Aid Effectiveness at the global level:
Rome (2003), Paris (2005), Accra (2008), and Busan (2011). These meetings,
organized by the OECD’s Development Assistance Committee (DAC) and
supported by the UN, have focused attention on increased donor coopera-
tion and harmonization of aid efforts and the need to align donors’ activities
more closely with the strategies, policies, and priorities of partner coun-
tries. Important agreements have emerged from the last three meetings,
which illustrate a major shift in the global aid architecture – from ‘stand-
alone’ bilateral and multilateral initiatives to a more integrated international
and multi-stakeholder approach backed by conditions of responsibility and
accountability.6
118 Cases in Multilateral Development Cooperation

The Paris Declaration on Aid Effectiveness (OECD 2011) outlines five

overarching principles, as summarized here:

• Ownership: Partner countries should exercise effective leadership over

their development policies and strategies and coordinate national devel-
opment efforts.
• Alignment: Donors should base their overall support on partner
countries’ national development priorities, strategies, institutions, and
procedures.
• Harmonization: Donors’ actions and procedures should be harmonized,
transparent, and collectively effective.
• Managing for results: Resources and improved decision-making should be
managed for development results.
• Mutual accountability: Donors and partners should be held accountable
for development results.

The Paris principles represent the international community’s consensus

on the direction for reforming aid delivery and management in order to
improve effectiveness and results. It includes a set of indicators to track
and measure progress. In their efforts toward implementation of the Paris
Declaration, donors and their partners have been primarily concerned with
improving the efficiency of the financial and administrative arrangements
necessary to reduce transaction costs and improve delivery. The focus is on
aid-delivery modalities, an appropriate mix of aid instruments, harmoniza-
tion of donor procedures, adoption of joint approaches, and alignment with
partner-country development and financial management systems, which are
seen collectively as an essential contribution to increasing the effectiveness
of aid.
The Accra Agenda for Action (AAA), while acknowledging the value of the
principles established in Paris, recognizes the need to speed up the imple-
mentation of the Paris Declaration in terms of translating principles into
action in relation to targets set for 2010.7
The aim of the AAA is to accelerate aid effectiveness reforms by proposing
and promoting a number of imperatives. These are:

• Country systems: Using partner-country systems to deliver aid by, for

instance, conditioning donors to share and coordinate their plans, as well
as to deepen engagement with civil society organizations.
• Predictability: Supporting developing countries in strengthening the link
between public expenditure and results, with donors to providing three-
to five-year forward planning information supporting conjunction.
• Division of labor: Encouraging partner countries and donors to develop
practice principles for streamlined country-led processes to ensure maxi-
mum development coordination and to avoid aid fragmentation.
 Franklyn Lisk et al. 119

• Conditionality: Discouraging donors from prescriptions on aid and

instead promoting aid alignment with recipient countries’ development
objectives.
• Untying of aid: Easing donors’ restrictions preventing partner countries
from importing necessary goods and services at the best possible prices in
the global marketplace.
• Partnerships: Appealing to all partners encouraged to adhere to the Paris
Declaration principles and to promote South-South cooperation.

These actions are particularly relevant to the global AIDS response espe-
cially as on par with UNAIDS principles relating to country ownership,
predictability and sustainability of inputs, division of labor, and access to
drugs at affordable cost.
UNAIDS laid the foundation for these actions, chiefly through its ‘Three
Ones’ principles,8 launched in 2004, and the Global Task Team on Improv-
ing AIDS Coordination among Multilateral Institutions and International
Donors (Global Task Team), which was formed in 2005. It has gathered valu-
able experience in tying aid-effectiveness commitments to AIDS responses.
This experience is reflected in its 2008 report prepared for the 3rd High Level
Forum on Aid Effectiveness in Accra, which documented the development
of an appropriate framework for the implementation of aid effectiveness
efforts, as well as UNAIDS’ ‘Three Ones’ reviews of national HIV/AIDS
responses, and Country Harmonization and Alignment Tool (UNAIDS 2008).
The main thrust of the AAA, as derived from the Paris Declaration principles,
is given operational significance by UNAIDS through the application of its
own core principles for AIDS responses pertaining to human rights, gender
equality, and non-discrimination with respect to prevention, treatment, and
care, and support (UNAIDS 2010a). Discussions are also underway within the
UNAIDS Secretariat and among its co-sponsors concerning a widened con-
cept of country ownership (including the role of civil society and leadership
at local levels) and mutual – national and global – accountability.
These and similar initiatives by UNAIDS are relevant to the focus and out-
comes of the recent 4th High Level Forum on Aid Effectiveness (HLF4) in
Busan, South Korea, which took place during November 29–December 1,
2011, and at which attending countries adopted the Busan Partnership
for Effective Development Co-operation (BP) (HLF4 2011). This declaration
establishes an agreed, albeit voluntary, framework for development coop-
eration that embraces all major stakeholders for the first time: traditional
and emerging donor governments, recipient countries, South-South cooper-
ators, civil society organizations, and private funders, which have pledged to
establish a ‘new inclusive and representative global partnership for effective
development cooperation’ (HLF4 2011; Chapter 11, this volume).
Paris and Accra laid the foundation to track and measure progress as
reflected in the international commitments made to support desirable
120 Cases in Multilateral Development Cooperation

reforms toward the effective use of development assistance. While acknowl-

edging the progress made thus far in promoting aid effectiveness, the
international community agreed on the need to intensify efforts toward
moving from agenda to action after Accra. Busan provided the opportunity
to review achievements from past efforts and to agree on priorities for future
action to improve the development impact of aid. Debate in Busan was dom-
inated by two related priorities: (1) continuation of efforts to implement
aid effectiveness reforms; and (2) a focus on improving ‘value for money’
(VfM) from aid by concentrating on investing resources in the most cost-
effective way and the need for greater impact on the wider development
process. In line with the notion of ‘development effectiveness,’ as articulated
in the Busan Declaration, UNAIDS has outlined an investment framework
to facilitate more focused and strategic use of scarce resources (UNAIDS
2011b). The key components of the investment framework are basic pro-
gram activities, critical enablers, and synergies with development sectors
for an effective AIDS response to meet the Millennium Development Goals
(MDGs), adopted by the United Nations General Assembly in 2000, partic-
ularly MDG 6 which is to stop and start reversing the spread of HIV/AIDS
by 2015.
Busan provided an opportunity for donors and recipients to seize the
chance to realign aid and redefine aid effectiveness based on the overar-
ching principles established and endorsed at the Paris and Accra forums.
These principles must now be applied to transform donor–recipient rela-
tionships into effective mechanisms for sustainable development. Implicitly,
this implies a broader conceptualization of the key players in national
development to include the private sector and international development
partners, as well as a transformation of the overall development pro-
cess along the lines of country ownership, domestic and global respon-
sibility, and accountability within a sustainable, rights-based holistic
framework.
HLF4 took place at a time when there was increasing apprehension in part-
ner countries about the need to keep the aid-effectiveness agenda going and
growing concern among donor governments to get greater VfM in devel-
opment cooperation. If the process of realigning aid and redefining aid
effectiveness is not properly managed as envisioned in Busan, there could
be a divergence between the promotion of the aid-effectiveness agenda and
the implementation of the VfM agenda. The two agendas are not incom-
patible and both could be reconciled with regard to their relevance to the
principles of the Paris Declaration and AAA – namely, country ownership,
alignment of development priorities, harmonization of actions and proce-
dures, sustainable development results, mutual accountability, and shared
responsibility. From the perspectives of both partner and donor countries,
compatibility of the two agendas is significant in terms of the link between
the commitments made in Paris, the aims agreed on in Accra, and the
partnership arrangements for effective development cooperation elaborated
 Franklyn Lisk et al. 121

on in Busan. Implicit in the reconciliation of the aid effectiveness and

VfM agendas is the main thrust of the BP and includes measures directed
toward increasing the impact of aid on broader development objectives.
In this regard, the post-Busan aid-effectiveness framework strives for greater
coordination between donors and their partners in the provision of develop-
ment assistance. At the same time, it is envisaged that coordination will be
grounded on the core values of mutual accountability and shared responsibility
in order to achieve aid effectiveness and efficiency, or VfM, in develop-
ment cooperation.9 Specifically referring to the global AIDS response, shared
responsibility with mutual accountability is seen as crucial for ensuring
national ownership of the process and coordinating development cooper-
ation based on the development effectiveness of resources invested and the
political governance and sustainability needed to realize positive results in
efforts to prevent and treat AIDS.10

Financing the global AIDS response

Donor governments provide the bulk of the funding for the global AIDS
response. The main donors are rich-country governments whose generosity
has been crucial to the implementation of HIV/AIDS prevention, treat-
ment, and care, and support programs in low- and middle-income countries.
Financing of the global AIDS response is either through direct bilateral trans-
fers from donors to partner countries, as in the case of PEPFAR, or by indirect
contributions by donors through relevant multilateral channels, such as the
Global Fund and UNAIDS.
Bilateral financing of the global AIDS response has been dominated by
DAC members. The United States (US) is by far the largest donor, especially
after the launch of PEPFAR with its projected initial expenditure outlay of
$15 billion over its initial five years, 2003–08. This represented what was
described at the time as the largest global health initiative directed at a single
disease undertaken by any nation in history (PEPFAR 2012). Further devel-
opments in efforts to combat HIV/AIDS since 2008 have resulted in new
funds of up to $48 billion pledged by the US for up to 2013. In line with the
general pattern of bilateral aid, donor governments often targeted particular
countries which were considered to be of special interest to them. Accord-
ingly, the number of countries benefiting from bilateral funding is limited
in relation to the total number of countries affected by the global HIV/AIDS
pandemic. This is best exemplified by PEPFAR, which initially covered only
15 ‘focus countries’ – 12 from SSA, 2 from the Caribbean, and 1 from Asia –
which were selected by the administration to benefit from PEPFAR.11 They
did not originally include some of the worst affected and poorest countries
in SSA.
Multilateral initiatives have played a significant role not only in fund-
ing the global AIDS response in poor countries but also in influencing the
global-aid architecture, such as through the establishment of the Global
122 Cases in Multilateral Development Cooperation

Fund and UNITAID, a UN-sponsored drug access program initiated in 2006.

Bilateral and multilateral HIV/AIDS funding initiatives have been supple-
mented by donations in cash and kind by philanthropic and business-linked
foundations, such as Bill and Melinda Gates, Elizabeth Glaser, Kaiser Family,
and Clinton foundations, and the charitable arms of private pharmaceutical
corporations like Bristol Myers-Squibb and Pfizer (Figure 5.1).
Financing of the global AIDS response skyrocketed from $200,000 in 1986
to $53 million the following year when the World Health Organization
(WHO) Global Programme on AIDS was created. It reached $225 million
in 1990 and exceeded the $1 billion mark by the end of that decade. Since
2000, AIDS financing has increased even faster thanks to the multiplication
of major resource mobilization initiatives, chiefly the World Bank’s MAP,
the Global Fund, PEPFAR, and UNITAID. Funding of HIV/AIDS programs in
low- and middle-income countries alone rose from $1.2 billion in 2002 to
over $6 billion by 2004, and reached $10 billion in 2008. In 2009, resources

International assistance to HIV/AIDS in Bilateral disbursements to HIV-related

2009 programs in 2009

16

14

12

10
US $ billion

0
2009

UN (2%) Bilateral (37%) United States (67%) United Kingdom

(11%)
Netherlands (6%)
Philanthropics (4%) Domestic (44%)
Germany (4%)
Denmark (3%)
GFATM (11%) Other Sweden (2%)
multilateral (2%) Australia (1%)
Norway (1%)
Ireland (1%)
France (1%)
Canada (0.7%)
Other governments
Japan (0.4%) (0.7%)
Italy (0.2%) Spain (0.4%)

Figure 5.1 Resources available for HIV-related programs in low- and middle-income
countries by financing source, 2009
Source: Author generated using data from UNAIDS estimates based on (1) UNAIDS (2010); (2)
KFF/UNAIDS (2010); (3) EFG (2010), and FCAAAA (2010).
 Franklyn Lisk et al. 123

17.50
$15.9
$15.6
15.00
Signing of declaration of
commitment on HIV/AIDS, UNGASS
12.50 HIP+ $12.7
US$ billion

10.00
World Bank $8.5 $8.9
MAP launch
7.50 UNITAID
$5.1
5.00 Less than Gates $4.2
US$ 1 million UNAIDS foundation
2.50 PEPFAR
$0.1 $0.2 $0.3 $0.3 The global fund
$1.4 $1.6
0.00
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
Figure 5.2 Resources available for HIV/AIDS: Low- and middle-income countries,
1986–2010
Source: Author generated using data from UNAIDS (2010).

available for the global AIDS response from all sources were estimated at
roughly $16 billion (Figure 5.2).
After a decade of continuous increase, the upward trend in total resources
available for the global AIDS response came to a halt in 2009, mainly as a
result of the global financial crisis, which affected donor funding. That year,
the last before resources devoted to HIV/AIDS actually fell, the US govern-
ment was the only major donor to increase its funding to the pandemic,
when it disbursed an additional $400 million. European donor countries
such as France, Germany, Ireland, Italy, and the Netherlands all reduced
their contributions in real terms to the Global Fund and UNITAID in 2009.
The post-2009 downward trend of overall HIV/AIDS funding ended a run of
annual double-digit percentage point increases in donor support for interna-
tional AIDS assistance to low- and middle-income countries since 2001 when
the UN General Assembly adopted the landmark Declaration of Commitment
on HIV/AIDS (Figure 5.3).
As stated above, 2009 marked a downward shift in the flow of funds for
the global AIDS response: however, in a positive development, that year,
domestic government funding accounted for 44 percent of the total global
AIDS resources and constituted the main source of funding for the AIDS
response in low- and middle-income countries. At the same time, funds pro-
vided by bilateral donors amounted to 37 percent of the total. Eleven percent
of total funding was channeled through the Global Fund; 4 percent through
US and European philanthropic organizations; and another 4 percent con-
tributed by the UN system and other multilateral agencies. See Figure 5.1
for an illustration of these trends. The prominence of domestic financing
in the AIDS response in low- and middle-income countries in 2009 reflects
124 Cases in Multilateral Development Cooperation

$7.7 $7.6
$8.7 $8.7

USD billions $6.6

$4.9
$5.6
$3.9
$4.3 $3.5
$3.6 $2.8

$2.0 $1.6
$1.6 $1.2
02

03

04

05

06

07

08

09

02

03

04

05

06

07

08

09
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
Commitments Disbursements
(enacted amounts)

Figure 5.3 International AIDS assistance: Trends in group of eight and other donor
government assistance, 2002–09
Source: Author generated using UNAIDS internally generated data.

a combination of the decline in external funding due to various manifes-

tations of ‘AIDS fatigue’ and concerted efforts by the developing countries
themselves to make up for some of the shortfall caused by decline in external
funding (Figure 5.4).

Eastern Europe and

Central Asia: US$172
million

Middle East and North

Africa: US$32 million
Asia and Pacific:
US$1.0 billion

Latin America and the

Caribbean: US$447
million

Sub-Saharan Africa:
US$5.9 billion Per Capita Received (International US$)

< $1 $5 >$ 10

Figure 5.4 HIV/AIDS financing in 2009

Source: Author generated using data from UNAIDS estimates, 2010.
 Franklyn Lisk et al. 125

From aid effectiveness to development effectiveness

in the global AIDS response

Busan Partnership for Effective Development Co-operation

The BP not only provides a concrete basis for applying the principles estab-
lished in Rome, Paris, and Accra, to action, but, more crucially, constitutes
for the first time an agreed framework for development cooperation that
embraces a wide group of stakeholders – donor and partner countries, civil
society organizations, private sector representatives, and multilateral insti-
tutions – and nations at all levels of development. In this regard, the
Busan agreement offers an opportunity for a new inclusive and represen-
tative global partnership for effective development cooperation, though
as Kindornay and Samy (Chapter 11, this volume) show, some challenges
still exist. Nevertheless, by focusing on the concept of development effec-
tiveness or, more precisely, on how the aid-effectiveness principles can
improve development outcomes, the Busan agreement represents a mech-
anism to transform aid relationships into spurs of development. Busan is
also the first international meeting to put a spotlight on aid in the new
development-assistance landscape, which is characterized by rising chal-
lenges as well as by emerging economies and a changing geopolitical climate.
These include the complexity of multiple development challenges such as
climate change, state fragility, and food and water crises; multiple sources
of finance, including the so-called BRICS states, Brazil, Russia, India, China,
and South Africa; demands from taxpayers in donor countries to see tangi-
ble results from aid; and from recipient countries to have a greater say in
their development agendas and processes. The adoption of the BP marks
a turning point in multilateral development cooperation, particularly with
regard to how aid effectiveness is measured. In the post-Busan scenario,
the main indicator of aid effectiveness is the impact of aid on significant
and tangible development objectives, such as the reduction of poverty and
inequality, wider and more equal access for larger proportions of populations
to socio-economic opportunities, lack of civil conflict, capacity-building
in weak and fragile states, and sustainable but more inclusive economic
growth.
The pledge made in Busan applies to challenges that reflect global eco-
nomic, political, and social changes and technological advancements since
multilateral development cooperation began in earnest about 60 years
ago. Poverty and inequality remain the central challenge in international
development, and this signifies an urgent need to achieve increased and
shared development benefits to narrow the gap between rich and poor
countries. The Busan agreement makes a strong case for linking aid effec-
tiveness with ‘development effectiveness’ to address various global chal-
lenges such as health pandemics, climate change, food crises, and state
fragility.
126 Cases in Multilateral Development Cooperation

Regarding AIDS financing, there is ample evidence at the country level

to suggest that aid promotes development when aid is provided under the
right circumstances and with the right design. Well-targeted and properly
designed funding can lead to increased investments and thereby contribute
to improvements in key social and economic indicators which in turn
yield high development payoffs. Large-scale investments in the multifaceted
response to HIV/AIDS, through PEPFAR and the Global Fund over the past
decade, for instance, have had positive impacts not only on HIV treatment
and care but also on broad economic and social development objectives such
as poverty reduction, gender equality, and inclusivity, economic as well as
social. In this regard, it is useful to explore how aid for the achievement of
declared HIV/AIDS objectives and targets can improve overall development
outcomes.

AIDS financing and development effectiveness

The processes and tools that link aid to development should be understood
with reference to the concept of development effectiveness. The quest for
development effectiveness, particularly in the context of aid and ODA, can
be a difficult task, in terms of capturing the full range of factors that drive
development and measuring these as a value-added process of change.12
There has been a lively debate about the ‘effectiveness’ of development-
assistance flows, which underpins the concept of effective development in
the HLF4 context. Interpretations have varied depending on which side of
the partnership it is viewed from. The donor community tends to focus
on issues of relevance and impact, and what is clear is that in the present
climate of austerity governments and taxpayers are not willing to support
ODA without robust demonstration of VfM. On the development part-
ner side, there is growing concern that ODA flows are being driven by
factors and external interests that may reduce rather than enhance their
efficacy and effectiveness for national development. Despite the unclear
definition of development effectiveness, from the standpoint of the global
AIDS response, the agreement reached in Busan provides a common global
vision and a renewed emphasis on strong partnerships for more effective
development efforts. Perhaps above all, UNAIDS and its partners view the
Busan conference as a historic moment that established a new develop-
ment cooperation paradigm based on ‘shared responsibility’ and ‘mutual
accountability’ (UNAIDS 2012).
Stemming from the principles and commitments expressed in the Paris
Declaration and AAA, the Busan partnership framework promotes greater
cooperation among donors and partner countries with the explicit goal of
achieving improved development outcomes by using aid more effectively.
The framework provides guidance for reforming the global aid architecture
to focus on both the design and substance of implementation mechanisms
required to achieve improved development outcomes. This shift in approach
from principles to processes lays the foundation for innovative partnerships
 Franklyn Lisk et al. 127

and a renewed country-level focus, with implications for enhancing national

ownership and accountability and for addressing major process require-
ments such as human and institutional capacity development, integrated
development, sustainable financing, and a rights-based approach. These are
critical components of the principles and goals of AIDS financing as outlined
in the UNAIDS 2011–15 strategy discussed below.
The linking of AIDS financing and development effectiveness is per-
haps best illustrated by the bidirectional relationship between HIV/AIDS
and poverty, which is an important reason for advocating the integra-
tion of AIDS response efforts with wider development strategies.13 In this
regard, development cooperation between donors and partner countries
for combating HIV/AIDS and its impact is designed to address two key
challenges: (1) manifestations of poverty in unsustainable livelihoods and
constraints on socio-economic development, which increase risk of HIV
infection among poorer segments of the population reduce their capacity
to take action against the epidemic; and (2) failure to effectively respond
to HIV/AIDS because of poverty undermines efforts to reduce poverty, and
thus reinforces the vicious cycle of ill health and poverty. Integrating AIDS
responses into poverty-reduction strategies would help to create the neces-
sary policy and planning environment for a comprehensive, multi-sectoral,
efficiently funded AIDS response, as well as to strengthen the link between
AIDS financing and development effectiveness.

The UNAIDS model: Its role in the global AIDS response and
contribution toward a new global aid architecture

Initially, the UN system responded to the global HIV/AIDS epidemic as a

public health issue. The creation of UNAIDS as a multi-agency co-sponsored
program provided the basis for a more comprehensive and multi-sectoral
response by the UN system at both global and country levels. The UNAIDS
model recognizes that the HIV/AIDS pandemic is clearly having an impact
beyond traditional public health. The direct involvement in the global AIDS
response of several UN agencies with different mandates covering a variety
of global concerns – from human reproductive health, food security, and
drug abuse to labor relations and rights at work, education, and economic
development – brings a wider development focus to the response.14 This
approach also facilitates the process of integrating the AIDS response with
other health and development needs.
UNAIDS is foremost a coordinating body that has been uniquely success-
ful in getting the international community to agree on a set of principles
and priorities for the AIDS response and increasingly for global health gov-
ernance. More recently, it has embraced the necessity of country ownership
and aid effectiveness and is leading the UN system in offering guidance
and implementation capacity on both counts. Rather unique in the UN
system, UNAIDS is a program whose governance structure allows for the
128 Cases in Multilateral Development Cooperation

active participation of civil society and representatives of people infected

and affected by HIV/AIDS in decision making. In the implementation of its
programs and activities, UNAIDS also makes provision for collaboration with
diverse partners in the private and nongovernmental organization sectors as
well as local and community leaders.
At the initiative of UNAIDS, bilateral donors and international agen-
cies gathered in London in March 2005 for the landmark meeting, ‘The
Global Response to AIDS: “Making the Money Work”, The Three Ones in
Action’. It resulted in an international agreement that donors harmonize
and align their efforts with strategies and coordinating mechanisms. The
multi-stakeholder Global Task Team, introduced above, was established to
improve coordination among multilateral agencies and review progress in
the global AIDS response.15
The ‘Three Ones’ principles, also endorsed by the UN General Assembly,
signify that all stakeholders at the country level strive toward:

• One agreed HIV/AIDS action framework that provides the basis for
coordinating the work of all donors and development partners.
• One national AIDS coordinating authority, with a broad-based multi-
sector mandate.
• One agreed country-level monitoring and evaluation system.

These principles guide the reform of the global-aid architecture and are
reflected in changes in the global AIDS response since their adoption. For
instance, at present:

• Over 100 countries have developed national AIDS strategies;

• These countries have established national AIDS coordinating bodies;
• Most of these countries have national monitoring and evaluation systems
in place.

The application of the ‘Three Ones’ principles has contributed toward the
intensification of the multi-sectoral approach to the AIDS response and the
strengthening of multi-stakeholder coordination platforms, such as National
AIDS commissions or councils, the Global Fund’s Country Coordination
Mechanisms, and PEPFAR’s partnership frameworks at the country level.
The UNAIDS Secretariat works on the ground in more than 80 coun-
tries worldwide, and coherent action by the UN system is coordinated at
the country level through multi-agency UN Theme Groups on HIV/AIDS.
In order to ensure common UN system responses to AIDS at the country
level, UN Resident Coordinators have had to establish Joint UN Teams and
Joint Programmes of Support on AIDS since 2005. The impetus to create
Joint UN Teams and Programs on AIDS at the country level came from the
 Franklyn Lisk et al. 129

recommendations of the Global Task Team, and the arrangement has served
as a model for joint programming in other areas, such as gender and youth.
The experience in working together ‘as one’ to respond to HIV/AIDS has also
contributed to improved coordination and accountability for global aid and
the reduction of transaction costs.
The UNAIDS strategy for 2011–15, which recognizes the increasing role for
and requirement of aid effectiveness at the country level and establishes an
operational framework, includes guidelines derived from the ‘Three Ones’
principles (UNAIDS 2011d; WHO 2011):

• Country ownership of policies, processes, and related capacity

development;
• Alignment of donors’ policies and procedures with national development
priorities;
• Shared responsibility between donors and partner countries and mutual
accountability;
• Predictable financing, including from domestic government resources,
breaking the cycle of dependency; and sustainability;
• Integrating the AIDS response with other health needs and overall
development efforts in national economies;
• Coordination and harmonization of procedures and actions;
• Alignment of donor policies and support with the development priorities
and planning processes of partner countries; and
• Predictability and sustainability of aid flows.

In its capacity as the most prominent global actor tasked with address-
ing HIV/AIDS, UNAIDS also facilitates policy dialogue and action in the
AIDS response across sectors and interests, and creates opportunities for
the response to influence action and change in non-health sectors and the
national economies, especially of most-affected states. In this regard, the
AIDS response has become an entry point for addressing other health sec-
tor issues such as patients’ rights, access to treatment through flexibility
in trade-related aspects of intellectual property rights for pharmaceutical
patents, and human resources for health, as well as for responding to wider
development challenges pertaining to poverty, security, and climate change,
among others.
With its unique institutional structure, and in the context of ongo-
ing reform of the UN system, UNAIDS has evolved and positioned itself
as a coordinator of the process for the development of a global policy
framework and an agenda of action for responding to HIV/AIDS at global,
regional, national, and local levels. UNAIDS has also become a neutral bro-
ker that brings together a wide range of stakeholders to develop a common
framework for action in key areas of the AIDS response through consul-
tation processes. Though not a funding agency itself, UNAIDS plays an
130 Cases in Multilateral Development Cooperation

important role in mobilizing resources – mainly through voluntary contribu-

tions from donors – for its biennial unified budget and work plan, which is
implemented by each of the ten co-sponsoring UN agencies and the UNAIDS
Secretariat on the basis of an agreed division of labor among the co-sponsors,
while at the same time ‘delivering as one’ at the country level.
In the context of the UN reform process, the leadership and coordinating
role of UNAIDS in delivering the UN system’s contribution to the global
AIDS response has blazed a path in the development agenda. It contin-
ues to play this role, though the institutional climate and incentives for
reform within the UN system have changed significantly. In 2002, then-
Secretary-General Kofi Annan emphasized the necessity of the UN system
‘working better together’ with a clearer strategic focus (‘doing what mat-
ters’), underpinned by a dedication to human rights, the guiding principles
for a reformed UN. UNAIDS has been at the forefront of realizing this vision.
Since then, the UN reform agenda has gained momentum with the ‘Deliver-
ing as One’ report on UN system-wide coherence in 2006 and the rollout of
‘One UN’ reform pilots in an increasing number of countries.
UNAIDS is widely seen as a model for UN reform at the country level, and
the experience of working together as one to respond to HIV/AIDS offers
a model of coordination, shared responsibility, and mutual accountability
in the evolving post-Busan global-aid architecture. Against the backdrop of
the global financial crisis and austerity measures adopted by major donors,
the UNAIDS model of working as one and delivering as one at the coun-
try level is regarded as most cost-effective in terms of VfM (UNDG 2006).
It is also seen as providing a unique opportunity to build consensus on a
new global agreement for the AIDS response that could serve as a guide to
establishing clearly delineated but also shared responsibility among national
and global governance structures. In this light, the new global compact that
is linked with the UNAIDS model can be formulated around three key pil-
lars: (1) country responsibility, including domestic investment on the basis
of ability and ensuring voice and participation in democratic governance;
(2) the responsibility of the international community, including long-term
predictable and aligned financing; and (3) the shared responsibility for
innovative financing and partnership mechanisms, including support from
emerging countries and new development partners, and enhanced mutual
accountability.16

The future of AIDS financing in a changing

global-aid architecture

Lessons from the past and new challenges

The huge upsurge in AIDS financing between 2000 and 2009 precipitated
claims in some quarters that the global AIDS response is over-financed
relative to its share of the global burden of diseases and when considered
 Franklyn Lisk et al. 131

with other health sector and wider development needs controlling the
spread of HIV/AIDS.17 At the same time, UNAIDS and several key stake-
holders have called for more aid for the global AIDS response to bring the
pandemic under control and meet the growing demand for antiretroviral
treatment and prevention worldwide (De Lay 2008).
UNAIDS estimated that $26.7 billion was needed for the global response in
2010 alone. It is estimated that the costs of HIV prevention and AIDS treat-
ment could in total exceed $722 billion by 2031, particularly in the absence
of a viable vaccine or cure. Rising costs, estimated at as much as 40 percent –
compounded by insecure access, falling funding rates, and unpredictability
of funding18 – for HIV and AIDS treatments, particularly second- and third-
line antiretroviral regimens, threaten the implementation of new guidelines
promulgated by the WHO designed to increase treatment for all who need it.
Relevant is whether or not increases in financial aid for the global AIDS
response, and the demand for more aid, can be justified in terms of effective-
ness both in fighting the pandemic and with respect to stimulating favorable
development outcomes.19 This line of inquiry is based on the accepted tenet
that ‘aid effectiveness’ matters in the AIDS response beyond the premise that
aid (in full) is justified so long as some of it works. From a UNAIDS stand-
point, the rationale for pursuing aid effectiveness is simply that the global
AIDS response and overall development will be considerably enhanced if
aid is used effectively, especially when confronted with the downward trend
in aid flows since the onset of the global financial crisis. In such a situa-
tion, it is important to ‘make the money work’: to spend what money is
available where it can make the most impact on a lasting and sustainable
basis. This is one of the objectives of the effective utilization of aid. The
more effectively AIDS money is utilized, the more quickly it can contribute
to long-term and sustainable outcomes in HIV prevention, AIDS treatment,
care, and support, and overall development. In this regard, the aim is to
obtain VfM and achieve an optimal impact from a given amount of fund-
ing dedicated for HIV/AIDS responses and improving overall development
performance.20
Thus, while empirical evidence illustrates the positive impact that aid
has had on the global AIDS response, notably enabling a large percent-
age of people to receive treatment, the heavy dependence on foreign aid
for responding to the pandemic in low- and middle-income countries may
have in the past weakened incentives for governments of those countries
to boost domestic financing for their AIDS responses. Aid for responding to
the AIDS epidemic at the country level often reflects donors’ preferences in
AIDS responses and related commercial interests, hence dependence on aid
can contribute to imbalances (in, for example, prioritization of prevention
versus treatment) and distortions of national policymaking – for instance,
to favor donor agendas.21 In some cases, assured flows of donor money
coupled with insufficient accountability mechanisms have not sufficiently
132 Cases in Multilateral Development Cooperation

supported or encouraged the strategic reforms and policies needed to ensure

good governance and maintain efficiency in AIDS responses.
The political expediency for donor governments to show concrete results
from aid has often resulted in a preference for highly visible and short-term
interventions, at the expense of investment in research and the development
of a successful vaccine. There is also evidence that the surge of additional
funding to poor countries with insufficient domestic absorptive capacity has
led to ‘Dutch Disease’ effects, such as when limited capacity of the civil
service at the national and local levels means that AIDS money cannot be
put to good use or leads to cost-effective and viable local initiatives being
crowded out.

Prospects for effective HIV/AIDS response in the global

aid architecture
Despite these genuine and grounded concerns, available evidence shows that
financial commitments over time have resulted in significant improvements
in the global AIDS response and that progress continues to be made in fight-
ing the pandemic. According to the latest UNAIDS update on the global
AIDS situation covering the 2005–10 period, the rate of HIV infection has
been reduced by almost 20 percent over the last ten years to fewer than
2.7 million infections per year in 2010; the number of people dying from
AIDS has similarly gone down by more than 20 percent to 1.8 million annu-
ally (UNAIDS 2011e; WHO, UNAIDS, UNICEF 2011a). As a result, the MDGs,
notably relating to the control of HIV/AIDS and improvements in health sta-
tus, and the targets for ‘universal access’ (set at 80 percent of those qualifying
for treatment) and ‘zero new infections’ (to stop new incidence in its tracks)
are not dreams but realistic targets as incorporated into the UNAIDS strategy
for 2011–15. However, even with the progress made so far in treating those
who are already infected and preventing new infections, critics argue this is
slow in relation to the numbers infected and the severity and devastating
impact of the epidemic – implying not only that more money is needed, but
also, crucially, that past spending has not been altogether effective.22 Fur-
thermore, because there is no cure for AIDS as of now, once commenced,
treatment has to continue for a patient’s entire life, meaning that costs will
continue to increase as more and more people are put on treatment.
The current global-aid architecture for responding to the AIDS pandemic
is still characterized by a need for strong coordination at both the coun-
try and the global levels. It is still dominated by a few international
actors, both public and private, struggling to harmonize their goals – and
those of their donors – with those of governments and their constituents.
On the one hand, it is widely accepted within the global health gover-
nance debate that the HIV/AIDS response poses enormous challenges for
governance architecture – for the ability of states to implement and to gov-
ern interventions. It also proffers unparalleled opportunity: namely, to seize
 Franklyn Lisk et al. 133

on the momentum of efforts aimed at the mitigation and eradication of

HIV/AIDS to secure greater country ownership for the benefit of both local
and international governance in the realms of health and welfare.
Indications are that donor agencies are conscious of the depth and com-
plexity of health sector management at the country level, and perhaps also
aware that the upsurge in AIDS financing had brought about or exacer-
bated deficiencies stemming from limitations on local public services and
domestic-aid absorptive capacities. Weaknesses in health sector manage-
ment further compound the challenge of securing country ownership of
aid-funded AIDS response efforts. This point can best be illustrated with
reference to the Poverty Reduction Strategy Paper initiative, which was
launched by the Bretton Woods institutions in 1999 to address the need for
governments of aid-recipient countries to commit themselves to poverty-
reduction goals through ownership of the process. The lessons derived
from this imperfect attempt to achieve and secure ‘ownership’ nonetheless
offer guidance for how to now improve aid effectiveness and development
impact.

Conclusion

In exploring ways to increase the effectiveness of aid going toward the

global AIDS response, options involve ‘hard choices’ for ‘making the money
work’, especially following the global financial crisis. The era of endless
and abounding financing for HIV/AIDS is over. New and sustainable fund-
ing sources, linked to broader health and development goals, need to be
found, nurtured, and applied to achieve the greatest impact and highest
effectiveness. For example, the costs of responding to AIDS could be sub-
stantially reduced, or aid could be made more effective at the country level,
by ‘treating’ vulnerable groups with prevention programs countering AIDS
without necessarily scaling up treatment to all who are currently eligible
to receive it. Also, addressing critical issues such as gender inequality and
gender-based violence, criminalization of HIV, stigma, and discrimination,
as well as investing in dealing with the social and structural causes of
widespread HIV infections, would likely generate long-term benefits in terms
of permanently altering both the behavior of individuals and attitudes of
affected societies, with the added positive benefit of stemming the tide of
infection.
The UNAIDS strategy for 2011–15 emphasizes the critical issues of coun-
try ownership and shared responsibility on the one hand, and governance
and mutual accountability on the other, all which are especially relevant for
effective AIDS financing and necessary for sustainable development. In this
instance, the need for global aid governance brings to the fore the critical
issues of shared responsibility and mutual accountability – the guarantors of
AIDS treatment and prevention seen as ‘global public goods’ that contribute
134 Cases in Multilateral Development Cooperation

to improvements in development outcomes – and their allocation and enact-

ment at the local, national, and global levels. This means that any attempt
to render more effective external – and internal, domestic – aid must be cou-
pled not only with an imperative to streamline the systems of ownership and
accountability, but should also allow for and allot responsibility and benefit
of aid to all people affected by aid policies and practices. In other words,
aid must not only work, it must also be made answerable at national, inter-
national, and global levels so that it can be sourced and used and does not
dissipate. Poverty reduction efforts would benefit from financing strategies
aimed at establishing more integrated, sustainable responses to the pan-
demic that focus on greater development impact in line with the objectives
of the MDGs.
The application of the concept of global public goods to the global AIDS
response is founded on the thinking that development cooperation between
rich and poor countries, as agreed in Busan, is imperative in the context
of the global aid architecture. The argument is that external transfers and
subsidies from richer countries to fund AIDS responses in resource-poor
countries are justified primarily because the pandemic continues to be seen
as a global threat: the lack of action can have consequences for all; there-
fore it is in all countries’ interests to act collectively against the pandemic.
Mobilizing international support and financial resources to prevent a truly
global pandemic is seen as a cost-effective investment on the part of rich
countries, while at the same time mobilization could yield benefits to those
poor countries facing deep and intractable development challenges because
of the impact of HIV/AIDS. Yet, as argued above, country buy-in, both polit-
ically and financially, and within the framework of the evolving global-aid
architecture, should help to secure country ownership and cement mutual
accountability as is necessary for the sustainability of effective interventions
in the global AIDS response.

Notes
1. SSA, with just over 12 percent of the world’s population, accounted for about
two-thirds of the total global HIV infections at the end of 2009.
2. See WHO, UNAIDS, and UNICEF (2011b).
3. The Global Fund was established in response to a call from the UN Secretary-
General Kofi Annan at the UN General Assembly Special Session on HIV/AIDS in
2001.
4. All figures in US dollars.
5. This trend is discussed and analyzed in greater detail in Lisk (2010).
6. See Kindornay and Samy (Chapter 11, this volume) for an overview of this
evolution.
7. The Paris Declaration included a set of 12 indicators to provide a measurable and
evidence-based way to track progress, and set out targets for 12 of these indicators
for the year 2010.
 Franklyn Lisk et al. 135

8. The ‘Three Ones’ refer to: ‘One agreed HIV/AIDS Action Framework that pro-
vides the basis for coordinating the work of all partners; One National AIDS
Coordinating Authority, with a broad based multi-sector mandate; One agreed
country level Monitoring and Evaluation System’. See UNAIDS (2004).
9. This is elaborated in the declaration that emerged from HLF4, the ‘Busan
Partnership for Effective Development Co-operation’ (HLF4 2011).
10. The partner paradigm shift in development cooperation, implicit in the ‘shared
responsibility with mutual accountability’ model, is presented in a recent post-
Busan UNAIDS publication (UNAIDS 2012).
11. Botswana, Côte d’Ivoire, Ethiopia, Kenya, Mozambique, Namibia, Nigeria,
Rwanda, South Africa, Tanzania, Uganda, and Zambia from Africa; Guyana and
Haiti in the Caribbean; and Vietnam in Asia.
12. The quest of development effectiveness, as distinct from aid effectiveness, has
elicited lively debates in institutional and academic circles on both conceptual
and operational aspects of what has been described as a new aid landscape. For
a useful discussion, see Rampa and Bilal (2011). A decade earlier, the World Bank
addressed this issue in a paper prepared for the UN International Conference on
Financing for Development, Monterrey, Mexico, March 12–18, 2002 (World Bank
2002).
13. For an analysis of the link between HIV/AIDS and poverty, see Lisk and Cohen
(2007).
14. There were six original co-sponsors – WHO, UNICEF, UNDP, UNFPA, UNESCO,
and the World Bank – which have increased to ten today with the addition of
UNODC, ILO, UNHCR, and WFP over time.
15. See UNAIDS (2006).
16. For a proposal on strategies for making this UNAIDS model operational, see Quin
and Serwadda (2011), UNAIDS (2011a, 2011c).
17. See, for example, England (2006, 2007, 2008), Garrett (2007), and Chin (2008).
18. The Global Fund alone announced a shortfall of $13 billion in resource mobi-
lization for its Round 10 commitments. In December 2011, the fund took a
decision to suspend all disbursement until 2014 due to lack of donor funds
already pledged.
19. A useful earlier discussion of this tenet could be found in Collier and Dollar
(2001).
20. The link between investment in health and overall development is discussed
critically in Ashraf et al. (2008).
21. See Berthelemy (2006), Bourquinon and Sundberg (2007), and Easterly (2007).
22. See, among others, the Annual Letter of the Bill and Melinda Gates Foundation
(Bill and Melinda Gates Foundation 2011) and Donnelly (2010).

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March 12–18, 2002.
6
The Role of the Third Sector
as Partners in the Development
Aid System
David Felsen and Hany Besada

Introduction

Non-governmental organizations (NGOs) and foundations involved in

development aid have become more sophisticated and complex in recent
years. They have learned to broaden their networks and strengthen cooper-
ation in ways that increase their influence with governments, multilateral
institutions, the private sector, and civil society in both developed and
developing countries. At the same time, NGOs and foundations, an integral
part of the third sector,1 still face growing pressures to achieve more con-
crete results in the area of aid effectiveness and continue to draw criticism
concerning their transparency and accountability.
Governments and multilateral institutions have raised questions regard-
ing NGO operational transparency and organizational accountability. Other
critics argue that NGOs are increasingly being co-opted by neoliberal ideas
and institutions and reflect these views and policies. They are seen as losing
touch with their original objectives. Despite these concerns, the third sector
was increasingly viewed by governments and multilateral agencies as part-
ners and as agents in the development aid sector. As Bräutigam and Segarra
(2007, 173) note, it was an era where ‘governments and NGOs [learned] that
partnerships can be useful, and NGOs (in particular) learn how to engage
the government officials as professionals’.
The constellation of NGOs and foundations remains highly fractured and
diverse. It is a web of actors that possess multiple goals and have a myriad
of organizational structures. Nevertheless, there are discernible NGO struc-
tures and processes, areas of specialization, and forms of collaboration with
other agents in the development aid sphere that can be identified. Since
there has not been a great deal of attention paid to this in the existing
academic literature, it is useful here to examine and elucidate the differ-
ent ways collaboration occurs among NGOs and between NGOs and other
stakeholders.

138
 David Felsen and Hany Besada 139

These forms of collaboration have changed over time as NGOs and foun-
dations have become more integrated into complex global partnerships.
Understanding the nature of these forms of collaboration and partnerships
can contribute to better understandings of development aid processes. Such
knowledge can lead to improvements in development results, specifically in
increasing aid effectiveness, reducing the overlap of multilateral aid efforts,
eliminating outdated programs, and responding to changing economic and
geopolitical realities.
This chapter examines the emergence of NGOs as collaborative part-
ners in international development, predominately in the last two decades.
The discussion pays particular attention to how NGOs work with govern-
ments, multilateral organizations, and other stakeholders on development
aid issues. The chapter further proposes a new typology of NGO collabo-
ration which describes three forms of engagement in the development aid
system based on how NGOs work in partnerships with other development
stakeholders and what areas specific NGOs seek to champion.
The chapter categorizes development sector NGOs into three groups:
capacity champions, policy champions, and grassroots champions. The designa-
tions describe how NGOs engage in the development aid system. Following a
brief discussion that unpacks the typology in greater detail, the chapter then
turns to several case studies to illustrate the typology in practice. The chapter
concludes by offering policy recommendations on the new typology and
how policymakers and scholars might build stronger strategic partnerships
involving NGOs in the development sector to improve aid effectiveness.

Emergence of the third sector in the development aid system

Over the years the third sector, made up of NGOs, non-profit organizations
(NPOs) and foundations, has been the focus of somewhat less scholarly
attention relative to the public and private sectors. This is in part due to
the poorly understood relationship that exists between this sector, on the
one hand, and governments, multilateral development organizations, and
private sector actors, on the other. That is not to say that there has been a
complete absence of work on different elements that make of the third sec-
tor. For instance, social scientists have increasingly focused their attention
on the role of civil society and its institutions (Florini 2000). Yet in general
there has existed a lack of conceptual clarity surrounding the idea of the
third sector.
Organized development aid relief work by NGOs dates back well over a
century. For example, missionary organizations have traditionally provided
material assistance to victims of conflict. In addition to their involvement
in improving labor conditions in Western Europe, organizations such as the
International Labour Organization were involved in humanitarian relief for
the victims of war and refugees in the early twentieth century, while many
140 Cases in Multilateral Development Cooperation

NGOs were involved in emergency activities during the two world wars. Offi-
cial recognition of NGOs in the postwar era came with the founding of the
United Nations (UN) in 1945. Article 71 of the UN Charter acknowledged
the important role that NGOs play as legitimate representatives of civil soci-
ety and sanctioned the UN’s Economic and Social Council to support NGOs
in certain cases (Otto 1996).
Despite recognition in the UN’s founding document, NGOs did not have
significant standing in the global arena since governments and multilateral
institutions remained the key actors in the development aid system. By the
1950s and 1960s NGOs had emerged as representatives of the interests and
aspirations of civil societies predominantly in the global South. However,
they had also become caught up in the politics and ideological rivalries of the
Cold War era. Governments’ development aid policies were often crafted to
suit national interests, particularly those related to enhancing regional influ-
ence. NGOs were typically funded by governments as vehicles to achieve
specific political or ideological ends (Fowler 2000).
The onset of détente in the 1970s resulted in a renewed commitment by
governments to development for its own sake. With diminished East–West
tensions, the development aid sector and the constellation of development
sector NGOs achieved a higher global profile. Unsurprisingly, the growing
interest in NGOs coincided with the rise of new social movements that
championed previously ignored groups in both the North and South. The
developed world began paying more attention to issues such as gender,
race, indigenous rights, environmental protection, sustainable development,
participatory democracy, and questions of social and economic justice (Otto
1996, 112).
Just as national governments’ interests grew, however, their capacity to
deliver programs was undercut in the 1980s by the new economic ideology
of free-market liberalism and deficit-cutting, privatization imperatives.

The changing development aid system in the 1980s and 1990s

Growing acceptance of free-market principles across the globe meant curtail-

ing the role of the state. Over the course of the next 30 years, government
agencies, programs, and services were cut or privatized outright, while fewer
government resources were available to fund public sector agencies and
external organizations involved in development (Collier and Dollar 2004).
With the logic of markets being extended to governments in the neo-liberal
era (Ferguson and Gupta 2002, 989; Ferguson 2006), the shrinking public
sector sought to transfer functions to non-state actors. This in turn opened
up opportunities for NGOs, with some taking up activities that were no
longer being delivered by the state. Additionally, the growing influence of
the private sector offered new collaborative opportunities between NGOs
and the private sector.
 David Felsen and Hany Besada 141

Alongside the shift in economic ideas was a concurrent change in geopol-

itics. During the 1980s East–West tensions eased, the Cold War ended,
democratic transitions occurred across the globe, and new democratic polit-
ical systems emerged. The ‘third wave’ of democratization was taking place
across southern and eastern Europe and Latin America throughout the 1980s
(Huntington 1991). Ultimately the fall of the Berlin Wall in 1989 and the dis-
solution of the Soviet Union two years later consolidated the push toward
the global dissemination of democratic values and free-market principles.
In addition to signaling a de facto victory for the ideologies of the West,
the collapse of communism in Eastern Europe and the Soviet Union also
prompted renewed interest and activism in the areas of human rights and
individual freedoms, particularly by NGOs connected to these issues.
A third phenomenon, which cannot be separated from the economic and
political developments of the period, was the growing diffusion of new tech-
nologies, specifically information and communications technologies (ICTs),
in the 1980s and 1990s. The rise of affordable personal computers, the
Internet, and other associated technologies complemented and hastened
globalization processes from the mid-1990s onwards. ICTs fostered more
efficient markets and more rapid financial flows. They also facilitated faster
communication and dissemination of information and ideas. In particular,
ICTs helped propagate ideas about free markets and democratic institu-
tions. They also encouraged civil society representatives from around the
world to demand greater political freedom and socio-economic reforms.
A by-product of civil society empowerment, however, was the strengthen-
ing of grassroots civil society organizations in developing countries, and the
global proliferation of NGOs and foundations.
Against the backdrop of shrinking states, strengthening markets, and new
ICTs, NGOs successfully broadened their engagement in new policy areas
and activities. For many years they had been viewed largely as critics of
market liberalization policies advocated by governments of developed coun-
tries and the multilateral institutions that strongly represented them, yet
by the mid-1980s NGOs were increasingly engaging in cooperation and dia-
log with governments and multilateral institutions such as the World Bank
(Bräutigam and Segarra 2007).
As a result, while funding for government agencies responsible for devel-
opment aid declined, governments increasingly turned to NGOs which
became acknowledged as collaborative partners that could assist in imple-
menting programs and services. Thus the third sector gradually saw greater
interaction and cooperation between itself, donor governments, and multi-
lateral institutions.
Furthermore, the third sector was also presented with new opportunities
by the private sector. It broadened its sources of funding support to include
multilateral institutions and the private sector, in addition to government
(Kindornay and Besada 2011). This trend reflected what was occurring
142 Cases in Multilateral Development Cooperation

among firms. The private sector’s new focus on corporate social respon-
sibility (CSR) – and its specific commitment to social and environmental
programs that aimed to improve communities and society – created new
funding opportunities for NGOs.
As the era of globalization unfolded, the third sector gradually became
increasingly capable of navigating its way through the vicissitudes of gov-
ernment and corporate politics. It could no longer be simply considered to
be composed of organizations merely equipped to deal exclusively with the
moral sides of their missions (Tvedt 2002).

NGOs as preferred development vehicles

in the globalization era

In the late 1990s, international NGOs became preferred vehicles for develop-
ment aid. These years saw a rapid rise of ever-better financed NGOs (Ronalds
2010). NGOs’ new circumstances coincided with growing taxpayer pres-
sure in donor countries for governments to show results for money being
spent. As Fowler (2000, 590) notes, NGOs were seen as part of govern-
ments’ plans to reach their objectives: ‘[NGOs’] contribution is seen to lie
in an, ostensibly distinct, practice in terms of direct operations and pol-
icy 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’. As a result, NGOs enjoyed
increasing access to policymakers of national governments and multilat-
eral institutions that cooperated with governments. Northern governments
channeled more and more development aid through NGOs largely as a result
of NGOs’ growing reputation for effectiveness but also increasingly owing
to the ineffectiveness of Southern governments in program implementa-
tion. In many cases, NGOs displaced government development agencies
in several areas of official development assistance. By the 1990s they had
become crucial to development aid efforts (Carroll 1992; Charlton and May
1995, 237).
The clout of the third sector among multilateral institutions grew as well.
Many NGOs and foundations were becoming increasingly influential in
global development decision making, inspiring a focus on new social cate-
gories and alternative forms of development. For instance, by 1993 ECOSOC
had established an open-ended working group to deal with the limitations
of Article 71 of the UN Charter in order to strengthen consultative and
participatory arrangements with NGOs and to introduce more coherent rules
for NGO engagement in UN-organized groups and conferences (Otto 1996,
107). NGOs received overt political backing from the UN leadership, includ-
ing former Secretary-General Kofi Annan, who thanked NGOs for being the
‘conscience of humanity’ (Tvedt 2002, 363), and former Secretary-General
Boutros Boutros-Ghali, who in 1995 stated that
 David Felsen and Hany Besada 143

[n]on-government organizations are a basic form of popular representation

in the present-day world. Their participation in international relations
is, in a way, a guarantee of the political legitimacy of those interna-
tional organizations. It is therefore not surprising that in a short space of
time we have witnessed the emergence of many new non-governmental
organizations.
(Kamat 2004, 162–3)

Similarly, CSR initiatives by private firms received more focus and more cor-
porate funding. In particular, there was a rise in partnerships in the area of
environmental sustainability (Seitanidi and Crane 2009). Greater attention
was paid to the relationship between the third sector and the private sector,
with one scholar noting that ‘non-governmental organizations and corpo-
rations are increasingly engaging each other in recognition that shareholder
and societal value are intrinsically linked’ (Loza 2004, 297).
The growing influence of NGOs with governments, multilateral institu-
tions, and the private sector was associated with increased professionalism
in these organizations (Ronalds 2010). They learned from public and private
sector practices in the spheres of organizational culture, human resource
staffing, fundraising, and advocacy. The choice of collaborations became
as much a strategic question as an ideological question, while the relation-
ships with donors and recipients became more clearly delineated. Criticism
of NGOs and foundations for their perceived lack of transparency and
democratic accountability notwithstanding, the role of the third sector had
become significant by the turn of the century.
In sum, NGOs had become more central to the international development
aid system. NGOs increasingly took the lead in building collaborative rela-
tionships with governments, multilateral institutions, the private sector, and
other stakeholders to achieve their objectives. The third sector successfully
adapted within an environment characterized by limited government finan-
cial commitments to search for broad support and funds while advocating
more forcefully for policy changes. NGOs also assumed new roles along-
side government and multilateral institutions with regard to aid and service
delivery in developing countries (Fowler 2000).

Conceptualizing NGO development partnerships

in the twenty-first century

The development aid system has evolved considerably in the last decade,
not least because globalization has resulted in the ‘rise of the rest’ (Amsden
2001) and the emergence of Southern donor countries and NGOs. A more
networked and interconnected world has produced NGOs that communicate
through new channels with national governments and multilateral institu-
tions. NGOs and foundations are now more integral to development aid
144 Cases in Multilateral Development Cooperation

efforts, while Northern governments grapple with new sets of issues; notably
terrorism, international security challenges, and debt reduction.
Today, NGOs, while continuing to remain responsive to donors and fund-
ing constraints, have gained a greater degree of operational autonomy
in the development aid sphere with independent agendas and missions.
As Sangeeta Kamat (2004, 155) notes:

If the twentieth century represented ‘top-down’ approach to social and

economic growth, then with the dawn of the new century we have
entered a new era of ‘bottom up’ growth and social improvement. In this
new model, national and international non-governmental organizations
(NGOs) are the primary catalysts of change rather than experts from large
bureaucratic institutions (including the state). NGOs have been identified
as the preeminent, if not sole, organizational forms that can implement
the global commitment to ‘bottom up’ development.

Patrick Develtere and Tom De Bruyn (2009) attempt to establish descriptive

categories that would take a more complex, multifaceted and grassroots-
oriented NGO sphere of activity into account in the twenty-first century. The
scholars (2009, 913) describe a new landscape of NGOs in which there are
four ‘pillars’ of development. Of these four, the first three are familiar to prac-
titioners and scholars: (1) donor governments involved in bilateral aid and
cooperation; (2) multilateral agencies involved in development – notably the
UN system and World Bank as well as other large intergovernmental bodies;
and (3) the traditional network of large, well-established NGOs (Develtere
and De Bruyn 2009, 912). The fourth pillar identified by Develtere and
De Bruyn is an eclectic variety of different agencies and individuals with
varying ideologies, approaches, and modes of intervention, but with com-
mon norms, practices, and codes of conduct and a shared language that
is specific to development. This pillar includes non-traditional government
departments and agencies (such those responsible for education or trade
with new development aid-related mandates), trade unions, social move-
ments, foundations, migrant organizations, academic institutions, famous
actors, musicians, and other celebrities, wealthy ‘do-it-yourself’ activists, and
retired politicians (Develtere and De Bruyn 2009, 914). This variety repre-
sents a large swath of what may be considered new elements of the third
sector.
These scholars (2009, 914) precisely account for what makes this fourth
pillar distinct:

They do not stem from North-South relations but are children of a post-
modern story of globalisation and international networking, even of
individualization. They are not so much concerned with the redistribu-
tion of wealth between the rich North and the poor South or with the
 David Felsen and Hany Besada 145

creation of a new world order. They want to redefine and adapt their
organisation, institution, or life to the new morphology and dynamics
of a globalising society. Already existing work patterns, experiences, and
ambitions determine what these organisations and individuals want to
do on the global scene.

While Develtere and De Bruyn have astutely identified many new par-
ticipants in the development aid system in the twenty-first century, the
fourth pillar categorization is too broad to be useful for understanding dif-
ferent forms of NGO engagement and in identifying how these different
individuals and organizations collaborate and fit into overall development
efforts.
This chapter offers a more parsimonious typology of NGO engagement
in the development aid system. The categories developed here are meant
to facilitate a better understanding of the different roles and forms of
engagement of NGOs in the development arena as well as the potential
relationships and collaborations of NGOs with other stakeholders such as
governments, multilateral institutions, and the private sector. Three cat-
egories of NGOs are identified: capacity champions, policy champions, and
grassroots champions. This typology is of heuristic value to help scholars and
practitioners grasp the different forms of NGO engagement, though from
the outset it is acknowledged that many NGOs may fit into more than one
category. The following section unpacks the new typology.

Conceptualizing NGOs: A typology of NGO engagement

Capacity champion NGOs and foundations

Capacity champion NGOs and foundations are organizations that have the
capacity to muster resources to initiate and carry out large-scale development
projects in partnership with other stakeholders. Important capacity champi-
ons include large organizations such as the Bill & Melinda Gates Foundation,
the Aga Khan Foundation, and the Global Fund to Fight AIDS, Tuberculosis
and Malaria.
These organizations are generally headquartered in developed countries,
though in some cases they are headquartered in larger developing countries –
and this may be the trend going forward in the twenty-first century.
Capacity champions marshal resources and establish partnerships to carry
out large-scale projects principally in cooperation with Northern govern-
ment agencies, multilateral institutions, and private sector firms. They are
skilled at raising funds, launching public relations campaigns to attract
widespread attention, and networking across sectors and countries. They
possess expertise in logistics and organizational management and usually
promote and work on highly visible causes – such as HIV/AIDS, malaria, and
146 Cases in Multilateral Development Cooperation

tuberculosis – that can achieve measurable and concrete results in the short
term so they can demonstrate specific achievements to partner stakeholders
and donors.
Capacity champions have proven particularly adept at taking the lead in
development projects in recent years. Foundations have successfully part-
nered with governments and multilateral institutions; generating interest in
their projects and obtaining high-profile endorsements from celebrities for
their causes or missions. Capacity champions may both receive funding from
multilateral institutions or themselves fund specific initiatives of these insti-
tutions. They have engaged in successful collaborations with private sector
firms and have partnered with firms’ CSR initiatives (Seitanidi and Crane
2009). NGO–firm partnerships offer firms the opportunity to tell sharehold-
ers that they are giving back to society. Such collaborations also encourage
NGOs to develop more specific project metrics and measures that can be
communicated to stakeholders and the world.

Policy champion NGOs

Policy champion NGOs effectively engage in policy processes at local,
national, and international levels to influence or change laws, treaties,
norms of behavior, rules, or values. These changes usually occur over the
medium term. Policy champions tend to focus their operational efforts on
the policy process. Like capacity champions, they are primarily headquar-
tered in developed countries in the North. These NGOs are skilled at what
James Ron et al. (2005, 557) have termed ‘information politics’ in domestic
and international arenas.
Policy champions attempt to influence national and global elites. They
tend to operate mostly behind the scenes by liaising with national legisla-
tors, high-level government functionaries, and the leadership of multilateral
institutions such as the UN, seeking policy changes over the medium
term. Their influence may help bring about new international treaties or
agreements or new widely accepted rules or norms of behavior.
Policy champion NGOs often focus on rights-based issues in develop-
ment, social justice, transparency, anti-corruption efforts, and basic free-
doms. They partner less with the private sector than do capacity champion
NGOs, while collaborating more effectively with legislators, multilateral
institution decision-makers, think tanks, academic institutions, and other
policy communities. Moreover, they also attract funding from governments,
multilateral institutions, and private sector firms and individuals.

Grassroots champion NGOs

Grassroots champion NGOs primarily focus on directing development aid
efforts on the ground. They aim to create programs and services that are
sustainable over the longer term. These organizations may be headquar-
tered either in the North or South. Civil society organizations and other
local stakeholders can be considered grassroots champions. They often grow
 David Felsen and Hany Besada 147

out of local initiatives on the ground and focus attention on direct aid
efforts and the creation of an environment in which health, education, and
poverty-reduction programs and services can be delivered. The objective is
for these programs and services to become self-sustaining. Hence, unlike
capacity and policy champions, grassroots champions largely concentrate
on the long-term horizon.
Grassroots champions operate to transform communities in developing
countries. They seek to establish permanent networks within communities
to preserve progressive changes, and are often more effective than capacity
or policy champions in building coalitions with local stakeholders in civil
societies. These NGOs also tend to receive support and engage collabora-
tively in projects with multilateral institutions. Nevertheless, they are often
less effective in influencing the policy direction and priorities of such institu-
tions. The same can be said of their efficacy vis-à-vis national governments.
Overall, grassroots champions are less influential than capacity and policy
champions in the development aid sphere. They also have less of an impact
on national governments, multilateral institutions, and large (often capacity
champion) NGOs for funding. Lastly, grassroots champions have fewer direct
interactions with the private sector than do capacity and policy champions.

Cases of NGO engagement in development aid

This typology of NGO engagement can help to shed light on different forms
of interactions between NGOs and governments, multilateral institutions,
and other stakeholders. The form of engagement depends upon the type of
NGO involved. For instance, capacity champions will possess the organiza-
tional muscle to initiate, raise awareness of, or take the lead in major global
development initiatives. Policy champions may have the political skills to
bring together coalitions to achieve specific changes in domestic legislation
or international norms. The Millennium Development Goals, to name but
one example, owe much to the behind-the-scenes work of policy champion
NGOs. Finally, grassroots champions have tenaciously constructed bridges
between Northern institutions and actors and Southern civil society actors
and have focused on needs that would have remained unaddressed by gov-
ernments and other stakeholders. The following section presents several
brief cases of NGOs that fall into the different categories described above.
As noted earlier, many NGOs may be classified under more than one rubric,
however the heuristic value in identifying categories lies in the fact that
the new typology can guide scholars and practitioners when they deploy
resources and connect with NGOs to advance program or service delivery
efforts.

Bill & Melinda Gates Foundation as capacity champion

The Bill & Melinda Gates Foundation best exemplifies a capacity cham-
pion NGO. As the largest philanthropic grant-making organization in the
148 Cases in Multilateral Development Cooperation

world, the Gates Foundation supports poverty alleviation and the improve-
ment of health in developing countries. It also supports the improvement of
education in the US. Well-funded and robust, the Gates Foundation has kick-
started various causes, such as the eradication of polio and malaria among
other development projects. Owing to its resource capacity, it has been able
to take up riskier and more ambitious start-up operations.
The organization’s capacity enables it to both receive large-scale funding
and make sizeable expenditures on projects. Since its inception in 1994, it
has released a total of $25.36 billion2 in aid disbursements. In 2010 alone,
it released $2.6 billion in grants and charitable contributions to more than
100 countries (Bill & Melinda Gates Foundation 2011b). Whereas in decades
past NGOs and foundations were dependent principally on support from
governments and multilateral institutions, the Gates Foundation illustrates
the dramatic increase in the influence of the third sector in the development
arena. The Gates Foundation has provided grants to multilateral agencies,
such as the UN’s World Food Programme. It has also funded historically
important organizations such as Rotary International, the United Way, and
the United Negro College Fund (Bill & Melinda Gates Foundation 2011b).
The Gates Foundation is an example of a third sector actor possessing the
capacity to step up to provide funding in areas once carried out by gov-
ernments of developed countries. As a capacity champion, it successfully
networks with governments, multilateral institutions, and other charitable
foundations to initiate and promote large-scale causes. Its flagship Global
Development Program partners with the Rockefeller Foundation, while
prominent individuals such as former UN Secretary-General Kofi Annan sup-
port the Gates Foundation’s African-led efforts to revitalize and improve
agricultural techniques in Africa (Bill & Melinda Gates Foundation 2011a).

Aga Khan Foundation Canada as capacity champion

Aga Khan Foundation Canada (AKFC), an agency of the Aga Khan Devel-
opment Network, is also illustrative of a capacity champion NGO. This
development-focused organization links Canada’s myriad development-
oriented organizations and experts with counterparts elsewhere in the world.
AKFC has successfully raised funds for four core program areas: health, edu-
cation, rural development, and NGO capacity building. Additionally, AKFC
has launched initiatives related to microfinance and disaster reduction.
One of the central pillars of AKFC is the Aga Khan Fund for Economic
Development. The project companies of this for-profit agency generated
$2.3 billion in revenue in 2010 and reinvested surpluses in other devel-
opment projects (AKDN 2011). Like other capacity champion NGOs, AKFC
succeeds in partnering not only with executive branch agencies of devel-
oped countries’ governments but also the private sector. For instance, it
has connected to and received support from agencies like the Canadian
International Development Agency and important corporate donors such
 David Felsen and Hany Besada 149

as the MasterCard Foundation and Scotiabank. This capacity champion’s

strategic objective is to kick-start high-profile projects and bring in relevant
government, multilateral, and corporate stakeholders for support.

Human rights watch as policy champion

Policy champion NGOs tend to have a rights-based focus and are usually
able to successfully navigate policy processes nationally and internationally.
With a focus on medium-term policy changes, policy champions’ objectives
are less impacted than those of capacity champions by the sudden increase
or decrease in funding. Institutional characteristics in recipient countries are
relevant in determining the success of policy programs (Collier and Dollar
2004, 256).
Human Rights Watch (HRW) is one of the world’s foremost policy cham-
pion NGOs. It has on staff attorneys, journalists, academics, and other
experts who promote the protection of human rights within the specific
context of a country’s development. On the one hand, HRW uses a naming
and shaming approach, publishing frequent reports and briefings on human
rights conditions to raise awareness of violations of international human-
itarian law. On the other hand, as a policy champion it works through
numerous behind-the-scenes policy channels to influence legislation and
pursue human rights objectives. It lobbies for intervention during crises and
presses for changes to policies, laws, norms of behavior, and international
treaties.
HRW is conscious of the need to keep at arm’s length the executive
branch agencies of governments in developed and developing countries
alike. It engages directly with legislators, UN decision-makers, other mul-
tilateral agencies, international courts, regional bodies, corporations, and
the media. HRW’s role in international development is to encourage greater
respect for the rule of law within countries, and to promote respect for
international law at the global level.
HRW has achieved numerous successes in terms of changes to policies and
norms and in the development of international treaties. In 1992, HRW was
a founding member of the International Campaign to Ban Landmines, the
coalition of NGOs that – together with its founding coordinator – jointly
received the 1997 Nobel Peace Prize for helping bring about the Mine Ban
Treaty. HRW also helped develop the 2008 Convention on Cluster Munitions
that banned such weapons. HRW has been instrumental in raising awareness
about human rights violations and bringing these to the attention of the
International Criminal Court (HRW 2011).

Coalition for the International Criminal Court as policy champion

The Coalition for the International Criminal Court (CICC) is also a pol-
icy champion NGO. It engages in activities similar to those of capacity
and grassroots champions, though its main focus is advocacy and the
150 Cases in Multilateral Development Cooperation

strengthening of international institutions in the realm of justice, specif-

ically as regards international cooperation with the International Criminal
Court. CICC is an umbrella NGO made up of 2500 civil society organizations
representing 150 countries. It lobbies for domestic legislation that increases
respect for human rights and strengthens justice for victims of abuses in
areas such as genocide and crimes against humanity. CICC seeks to enhance
the impact of international law and behavioral norms. It was instrumental
in working with domestic legislators and multilateral institutions to estab-
lish the ICC and has been a driving force behind the international lobbying
campaign to implement relevant statutes (CICC 2011b).
While capacity champions have succeeded in forging ties with private-
sector firms, the CICC has successfully built relationships with like-minded
NGOs, foundations, governments, legislators, and multilateral institution
decision-makers that seek to promote policy changes to strengthen inter-
national norms. For instance, CICC has partnered with the Open Society
Foundations, the Ford Foundation, and the European Union. Additionally,
it collaborates with supportive governments and their legislators to facilitate
international cooperation on matters involving international treaties and
domestic legislation. Like other policy champions that engage in ‘informa-
tion politics’ (Ron, Ramos, and Rodgers 2005), the CICC operates informa-
tion campaigns and provides advice and support for NGOs and governments
as part of public outreach strategies to influence stakeholders (CICC 2011a).

BRAC as grassroots champion

Grassroots champion NGOs are most closely connected to local communi-
ties in recipient countries. Since they operate with less resources, they are
often less visible and have less influence at the local and global levels. Yet
they are essential to bridging the developed and developing worlds. These
NGOs are also best placed to see how development projects are progress-
ing on the ground and advise on modifications to programs and services.
As scholars and practitioners frequently note, problems arising from aid pro-
grams often have less to do with the amount of development aid made
available and more to do with the appropriate targeting of aid to achieve
development objectives (Thiele et al. 2007, 622).
BRAC – formerly known as the Bangladesh Rehabilitation Assistance Com-
mittee, then as the Bangladesh Rural Advancement Committee, and now
just by the acronym – is one of the most visible and successful grassroots
champion NGOs. Founded in 1972 in Bangladesh following the country’s
1971 War of Liberation, BRAC implements long-term community devel-
opment initiatives across Asia, Africa, and the Americas. BRAC’s mission
is to alleviate extreme poverty and promote social justice through large-
scale economic and social programs. BRAC employs over 120,000 staff, most
of whom are women, in development projects serving 100 million people
worldwide. Specific projects include rural economic development, women’s
 David Felsen and Hany Besada 151

education, human rights, public health, social development, disaster relief,

and dissemination of information technology (BRAC 2011b).
BRAC aims to transform individuals, groups, and societies over the long
run from aid recipients to empowered and self-sustaining agents. Its opera-
tions build bridges between civil societies across regions as well as between
civil societies and formal institutions. The organization addresses poverty
systematically and comprehensively rather than the symptoms of poverty.
For instance, it is involved in long-term life skills training for adolescents in
order to meet development needs (BRAC 2011a). As a grassroots champion
NGO, BRAC is extremely well placed for development-aid program and ser-
vice delivery, which makes it an appealing funding recipient and partner for
capacity NGOs, donor governments, and multilateral institutions.

Churches Health Association of Zambia as grassroots champion

The Churches Health Association of Zambia (CHAZ) is another example of
a grassroots champion NGO. Created in 1970, it is an umbrella organiza-
tion for faith-based health institutions in Zambia. It operates primarily in
Zambia’s rural districts where government health care provision is absent.
Hence, the organization forms a nexus between civil society and official
institutions in the health sector. CHAZ focuses on mitigating the socio-
economic impact of the HIV/AIDS epidemic in rural Zambia and supports
prevention measures. Through church health facilities, it offers testing,
counseling, support, prevention programs, and orphan support. It accounts
for about 30 percent of the country’s health services and programs (Embassy
of the Kingdom of the Netherlands in Lusaka, Zambia 2011).
CHAZ partners effectively with local organizations and broader civil soci-
ety representatives in efforts to remedy the negative consequences of a vast
epidemic. It also connects civil society to the national government, other
capacity and policy champion NGOs, donor governments, and multilateral
institutions that can provide support. For instance, CHAZ is a primary recip-
ient of funds from the Global Fund to Fight AIDS, Tuberculosis and Malaria,
which it in turn disburses to faith-based organizations (CHAZ 2011). While it
does not possess the resources of larger Northern capacity and policy cham-
pions, CHAZ is well-rooted in Zambian society and is able to attract funding
because of its objectives and commitment to the long-term improvement of
quality of life for HIV-infected Zambians.

Conclusion

The constellation of NGOs and foundations involved in development will

continue to evolve as the twenty-first century progresses. NGOs’ organiza-
tional structures and forms of engagement evidently differ across countries,
sectors, issues, and programs. The new typology proposed in this chapter
attempts to help make sense of this complex constellation. It identifies
152 Cases in Multilateral Development Cooperation

different categories of NGO engagement in the development aid system and

provides examples of each.
Better understanding NGO engagement is crucial since NGO effectiveness
in international development aid is impacted by the types of collabora-
tive relationships that are formed. For instance, some NGOs operate more
productively in the policy sphere with a medium-term agenda, while other
larger NGOs need to continue producing immediate and measurable results
and therefore want to be involved in highly publicized campaigns to help
sustain their funding base. Understanding different forms of NGO engage-
ment can help determine which stakeholder partnerships are appropriate for
realizing specific development aid projects.
In the development aid system of the twenty-first century, the partner-
ships formed between NGOs, governments, multilateral institutions, and
the private sector matter more than ever before. Development initiatives
cannot be left only to governments, the World Bank, or UN agencies.
The proliferation of third sector actors has modified – and in many ways
diluted – the influence of traditional development assistance organizations.
It is important to note that funding for traditional organizations has sig-
nificantly dropped since the end of the Cold War. In recent years, NGOs
and foundations have become development champions in a variety of dif-
ferent ways. Some, like the Gates Foundation, have achieved leadership
roles through sheer resource capacity. Rights-based groups have grown in
influence because their strong moral imperatives resonate across global civil
society. In contrast to earlier decades, third sector actors may themselves
be providing resources to governments and multilateral institutions for
development projects.
In the new millennium, NGOs and foundations have become increas-
ingly attractive as partners in development. All three categories of NGOs
experience fewer constraints on their actions and activities than govern-
ments or multilateral institutions. Capacity champions are able to bypass
traditional political and ideological obstacles to aid delivery, which have
complicated traditional development assistance in past years. Policy cham-
pions face fewer political or ideological hurdles in bringing to the fore new
policy proposals at the national and international levels. Grassroots cham-
pions face fewer political constraints on the ground in communities than
Southern government agencies or multilateral institutions and can offer
more tangible results to communities.
Furthermore, collaborative partnerships between NGOs and governments
can lead to productive and enduring relationships. For capacity and policy
champion NGOs, such relationships facilitate the pursuit of their orga-
nizational objectives. For grassroots champion NGOs, more collaborative
relationships increase prospects for more domestic resources and support.
The nature of collaboration between NGOs and the private sector is
also changing. NGOs have become effective partners for firms that seek
 David Felsen and Hany Besada 153

a presence in developing countries. Firms collaborating with NGOs gain

greater legitimacy, more customers, and more knowledge of cultural and
business practices. Involvement in the development of the South also fits
CSR missions of large multinational corporations from the North.
At the same time, NGOs benefit from these relationships by gaining access
to additional resources, new management techniques, publicity, and the pol-
icy arena. Such cross-sector collaboration is part of the changing landscape
of public–private, government–NGO, and NGO–private sector partnerships.3
Collaboration should be welcomed with a degree of caution, however, since
it risks compromising the integrity and goals of NGOs.
In short, greater NGO engagement with other stakeholders in the develop-
ment aid system has not occurred without important questions being raised.
There are questions about organizational accountability for development
projects and services. NGOs remain less accountable than other organiza-
tions, such as government agencies. There are serious concerns about the
transparency of NGOs and their potential for corruption and mismanage-
ment of resources. Such considerations have compelled observers to take
a closer look at the limitations and potential pitfalls of NGOs as collabo-
rative partners in development. As NGOs and foundations proliferate and
become larger and more influential in the twenty-first century, scholars
and practitioners need to gain an improved understanding of how they
can be better monitored for aid effectiveness and how these organizations
can be held to account when doubts are raised about project efficacy or
results.
A related area of concern is how the growth of NGO activity impacts
democracy, citizen engagement, and representation. NGOs have tradition-
ally been viewed as representatives of civil society, offering a voice to civic
groups, particularly those of the South. Yet the increasingly prominent role
of unelected NGOs raises questions about the representation function. For
some observers, NGOs have succeeded in becoming integrated components
of global governance processes, while for others they are ‘unelected and
unaccountable special-interest groups [which] disrupt global governance’
(The Economist 1999). Additionally, the rise of NGOs challenges other legit-
imate forms of civil society representation, such as labor unions, business
associations, and other groups that previously had influence over policy-
making processes. Thus, NGOs need to work more effectively with other
civil society representatives to improve challenges of representation and
responsiveness.
Other concerns have been raised about NGOs’ threats to the political
and financial legitimacy of established government agencies and multilat-
eral authorities at the national and international levels. The provision by
NGOs and foundations of alternative sources of funding and services has
mobilized marginalized groups that would have been neglected otherwise.
This has occurred at the cost of the legitimacy and authority of governments
154 Cases in Multilateral Development Cooperation

and multilateral institutions that had been established through consensual,

democratic, or other representative means.
An additional financial concern stemming from the rise of the third sector
is that NGOs’ activities may spur cash-constrained governments to pursue
further cuts to programs and services and thereby further undermine state
capacity to meet certain needs. Governments may try to bolster their posi-
tions by co-opting NGOs in certain circumstances and claiming credit for
their programs and services (Boulding and Gibson 2009). However, any
short-term bolstering of state legitimacy in service delivery could under-
mine medium- or longer-term legitimacy and risk future assistance from and
collaboration with NGOs and foundations.
Finally, there is concern that the growing collaboration between NGOs
and multilateral institutions may have undesired impacts on NGOs’ respon-
sibilities as representatives of civil society. Policymakers find that NGOs serve
as attractive alternatives to inefficient government agencies, which can be
plagued by corruption and controversial human rights records. This has
resulted in new funding opportunities for grassroots champion NGOs in par-
ticular, and in some cases, their integration with Northern donor agencies.
Nevertheless, this situation has also encouraged a shift in NGOs’ focus from a
traditional social mobilization function to a service delivery orientation. As a
result, some NGOs have increasingly depoliticized their activities and turned
away from traditional tasks, such as engaging in collective political action
and mobilizing the poor to participate in democratic processes. In other
words, greater integration has caused grassroots champion NGOs to become
less effective as agents of empowerment. This has depoliticized development,
weakened incentives for citizens to demand more of their governments, and
lessened incentives for governments to respond to citizens with poverty
reduction policies and programs (Perkin and Court 2005, 5). For Stephen
Smith and Michael Lipsky (1998), this shift has also encouraged a more uni-
form structure among NGOs, which threatens their inventiveness, creativity,
and uniqueness.
In sum, the typology proposed in this chapter has categorized different
forms of NGO engagement in an effort to help scholars and practitioners
better understand how NGOs participate in collaborative partnerships in the
development arena. Research also needs to continue exploring how the third
sector and governments, multilateral institutions, and the private sector
work together, and how NGOs can be best incorporated into contemporary
global governance structures.
One caveat for understanding the third sector and its role in the devel-
opment aid system requires an attention to nuance. NGOs have different
forms of engagement and varying time horizons in which to accomplish
their objectives. An evaluation of the effectiveness of policy champion
NGOs must use different metrics than an evaluation of capacity and
grassroots champion NGOs. Efforts should be directed toward establishing
 David Felsen and Hany Besada 155

more accurate methodologies to evaluate different forms of engagement in

order to provide a clearer picture of NGOs’ effectiveness. To offer but one
example, NGOs’ advocacy and networking activities, though widely praised,
are under-studied areas of research. Large gaps in knowledge of effectiveness
remain for a range of NGO activities.
As a result, further research on non-state collaboration as a key compo-
nent of the development aid system will clarify the challenges posed by the
third sector. Three issues in particular warrant future consideration. First, it
is necessary to more closely examine NGO coordination and collaboration
with governments, multilateral institutions, the private sector, civil society
groups, and other stakeholders in order to reduce the problem of overlap
in programs and services. Second, greater understanding of collaboration
between the North’s third sector actors and the South’s actors responsi-
ble for service delivery is needed as such knowledge could help reduce
funding uncertainty and create incentives to pursue longer-term projects
that produce sustainable capacity improvements. Third, improved research
methodologies are required to evaluate goals and forms of engagement of
active NGOs.
Going forward, better understanding of the third sector as central agents
in the development aid system is required on the part of scholars and
practitioners. What needs to be grasped more fully are the contexts and com-
plexities of NGOs and foundations, their objectives, missions, and methods,
how they interact and influence other development actors and institu-
tions, and the opportunities and challenges posed by their operations. This
chapter’s typology is meant to contribute to the broader discussion of the
third sector’s growing role.

Notes
1. The concept of the third sector can be traced to the 1970s, when multilateral coop-
eration was embraced by Northern governments. During this period, actors from
the private sector and the constellation of non-governmental/non-profit entities
were increasingly included in decision-making processes. See, for example, Etzioni
(1973) and Bell (1973).
2. All figures in US dollars.
3. See, for instance, Rahman (2006).

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7
Canada’s Fraying Commitment
to Multilateral Development
Cooperation
Stephen Brown and Michael Olender

Introduction

Faced with the simultaneous challenges of financial, environmental, and

food crises, as well as the growing power of Southern countries, the multi-
lateral development system has not yet adapted to the emerging twenty-first
century global development challenges – or rather the states that constitute
the system have not yet taken the steps to renew it. On the contrary, Western
countries’ support for multilateral development cooperation declined in the
2000s (OECD 2011, 5, 26; Picciotto 2012, 64). Multilateralism has become
‘frayed [at] the edges if not the core’ (Leipziger 2012, 17). While Canada is a
relatively small player in global aid, it has traditionally been engaged within
institutions and committed to the principles and practice of multilateralism.
That commitment, however, has – like those of Canada’s counterparts – been
declining. A closer look at the Canadian case illustrates the new shapes that
multilateral development cooperation is taking.
This chapter analyzes the evolving place of multilateralism in Canada’s
development cooperation, focusing primarily on the 2000–10 period. It seeks
not only to identify specific trends but also to understand the dynam-
ics at play in three important issue areas: maternal, newborn, and child
health (MNCH), food security, and climate change. Overall, it finds that
Canada increasingly adopted an issue-by-issue approach to multilateralism,
engaging when the government determined it was in its interest to do
so, but otherwise disengaging or becoming a free rider. Though some par-
tial exceptions exist, this reflected Canada’s growing instrumentalization of
international fora and agencies, as well as a growing preference for what Tom
Keating (2010, 20) calls ‘à la carte multilateralism’. Rather than strengthen-
ing multilateralism to address persistent and new challenges, Canada tended
to prioritize its national interests, thereby weakening the multilateral devel-
opment cooperation system and eroding its reputation as an important
supporter of the system. While the shift to the prioritization of national

158
 Stephen Brown and Michael Olender 159

interests coincides with global trends, in some ways the Canadian case
stands in stark contrast to the American, British, and French cases, the details
of which are provided below.
The chapter begins with an overview of the evolution of Canadian funding
of multilateral development agencies. It notes an overall decline in alloca-
tions, especially to some United Nations (UN) institutions, and highlights
recent increases in contributions to multilateral development banks and in
the use of multilateral institutions as conduits for bilateral aid (as distinct
from funding to the organizations themselves). The rest of the chapter con-
sists of an analysis of the Canadian government’s actions (and inaction) in
the three areas mentioned above. These cases were selected according to their
priority as multilateral development issues for the Canadian government
and the international community. The Canadian government provided
global leadership initially via the Group of Eight (G8) on the subject of
MNCH and enthusiastic support via UN agencies regarding food security –
though in both cases Canadian national interests and policy preferences
generally undermined rather than strengthened multilateral development
cooperation. On the third issue, the Canadian government distanced itself
from concerted action on the prevention of global climate change, despite
the latter being a quintessential example of a global public good requiring a
multilateral response, though it provided significant multilateral funding for
mitigation in developing countries. The chapter concludes with a discussion
of implications for Canadian multilateralism, as well as the means and the
rationale for improved multilateral development cooperation.
This contribution helps fill a gap in current understandings of contempo-
rary Canadian development policy. Though the decline of Canada’s support
for multilateral diplomacy has been widely analyzed and documented (for
instance, Keating 2010), Canadian multilateral development cooperation
is vastly understudied. A recent special issue of the journal Canadian For-
eign Policy on ‘Canadian Multilateralism: Past, Present, and Future’ did not
include any in-depth discussion of foreign aid, let alone an article dedi-
cated to the topic (Black and Donaghy 2010). Though multilateral assistance
has been described as ‘a key aspect of Canadian development cooperation’
(Thérien 1996, 320), the most recent scholarly examination of multilateral
aid was written in 1993 (Protheroe 1996). The only two comprehensive
books on Canadian foreign aid published in over a decade barely men-
tion multilateral development cooperation at all (Audet et al. 2008; Brown
2012). The link between international politics and the Canadian govern-
ment’s Muskoka Initiative on MNCH is virtually unexplored. Scholars have
been assessing food (in)security since the 2007–08 international food crisis,
yet examinations of Canada’s contribution to food security are at a nascent
stage. Finally, Canada’s role in efforts to address climate change deserves
greater attention and analysis, especially following its withdrawal from the
Kyoto Protocol in 2011.
160 Cases in Multilateral Development Cooperation

Canadian multilateral aid

Canada became an enthusiastic supporter of the multilateral aid system in

the 1960s and 1970s, but its contributions began to wane in the 1980s
(Morrison 1998, 20–1, 54). As demonstrated below, its real contributions to
multilateral organizations, especially UN agencies, slowly declined in dol-
lar terms and the proportion of official development assistance (ODA) it
contributes to multilateral institutions fell more dramatically. During the
2000–10 period, certain trends emerged, some of which contradict the over-
all trend. In particular, it increased its contributions to the World Bank
and regional development banks. In addition, Canada increasingly chan-
neled funds that are designated for specific purposes in certain countries
through multilateral organizations, as opposed to providing core funding to
those organizations themselves. Other donor countries similarly constrained
multilateral agencies’ use of their funds, as highlighted by Blomfield and
Kharas (Chapter 3, this volume), but Canada did so to a significantly greater
extent.
In his study of Canadian multilateral aid in the 1980s, David Protheroe
(1996, 46–8) suggests a number of explanations why multilateralism holds
particular appeal for Canada. Most reasons draw more directly on Canadian
interests. For instance, he argues, it is advantageous for Canada, as a mid-
dle power, to participate in multilateral institutions, where it can have
more influence than when discussions are made solely by large powers.
Multilateralism also helps shape Canadian identity and gives the country
an international profile.1 Some multilateral aid institutions serve Canadian
regional interests as well. For example, before Canada untied its food aid in
2008, the World Food Programme (WFP) distributed Canadian agricultural
surpluses, which benefitted Canadian provinces with strong farming sec-
tors. Less self-interested motivations include a commitment to international
burden-sharing and specific institutions.
More broadly speaking, multilateral aid has several advantages over bilat-
eral assistance, including the ‘pooling of money and expertise’ and the
capacity to ‘handle such inherently international problems as environmen-
tal damage and infectious diseases’ (Protheroe 1996, 26; see also Chapter 3,
this volume). Examples of the latter include global pandemics or outbreaks
of HIV/AIDS, avian influenza, and Severe Acute Respiratory Syndrome. Mul-
tilateral assistance also allows a country to avoid dealing directly with
some politically sensitive issues, such as support to the Palestinian people.
Economists have argued that multilateral aid is ‘more effectively targeted
to poor countries’ (Dollar and Levin 2006, 2036), helps avoid duplication,
and reduces the number of actors involved in each sector in a given recip-
ient country (Knack et al. 2010, 14). Danielle Goldfarb and Stephen Tapp
have argued that multilateral aid agencies ‘can take advantage of economies
of scale in research, analysis, and monitoring, requiring less attention for
 Stephen Brown and Michael Olender 161

donor coordination’ and therefore recommended Canada shift ‘more aid

toward multilateral agencies that have greater analytical capability and that
target their aid more effectively than has CIDA [the Canadian International
Development Agency] in the past’ (Goldfarb and Tapp 2006, 2, 22). The
World Bank, in particular, is widely perceived as an intellectual leader pos-
sessing technical capacity to disburse aid effectively.2 Multilateral agencies
also generally adopt a longer-term perspective than bilateral donors and
help prevent the emergence of ‘aid orphans’, that is, countries that would
otherwise receive very limited assistance because of bilateral donors’ lack of
interest.
Nonetheless, even those who advocate a higher proportion of Canadian
aid delivered through multilateral institutions recognize that CIDA and
other bilateral aid agencies still have some comparative advantages. For
instance, such agencies ‘can be more flexible and can more easily adjust or
cancel ineffective projects’ (Goldfarb and Tapp 2006, 22). They can also fund
NGOs more efficiently, rather than focusing almost exclusively on the state.
Furthermore, excessive multilateralization would prevent Canada from dis-
senting from dominant paradigms and applying its own analysis (Campbell
and Hatcher 2004, 679). It reduces the donor’s ability to direct its ODA in
line with its national interests and priorities (Protheroe 1996, 26–7). It also
opens the donor up to accusations of supporting institutions with poor repu-
tations, notably some UN agencies, and controversial approaches to develop-
ment, such as World Bank–sponsored structural adjustment programs, which
sometimes had disastrous results.
Given the pros and cons of both approaches, no one advocates spending
all Canadian ODA entirely through either bilateral or multilateral devel-
opment cooperation. The main issues are therefore what mix of bilateral/
multilateral aid to adopt and how strongly to support specific types of or
individual multilateral institutions.
Canada has provided an annual average of about $1.1 billion in mul-
tilateral aid since 1980.3 As can be seen in Figure 7.1, the amounts vary
considerably from year to year. For the 1980–2010 period the overall
trend is slightly downward. In comparison, bilateral assistance increased
dramatically, especially since the early 2000s.
As a result, the proportion of Canadian ODA provided to multilateral insti-
tutions declined more visibly during this period (see Figure 7.2). From a high
of 41 percent in 1983, the multilateral share of ODA reached a low of 21 per-
cent in 2009. Though Canada has historically been a higher-than-average
contributor among its fellow Organisation for Economic Co-operation and
Development’s Development Assistance Committee (OECD-DAC) countries,
it fell below the DAC average of 31 percent. Nonetheless, Canada remained
one of the DAC members that contributed the highest percentage of their
ODA to multilateral institutions when debt relief and support to European
Union (EU) institutions are excluded (OECD 2011, 6, 25).4
 162

Percent Thousands of US$ (constant 2009 prices, gross)

0
5
10
15
20
25
30
35
40
45

Figure 7.2
Figure 7.1
0
500
1000
1500
2000
2500
3000
3500

1980
1981 1980
1982 1981
1983 1982
1984 1983
1985 1984
1986 1985
1987 1986
1988 1987
1989 1988
1989

Canadian ODA by type

1990
1991 1990
1992 1991
1993 1992
1993

Bilateral
1994
1994

Year
1995
1995
1996

Year
1996
1997

Source: Generated by authors using data from OECD (2012).

Source: Generated by authors using data from OECD (2012).
1997
1998
1998
1999
1999
2000

Multilateral share of total Canadian ODA (gross)

2000
2001
2001
Multilateral
2002 2002
2003 2003
2004 2004
2005 2005
2006 2006
2007 2007
2008 2008
2009 2009
2010 2010
 Stephen Brown and Michael Olender 163

Such aggregate figures, however, only paint a very general picture of

changes in Canadian multilateralism. Multilateral aid can be broken down
according to the types of agencies it supports or through which it flows.
The main ones are the UN, the World Bank, and the regional development
banks (RDBs). The Canadian government signaled in 2005 that it would
be more strategic in its choice of multilateral partners, pledging to ‘focus
greater support on those institutions that are most effective in promoting
global governance and contributing to the MDGs [Millennium Development
Goals] and review Canada’s contributions to those that are less effective’
(Canada 2005, 27). In 2009, an internal CIDA evaluation recommended
increased scrutiny of multilateral agencies funded by Canada and pressure
to improve their performance. It also commented on the managing of effec-
tiveness in individual institutions, but fell short of suggesting any changes to
funding levels (CIDA 2009b, 43–4). In 2011, Minister of International Coop-
eration, Beverley J. Oda, announced that CIDA would ‘continue to support
and work with multilateral organizations that are effective and efficient and
aligned with our government’s policies’ (Oda 2011), rather than the previ-
ous rationale based on the agencies’ overall effectiveness. The following year,
the Canadian government confirmed that funding decisions would reflect
‘Canada’s interests and priorities’ (Canada 2012, 267). Such self-interest
is antithetical to the core principle of multilateralism, whereby countries
subordinate their own, more narrow interests to the collective good.
During the 2000–10 period annual Canadian ODA to the UN fluctuated
between $206 million and $342 million, down from between $400 million
and $500 million per year between 1982 and 1994. Aid to the World Bank
and its regional counterparts was also lower than its historical levels during
the 1980s and first half of the 1990s. In the case of the World Bank, contri-
butions fluctuated greatly. For instance, Canada contributed $635 million in
2008 but only $40 million in 2009 (see Figure 7.3).5
Canadian support to individual UN agencies varied widely during this
period. Though assistance to the United Nations Development Programme
(UNDP) remained comparatively constant during the 2000s, as seen in
Figure 7.4, Canada reduced its core contributions to the other two main UN
recipients of its ODA, WFP (discussed in the next section) and the United
Nations Children’s Fund (UNICEF).
Over the course of the 2000s, in contrast with Canadian contributions to
the UN, ODA funding to the World Bank and the RDBs generally increased,
though some years were outliers (2009 for the former and 2010 for the lat-
ter). Figure 7.5 illustrates how Canadian contributions to the three main
regional banks evolved in the 2000s. Discounting the exceptional year of
2010, disbursements to the Asian Development Bank remained relatively
steady around $45 million to 65 million per year, while ODA to the African
Development Bank and the Inter-American Development Bank generally
increased.6
164

Millions of US$ (constant 2009 prices, gross)

700

600

500

400

300

200

100

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
UN agencies World Bank RDBs

Figure 7.3 Canadian multilateral ODA by type of agency

Source: Generated by authors using data from OECD (2012).

80
Million US$ (constant 2009 prices, gross)

70

60

50

40

30

20

10

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
WFP UNDP UNICEF

Figure 7.4 Canadian ODA to UN agencies

Source: Generated by authors using data from OECD (2012).
 Stephen Brown and Michael Olender 165

250
Millions of US$ (constant 2009 prices, net)

200

150

100

50

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
African DB Asian DB Inter-American DB

Figure 7.5 Canadian ODA to regional development banks

Source: Generated by authors using data from OECD (2012).

It is too early to know if growth in funding to the World Bank and the
RDBs will be sustained or why it occurred (see Ingram 2011). One poten-
tial argument in favor of support to the development banks is their alleged
greater effectiveness. As pointed out by Blomfield and Kharas (Chapter 3, this
volume), several recent rankings of aid donors have placed these multilateral
agencies at the top of their lists (Easterly and Pfutze 2008; Knack et al. 2010).
Robert Picciotto (2012, 67), a former World Bank vice president, concludes
that ‘there is considerable variation in the effectiveness of multilateral agen-
cies, but it is equally clear that most bilateral aid agencies are less effective
than most multilateral agencies’.7 Nonetheless, Danny Leipziger (2012, 27),
another former vice president of the World Bank, sees mainly deficiencies:
‘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’. The explanation
might actually be one of expediency rather than principled policy. Canada
has long used multilateral institutions to disburse funds rapidly, when the
need arose, with a ‘minimal administrative workload’ (Morrison 1998, 54).
When the government needs to meet specific spending targets before the
end of the fiscal year, contributions to the development banks are an easy
way to do so, be it through early disbursement of funds already allocated or
one-off increased contributions.
166 Cases in Multilateral Development Cooperation

Above and beyond those trends is Canada’s increased use of multilateral

organizations as conduits for bilateral funding, that is, assistance earmarked
to a specific country. For instance, CIDA approved a Cdn$100 million con-
tribution to the World Bank’s Afghanistan Reconstruction Trust Fund for
the 2007–14 period and another $69.5 million for the World Bank’s Edu-
cation Quality Improvement Project in Afghanistan (CIDA 2012a, 2012b).8
The OECD counts those flows as bilateral aid, but they are in fact a hybrid
form, sometimes referred to as ‘multi-bi’ funding. They can be interpreted as
both ‘the bilateralization of multilateral aid’ and ‘the multilateralization of
bilateral aid’ (OECD 2011, 28).
As the OECD (2011, 5) recognizes, ‘Earmarking allows donors to track
results more easily, to have greater say over specific uses, and to raise the
visibility of their contributions in the eyes of domestic constituencies’. This
growing trend, however, has been described as ‘worrisome’ (Kindornay and
Besada 2012, 38) because it increases the fragmentation of aid and reduces its
effectiveness (Picciotto 2012, 62). Such ad hoc contributions also undermine
a multilateral institution’s capacity to plan ahead and allocate resources
according to its mandate and its established internal processes. More fun-
damentally, they negate some of multilateral development cooperation’s
comparative advantages and basic objectives.9
When such statistics are included in the multilateral share of ODA, over-
all figures increase much more rapidly over the course of the 2000s (see
Bhushan and Higgins 2012). In fact, the 24 percent of Canadian ODA chan-
neled through multilateral agencies exceeded the 22 percent that Canada
contributed to the agencies themselves in 2009 (OECD 2011, 54).10 During
that year, Canada made non-core ODA contributions of $238 million to the
World Bank and $483 million to UN agencies, including $205 million to
WFP and $109 million to UNICEF, amounts that surpassed by far Canada’s
core funding to those institutions (OECD 2011, 59; compare with Figure 7.4
above). This suggests that Canada has not regained its former enthusiasm for
multilateral aid per se, but rather sees definite advantages in selectively using
some multilateral agencies to meet its own national goals and priorities,
while sidelining other organizations.
Having provided the overall context of Canada’s multilateral develop-
ment assistance, this chapter now examines the place of multilateralism
in Canada’s actions in three important development issue areas, beginning
with MNCH.

Maternal, newborn, and child health

In a speech at the World Economic Forum in Davos, Switzerland, in January

2010, Canadian Prime Minister Stephen Harper indicated for the first time
that one of his G8 priorities would be to improve maternal and child health
in developing countries. The following month, CIDA Minister Oda said
 Stephen Brown and Michael Olender 167

that the government had considered the issue for a long time as it fit with
CIDA’s priority themes of children and youth, and food security, experience,
and the interests of nongovernmental organizations and other G8 countries
(Berthiaume 2010). As host of the Muskoka G8 Summit in June 2010, the
Canadian government announced the Muskoka Initiative on MNCH, which
aims to generate $5 billion in new spending for the years 2010–15, with the
hope of ultimately mobilizing more than $10 billion (G8 2010, 3).11 MNCH
issues had already been a global priority for UN members and international
organizations for a decade since the adoption of the MDGs in 2000. The
initiative relates directly to two of the eight goals: reducing child mortal-
ity (MDG 4) and improving maternal health (MDG 5). Canada argued for
a focus on MNCH issues based the fact that progress on the two goals was
‘unacceptably slow’ and they were the ones least likely to be achieved by
2015 (G8 2010, 2).
Though the initiative appears at first glance to be a good example of
relatively selfless Canadian multilateralism, further examination suggests
that Canada relaunched a UN initiative and instrumentalized a forum to
implement its policy preferences for reasons of self-interest, with only lim-
ited results. When compared to the Toronto Group of Twenty Summit, at
which the only successful Canadian initiative was to block an international
bank tax, the G8 provided Canada with a platform to accelerate progress on
two MDGs in particular and development more generally. As the leader of
the initiative, Canada committed $1.1 billion in new funding and renewed
existing funding of $1.75 billion for a total commitment of $2.85 billion
by 2015 (Christie 2010, 143–4). The country, however, is not the first to
champion MNCH issues. UN agencies, nongovernmental organizations, and
governments in low-income countries have been working on MNCH for
decades (Caplan 2010). In 2009, British Prime Minister Gordon Brown and
World Bank President Robert Zoellick held a major event at the UN Gen-
eral Assembly that generated pledges of more than $5 billion to a new
global Consensus for Maternal, Newborn and Child Health, which set out
a ten-point action plan (Berthiaume 2010). Moreover, countries such as the
Netherlands and Norway had previously pledged hundreds of millions of
dollars to address MNCH issues in developing countries (Berthiaume 2010).
Some observers argue that, if anything, the Muskoka Initiative ‘highlights
the complete abandonment of past promises’ made by G8 countries at sum-
mits, specifically those regarding financial assistance to Africa (McMillan
and Besada 2010). Still, the political profile of the G8 led to increased
prominence of MNCH issues. The Netherlands, Norway, New Zealand, South
Korea, Spain, Switzerland, the Bill and Melinda Gates Foundation, and the
United Nations Foundation committed $2.3 billion to the initiative, which
received endorsements from other donor countries, African leaders, private
foundations, the World Health Organization, and other leading health orga-
nizations (Christie 2010, 144). While this context shows that Canada chose
168 Cases in Multilateral Development Cooperation

an emotive initiative that could garner substantial support, the Canadian

government was acting more as a facilitator and a policy taker than a policy
innovator.
Unlike most donor countries, Canada has fulfilled its commitment to
fund the initiative. While distinct OECD data on MNCH does not exist, the
G8 Research Group (2011, 42–4) has documented how only Canada and
Germany allocated the full funding they pledged to specific MNCH initia-
tives in 2010–11. Canada led the group by contributing $284.6 million, well
over its pledge of $220 million. All other countries allocated less than half
of the funding pledged. The United Kingdom, which committed $600 mil-
lion, did not provide any new funding, while France contributed a mere
5.7 million after pledging 125 million and the United States, which
pledged $1.3 billion, contributed only $18.3 million. Compliance with the
Muskoka Initiative had by far the lowest score of the 18 summit commit-
ments assessed by the G8 Research Group, including those in the areas of
ODA, good governance, trade, non-proliferation, and terrorism (G8 Research
Group 2011, 7), indicating that non-compliance with the initiative is indeed
an outlier. Nonetheless, Canada has continued to champion the initiative
and created an accountability framework. In December 2010, Harper and
Tanzanian President Jakaya Kikwete became co-chairs of the UN Commis-
sion on Information and Accountability for Women’s and Children’s Health.
Canada continues to attempt to advance G8 policy and the new framework
is an instance of Canada contributing to governance reform that may affect
multilateral dysfunctionality – but effects remain to be seen.
Canada’s apparent multilateralism on the MNCH issue has its detractors.
Stephen Lewis, former Canadian ambassador to the UN and UN special
envoy for HIV/AIDS in Africa, called Harper’s Davos speech ‘a piece of
crass, political opportunism’, pointing out that the Canadian government
had come late to an issue that other countries had been working on for
years, and stating that it sees women as mothers and little else (Berthiaume
2010). In fact, CIDA’s programs have emphasized health over the 2000–10
period and, in some cases, longer. For example, the agency has been fund-
ing micronutrient programs for decades, as well as programs to improve
health systems and services for mothers and children. Still, the issue has evi-
dently been repackaged and the prioritization of MNCH was indeed ‘sudden’
(McMillan and Besada 2010). Noting this abruptness, one observer high-
lighted the government’s ‘real credibility gap in this area’ (Caplan 2010).
Moreover, Gordon Smith and Peter Heap (2010, 10) argue that ‘the choice of
initiative seems to have been essentially a political call related to improving
the government’s standing with domestic constituencies’. With Harper lead-
ing a minority government and a federal election possible at any time – one
was held later that year – the promotion of (literally) a motherhood issue
within a high-profile international forum likely played into calculations
to garner a warm response from voters. Charges of political opportunism
 Stephen Brown and Michael Olender 169

and electoral imperative suggest that the Canadian government’s MNCH

multilateralism is primarily self-interested.
The issue became unexpectedly controversial because of the Canadian
government’s unilateral stance on excluding abortion access in its pro-
grams. The government’s aversion to the abortion issue has been linked by
maternal-health advocates to its desire not to upset part of its political base
(Clark 2010). Observers argue that unwanted pregnancies jeopardize health
in developing countries and improved access to abortions and post-abortion
care are necessary components of any MNCH initiative. Noting that 70,000
women die from unsafe abortions every year, an editorial in British medical
journal the Lancet called Canada’s position ‘hypocritical and unjust’ given
the country’s permissiveness domestically and recommended that ‘Canada
and other G8 nations [ . . . ] show real leadership with a final maternal health
plan that is based on sound scientific evidence and not prejudice’ (Lancet
2010, 1580). G8 countries were free to fund MNCH projects as they pleased,
but – by excluding abortion – the country leading the push for new fund-
ing and contributing significant resources undermined the credibility of the
initiative from a development perspective.
In the run-up to the Muskoka Summit, the Canadian government faced
highly publicized pressure for its rigid stance on abortion access. US Secre-
tary of State Hillary Clinton argued that ‘You cannot have maternal health
without reproductive health, and that includes contraception and family
planning and access to legal, safe abortions,’ while British Foreign Secretary
David Miliband argued that Britain felt the initiative should include access
to abortion (CBC News 2010). In Canada, the Standing Committee on the
Status of Women released a report in June 2010 advising the government to
take a ‘comprehensive approach’ to family planning that includes abortion
wherever it is legal, citing effectiveness on the issue of health, but Harper said
that he imposed the ban because he does not want to reopen the abortion
debate, which divides Canadians (CBC News 2010; Smith 2010). A reason
Canada did not garner support for the initiative may have been because
Harper did not obtain G8 buy-in through consultations, but rather suddenly
imposed it. The rigid policy framework that he insisted upon may have
turned a UN-supported initiative into a perceived flawed Canadian scheme,
from which other G8 countries distanced themselves.
The G8 countries tacitly accepted Harper’s refusal to address the issue of
abortion under the Muskoka Initiative – abortion access was not mentioned
in the summit’s joint declaration. This led Maclean’s journalist Paul Wells
(2011) to argue that, while the government is doing a lot to promote MNCH,
‘[i]n effect, the Harper Conservatives have outsourced their pro-life politics
to the developing world’. He also noted that no G8 government criticized
leaving abortion access out of the initiative, nor was there any other promi-
nent international criticism, even from governments whose own policies
include access (the United States, Britain, and France provide funding for
170 Cases in Multilateral Development Cooperation

abortion where it is legal abroad). Some critics argue that abortion access is
a non-issue given that Canada’s position only applies to a small group of
developing countries where abortion is legal (Auld and MacDonald 2010).
Widespread non-compliance could, however, be a signal that G8 countries
did not wish to be associated with the Canadian approach or the initia-
tive. The lack of public objections could be due to G8 countries’ practice of
wanting to speak in one voice following joint announcements to legitimize
commitments.
While Canada adopted the MNCH policy initiative for a combination
of altruistic and self-interested reasons and then attempted to use the G8
to impose its preferences internationally, it failed to mobilize a significant
amount of funding from other countries, especially the United States and
United Kingdom. Without more qualitative research and interviews with
key decision-makers, it is impossible to determine the extent to which the
exclusion of abortion access has undermined concrete G8 support for the
initiative, but the unusually widespread reluctance to follow through on
commitments is striking. Simple lack of interest and scarcity of additional
ODA funds during the global economic crisis are alternative explanations.
The G8’s generally poor record on delivering on commitments to develop-
ing countries should be kept in mind (see Caplan 2010; McMillan and Besada
2010). However, broad interest in MNCH issues before Harper’s Davos speech
followed by the palpable division in the run-up to the Muskoka Summit sug-
gest that there is more to the story. Regardless of the actual explanation, the
Muskoka Initiative is a case of Canada’s failure to multilateralize an issue
within a forum that it had selected for that purpose.
Canadian multilateral development cooperation does not always involve
seeking to influence other donors within a multilateral forum, as it tried
to do regarding MNCH. On the issue of global food security, to which this
chapter now turns, Canada focused its contributions on specific multilateral
agencies.

Food security

In May 2009, in response to the global food crisis, CIDA Minister Oda
announced that increasing food security would henceforth be one of the
three priority themes for Canadian development assistance (CIDA 2009a).
A few months later, at the G8 summit in L’Aquila, Italy, Harper pledged to
increase spending on food security by $600 million per year for three years
(Canada 2009). In 2011, CIDA announced a $350 million contribution to the
sector over a five-year period, most of which would be channeled through
WFP (CIDA 2011a).
This dramatic increase in funding was the latest iteration of a wax-
ing and waning of CIDA’s interest in the agricultural sector. For instance,
the Canadian government had previously announced in 2002 that its
 Stephen Brown and Michael Olender 171

500
Millions of US$ (current)

400

300

200

100

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year

Figure 7.6 Canadian ODA commitments to the agricultural sector

Source: OECD (2012).

aid program would focus on rural development and agriculture, among

other sectors, only to drop it in 2005 (CIDA 2002, 14–16; Canada 2005).
As Figure 7.6 illustrates, commitments in this area fluctuated accordingly.12
The 2009 announcement, however, made official an unprecedented increase
in commitments that was already underway. Over the course of less than a
decade, commitments skyrocketed from a low of only $21 million in 2002
to $498 million in 2010.13
Global food crises require multilateral responses (Conceição and Mendoza
2009) and a significant part of CIDA’s new food security funding was
to be delivered multilaterally. Canada’s decision to untie its food aid in
2008, thereby eliminating a direct interest in providing it bilaterally, facil-
itated this move. CIDA’s Food Security Strategy, released in 2010, outlined
how the agency would ‘support efforts underway through the World Bank
and the International Fund for Agricultural Development [IFAD] . . . to help
address the food security needs of vulnerable populations, in particular, of
women,’ provide food aid via WFP, and work with the Consultative Group
on International Agricultural Research (CGIAR) to increase the nutritional
value of food and the ‘resiliency of agricultural systems to climate change’
(CIDA 2010, 5–7).14
As one would expect, Figure 7.7 illustrates an overall increase in core fund-
ing for CGIAR and IFAD after 2007, when Canadian commitments to the
agricultural sector began to increase dramatically.15 However, contributions
to WFP not only held steady but represented barely one-quarter of their level
in the early 2000s (around $16 million, compared to about $60 million).
This could be because the latest figures are for 2010, which may not allow
sufficient time for intentions to translate into spending.
172 Cases in Multilateral Development Cooperation

70
Million US$ (constant 2009 prices, gross)

60

50

40

30

20

10

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
WFP CGIAR IFAD

Figure 7.7 Canadian ODA to multilateral agricultural organizations (core)

Source: Generated by authors using data from OECD (2012) and CGIAR annual financial reports
(see footnote).

However, figures from the WFP website paint a very different picture: a
doubling of Canadian contributions between 2007 and 2011, when annual
contributions almost reached $300 million, more than seven times the
amount for 2001 – making Canada the WFP’s second or third largest
contributor depending on the year (WFP 2012; see Figure 7.8). Why the
discrepancy?
Unlike the OECD data in Figure 7.7, the WFP flows represented in
Figure 7.8 include not only core funds to the institution, but also those desig-
nated for use in specific countries, the ‘multi-bi’ funding mentioned above.
In the agricultural sector, the vast majority of CIDA spending thus far has
been in the form of bilateral contributions to specific countries – selected
by CIDA according to its own priorities, not necessarily global need – and
merely channeled through multilateral institutions, instead of being under
the latter’s control. For example, CIDA announced in 2011 a $13-million
contribution to WFP designated for use in Afghanistan (CIDA 2011c). This
is not to suggest that CIDA’s earmarked aid does not meet authentic,
urgent needs. Nonetheless, this practice retains decision-making power at
CIDA headquarters and, especially when adopted by other donor coun-
tries as well, earmarking prevents multilateral institutions such as WFP
from coordinating an equitable distribution of resources across countries
in need.16 Donors’ growing use of similarly ‘restricted’ funding has also
seriously undermined the work of other food security–related multilateral
 Stephen Brown and Michael Olender 173

300

250
Million US$ (current)

200

150

100

50

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Year

Figure 7.8 Canadian contributions to WFP

Source: Generated by authors using data from WFP (2012).

organizations (CGIAR 2008, 4–5, 53–7). It remains to be seen how much

of Canada’s new assistance in the sector will be through such ‘multi-bi’
arrangements, rather than fully multilateral.
Moreover, food aid is only a charity-based, short-term, palliative mea-
sure that saves lives but does nothing to resolve the underlying causes of
chronic food insecurity and acute food crises that arise periodically: poverty
and inequality. It can actually exacerbate future dependency, thereby reduc-
ing food security. Though not directly applicable to Canada since it stopped
providing in-kind assistance in 2008, food aid is also inextricably linked to
a powerful agricultural and agro-industrial sector that receives massive sub-
sidies from industrialized country governments and has a strong interest in
the maintenance and expansion of food aid (Clapp 2009).
The insufficiencies of food aid help explain why CIDA’s food security strat-
egy also supports research and development of new agricultural varieties and
techniques to increase yield and better withstand climate change, through
financial contributions managed by the World Bank, IFAD, and CGIAR, as
well as Canada’s own International Development Research Centre (IDRC).
Though new technologies have made tremendous contributions in the past,
most notably to the ‘green revolution’ of the 1960s and 1970s, the empha-
sis on technical solutions ignores more fundamental political problems in
agricultural producing countries in the global South. In their examina-
tion of CIDA’s land and food security policies, Denis Côté and Dominique
Caouette (2012, 181) argue that ‘food insecurity is more a result of an
extreme inequality in terms of access to land than of a lack of production and
174 Cases in Multilateral Development Cooperation

productivity’ (see also Quan 2000). In addition, reforming and strengthen-

ing institutions in developing countries has been found to be a prerequisite
for successful poverty alleviation and assistance to the agricultural sector,
which in turn are necessary to ensure food security (Abbott 2012). Food
security and agricultural policies must also be embedded in broader contexts
and policies, especially poverty, not in isolation (Marsden 2012). Overall,
Canada’s and other aid donors’ bilateral and multilateral responses to food
insecurity are unlikely to produce sustainable results (Essex 2010).
CIDA’s strategy leaves important gaps and it is not clear that other donors
are filling them either. By earmarking humanitarian-oriented food aid for
its priority countries, such as Afghanistan, rather than allowing it to be dis-
tributed by a multilateral institution according to need, and by emphasizing
technological solutions while ignoring underlying causal factors, CIDA’s new
strategy will fight food insecurity in select countries in the short term but
is unlikely – barring a technological miracle – to make a significant long-
term contribution to preventing its recurrence. Moreover, climate change is
increasingly likely to make some of Canada’s best food security efforts more
difficult, a topic to which this chapter now turns.

Global climate change

Canada used the multilateral system to address a changing global climate

during the first half of the 2000s, but since the Conservatives came to power
in 2006 the country has shied away from multilateralism in favor of uni-
lateralism. If greenhouse gas (GHG) emissions are not substantially reduced,
climate change will have negative consequences for health, migration, and
infrastructure, which will be disproportionately experienced by develop-
ing countries in Africa, Southeast Asia, and the Middle East (OECD 2009,
34–40). Preventative action, particularly by way of a legally binding treaty
that substantially abates global emissions, is a UN priority. However, the
issue is mired in bitter controversy and developed and developing countries
are divided regarding historical responsibility for the stock of emissions cur-
rently in the atmosphere. Moreover, electoral cycles that complicate contem-
poraneous trade-offs in spending scarce political and monetary resources,
short-term domestic political maneuvering related to the expectations of
core constituencies, and the requirement of international consensus – under
UN rules, every country must agree to the text of a treaty for it to be
adopted – makes designing an enforceable treaty difficult (see Hovi et al.
2009). The United States has refused to ratify the Kyoto Protocol, the world’s
only binding climate change treaty, unless developing countries, particu-
larly China, also commit to fixed emissions targets, while China and 77
other developing countries maintain that developed countries should limit
emissions before developing countries cut them (Laing 2011). Once a partic-
ipant in this vivid and crucial debate, the Canadian government has largely
 Stephen Brown and Michael Olender 175

disengaged from UN negotiations, becoming the first (and at the time of

writing only) country to withdraw from the Kyoto Protocol.
The Conservative government’s action contrasts with its predecessors’
contributions to the multilateral response to climate change. The Liberal
government of Jean Chrétien signed the Kyoto Protocol in 1997 and ratified
it in 2002. Kathryn Harrison (2007, 92, 111–13) finds that Chrétien’s norma-
tive commitment to protect the global commons, his personal commitment
to multilateralism, and strong party discipline in Parliament were the pri-
mary reasons for ratification. Still, the prime minister did not follow up with
a plan to reduce carbon emissions by 29 percent below projected business-as-
usual emissions in 2010. The accord establishes legally binding obligations
for developed countries to reduce GHG emissions below 1990 levels, but
does not obligate developing countries to reduce emissions, which means
that the world’s largest emitters – China and the United States – are not
bound by the current framework. Despite American recalcitrance, negligible
environmental gains, and considerable implementation costs, 39 developed
countries and the EU ratified the accord,17 along with over 150 developing
countries as of November 2011.
When the Conservatives came to power in 2006, Harper repeatedly stated
that his government would not implement the Kyoto Protocol signed by the
former Liberal government, which had consistently failed to meet reduc-
tion targets. Canada’s ‘relentless’ emissions growth, fueled by population
growth, GDP growth, and surging oil sands production, is unmatched
among OECD countries (Jaccard 2007, 8–9). Harrison (2007, 110, 114–15)
argues that Harper never intended to fulfill the Kyoto commitments and,
in the absence of electoral pressure, his stance is compounded by persistent
business opposition and demands from the provinces for federal money for
climate programs. Emphasizing that the accord would jeopardize job cre-
ation in difficult economic times, Harper in 2009 set a less-stringent goal to
lower GHG gases that is in line with that of the United States (Canadian Press
2011). Alongside the leaders of Russia and Japan, Harper opposed the exten-
sion of the Kyoto Protocol beyond 2012, arguing that developing countries
that are large emitters, such as China and India, should be obligated to meet
targets (Kennedy 2011).18
Although Canada has changed its position significantly over the last
decade, it has always recognized that a multilateral response is required to
address the problem of global climate change – a more comprehensively
multilateral response, according to the Conservatives. In December 2011,
immediately following the UN Framework Convention on Climate Change
conference in Durban, South Africa, where 194 countries extended the Kyoto
Protocol’s first commitment period from 2012 to 2017 and outlined a course
of action that would see a new climate change treaty finalized by 2015 and
come into force five years later, Environment Minister Peter Kent announced
Canada’s formal withdrawal from the Kyoto Protocol. He cited the fact that
176 Cases in Multilateral Development Cooperation

Canada was not on track to meet targets, costs of $14 billion in compliance
credits that would not have impacts on GHG emissions or the environ-
ment, and the resulting conclusion that the treaty is an ineffective, outdated
attempt at a global solution to climate change (Canadian Press 2011).19
Countries including China and India condemned Canada’s withdrawal, and
there has been much domestic criticism (see Kennedy 2011), but also some
prominent support. For instance, the Globe and Mail (2011), which advo-
cates emissions reductions, editorialized: ‘Canada was right to leave the
Kyoto Protocol, rather than continue to take part in the false pretense that
there is an international consensus’. Kent has stated that Canada will work
toward a new global climate change treaty that legally obligates all major
emitters – the United States and the developing countries whose emissions
are increasing – to lower GHG emissions, while allowing Canada to generate
jobs and growth (Kent 2012).
Mitigation and adaptation strategies are both necessary to address cli-
mate change, which is inherently a global problem and hence requires
international solutions (see Hovi et al. 2009; OECD 2009). Yet, Canada
effectively disengaged from UN negotiations and focused on national cir-
cumstances. The government’s domestic plan commits it to reducing GHG
emissions by 17 percent below 2005 levels by 2020 and emphasizes a
‘balanced approach’ to regulation (Kent 2012). Given entrenched division
between developed and developing countries, the difficulties in garnering
international consensus, and a domestic plan that gives Canada significant
leeway, it is questionable how committed the government is to UN negotia-
tions. The Canadian government’s priority is evidently Canadian economic
interests.
Figure 7.9 presents OECD data for annual ODA commitments for envi-
ronmental protection for the 2000–10 period, which includes initiatives
to combat climate change.20 The trend line is flat, indicating that, over-
all, intended spending on the issue had been stagnant across the decade.
The drop after 2002 is interesting since the Chrétien government ratified
the Kyoto Protocol that year. The spike in 2009 presumably reflects com-
mitments to address the global food crisis and new commitments on the
environment following the previous year’s federal election, characterized by
electoral pressure on environmental issues.
After 2010, the Canadian government disengaged from negotiations on
a new treaty, but funded multilateral schemes to help developing countries
adapt to climate change and reduce emissions. For its part, CIDA approaches
climate change as a development issue and supports multilateral initiatives.
The agency prescribes adaptation measures and supports the reduction of
global GHG emissions through involvement in the World Bank Pilot Pro-
gram for Climate Resilience, the Global Environment Facility (GEF), and the
UN’s Special Climate Change Fund (CIDA 2011b).21 In Durban, countries
agreed on terms for the establishment and governance of a new multilateral
 Stephen Brown and Michael Olender 177

80

70
Millions of US$ (current)

60

50

40

30

20

10

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year

Figure 7.9 Canadian ODA commitments to environmental protection

Source: Generated by authors using data from OECD (2012).

fund to help developing countries adapt to climate change and promote

clean energy growth. When it becomes operational in 2013, the Green
Climate Fund is expected to play a key role in new adaptation and miti-
gation strategies by channeling $100 billion annually to developing coun-
tries by 2020. Canada, however, refused to contribute to the fund unless
its beneficiaries committed to targets and transparent reporting (Kennedy
2011). The fund’s accountability arrangements are to be approved in Doha,
Qatar, in late 2012, though CIDA’s efforts offset this refusal to some
extent.
To prepare for the establishment of the Green Climate Fund and kick-
start funding for environmental projects, special financing was agreed at
the 2009 UNFCCC conference in Copenhagen, Denmark. In support of
the non-binding Copenhagen Accord that saw developed countries commit
$30 billion over 2010–12, the Canadian government committed $1.2 billion
to fast-start financing, focusing on adaptation by the poorest and most vul-
nerable countries, clean energy, and forests and agriculture (Environment
Canada 2011b). This is Canada’s largest ever monetary commitment to sup-
port multilateral efforts to address climate change.22 Canada’s contributions
are highly multilateral relative to those of other many countries, though by
far its largest contribution is to support a broad portfolio of clean energy
projects – the $291.5 million that is allocated to the IFC appears dispropor-
tionate when compared to the $44.5 million directly allocated for adaptation
(WRI 2011, 4). This approach suggests that the Canadian government is
reserving its right to pollute domestically for economic reasons, but it
178 Cases in Multilateral Development Cooperation

recognizes that this stance must be complemented with initiatives to help

developing countries primarily reduce emissions and secondarily adapt to
new adversities resulting from climate change.
When spending levels are viewed in a comparative perspective, the
Canadian government is doing its share. Canada’s initial 2010 contribution –
the only contribution for which cross-national comparisons were available
at the time of writing – was approximately 4 percent of total multilateral
assistance. Its total amount pledged is well behind Japan, the United States,
and many European countries including the United Kingdom and France
(WRI 2011, 1–6, 12). This makes sense because the Canadian economy is
smaller. Climate Action Network Canada (2011) argues that the total amount
pledged is in line with Canada’s ‘fair share,’ though the announcement of
further investment in Durban should be seen in the context of the govern-
ment’s inaction – at that point it had already decided to withdraw from
Kyoto. The announcement effectively deflected attention away for Canada’s
disengagement from negotiations.
Moreover, the vast majority of funding has thus far gone to the IFC to be
lent to the private sector to mitigate emissions, rather than made available
to developing countries for immediate adaptation activities (Climate Action
Network Canada 2011). Africa is responsible for 4 percent of global emissions
and only large, richer countries like South Africa are able to ‘meaningfully
contribute’ to mitigating climate change (World Bank 2011, 18). Nonethe-
less, adaptation is particularly important for Africa, since it is the continent
most affected by the negative impacts of climate change (see Besada and
Sewenkambo 2009; UNFCCC COP 2010). International support for fast-start
financing is therefore necessary to help the poorest and most vulnerable
countries to reduce emissions and cope with the effects of climate change.
The Copenhagen Accord commits developed countries to ‘balanced allo-
cation between adaptation and mitigation’ (UNFCCC COP 2010, 7), but
Canada evidently prioritizes the latter goal.23
Regardless, Canada’s funding strategy indicates that the government
prefers to shift the burden of emissions reductions to developing countries.
Developed countries tend to prioritize funding for mitigation because of
its global benefits; adaptation in developing countries tends to have only
local and regional benefits – from which developed countries gain nothing
(Rübbelke 2011, 1472–4).24 With its IFC funding, Canada’s stated objective
is to catalyze private sector investment and innovation to realize long-term
financing and mitigation goals (Canada 2011a). Although CIDA’s focus is
almost exclusively on adaptation measures and IDRC is supporting adap-
tation research, the scale of Canada’s funding for mitigation dwarfs these
initiatives. Many developed countries – the United Kingdom and the United
States in particular – have funding strategies that are more balanced than
Canada’s (WRI 2011, 1–6).
 Stephen Brown and Michael Olender 179

Environmental protection is a global public good – it benefits all

countries – but providing it has become the world’s greatest collective action
problem. Since all benefit and given the long-term nature of climate change,
there is a strong incentive to free ride. Canada’s persistent emissions growth,
disengagement from UN negotiations, domestic strategy that prioritizes
Canadian economic growth, and choice to provide only an average level
of development assistance indicate that, overall, the country is a free rider
on other countries’ efforts. Canada had been unable to influence the multi-
lateral response to climate change through the UN and its withdrawal from
the Kyoto Protocol did not influence others to follow suit, leaving it in an
embarrassing position. However, while the Canadian government has largely
disengaged at the UN level, it does fund multilateral initiatives to support
mitigation and adaptation in developing countries. By following through
on its overall funding commitment set out in the Copenhagen Accord, the
government has adopted an ambivalent stance, simultaneously disengaging
from the UN at one level and supporting it at another. Multilateralism on the
issue of climate change has become a way to reject international efforts that
might constrain jobs and growth domestically, while helping developing
countries adapt to climate change and reduce emissions. Although its strat-
egy to help developing countries is to some extent commendable, Canada
leaves a disproportionate share of the burden of emissions reductions to
other countries because of its short-term interests.

Conclusion

This chapter has examined Canada’s multilateral development coopera-

tion vis-à-vis major global development challenges at the beginning of the
21st century. It has identified specific trends and outlined dynamics in
multilateral aid mainly during the 2000–10 period, focusing on a major
MNCH initiative, food security, and climate change policy. The evolution
of Canadian ODA financial contributions to multilateral agencies and the
Canadian government’s actions and inaction in the areas of MNCH, food
security, and climate change demonstrate that the Canadian government
increasingly used – or tried to use – specific multilateral fora and institutions
to pursue national interests and disengaged in cases when the institutions
went against Canadian interests. There were instances where Canada made
generous multilateral contributions, but even these showed a significant
self-interested dimension or offset the effects of self-interested policies.
Canada’s real contributions to multilateral development organizations,
especially UN agencies, slowly declined in dollar terms and the proportion
of ODA it provided to multilateral institutions fell more dramatically. The
Canadian government, however, increased its contributions to the World
Bank and RDBs, though the motives for the change were unclear and it is
180 Cases in Multilateral Development Cooperation

too early to know if the trend will be sustained. Notably, Canada increas-
ingly channeled funds designated for specific purposes in certain countries
through multilateral organizations, as opposed to providing core funding
to those organizations themselves. Canada’s increased use of multilateral
organizations as conduits for bilateral funding suggested that Canada saw
advantages in selectively using some of them to meet its own national goals
and priorities.
Regarding the Muskoka Initiative, it appears that while there was prior
international interest in MNCH issues, Canada tried to make the issue its
own within the G8 for humanitarian and electoral reasons, but largely failed
to get more than rhetorical endorsement, potentially due to its firm stance
against abortion access. Canada was unable to multilateralize MNCH issues
within the G8, but remained committed to the initiative, as evidenced
by contributions in excess of pledges and the creation of an international
accountability framework. If most Canadians are not aware of Canada’s
failure with the initiative, it may have served its domestic public relations
purpose to a certain extent.
In response to the global food crisis, Canada dramatically increased fund-
ing for food security, including through additional multilateral funding
to WFP, the World Bank, IFAD, and CGIAR. However, the vast majority
of CIDA spending on food aid were contributions earmarked for specific
countries – chosen by CIDA according to its own interests, rather than
global need – and channeled through multilateral institutions, rather than
being under the latter’s control, which did not actually constitute multi-
lateral assistance. It is not yet clear to what extent this might also be the
case for assistance to the other multilateral agencies in this sector. More-
over, Canada’s focus on research and development funding might somewhat
increase food security, but without addressing – or ensuring that other
donors address – poverty and inequality, especially regarding access to land,
food insecurity will remain a serious global problem.
At face value, Canada’s rapid emissions growth and disengagement from
UN negotiations has hindered global efforts to tackle climate change.
Though the Canadian government unilaterally abandoned its international
obligations to reduce emissions in order to safeguard jobs and improve
growth prospects domestically, it increased spending via multilateral chan-
nels to help developing countries adapt and reduce emissions themselves.
Since Canadian aid in this sector is at an average level when compared to
other donors, it cannot be said to compensate for inaction at home. While
its strategy in developing countries should result in various benefits, Canada
has shifted the burden of action to other countries, confirming that it is
essentially a free rider on others’ efforts.
This picture of Canadian multilateral development cooperation suggests
that the Canadian government had very little interest in strengthening
multilateralism. It increasingly adopted a utilitarian approach, for example
 Stephen Brown and Michael Olender 181

on MNCH issues, and decided to act unilaterally when it was in its inter-
est to do so, for instance on the issue of emissions reductions. Its efforts to
address global food security, while flawed, and its support for adaptation and
emissions reductions in developing countries were to a certain extent com-
mendable. Overall, however, this issue-by-issue approach hindered efforts
to adapt the multilateral system to 21st century global development chal-
lenges. It resembles behavior that ‘realist’ international relations scholars
expect from hegemonic global powers, not middle powers like Canada that
have long supported multilateral solutions to global problems.
This chapter’s findings suggest that Canada’s multilateral development
cooperation could improve in at least three concrete ways. First, the gov-
ernment could reduce its use of multilateral organizations as conduits for
bilateral aid, which could increase aid effectiveness. It could also help
strengthen the institutions themselves, jointly with other member countries,
rather than undermining the organizations’ missions, priorities, and proce-
dures. Second, Canada’s effectiveness as a development partner would be
enhanced if the government included access to safe, legal abortions in future
projects under the Muskoka Initiative and also addressed broader poverty
and inequality concerns in its food security strategy. Third, to increase
prospects for designing a new climate change treaty that would benefit all
parties, it could contribute constructively to negotiations in 2015 rather than
refusing to participate.
By acting in a less self-interested way, Canada could renew its commitment
to multilateral development cooperation and contribute to a more effective
response to global challenges, which require a multilateral approach that by
definition cannot be based on national interest. In particular, Canada and
other countries could reinvigorate multilateral practices, seize the oppor-
tunities to work with new and old partners in multilateral development
cooperation, and contribute to establishing a more stable, equitable, and
prosperous international system, which is in all countries’ long-term inter-
est. Multilateralism will continue to fray, however, if Canada and its peers
act according to more narrowly defined, short-term self-interest.

Acknowledgments

The authors are grateful to Elizabeth McAllister, Carolyn McAskie, Hunter

McGill, Ian Smillie, Rieky Stuart, anonymous reviewers, the editors, and
especially Bruce Montador for their helpful comments on earlier drafts of
this chapter.

Notes
1. Most Canadians have a strong – and often exaggerated – sense of their coun-
try’s contributions to multilateral institutions and the respect that such support
182 Cases in Multilateral Development Cooperation

garners abroad. Many consider supporting a significant role for Canada in

international affairs as being integral to what it means to be Canadian.
2. On the World Bank’s comparative advantage among development organizations,
see Leipziger (2012, 21–2), Picciotto (2012, 65–7), and Blomfield and Kharas
(Chapter 3, this volume).
3. Unless specified otherwise, all ODA amounts cited in this chapter are taken from
OECD (2012), based on data provided by the Canadian government. They are
expressed in constant US dollars (at 2009 prices) to facilitate comparison. Such
data are harder to obtain directly from CIDA, notably because they are not
adjusted for inflation and it is not always clear if they qualify as ODA.
4. With those exclusions, Canada provided an average of about 25 percent of its
ODA multilaterally in 2007–09. Among DAC members, the highest shares were
contributed by South Korea (29%), Italy (28%), and Sweden (26%), and the lowest
by Portugal (12%), the United States (12%), and Greece (11%) (OECD 2011, 25).
5. The Department of Finance, rather than CIDA, is responsible for Canada’s contri-
butions to the World Bank, making coordination with other aid programs more
difficult. The fluctuations could be due in part to the fact that the Canadian
government’s fiscal years differ from international organizations’ use of calen-
dar years for accounting purposes. Moreover, the replenishment of some World
Bank funds does not always occur on a constant annual basis.
6. As mentioned above regarding the World Bank, one should not over-interpret
year-to-year variations because replenishments do not necessarily occur annually.
Moreover, as explained below, there are more practical explanations for decisions
regarding funding levels.
7. Much depends, however, on what dimensions of development assistance are
being measured and how they are aggregated. A joint study by the Washington,
DC-based Center for Global Development and Brookings Institution gave high
scores to multilateral lending agencies for ‘maximizing efficiency’ and ‘fostering
institutions’, but much lower ones on ‘transparency and learning’ (Birdsall et al.
2010). Multilateral aid organizations also compare poorly in other areas, includ-
ing significantly higher administrative costs, explained by higher salaries and
more generous benefits for employees (Easterly and Pfutze 2008, 47–8). For fur-
ther discussion of multilateral and bilateral donor rankings, see Picciotto (2011,
65–7).
8. Unlike all other amounts in this chapter, these figures are in Canadian dollars,
which at the time of writing were very close to being at par with US dollars.
9. For a more complete list of advantages and disadvantages from various perspec-
tives, see OECD (2011, 29).
10. By way of comparison, figures for DAC donors as a whole for the same year
were 28 percent of ODA to multilateral agencies themselves and an additional
12 percent of ODA using multilateral organizations as bilateral aid conduits. The
corresponding figures for France were 45 percent and 1 percent; the United King-
dom, 34 percent and 22 percent; and the United States, 12 percent and 15 percent
(OECD 2011, 5, 24, 54).
11. According to World Health Organization and World Bank estimates, the initiative
would help developing countries to prevent 1.3 million child deaths and 64,000
maternal deaths, while enabling 12 million couples to access modern methods of
family planning over the five-year period (G8 2010, 3). For more information on
the Muskoka Initiative, including principles, mechanisms, and targets, see Annex
 Stephen Brown and Michael Olender 183

I of the G8 Muskoka Declaration. See Canada (2011b) for a list of MNCH projects
that have been allocated funding.
12. Unlike for the previous figures, the data relating to the agricultural sector refer to
official commitments, rather than actual disbursements, as that is how they are
recorded in the OECD statistical database.
13. Part of this dramatic growth could be attributed to a greater emphasis on agricul-
ture in the sectoral coding of CIDA projects, rather than solely to a new program
priority. Still, CIDA’s return to the agricultural sector mirrored that of other
donors in response to the food crisis. It followed a period of chronic underfunding
of multilateral agricultural institutions.
14. CGIAR is a network of development organizations that focus on agricultural
research, including 15 research centers located across the world.
15. CGIAR figures are taken from its annual financial reports (2001–10), available
on the organization’s website at http://www.cgiar.org/publications/finrep/index
.html, and are expressed in current dollars.
16. WFP, UNICEF, and other multilateral agencies are aware that donors often pre-
fer to designate their assistance to certain countries and use the occasion to
boost their public profile. Out of pragmatism, the organizations have therefore
established channels to facilitate such contributions, including launching specific
emergency appeals.
17. For a discussion on the leadership role of the EU in international climate politics,
see Hovi et al. (2003). Notably, the EU created an internal burden-sharing agree-
ment that established differentiated emissions-reduction targets for its member
countries, an arrangement that allows some countries to pollute over the Kyoto
targets based on their level of development (Hovi et al. 2003, 10, 17).
18. Canada is responsible for approximately 2 percent of global emissions, China
over 20 percent, the United States around 18 percent, the EU about 14 percent,
and India and Russia approximately 5 percent each (Environment Canada 2011a,
13). Developing countries together (including China and India) accounted for an
estimated 57 percent of global emissions in 2010, but emissions per person were
significantly higher in developed countries (Gillis 2011).
19. When Canada withdrew the accord covered only 13 percent of global emissions,
a number that is set to shrink as emerging market economies continue to rapidly
develop (Kent 2012).
20. Like with its agricultural sector data, the OECD records statistical data on offi-
cial commitments, rather than actual disbursements, for overall environmental
protection ODA.
21. The World Bank Pilot Program for Climate Resilience, which CIDA is helping
to fund over the 2008–14 period, supports country-led adaptation projects and
will help up to ten least-developed countries and small island states vulner-
able to climate change to integrate adaptation measures and approaches into
environmental, public sector, and water sector policies and improve adminis-
trative management. Along with partner countries, the GEF provides financing
for innovative technologies and policy development and technical assistance
and capacity development. Canada has greatly increased its funding to the GEF
and is contributing $216.5 million over the 2010–14 period (WRI 2011, 12;
CIDA 2012c). The GEF operates the UN’s Special Climate Change Fund, which
finances projects that prioritize adaptation, technology transfer, and associated
capacity-building activities.
184 Cases in Multilateral Development Cooperation

22. Canada’s first $400 million, announced in June 2010, supported various mul-
tilateral initiatives, the largest three being $291.5 million allocated to the
International Finance Corporation (IFC), a member of the World Bank Group
that provides concessional loans, to encourage private investment and inno-
vation to reduce GHG emissions in developing countries; $40 million to the
World Bank Forest Carbon Partnership Facility Readiness Fund to build capac-
ity to address deforestation and forest degradation in developing countries; and
$20 million to the Least-Developed Countries Fund to support 49 especially vul-
nerable countries in adopting National Adaptation Programmes of Action on
Climate Change (Canada 2011a). Notably, IDRC received $10 million to support
seven African research centers in conducting climate change adaptation research
(Canada 2011a). In Durban in December 2011, Kent announced further invest-
ment of $600 million for 2011–12 and 2012–13, though did not provide details
(Environment Canada 2011b).
23. According to Bruce Montador, former CIDA Vice-President for Multilateral Pro-
grams and former Executive Director representing Canada at the African Devel-
opment Bank, the Canadian government and other donors provide concessional
financing for mitigation because, with the ability to estimate the dollar cost of
carbon dioxide emissions, it is easier to decide on the allocation of funds for mit-
igation than for adaptation. Moreover, clean energy projects generate revenues.
By way of contrast, adaptation projects typically do not generate revenues and
therefore require grant funding. Also, because there are no clear criteria for rank-
ing proposals, decision making becomes more political and thus more difficult
(personal communication, October 2012).
24. There is much debate over justification for adaptation, its effects, and best strate-
gies. It can be regarded as a ‘confidence-building activity’ that could increase
the trust of developing countries and improve the prospects of success of
international negotiations (Rübbelke 2011, 1478).

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8
Assessing the Relevance of the
WTO in International Trade
and Development
Pablo Heidrich

Whether in global health, human security, or international trade

governance, there are two ways of assessing the relevance of a multilateral
institution. One approach is to begin with the institution itself and assess
what it has done in terms of its mandate. Another, opposite approach con-
sists of examining the subject explicitly targeted by that mandate to study
how it has evolved. This method captures the impact or relevance of the
agreements and actions resulting from a multilateral institution’s mandate
without being institution-centric in the analysis.
This chapter makes use of the latter approach to discuss the relevance of
the World Trade Organization (WTO) in international trade. This method
was chosen because governance provided by the WTO and its predecessor,
the General Agreement on Trade and Tariffs (GATT), has always competed
with other modes of regulation in international trade, such as regional or
preferential agreements, in the precise subject of its mandate – trade liber-
alization (Bhagwati and Sutherland 2011). Moreover, international trade is
an activity mostly confined to the realm of private agents (companies) and
not directly executed by the actual members of the multilateral organization
(national governments).1 As a result, the WTO serves as a mechanism of
global governance for an activity – international trade – that is mostly con-
ducted by non-state entities, unlike other multilateral bodies charged with
issues of global security, education, justice, or health, for example, which
remain in the direct purview of states (Charnovitz 2010).
It is important to examine the structure of international trade in order
to understand the relevance of the GATT/WTO as a governing agent. Here,
it is essential to keep in mind that international trade has occurred and
will continue to take place in the future regardless of whether this orga-
nization exists. Therefore, this chapter seeks to explore if and how the
GATT/WTO governance of global trade has contributed to its growth and
current structure through its multilateral liberalization and deregulation

189
190 Cases in Multilateral Development Cooperation

efforts, as well as the institution’s role in the future. This examination

will link the WTO with debates on development as the GATT/WTO’s rele-
vance is anchored in the axiom that trade liberalization can be a harbinger
of economic growth and productive transformation (Deere Birkbeck 2011).
Therefore, the role of this multilateral organization in promoting trade liber-
alization and governing the practices of international commerce is expected
to have an important influence on the possibilities of developing countries
to achieve higher levels of income for their populations.2
This chapter appraises then, from the perspective of developing coun-
tries, whether the WTO is currently relevant to international trade, and
consequently, to international development. The first section of the work
looks at the dimensions and characteristics of international trade today. The
second observes the basic work of the WTO in trade negotiations, dispute
settlement, trade policy monitoring, and technical assistance. The third con-
cludes with a series of recommendations on how the WTO could maintain
or increase its relevance, and what effects that might have on developing
countries.

State of trade today

Global trade was worth almost US$15 (14.8) trillion in 2010, accounting for
almost a third of all goods and services produced and sold worldwide that
year (WTO 2011b). These statistics highlight the relevance of international
trade in the global economy, as well as in the individual lives of most people.
This historically unprecedented scope of global trade means that in peo-
ples’ daily lives, regardless of geographical location and purchasing power,
they are engaged across borders by the foreign content, raw materials, and
finished goods or services people produce and consume.
That has not always been the case, not only in a longue durée vision of
history but as recently as few decades ago. In the 1950s, global trade rep-
resented barely 10 percent of global production. As late as the mid-1990s,
however, it was just over 20 percent growing to 32 percent of the world’s
gross domestic product (GDP) by 2010 (WTO 2011b). This unequivocally
implies that, as the global economy has developed in the last 60 years, it has
become increasingly integrated via trade linkages. The main argument for
the relevance of the WTO and its effectiveness in carrying out its mandate
of trade liberalization rests on precisely this evidence, closely accompanied
with assertions that the multilateral rounds of trade negotiations have made
this growth in global trade possible. These statements will be revisited in the
chapter to determine if the increase in global trade is a case of causality or
simple correlation of the WTO’s trade liberalizing agenda.
What is most statistically compelling is that global trade has been expand-
ing at twice the rate of the global economy since the 1950s, despite the
diversity of development policies and paths undertaken around the world
 Pablo Heidrich 191

Table 8.1 Comparing growth in world trade and GDP

Trade growth (1) GDP growth (2) Ratio (1/2) Trade as % of

global GDP

1950–60 7.7 4.5 1.71 10.1

1960–70 8.6 5.5 1.56 12.0
1970–80 5.3 4.1 1.29 16.2
1980–90 3.9 3.2 1.22 19.5
1990–00 6.5 2.3 2.83 21.1
2000–10 5.2 2.4 2.16 25.8
2009 −10.7 −1.7 6.29 31.4
2010 12.8 3.8 3.36 32.1

Source: Generated by author using data from WTO (2011a).

(Table 8.1). As economic policies and practices continue to become less het-
erogeneous in the coming years, one can expect international trade to be
an even more important part of what people produce, consume, and work
with. Another observable long-term trend is the progressive slow-down in
growth of the global economy during the last three decades (1980s–2000s),
compared to the average of the previous three (1950s–70s). Meanwhile,
international trade has actually grown much faster than global GDP since
the 1990s, as can be observed in the Ratio column of Table 8.1. Thus, not
only will international trade become a larger share of GDP in the future, but
this increased relevancy will coincide with a situation where global produc-
tion, or global GDP, might be growing slower. In other words, international
trade will represent a more significant part of the global economy not only
as the destination or source of the goods and services people produce and
consume, but increasingly as the ‘great adjuster’ or ‘great arbiter’ through
which countries will host narrower and more specialized parts of a larger
but slower growing and more tightly integrated global economy. The fol-
lowing sections of this chapter explain how this global economy, mostly
organized through international production networks has already come
into being, with intra-industry and intra-firm transactions as the dominant
characteristics of global trade.
From a development point of view, the simultaneous power of interna-
tional trade to allocate production capacities on a global scale and distribute
production stages around the world make it a de facto designer of devel-
opment possibilities for all countries, not only the developing ones. This
understanding of trade’s structural power is what harbors the most hope for
advocates of trade liberalization (as stated in the mandate of the WTO), and
also the strongest fears for those concerned with effects of even freer trade.
Beyond these hopes and fears lie rather uneven and often contradictory
realities.
192 Cases in Multilateral Development Cooperation

130

120

110

100
1981 1985 1989 1993 1997 2001 2005 2009
90

80

70

60

Value index-previous year = 100

Figure 8.1 Global trade annual change rate

Source: Generated by author using data from WTO Historical Time Series (WTO 2011c).

Global trade is indeed a significant and growing part of the world’s GDP
but it is also one of its most fickle parts: volatility in trade flows is notori-
ously high, often doubling or tripling falls in global GDP during economic
slowdowns or recessions on an international scale (see Figure 8.1). For exam-
ple, while the world’s GDP fell in 1975, 1981, 1991, and 2001 by between 0.5
percent to 1.5 percent, international trade slowed down its own growth by
several times that magnitude on each occasion. The assumption frequently
espoused by countries, centering on the belief that global trade can operate
as an expandable safety net for their excess productions in times of signif-
icant crises, has been proven repeatedly wrong on the aggregate of global
trade.3 In the latest global crisis of 2008, the initial effect was a dramatic
fall of 22 percent international trade during 2009. As it turns out, the ‘great
adjuster’ is quite a temperamental one, with the obvious corollary as to its
distributional wisdom.
Another characteristic of international trade is its geographical distribu-
tion, which is not by any means an even mantle covering the whole of
the world economy (Figure 8.2). Historically, most international trade has
taken place in the last 60 years in the North Atlantic corner of the globe.
That has varied only slightly from 60 percent in the 1950s to 62 percent
in the 1980s, and later only falling to a still significant 52 percent in 2010.
Regionally, the mantle is more reminiscent of an uneven peel, as the African
continent has never participated with more than 3 percent of international
trade; Latin America’s share has hovered around 5 percent; and the Middle
East has been at about the same level. Only Asia has consistently grown from
13 percent in the 1950s to 31 percent in 2010. The distributional powers and
 Pablo Heidrich 193

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1948 1953 1963 1973 1983 1993 2003 2010

Asia Middle East Africa Europe

North America Commonwealth of

Independent States (CIS)
South and Central America

Figure 8.2 Geographical distribution of global trade

Source: Generated by author using data from WTO Historical Time Series (2011c).

designer capacities of the global trade juggernaut are consequently limited

by its relative strength in coverage. Once this is brought in with a circum-
spect understanding of its fickleness, the resulting combination is that the
structural might of international trade is there but without the invincibility
and omnipresence its cheerleaders and Cassandras intend to impress upon
academics and policymakers.

Understanding global trade

It is simply not enough to look at the increasing relevance of international
trade, its historical volatility, and geographical reach to fully understand its
impact on the global economy. One also needs to examine the ways in which
the structure of international trade has changed over the last 60 years in
terms of composition and mode of operation. Only then can the added value
of the WTO in governing international trade by promoting its liberalization
be assessed.
In terms of sectoral composition, Figure 8.3 illustrates how the share of
primary commodities (agricultural, mining, and fuel products) has grown at
a much slower pace than that of manufacturing products. A more detailed
look at the data indicates that trade in manufactures has increased fastest
between 1985 and 1996 and again over the 2002–08 period; its growth
slowed down between 1980 and 1984, and from 1997 to 2001. In contrast,
194 Cases in Multilateral Development Cooperation

12,000

10,000

8,000

6,000

4,000

2,000

0
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Agricultural Fuels and
products mining products
Manufactures

Figure 8.3 Composition world trade (in USD billions)

Source: Generated by author using data from WTO Historical Time Series (WTO 2011c).

the contribution of fuels and minerals to global trade actually decreased

from 1980 to 1986, followed by slow growth until 1999. However, from
the beginning of the twenty-first century the global trade’s share of fuels
and minerals increased systematically until 2008. In comparison to fuels
and minerals, trade in agricultural commodities has grown at a much
slower but also more consistent pace. Just like in the case of the other
natural resources, the growth of agricultural trade accelerated from 2000
onwards. The impact of the global crisis of 2008–09 has been felt in all three
categories – manufactures, fuels/minerals, and agriculture – but as explained
later, through quite different channels. While trade in manufactures con-
tracted mostly in terms of volume, trade in commodities shrunk most
according to unit prices, with volumes remaining comparatively constant.
The extraordinary growth in the international trade of manufactures,
accounting for over 80 percent of total growth in global trade since the
1950s, has been increasingly achieved in two quite unprecedented types
of trade: intra-industrial commerce and intra-firm transactions. The for-
mer term refers to trading finished goods or intermediary inputs inside a
same industry such as cars, textiles, or electronics, the latter expression
implies trade done among the different branches or affiliates of a same
(multinational) firm.
 Pablo Heidrich 195

According to Brülhart (2009) intra-industrial trade accounted for 44 per-

cent of all international trade by 2006, having increased its share from just
11 percent in 1962. Industrialized countries have had a stronger represen-
tation in this type of exchange, but developing countries have gradually
incorporated themselves into it as well. The figures for previous years
(1950–61) are rather approximate given the scarcity of data, but provide evi-
dence that intra-industry trade was even lower during that decade, perhaps
around 5 percent for the beginning of the post-war era. In terms of sectoral
or industry composition, only 10 percent of primary goods (mostly special-
ized food products) are traded today among countries in this intra-industrial
manner, compared to over 50 percent of all intermediate and final manufac-
tures traded across borders. The sectors accounting for most of the growth in
manufacturing (and in global trade as a whole) are vehicles and auto parts
and electronics. To recap then, global trade has indeed grown faster than
global production and most of that growth has been in the manufacturing
sector, specifically in the intra-industrial trade of manufactured parts and
finished goods. Therefore, the engine of growth for global trade is one where
trade is actually closely integrating industries across countries.
As a result of this phenomenon of intra-industrial commerce, a whole
new perspective has been born in respect to international trade.4 It is no
longer conceived as an exchange of different goods but rather, the exchange
of similar, equivalent, or directly complementary goods. The corollary
for development possibilities of countries engaging in international trade
consists not of defending or promoting sectors or industries but instead,
defending or promoting their respective international positions and global
market shares in them. From this, the number and quality of jobs, as well as
opportunities for profits, are to be calculated.
It is important to remember that international trade had historically been
conceptualized as taking place along lines of comparative advantage. This
theory was expounded by the simplified Ricardian example of importing
Portuguese wine and exporting English cloth (Alessandrini 2005).5 When the
GATT was set up in 1948 the concept of comparative advantage was the pre-
vailing understanding (and accurate description) of the state of international
trade. As such, the GATT was constructed around the principles of countries
exchanging trade preferences (discounts in tariffs) and then multilateralizing
those preferences to all signatories of the agreement (Bowman 2011). The
signatories envisaged that market access for their respective Ricardian cloth
exports to multiple partners would facilitate their possibilities to import
Ricardian wines, and allow for their maximization of available resources in
what they produced most efficiently, thus increasing productivity and lifting
national and per capita incomes (Lawrence 2010). They did not imagine that
the resulting structure of global trade would instead be one where most trade
flows are of either intermediary inputs for manufactured goods or finished
196 Cases in Multilateral Development Cooperation

goods similar to the ones being imported from/exported to that same partner
as they are today (Subramanian and Wei 2007).
Another essential descriptor of today’s international trade is that an
increasing proportion is done among subsidiaries of or with headquarters of
foreign firms, often multinational ones.6 Those exchanges are labeled intra-
firm trade, being a by-product of the ascendance of multinational companies
since 1945, declining transportation and communication costs, as well as
the growth of domestic markets in emerging economies, all of which are
together driving the development of global production chains. Lanz and
Miroudot (2010) gauge intra-firm trade at approximately 20 percent of the
total Organisation for Economic Co-operation and Development (OECD)
countries’ trade and estimate that numbers could be at roughly two thirds
of that for all other (mostly, developing) countries around the world in
2008. Just as in the case of intra-industrial trade, the heaviest concentra-
tion of intra-firm trade is in manufactures, particularly in sectors dealing
with electrical and mechanical machinery, vehicles, electronics, and chem-
icals (Levchenko et al. 2010). Moreover, the historical development and
geographical distribution of intra-firm trade echoes that of intra-industrial
trade, with the notable difference of North-South and even increasing parts
of South-South trade in manufactures taking place among subsidiaries of
multinationals. The relative competitiveness of countries where production
and assembly plants are located is a key factor in explaining why global
production chains are being led, organized, and sometimes fully owned
by multinational companies (Echeverria 2008). That competitiveness is not
only grounded in domestic determinants such as wages, education, and
infrastructure, but also in relational factors, such as respect for (foreign) tech-
nology copyrights and rules of origin,7 as well as membership to preferential
trade agreements (Bernard et al. 2010).
The imposing role of intra-firm trade introduces then another caveat in
the traditional historical conceptualization of international trade. Since the
creation of the GATT, trade governance was set up with national govern-
ments bargaining with each other on what trade concessions they would
exchange. The underlying assumption has been that national governments
are the best interlocutors to express the demands of their respective national
firms (and unions, for those with any social democratic inclination) in this
international forum (Feinberg and Keane 2009). The creators of the GATT,
and even the leaders of its several trade rounds had not conceived interna-
tional trade becoming an activity increasingly undertaken inside individual
multinational firms and across national boundaries (Lanz and Miroudot
2011).
The surging current of intra-industrial and intra-firm flows has also created
strong domestic voices inside countries to refrain from trade protection-
ism in times of crises, which would hinder the functioning of global
production chains (Bems et al. 2011). That consequence, well demonstrated
 Pablo Heidrich 197

in the current global economic crisis, is however mistakenly assigned to a

widespread global belief in the benefits of free trade and even for respect on
the governance provided by the WTO (Bown 2011). Instead, it can be the
symptom of a reasonable acceptance for the ties that bind us as well as the
increasing possibilities to specialize at one or more stages of production, par-
tially reducing fears that crises would induce massive unemployment and
widespread bankruptcy in a particular sector or country (Kim, S. Y. 2011).
Furthermore, little from this changing structure of global commerce towards
intra-industry and intra-firm trade indicates its need for further liberaliza-
tion to advance, or even for multinational enterprises to control a larger
share of global trade (and production) than they already do. In fact, any
modification of the current status quo in trade rules would imply changes in
the geographical deployment of these global production chains that would
affect a range of countries along lines too difficult to quantify in bargaining
as done at the WTO negotiation rounds so far.
Aside from all these quite revolutionary impacts of intra-industry and
intra-firm trade, which have propelled international commerce chiefly in
manufactures, the rest of the growth of international trade as a growing
fraction of global production is a result of the increases in production and
prices of commodities. The most significant overlap between that and the
rapidly growing flows of manufactures is the remaining trade of one for the
other. For instance, country A exports wheat and soy oils to country B, while
importing from it cars, televisions, and financial services. That remainder
of international trade could easily be called the ‘Ricardian rest’, as it more
clearly reflects David Ricardo’s nineteenth-century notions of comparative
advantage. By grace of its historicized character, that ‘Ricardian rest’ remains
the most often used characterization of international trade from a develop-
ment perspective even as it has increasingly become less representative of
what global trade flows actually are nowadays.8 Still, advocates and oppo-
nents of further global trade liberalization keep on pointing to these cases of
Ricardian relationships when seeking further reasons for why trade ought or
even ought not to be subject of any further WTO-style trade liberalization
(Martin and Mattoo 2011).
Moreover, Ricardian relationships are moving in directions that, until
recently, were unimaginable. The prices of commodities have increased by
a full 100 percent over the averages of the previous decade and promise
to remain at fairly high levels for the next several years. There are a num-
ber of factors that have led to this rise in commodity prices: the rise of
China, India, and other emerging markets, whose growth requires a steady
stream of natural resources; increased demands for different diets, affecting
food and agricultural exports; demand for more housing and infrastructure
requiring metals and energy; and the evolving dynamics of financial specu-
lative markets which have allowed hedge and pension funds full entry into
commodity futures (Coxhead and Jayasuria 2010). As a result, prospects for
198 Cases in Multilateral Development Cooperation

commodity exporters, essential partners for a Ricardian dyad to exist, are

indeed favorable. This situation allows developing countries that are also
commodity exporters to pursue quite different approaches to trade policy.
These nations have become less keen to agree to new rounds of liberaliza-
tion in the WTO multilateral regime now that higher commodity prices,
which are only expected to rise in the near future, have increased their
exports earnings even without obtaining further market access. Besides,
commodity exporters often face Dutch-disease-like problems of currency
appreciation – another important reason to resist further WTO liberalization
commitments.9
In other words, the ‘Ricardian rest’ is the place where the galleys of inter-
national trade liberalization find their sirens: it is utterly attractive to make
the claim that now more free trade will benefit commodity-exporting signa-
tories (as most developing country members of the WTO are), but tragically
fatal for those approaching it that way. Not only have export proceeds grown
for commodity exporters but other problems have also arisen for them from
that same change in primary goods’ prices. Thus, those high commodity
prices are an irresistible chanting helping lead the Doha Round negotiations
to wreckage.

WTO contribution to global trade

This part of the chapter now turns to a brief analysis of the contribu-
tion the WTO and its predecessor, the GATT, have had to the growth
and change process in international trade described earlier. In principle,
given trade’s significant expansion over the course of the past 60 years,
the GATT/WTO ought to have mattered a great deal. After all, just as the
number of member countries to the GATT/WTO has increased from 23 in
1948 to 157 by 2011 and the organization has undertaken several mul-
tilateral rounds of negotiations, trade has also augmented and nations’
economies have become ever more internationally involved. Moreover, the
GATT/WTO negotiation rounds have moved from being an obscure club
of specialized negotiators to become a global event, complete with thou-
sands of journalistic and academic pundits, and hundreds of thousands of
protestors for a myriad of trade-related (or trade-affected) issues. On the sur-
face, these variables blatantly indicate the obviously growing relevance of
the WTO in the global economy.
In contrast, research gives a more nuanced picture, full of rather aca-
demic but very insightful debates. The GATT/WTO has indeed promoted
the growth of international trade as a percentage of global production,
thus furthering economic interdependence across frontiers. However, this
has mostly been the case for the older members of the institution (Abu-
Bader and Abu-Qarn 2008), and particularly for the industrialized coun-
tries (Subramanian and Wei 2007). Nevertheless, systematic analysis of
 Pablo Heidrich 199

GATT/WTO membership has found no statistical evidence of the institu-

tion’s historical relevance to individual countries’ trade liberalization (Rose
2004). Regionalism, in the form of preferential trade liberalization among
a limited set of signatories, and the unilateral lowering of trade barriers
have been far more significant forces of trade liberalization for most nations
(Goldstein et al. 2007; Baldwin 2009).
Much of the confusion regarding the historical impact of the GATT/
WTO is due to the ambiguous counts of GATT membership in the 1950s and
1960s, before decolonization was fully achieved in much of Africa, Asia, and
the Caribbean. Most of the research arguing that this multilateral organiza-
tion has been relevant to global trade liberalization and thus, to the growth
of international trade, is actually anchored in counting colonies as virtual
parties to the agreement, without considering that they had no real voice
representing them in their colonizing metropolis (Gowa 2010). In fact, once
independent, most of these former ‘liberalizers’ drastically increased their
protectionist measures and most only decided to join the GATT/WTO as
independent nations much later, in the 1990s. The period between their
independence (and de facto abandonment of the GATT/WTO) and their for-
mal entry as countries into this agreement is, however, ignored by those
claiming that GATT/WTO has had a significant role in liberalizing trade
globally. On the other side of the development scale, international security
experts have successfully argued that security frameworks are a key variable
explaining the growth in trade among allies using the case of the North
Atlantic Treaty Organization (NATO) alliance, most of which are industrial-
ized countries, and who have accounted for over half of the total growth of
international trade since the 1950s (see Gowa and Kim 2005 for a survey of
that literature).
Other competing explanations of international trade growth counter the
basic notion that trade liberalization (by lowering trade barriers) through the
GATT/WTO is the main reason for its global growth. Some of that research
has shown that technological advancements in communications and trans-
portation have been more significant for the expansion of international
trade than the removal of protection measures (Navaretti et al. 2010). The
changing structure of demand in the global economy due to rising incomes
has also had a powerful effect in increasing international trade according to
some studies (Kim, M. H. 2011). Finally, commerce has also grown domes-
tically, closely connecting different localities and regions inside countries
more than ever before, as domestic economies have also expanded by means
of sectoral and spatial specializations. In the larger scheme of things, argu-
ing that ‘international’ trade has grown thanks to the measures agreed upon
at a multilateral organization like the GATT/WTO is akin to disconnecting
international commerce from all other economic activities, as well as from
the multiple ways in which the world has been changing as incomes raise
and technology changes lives.
200 Cases in Multilateral Development Cooperation

For more radical scholars, this trade-centric – or rather international-trade-

centric – understanding of recent economic history is an ideological affair
that seeks to coin international trade liberalization as the indispensable
engine for income growth and economic development (Bowman 2011 pro-
vides a review). Trade liberalization advocates have ensured the hegemony
of the ‘free trade’ argument in economics by successfully claiming that trade
liberalization, as done through the GATT/WTO agreements, drives global
growth. Proponents of this claim often identify increases in international
trade as proof of this (Alessandrini 2008). However, the analysis above sug-
gests that while international trade has grown and may have helped bring
historically unprecedented levels of prosperity to the world, this prosperity
has not necessarily been due to trade liberalization, particularly as ensued
through of the GATT/WTO. The ‘governance’ provided by this organiza-
tion in international trade (the term used here to refer to the subject the
WTO self-references as its own domain) might have helped, albeit only
slightly, to drive the global economic integration we have witnessed since
the 1950s.

WTO negotiation rounds and the role of enthusiasm

The Doha Development Round (DDR), launched by the leading members of
the WTO in 2001, illustrates the role that enthusiasm in the power of ideas
has in crafting reality. Just as in contemporary ‘wars of choice’ (in Iraq and
Afghanistan), a particular vision of what is to be done seems to have driven
participating countries into an intractable situation at the WTO negotia-
tions. There, reality has, just as stubbornly refused to agree with the guiding
views that induced their inception.
The DDR was explicitly launched in 2001 with the dual objective of
increasing the development possibilities of low-income countries. It was
expected that the objective could be achieved by lowering the trade bar-
riers that limit their access to markets of industrialized and middle income
countries and by expanding WTO agreements and rule-enforcement, such as
foreign direct investment, services, and trade facilitation measures, to areas
where it still had a limited role (Bhagwati and Sutherland 2011). The view
that trade barriers in wealthier countries remained a strong handicap for the
expansion of low income countries’ exports and that escalating WTO-type
multilateral liberalization to non-trade or non-merchandise areas would also
support increased participation, and thus benefit, of all countries in global
trade, underpinned these goals.
The practice of the DDR has, however, translated into a negotiation
process where the propositional power of industrialized economies has can-
celed the developmental potential of increased market access obtainable
via greatly reducing agricultural sector offers. Industrialized members of
the WTO have made increased market access in agriculture conditional on
developing country (including low-income countries) implementation of
 Pablo Heidrich 201

great reductions in their own trade barriers via the so-called NAMA (non-
agricultural market access) chapter in the negotiations (Shafaeddin 2010).10
From a trade-structural perspective, the DDR embodies a clash of diver-
gent interests and therefore, strategies by distinct sets of countries with very
different positions in global trade. Industrialized countries are eager to main-
tain their dominance of the higher-technology manufacturing industries
and services for their firms but increasingly for their workers as well. Large
and emerging middle-income economies want to move up the economic
ladder and diversify their means for access by opening other venues such
as in agricultural goods (processed foods) and mineral-based commodities
(processed metals). Meanwhile, low-income countries want to preserve their
current policy space expressed in their potential levels of protection (bound
tariffs) (Bhagwati and Sutherland 2011).
A cursory analysis of official accounts on the potential advantages to sign-
ing the DDR in its latest iterations, including all side agreements on services
and trade facilitation measures, promises roughly $160 billion11 per year of
gains for developing countries, or 1.2 percent of global trade in December
2008 (when the last comprehensive proposal was tabled) (Laborde et al.
2011). Given that global trade, worth $15 trillion in 2010, has grown each
year for the last two decades at close to 6 percent annually (or $840 billion
of the 2010 figure), it is hard to be impressed by the potential yield of the
Doha Agreement. The gains to developing countries would only amount to
a quarter of the total gains from closing the DDR, as the other three quarters
would go to industrialized countries. The World Bank calculated the gains for
low-income countries to total only $30 to $40 billion, compared to gains for
industrialized countries of roughly $320 billion (Hoekman 2011). Further-
more, these calculations operate on the historically unproven assumption
that there would be full implementation of the agreement by all WTO mem-
bers in approximately eight years after the deal is signed. Previous GATT
rounds have had much less than full indexes of implementation, particularly
by industrialized countries, and these lapses have traditionally concentrated
in the sectors most relevant for developing countries, as these have the least
capacity to put pressure on the non-compliers via WTO mechanisms such
as the Trade Policy Reviews or the Dispute Settlement Mechanism (Shaffer
2005).
Nonetheless, the DDR was launched in a context of a global recession in
2001 and against the backdrop of a dramatic global struggle with terrorism.
It was then portrayed as a positive contribution to help resolve both issues by
confirming the trust and consensus of all WTO members to further liberalize
trade as a means to increase economic welfare (Lawrence 2010). However,
the changing tone or response from the private sector has been what has
set apart this round of negotiations and not its dramatic historical context.
The more radical observers would have expected militant efforts from multi-
national enterprises and the so-called global capitalist class pushing for an
202 Cases in Multilateral Development Cooperation

ambitious and comprehensive round of trade liberalization from which they

ought to be the obvious winners in the early 2000s.12 Even more mainstream
or liberal analysts expected global corporate leaders to provide strong polit-
ical, public, and even intellectual support for that same goal.13 However,
observed reality and abundant commentary from the business press indi-
cates that, in contrast to expectations of capitalist conspiracy or leadership,
leading voices from the international business community were only ini-
tially supportive of the DDR spearheaded by the governments of the United
States, the European Union, and Japan. As early as 2008, however, that
enthusiasm began to wane rapidly. In fact, the opinion of the business com-
munity of the negotiations progressively transformed into an imploration to
‘just get it over with’, almost regardless of actual results.14 Given the momen-
tous amounts of political capital invested in the DDR, and more generally, in
the WTO as the purported engine of global growth through the multilateral
liberalization of markets, the corporate contribution has begun to suggest
ways for political leaders to save face with proposals of variable geometry,15
coalitions of the willing, and other forms of orderly retreat.16 Indeed, voices
representing leading business sectors have started to suggest ways of bring-
ing a formal closure to the DDR, even explicitly indicating that the current
status quo in the governance of trade is not one that necessitates any major
readjustments (Barfield 2011).

WTO trade policy reviews and the role of contemplation

The Trade Policy Reviews Mechanism (TPRM) was created with the sensible
purpose of allowing all WTO member countries to monitor the trade poli-
cies of their actual or potential trading partners in a cost-efficient manner.
While the larger and wealthier countries do have national or regional mech-
anisms to fulfill this function,17 most developing countries do not have the
means or capacity to do the same. Therefore, states from the developing
world intended to have the WTO, and the GATT before it, fill this evident
vacuum. The final declaration of the GATT’s Uruguay Negotiation Round
(1986–94), after much debate in the 1960s during the Kennedy Round trade
negotiations, created an official mechanism to review the policies of member
countries.
Given the strong expectations surrounding the review mechanism, devel-
oping nations made significant concessions to industrialized ones. The price
for developing countries was high, and paid in terms of smaller gains in
actual access to the agricultural markets of industrialized countries, tariff
escalation, and arbitrary use of dumping rules to protect uncompetitive
industries. The growth in the number of developing countries joining the
GATT, from 40 in the early 1970s to 85 in the late 1980s, was a key factor
in raising the issue of surveillance and finally tipping the balance in favor
of a substantive surveillance mechanism. This, however, also meant that the
 Pablo Heidrich 203

total number of member countries to be reviewed grew to 123 by the end of

the Uruguay Round and to 153 today (Ghosh 2010).
The initial mandate of the TPRM was to disseminate information on indi-
vidual countries’ trade policies, promote their compliance with WTO agree-
ments and principles, and evaluate the spirit of their overall trade regimes.18
However, as shown by Ghosh (2010), the actual implementation of TPRM
was whittled down, largely due to pressures from industrialized countries.
The mandate on information dissemination was undermined by greatly
reducing the degree of detail that was required to be made public. Com-
pliance promotion was also deemphasized, as TPRMs could not be used by
the WTO itself to force a country to comply with its rules and regulations.
Finally, the overall evaluation was left to a mostly politically qualitative
assessment on whether a country’s policies were in the aggregate conducive
to freer trade or not. Nevertheless, these lightened TPRMs could still be used
to bring forward official disputes before the new WTO’s Dispute Settlement
Mechanism (Davis and Bermeo 2010).
The praxis of the TPRM has then been very much in line with its pro-
tracted birth and early capping. The WTO has never managed to do more
than 60 percent of the 20–25 country reviews it was supposed to conduct
every year since 1995, as it has never dedicated enough resources to that
activity19 (Ghosh 2010). Few developing countries have complained of the
drastically trimmed surveillance power of the TPRMs. A mechanism that was
supposed to be the key in reviewing policies of most of the world’s main
trading partners has therefore become a hollow ceremony in its actual prac-
tice. Prior to implementation, TPRMs were expected to draw much attention
from most WTO members. However, in the past 16 years since the TPRM was
developed, the majority of countries have shown very little interest in par-
ticipating as questioning parties, even when their main trading partners are
brought in for review. Representatives from developing countries have only
participated in around 20 percent of the public sessions and ironically, indus-
trialized countries such as Japan, Canada, United States, and the European
Union, have followed up on 90 percent of all TPRMs done so far on their
trading partners.20
The member countries of the GATT and now the WTO have therefore
forfeited the possibility of constituting an effective policy surveillance mech-
anism from the multilateral arena on international trade that would have,
at least partially, equalized the asymmetries in policy monitoring capacities
between developing and developed countries. The countries that had pre-
viously lobbied for the creation of the TPRM most are now voting with
their feet by simply ignoring the TPRM questioning sessions and even
the final reports when they decide to dispute the policies of any of their
trading partners. On the other hand, the countries that resisted its birth
most and worked hardest to weaken its implementation – the industrialized
204 Cases in Multilateral Development Cooperation

nations – have had the highest level of participation in TPRM sessions.

That is even when these WTO policy reviews do not provide them any
information they do not already have.

WTO dispute settlement body and the role of arbitration

Just as in the case of the TPRM, the GATT/WTO eventually developed a
mechanism to settle trade policy disputes. The current mechanism at the
WTO is called the Dispute Settlement Body (DSB) and is regarded as the most
successful and legitimate of the functions provided by this multilateral orga-
nization (Shaffer 2008). Disputes among all 153 members of the WTO can
be settled there in a relatively swift period of time, around one year, if there
are no appeals, which draw out the process of up to three years (Bown and
McCulloch 2010). In principle, WTO member countries have agreed that
they will use the multilateral system to settle disputes if they believe fellow
members are in violation of trade rules, rather than take action unilater-
ally or bring their cases to other regional mini-lateral courts. In practice,
however, most countries bring only some cases of their many bilateral trade
disputes to this WTO mechanism.
The WTO is not the main arbiter of trade conflicts for several reasons.
For one, adjudication is costly and thus effects the possibilities of most
developing countries (Tussie and Delich 2005; Davis and Bermeo 2009).
The structure of cases also allows third parties to bandwagon against an
the defendant and potentially benefitting them as well from the decision
obtained, which alters the strategic calculations involved in whether to bring
up a case or not (Bown and Hoekman 2005). Finally, given the nature of the
rulings, which normally determine that compensation can only be obtained
by restricting market access to the country at fault, it is difficult for most
developing countries to obtain adequate and timely compensation for the
trade damage suffered (Francois et al. 2008).
Most WTO observers agree that the actual functioning of the DSB responds
to the logic of ongoing negotiations and competition among the largest trad-
ing partners, which are also responsible for most of cases brought before
this dispute arbitration mechanism (Bernauer et al. 2010). In fact, of the
425 cases filed between 1995 and 2011, over three quarters have involved
industrialized countries (mostly the United States, the European Union, and
Japan) either as defendant or initiator in a dispute. Some larger develop-
ing countries such as India, Brazil, and China have accounted for most
of the remaining cases from developing countries. In terms of industries,
manufacturing has accounted for 85 percent of all disputes, with rules affect-
ing mostly agricultural trade or measures influencing the financing of all
tradable sectors accounting for the rest.21
In this regard, the DSB possibly represents the strongest pillar for the
WTO and its relevance in international trade as the cases brought before
it correspond to the current composition of global trade in terms of
 Pablo Heidrich 205

industries and countries’ participation. Nonetheless, developing countries

cannot expect much from this mechanism of the WTO given the costs
involved and the difficulties in obtaining compliance even when winning
a case.

WTO trade-related technical assistance and the role of gospel

The WTO has a fourth mechanism to fulfill its mandate of promoting free
trade around the world: providing technical assistance or capacity develop-
ment to developing countries, particularly those that have recently joined
the organization. Given the enormous volume of legislation and regulations
involved in complying with current WTO agreements, the provision of tech-
nical assistances has de facto created a further opportunity for the WTO to
promote a specific set of views on what trade policy ought to be in devel-
oping countries (Kostecki 2001). Furthermore, this technical assistance is
financed for the most part by the industrialized members of the WTO, espe-
cially those from the European Union. The result has been a transformation
of the WTO into an advocacy organization that promotes trade liberaliza-
tion via engagement with bureaucracies of developing countries under the
guise of technical assistance and capacity building (Shaffer 2012).
In the period 2002–10, and according to its own records, the WTO carried
out over 8000 technical assistance training seminars for tens of thousands of
government officials in over 70 developing and recently accessed members
(mostly, transition economies). In most of these capacity building semi-
nars, officials are trained to understand the texts of WTO agreements by
WTO personnel or WTO-hired consultants. Through that process, partici-
pants are chiefly instructed on ways in which their national policies and
regulations must be changed in order to bring their countries into compli-
ance with WTO agreements. These seminars cover all aspects of trade, from
tariffs to phytosanitary regulations, subsidies, anti-dumping, and other safe-
guard measures. Another notable component is to provide ample training
on how to explain the benefits of free trade to other officials in local and
national levels of government, politicians, and journalists.
In contrast, the WTO technical assistance provides no training on what
policy space and tools developing countries still have available once they
have signed onto WTO agreements on trade of goods, services, or other
domestic legislation that might influence the former. They also receive no
information on best practices to advance other policy goals such as poverty
reduction, environmental sustainability, industrial upgrading, and higher
export earnings through their national trade policies, all while implement-
ing trade liberalization along the lines promoted by the WTO. From a
developing country perspective, WTO technical assistance lacks the neces-
sary components to build developing country capacities to make the most
from trade.
206 Cases in Multilateral Development Cooperation

Conclusion

This chapter has sought to examine the relevance of the WTO by analyzing
how international trade – the subject of its mandate for trade liberalization –
has grown and evolved in the composition and character it has today. The
chapter has briefly examined the most recent performance of the WTO in
its main institutional faces such as the multilateral trade negotiation arena
in the DDR; the provider of a global trade policy surveillance mechanism; a
tribunal for member countries to settle trade disputes; and the world’s largest
supplier of trade-related technical assistance to developing and newly WTO-
accessed countries.
Overall, the WTO has become much less relevant in international trade
than it used to be in the 1990s (or the 1980s and 1970s in the case of
the GATT) as trade liberalization issues have become less pertinent. This is
partly a consequence of decreased trade barriers, a larger trend propelled
by regional integration and unilateral trade liberalization, which certainly
cannot be attributed solely to WTO multilateral negotiations, surveillance,
dispute settlement, and capacity building.
From a global economic structure point of view, the subject of the
WTO liberalization efforts – international trade – has evolved, increasingly
driven today by intra-firm and intra-industry trade in manufactures. Even
if multilateral trade liberalization, as administered through the successive
rounds of GATT/WTO negotiations, might have helped in bringing that
change about in previous decades, the institution’s importance in the past
does not assure its relevance in the future. As the lack of interest by multina-
tional firms for the Doha Round demonstrates, other factors such as the rise
in per capita incomes in much of the developing world and technological
advances in telecommunications might have been more important drivers
in global trade growth trends in the last decade. In addition, the strong and
widespread reversal in the long-term decline in commodity prices in this
same period has further reduced the relevance of the WTO to administer the
opportunities arising in the future growth of global trade through negotia-
tions pertaining market access regulations. These more structural factors are
converging now to make the future role of the WTO as an arena for trade
negotiations look bleak indeed.
Not helping this reduced relevance are the other less visible design faults
in the institution. WTO’s trade policy surveillance is weak and not taken
seriously by its members, and arbitration mechanisms are mostly available
to the largest firms and business associations in main trading countries, pre-
venting this institution from having any significant developmental impact
hereafter in matters of international trade.
It is tempting to speculate that the WTO, as a multilateral organization,
may have become a victim of its own success. However, this is far from the
truth. In fact, WTO’s story is driven by the unexpected nature of the creature
 Pablo Heidrich 207

the organization has only helped conceive – a global trading economy.

In today’s world, ever more shaped by international trade flows, national
trade policies matter increasingly less than the decisions of private global
firms on where and what to produce or sell. These private interests have
progressively come to command international trade flows, in turn assuring
the decline in relevance of a multilateral institution that helped propel this
mode of economic exchanges. Only by clearly understanding this non-state
centric nature of ‘international trade’, could the WTO now be reshaped into
a relevant actor again. This will implicate strenuous changes in all of its cur-
rent functions to become diplomatically worthwhile again, and for the first
time, transform it into an actor also relevant to global development policies.
From the perspective of developing countries, the latter can be easily sum-
marized in the next paragraphs. Given this new global trade environment,
the role of the WTO as a preacher of the benefits of free trade through capac-
ity building and training to least developed countries and newly accessed
members seems utterly biased, simply favoring the interests of larger trading
nations and their firms. Ultimately, that approach has grown irrelevant since
trade liberalization has already become a moot point for decision-makers in
developing countries. Instead, the WTO capacity building efforts ought to
concentrate on what matters now most urgently to developing countries:
how to position themselves best in the global production chains that are
driving international trade and will continue to propel the global economy
for the next decade.
The volatile commodity prices’ boom of the 2000s and the global finan-
cial crisis of 2008–11 have also illustrated the reduced relevancy of the
WTO today on matters affecting domestic economies in developing coun-
tries via trade flows. Most developing countries are now important exporters
of commodities to China and other rapidly growing Asian economies, while
growing into their most dynamic importers of manufactures. The current
global financial crisis has shown that those South-South trade flows are
extremely sensible to currency manipulation and other monetary distor-
tions brought to the trade arena by state policies. The WTO could once again
transform itself into a relevant actor if it could become a forum for this aris-
ing global economic policy debate, effectively linking monetary and fiscal
policies with the future of trade policy bargaining.
Such major directional changes would also require the Trade Policy Review
Mechanism and the Dispute Settlement Body to drastically adjust. The for-
mer would need to have real teeth in terms of adequate budgets, personnel,
and political support inside the WTO and from its member countries. Only
adequate and systematic surveillance in trade policy can inform decision
makers in a useful manner, not only to those who otherwise do not have
the means to conduct such surveillance on their own, but also provide an
internationally recognized benchmark on what trade policy (including the
use of exchange rates) is implemented by commercial partners. The latter,
208 Cases in Multilateral Development Cooperation

the dispute settlement mechanism, ought to be more closely integrated with

the TPRM (surveillance function), providing the means for a ready-to-settle
mechanism in which not only the largest firms and trading nations can
accede, but everyone else can also benefit. Therefore, significant changes to
the real pricing the WTO Dispute Settlement inflicts on their users in terms
of institutional preparedness, financial costs, and economic sustainability of
their affected industries.
The likelihood of these changes happening at the WTO is not high. Nev-
ertheless, they still need to be pointed out even if to show the length and
gradient of the road to travel. The WTO’s relevance demands on more than
clearly and definitely reflecting the changed structure of global economic
power but also greatly altering its current institutional identity. To do this,
the WTO will eventually have to incorporate totally new leadership and per-
haps, even move to a non-European (and non-North-American) address.22
Given the publicly observed pains other multilateral agencies charged with
global economic governance, namely the World Bank and the International
Monetary Fund, have felt for the past decade in redefining their missions
and identities simultaneously, the prospects for reform at the WTO cannot
be said to be easy.

Notes
1. See ‘The visible hand’ in The Economist, January 21, 2012 for a summary.
2. The WTO defines its mandate as governing and liberalizing international trade
for all countries. It expressively indicates that it is not a development organiza-
tion but one that has understanding for the different needs and capacities of its
members according to their levels of development. See official mandate at http://
www.wto.org/english/thewto_e/whatis_e/wto_dg_stat_e.htm.
3. Still, individual countries can try to reduce the impact of a crisis by devaluing
their currencies and thus, obtain a temporary subsidy for their exporting firms, as
well as for those competing with imports in their national economies.
4. See Feenstra (2003) for an overview.
5. Ricardian refers here to the seminal work of David Ricardo (1772–1825), an
English political economist who wrote Principles of Political Economy and Taxation
(1817), introducing the theory of comparative advantage to analyze international
trade.
6. OECD (2005) defines intra-firm trade as ‘consist(ing) of trade between parent
companies of a compiling country with their affiliates abroad and trade of affil-
iates under foreign control in this compiling country with their foreign parent
group’.
7. Rules of origin refer to the percentage of the added value in a given product that
can be counted as identifying its immediate origin.
8. See Deere Birkbeck (2011) as an example of the former, and Navaretti et al. (2010)
for evidence on the latter.
9. Dutch-disease refers to the appreciation in real terms of the currencies of
commodity-exporting countries, rendering those economic sectors which are not
 Pablo Heidrich 209

intensive users of natural resources (compared to labor or capital) less compet-

itive internationally. The result for a country suffering this type of problems is
that while the commodity-exporting industries succeed, the rest of the economy
shrinks, increasing unemployment and reducing economic growth.
10. Non-agricultural market access (NAMA) is the term used in the Doha Round
negotiations to refer to tariff reductions in manufacturing industries, something
expected as a concession from developing to industrialized countries in order
to grant the former increased access to currently closed or heavily protected
agricultural markets in the latter group of nations (Laborde et al. 2011).
11. Figures in US dollars.
12. For example, see Khor (2007).
13. As in ‘Business leaders increase pressure on governments for Doha deal’ Interna-
tional Chamber of Commerce, Stockholm, Sweden, June 13, 2008.
14. ‘USCIB Regrets Breakdown in Doha Trade Talks, Urges Parties to Keep Offers on
the Table’ United States Chamber of International Businesses. Washington, DC.
Press Release 242, September 30, 2008.
15. Leal-Arcas (2011) lists the several alternatives discussed among business and gov-
ernment elites to link concessions in the governance and objective functioning
of the International Monetary Fund and World Bank to developing countries
in order to entice some key nations (i.e. Brazil, China, India, Mexico, South
Africa, etc.) to agree to accepting the current deal tabled at the WTO by indus-
trialized countries. Variable geometry refers to the combinations of concessions
and demands been agreed on a series of different areas not explicitly linked but
thematically related (trade, finance, development).
16. ‘End the charade in talks on global trade’, Jean-Pierre Lehmann, Financial Times,
August 24, 2011. Or ‘Miserly progress made on Doha trade talks’, Alan Beattie,
Financial Times, December 11, 2011.
17. For example, the US has a Trade Representative Office while the European Union
has a Directorate General for Trade.
18. See the agreement’s text at http://www.wto.org/english/tratop_e/tpr_e/
annex3_e.htm.
19. The WTO allocated an average of 30 staff and US$6 million per year in the period
1995–2010 to this endeavor, accounting for roughly 4 percent of its total budget.
20. All statistics are collected for the 1995–2011 period.
21. These figures are extracted from the comprehensive database maintained by
the World Bank Trade Research Division, which can be found at http://econ
.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:
20804376∼pagePK:64214825∼piPK:64214943∼theSitePK:469382,00.html.
22. According to its 2011 Annual Report, the WTO had a personnel of 640 at its
only offices in Geneva, Switzerland. Of those, 58 percent are from EU countries,
18 percent from other industrialized nations, and only the remaining 24 percent
from the developing world (WTO Annual Report 2011a). The current director
general of the WTO, Pascal Lamy, was the chief trade negotiator for the European
Union at the beginning of the Doha Round until taking his new position at the
WTO. All other former leaders of the GATT and WTO since the 1950s have also
been former government officials from industrialized countries with the excep-
tion of only one, Thailand’s Supachai Panitchpakdi, who was allowed to lead
the WTO for just half of a term (three years) due to opposition from developed
countries (Blustein 2009).
210 Cases in Multilateral Development Cooperation

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Part III
Emerging Multilateralisms:
Possibilities for the
Twenty-First Century
9
New Donors and Old Practices:
The Role of China in the
Multilateral System
Arjan de Haan and Ward Warmerdam

Introduction

The rise of emerging powers in international development has raised many

concerns. Major questions are arising regarding the future of a ‘Paris
Consensus’1 in the face of emerging donors’ hesitance to join a forum
dominated by countries from the Organisation for Economic Co-operation
and Development (OECD). The role of China in this context has raised
concerns regarding the possibility of a ‘Beijing Consensus’2 overtaking a
‘post-Washington Consensus’.3
This chapter contextualizes the differences between ‘old’ and ‘new’
approaches to aid, in order to enhance the understanding of the differences,
similarities, and potentials for collaboration. While it focuses on the mul-
tilateral system, it is attentive to bilateral relations. It is argued that the
differences across approaches adopted by traditional OECD Development
Assistance Committee (OECD-DAC) donors are as significant as the differ-
ences between emerging and (‘old’) DAC donors. While both academic and
policy debates have stressed that new donors tend to remain outside the
Paris Consensus, implementation of its principles by DAC donors them-
selves has remained limited, and is under continued stress. It is important to
understand the national politics and institutional constraints within donor
countries, old and new.
This chapter takes China as a case study for examining new and old
approaches to aid. Among the emerging donors, China’s increasing promi-
nence in international development has received the most attention, partly
because of the size of China’s new aid program, but equally because of
China’s ascendency in international forums more broadly. In addition,
China’s rapid economic development is regarded by other developing coun-
tries as a model from which to draw lessons. Its foreign policy and foreign
aid policy principles of non-interference, non-conditionality, and economic
cooperation based on mutual interest, seem to stand in stark contrast

215
216 Emerging Multilateralisms

to traditional donor foreign policy and foreign aid policy principles and
the ‘Paris’ and ‘Post-Washington’ consensuses. The popular critique that
aid,4 in the traditional sense, does not work makes an analysis of Chinese
engagement even more pertinent.
This chapter, based on the first author’s experience working for the
Department for International Development (DFID) in China from 2006 to
2009, and the second author’s ongoing doctoral research on Chinese for-
eign aid, advances three arguments. First, the authors show that the rise
of China is not as remarkable or exceptional as is often assumed. A basic
description of the aid program provides an unsurprising picture, with for
example, an attention to different sectors and countries that is similar to
most donor practices. China does not report its official development assis-
tance (ODA) volumes to the DAC, but data can be and has been compiled
from existing statistics. It is conceivable that China will increasingly report
on its ODA using DAC norms.5 China’s approach to aid, and collaboration
with other donors, including multilateral institutions, also demonstrates
similarities between the experiences of old and new donors.
Second, the elements that seem most distinct in Chinese approaches
are directly linked to their domestic experiences and constituencies – and
again this is in itself consistent with the experience of other donors such
as the United States (US), the United Kingdom (UK), Japan, and more
recently, South Korea. These include China’s emphasis on infrastructure
and growth through export promotion, its productivist orientation in pub-
lic policies, alignment with foreign policy principles – notably aversion
to conditionalities – and insistence on supporting initiatives of mutual
interest rather than ‘aid’ as an organizing framework. The recent white
paper on China’s ‘Foreign Aid’ indicates that these approaches are evolv-
ing rapidly, and Chinese officials recognize the function that aid plays
in its role as a responsible stakeholder,6 which it is gradually, albeit hesi-
tantly, assuming. Though it is difficult to determine conclusively, China’s
white paper may also point to an upcoming re-evaluation/re-definition
of its foreign policy principles, as occurred in 1978 and in the mid-
1990s.
Finally, there are potential complementarities between the approaches of
old and new donors. China’s emphasis on infrastructure fills a gap left by
other donors. The authors also suggest that the extent to which China’s
model represents a challenge to other donor approaches to development
may be overstated. China’s experience is contributing to renewed attention
to the role of a developmental state and its relation to market sectors. Much
of its aid policy is similar to that of other donors. Nevertheless, China’s
emphasis on mutual benefit and non-interference differs from the formal
principles that underlie OECD-DAC donors’ approach to aid. In practice,
however, these differences are less pronounced. In addition, an increasing
number of studies show how quickly Chinese operations have been able to
adopt and adjust to new ways of working,7 including in terms of how China
 Arjan de Haan and Ward Warmerdam 217

applies the concept of non-interference. These factors suggest a promising

base for expanding mutual learning, through bilateral as well as multilateral
(and trilateral) channels.
Underlying the arguments in this chapter is a belief that the international
community needs to gain a much better understanding of China’s own
development path and principles, including the role aid played in China
itself – though quantitatively of little significance – and how this aid was
managed.8 Inevitably, what China and the many public and private actors
that constitute ‘China’ do abroad is directly informed by what they do
at home, and for reasons of language and history, this dynamic has been
poorly studied and understood by development experts. Given the chang-
ing development context, it is important to consider whether and how this
new constellation of powers is going to change the practices of development
cooperation.9

China’s aid program

China’s increased aid commitments have garnered a great deal of attention.10

This is happening in the context of debates on China’s rise more broadly,
manifested by headlines such as the ‘New Scramble for Africa,’ the ‘tsunami
of Chinese imports,’ China’s ‘plundering of natural resources,’ and an idea or
fear that ‘the extremely rapid and often chaotic industrialisation of the most
populous country on the planet has put China on a collision course with
the rest of the world’ (Navarro 2008, xv). At the same time, China’s rise is
increasingly fueling the already heated debates on the efficacy of aid. A great
deal is already known internationally about how Chinese aid functions,11
but it is important to highlight that the Chinese approach (or approaches)
is rapidly evolving. Though Chinese implementation capacity and scholarly
engagement with the subject are limited compared to those of traditional
donors, competencies in these areas are growing rapidly (Zhang 2008).
There are continuing doubts about the size of China’s aid program.12
In fact, China may not know the exact figures because the program is
implemented by many different agencies. There are about 20 line agencies
involved alongside the Ministry of Commerce (MOFCOM), Ministry of For-
eign Affairs of the People’s Republic of China (MFAPRC), and Ministry of
Finance (MOF) as coordinating agencies and provincial level governments
often engage with developing countries outside of the control of the central
government. Further, there is no clear division between ‘aid’ and commercial
activities such as trade and investment (Brautigam 2011b). Moreover, China,
for international or domestic reasons, may be unwilling to publish these
figures – though this is contradicted by some Chinese scholars (Li Xiaoyun,
pers. comm.).
Various sources have put the figures on Chinese aid commitments some-
where between $1 billion13 and $3 billion annually, with aid to Africa
at about one-third to one-half of these figures. These are relatively small
218 Emerging Multilateralisms

contributions compared to the UK for example, which has an aid budget of

over $8 billion. In 2007, the official aid figure as published in the China Sta-
tistical Yearbook (Brautigam 2009, 166–7) was a little over $3 billion. MOF’s
budget constituted half of this, while concessional loans administered by
Eximbank and debt relief accounted for $1 billion and almost $0.5 billion,
respectively (China first debt relief pledged in 2000, paralleling the Heavily
Indebted Poor Country initiative).14 At the end of 2008, China announced
it would not cut aid regardless of the economic crisis. More recent estimates
by Berger et al. (2011) put Chinese aid to Africa at approximately $1.6 bil-
lion in 2009. They estimate that low-income countries receive 80 percent
of China’s foreign aid.15 While this demonstrates an increase in Chinese
aid flows to the continent, these flows are still much smaller than those
of Africa’s main donors (Berger et al. 2011). In 2009 the DAC donors dis-
bursed approximately $51 billion in ODA to Africa, with $36.5 billion of
this allocated to sub-Saharan Africa (OECD StatExtracts 2012).
A rather different picture of China’s role emerges when one moves away
from a narrow OECD-DAC definition of aid. For example, China’s ‘foreign
assistance and government-supported economic projects in Africa, Latin
America, and Southeast Asia grew from less than $1 billion in 2002 to
$27.5 billion in 2006 and $25 billion in 2007’ (Lum et al. 2009). In 2009,
China disbursed $29.6 billion in export credits globally, a large portion of
which went to Africa (AfDB et al. 2011). The sum of all DAC member export
credits amounted to $4.2 billion between 2004 and 2008, with an annual
disbursement of $500 million to Africa. China’s financial flows to Africa
amounted to an average annual commitment of $7.1 billion between 2007
and 2009, compared with the estimates for the DAC of $1.9 billion in 2009
(AfDB et al. 2011). In order to understand China’s growing importance in
the international aid architecture, China’s role must be understood in terms
of its broad approach to partnership that goes beyond aid; China is reluc-
tant to see aid as something detached from international engagement more
broadly.16
Chinese academics highlight the continuity of China’s aid program
since the period under Chairman Mao. Li and Wang (2009), for example,
stress that

China’s foreign aid to Africa started in 1956. Despite its own difficulties
in economic development, during the 50 years since, China has provided
large amounts of unconditional aid to Africa. China’s foreign aid to Africa
has amounted to 44.4 billion RMB17 implementing about 900 projects
on infrastructure construction and social services provisions . . . In 1963,
China started to send medical teams to Africa with the total number
over the years being 15 thousand. Currently there are 35 medical teams
working in 34 African countries.
(Li and Wang 2009, 3)
 Arjan de Haan and Ward Warmerdam 219

According to the Forum on China-Africa Cooperation (2009), Foreign Minis-

ter Yang Jiechi had this to say regarding President Hu Jintao’s visit to African
countries in early 2009:

China has long been committed to developing the all-round friendly

relations with . . . African countries and has rendered disinterested assis-
tance to Africa . . . China-Africa cooperation is all-round, multi-faceted,
and long-term oriented, is based on equality, mutual benefits, reciprocity
and win-win results, and enjoys great potentials and broad prospects.18

In April 2011, the State Council published China’s first white paper on its
foreign aid program. The earlier 2005 white paper China’s Peaceful Develop-
ment Road discussed principles of its foreign aid, but was primarily concerned
with locating China’s domestic development within the international con-
text. It endeavored to allay fears and suspicion among Western analysts and
policymakers about the rise of China and the impact such a rise would have
on the rest of the world, and contradicted the idea that a rising nation
must inevitably challenge the existing world order using aggressive tactics
to become a world leader. Similarly, the April 2011 white paper intends to
reduce speculation about China’s foreign aid program. It reiterates the prin-
ciples of China’s foreign aid program, including equality, mutual benefit and
common development, non-conditionality, non-interference in domestic
affairs, promotion of recipients’ self-development capacity, and mainte-
nance of a flexible and responsive foreign aid program (IOSCPRC 2011a).
It details the financial resources of China’s foreign aid program and the forms
of aid for which these resources are used.19

Comparing China and old donors

Recent debates often stress the distinctiveness of China’s aid program as it
has developed over the last decade or so. China’s aid program has taken a
new form since the 1978 reforms. It is now directly informed by China’s
own recent experience as a developing country and recipient of aid, by the
experience of other East Asian emerging economies and China’s experience
in and lessons from international cooperation with other countries over the
previous decades. However, many of the characteristics of Chinese aid find
clear similarities with that of the ‘old’ donors, which are formally members
of the OECD-DAC.
First, China’s aid is a combination of project aid, grants and loans, debt
relief (but not budget support),20 humanitarian aid, human resource devel-
opment, and technical assistance. In this respect, Beijing’s approach to
development assistance does not differ markedly from the aid programs of
most donors. There is a strong emphasis on support to infrastructure, similar
to that of East Asian countries like Japan and South Korea. This picture may
seem distorted because of the unclear – or indeed non-existent – boundary
220 Emerging Multilateralisms

between aid and commercial investment, and the use of aid as a springboard
for trade and investment (Brautigam 2009). Most international commen-
tators agree that China’s focus on infrastructure fills a gap left by the
old donors, with its emphasis on social sectors in the wake of the struc-
tural adjustment period, exemplified in the Millennium Development Goals
(MDG) framework. Indeed, the recent Chinese white paper provides an
explicit defense of the approach, and it potentially links very well with
the old donors’ recent emphasis on private investment as a route for
development.21
Second, China provides aid to a large number of countries. The relative
weight given to different countries has changed over time with the transfor-
mation of China’s insertion into the global economy and politics (discussed
below). China provides aid to every developing country with which it main-
tains political relations (Brautigam 2011a; IOSCPRC 2011a), amounting to
147 countries in 2003 (Zhang 2006). This is not unlike the patterns of old
donors as reported in OECD-DAC statistics (Table 8 in Chun et al. 2010),
despite promises by old donors to concentrate programs and reduce the
number of countries with which they collaborate. The 2009 OECD Report on
Division of Labour shows that OECD-DAC donors provide aid to an average
of 76 countries.22
Further, China prefers not to refer to development assistance as aid,
but rather as cooperation – though the recent white paper may signal a
change in this respect as it is entitled China’s Foreign Aid. While this dis-
tinction drawn by China has attracted much attention, it is not dissimilar
to debates over the nature and objectives of aid by old bilateral donors
and multilateral agencies. In the Netherlands there are perennial discus-
sions on the terms ‘ontwikkelingshulp’ (development assistance), versus
‘ontwikkelingssamenwerking’ (development cooperation) or ‘internationale
samenwerking’ (international cooperation). In the UK, similarly, there has
been continued emphasis on moving from aid and assistance, to interna-
tional development (as evidenced by the name DFID), and working outside
the traditional sectors.
As part of the Third World and Non-Aligned Movement (the group of
nations that do not align themselves formally with or against any major
power bloc), China feels that it is in a much stronger ideological position
to argue that their aid is not based on exploitation – a critique leveled at
the colonizers of the Global South and today’s DAC donors – but on South-
South cooperation and mutual benefits. While China is often criticized for
bringing in large numbers of Chinese workers for projects, it prides itself on
following principles of equality. This is reflected by the fact that Chinese
aid workers do not receive high salaries or live in the luxurious conditions
of Western experts. In fact, this is one the Eight Principles23 for economic
aid and technical assistance to other countries set forth by Zhou Enlai in
1964. Zhao Ziyang repeated this principle in 1982. According to the Eight
 Arjan de Haan and Ward Warmerdam 221

Principles, Chinese experts dispatched to recipient countries are to have the

same living standards as their local peers, and are not permitted to make
any special demands or enjoy any special amenities (IOSCPRC 2011a; Ping
1999).
China’s emphasis on ‘non-interference’ is often held up as a distinctive
trait. China actively promotes the idea that it should not prescribe partners’
national policies (while having a tendency to remain involved in project
implementation for much longer than DAC donors). Beijing also points
to the failure of the conditionality and governance agendas of the struc-
tural adjustment programs formulated by traditional donors. To illustrate
this point, consider Brautigam (2009, 149) quoting a former Sierra Leone
government minister:

The World Bank will say: ‘you must not have so many teachers on your
payroll. You must employ some expatriate staff. You must cut down on
your wages’. The Chinese will not do this. They will not say ‘You must do
this, do that, do this!’

However, old donors also emphasize – though again with limited evidence
of success – that it is up to the recipients to define the use and objectives
of aid. They have complemented this approach with a technical emphasis
on national ownership as seen in the Paris Declaration on Aid Effectiveness,
recognizing it as a precondition for successful aid provision.
While China emphasizes its lack of conditionalities, the ‘One China’ pol-
icy remains a key conditionality. China only provides aid to countries with
which it has diplomatic relations and only has diplomatic relations with
countries that recognize the government in Beijing as the only legitimate
government of China, including Taiwan. At the same time, very few old
donors actually implement the DAC aid effectiveness principles,24 and evalu-
ations of existing budget support indicate mixed results (IDD and Associates
2006). Analyses of debt sustainability and critiques of Chinese practices
remain disputed, and the Chinese emphasis on commercial investment
provides a different picture compared to the more social-sector-oriented
approaches of the old donors.
China’s aid program is implemented by a large number of government
agencies. A central office administering the aid program has existed for a
long time, and is currently called the Department of Foreign Aid and housed
in the MOFCOM. However, this manages only a small part of Beijing’s total
aid portfolio, and has a correspondingly small number of employees. While
this set up makes it very different from, for example, the UK, China’s aid
program is similar to that of the US, which has many departments involved
in implementing its aid program. Some of the old donors have suggested
that China set up an aid organization similar to DFID or CIDA, but this does
not seem to be a priority for China.25
222 Emerging Multilateralisms

Collaboration and multilateral engagement

While operating primarily on a bilateral basis in its aid relations and stress-
ing its distinctiveness, new forms of donor collaboration have developed
since 1978, particularly during the last decade. China’s role as a respon-
sible actor has been noted in international climate change negotiations
(though causing much disappointment in Copenhagen, China made more
promising announcements at the climate summit in Durban in 2011). China
has received praise for its actions pertaining to issues of regional stabil-
ity (North Korea), and increasing support for international diplomacy in
Sudan, for example. Since China’s return to the UN in 1971, it has actively
increased its high-level participation and leadership in international bodies.
It hosted the Fourth World Conference on Women in Beijing in 1995, and
its contribution to UN peacekeeping operations has expanded.26 The Inter-
national Poverty Reduction Centre in China (IPRCC) was established at the
Chinese government’s request with support from the United Nations Devel-
opment Program (UNDP) and others. The China-Africa Business Council is a
public–private partnership which provides support for China’s private sector
investment activities in sub-Saharan Africa (World Bank 2007).
China’s growing international role includes collaboration with the World
Bank at the operational level and pledging a modest contribution at the
2010 International Development Association (IDA) replenishment round.
It has supplied the World Bank’s Chief Economist (Justin Lin Yifu), which
was a first for a developing country. In 2006 the China Exim Bank and
the World Bank signed a Memorandum of Understanding to improve
cooperation in development assistance, notably in the area of economic
infrastructure development and energy investment projects in Africa (Davies
2007).27
China collaborates with the OECD on matters of corporate social responsi-
bility and explaining the Guidelines for Multinational Enterprises to Chinese
firms. In 2006 the MOFCOM issued recommendations for Chinese compa-
nies working overseas. It recommended the firms adhere to international
safety standards, hire local workers and improve worker safety mechanisms
(Bosshard 2007). A number of Chinese companies have also joined the UN
Global Compact on Corporate Social Responsibility.
China has further engaged with traditional donors and their multilateral
counterparts through active participation in a dialogue initiated by the DAC,
European Union (EU) and DFID (Manning 2006; Wissenbach 2009). Chinese
officials have generally stated a preference to work with donors in a coordi-
nated fashion, and through the establishment of a China-DAC Study group
hosted by IPRCC. The China-DAC Study Group aims to strengthen dialogue
and mutual understanding between China and DAC donors and reviews
China’s poverty-reduction strategies while investigating how international
cooperation contributed to those efforts. It also reviews a number of aspects
 Arjan de Haan and Ward Warmerdam 223

of China’s development activities in Africa and the impact these have on

poverty reduction.
China has also explored collaboration between the Sino-Africa Cooper-
ation Forum (FOCAC)28 and the New Economic Partnership for African
Development (NEPAD), which has been promoted as a core mechanism for
the development of the African region. In China’s 2006 African Policy, the
government announced its support for the NEPAD and sought to find ways
to further cooperation between FOCAC and the NEPAD (MFAPRC 2006).
This is likely the result of African leaders’ requests that the NEPAD play
a more important role in Sino-African relations (Tjønneland et al. 2006).
NEPAD was first present for the FOCAC summit in 2006, and cooperation
has focused on infrastructure, human resource development, agriculture,
and the treatment of infectious diseases (Davies et al. 2008; Davies 2007;
Tjønneland et al. 2006).
The discussion above demonstrates similarities between China’s approach
to development and that of donors. It also highlights concrete ways in
which China is collaborating with other donors and engaging multilat-
eral institutions. This implies that Chinese aid is not as distinctive as is
often suggested, and may be moving toward more similarities with the ‘old
donors’. This is happening within a Chinese context that is undergoing rapid
transformation, as discussed below.

Chinese aid and foreign policy

While there is much continuity in the practices of China’s cooperation,

the program was reshaped during the 1980s and 1990s. The political and
revolutionary interest was replaced by the pragmatic economic interest of
the post-Mao period.29 There has been a critical change in the way China
perceives its domestic and international interests. While its foreign diplo-
macy, especially related to Taiwan, has remained relatively unchanged,30 its
economic interests have changed dramatically. This has been particularly
evident since the second half of the 1990s, with China assuming the role of
major exporter, importer of natural resources,31 and global investor.
In 1978, China was firmly entrenched within the communist camp and
Non-Aligned Movement, actively promoting its political and ideological
model from within this politico-economic orbit. China’s isolation from
the rest of the world was accompanied by great internal turmoil includ-
ing the economic disaster of the Great Leap Forward32 and the subsequent
Cultural Revolution;33 both greatly affected China’s future policymaking.
Deng Xiaoping’s motto ‘it doesn’t matter whether the cat is black or white,
as long as it catches mice’ effectively captures the preconditions under
which international policy exchange has occurred. Since 1978, China has
adopted a uniquely pragmatic reform approach, with frequent changes in
policy approaches and constant political contestation. It has also refined its
224 Emerging Multilateralisms

policymaking by reflecting on its own experiences and learning from those

of other countries, particularly the East Asian Tigers.
Pragmatism also marked its new approach to international collaboration.
Contacts between the US and China had started to improve with Kissinger
and Nixon’s overture to China in 1971–72. Deng Xiaoping’s first visit to
the US set the scene for the subsequent economic strategy, which has been
marked by continued strong nationalism and party control, pro-actively
incorporating international collaboration, and seeking access to the Gen-
eral Agreement on Tariffs and Trade and later, the World Trade Organisation.
It included collaboration with the World Bank, which developed a long his-
tory of working within China,34 even before it became obvious in the late
1990s that the World Bank needed China as much as China needed it.35
China started to leverage its experiences with the World Bank, for exam-
ple, using the lessons of tendering systems to bid for aid projects (Brautigam
2009, 110).
China’s official policy discourse emphasizes the continuity of China’s for-
eign policy, which is dominated by its relations with Japan and Taiwan.
China places international collaboration within this context. The Five Prin-
ciples of Peaceful Coexistence – first formulated in an agreement between
China and India in 1954 – are still central to this approach, including
mutual respect for sovereignty and territorial integrity, non-aggression, non-
interference in the internal affairs of other states, equality and mutual
benefit, and peaceful coexistence. Under Jiang Zemin (President from 1993
to 2003), foreign policy gradually moved toward ‘developing China into a
comprehensive power’ (Zheng and Tok 2007, 2). This challenged the ‘24
character’ emphasis of Deng Xiaoping’s foreign policy approach to ‘observe
calmly; secure our position; cope with affairs calmly; hide our capacities
and bide our time; be good at maintaining a low profile; and never claim
leadership’36 (Whiting 1995, 301).
Africa was relatively – but never completely – neglected within China’s
foreign policy of the 1980s, which focused on relations with the West
(Eisenman and Kurlantzick 2006; Brautigam 2009). This changed with
China’s economic rise and as a result of criticisms after the Tiananmen vio-
lence in 1989 (Taylor 2006). Western governments imposed a broad range
of political, economic, and trade sanctions on China. In order to break out
of this diplomatic isolation, China strove to improve and strengthen its ties
with developing countries, a number of which have subsequently shown
their support for China (Zhu 2010).
Since Zhao Ziyang’s visit to Africa in 1982–83, China’s policy emphasized
mutual economic benefit. The emphasis on economic growth and modern-
ization was accompanied by a shift away from promotion of international
solidarity to serving its economic interests. These economic interests include
exporting to the advanced economies and importing raw materials as well as
investing in China’s exploration in the South. In the mid 1990s, consistent
 Arjan de Haan and Ward Warmerdam 225

with internal economic reforms, companies operating internationally were

increasingly separated from their parent ministries. China created its three
policy banks,37 effectively putting ‘an end to the era of pouring funds down
drains (like the Mbarali State Farm in Tanzania) (Ping 1999), and subsi-
dizing flamboyant sports stadiums and presidential palaces’ (Indian Ocean
Newsletter, in Brautigam 2009, 78–9). A ‘Five Point’ agenda was formulated
in 1996,38 and ‘China’s Policy Paper on Africa’ issued in 2006.39 China, for
example, instituted zero tariff treatment to 440 exports from Africa’s least
developed countries.
In terms of foreign aid, Africa is the largest recipient of flows from China,
at 45.7 percent of total flows (IOSCPRC 2011a).40 Africa was also the largest
beneficiary of Chinese government debt cancellations, receiving 312 of 380
debt cancellations by the end of 2009 (IOSCPRC 2011a). It remains impor-
tant, however, to stress that economic relations with Africa are a very small
element of China’s total economic flows, which continue to be dominated
by links to the East Asian region.41 While Europe and North America’s trade
share in Africa has been decreasing, and emerging powers are accounting
for an increasingly greater share, Europe and North America still account for
more than half of Africa’s trade and foreign investment stock (AfDB et al.
2011).
While China’s aid in the 1950s and 1960s was an essential component of
its foreign policy ideology and objectives at the time, it has now become
part of the soft power that it employs (Kurlantzick 2007).42 This is not
unique to but notable in the African context. While a few countries may
dominate its economic relations, China stresses fraternal relations with the
entire continent and not just with the resource-rich countries. Its support of
South-South cooperation and learning similarly highlights a new emphasis
in China’s global positioning.
While a public spirit of cooperation has continued to be central to inter-
national development cooperation, China has become much more assertive,
with increasing demands for and emphasis on a comprehensive approach
to help China define the rules of foreign policy rather than simply follow-
ing dictates crafted elsewhere. Even pro-Western thinkers in China have
argued that it should adopt a more assertive stance. This is articulated as
China’s peaceful rise or, since 2004, China’s peaceful development.43 This
emphasizes that Chinese political reforms – which are considered necessary
by many in China – will not necessarily lead to a Western-style democ-
racy. Growing assertiveness was demonstrated in the context of responses
to global financial crisis, the dispute surrounding the Google search result
filtering agreements and hacking accusations, and the execution of a British
citizen on charges of drug smuggling in 2009. It was also shown in the
fiery rhetoric in response to US arms sales to Taiwan, suspension of mili-
tary exchanges and the imposition of economic sanctions on US companies
involved in the US-Taiwan arms deal, the indictment of Rio Tinto staff
226 Emerging Multilateralisms

on bribery charges, and the suspension of all activity at the site of the
ConocoPhillips oil spill in the Bohai Sea.
Accompanying this increased global assertiveness, it appears that China
has also tried to reduce the attention attracted by its current international
strategy. Fierce international criticisms have prompted internal debate in
China, as well as a realization that applying soft power is becoming more
difficult (including in Africa, for example, surrounding Zambia’s 2006 elec-
tions where candidate Michael Sata campaigned on anti-Chinese sentiments
leading China to threaten to cut ties with Zambia if he were elected).44
Chinese leaders have emphasized that China is still a developing country.
They stressed this point, for example, immediately following the Beijing
Olympics, and in the context of the FOCAC meeting at Sharm el-Sheikh,
Egypt, in November 2009 which seemed to garner much less publicity than
the one in Beijing in 2006.
It is important to note that China’s approach to situating aid policies
within its broader foreign policy priorities is not unique. Due to public
pressure in many Western countries, development cooperation has become
increasingly untied, both in an economic sense and in a political sense, as
the pressure has been to disburse aid against poverty reduction and humani-
tarian objectives independent of political relations.45 A notion of the need to
untie aid, which in Europe has greatly influenced official approaches to and
debates on aid, is absent in China. However, these differences should not be
overstated. While China also stresses the independence of aid from direct
political motivations, it would be naïve to suggest that Western aid pro-
grams are independent of the way countries define their broader global role.
Notably, since 9/11, the pressure to make aid an instrument of the global
security agenda has been very large and effective, as evidenced by the secu-
rity policy publications of a number of traditional donors, including the US,
Australia, and the Netherlands’ ‘Three D Approach’ (Defense, Development,
and Diplomacy).46

Implications for the rest

Even if China’s aid program is not as exceptional or large as sometimes

suggested,47 it still has an impact on global development. The follow-
ing describes some of the main differences between Chinese and OECD
approaches to aid provision.

Complementarities between China and the rest

As indicated previously, the composition of China’s aid program is not
unique, and ranges in strategy across various sectors. Nevertheless, its
aid and other investments have a strong emphasis on infrastructure and
industry. This is unsurprising as the approach matches both China’s global
strategy to gain access to natural resources and its internal development
 Arjan de Haan and Ward Warmerdam 227

experience, which emphasized providing access to economic opportu-

nities.48 Many African governments have welcomed the emphasis on
infrastructure – and success in rapid project completion – as it fills a gap left
by the old donors’ emphasis on social sectors. In fact, there is evidence that
China was exerting pressure on the international aid community, particu-
larly the World Bank, on this issue well before its development cooperation
made the news (Mallaby 2004). From the perspective of African govern-
ments, plans to establish preferential trade zones for Chinese business entry
into Africa (Davies et al. 2008) may be welcome, regardless of whether they
are aid-funded or not. China’s aid, trade, and investment package provides
an opportunity for developing countries to diversify their economies.
Brautigam (2011b) has highlighted that the DAC, with its narrow defini-
tion and standards of aid, may not be the right forum to govern coordination
between China and OECD countries. As shown by Kindornay and Samy (this
volume), OECD-DAC donors have faced ongoing challenges to engaging
emerging powers, including China, on the international aid-effectiveness
agenda. They suggest that broadening the agenda to encompass more holis-
tic discussions on the role of aid and non-aid policies, such as trade and
investment, in development, may serve as one way to encourage further
collaboration with emerging donors like China.
Nevertheless, while there is much discussion about the different principles
of China’s development model,49 these principles provide a feasible and use-
ful complement to the approaches of old donors. They have fueled debates
on international development, as stressed for example in Peter Ho’s contri-
bution to one of the preparatory studies for the Dutch Scientific Council
for Government Policy (WRR) report on development aid.50 While some
present a ‘Beijing Consensus’ as a fundamental challenge to Western think-
ing, and ‘a definite threat to democratic values’ (Freedom House 2009, 14),
the interpretations of what the Beijing Consensus is varies (and Chinese
experts are the first to assert there is no one ‘China model’),51 as opposed
to its alleged competitor, the Washington Consensus. What the Chinese
experience is contributing, particularly after the financial crisis is renewed
attention to the role of a developmental state and its relation to market
sectors. This is also manifested in the way Chinese development agents
operate in Africa through their focus on productive economic and social
projects rather than on governance. While China’s reform path and large-
scale privatization since 1978 is historically unique, the specific lessons
about state–private sector interaction, among others, are not unique and can
very well be understood in terms of common public management concepts.

Chinese principles versus the rest

Some of the differences between China’s and other donors’ approaches are
perhaps larger but do not necessarily have a big impact. China’s interna-
tional strategy is framed in a language of solidarity and brotherhood and a
228 Emerging Multilateralisms

belief in the ability of developing countries to take responsibility for their

own development. As such, the strategy is presented as an alternative to
postcolonial relations. Leaders of African countries have unsurprisingly wel-
comed this ‘alternative’. It is opening up space for dialogue between African
leaders and old donors and investors, as they can now turn to other partners
for terms and conditions that allow them more space to pursue their own
policy goals. To a certain extent, this trend supports the principle of coun-
try ownership under the Paris Consensus, which is seen as fundamental to
successful aid programs. As the novelty of China’s recent engagement wears
off, it is likely that it will become one among many suppliers of aid.52
There are, however, two areas where China’s approaches arguably pro-
vide more radical challenges to the dominant aid paradigm. First, there is
China’s emphasis on mutual benefit.53 As indicated earlier, this approach
runs counter to old donors’ emphasis on untied aid, found in the aid-
effectiveness paradigm. Tied aid reduces the possibility of responding to part-
ners’ priorities. The ideological differences are large. Untied aid contradicts
China’s internal development experience. For example, coastal companies in
China’s western development were encouraged to invest in China’s western
provinces in the Great Western Development Scheme through a variety
of government incentives. This allowed them greater access to resources
and lower-cost production, while simultaneously stimulating the socio-
economic development of these regions. In addition, as Chinese colleagues
in DFID explained, very few people actually believe that Western donors
ever provided aid independent of their own interests.54 Moreover, it is pos-
sible that projects based on mutual interest are more likely to succeed than
those based on charity.
As documented in an annotated bibliography (Warmerdam and de Haan
2011), impartial aid provision may be morally desirable, but is increas-
ingly difficult to implement politically. The period of more untied aid
governed by the MDG framework since the late 1990s has perhaps been
exceptional in this respect. Economic, political, strategic, or security inter-
ests always affect aid allocation to varying degrees. Aid expenditures, as
part of government budgets, must be justified to the general public as
well as government executives and parliaments. Such justification, espe-
cially in financially constrained times, is facilitated by the expectation of
reciprocity, which resurfaced in a big way, for example, around the 2010
general elections in the Netherlands. Japan is again looking at the aid pack-
age approaches which it utilized in China and Southeast Asia in the 1980s,
and the Obama administration has initiated a project which combines the
United States Agency for International Development and US Exim Bank
financing in order to promote economic growth in recipient countries, while
also benefiting the US commercially (Xu 2011).
Secondly, China’s emphasis on non-interference, and its opposition to
conditions related to good governance and human rights,55 is likely to
divide views and analysis for some time to come. Moreover, the absence
 Arjan de Haan and Ward Warmerdam 229

of non-governmental organizations and a forum for public debate in China

will facilitate a continued state-centric response from Beijing. Nevertheless,
the Chinese government has shown a willingness and ability to re-evaluate
and redefine its principle of non-interference, as evidenced in the adjust-
ments made to its aid program since 1978. From this time onward, joint
ventures, joint management, and operation projects, which had previously
been considered antithetical to China’s foreign aid principles, started to
appear. Recent events regarding Libya further testify to the re-evaluation and
re-definition of its policy of non-interference. Beijing allowed NATO to pro-
vide Libyan rebels with air support by abstaining from the UN resolution.56
The role of the PLA Navy in relation to Somali piracy is another example
of the re-evaluation and re-definition of its principle of non-interference,
as China considers its economic interests and the safe passage of its cargo
ships important enough to send PLA Navy ships to assist with international
anti-piracy efforts in the Gulf of Aden.
In practice, and perhaps by design, China’s support of fragile states
(notable examples include Cambodia, the Democratic Republic of the
Congo, and Angola) provides an alternative to the support that comes with
heavy conditions of the old donors. This presents a dilemma according to
Ian Taylor (2007, 22) who has provided insightful though strongly ‘realist’
political analyses of China-Africa relations: ‘whilst China emphasizes the
notion of state sovereignty, this is most enthusiastically applied to countries
where the empirical properties of the state are lacking’. Naidu and Janson
(2009) may be right that China will have to take power configuration within
Africa into account, including non-state actors, and thus become more like
the traditional development partners.
Nevertheless, China’s position on non-interference is likely to com-
pete with other donors’ objectives of improved governance, economic
reforms, and democracy. It is also likely to impact the debates concern-
ing reforms that are also at the heart of aid effectiveness in less fragile
contexts.57 Governance reform agendas respond to the drawbacks of the
project mode donors took in the 1970s and recognize that islands of
excellence are not likely to achieve long-term results or sustainability.
While China’s emphasis on the private sector may lead to new forms
of partnership, questions of governance are unlikely to be resolved
through non-interference. The governance agenda promoted by the old
donors, including the World Bank, however has not been overly successful
either.58
This debate is evolving rapidly. On the one hand, China has been
increasingly critical of international organizations’ responses to China’s
engagement. For example, the Chinese Ambassador in Kinshasa accused the
International Monetary Fund of blackmail because of its objection that the
support package China offered to the DRC would again saddle the coun-
try with unsustainable debt (The Economist of April 18, 2009). On the other
hand, there has been much internal debate regarding the international
230 Emerging Multilateralisms

critique of China’s engagement in the developing world and significant

moves to adjust in new international environments. China has also come
under greater public scrutiny in recent years. Woods notes that China has
been responsive to international critique regarding its support of ‘rogue
states’ (Woods 2008). Alden and Hughes (2009) add that Beijing now finds
it increasingly difficult to exert its soft power, while Jiang (2009) highlights
the intense internal debate on China’s role in Africa.

Conclusion: When China stops being a special case

It will not be long before China’s global role is no longer seen as excep-
tional or with the same judgmental tendencies as it is at the moment.
This is mainly because China does not want to be considered exceptional.
It does, however, want to reclaim its rightful status as an important global
player and to advocate the cause of other developing countries – particularly
vis-à-vis the world’s foremost multilateral agencies. China has yet to fully
embrace this role. Nevertheless, China is becoming an ever-more impor-
tant part of international fora. As such, it increasingly modifies and evolves
its practices according to the discourses in these fora, though it maintains
distinctiveness, similar to the community of old donors among whom enor-
mous differences exist. Some would argue however that it will take some
time before China assumes its place at the table of the old donors. Nev-
ertheless China’s recent white papers are clear examples of an increased
responsiveness to the old donors’ desire to engage more intensively with
China.
Many international agencies have been proactive in working with China,
including the World Bank, UNDP, the OECD-DAC, and DFID. Those hav-
ing worked in Beijing on this issue have realized that there has been more
pressure from the old donors for this collaboration than demand from
Chinese agencies, which are understaffed by comparison. This imposes lim-
its on China’s ability to respond to calls for collaboration. Though venues
for collaboration vary by country, most policymakers and academics agree
that there is mutual interest in collaboration between China and Western
donors, and that these institutional differences should not stop international
agencies from exploring new venues of cooperation with China.
The old donors have much to learn about China’s development model,
and how the country is making a unique transition from being an aid recipi-
ent to an aid donor, while undergoing far-reaching internal transformation.
In-depth and long-term research and increased exchange and collaboration
is needed to help move beyond what presently seem to be overly political
and realist interpretations of China’s actions and excessively apolitical inter-
pretations of the role of old donors. The international community can play
a role in facilitating the process of learning about China’s development suc-
cesses and challenges. In comparison to other emerging economic, less is
known about China in the international community. At the very least, this
 Arjan de Haan and Ward Warmerdam 231

would reduce the articulation of mistaken notions about China and Chinese
aid policy. Old donors – and indeed China itself – could draw on lessons
from aid provided to China to understand the conditions under which aid
can work. This may also renew discussions on aid effectiveness, something
from which old donors and emerging donors alike could benefit.

Notes
1. ‘Paris Consensus’ here is used as shorthand for the norms and standards of aid
and aid effectiveness advocated by the OECD-DAC, based in Paris. The 2005 Paris
Declaration on Aid Effectiveness articulated five principles relating to ownership,
alignment, harmonization, managing for results, and mutual accountability. The
subsequent 2008 Accra Agenda for Action sought to strengthen and build on the
Paris Declaration, and included commitments to country ownership, building
more effective and inclusive partnerships, achieving development results – and
openly accounting for them.
2. A term first coined by Joshua Cooper Ramo (2004) in The Beijing Consensus. The
term itself, and what it purports to describe is still widely debated by both Western
scholars and Chinese scholars and officials (Qin et al. 2011). For many Western
scholars, the core elements of the Beijing consensus with respect to international
cooperation are non-interference, non-conditionality, the tying of foreign aid
to commercial interests, and a focus on economic infrastructure development
and economic cooperation of mutual interest. While agreeing with this, Chinese
scholars tend to frame the consensus in a more positive tone, and add prag-
matism, gradualism, and a constant process of reflective learning that involves
carefully selecting policies and mechanisms most suitable to local conditions.
3. The ‘Post-Washington Consensus’ refers to the successor of the ‘Washington Con-
sensus’, both of which have their roots in the International Monetary Fund and
World Bank analysis, programs, and prescriptions. The ‘Washington Consensus’
was the neoliberal market-centered strategy employed by these institutions in
1980s and 1990s. The ‘Post Washington Consensus’ is its successor, focusing to
a greater extent on good governance, poverty eradication, and public service
provision.
4. See de Haan (2009b) for a discussion of the aid debate and Moyo (2009) as the
most-outspoken and discussed account of ‘dead aid,’ which uncritically presents
China’s engagement as an alternative to traditional donors.
5. The recent Chinese government White Paper, as discussed below, provides a broad
range of statistics, though these still lack the detail of traditional donor reports,
and foreign assistance reports do not include country-specific data (rather, they
include data by region and recipient-country income level). The definition of
Chinese concessional loans is broadly similar to the DAC’s definition.
6. The recent White Paper entitled China’s Peaceful Development (IOSCPRC 2011b),
seems, in parts, to respond to demands from the international community that
China should become a ‘responsible stakeholder’ and outlines the steps it has
undertaken to fulfill this role. There is broad agreement in the Chinese academic
community that China should take up the role of a responsible stakeholder in
the international arena. This is referred to as responsible great power in China,
which is concordant with its new economic and political influence in the world.
Regardless, there is still great debate about what this should mean to China and
how this could fit within its ideological framework.
232 Emerging Multilateralisms

7. This should come as no surprise, as learning from international experience has

been deeply engrained in China’s internal reforms, as demonstrated clearly in
a recent joint World Bank and DRC report (2012) that emphasizes the need for
integrated reforms.
8. Chinese analysts are aware of the importance of understanding the role that for-
eign assistance played in fostering China’s development and improving its foreign
assistance program. For further details, see the preliminary research by Zhang
(2010).
9. We use the words aid and development cooperation interchangeably (except
where the distinction is explicit), as defined in How the Aid Industry Works (de
Haan 2009a). We also use the terms old and new donors, to reflect the changes in
the debate led by the OECD/DAC, while acknowledging that China has provided
aid for over half a century.
10. So has the rise of non-DAC donors (NDDs) more broadly, as highlighted in the
recent ‘Policy Arena’ of the Journal of International Development. Kim and Lightfoot
(2011) and Zimmermann and Smith (2011) indicate that aid by new donors
amounted to $11 billion of $133 billion in aid flows in 2009, with Saudi Arabia
providing the single largest amount. They describe four types of NDDs: non-DAC
member OECD countries, Middle Eastern and OPEC countries, the BRICS, and
states recently admitted to the European Union.
11. Brautigam (2009) is a particularly useful source on this subject, while
Chapponnière (2009), Davies et al. (2008), Lancaster (2007), and Chin and Frolic
(2007) also provide useful overviews. For Chinese overviews see Shu (2009), Shu
(2010), and Zhou (2008).
12. See for instance World Bank and DRC (2012): Supporting Report 5, Chapter 4.
13. All figures are in US dollars, unless otherwise stated.
14. This initiative was proposed by the IMF and World Bank in 1996, and was fur-
thered by the meeting of G7 finance ministers in 1999. It was intended to provide
debt relief to 42 countries with ‘unsustainable debts’. These states had to qualify
for this relief by satisfying a number of criteria.
15. Africa receives 46 percent of China’s foreign aid funds, while Asia receives
33 percent, and Latin America and the Caribbean 13 percent (Information
Office of the State Council of the People’s Republic of China, IOSCPRC,
2011a).
16. It is possible that China will develop ways of reporting aid distribution consistent
with OECD-DAC practices in the near future, just as other emerging donors have
done (see for example the description of South Korea’s ODA by Chun et al., 2010
and Otopalik (2010) regarding Japan). See Davies et al. (2008) for a description of
the components of China’s disbursements.
17. This statement was made in 2009, when the CNY-USD exchange rate was typically
6.83. On that basis China disbursed $6.5 billion to Africa cumulatively from 1956
to 2009.
18. See for example Li Anshan (2008) and Zhou (2008) for a presentation on Chinese
approaches and principles.
19. Grants for social-sector projects (education, low-cost housing, medium to small
social welfare projects); interest-free loans to construct public facilities and initi-
ate large-scale social livelihood projects; and concessional loans for infrastructure
development, turn-key projects, etc. The latter is administered by the China
Eximbank – one of the three ‘policy banks’ created in the mid 1990s – while
the first two are part of state expenditures. The concessional loans have annual
 Arjan de Haan and Ward Warmerdam 233

interest rates of between 2 percent and 3 percent. The repayment periods on these
loans are 15–20 years, of which five to seven years are grace periods (IOSPRC
2011a).
20. One of the concerns about China’s expanding loans to Africa has been the ques-
tion of whether or not it creates a new unsustainable debt burden. The views on
this are predictably diverse. See Brautigam (2009, 185 ff.) for a discussion includ-
ing the different concepts used by Chinese agencies like Eximbank, as well as
Dahle Huse and Muyakwa (2008), and Davies (2007).
21. See Lin (this volume) for example. Lin discusses potential partnerships between
old donors and the private sector to address ongoing infrastructure gaps in
developing countries.
22. Of the OECD-DAC members, there are six donors who provide aid to more than
100 countries: EC (148), Japan (132), US (127), France (120), Germany (111), and
Canada (109). The UK provides aid to 94 countries (OECD 2009b).
23. The Eight Principles are (1) Assistance is mutual and not unilateral. It should
be based on the principle of equality and mutual benefit. (2) Recipient state
sovereignty is strictly respected in the provision of assistance. Conditions are
never attached and privileges are never asked for. (3) Assistance is provided in the
form of interest-free or low-interest loans and repayment dates may be extended
in order to relieve the burden on recipient countries. (4) The purpose of assis-
tance is not to foster or encourage dependency, but rather, to help recipient
countries work towards self-reliance and independent economic development.
(5) Minimum investment, quick return projects are preferred in order to allow
recipient nations to increase their revenues and accumulate funds. (6) Equip-
ment and materials provided by the Chinese government are to be of the highest
quality that it can produce, with prices negotiated by referring to international
market prices. If the recipient deems that the equipment and materials provided
are not up to the agreed standards, the Chinese government will replace them.
(7) Along with the provision of technology, the Chinese government will ensure
that workers in the recipient country are able to fully master the received tech-
nology. (8) Chinese experts dispatched by the government will enjoy the same
living conditions as their local counterparts, and are not allowed to make special
demands (Ping 1999).
24. The OECD (2009a, 23–4) report on aid predictability notes that only 13 of the
41 surveyed donors could provide estimates for budget support expenditure for
2009–11. The report also revealed that the average DAC member funding for bud-
get support was 5 percent of country programmable aid in 2007. DFID minister for
development cooperation Andrew Mitchell recently described the DAC as a rigid
structure (Kim and Lightfoot 2011, 714). In our experience, however, the DAC
has little enforcement power. See also Chandy and Kharas (2011), who highlight
the fact that progress on aid coordination has been disappointing even among
‘like-minded’ DAC members.
25. There have been a number of exchanges between Chinese officials and several
bilateral agencies. Their purpose is to allow the Chinese side to learn from experi-
ences elsewhere, and for Western donors to promote various forms of organizing
aid delivery.
26. China is the largest contributor to UN peacekeeping operations out of all the
permanent members of the UN Security Council, and for example the largest
contributor to peacekeeping in Sudan. In April 2008, 1981 Chinese military and
police personnel were participating in UN peacekeeping operations in a total of
234 Emerging Multilateralisms

12 UN missions (IOSCPRC 2005; IOSCPRC 2011b; ICG 2009; Taylor 2009; Zhu
2010).
27. It was reported that China and the World Bank were in early stages of talks on
cooperating to promote the transfer of low-level manufacturing jobs from China
to Africa (Bloomberg, September 5, 2011).
28. FOCAC Forums in 2000, 2003, 2006, and 2009 are generally seen as important
steps by China to enhance its relationship with Africa.
29. While the general economy of China has undergone well-known ‘reform and
opening up’, the Chinese foreign aid program underwent a simultaneous process
of what is referred to as ‘reform and readjustment’ between 1978 and 1982. There
were further reforms and readjustments made in the mid-1990s. This process was
initiated in response to the realization that providing aid beyond its means was
obstructing China’s own economic development, and that there had been a great
wastefulness in aid provision prior to 1978. There was also a broad consensus
among policymakers that China’s foreign aid policy should be brought in line
with its own conditions and evolving economic system.
30. One of China’s most prominent foreign policy goals is to isolate Taiwan from
the international community, and foreign aid is seen a very useful tool in this
venture. In Africa only four countries remain loyal to Taiwan, while the rest have
switched their allegiance to Beijing (Zhu 2010).
31. China became net importer of oil in the mid-1990s. While it is still self-sufficient
in coal and gas, its rapidly developing economy and high demand for other
natural resources and raw materials mean that the latter two now constitute a
significant percentage of China’s imports.
32. During the Great Leap Forward large amounts of state funds were injected into
capital-intensive industries with the goal of ‘overtaking England’ and ‘catching
up to the US’ in industrial development. Agricultural development mechanisms
focused on increased collectivization, mass mobilization and decentralization of
power to local governments. The effects of this were disastrous, leading to the
Great Famine.
33. The Cultural Revolution was originally launched in order to consolidate China’s
socialist system, but as a result of decentralization, mass mobilization, misman-
agement, and ideological extremism created widespread turmoil instead.
34. China became a World Bank member in 1980. The forms of cooperation are
described in the World Bank publication China and the World Bank: A Partnership
for Innovation (2007).
35. Mallaby gives a fascinating description of the World Bank under Wolfensohn,
with a discussion of the controversial Qinghai project (2004, 270–85), and the
role of managing director Shengman Zhang (former MOF) in moving the bank
toward a stronger emphasis on infrastructure (2004, 359).
36. This phrase in the original Chinese is composed of 24 Chinese characters
( , , , , , ).
37. The three policy banks are the Agricultural Development Bank of China, China
Development Bank, and the Export-Import Bank of China. Their mandate is to
focus on and support government development policies in China and abroad.
These banks are not commercial banks; profit generation is not their main
mandate (Davies et al. 2008).
38. The five-point agenda set forth by President Jiang on his trip to Africa in 1996
was ‘(1) to foster a sincere friendship and become each other’s reliable “all-
weather friend”; (2) to treat each other as equals, respect each other’s sovereignty
and refrain from interfering in each other’s internal affairs; (3) to seek common
 Arjan de Haan and Ward Warmerdam 235

development on the basis of mutual benefit; (4) to increase consultation and

cooperation in international affairs; (5) to look into the future and create a more
splendid world’ (Yu and Wang 2008, 90).
39. China’s African Policy (MFAPRC 2006) emphasized Chinese efforts in both social
and economic development in Africa and the desire to strengthen cooperation
with Africa in the UN and other multilateral systems. It called for more attention
to be given to issues of peace and development in Africa. It also stated a desire to
increase multi-level and multi-channel exchanges between China’s National Peo-
ple’s Congress and the various parliaments of Africa and the African Union (AU).
The policy paper announced measures to facilitate African commodity access
to the Chinese market and increased exchange and cooperation in agriculture,
transportation, technology, judicial and law enforcement departments, disease
prevention, bio-agriculture, solar energy, and tourism among many others. Debt
reduction and relief efforts were announced, and China agreed to put pressure on
the international community to take more action on debt relief and debt reduc-
tion for African countries. Finally, China’s African Policy recognized the vital role
of the AU and the NEPAD and its desire to seek the best ways of cooperating with
them through FOCAC.
40. Asia received 32.8 percent, and Latin America and the Caribbean 12.7 percent of
total Chinese aid disbursements in 2009.
41. In 2008, exports to Africa formed 3.5 percent of total Chinese exports. Imports
were a mere 5 percent of total imports. Chinese dependence on Africa for oil
imports is much larger. While 45 percent of its crude oil imports come from the
Middle East (Saudi Arabia and Iran being the largest suppliers), 32 percent come
from Africa. Angola (15 percent) and Sudan (6 percent) are China’s largest African
oil suppliers. Moreover, Angolan and Sudanese oil exports to China increased
from 6 million tons in 1997 to 53 million in 2007. Also, China is dependent on
Africa for cobalt and manganese ores (Jiang 2009).
42. Top officials have invoked this concept. For example, President Hu Jintao’s
address to the 2007 National Congress, where soft power (ruan shili) described
China’s efforts to improve the appreciation of Chinese culture for the Chinese
people, for example through the opening up of Confucius institutes around the
world. China also started to use the term ‘harmonious world’ as the alter ego of
its internal project to create a ‘harmonious society’. See Zheng and Tok (2007)
and de Haan (2010).
43. This new phrase was adopted following a controversy stemming from use of the
word ‘rise’. Some believed that this implied that China was a threat to the estab-
lished order, and that China’s ‘rise’ is necessarily equated to the ‘decline’ of other
nations (Zhu 2010).
44. Although Sata lost the election in 2006, he eventually became president of
Zambia in September 2011. Tensions with China have eased, partly as a
result of Chinese government efforts to improve regulation of Chinese enter-
prises in Zambia, and partly due to the Zambian realization that China is
becoming an increasingly important partner given the economic downturn in
the West.
45. Quantitative analysis (Alesina and Dollar 2000) shows that economic, politi-
cal, and historical (colonial) factors determine aid allocation alongside recipient
countries’ needs. While untying aid has probably reduced the economic factor as
a determinant, the security agenda has clearly strengthened the political motiva-
tion, while colonial links continue to be cited as an aid motive and are reinforced
through the ‘soft power’ of immigrant communities.
236 Emerging Multilateralisms

46. Moreover, in the Netherlands there has been increasing pressure, partly prompted
or motivated by Chinese approaches that appear to integrate traditional diplo-
macy with economic objectives, to ensure aid benefits the Netherlands too (this
opinion is based on discussions at the Clingendael workshop in 2009). Since
the formation of the Dutch coalition government in 2010, approaches to Dutch
development aid have been reformulated to include serving Dutch commercial
interests as one of its objectives.
47. Some of the literature (e.g. Six 2009) and related debates suggest – or at least
ask – if the rise of China and other emerging donors poses a challenge to the pre-
vailing development paradigm. We believe that this overstates the differences in
approaches, both in terms of the uniqueness of China’s actions and the existence
of a unifying paradigm among old donors.
48. This concept is best captured by the Chinese mantra ‘If you want to eradicate
poverty, build a road’.
49. See, for example, Six (2009), who discusses China and a range of other emerging
countries.
50. See Ho (2009), WRR (2010), and de Haan (2009c) for further details.
51. Interestingly, in the 2011 White Paper China refers to its foreign aid as a ‘model
with its own characteristics’ (IOSCPRC 2011a). This indicates either a change in
rhetoric or a belief that its methods of foreign aid engagement now constitute a
‘model’.
52. As discussed by others in this volume (Chapters 3, 4, and 11), many see the role
of emerging powers in development as having the potential to contribute to the
proliferation of aid agencies. However, the extent to which China contributes to
this problem is unclear, given the current size of Chinese investments.
53. This point is taken up by Jing Gu at a presentation at ISS (the International
Institute of Social Studies at Erasmus University) in May 2010.
54. Traditional donors Australia, France, Italy, and the US are known for their
frequent use of tied aid (Berthélemy 2005).
55. The 2000 FOCAC declaration noted that the imposition of human rights condi-
tionalities themselves constitute a violation of human rights (quoted in Taylor
2006, 68).
56. An abstention in these circumstances was as far as China could go politically
without overstepping the limits set by its principle of non-interference while still
supporting the UN resolution. China did not obstruct the NATO intervention
because Chinese companies, among them large SOEs, had many investments in
Libya at the time. Additionally, some 30,000 Chinese citizens had to be evacuated.
57. Helmut Reisen at the 2011 PEGNet Conference in Hamburg, September 7–9, indi-
cated that recent findings suggest that high levels of Chinese engagement are
correlated with improved governance indicators.
58. See recent literature review on the impact of aid on state capacity (de Haan and
Warmerdam 2011).

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China Policy Institute, University of Nottingham.
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ment 23: 722–38.
10
South-South Cooperation: How Does
Gender Equality Factor in the
Emerging Multilateralism?
George Kararach, Frannie Léautier, and Towera Luhanga

Introduction

The global south is emerging as a large market, attracting investors globally.

Better linkages among countries in the south have a gender dimension in the
exchange of resources, technology, and knowledge across countries. A num-
ber of issues relating to gender need specific attention including access
to education by girls and women; risks of trafficking of women and chil-
dren; gender, trade, and regional integration; poverty levels among women;
democracy, human rights, and gender; as well as intellectual property rights,
indigenous knowledge, and the role of women. Data and analysis is criti-
cal to deal with these issues and there is a role for capacity development to
ameliorate them. Organizations like the African Capacity Building Founda-
tion (ACBF) contribute to addressing the many facets of capacity challenges
to enhance gender equality by supporting institutions, policy development
and program implementation processes at local, national, regional, and con-
tinental levels. There is also opportunity to draw on the experiences of
specific women-lead initiatives such as the African Women’s Development
Fund (AWDF)1 – based in Ghana yet operating continentally.
In the context of gender and South-South cooperation (SSC), this chapter
argues that capacity issues have been given little attention despite the
role women and men play in their various capacities (as parents, pro-
ducers, leaders, etc.) in the societies of the global South. There is a need
to look critically at how SSC can be leveraged to enhance Africa’s devel-
opment and particularly the role that women can play in that form of
cooperation.
The chapter is divided into five broad sections reflecting what the authors
consider to be neglected areas of discussions in the SSC discourse. Follow-
ing the introduction, the second section briefly discusses the notion of SSC.

241
242 Emerging Multilateralisms

The following section looks at key issues relating to gender in the con-
text of SSC. It looks at emerging multilateral forms of SSC and suggests
how gender considerations can be better factored in. It examines economic
dimensions of SSC and their impact on gender. Trade is becoming more
important than ever before and it is unclear, given the economic objec-
tive of SSC, how well it has addressed social issues, such as improving
gender equality and reducing poverty and inequality – the first of the Millen-
nium Development Goals (MDG 1). Given the attempt to foster knowledge
through SSC, the section examines issues of intellectual property, indige-
nous knowledge, research and development, and education from a gender
perspective. The chapter then discusses SSC as a political objective and looks
at promotion of democracy and pluralism, good governance, and civic par-
ticipation. It examines gender considerations in the achievement of these
objectives. Finally, it examines the issue of human trafficking, especially
of women and children, and how using a SSC mechanism would be cru-
cial in curtailing it. Following the discussion of these important issues,
the issue of capacity building is examined as a possible mechanism for
achieving SSC objectives based on the experience of AWDF – a women’s
organization supported by ACBF. The final section concludes with policy
recommendations.

What is South-South cooperation?

A number of definitions have been used to describe SSC – most of which

come from international relations theory. SSC has historically been used by
policymakers and academics to describe the exchange of resources, technol-
ogy, and knowledge between developing countries, also known as countries
of the global south. There is now an attempt to include collaboration
between developing countries in that definition, along with the sharing of
resources and costs for mutual benefit. Developing countries see cooperation
as a way of promoting self-sufficiency among southern nations and strength-
ening economic ties among various states (Shaw et al. 2011). This process
has been shaped by the historical evolution of SSC from the Begor Confer-
ence in 1954, the Bandung Conference of 1955, followed by the Afro-Asian
People’s Solidarity Conference in Cairo in 1957 and the Belgrade Confer-
ence in 1961 that ultimately led to the establishment of the Non-Aligned
Movement.
SSC has also been conceived as an expression of solidarity among coun-
tries and a way to collaborate outside of traditional approaches including
North-South cooperation. Knowledge exchange is among the objectives of
SSC based on similarities between emerging and developing countries in
terms of their interests and challenges. The nature of SSC has evolved over
 George Kararach et al. 243

Developing Developing
country country
• Trade
• Regional Integration
• Knowledge exchange
• Sharing success stories

Emerging Emerging
country country
• Trade
• Regional integration
• Transfer of knowledge and expertise
• Development partnership
• Capacity development

Figure 10.1 Graphical structure of South-South cooperation

Source: Developed by authors from summary of literature on South-South cooperation.

time from a focus on defeating colonialism to greater mutual partnerships

based on economic diplomacy, which has coincided with the shift in the
balance of economic and political power in the world. Countries are keen
to see how they can benefit from ideas that have worked elsewhere, using
them to leapfrog development. SSC includes elements of aid, knowledge
and technology transfer, and trade and investment. Figure 10.1 above gives
a graphical representation of these dynamics.2
SSC has changed the nature of development aid which has shifted
as a number of new entrants have joined the aid market. The effect
has been a crowding-in of more development aid from existing players.
Figure 10.3 demonstrates the response of the OECD countries to new
entrants. As pointed out by de Haan and Warmerdam (Chapter 9, this vol-
ume), countries provide aid for strategic reasons. It is driven by policies
in trade, diplomacy models, security needs, and business or commercial
interests. When there is a fixed set of donors over a long period of time, fluc-
tuation in aid levels is driven by changes in donor policies with respect to
the role they see for aid, spurred mainly by domestic policy changes. While
SSC providers also have their own motivations for providing aid, they have
redefined the frontier for aid and pushed the aid envelope toward higher
levels, as seen in Figure 10.2.
SSC has been successful in decreasing developing countries’ dependence
on the aid programs of developed countries and in creating a shift in
the international balance of power – especially economic and political
power (King 2010). SSC has great potential for increasing effectiveness and
efficiency of aid due to similarities in development stages, culture, and con-
ditions among developing countries. It can engender solidarity between
countries and has the potential to promote greater country ownership. This
244 Emerging Multilateralisms

Benefits of aid and level of aid Effect of new aid entrants

Aid levels un US$ billions
Benefits OECD DAC Countries
Aid, trade, foreign, +4.9
and security policy China
+1.1
New players
Greece
+8.9
Korea

Portugal
K^/N K*/N Level Spain ODA level

K^ = benefit maximizing level of aid

9
−7

−8

−9

−0
K* = socially optimal level of aid

70

80

90

00
19

19

19

20
Data on Aid from OECD-DAC

Figure 10.2 Changing aid environment and effect of new entrants in aid
Source: Generated by authors using data from OECD (2012).

is because the increasing sources of finance afford developing countries

greater options in terms of the partnerships they pursue (Chapter 9, this
volume).
For example, cooperation between Brazil and Africa is growing in areas
such as agro-diplomacy (whereby agriculture is at the center of interna-
tional diplomacy). Brazil has developed an increasingly successful model of
overseas aid provision of over US$1 billion annually (Cabral and Weinstock
2010) (ahead of some traditional donors), which focuses on technical
expertise and the transfer of knowledge through frameworks such as the
IBSA (India-Brazil-South Africa) Forum. Brazil’s form of South-South devel-
opment aid has been called a ‘global model in waiting’. Africa has requested
specific forms of assistance from Brazil including tropical agriculture, tropical
medicine, vocational training, energy, and social protection.
SSC, however, is about much more than aid; it cannot be defined in the
way Northern donors understand aid.3 It includes embracing cooperation
through experience sharing, trade, investment, technology distribution, and
skill transfer. In 1978, the United Nations (UN) General Assembly estab-
lished the Special Unit for South-South Cooperation (SUSSC) to promote
South-South trade and collaboration within its agencies. One of the key
goals of the cooperation is to strengthen and improve economic ties among
developing countries (Wanjiru 2009). SSC is seen as a more efficient alter-
native to North-South bilateral aid. Due to coverage of active members,
the cooperation is now well known as South America-Africa-South Asia
(SASA) cooperation. In May 2011, a joint program of the Organization of
the Islamic Conference (OIC) and UN SUSSC (OIC/SUSSC) was launched
 George Kararach et al. 245

in support of OIC member states and in particular, countries recovering

from the effects of major conflicts, natural disasters, and other critical
humanitarian situations. The Joint OIC/SUSSC program aims to support SSC
arrangements between countries in need and those of other OIC member
countries.4
SSC also calls for preferential market access, trade-oriented support and
investment, employment generation, and capacity building. There has been
a significant increase in the importance of developing countries in Africa’s
merchandise trade. Patterns have been highly differentiated in the perceived
and real benefits of SSC with respect to trade flows, leading to a variety
of studies investigating whether trade flows with the South are beneficial
or whether they are reinforcing a long-standing trend in which African
countries export primary products (oil, minerals, agricultural products)
and import manufactured goods (see for example UNCTAD 2010). Indeed,
according to trade statistics from the International Trade Center (ITC 2011),
between the period May 2010 and May 2011, Thailand’s imports from
Nigeria grew by 3671 percent to a volume valued at $76 million,5 while
Brazil’s imports from Angola declined by 91 percent (valued at $7.5 million)
during the same period. Focusing on intra-African trade, data shows that
Burundi’s imports from Zambia declined by 23 percent to $2.1 million while
its imports from China grew by 145 percent to $7.6 million (ITC 2011).
Figure 10.3 shows the rise in imports from sub-Saharan Africa (excluding
South Africa) (World Bank 2011).

3,500,000

3,000,000

2,500,000
x 10,0000

2,000,000

1,500,000

1,000,000

500,000

0
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009

Goods imports (Bop, current US$) Sub-

Saharan Africa (developing only)

Figure 10.3 Goods imports (BoP, current US$) Sub-Saharan Africa (developing only)
Source: Generated by authors using data from World Bank (2012a).
246 Emerging Multilateralisms

Increasingly, it is being recognized that emerging issues such as climate

change and natural disasters are better dealt with on a regional basis through
regional frameworks and networks. As the UNDP (2005, 15) notes:

One important lesson from observing the evolution of South-South Coop-

eration is the broad spectrum of fields and issues that it currently encom-
passes. Today more than ever before, disaster prevention, management,
and recovery have become major areas of cooperation between devel-
oping countries. Many countries of the South have been devastated by
hurricanes, floods, earthquakes and tsunamis, leading to the realisation
that only a common response would help prevent or reduce the impact
of those natural disasters. Groups of countries including Small Island
Developing States have engaged in serious negotiations to put in place
early warning mechanisms adapted to their specific needs. At the same
time, developing countries have shown a great sense of solidarity towards
countries and individuals affected by these natural disasters as evidenced
by the level of pledges and contributions to various funds established in
response to the Indian Ocean Tsunami.

Despite the opportunities SSC presents, it also has some important draw-
backs. Civil society organizations (CSOs) have expressed concerns about
ensuring that human rights factor into SSC. There has also been a lack of
participation by parliamentarians and non-executive branches of govern-
ment in the establishment of SSC deals, which are often made at the highest
political level without broad inclusion.

Gender and South-South cooperation

Gender equality is an explicitly stated development goal among the MDGs

(MDG 3). It is important as a means to achieve all of the other MDGs.6
The UK-based Overseas Development Institute (ODI) (2010, 1) recently
noted that

the MDG focus and debate on addressing key development challenges is

unlikely to lead to sustainable poverty reduction unless there is a recog-
nition that the gender dynamics of power, poverty vulnerability and care
run through all of the goals. The goal of eradicating poverty and hunger
(MDG1), now and post-2015, [ . . . ] means tackling the discrimination that
underpins and perpetuates gender inequality.

This section examines important gender issues in the context of SSC. Recog-
nizing that limited information and analysis exist on gender dynamics and
SSC, the section looks at the following areas: economic dimensions of SSC;
knowledge transfer; human rights and democracy promotion; and human
 George Kararach et al. 247

trafficking – especially of women and children. For each issue, the authors
provide context, highlight key gender considerations, and look at how SSC,
particularly multilateral approaches, can be used to pursue improvements in
gender outcomes.

Globalization,7 gender, and poverty reduction in the context

of South-South cooperation

Economic dimensions of multilateral and bilateral

South-South cooperation
In a dynamic global market, the need to be strategically savvy and innovative
to strengthen competitiveness requires knowledge of production, research
and development, design, maintenance, management, and commodity mar-
keting. Indeed, many opportunities exist to use networks and movements
on the ground to ensure that globalization results into faster growth in
GDP and trade for developing countries and more so within these countries
(Emmanuel 1972; Stiglitz 2001) without immiserising growth. At the multi-
lateral level, the Group of 77, China and the Non-Aligned Movement (NAM)
continue to serve as the broadest mechanisms for consultation and policy
coordination among developing countries for poverty reduction. As noted
at the South Summit held in Havana in 2000, the positions adopted over the
years by the Group of 77 and NAM form a comprehensive philosophy and
framework for action among developing countries (Clark 2011). UN con-
ferences – particularly the Millennium Summit of 2000 that adopted the
MDGs – have guided many recent South-South initiatives at the global and
regional levels (UNDP 2005). As a consequence the G77 has been involved
in a number of international negotiations and achievements, with recent
highlights including the MDG Summit in September 2010, the Nagoya
Biodiversity Summit, and the UN Climate Change Conference in Cancun
in December of the same year (Clark 2011).
Emphasis on SSC has coincided with a strategy to harness the opportu-
nities presented by globalization. A number of countries in the South are
successfully and rapidly reducing poverty, raising life expectancy and bol-
stering their rates of economic growth, justifying the need for continued
promotion of South-South exchanges of ideas and strategies. Several coun-
tries, especially within the G77, have found that regional cooperation is an
effective tool to address socio-economic issues. Regional groups are gener-
ally oriented toward the promotion of South-South flows of trade and other
solutions among developing countries. Barriers (such as infrastructure, com-
munications, customs procedures, etc.) that have prevented South-South
trade in the past are being removed (King 2011). By the end of 2002, the
World Trade Organization recognized nearly 250 regional and sub-regional
free-trade and economic partnership arrangements intended to promote
economic and social development. Worthy of note is that many of these
248 Emerging Multilateralisms

arrangements originate in Africa, resulting in the most significant progress

toward regional integration and partnership for development. In May 2011,
China and Brazil were engaged in discussions to open up China’s market to
more value-added Brazilian products. Some of the biggest mergers and acqui-
sition in the recent past were in the context of a South-South nexus. For
example, Brazil’s Repsol-YPF was acquired by Sinopec (a Chinese company)
for $7.1 billion in 2010. Indeed, most major international negotiations have
made great strides in promoting SSC in recent years.
The biggest integration effort in history is the 54-member African Union
(AU). Since January 2005, the AU has put significant effort toward eco-
nomic and political integration throughout the continent. Discussions have
since focused on operationalizing a number of common institutions such
as the AU Central Bank and the AU Monetary Fund, key institutions meant
to facilitate the economic and financial integration of the continent. The
African Union has also established transnational bodies such as the Parlia-
ment, Court of Justice, Human Rights Commission, the New Partnership for
African Development (NEPAD) Agency, and the Peace and Security Council.8
NEPAD introduced a new approach to thinking about African development
by linking poverty eradication to governance issues such as democracy,
human rights, and corruption. The MDGs also remain central to these
efforts. As part of that process, as of November 2011, 30 countries have
signed the Memorandum of Understanding acceding to the African Peer
Review Mechanism.9
Coordination between Latin American countries and Africa is also increas-
ing. Among other regional trade and economic agreements reached recently,
at the Second Africa-South America Summit held in September 2009,
Venezuela signed an oil agreement with South Africa and Sierra Leone to
form a joint mining company. The Bank of the South (Banco del Sur) was
launched with $7 billion in start-up capital. Africa and Latin America have
over one-quarter of world’s energy resources. This includes the oil and natu-
ral gas reserves in Bolivia, Brazil, Ecuador, Venezuela, Algeria, Angola, Libya,
Nigeria, Chad, Gabon, and Equatorial Guinea. Brazil has increased its sup-
port to Africa in recent years, resulting in an increase in trade between Brazil
and Africa from $2 billion in 2000 to $12 billion in 2010 (World Bank
2012b). Overall, 58 percent of Brazil’s current global trade is with developing
countries of as June 2011 (see also King 2011). According to King (2010), the
West should take greater note of economic drivers of SSC if it is to remain
relevant. This is especially the case when looking at regional trade and its
changing patterns.
Other SSC partners are also engaging Africa. Turkey has emerged as a
strong partner to Africa with its trade growing from $1.5 billion in 2001
to over $10 billion in 2009. A large number of Africans have received schol-
arships and been trained in Ankara. Turkey is opening up presence in Africa
in a number of embassies and decentralized location of its aid agency, the
 George Kararach et al. 249

Turkish International Cooperation and Development Agency (Ôzkan 2008;

Freemantle and Stevens 2012).
A delisting process of listed domestic companies10 in some African coun-
tries has emerged which follows a general trend in global mergers and
acquisitions and seems to be tracking the south-south investment pro-
cess that is taking place. Within Africa, about 5 percent of foreign direct
investment is intra-regional, with investments from one SSA country to
another taking over the bulk of that share (UNCTAD 2011). Using data from
the World Development Indicators (WDI), Figure 10.4 shows the depth of
national ownership per African country as well as where companies are listed
by year. While there is a considerable paucity of data,11 what is available
indicates that less than 20 percent of African countries have more than 50
(Figure 10.4). During the period 2001–10, there has been a delisting process
occurring with the number of listed domestic companies dropping by nearly
half from 2226 companies, that make up about 5 percent of the world’s listed
domestic companies, in 2001 to 1286, which is less than 3 percent of the
world’s listed domestic companies (WDI 2010).
The highest level of delisting has taken place in Egypt, Kenya, Namibia,
and South Africa (Figure 10.5). All remaining countries saw an increase in
listed domestic companies. The largest growth has been in Morocco which
saw a 32.73 percent growth rate in domestically listed companies from
55 in 2000 to 73 in 2010. Other countries witnessing significant growth are
Tunisia with a 17.39 percent growth rate (going from 46 domestically listed
companies in 2000 to 54 in 2010) and Nigeria with an 11 percent growth

Depth of Countries Share of

national countries
ownership (%)
(%)
No data Algeria, Angola, Benin, Burkina Faso, Burundi, Cameroon, 65
Cape Verde, Central African Republic, Chad, Comoros,
Congo DR, Congo, Djibouti, Equatorial Guinea, Eritrea,
Ethiopia, Gabon, Gambia, Guinea, Guinea Bissau, Lesotho,
Liberia, Libya, Madagascar, Mali, Mauritania, Mozambique,
Niger, Rwanda, Sao Tome & Principe, Senegal, Sierra
Leone, Somalia, Sudan
<10 Namibia, Uganda, Swaziland 6.5
10–50 Botswana, Cote d'Ivoire, Ghana, Malawi, Tanzania, Zambia 12
50–100 Kenya, Mauritius, Morocco, Tunisia, Zimbabwe 10
>100 Egypt, Nigeria, South Africa 6.5

Countries in Bold have significant declines in listed domestic companies during

the period under review

Figure 10.4 Listed domestic companies (2001–10)

Source: Generated by authors using data from World Bank (2012c).
250 Emerging Multilateralisms

1200 1110
1000
800
600 542

400 360
211
200
57 53 13 7
0
Egypt South Africa Kenya Namibia

2001 2010

Figure 10.5 Countries with declining listed domestic companies 2000–10

Source: Generated by authors using data from World Bank (2012c).

rate (jumping from 194 domestically listed companies in 2000 to 215 in

2010). This is partly due to the rise in financial deepening in many of these
countries and widening markets for companies.
The majority of non-listed companies in Africa are in the informal sector,
meaning that a process of easing the steps needed to list a company could
not only help women significantly, many of whom work in the informal
sector, but also contribute to job creation efforts through self-employment
in small and medium enterprises. However, more research is needed on the
gender dimensions of company registration. The World Bank Doing Business
data provides a useful starting point for conducting research on women-
led companies, their location, and progress. Women tend to be employed
in domestically listed companies and in the informal sector. As such, the
trends noted above have an impact on gender dimensions of private sector
development and the participation of women in business-led south–south
trade (Chen 2001, 2007).

Globalization, gender, and poverty reduction

When the gender-trade-regional integration nexus is dissected, the litera-
ture shows that women are unable to take up the opportunities to trade.
The biggest challenge women face involves deep-seated poverty and gen-
der inequalities, uncertain land rights, low literacy and education, and the
responsibilities of caring for the family. Analysis through a gender lens
indicates that women also lack the time, resources, and freedom to access
services, and may also be constrained by their dual roles as income earners
and care-givers (ODI 2010, 1–2). Economic downturns affect women dispro-
portionately in developing countries, exacerbating existing care work and
prejudices (The Reality of Aid 2010).
Figure 10.6 demonstrates the nature of women’s employment. In Africa
women account for close to 70 percent of those working in agriculture and
in employment that is insecure or poorly paid. The financial and global
 George Kararach et al. 251

90

68

45

23

0
Botswana Egypt Madagascar Morocco Senegal Tanzania

Agriculture Industry Services

Figure 10.6 Female employment by sector, 2011 (%)

Source: Generated by authors using data from World Bank (2011). Constructed using data showing
the share of female employment in each sector by country. Data also available from World Bank
(2012c).

economic crisis has pushed up income poverty and unemployment in devel-

oping countries and there are a projected 200 million new working poor
earning less than $2 a day – mostly in the informal economy, the majority
of whom are women.
The ODI (2010) notes that when women own and control resources, and
have access to a good education, it results in reduced poverty and greater
productivity. Yet, despite proven results, many women are still barred from
education and ownership of businesses (Figure 10.7) by prevailing attitudes
and discriminatory laws. There is high variability in female participation in
ownership of companies across African countries. Only 16 percent of coun-
tries have significant depth of female participation in ownership of domestic
firms; close to 20 percent of countries do not have gender disaggregated data
necessary to gauge progress in this area.

Globalization, gender, and South-South cooperation: Remaining

challenges and potential solutions
Though developing and poor countries have focused on natural resource
extraction or boosting commodity exports to create wealth until recently,
there is now a greater emphasis on the promotion of productive diversifica-
tion and value-addition. Despite the increasing presence of SSC providers,
however, Africa has seen highly variable patterns of transformation of pri-
mary products for export and limited diversification of its export base. Most
252 Emerging Multilateralisms

Depth of Countries Share of

female Countries
ownership (%)
(%)

No data Central African Republic, Comoros, Djibouti, Equatorial 19

Guinea, Libya, Sao Tome & Principe, Somalia, Sudan,
Tunisia, Zimbabwe
0–10 Eritrea, Sierra Leone 4
10–20 Algeria, Burkina Faso, Cameroon, Guinea Bissau, 21
Lesotho, Mali, Mauritania, Mauritius, Morocco, Niger, Nigeria
20–30 Angola, Gambia (The), Guinea, Malawi, Mozambique, 15
Senegal, South Africa, Swaziland
30–40 Burundi, Cape Verde, Congo DR, Congo, Egypt, Ethiopia, 25
Gabon, Kenya, Namibia, Tanzania, Togo, Uganda, Zambia
40–50 Benin, Botswana, Chad, Ghana, Rwanda 10
>50 Cote d'Ivoire, Liberia, Madagascar 6

Countries in Bold have significant declines in listed domestic companies during

the period under review

Figure 10.7 Firms with female participation in ownership (2005–10)

Source: Generated by authors using data from World Bank (2012c).

countries in the southern hemisphere are unprepared to meet the challenges

of a changing technological and competitive environment (Kararach 2010;
Hanson and Kararach 2011). Transport and trade-related infrastructure and
customs reforms and border procedures remain a challenge (Shaw 2010).
Developing countries lack the strong knowledge base and integrated physical
infrastructure and organizational practices needed to pursue other economic
strategies. The ability of their institutions to perceive opportunities and con-
straints and to translate them into effective policies for change has, for the
most part, remained limited. Indeed, as pointed out by Toornstra and Martin
(this volume), resource, policy, and implementation-capacity gaps remain a
significant challenge. In the case of women, institutions have low capacity
to address the issues women face. In the context of SSC, this means these
issues also receive limited attention.
In order to promote gender equality and the empowerment of women in
trade and regional integration, there is a need for more research on gender
and trade as well as the effects of trade liberalization on men and women
net consumers (Shaw 2010). Policies are also needed that can help ensure
female importers and exporters reap the same benefits from improved trade
logistics as their male counterparts (Shaw 2010). Such an approach would
likely require the creation and strengthening of governance systems that are
more perceptive of the needs of vulnerable populations – especially women.
 George Kararach et al. 253

More can be done to ensure women’s participation in the formulation and

implementation of trade agreements, regional integration efforts and trade
policies across both traditional and emerging donors. One solution could
be to empower women to be fully involved in key decisions about national
policies, including in negotiations with traditional and emerging players.
This will enable policymakers to manage trade liberalization in ways that
reduces poverty by taking into account the impact of trade on women,
and ensuring that complementary policies and services support those who
are negatively affected by liberalization and enhance the potential positive
benefits. Women entrepreneurs would benefit from efforts targeting bet-
ter access to trade information, business training, productive inputs, and
land/property rights. Such initiatives could support associations of women
exporters, traders, and businesswomen to increase their understanding of
trade rules and to leverage economies of scale.
These gender challenges apply to both North-South and SSC. In the con-
text of SSC, however, specific attention could be paid to the design of SSC
initiatives that target trade and regional integration to ensure they address
economic issues that face women, support women leadership, and provide
management and vocational skills training to women. Initiatives could tar-
get value chains that impact women in particular, such as food processing,
textiles, and handicrafts. It is also important to recognize the gender impact
of SSC on providers. SSC investments in the construction of large scale and
complex infrastructure, as well as agriculture and mining, have brought with
them gendered patterns of activity. For example, consider the partnerships
between China and Africa that have seen the vast majority of the labor-based
support provided by male laborers from China. This means that men leave
behind women compatriots and interact mostly with other men when in
Africa on the labor sites and in camps. The gendered effect is more visible
in the relative share of aid and SSC that goes to construction and mining,
relative to agriculture and other activities where women are more involved.
SSC arrangements that support women to develop their potential and
contribution to transforming societies exist. For example, Partners in South-
South Cooperation (PSSC) is an entity involving several developing countries
working together for sustainable poverty reduction and development (capac-
ity4dev 2010; PSSC 2012). This partnership, which involves participation at
the highest leadership levels in Benin, Bhutan, and Costa Rica, was initially
funded by the Netherlands. The Dutch provided seed money to kick-start
the partnership which is now fully funded. It operates through CSOs and
champions in the three cooperating countries, which support each other
through sharing knowledge and ideas. Since 2002, the partnership has led
to 36 programs focusing on economic and social development, environ-
mental protection and gender equity. It has created nearly 5000 jobs and
contributed to the increased earnings of more than 4000 families. It has led
to the creation of 139 new enterprises and a large number of products and
254 Emerging Multilateralisms

services. Most of the beneficiaries have been women and women partici-
pate at the leadership level. The partnership has sped up the achievement
of results by introducing eco-friendly technologies to women’s groups and
women-run activities (PSSC 2012). The PSSC provides a useful model that
targets sustainable development outcomes and gender equality for other
providers of SSC to follow.

Knowledge and South-South cooperation

Compared to economic dimensions of SSC, in the areas of intellectual prop-

erty rights, indigenous knowledge and education, Southern countries have
been less successful in pursuing a concerted agenda at the multilateral level
or in harnessing experiencing sharing.
Intellectual property rights and indigenous knowledge
The economic, political, and social dimensions of intellectual property rights
demonstrate a contrast between the North and the developing Southern
regions. The North pushes for greater intellectual property rights protec-
tion and enforcement while the South exercises some political unity at the
international level and advances development in innovation and technol-
ogy to address critical socio-economic problems. Nevertheless, the South
has had limited success in advancing a common agenda, and individual
efforts are often uncoordinated or challenged by pressure from the North
(Biadgleng 2007). Northern countries have typically dominated global gov-
ernance of intellectual property. Differences exist between Northern and
Southern countries, including in terms of levels of support for policymak-
ing. There has been limited development of policies and norms supported by
developing countries in multilateral and bilateral negotiations, and develop-
ing countries have weak coordination despite similarity of interest and a lack
binding norms among themselves (Kararach 2010, 14–22). These dynam-
ics hamper developing countries ability to pursue a coordinated agenda on
intellectual property rights at the international level. At the multilateral
level, important lessons can be drawn from the experience of developing
countries on intellectual property rights and technology-related multilat-
eral negotiations. By learning from past negotiations, countries can establish
ways in which SSC can function as a tool to complement the efforts of devel-
oping countries to enhance innovations and global competitiveness. SSC
can undoubtedly play a complementary role to multilateral, regional, and
bilateral norm-setting on intellectual rights (Claxton 2010).
Within countries, SSC can support knowledge and innovation, particu-
larly innovations that unlock women’s potential, which is important to
the successful execution of SSC policies. User evidence shows that technol-
ogy can transform the lives of girls. The use of bicycles in rural Zimbabwe
has shortened girls’ journey to school and helped to protect them from
victimization and sexual abuse (BBC 2011). In rural Zambia, the reduced
 George Kararach et al. 255

travel time raised participation and attendance levels (Mwanangombe 2012).

Knowledge transfers through SSC have the potential to further support these
kinds of innovations.
Another important question concerns the role of indigenous knowledge in
SSC (Léautier 2004). Indigenous knowledge and sustainable development are
very closely linked, as indigenous knowledge can be extracted at relatively
low costs. The reservoir of indigenous knowledge in the Global South is the
largest in the world. Communities have utilized practices and techniques
or ‘Principles of Permanence’ permitting continuous sustainable use of the
environment (Claxton 2010, 1). Indeed, the call for smart partnerships in the
South should be founded upon the use of local and indigenous knowledge
to support local an indigenous development.
However, differences exist in the way men and women have access to
research and development outcomes and the protection of the intellec-
tual property rights. Research and development may be divorced from
indigenous knowledge as it relies upon traditional platforms of knowledge.
According to Dahlman (2007) there is a strong innovation-learning-gender
nexus and Pritchett (2010) has shown that a society that has social equality
and tolerance is more likely to have a polity that represent the will of all citi-
zens and uses skilled people regardless of gender to create and use knowledge
(Figure 10.8). A society that has such norms would be able to extract high
performance at the administrative level and achieve economic prosperity

In
Economic prosperity, in ce
In no lea nti
Infr forma high productivity v n v
a
fac struc tion us ati ing es
ilita ture e on , c to
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acc r i n gu ist e ivi rd
ess g, and e, in ffe ty,
g
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s ea e
s
1800
Polity represents High administrative
Will of the citizens Capability
Org can s s, tap
tha al ide ck of d

Sk
wh illed p
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ani our
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oc
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ass l con
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ion e
a

e
effe wledg
imi text
a

s
c
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l

ely
Social equality, tolerance
s

environmental sustainability

Figure 10.8 Capacity: Innovation, learning, and gender

Source: Generated by authors, adapted from Lant Pritchett (2010) and Carl Dahlman (2007).
256 Emerging Multilateralisms

and high productivity – and approach that allows for smart-partnerships as

advocated among the G77.
A series of studies done in the 2000s at the World Bank demonstrated
amply the differential impact of indigenous knowledge on men and women
and indeed the potential for collaboration and learning from the practices
in the Global South. Scheinman (2004) shows how research can support
the extraction of knowledge from indigenous medicine to combine ancient
and modern methods to treat HIV/AIDS in Tanga, Tanzania. Infection rates
among women are at alarming rates in rural Tanzania meaning that benefits
from better use of traditional practices with modern practices has a chance
for higher success, especially in rural areas where traditional healers are the
first port of call. Henning (2004) provides a powerful example of the value in
indigenous knowledge of Jatropha as a raw material and fuel, and how rural
women can get not just a livelihood but also an opportunity to contribute
to the green economy, by using Jatropha as a substitute for gasoil-driven
grainmills as was shown in rural Mali. A community approach combined
with SSC could unlock tremendous potential in this area, but to do so it
would be important to enhance indigenous capacity (Léautier 2004).

Education
Investment in improving the quality of education is critical for a well-
managed transition into a knowledge society. Education is also an area where
significant development gains can be made by investing in women and girl’s
education. In her speech launching the 100 Women Initiative: Empowering
Women and Girls through International Exchanges, United States Secretary of
State Hillary Clinton said that investing in women is the right choice and
can help alleviate problems like poverty and hunger. ‘For me, investing in
women and girls is smart. It pays off’ (Clinton 2011). Research has shown
that investing in girls and young women has a disproportionately beneficial
effect in alleviating poverty – not only for girls themselves – but for their
families, communities, and entire countries. Girls who spend an extra year
in school will increase their lifetime income by 10–20 percent on average
(Plan International 2011). Yet, there is still a lag in the level of investment in
the education of women as can be seen in the literacy levels and educational
attainment by women demonstrated in Figure 10.9.
The quality of education as measured by gender-disaggregated data on
the number of women and girls repeating a given level of education also
indicates that this is an area still in need of attention (see Figure 10.10).
An assessment of progress between 2002 and 2010 indicates a wide variety
of patterns in quality education in Africa. Benin managed to bring the ratio
of female primary repeaters from 29 percent in 2002 to 13 percent in 2010.
Countries like Chad so no change with the ratio flat at 26 percent during
this period. Countries like Malawi saw a worsening from a female repeater
level of 15 percent in 2002 to 19 percent in 2010. In general, 7 percent
 George Kararach et al. 257

Adults 93 73 61 66

Adult females 90 65 50 57

Youth females 98 86 73 71

0 100 200 300 400

East Asia & Pacific Middle East & North Africa
South Asia Sub Saharan Africa

Figure 10.9 Adult literacy achievements across regions for the year 2007
Source: Generated by authors using data from World Bank (2012c).

Small improvement Big improvement

43% 7%

Decline No chance
30% 20%

Figure 10.10 Quality of education and gender (repeaters, primary, female (percent
female enrolment))
Source: Generated by authors using data from World Bank (2011). Constructed using data on
repeaters, primary, female (percent female enrolment) taken from the period 2002 to 2010. Big
improvements are higher than 5 percent, small improvements are between 0.1 percent and
5 percent, any negative change is a decline and no change is a flat level between 2002 and 2010.

of countries in Africa saw a big improvement, including Benin, Ethiopia,

Mozambique, and Rwanda; 20 percent saw no change like Chad, Djibouti,
and Swaziland; 30 percent experienced a decline in quality along this mea-
sure like Burundi, Malawi, and Uganda; and 43 percent saw improvements
but small ones during the same period like Lesotho, Togo, and Zambia, albeit
from very different starting points.
258 Emerging Multilateralisms

Quality of education and gender is an important area where there remains

work in terms of harnessing SSC, particularly as it relates to support in the
social sectors. After many years of attention on the MDGs, including those
related to getting girls into schools, some countries have seen big improve-
ments in the enrolment figures, but not so in the quality of education. Some
countries have done very well on both – such as Bangladesh – and have
lessons that can be shared with others. Countries like Colombia, Bangladesh,
and Egypt have lessons to share in a South-South environment that could
help address this challenge of women and girls’ education. For example, uni-
versities, such as al Azar in Egypt which has supplied Islamic scholars to Asia
and Africa over the centuries, and many waqf charities sponsor mosques,
madrassas, and other social programs in many parts of the developing world
(Heyneman 2010). These types of activities could be further harnessed.

Democracy, human rights, gender, and

South-South cooperation

Political dimensions of SSC serve a number of functions for countries in

the south. In some instances, southern national and regional leaders aim
to increase their global influence through partnerships. This has been a
driver of international cooperation among, for example, IBSA countries.12
Some leaders also see cooperation as offering freedom in choosing a political
system. For example, Hugo Chavez hoped to use SSC as a stage to get his
message of what he calls ‘21st Century Socialism’13 across.
Increasingly, peace and security of persons have also been placed at the top
of the SSC agenda. In some instances, SSC serves as a response to perceived
failures of northern dominated traditional forms of multilateralism. Though
yet to be operationalized, Libya proposed a defense alliance between the
Africa and Latin America to create a so-called NATO of the South at the 2009
Africa-South America Summit. This type of alliance aims to act as an alterna-
tive to the UN Security Council, an administrative organ lacking permanent
representation from either continent. Southern security systems have been
operationalized, paradoxically, due to the deterioration of the political situ-
ation in some southern countries. For example, the Economic Community
of West African States (ECOWAS) had to strengthen its role in peace build-
ing and mediation in the sub-region. Many women and children were badly
affected by violence from the civil war in Liberia. One area of relative success
has been the return to democratic processes in the country after years of civil
war and political instability (UNDP 2005).
SSC also affords other opportunities at the national level. It is relatively
well known that socially inclusive economic development has beneficial
effects on the sustainability of democracy as it can enhance welfare and state
legitimacy (Przeworski and Limongi 1997). Sustainability of democratization
 George Kararach et al. 259

is guaranteed by economic growth and reforms if it can generate legiti-

macy and reduce the authoritarian structure of ruling parties. Accountability
to a country’s people can increase with economic growth, implementa-
tion of necessary domestic reform measures, accommodation of dissent,
and participation of all citizens. Indeed, civic pressure for accountability of
the government, larger social participation of all sections of society, and
increased levels of education are some of the outcomes that occur with
the advent of economic reforms; leading to greater transparency, democ-
ratization, and respect for human rights. Essentially, economic growth and
democracy are mutually reinforcing.
Equally, donors and recipient governments are increasingly bound by
human rights obligations as set out in UN summits and review meetings
(The Reality of Aid 2010). Many governments in the Global South have
signed international human rights treaties and accepted (in principle) that
development must be about enabling people to fulfill their rights. However,
in practice they too frequently overlook the rights agenda – especially those
of women and children. Additionally, implementation of human rights
treaties and accountability measures has often been slow, resulting in little
connection between these agendas.
Of course, there are significant challenges associated with adopting and
operationalizing a human rights agenda in development because it is often a
politically sensitive issue prone to differences in interpretation (McInerney-
Lankford 2009). Enhancing human rights requires greater discussion among
all members of society about the various ways in which human rights can be
incorporated into development. This approach to development is crucial in
the achievement of long-term and sustainable empowerment of marginal-
ized groups and engendering structural change in society through human
rights advocacy (Farrior 2009). Many traditional donor organizations (e.g.
Germany, Sweden and Finland) have begun to consider how to integrate
human rights language and concerns into their development policies and
funding decisions. Such approaches made it into programs spearheaded by
the United Nations under Kofi Annan (UNDP 2004) and are now a part of a
series of international human rights-based organizations who have managed
to influence European Union policy (IHRN 2008).
The current attention to focus on results and value for money has not
put a high priority on issues of human rights. However, at the 2011 4th
High Level Forum on Aid Effectiveness in Busan, the United States held
a special session a gender under the leadership of Hilary Clinton, where a
fact sheet on empowering women and girls was issued and discussed. Com-
mitments on gender were also included in the Busan outcome document
(aideffectiveness.org 2011).
One can argue that the poor are most capable of appraising how to
improve their own livelihoods because they are most aware of what must
be done to attain these improvements with the resources available to them.
260 Emerging Multilateralisms

Genuine participation of the poor is a right in itself, but it is also necessary

to realize other human rights. The input of poor people is necessary for the
effective formulation of policies that reduce poverty and advance basic enti-
tlements such as adequate education, health, food, and potable water. The
involvement of women in social movements demanding greater rights, state
accountability, and transparency can be cited as evidence of that awareness.
For example, many women’s groups – such as the Mau Mau and the ANC
Women’s League – have been involved in the struggle for democratization of
society in the Global South since decolonization. African feminists and gen-
der researchers have provided strong justification for an alternative model
to development for women – challenging the model to produce not only
knowledge that reflects African priorities, but also the very basis by which
knowledge is produced and how it relates to women (Afonja 2005; Lewis
2005).
Compared to traditional donors, the lack of historical and political bag-
gage provides emerging donors with the incentives to adopt a rights agenda
(Oya 2008). Women’s groups have shown how SSC promotes shared inter-
ests and addresses common concerns. It is also a means by which developing
countries can diversify and expand their development options and eco-
nomic links, and a powerful tool for building new partnerships; creating
more democratic and equitable forms of global interdependence and global
governance. However, there is still a lot of work to do to ensure that SSC
includes the issues related to gender and the realization of human rights,
and promotes shared interests that lead to shared growth and opportunities,
through groups like the IBSA Forum, G77, and leadership forums such as the
African Parliament.

Prevention of human trafficking and South-South cooperation

Women bear the brunt of poverty, war, disease, and famine. Girls through-
out the world still face ‘double discrimination’ due to both sex and age
(www.plan-uk.org). Children and women continue to be subjected to early
marriage, violence, abuse, and trafficking (Quisumbingi 2010). Each year,
women and girls experience different forms of violence such as rape and sex-
ual violence, female genital mutilation, domestic violence, forced marriage,
trafficking, and prostitution. The UN estimates about 700,000 to 2.4 million
people are trafficked globally and forced into prostitution, labor, and other
forms of exploitation annually (UNDOC 2009).
While trafficking affects both men and women, women, girls, and children
are more likely to face this fate. Forty-three percent of those trafficked end
up in commercial sexual exploitation, of whom 98 percent are women and
girls (ILO 2007). Women and children are primary targets owing to their
vulnerability and disproportionate likelihood of being affected by poverty
 George Kararach et al. 261

and discrimination. These factors impede their access to gainful employment

opportunities and other resources.
Human trafficking is a multifaceted problem with many causes. Above
all however, human trafficking takes place because there is demand for it.
It can result from lack of awareness, including lack of access to informa-
tion; lack of requisite education and skills; abject poverty, especially among
women; high levels of corruption, and weak law enforcement. Traffickers
often bribe corrupt law enforcement and immigration officials to overlook
criminal activities (Shaw et al. 2011).
A number of measures can be taken to combat human trafficking. Pol-
icy reforms regarding poverty, migration, gender issues, and involving
civil society are necessary in order to create a framework in which to
combat trafficking (UNESCO 2010; Sawadogo 2012). More effective action
against human traffickers could be undertaken in the context of adequate
national legislation, institutions, and frameworks for coordination. At the
regional level, SSC affords the opportunity to develop frameworks and
networks aimed at combatting human trafficking. Such frameworks could
work to strengthen ratification of anti-trafficking protocols such as the UN
Anti-trafficking Protocol and unify regional and international institutional
frameworks for coordination and strategic monitoring. Importantly, there
is a need to harmonize regional legislation and judicial systems to effec-
tively respond to the situation, including exchange of crucial intelligence,
expertise, and security information between and among states. The four Ps –
prevention, protection, prosecution, and partnership – ought to be prereq-
uisites for increased and effective action against human traffickers (Touzenis
2008).
Regional networks to combat trafficking are lacking in Africa. Progress in
Asia demonstrates the potential of regional frameworks however. For exam-
ple, the Asian Development Bank has set up a project as part of its regional
technical assistance framework to help developing member countries better
institutionalize anti-trafficking and safe migration issues into sub-regional
cooperation and integration initiatives. The focus of the project is on
the Greater Mekong Sub region and South Asia. The project has achieved
improvements in the safety of migrant workers in the sub-region, partic-
ularly of poor women and men, reduced migration by vulnerable groups
such as children and adolescents, and promoted economic benefits for the
poor through greater safety and ease of cross-border movements. Similar ini-
tiatives could be used not only in Africa, but for other developing regions
as well.
There is a need for more research into the impact of economic reform,
development programs and SSC on human trafficking and to assess factors
that fuel the demand for trafficking. This would require enhanced coordi-
nation of efforts with clear data generation, analysis, and sharing to give
262 Emerging Multilateralisms

practitioners a chance to learn from one another and avoid competition and
redundancies. Governments should continue to strengthen social protection
systems to prevent child trafficking. Greater involvement of civil society in
anti-trafficking initiatives, including measures to build their capacity to work
more effectively in this area is also needed. Other solutions include: long-
term prevention to ensure long-term results; strategies to address capacity
constraints among partners, such as through the establishment of a cen-
tral coordinating agency for development assistance; strengthening systems
of justice and local government capacity building for poverty reduction
and achieving MDGs; and education and skills enhancement to increase
employment opportunities for women and children to enhance financial
independence. Crime can be combated through international cooperation.
There is need for transnational commitments and responsive strategies to
address the trafficking of women and children. SSC frameworks, includ-
ing regional collaborations and networks, could be developed to strengthen
cooperation on human trafficking (ADB 2009).

Capacity development, gender, and South-South cooperation

The role of capacity development is key to addressing the interface between

SSC and gender issues. A society that is inclusive and involves women in
decision making is an advanced society. Representation by women in lead-
ership positions and important administrative areas is a measure of equitable
administrative capacity. Providing access to ideas and information, includ-
ing the innovations from small and medium enterprises, allows women to
be more involved in societal transformation and economic progress.
Women interacting with other women on business and policy issues across
countries could provide a tremendous opportunity for investment if these
interactions are used effectively to shape SSC policies. Yet this is one of
the least developed areas of attention to date. For example, countries in
sub-Saharan Africa have made progress concerning views of women in devel-
opment decision making, which has increased the overall performance of
countries in the path toward democracy (see Figure 10.11). The Africa Capac-
ity Indicators (ACI) Report, produced by the ACBF, scores citizen engagement
based on a composite score between 0 and 100. Engagement is defined
along five categories: Very Low, Low, Medium, High, and Very High. As seen
in Figure 10.11, the majority of countries have scored in the High and
Very High Category. Progress on civic engagement has improved because
women have been more engaged in dialogues on development. However,
analysis done in 2011 afford specific attention to gender issues shows that
a lot of countries have ratified gender-related conventions (like CEDAW)
but have not implemented them – that is, greater involvement by women
does not mean that countries are necessarily acting on their human rights
commitments.
 George Kararach et al. 263

Level of dialogue and inclusion at country level (%)

40

30

20

10

0
Very low Low Medium High Very high

Figure 10.11 Citizens engaged in decision making

Source: ACI database 2010 reported in ACI (2011). The category definitions are as follows: Very Low
is from 0 to less than 20; Low is from 20 to less than 40; Medium is from 40 to less than 60; High
is from 60 to less than 80; and Very High is from 80 to 100.

Investing in innovations and learning from SSC can also accelerate devel-
opment. Farm-to-fork type innovations have particular relevance, as many
women are involved in such activities. The potential to impact the liveli-
hood of women is high in countries like Mozambique where the agriculture
value-added as a share of GDP is high compared to South Africa where it is
much lower (see Figure 10.12).
Indeed, as women make up between 60 percent and 70 percent of workers
in the agricultural sector, innovations in the sector need to be specifically
targeted to them so they can increase their productivity. An example from

• Agriculture value added as Country 1980% 1990% 2000%

share of GDP (%) higher in Mozambique 37.1 37.1 24.0
countries that tap into science
South Africa 6.20 4.6 3.3
and technology, regional
markets and use
Most countries still need to define
entrepreneurial skills for
agricultural policies and implement them (%
farming
with such capacity in 2010 according to ACI)
• Most countries still need to
define agricultural policies and
implement them

0 20 40 60

Figure 10.12 Innovations that transform sectors employing women: From farm
to work
Source: Generated by authors using data from World Bank (2011). The percentages refer to the
agricultural value added as a share of GDP in Mozambique and South Africa.
264 Emerging Multilateralisms

the streets of Accra shows that a simple technology of baking plantain chips
and packaging them in a safe plastic container increases outreach to health
and safety conscious urban dwellers who would stop and purchase such
chips from a street vending woman, thereby contributing to her income
directly. Some projects take farm to fork products through intermediary pro-
cessing such as the case of plantain chips sold at the side of the road by
street vendors. A similar innovation in the use of small ovens to bake chips
for supermarkets and exports raises overall productivity in the value chain
of plantains but does not contribute directly to women’s productivity or
income. Few women are involved in the high value adding manufacturing
of chips for export. Thus an engendered innovation strategy in sectors or
value chains where women are most involved would have an overall effect
in raising productivity and increasing economic prosperity all around. More
needs to be done to make high value added translate into high value to
women.
It also relatively well known that regional integration can serve as a pow-
erful catalyst engendering poverty reduction, economic growth, and devel-
opment provided this integration is focused upon proliferation of trade.
However, developing countries sometimes face capacity challenges that limit
their ability to fully capitalize upon such opportunities. In some instances
countries have faced challenges relating to poor cross-border procedures
including customs duties and logistics (e.g. DRC and Uganda, Tanzania, and
Zambia); calling for strategies to address such constraints to regional trade
integration.
Indeed, SSC can be enhanced by capacity building that takes on a
transnational nature. The African Capacity Building Foundation has been
active in promoting such an approach to enhance the role of gender in
SSC. It supported that process by investing in organizations such as the
AWDF based in Accra. AWDF is the first Africa-wide grant-making fund to
support women’s empowerment and contribute to filling the existing gap
in funding to women’s organizations with the intention to build capac-
ities to promote gender equality and women’s empowerment for poverty
reduction.
AWDF also operates a Resource Centre – the first of its kind on the
continent because it contains both tacit and explicit knowledge collected
from Africa and beyond on gender and development issues in general and
women’s rights in particular. The Resource Centre is not only a reposi-
tory of information and knowledge that is used to advance gender equality
and women’s empowerment. It is also a powerful vehicle for change. Con-
sider, for example, the work the center has done to strengthen women’s
movements in Africa as a result of its work in providing evidence-based infor-
mation to influence the design, implementation, and monitoring of policies
and programs to achieve positive outcomes for both women and men. AWDF
also uses the Resource Centre as a means for contributing knowledge and
 George Kararach et al. 265

ideas, as well as providing access to information that can be used to build

robust women’s organizations. Such organizations in turn contribute to the
development of their families and society as a whole. Resource centers such
as the one operated by AWDF are good models to showcase how the shar-
ing and dissemination of research and documentation by African women
can aid in the general search for gender equality and development (Léautier
2010).
The support by ACBF to AWDF was also anchored on the view that Africa
is faced with numerous development challenges. Challenges of HIV/AIDS,
the global financial crisis, climate change, conflicts, and worsening food
insecurity continue to have particularly negative effects on women. As the
Executive Secretary of ACBF noted:

[T]hese challenges have significant implications for the kind, quality,

quantity and type of knowledge and information that is available. The
utility of relevant and Africa-specific knowledge is critical to support
innovative approaches required to address some of the emerging chal-
lenges. ACBF contends that the production, dissemination and utilization
of knowledge is a process that is poised to play an increasingly vital
role in on-going [sic] efforts to tackle Africa’s development challenges.
Africa needs easily accessible knowledge clearing houses to share best and
innovative practices, identify and/or avoid pitfalls in development policy
management. Africa also needs to set up support for the continuous appli-
cation of new learning and shared knowledge so that our institutions can
seize upon improvement opportunities, grow and flourish.
(Léautier 2010)

AWDF has done a lot to achieve its vision for ‘women to live in a world in
which there is social justice, equality and respect for women’s human rights’
(AWDF 2010). To this end, it has continued to mobilize financial resources
to support local, national, and regional initiatives led by women, which will
lead to the achievement of this vision. Such transnational agencies are good
examples of how SSC can work in practice.

Conclusion

Today, conventional multilateralism exists in a world marked by increasing

openness of national borders and deepening policy interdependence among
countries. Policymaking institutions at the national and international lev-
els have not yet fully adjusted to this new reality, and are consequently
producing policies that are lacking in effectiveness. Thus, it is necessary
to implement fundamental policy reform measures at national, regional,
and international levels to change the current trend (Kaul 2009). Increas-
ing interdependency calls for a new approach to development which relies
266 Emerging Multilateralisms

more on countries learning from those most similar to them and from those
that have the most effective lessons to offer, whether from the south or the
north. In the context of SSC, new forms of multilateralism are emerging and
old groupings are taking on new impetus aimed at addressing development
challenges.
Regardless of the continuing interest expressed by many states in Africa,
Asia, and South America, cooperation is still mired by challenges in raising
capital. One example of these challenges is a lack of a sufficient capital to
start a ‘South-South Bank’ (as an alternative to the International Monetary
Fund and the World Bank).
Nevertheless, SSC can also be an effective tool for capacity development,
particularly in addressing the need for innovative strategies to enhance the
role of gender. However, there are not many practices today that explic-
itly seek to learn from SSC in the area of gender equality. SSC is also
catalyzing the debate around aid effectiveness and offering meaningful par-
ticipation opportunities (Kindornay and Samy, this volume). The inclusion
of non-state actors in the South-South dialogue is of considerable impor-
tance and is crucial for increased accountability of development actors. It is
also critical to capture innovations and create platforms for countries to
learn from each other and to speed up implementation using SSC and other
forms of triangular cooperation.
The most apparent critique is that there are just a few voices still heard
in development – especially those of women. The voices that are often
heard are from the comparatively rich and powerful states of the south
(e.g. Brazil, South Africa, and Venezuela). Agencies such as the African
Capacity Building Foundation need to explore new ways of sourcing knowl-
edge and developing innovative strategies to better enhance the role of
gender in SSC.

Notes
1. The African Women’s Development Fund (AWDF) is an African women’s fund.
It supports human rights and development initiatives aimed at promoting
women’s equality. Since its inception in 2001, AWDF has supported over 400
women’s organizations in 41 countries on the continent as of March 2012.
2. The term ‘emerging country’ (in addition to emerging markets/economy) is used
to refer to countries in the early stages of becoming industrialized and undergoing
economic growth and foreign investment. Countries that fall into this category
vary in size and are usually considered emerging because of their development
and reforms. Hence, even though China is deemed one of the world’s economic
powerhouses, it is lumped into the category alongside much smaller economies
with a great deal less resources, like Tunisia. Both China and Tunisia belong to
this category because they have embarked on economic development and reform
programs, and have begun to open up their markets and ‘emerge’ onto the global
scene.
3. Some traditional donors, such as Sweden and the UK, have made an effort to
go beyond aid and approach development cooperation from a more holistic
 George Kararach et al. 267

perspective that considers the impact of non-aid policies on development.

However, by and large, donors have not made good on their commitments to
scale up development financing and address non-aid policies.
4. Somalia, Pakistan, Afghanistan, Sudan, and Iraq are benefiting from the provision
of humanitarian assistance and efforts toward state consolidation.
5. All figures in US dollars, unless otherwise stated.
6. According to ODI, because of the lack of gender-specific strategies for implemen-
tation, around 64 percent of the MDG targets for service-related goals (2, 3, 6,
and 7) are ‘off track’.
7. Globalization is understood here as increased trade in human and physical
capital, knowledge as well as associated technology.
8. For example, on March 23, 2012, a special meeting of the council condemned
the coup in Mali and reaffirmed the relevant AU instruments, in particular the
provisions of the African Charter on Democracy, Elections and Governance,
which reject any unconstitutional change of government, including seizure of
power by force.
9. Algeria, Angola, Benin, Burkina Faso, Cameroon, Djibouti, Egypt, Ethiopia,
Gabon, Ghana, Republic of Congo, Kenya, Lesotho, Liberia, Mali, Malawi,
Mauritania, Mauritius, Mozambique, Nigeria, Rwanda, Sao Tome and Principe,
Senegal, Sierra Leone, South Africa, Sudan, Togo, Tanzania, Uganda, and Zambia.
10. A listed company is a firm whose shares are traded/listed (quoted) on a stock
exchange for public trading (Winter 2002).
11. Sixty-five percent of countries have no readily available data on the number of
listed domestic companies.
12. The fifth summit held in South Africa in 2011 focused on coordination among
IBSA countries on issues related to United Nations Security Council, sustainable
development, the Conference of Parties under the UNFCCC and the Confer-
ence of Parties to the Kyoto Protocol, and the Rio+20 Conference. Other issues
include the global economic crisis and international terrorism. IBSA leaders see
the unique relevance of the IBSA as it brings together three large democracies
of three continents and is not undermined by/in conflict with the Brazil-Russia-
India-China-South Africa (BRICS) alliance.
13. A situation where multination corporations as well as domestic firms are regulated
in line with some perceived national agenda premised on four pillars: economic
equality, majority and basic democracy, and responsible citizenry – a socialism
that would be more pluralistic and less state-centered.

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11
Establishing a Legitimate
Development Cooperation
Architecture in the Post-Busan Era
Shannon Kindornay and Yiagadeesen Samy

Introduction

The current international aid architecture, broadly defined as the set of

structures and institutions for delivering aid, is often described as dysfunc-
tional and uncoordinated. Despite attempts to reform it, this architecture
has become increasingly complex and incoherent over time and is criticized
for a multiplicity of modalities and actors for delivering aid, making coordi-
nation virtually impossible, and exponential growth in aid projects, among
other things.1 The legitimacy of global aid governance has been undermined
by insufficient representation and feedback from recipient countries in what
some refer to as a Northern or donor-dominated system. This legitimacy gap
has been exacerbated by the emergence of new actors represented by South-
South development cooperation (SSDC) providers2 and the private sector,
many of whom operate outside established governance structures aimed at
improving the effectiveness of aid.
The Organisation for Economic Co-operation and Development (OECD)
and its Development Assistance Committee (DAC) – the forum through
which major traditional bilateral donors coordinate their aid efforts – have
played a central role in establishing norms and evidence-based frameworks
to improve the quality of aid. At the High Level Forum (HLF) on Aid Effec-
tiveness, hosted by the OECD-DAC four times between 2003 and 2011,
members of the international community have established principles, sys-
tems for monitoring and evaluating progress against commitments, and
lessons learned for improving aid effectiveness. The DAC-hosted Working
Party on Aid Effectiveness (WP-EFF), launched in 2003, has historically over-
seen this work, organized HLF processes, and monitored progress on aid
effectiveness. Although it includes bilateral and multilateral donors, recip-
ient countries, some SSDC providers, and civil society actors among its
membership, the WP-EFF does not include representation from all countries.

271
272 Emerging Multilateralisms

The most recent HLF, the 4th High Level Forum on Aid Effectiveness
(HLF4), was held in Busan, South Korea, from November 29 to Decem-
ber 1, 2011. It took stock of progress made on aid effectiveness and sought
to broaden the partnership and the agenda by inviting emerging actors
into the fold and shifting discussions from aid to ‘effective development
co-operation’. A key goal in this context was to establish a legitimate
new global partnership that would include all actors engaging in devel-
opment cooperation. The Busan Partnership for Effective Development
Co-operation (henceforth BP) endorsed at the end of HLF4 committed to
form a new Global Partnership for Effective Development Co-operation3
(henceforth Global Partnership) ‘to support and ensure accountability for
the implementation of commitments at the political level’ (HLF4 2011, 12).
A key concern for the process of developing the Global Partnership is
to ensure that the governance structure that emerges is both legitimate
owing to its inclusivity and mandate, and effective in overseeing com-
mitments made in Busan. The Global Partnership builds on past efforts
by the WP-EFF to increase its legitimacy through greater participation by
developing countries, SSDC providers, the private sector, and civil society.
This chapter examines the proposed changes to the post-Busan gover-
nance structure and provides an analytical framework to assess the merits
of and challenges in establishing a legitimate governance mechanism for
the development cooperation architecture.4 The authors argue that the suc-
cess of the BP in establishing the Global Partnership and making it truly
global will depend on the extent to which stakeholders see the governance
mechanism as legitimate in terms of inclusivity, representation, and effec-
tiveness. Drawing on Sue Graves and Simon Burall’s (2008) tripartite notion
of legitimacy as inclusivity and representation (input legitimacy), qual-
ity of decision-making processes (throughput legitimacy), and effectiveness
in achieving outcomes (output legitimacy), a framework to analyze post-
Busan governance is developed. The authors expand on the work of Graves
and Burall to examine challenges related to developing country ownership
over the international agenda and capacity for engagement, two important
contributing factors to the legitimacy of the Global Partnership.
The following section outlines the background and historical context for
this debate prior to Busan, including the evolution of the WP-EFF which
has sought to become the international platform on aid effectiveness and
increase its legitimacy through greater participation of development stake-
holders over time. The proposed framework is then presented, followed
by policy implications from the analysis. While the analysis focuses on
HLF processes, it has value for broader discussions on international eco-
nomic governance in which many of the same tensions and trade-offs exist.
The challenges of representation and legitimacy are not new for organiza-
tions such as the World Bank and International Monetary Fund (IMF), for
 Shannon Kindornay and Yiagadeesen Samy 273

example, and the growing influence of SSDC providers exacerbates tensions

in these areas. The Group of Twenty (G20), with its limited membership, also
faces questions regarding its legitimacy as a decision-making body on issues
related to development cooperation. As in the case of aid governance, there
is consensus that reforms are necessary but discussions on broader aspects
of international economic governance have not always yielded concrete
results, in addition to being non-transparent.

From Rome to Busan

It is worthwhile to clarify how the HLF process has been firmly grounded
in traditional donor concerns with effectiveness since there is often some
confusion about the relationship between the DAC and the WP-EFF. The
nature of this relationship is important for the discussion on legitimacy
because of the reputational challenges the DAC faces owing to its limited
membership (Killen and Rogerson 2010). Recognizing the importance of
this issue, the DAC maintains that it merely ‘hosts’ the WP-EFF, which it
contends is the author of the aid-effectiveness agenda. As pointed out by
Homi Kharas and Laurence Chandy (2011), this distinction is fuzzy given
that the WP-EFF is still a committee of the DAC. In addition, the Develop-
ment Co-operation Directorate (DCD) of the OECD serves as the secretariat
for both the DAC (which determines the DCD’s work streams) and the
WP-EFF. Despite attempts by the DAC to distance itself from the WP-EFF
and its insistence on a distinction between them, the evolution of the
aid-effectiveness agenda clearly demonstrates where the agenda’s roots lie.
International actors engaging in these processes have recognized the need
for the agenda to be more legitimate, and as such, have sought to address
this issue through greater inclusivity and representation within the WP-EFF
and, more recently, through the Global Partnership.

Rome Declaration on Harmonisation – 2003

In 2001, the DAC established the DAC Task Force on Donor Practices, which
had a two-year mandate to ‘elaborate a set of good practice papers on how
donors can enhance their operational procedures with a view to strength-
ening partner country ownership’ (OECD 2003a, 3). The original Task Force
invited 16 developing country representatives to participate in meetings.5
In 2003, more than 40 multilateral and bilateral development institutions
and 28 recipient countries agreed to harmonize their efforts, adapted to
country context, in the Rome Declaration on Harmonisation (OECD 2003b).
From Rome, the WP-EFF evolved out of the DAC Task Force on Donor Prac-
tices and was established as a subsidiary body of the DAC. Although these
efforts were rooted in the OECD-DAC, participation in the international
aid-effectiveness agenda grew substantially during the 2000s.
274 Emerging Multilateralisms

Paris Declaration on Aid Effectiveness – 2005

In 2005, over 100 countries endorsed the Paris Declaration on Aid Effective-
ness.6 However, the declaration covered less than half of all aid to developing
countries when the contributions of private foundations, non-governmental
organizations, humanitarian groups, and non-DAC donors were taken into
consideration (Kharas and Linn 2008, 3). An enduring problem in this regard
is the lack of proper recording and accounting (that is, who gives what to
whom) of non-DAC aid flows, whether official or private, with no clear fix
on the horizon.7 Civil society organizations (CSOs) criticized the Paris Dec-
laration, calling it a government-to-government accord that not only lacked
civil society involvement, but failed to sufficiently link aid to development
goals (International Civil Society Steering Group 2008, 2).
Following Paris, the WP-EFF consisted of 23 bilateral donors, 14 develop-
ing countries, and officials from the World Bank, IMF, United Nations (UN)
agencies, and regional development banks; it was this group that finalized
the indicators and targets agreed to in Paris (WP-EFF 2012a). The compo-
sition of the WP-EFF at this time continued to be dominated by donors
despite efforts to be more inclusive. Up until HLF4, the WP-EFF was respon-
sible for: (1) facilitating implementation of aid-effectiveness commitments;
(2) monitoring and evaluation of the Paris Declaration and, later, the Accra
Agenda for Action; (3) developing and disseminating research, analysis, and
messages on aid effectiveness; and (4) organizing high-level fora (Killen
2011, 30).

United Nations Development Cooperation Forum – 2007

In 2007, the UN Economic and Social Council’s Development Cooperation
Forum (DCF) was created in response to the changing development coop-
eration landscape and the increasing number of development actors. The
rationale for the creation of the DCF was that governance of international
development cooperation needed to be more inclusive and democratic, in
particular by incorporating the views of Southern partners (Graves and
Burall 2008, 13). The DCF brought together a range of actors from devel-
oping and developed countries – including parliamentarians, CSOs, and
the private sector – making it a more legitimate forum in terms of inclu-
sivity and representation, compared to HLF processes. The DCF’s mandate
is ‘to work to enhance the implementation of the internationally agreed
development goals . . . and promote dialogue to find effective ways to sup-
port it’ (ECOSOC 2012). In this respect it reviews trends in international
development cooperation, promotes coherence among development activ-
ities, and seeks to strengthen the normative and operational links in UN
work (Graves and Burall 2008). An important distinction between the DCF
and the WP-EFF is that the DCF’s activities broadly focus on development
cooperation as opposed to just aid. The DCF’s work does, however, look at
 Shannon Kindornay and Yiagadeesen Samy 275

aid quality, mutual accountability, transparency, and results. This work has
made important contributions to the aid-effectiveness agenda in the past,
and fed into the monitoring and evaluation of the Paris Declaration.

Accra Agenda for Action – 2008

Before the Third HLF (HLF3) in Accra in 2008, preliminary assessments of
progress on the Paris Declaration were released, showing that improvement
had not been as fast and as great as originally anticipated.8 The 2008 Mon-
itoring Survey on the Paris Declaration concluded that without faster reform
and implementation, the targets set out in 2005 would not be met by 2010
(OECD 2008a). Only 3 of the 12 indicators were ‘on track’ for the 2010
deadline. Nevertheless, a report released by the WP-EFF was quick to point
out that the Paris process had led to several other intermediate achieve-
ments such as the creation of a more inclusive dialogue with higher quality
debates, empowerment for developing countries, shared standards, and com-
mitments against which to hold governments to account (OECD 2009).
The OECD also considered the monitoring and evaluation processes them-
selves as instruments of change, citing the addition of new governments
that were keen to advance effectiveness in their countries through the eval-
uation process (OECD 2008a). Nevertheless, the independent evaluators of
the Paris Declaration found that some countries were concerned with the
clarity, validity, and purpose of some survey indicators. Some developing
countries described targets as ‘unhelpful, unrealistic or insufficiently adapted
to diverse conditions’ (Wood et al. 2008, xiii).
Despite these challenges, HLF3 sought to accelerate progress9 and engage
more development actors. Efforts made before and after HLF3 indicate that
the WP-EFF recognized the importance of inclusivity and representation
for legitimizing the aid-effectiveness agenda as an international partner-
ship. The WP-EFF held extensive consultations on the Accra Agenda for
Action before the forum began (WP-EFF 2008). The outcome document
broadened representation in the aid-effectiveness agenda through commit-
ments to deeper engagement with CSOs and parliamentarians, as well as
recognizing the importance of South-South cooperation (OECD 2008b).
Following Accra, attempts were made to improve the inclusiveness of
the WP-EFF by moving ‘from a working party to “the international part-
nership on aid effectiveness” ’ (DCD/DAC 2012c). The WP-EFF extended
membership from three to five categories including: (1) countries receiv-
ing official development assistance (ODA); (2) countries both receiving
and providing assistance; (3) donor countries reporting ODA to the DAC;
(4) multilaterals; and (5) CSOs, foundations, local governments, and parlia-
mentarians (DCD/DAC 2012c).10 As part of efforts to become more inclusive,
the WP-EFF also established North-South co-chairing (WP-EFF 2010) and
gave CSOs a seat on the Executive Committee.11 The WP-EFF also established
a Task Team on South-South cooperation which collected over 100 cases
276 Emerging Multilateralisms

looking at South-South cooperation and aid effectiveness. In 2010 in Bogotá,

the Task Team organized the High Level Event on South-South Cooperation
and Capacity Development, the outcomes12 of which included a commit-
ment to deepen understanding on South-South cooperation by promoting
and implementing best practices from the case stories presented. These
efforts demonstrate the goal of the WP-EFF to garner greater international
legitimacy as well as a perception that broader representation, inclusion,
and ownership on the part of developing countries was one way to achieve
this goal.

Busan Partnership for Effective Development Co-operation – 2011

The WP-EFF was marginally successful in accelerating progress on Paris and
Accra and opening up international discussions on aid effectiveness. The
2011 Survey on Monitoring the Paris Declaration showed that only one of the
13 targets had been met – coordinating technical assistance (OECD 2011).
Policymakers agreed that timelines were too short and ambition needed to
be balanced with realism (Wood et al. 2011, 10). Further, the independent
evaluation and the monitoring survey showed that developing countries had
done a better job at meeting their commitments than donors. These failures
occurred during a decade when aid volumes had been scaled up consider-
ably (especially since the Millennium Declaration in 2000 and the Monterrey
Consensus13 in 2002). It is fair to say that aid-effectiveness debates in the last
decade or so focused too much on aid practices and technical mechanisms
(such as better aid management and delivery), which even if necessary do
not address the power imbalances that exist between donors and recipients
in day-to-day operations. Not surprisingly, the overall result has been a lack
of real change in development outcomes.
In response, the WP-EFF made results a key overarching theme for HLF4.
Dismal progress since Accra was recognized as an indication of the need for
sustained political will to improve aid effectiveness (Wood et al. 2011, 54).
As such, the WP-EFF focused on establishing a broad political consensus in
Busan, moving away from the technical approach taken in previous HLFs.
In a new attempt to involve more development actors, namely the private
sector and SSDC providers, HLF4 sought to ‘enlarge the tent’ by bringing
these actors – many of whom had not endorsed the Paris Declaration or
Accra Agenda for Action – to the table (DCD/DAC/RD 2011). This attempt
reflected two key concerns.
The first relates to traditional donors’ concern with the lack of coor-
dination between and among SSDC providers. The growing literature on
these actors has highlighted the differences that exist between a tradi-
tional rules-based or standard-setting approach on the part of DAC donors
and approaches taken by countries that are both donors and recipients.
In particular, although some SSDC providers are signatories to the Paris
aid-effectiveness principles as recipients, they do not adhere to them as
 Shannon Kindornay and Yiagadeesen Samy 277

donors, but rather they practice what they loosely define as ‘South-South
Co-operation’. Indeed, as Felix Zimmerman and Kimberly Smith (2011, 733)
point out, the emergence of new development models, sources of finance,
and modes of development cooperation presents a real challenge to the
DAC. They suggest that the continued relevance of DAC donors will depend
on their ability to engage SSDC providers.
Although SSDC providers’ exact contributions are not known,14 their
increasing real and perceived role has garnered a lot of attention, especially
from members of the DAC. Traditional donors are concerned that many
SSDC providers15 operate independently and outside of existing frameworks
(such as the Paris Declaration) and consider some aspects of their aid
delivery (for example, tied aid or failure to take into account good gov-
ernance by recipient countries) to be undermining the aid-effectiveness
agenda (Manning 2006; Naim 2007; Paulo and Reisen 2010). De Haan and
Warmerdam (Chapter 9, this volume) provide a useful case study looking
at differences and similarities in China’s approach to SSDC vis-à-vis DAC
donors. They point out that while providers of SSDC may vary from the prin-
ciples embodied in the Paris Declaration, the legitimacy of bilateral donor
concerns in this regard are undermined by their own poor track record
on meeting commitments. Nevertheless, from the DAC donors’ perspec-
tive, there is a need to develop shared principles between old and emerging
development partners, and to ensure better coordination.
In contrast to DAC donor concerns, many SSDC providers and recipi-
ents claim that the role of SSDC providers in development cooperation
offers a number of benefits through, for instance, effective partnerships,
non-interference, and respect for sovereignty. Moreover, much of what
emerging donors do falls outside the traditional criteria for ODA as defined
by the OECD-DAC. South-South cooperation includes, inter alia, knowledge
exchange, trade and investment provisions, debt relief, and human resources
development (Davies 2010; Bräutigam 2011; Kim and Lightfoot 2011; Naidu
2012). Based on their shared experiences, SSDC providers are seen as bet-
ter placed to propose development solutions to recipients, leading some to
suggest that the development models offered by SSDC providers serve as a
challenge to those proposed by traditional donors (Kim and Lightfoot 2011;
Davies 2012; Kindornay and Besada 2012; Naidu 2012).
Regardless of the opportunities and challenges presented by SSDC
providers, the increasing number of official and private actors exacerbates
the difficulties of managing multiple financial flows for recipient coun-
tries, raising the question of how effective development cooperation can
be achieved without coordination between the multitude of actors. The
plethora of donors contributes to fragmentation, creating difficulties for aid
management and governance and increasing transaction costs (Kragelund
2008; World Bank 2008; Davies 2010; Killen and Rogerson 2010). The goal
of ‘enlarging the tent’ in Busan was partly about addressing this issue by
278 Emerging Multilateralisms

establishing common principles between various providers of development

assistance.
The ‘enlarging the tent’ analogy was also about giving the aid-effectiveness
agenda greater international legitimacy. Inclusion and legitimacy were an
underlying theme in Busan to develop ‘a broader and deeper partnership
at all levels of development, including developing and developed coun-
tries, and private and non-governmental organizations’ (DCD/DAC 2012c).
CSOs called for a more inclusive and just aid architecture (BetterAid 2011),
while African countries called for reform of global fora that moves past
‘token inclusion of Africa’ (NEPAD 2011). The Development Co-operation
Directorate of the DAC added that the new consensus might require ‘letting
go’ on the part of the DAC and cautioned that DAC members should pro-
ceed on that basis if a truly global consensus was to be achieved (DCD/DAC
2011, 4). The importance of developing an inclusive and legitimate Global
Partnership was well-established in the lead-up to Busan.

The Global Partnership – 2012

There was much debate on what an inclusive Global Partnership might look
like.16 Discussions centerd on the role of the UN and the OECD, with the
former championed for its legitimacy and the latter for its effectiveness and
expertise. In Busan, participants agreed to establish the working arrange-
ments of a new partnership platform, yet it was unclear from the outcome
document what role existing fora would play. The DCF was invited to ‘play a
role in consulting on the implementation of agreements made in Busan’ and
the OECD and United Nations Development Programme (UNDP) to support
the partnership. Specifics were to be determined by June 2012, when a new
governance structure took over from the WP-EFF.
The BP was endorsed by large SSDC providers such as Brazil, China, and
India, but with an important caveat. All declarations from HLF are volun-
tary, yet SSDC providers (notably China) negotiated to include the word
‘voluntary’ in the outcome document in relation to their commitments on
South-South cooperation; in other words, their commitments are voluntary-
voluntary. Observers suggest that this effectively allows SSDC providers to
keep one foot outside the metaphorical tent. This raises questions as to
whether or not the BP represents a true break from the DAC-dominated aid-
effectiveness agenda to a new legitimate global partnership for development
cooperation.
The Post-Busan Interim Group (PBIG) has been established to provide
suggestions about possible governance changes to the WP-EFF, the mem-
bership of which will give the final approval. Brazil, China, India, and
Mexico are members of this group, serving as the larger SSDC providers
around the table.17 An important caveat to their involvement is that Brazil,
China, and India maintain that they are participating in the PBIG as
active observers (WP-EFF 2012b), which demonstrates their reluctance to
 Shannon Kindornay and Yiagadeesen Samy 279

fully embrace the new partnership.18 The question of incentives for SSDC
providers to fully engage remains, given that it is unclear what the new
agenda really offers them, the poor track record of the Paris Declaration
(why join something that is not working?), and the continued perception
that the aid-effectiveness agenda is a DAC agenda (Kindornay 2011). Lim-
ited involvement of SSDC providers in the Global Partnership will seriously
undermine its legitimacy as an inclusive international partnership.
The PBIG and WP-EFF face many challenges establishing the Global Part-
nership. Despite the best intentions of HLF meetings on aid effectiveness,
the aid system has become far too complex, prompting some to even ques-
tion the use of the term ‘architecture’ for a system that is so eclectic (Killen
and Rogerson 2010; Kharas et al. 2011). Even with improvements like the
untying of aid and new modalities that try to improve coordination, aid
flows remain far too volatile and unpredictable for countries that rely most
heavily on them, aid allocation creates both aid orphans and aid darlings,
and fragmentation remains a pervasive problem, all of which contribute to
reducing the value of actual aid delivered.
Despite the limited gains from Paris and Accra, the BP expanded and deep-
ened commitments beyond aid to include a broader range of development
issues such as corruption, illicit capital flight, aid for trade, engagement
with the private sector, and climate finance. Busan moved beyond aid and
built on Accra, acknowledging the growing importance of SSDC, the private
sector in development, and welcoming the ‘New Deal’ for engagement in
fragile and conflict-affected states developed by the International Dialogue
on Peacebuilding and Statebuilding. Other positive developments included
more power for CSOs to hold governments to account, a reiteration of the
importance of mutual accountability and transparency in aid relationships,
and commitment to use country systems as the default approach to the
provision of development assistance. At the same time, few concrete com-
mitments were actually made.19 The new Global Partnership will need to
reconcile the failures of the past aid-effectiveness agenda with the ambitions
for effective development cooperation outlined in Busan.

Framework and criteria for a post-HLF4 governance structure

At the time of writing, the PBIG had already met for a few days in February
and April 2012 in Paris to discuss the post-Busan development cooperation
architecture. While the primary purpose of the group is to look into how the
Global Partnership will be implemented and managed to maintain political
momentum, a second but nonetheless important objective is to decide on
indicators for monitoring progress. Reflecting Busan commitments, mem-
bers of the WP-EFF want a structure that is ‘global light, country heavy’
(WP-EFF 2011a), in other words one that incorporates a few select indica-
tors at the global level. It is unclear how the monitoring framework from
280 Emerging Multilateralisms

Paris and the broader effective development cooperation agenda will be

incorporated into this structure or how country-level monitoring will con-
tribute to global monitoring. Preliminary discussions indicate a reluctance
to move beyond aid effectiveness (that is, reviewing progress on implement-
ing HLF4 commitments) and embrace effective development cooperation
(that is, address policy coherence for development and set global standards).
Instead, most participants have advocated for a focused approach and indi-
cated that moving beyond HLF4 commitments would be too much for the
Global Partnership to handle.
The PBIG has identified four core functions for the Global Partnership:
(1) maintain and strengthen political momentum for more effective devel-
opment cooperation; (2) ensure accountability for implementing Busan
commitments; (3) facilitate knowledge exchange and sharing of lessons
learned; (4) and support implementation of Busan commitments at the
country level (WP-EFF 2012b, 3). It will also address future opportunities in
effective development cooperation. Regarding the structure for delivering on
these functions, the PBIG identified ministerial-level meetings as the main
working structure of the Global Partnership, supported by a Steering Com-
mittee. In line with the recommendation of the BP, the OECD and the UNDP
will jointly provide secretariat support, building on their collaboration and
areas of comparative advantage.20 It remains to be seen how this secretariat
will conduct its activities and how this proposed collaboration will unfold.
This has important practical implications because the DAC and DCD, despite
their efforts, have always been viewed as input-driven by DAC members.21
A draft concept note by the OECD/UNDP outlining their potential roles in
the secretariat gives further cause for concern in this regard. It states that ‘the
plurality of the organizations’ roles and mandates means that each organi-
zation will engage with the Global Partnership on behalf of its respective
members and constituencies (for example, UNDP will engage [UN Develop-
ment Group] members as appropriate)’ (OECD/UNDP 2012, 2). While the
UNDP would technically represent the UN system, as well as the member
states, the OECD would continue to engage on behalf of traditional donors.
To the extent that this situation continues in the new Global Partnership, it
is highly unlikely that CSOs, developing countries, and SSDC providers will
see it as a positive development.
While these discussions within the PBIG continue, the authors propose
criteria below for an effective and legitimate post-HLF4 governance struc-
ture. Specifically, they build on Graves and Burall’s (2008) conceptualization
of legitimacy and include ownership and capacity in the discussion. These
are important because they apply to governance of the aid architecture
and are relevant for discussions on broader global economic governance,
for example the international financial institutions or G20. The experi-
ences of the WP-EFF and DCF are used to illustrate and provide justification
for suggested considerations. The analysis draws from these fora because
 Shannon Kindornay and Yiagadeesen Samy 281

they deal with the quality of aid and effective development cooperation,
include a broad range of development actors in their decision-making pro-
cesses, represent different models for governing development cooperation
that have been considered in international discussions on the future archi-
tecture, and provide examples of best practice and lessons learned. The role
of multilateral processes like the G20, UN General Assembly, or thematic
UN conferences such as the UN Conference on Sustainable Development or
the UN Conference on Least Developed Countries are not discussed. While
these processes play an important role in establishing and promoting devel-
opment policy, they face one or more challenges relating to representation,
inclusivity, or lack of formal institutionalization. Given that international
development policy is also established via these processes, the Global Part-
nership will have to coordinate with them as well as the growing role of civil
society and private sector engagement in UN processes.
Given that HLF4 sought to ‘enlarge the tent’ by bringing new development
actors to the table, any post-HLF4 structure would need to be, by necessity,
inclusive, representative, and legitimate, as recognized by the PBIG. Compared
to the DAC, both the WP-EFF and DCF have been praised for their willing-
ness to be inclusive and democratic by taking into account the voices of
Southern partners and engaging a broad range of stakeholders. The WP-EFF
and DCF are steps in the right direction that should be built upon when
thinking about the Global Partnership.
Brenda Killen and Andrew Rogerson (2010) have examined the global
governance of development cooperation against the criteria of legitimacy
(understood as inclusivity) and effectiveness (referring to the ability of an
institution to deliver results). This framing (and their analysis), however,
does not fully capture the legitimacy and effectiveness issues facing institu-
tions governing international development cooperation. It is more useful to
start from a broader understanding of legitimacy that captures its many com-
ponents. In their discussion of legitimacy and the DCF, Graves and Burall
(2008) make a useful distinction between different types of legitimacy that
are essential for fostering inclusiveness and effecting change in the gover-
nance of development cooperation, as well as policy and practice. Graves
and Burall (2008) make a case for: input legitimacy, which consists of par-
ticipation, discussion, and information exchange; throughput legitimacy,
which refers to the quality of deliberation; and output legitimacy, which
refers to impact or effectiveness. This categorization speaks to the issue of
legitimacy as not only something that is inherently right but also to what it
can achieve in a concrete sense. In other words, it is not enough to say that
different actors should be grouped around the table and be given a voice
(input legitimacy). Ultimately what matters is the impact that they will have
on policy (output legitimacy) and the nature and quality of those policy
changes (throughput legitimacy). Building on Graves and Burall’s analysis,
the discussion includes an examination of developing country ownership
282 Emerging Multilateralisms

of the global agenda and capacity for engagement as important contribu-

tors to legitimacy. The challenge for members of the PBIG will be to strike a
balance between these various types of legitimacy to ensure that the Global
Partnership has input, throughput, and output legitimacy.

Input and throughput legitimacy

In terms of input legitimacy, the WP-EFF’s membership was neither univer-
sal nor necessarily viewed as being representative of developing countries’
interests. Nevertheless, those involved in the WP-EFF praise it for the democ-
ratization process it underwent over its lifespan, which arguably improved
input legitimacy by affording developing countries (and civil society) greater
roles and say within the WP-EFF. Moreover, the WP-EFF demonstrated flexi-
bility in considering various issues that were important to different members
across its membership. The WP-EFF had several work-streams in the form
of task teams and clusters. The five clusters were ownership and account-
ability, country systems, transparent and responsible aid, assessing progress,
and managing for development results. The clusters had subgroups respon-
sible for advancing work in key areas through research and analysis. The
sub-task teams reported back to their respective cluster, which then fed
analysis and recommendations into WP-EFF discussions. These work-streams
allowed likeminded groups among development partners to establish work
programs, maintain dialogue on areas of mutual interest, make recommen-
dations to the broader WP-EFF, and provide input to the BP. They evidently
contributed to enhanced learning and knowledge sharing within and out-
side the WP-EFF. Arguably, these processes not only contributed to input
legitimacy but also throughput legitimacy in the form of higher quality
deliberations based on the evidence and analysis (even if the increasing
number of subgroups did lead to criticisms that the WP-EFF had become
overly bureaucratic).22 The monitoring survey and the independent evalu-
ation of the Paris Declaration also contributed to throughput legitimacy in
this sense.
The DCF, on the other hand, has universal membership and affords all
development actors an opportunity to engage in mutual dialogue, which
provides it with a certain amount of input legitimacy. However, it is hindered
by the rigidity of UN decision-making processes which are consensus-based
and thus slow and inefficient, making it an unattractive venue for DAC
donors. Its mandate is also limited in the sense that it does not have a
formal decision-making or norm-setting role; it is largely a forum for dis-
cussion. In terms of throughput legitimacy, the Secretary-General produces
a report for the DCF for each meeting which reviews trends in development
and contributes to the quality of debates in development cooperation more
generally. The DCF’s work on mutual accountability has also made a valu-
able contribution in this area (particularly since this principle is one of the
lesser understood Paris principles) and contributed to the aid effectiveness
 Shannon Kindornay and Yiagadeesen Samy 283

monitoring process. While the DCF’s raison d’être is explicitly related to the
need to democratize discussions on development cooperation, the forum has
been criticized for duplicating what was being done elsewhere. For instance,
the OECD-DAC worked on policy coherence and the WP-EFF worked on aid
before the DCF did. Conversely, this point may be moot given that the estab-
lishment of the DCF was a de facto indication that organizations doing work
in these areas required greater input legitimacy.
The PBIG will need to clarify how various components of the Global
Partnership, namely the Steering Committee, OECD-UNDP joint support
team, and ministerial meetings will contribute to both input and throughput
legitimacy. Busan outcomes included Building Blocks and other initiatives
that afforded likeminded development actors the opportunity to voluntarily
commit to advancing progress in key areas of importance, such as gender
equality and results.23 These initiatives also have the potential to contribute
to improving input and throughput legitimacy, depending on who they
involve (currently, many of the building blocks tend to be dominated by
donors), how they are managed, what their work programs entail, and their
role in the Global Partnership. At the time of writing, it is not clear how
research and analysis (moving past monitoring and evaluation of commit-
ments) will feed into the work of the Global Partnership; the clusters and
their associated task teams carried out this function in the WP-EFF. To ensure
the Global Partnership has throughput legitimacy, the PBIG will need to con-
sider if and how building blocks and related governance structures will feed
into high-quality analysis and debates to inform decision making.

Output legitimacy
Regarding output legitimacy, a second consideration in thinking about the
post-Busan architecture is its effectiveness in affecting change or, in other
words, its positive influence on the current system through its decision-
making process as well as monitoring and evaluation. This implies being
aware of trade-offs between inclusiveness (for instance, large membership
and ‘enlarging the tent’) and achieving results (as consensus becomes more
difficult to achieve). This issue has already been discussed by the PBIG,
which debated the merits of representation vis-à-vis efficiency for the Steer-
ing Committee of the Global Partnership during its second meeting in April
2012, finally agreeing that there should be a balance in terms of efficiency,
representativeness, and capability (PBIG 2012). It is unclear what this will
look like in practice.
There are a number of factors that the BP should consider with regard
to output legitimacy. One consideration is the extent to which actors must
accept the tension between effectiveness in changing development part-
ners’ behavior and inclusivity. The BP already recognizes that, to a certain
extent, full consensus may not be possible on all issues (or even desirable).
The BP explicitly stresses common principles but differentiated approaches
284 Emerging Multilateralisms

for development actors. Voluntary initiatives provide likeminded actors

an opportunity to progress on key issues on which consensus is lacking
(although it is unclear how these will fit into the Global Partnership).
While the multiple layers of commitment increase the likelihood of frag-
mentation, this approach may reflect the flexibility required for the Global
Partnership to manage the diversity of development actors and the need for
context-specific approaches across developing countries.24 SSDC providers
have already made it clear that they will not participate in the future
monitoring framework (WP-EFF 2012b, 6), but they are nevertheless at the
negotiating table, which is arguably the first step to a more inclusive aid
architecture. They have also been asked to articulate how they plan to partic-
ipate in the Global Partnership. The Global Partnership should be structured
in a way that allows for this diversity of perspectives and approaches, reduc-
ing the need for full consensus across all areas of concern, and in turn easing
the tension between inclusivity and effectiveness. The transition from the
old governance structure to something broader means accepting less consen-
sus and the tensions between inclusivity and effectiveness that accompany
a more legitimate development cooperation architecture.
A second consideration is how change will be assessed. As demonstrated in
the Paris monitoring and evaluation processes, a narrow focus on quantita-
tive technical measures misses a large part of the story and has the potential
to overlook outcomes. The PBIG has agreed that Busan commitments should
be monitored by quantitative and qualitative analysis (WP-EFF 2012b, 5),
which will provide a richer understanding of development progress. It has
also agreed to draw on existing information sources and analyses. In this
context, it will be important to ensure that these sources of information
are both Southern and Northern. The PBIG will also need to ensure that
the global indicators, while light, are still comprehensive, especially given
that global monitoring frameworks (like the Paris indicators) are critical
for obtaining agreement with donors on mutual accountability frameworks
at country level (Martin and Watts 2012). Matthew Martin and Richard
Watts (2012) point out that a comprehensive framework would not nec-
essarily detract from a ‘global light’ approach as various other monitoring
processes, such as the DCF/UNDP mutual accountability and transparency
survey, DAC reporting, and the International Aid Transparency Initiative, for
example, already report on key areas of the Busan commitments. Given that
SSDC providers have refused to participate in the global monitoring frame-
work, drawing from existing DAC-donor monitoring processes would be a
cost-effective and logical approach to creating a comprehensive framework.

Ownership and the global partnership’s mandate

The extent to which the governance structure engages on non-aid issues and
how will also impact its legitimacy. This issue reflects the tension between
inclusivity and effectiveness in the Global Partnership. With a narrow
 Shannon Kindornay and Yiagadeesen Samy 285

mandate, it may be easier for the Global Partnership to achieve the objec-
tives that it sets for itself and to become a credible voice, as opposed to trying
to do too much. On the other hand, the Global Partnership may need to
consider the long-standing priorities of developing countries, such as policy
coherence for development as suggested by Brazil in the first PBIG meeting,
if it is to have full input, throughput, and output legitimacy. This consid-
eration also relates to developing countries’ ownership over the priorities
of the Global Partnership. Prior to Busan, African countries argued for the
establishment of more ‘inclusive, compact and strategically-oriented moni-
toring mechanisms with strong Southern leadership and ownership’ (NEPAD
2011). The legitimacy of the Global Partnership will also be determined by
the extent to which its mandate and function takes into consideration their
concerns.
Developing countries have historically argued for reform of the develop-
ment cooperation architecture and for a more equitable and representative
system of global governance as means to address these broader economic
issues.25 They have made it clear that the donor-recipient approach, as
seen in North-South flows, is out-dated. Prior to Busan, they called for a
new development partnership approach based on Millennium Development
Goal (MDG) Eight, strengthening global partnerships (WP-EFF 2011b, 7),
which includes commitments on trade, finance, debt, technology and
knowledge transfers, and addressing the needs of least developed coun-
tries. CSOs support this broader agenda (BetterAid 2011). In addition, SSDC
providers deliver far more than just aid, so examining their cooperation (and
that of traditional donors) from a more holistic perspective that considers aid
and non-aid flows would provide a clearer picture on overall development
cooperation between countries. This approach would also necessitate coor-
dination between the Global Partnership and other fora such as the DCF,
OECD, and G20, which look at broader issues relating to trade, investment,
and so on.
The PBIG will need to wrestle with the tensions between narrow and broad
mandates for the Global Partnership. A narrow mandate may help to ensure
that discussions are more focused, decisions are easily made, and monitor-
ing and evaluation are more targeted. Although, as demonstrated after Paris,
this approach does not necessarily guarantee behavioral change. The ques-
tion of incentives that engage SSDC providers on a narrower agenda also
remains, especially if it means less of a break from the historically DAC-
donor-dominated Paris agenda. On the other hand, it is not clear that a
Global Partnership with a broad mandate would offer the right incentives for
DAC donors to engage on issues beyond aid, especially when other organi-
zations they currently fund, such as the OECD, already address these issues.
Already there are divergent views within the PBIG on the extent to which
the Global Partnership should engage with broader issues, with some partic-
ipants concerned that additional issues, such as engaging on the post-MDGs
286 Emerging Multilateralisms

agenda, might overstretch the partnership (WP-EFF 2012, 3) and others

pointing out that there is plenty of unfinished business on aid.
Another option is for the Global Partnership to do both – adopt a holis-
tic approach to development cooperation and at the same time carve out
space to address issues specifically related to aid. Such an approach could
provide the Global Partnership with the flexibility to meet the BP’s commit-
ment to common principles and differentiated responsibilities and ensure
that its mandate reflects the concerns of all actors. It may also create greater
opportunities for interaction between the Global Partnership and relevant
fora. The Global Partnership could be structured to include broader dis-
cussions on development at the ministerial level that link up to the work
other fora, such as the UN, are doing in areas related to climate change,
sustainable development, the MDGs, the post-MDGs agenda, policy coher-
ence, and so on. It could play an important role in coordinating across the
development cooperation architecture to minimize duplication of efforts
and improve coherence. Outcomes from other fora could also serve as inputs
into the ministerial-level meetings alongside more detailed and technical
work resulting from the joint OECD-UNDP support team and country-
level monitoring and evaluation. To ensure that the unfinished aid agenda
continues to receive attention, the ministerial-level meetings could devote
space (one day for example) to look specifically at aid. One function for
the joint support team and Steering Committee could be to provide strate-
gic direction, research findings, and monitoring and evaluation outcomes
that focus specifically on aid. While this approach may not mean that
the Global Partnership is formally responsible for monitoring and evalua-
tion of a holistic development agenda, it could serve as a compromise to
ensure that a broader range of issues is discussed and linked to BP commit-
ments, addressing concerns for a broader mandate and the unfinished aid
agenda.
One of the benefits of the WP-EFF was that it was able to adapt to
new issues and concerns as they arose – its governance structure and work
streams evolved accordingly. Regardless of which mandate (narrow or broad)
the Global Partnership adopts, it should be structured in such a way that
allows for evolution as issues, priorities, and challenges facing development
cooperation change.

Capacity to engage
A final issue to consider is the question of capacity for developing coun-
tries to engage in monitoring, evaluation, and decision-making processes
under the BP. As Toornstra and Martin (Chapter 4, this volume), developing
countries continue to face a number of capacity gaps. Compared to devel-
oping countries, DAC donors are considerably better equipped to engage
with the Global Partnership and have greater capacity to feed inputs into
decision-making processes. While formal representation and ensuring that
 Shannon Kindornay and Yiagadeesen Samy 287

the mandate of the Global Partnership reflects developing country concerns

(in other words, that they have some ownership over how it is established
and what it entails) are important, the capacity of developing countries for
continued and meaningful engagement in these processes is critical to legit-
imacy. The Global Partnership may need to include support mechanisms
that enable developing countries to engage more fully in the policymaking
process. Such support may also contribute to ameliorating the power imbal-
ance between donors and recipients that results from differences in capacity.
This approach, however, would require human and financial resources and
at this point it is unclear who will be funding the Global Partnership, what
their priorities will be, and how much they will offer. Going forward, sup-
porting developing countries could be achieved through funding pools that
allow trained nationals from developing countries to participate as well as
through mechanisms that allow knowledge transfer between those develop-
ing countries that are already heavily involved in the process and those that
lack the human and financial capacity to get involved.

Conclusion and recommendations

The aid-effectiveness agenda has come a long way in the last decade, but the
aid architecture has become increasingly complex and incoherent. While the
Paris Declaration provided a blueprint with clear goals and targets (which
were mostly not met), the BP – despite being more inclusive and stronger
input from developing countries, new donors, and civil society – moved
away from concrete targets, offered few specific commitments, and pro-
posed the Global Partnership, the details of which are at the time of writing
being debated. It acknowledged that the aid landscape had changed with
the emergence of new actors and agreed on the need for goals in areas such
as the untying of aid, transparency, and predictability and use of country
systems (with partner country leadership), but without being specific about
the extent to which the goals will be achieved and how responsibilities will
be shared.
This chapter was partly motivated by the BP’s lack of specificity. The objec-
tive was to outline what the post-Busan governance structure, represented
by the Global Partnership, should consider. After discussing the background
and historical context of debates about aid effectiveness, including activities
of the WP-EFF and DCF, the analysis drew on lessons learned from these
fora to discuss the factors that the Global Partnership should consider in
moving the aid-effectiveness agenda forward. Details of the Global Partner-
ship have yet to be hammered out and discussions are ongoing at the PBIG
level. Once formally established, this partnership will have a key role to play
as Busan targets and voluntary building blocks are implemented over the
coming months. Inclusiveness, representation, legitimacy, effectiveness, and
ownership are necessary conditions for the governance of aid after Busan.
288 Emerging Multilateralisms

In closing, the following recommendations are offered. First, the input

legitimacy of the Global Partnership will be determined by the extent to
which developing countries have ownership over the international agenda
and capacity to engage in the Global Partnership’s governing structures.
Second, to ensure throughput legitimacy – high-quality evidence-based dis-
cussions and policymaking – the Global Partnership will require analytical
inputs that move past simple monitoring and evaluation. Third, the Global
Partnership needs to have a clearly defined and focused agenda that is simul-
taneously flexible enough to accommodate a diversity of perspectives – this
will reduce tensions between inclusivity and effectiveness. Regarding the
unfinished aid agenda, even a narrow mandate that concentrates on aid
issues will need to afford space for a discussion on development from a
holistic perspective, which has long been a priority for most developing
countries. Finally, funding for and burden sharing within the Global Part-
nership have to be clearly sorted out. In particular, it must be ensured that
developing countries that lack capacity are properly represented. These rec-
ommendations are, in the authors’ view, crucial to ensure that the many
commitments made in the past decade, at least since Monterrey, continue to
be implemented.

Notes
1. See Blomfield and Kharas (Chapter 3, this volume) for a full discussion of the
increasingly complex aid architecture emerging.
2. We use the term ‘SSDC providers’ because other terms, such as emerging or non-
DAC donors, used to refer to these actors are misnomers. The word ‘emerging’
reflects the notion of ‘new’, yet some donors such as China have been providing
aid for decades. Non-DAC donors defines providers of SSDC by what they are not
rather than what they are (Davies 2012).
3. Throughout the chapter we use the term ‘development cooperation’ only when
referring to the post-Busan era and its related governance structures. Prior to
Busan, discussions focused on the aid architecture and achieving aid effectiveness.
For consistency’s sake, we use these terms to refer to pre-Busan commitments and
discussions.
4. This chapter was written and submitted for publication prior to the finalization
of the governing structures and monitoring frameworks for the Global Partner-
ship for Effective Development Co-operation. As such, it discusses the form a
legitimate global partnership might take. It does not assess the legitimacy of
the governing structure that was agreed to in June 2012, which is an area for
follow-up in this research.
5. These included Bangladesh, Bolivia, Cambodia, Egypt, Senegal, Guatemala,
Kenya, Kyrgyz Republic, Mali, Morocco, Mozambique, Romania, Tanzania,
Uganda, and Vietnam, and the Pacific Forum.
6. The Paris Declaration on Aid Effectiveness included commitments and implemen-
tation targets in five areas: ownership, alignment, harmonization, managing for
results, and mutual accountability (OECD 2005).
 Shannon Kindornay and Yiagadeesen Samy 289

7. Zimmerman and Smith (2011, 724) estimate that development cooperation flows
from Brazil, China, India, Russia, South Africa, and the 20 non-DAC donors that
report to the DAC were nearly US$11 billion in 2009.
8. Authors of the independent evaluation of the Paris Declaration also pointed out
that it was misleading to attribute even marginal gains to the Paris Declaration
since many aid-effectiveness initiatives were underway before the 2005 agreement
(Wood et al. 2008, 3).
9. Accra strengthened commitments to improve the delivery of aid through stronger
country ownership of development, greater predictability, better use of country
systems, and changing the nature of conditionality (OECD 2008b).
10. See DCD-DAC (2012b) for full list of members.
11. For a summary of the WP-EFF’s attempts to democratize following Accra, see
Schulz (2009).
12. For the outcome document, see Steering Committee (2010).
13. In Monterrey, bilateral donors, multilateral agencies, and aid recipients agreed to
a broad development agenda, recognizing the need for developing countries to
‘own’ poverty-reduction strategies and donors to continue to increase support for
these endeavors.
14. Part of the difficulty in assessing their development cooperation is that SSDC
providers do not always make their figures public, nor do they necessarily use the
OECD-DAC definition of ODA as their reference point (Davies 2012).
15. Some SSDC providers, such as Turkey, Poland, and Israel, are seeking a closer
relationship with the DAC and report their ODA statistics (see Smith et al.
2010). Chandy and Kharas (2011) suggest that the differences between tradi-
tional donors and some SSDC providers are not as far apart as they seem at first
glance, claiming that differences arise from how principles such as ownership and
harmonization are interpreted by each group.
16. See for example, South Centre (2008); Hammad and Morton (2009), Schulz (2009,
2010); BetterAid (2011); Glennie (2011); WP-EFF (2011a); Kharas et al. (2011);
Park (2011); Regazzi (2011); and Kindornay and Besada (2011).
17. The PBIG also includes the African Union/New Partnership for Africa’s Devel-
opment, Bangladesh, BetterAid (an umbrella organization representing civil
society), Canada (CANZ – Canada-Australia-New Zealand – representative), DAC,
European Commission, Germany, Honduras (representing lower-middle-income
Latin American countries), Inter-Parliamentarian Union, Japan, Korea, Mali,
Rwanda, Samoa (Pacific Islands representative), South Africa, Sweden (rep-
resenting Nordic countries), Timor-Leste (representing g7+ group of fragile
states), United Kingdom, UNDP, United States, and World Bank (DCD/DAC/
EFF 2012).
18. Nevertheless, Brazil was fairly vocal during the first PBIG meeting, however, dur-
ing the second meeting emerging donors contributed very little to discussions,
with the exception of Mexico which has historically been more engaged in these
processes.
19. Commitments include agreeing on the working arrangements of the Global Part-
nership by June 2012; reviewing plans to untie aid; implementing a common
standard for publishing information electronically; implementing Accra com-
mitments on predictability; agreeing on principles and guidelines to reduce the
proliferation of multilaterals and address aid orphans; and reviewing delegation
authority to the field (DCD/DAC 2011a).
290 Emerging Multilateralisms

20. In a draft concept note on the arrangements for joint OECD-UNDP secre-
tariat support, the OECD and UNDP suggest their roles may include supporting
ministerial-level engagement at the global level; developing and implementing
the global monitoring framework which will supplement country-level moni-
toring efforts; support partnership and accountability frameworks in countries;
facilitate learning and knowledge sharing; and advocacy and outreach, including
efforts to engage the DCF, G20, and DAC (OECD/UNDP 2012, 1).
21. Jonathan Glennie (2011, 4) similarly points out that OECD staffers played a
key role in the drafting of the BP and writing the aid-effectiveness progress
reports. While developing countries provide some input into these processes, this
approach is hardly led by developing countries.
22. At the first meeting of the PBIG, participants agreed that it was necessary to
avoid creating a governance structure that has too many layers and is overly
bureaucratic, favoring a ‘global light’ approach (DCD/DAC/EFF/M 2012, 6).
23. For a full list of these initiatives and their respective members, see Open Forum
(2012).
24. The challenge, however, will be to ensure that these various layers of commitment
are not imposed as another layer of conditionality in donor–recipient relation-
ships in contexts where developing countries have not agreed to the voluntary
initiatives.
25. See, for example, Government of South Africa/New Partnership for Africa’s
Development (2010), UNCTAD (2008), and South Centre (2008).

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Post-2015 as the Litmus Test for
Multilateral Development
Cooperation?

This volume has examined many of the challenges facing the traditional
multilateral system and emerging forms of development cooperation,
multilateral and otherwise. A number of critical issues were addressed,
including the fragmentation, support, and effectiveness of the multilateral
system, as well as long-standing concerns regarding the legitimacy of mul-
tilateral development cooperation. While the perspectives of contributors
vary, the chapters in this volume highlight three key themes. First is the
increasingly complex and competitive environment in which development
cooperation occurs. The presence of old donors, emerging economies, civil
society, and the private sector is being felt by all development actors, leading
to greater fragmentation of the aid system and more competition at the insti-
tutional, financial, and ideational levels. Second, despite the increasingly
competitive environment and declining support, multilateral institutions
still have an important role to play, particularly in collaborating with new
actors and coordinating international efforts to address global challenges.
Nevertheless, necessary reforms to improve the legitimacy of governance
and decision-making processes to better account for developing country
priorities remain.
Finally, the chapters in this volume show that the existing frameworks
for improving development cooperation – particularly the provision of aid –
matter, and are likely to continue to matter in the future. While interna-
tional discussions on aid effectiveness have not been fully inclusive to date
and continue to face criticisms regarding their legitimacy, there has been
success in changing the behaviors of traditional aid donors and recipients,
albeit to an uneven extent.
Perhaps the true test of multilateral development cooperation in the
changing global order is yet to come. The 2015 deadline for the Millennium
Development Goals is fast approaching. At the same time, the international
community agreed to establish Sustainable Development Goals (SDGs) at
the Rio+20 Summit in June of 2012. Some of these goals are likely to fea-
ture in the post-2015 framework that emerges. Yet, despite the great deal

295
296 Conclusion

of attention the post-2015 agenda has received to date, the future is still
uncertain. No less than 8 comprehensive and 14 sectoral and thematic
proposals have been made by think tanks, governments, and United Nations
(UN) organizations, which include concrete goals, targets, and indicators.
In addition, several multilateral processes have been launched, geared at
establishing future development goals and frameworks.
The UN Secretary-General Ban Ki-Moon has established a High Level Panel
on the post-2015 development agenda, which includes 26 representatives
from government, civil society, academia, and the private sector. The UN also
has a UN System Task Team on the post-2015 Development agenda which
involves over 50 UN entities and international organization and is tasked
with convening at least 50 national consultations on key issues in devel-
opment. Running parallel to these efforts is the intergovernmental working
group on the SDGs which resulted from Rio+20. For its part, the Global
Partnership for Effective Development Cooperation, which was established
following the 2011 4th High Level Forum on Aid Effectiveness and brings
together government, civil society, and private sector actors concerned with
effective development cooperation, is also looking at how it can engage on
these agendas.
At this point, it is unclear how this plethora of multilateral fora will work
together. In many ways, the establishment of the Post-2015 Development
agenda serves as a manifestation of the key themes and challenges discussed
in this volume. It is characterized by competing perspectives and ideas, and
fragmented multilateral processes, some of which may be in competition
with one another. The challenge remains as to how the future develop-
ment framework be negotiated effectively at the intergovernmental level.
Meanwhile the Global Partnership for Effective Development still faces some
ongoing legitimacy challenges, particularly since key emerging economies,
such as Brazil and China, have engaged minimally.
While the establishment of new development agendas and forums
provides a context for future cooperation, acknowledging the past and
present challenges facing efforts toward development coordination will
necessarily mark a starting point for the way forward. As changes to the
multilateral framework create new challenges for development cooperation,
the ability for the multilateral system to provide a representative, coordi-
nated, and effective outlet for addressing key concerns to the advancement
of global development remains central to the ability for multilateral efforts
to meaningfully contribute to the development agenda.
The current development paradigm is in a state of flux. It is through this
transition that there is opportunity to revamp and reform the multilateral
system to ensure its relevance to the future development agenda. The chal-
lenges and road ahead will be defined by the ability of the international
community to learn from past challenges, adopt meaningful reforms, and
advance coordinated efforts toward development.
Index

Note: The letters ‘f ’ and ‘t’ following locators refer to figures and tables.

Abbott, Philip, 174
abortion, 169–70
Abu-Bader, Suleiman, 198
Abu-Qarn, 198
Accra Agenda for Action (AAA)
commitments made in, 91–3,
102
imperatives, 118–19
lead up to, 90
overview of, 275–6
Paris Declaration and, 118, 119, 120,
275
WP-EFF and, 275–6
Acharya, Arnab, 65, 92, 100
acquired immune deficiency syndrome
(AIDS), see HIV/AIDS
Adam, Christopher, S., 29
adjustment with a human face, 38
advanced economies, infrastructure
investments in, 21–2
Afghanistan Reconstruction Trust Fund,
166
Afonja, S., 260
Africa Capacity Indicators (ACI) Report,
262
African Capacity Building Foundation
(ACBF), 241, 242, 262, 265
African Development Bank (AfDB), 3,
163
African Union (AU), 248
African Women’s Development Fund
(AWDF), 241, 242, 264–5
Aga Khan Foundation Canada (AKFC),
148–9
Agarwal, Manmohan, 9, 36–56
Agenor, Pierre-Richard, 23
aid, achievement of MDGs through,
48–51
aid architecture, see multilateral
institutions in aid architecture
aid darlings, 71, 279
aid delivery, see China, aid delivery and
aid effectiveness, 89–109
alignment and, 97–8
capacity gaps and, 98–109
conclusion, 109
country ownership and, 95–7
harmonization and, 97–8
HIV/AIDS and, global response to,
117–21, 126–7
HLF4 on Aid Effectiveness and, 271–88
improving, 90–4
introduction, 89–90
multilateral institutions in aid
architecture and, evidence of,
74–7
Paris Declaration on, 2005, 274
progress in, capacity development
and, 94–5
transaction costs and, reducing, 97–8
aid giving, patterns of, 3–4
aid orphans, 71, 279
AIDS fatigue, 11, 116, 124, 124f
à la carte multilateralism, 158
Alden, Chris, 230
Alessandrini, Donatella, 195, 200
alignment
in AAA, 97, 118
Country Harmonization and
Alignment Tool and, 119
country ownership and, 95
HLF4 commitments to, 93
in Paris Declaration, 72, 74t, 90, 91,
118
transaction costs and, 97
in UNAIDS, 119, 120, 129
Amsden, Alice H., 143
Asian Development Bank (ADB), 261
Attaran, Amir, 39
Audet, François, 159
Auld, Alison, 170
avian influenza, 160

297
298 Index

Baldwin, Richard E., 199 Busan Partnership for Effective

Barfield, Claude, 202 Development Co-operation (BP)
Beijing Consensus, 2, 12, 215, 227 adoption of, 119
Bems, Rudolfs, 196 in AIDS financing and development
Berger, Axel, 218 effectiveness, 126–7
Bermeo, Sarah Blodgett, 203, 204 capacity gaps and, 102–4
Bernard, Andrew B., 196 overview of, 125–6
Bernauer, Thomas, 204 PBIG, see Post-Busan Interim Group
Berthiaume, Lee, 167–8 (PBIG)
Besada, Hany, 1–13, 138–55, 166, 167, WP-EFF and, 276–8
168, 170, 178, 277
Bevan, David, 29 Cabral, L., 244
Bhagwati, Jagdish N., 46, 189, Cairo Consensus on Capacity Development,
200–1 102–4
Bhushan, Aniket, 166 Calderón, Cesar, 24, 28
Biadgleng, E. T., 254 Campbell, Clark, 161
bilateral donors Canada, multilateral development
Canadian ODA and, 161, 162f agencies and, 158–81
IDA and, 75, 78 conclusion, 179–81
SSC and, economic dimensions of, food security and, 170–4
247–50 global climate change and, 174–9
bilateralization of multilateral aid, 2, 12, introduction, 158–9
78, 166 maternal, newborn, child health and,
Bill & Melinda Gates Foundation, 166–70
147–8 multilateral aid and, 160–6
Birdsall, Nancy, 2, 75 Canadian International Development
Black, David, 159 Agency (CIDA)
Blomfield, Michael, 63–82 climate change and, 176–7, 178
Bolsa Familia, 55 food security and, 170–4
Booth, David, 95 maternal and child health and, 166–7,
Bosshard, Peter, 222 168
bottom-up development, 11, 144 multi-bi funding and, 166
Boulding, Carew E., 154 multilateral agencies evaluated by, 163
Bowman, Gregory W., 195, 200 “Canadian Multilateralism: Past, Present,
Bown, Chad P., 197, 204 and Future,” 159
BRAC (Bangladesh Rural Advancement Canadian ODA
Committee), 150–1 to agricultural sector, 171f, 172f
BRICS (Brazil, Russia, India, China and bilateral vs. multilateral, 161, 162f
South Africa), 1, 2–3, 125 to environmental protection, 176,
Brinkerhoff, Derick, 94, 99–100 177f
Brookings Institution, 74 to maternal and child health, 168, 170
Brown, Stephen, 158–81 multilateral share of, 161, 162f, 166
Brülhart, Marius, 195 non-core contributions, 166
Bruno, Michael, 48 to regional development banks, 163,
Buiter, Willem, 95 165f
Bullaleh, Musa, 6, 11, 115–34 by type of agency, 163, 164f
Burall, Simon, 3, 272, 274, 281 to UN agencies, 163, 164f, 166
Burnside, Craig, 99 Caouette, Dominique, 173
 Index 299

capacity champion NGOs, 145–6 complementarities between China and

Aga Khan Foundation Canada as, the rest, 226–7
148–9 conclusion, 230–1
Bill & Melinda Gates Foundation as, introduction, 215–17
147–8 white paper on foreign aid program,
capacity development 216, 219, 220
Cairo Consensus on Capacity China-DAC Study Group, 222–3
Development and, 102–4 China’s Peaceful Development Road, 219
capacity gaps and, 98 China Statistical Yearbook, 218
gender and SSC and, 262–5 Christie, Keith H., 167
in graphical structure of SSC, 243 Churches Health Association of Zambia
High Level Event on South-South (CHAZ), 151
Cooperation and Capacity civil society organizations (CSOs), 91,
Development, 276 95, 246, 253, 274–6, 278, 279, 280,
implementation gaps and, 102 285
in improving aid effectiveness, 90–2, Clapp, Jennifer, 173
94–5 Clark, H., 247
policy gaps and, 100–1 Claxton, M., 254–5
in UNAIDS strategy for 2011–15, 129
Clinton, H., 256
WTO trade-related technical assistance
Coalition for the International Criminal
and, 205
Court (CICC), 149–50
capacity gaps, addressing, 102–9
Collier, Paul, 140, 149
by Busan, 102–4
Conceição, Pedro, 171
implementation gap, 107–9
Consensus for Maternal, Newborn and
policy gap, 106–7
Child Health, 167
resource gap, 104–6
Consultative Group for International
capacity gaps, identifying, 98–102
Agriculture Research (CGIAR), 51,
implementation gap, 101–2
171–3, 172f, 180
policy gap, 100–1
Cornia, Giovanni, 38
resource gap, 98–100
Carroll, Thomas F., 142 corporate social responsibility (CSR),
142, 143, 146, 153, 222
Castel-Branco, 95
Catalyzing Development: A New Vision for Côté, Denis, 173
Aid (Jung), 6 Cotton 4 Project, 55
Center for Global Development, 74 countries of the global south, see
Chandy, Laurence, 273 South-South cooperation (SSC)
Charlton, Roger, 142 country ownership
Charnovitz, Steve, 189 in Accra, 91, 276
Chen, Shaohua, 19, 250 aid-effectiveness and, 94, 95–7
Chenery, Hollis B., 48 of aid-funded AIDS response efforts,
child health, see maternal, newborn, and 133
child health (MNCH) alignment and, 95
China, aid delivery and, 215–31 depth of, per African country,
China’s aid program, 217–19 249f
Chinese aid and foreign policy, 223–6 in Global Partnership, 272, 284–5,
Chinese principles vs. the rest, 227–30 287
colaboration and multilateral HLF4 commitments to, 91–2, 280–1
engagement, 222–3 in OECD study, 91
comparing China and old donors, in Paris Declaration, 72, 74t, 90, 91,
219–21 95–7, 118, 228
300 Index
country ownership – continued
in post-HLF4 governance structure,
284–6
in QuODA evaluation, 75–6
in Rome Declaration, 273
in UNAIDS, 119–21, 127, 129
in WP-EFF, 282
Court, Julius, 154
Coxhead, Ian, 197
Crane, Andrew, 143, 146
Dabla-Norris, Era, 26
Dahlman, C. J., 255
Dailami, Mansoor, 28
Davies, Martyn, 223, 227
Davies, Penny, 3, 4, 5, 6, 89, 92, 222–3,
277
De Bruyn, Tom, 144–5
Declaration of Commitment on HIV/AIDS,
123, 124f
Deere Birkbeck, Carolyn, 190
de Haan, Arjan, 7, 8, 12, 215–31, 243,
277
De Lay, Paul, 131
Delich, Valentina, 204
delisting process, 249–50, 249f, 250f
delisting process of listed domestic
companies, 249–50, 249f, 250f
Delivering as One report, 130
delivery models, 73
Democratic Ownership and Development
Effectiveness, 91
Department for International
Development (DFID), 68–9
China and, 220–1, 222, 228
International Growth Centre’s
network and, 72–3
review of multilateral institutions by,
76
Department of Foreign Aid, 221
Desai, Meghnad, 38–9
developing countries
infrastructure investments in, 23–5
in SSC structure, 243f
development aid
engagement in, cases of, 147–51
in 1980s and 1990s, changing system
of, 140–2
partnerships in, 143–5
Development Assistance Committee
(DAC)
aid-effectiveness agenda and, 92
Canadian aid and, 161
Chinese aid and, 218, 219–20, 227
data on aid from, 244f
DCD and, 103–4
HLF4 hosted by, 5
lareg projects funded by, 68, 69f
MDGs and, 38
ODA criteria defined by, 277
repayment conditions qualifying as
aid and, 54
resource gap and, 98–9
Rome Declaration and, 273
Development Co-operation Directorate
(DCD), 103–4
Development Cooperation Forum (DCF),
2007, 274–5
development effectiveness
AIDS financing and, 126–7
Busan Partnership and, 125–6
Democratic Ownership and Development
Effectiveness and, 91
linking aid to improved development
outcomes and, 117
shared responsibility with mutual
accountability and, 121
UNAIDS investment framework and,
120
Development of Agriculture and
Livestock Fund, 55
Develtere, Patrick, 144
Dispute Settlement Body (DSB),
204–5
Doha Development Round (DDR),
200–2
Dollar, David, 20, 99, 140,
149, 160
Donaghy, Greg, 159
double discrimination, 260
Dutch-disease, 198
Dutch Scientific Council for
Government Policy (WRR), 277
earmarking, 166, 172–4
East Asia and the Pacific (EAP)
agricultural output in, 43–4
child and maternal mortality rates in,
44, 45t

economic and social progress in, 46,
47t
GDP and its growth in, 38, 41, 41t
importance of aid in, declining, 49–50,
49t, 50t
inflation rate in, 38
malnourishment levels in, 40t, 43
poverty levels in, 40–1, 40t
World Bank aid in, sectoral
composition of, 50, 51t
Easterly, William, 75, 165
Economic and Social Council (ECOSOC),
140, 142
Economic Community of West African
States (ECOWAS), 258
economic progress, MDGs and, 46–8, 47t
education
adult literacy achievements, 257f
knowledge and SSC and, 256–8
MDGs and, 44
Egan, Andrew, 96
Eifert, Benn, 23
Education Quality Improvement Project
in Afghanistan, 166
emerging country in SSC structure,
243f
Engel, Eduardo, 28
enabling environment, 94, 100
enlarging the tent analogy, 277–8, 283
Esfahani, H., 26
Essex, Jamey, 174
European Union (EU), 69f, 161, 175, 222
Europe 2020 Project Bond Initiative,
22, 25
Farrior, S., 259
Faust, Jörg, 95
Feinberg, Susan E., 196
Felsen, David, 138–55
Fengler, Wolfgang, 81–2
Ferguson, James, 140
financial crisis, 2
China and, 225, 227
global AIDS response and, 116, 123,
131
near-term global growth projections
and, 20
poverty reduction and, 41, 43
resource gap and, 98, 106
Fioroni, C., 5
Index 301
Five Point agenda, 225
flag planting, 2, 10
Florini, Ann M., 139
focus countries, 121
Food and Agriculture Organization
(FAO), 43, 51–2, 52t
Foster, Mick, 101
Foster, Vivien, 23, 26, 27, 28, 30
Fowler, Alan, 140, 142, 143
fragmentation, 2, 64–7, 66f, 77t
Francois, Joseph, 204
Freemantle, Simon, 248
free trade mandate, WTO, 12, 197,
198, 200, 205, 207, 247
Fukuda-Parr, Sakiko, 38–9, 94
Fukuyama, F., 2
Gelb, Alan, 65
gender equality, SSC and, 246–66
adult literacy achievements, 257f
capacity development, 262–5
challenges and solutions in, 251–4
citizens engaged in decision making,
263f
democracy, human rights, gender and,
258–60
economic dimensions of multilateral
and bilateral SSC, 247–50
female participation in ownership,
252f
globalization, gender and poverty
reduction, 247–54
human trafficking and, 260–2
innovations that transform sectors
employing women, 263f
knowledge and, 254–8
General Agreement on Trade and Tariffs
(GATT), 189–90
China and, 224
comparative advantage and, 195
intra-firm trade and, 196
membership in 1950s and 1960s, 199
policy surveillance mechanism and,
203
rounds, 201, 202
see also World Trade Organization
(WTO)
Gibson, Clark C., 154
global AIDS response, see HIV/AIDS,
global response to
302 Index

global capitalist class, 201–2 economic and social progress and,

Global Environment Facility (GEF), 176 47–8
Global Fund to Fight AIDS, Tuberculosis globalization and, 247
and Malaria, 54, 116, 121, 122, 123, global trade and, 190–2, 191t
126, 128, 145, 151 infrastructure services and, 23
global infrastructure initiative, poverty reduction and, 40–2, 40t, 41t
implementing, 25–30 public debt-to-GDP ratio in G7
globalization countries, 21
NGOs and, 142–3 remittances as a percentage of, 50
SSC and gender equality and, 247–54 Group of 7 (G7), 21
global light approach, 279, 284 Group of 8 (G8), 98, 159
global model in waiting, 244 Group of 20 (G20), 26, 167, 273, 280–1,
Global Partnership 285
capacity to engage and, 286–7 Group of 77 (G77), 247, 256, 260
components of, 283 Guasch, J. Luis, 28
country ownership and, 284–6 Gugerty, Mary Kay, 20
establishment of, 5, 92, 272, 278–9 Guha, Krishna, 108
functions for, 280 Gupta, Akhil, 140
output legitimacy and, 283, 284
PBIG and, 280–3 Hanson, K. T., 252
in post-HLF4 governance structure, harmonization
279–82 Country Harmonization and
Steering Committee of, 280, 283, 286 Alignment Tool and, 119
Global Programme on AIDS, 122 in Paris Declaration, 72, 74t, 90,
global public goods, 133–4 118
global trade transaction costs and, 97
annual change rate in, 192f UNAIDS model and, 119, 120, 129
composition of, 194f see also Rome Declaration on
current state of, 190–3 Harmonization
geograpical distribution of, 193f Harper’s Davos speech, 166, 168–70,
growth in, vs. GDP, 191t 175
understanding, 193–8 Harrison, Kathryn, 175
WTO contribution to, 198–200 Hatcher, Pascale, 161
Goldfarb, Danielle, 160–1 Hauswald, Robert, 28
Goldstein, Judith L., 199 Heap, Peter C., 168
Gowa, Joanne, 199 Heavily Indebted Poor Country
Graves, Sue, 272, 274, 280, 281 initiative, 218
grassroots champion NGOs, 146–7 Heidrich, Pablo, 8, 12, 189–208
BRAC as, 150–1 Heine, Jorge, 3
CHAZ as, 151 Heintz, James, 22
Green Climate Fund, 177 Henning, R. K., 256
greenhouse gas (GHG) emissions, 174 Heyneman, S. P., 258
Green Revolution, 51, 173 Higgins, Kate, 166
Griffith-Jones, David, 3 High Level Forum on Aid Effectiveness,
Griffith-Jones, Stephany, 3 4th (HLF4), 271–88
gross domestic product (GDP), 19, 37 AAA and, 275–6
agriculture value-added as share of, Busan Partnership and, 276–8
263, 263f conclusion and recommendations,
aid flows and, 48–50, 49t 287–8
child and maternal health and, 46 DCF and, 274–5

Global Partnership and, 278–9
introduction, 271–3
Paris Declaration and, 274
Rome Declaration and, 273
see also post-HLF4 governance
structure
HIV/AIDS, global response to, 115–34
aid effectiveness and, 117–21,
126–7
Busan Partnership and, 125–6
conclusion, 133–4
effective, 132–3
financing, 121–4, 122f, 123f, 124f,
126–7, 130–3
introduction, 115–17
UNAIDS model and, 127–30
Hoekman, Bernard M., 201, 204
Hovi, Jon, 174, 176
Hudson Institute Index for Global
Philanthropy and Remittances, 99
Hughes, Christopher R., 230
Hulme, David, 38–9
Human Development Index (HDI), 38,
39
Human Development Reports (HDRs),
36–7, 38
human immunodeficiency virus (HIV),
see HIV/AIDS
Human Rights Watch (HRW), 149
human trafficking, 260–2
hunger, MDGs and, 39–44, 40t,
41t, 42f
Huntington, Samuel P., 141
hyperinflation, 38
Iarossi, Giuseppe, 23
IBSA countries, 3, 258
IBSA Forum, 54–5, 244, 260
IDEA International Institute, 104,
108–9
implementation gap
addressing, 107–9
identifying, 101–2
Independent Evaluation Group (IEG),
108
indigenous knowledge, SSC and,
254–8
education and, 256–8
intellectual property rights and,
254–6
Index 303
inflation, 38
information and communications
technologies (ICTs), 141
information politics, 146, 150
Infrastructure Finance Center of
Excellence, 26
infrastructure investments and MDGs,
19–31
in advanced economies, 21–2
in developing countries, 23–5
global initiatives and, implementing,
25–30
Ingram, Joseph, 165
input legitimacy, 282–3
Institute for Development in Economics
and Administration (IDEA), 104,
108–9
intellectual property rights, knowledge
and SSC and, 254–6
achievements and comparative
advantages of, 76, 77t, 81–2
coordinating assistance and, 70
creation and purpose of, 71
project size and, 68–9, 69f
replenishment round, 222
as top multilateral and bilateral donor,
75, 78
transaction costs and, study on,
92
International Development Goals
(IDGs), 38
International Development Research
Centre (IDRC), 173, 178
International Fund for Agricultural
Development (IFAD), 76, 171,
172f
international institutions and MDGs,
48–55
aid and, 48–51, 49t, 50t, 51t
SSC and, 54–5
United Nations agencies and, 51–4,
52t, 53f, 53t, 120
International Monetary Fund (IMF)
China’s criticism of, 229
macro stability and, 37–8
Paris Declaration and, 274
representation and legitimacy and,
272–3
resource gap and, 100
voting rights and, 3
304 Index
International Poverty Reduction Centre
in China (IPRCC), 222
International Trade Center (ITC),
245
intra-firm transactions, 191, 194
intra-industrial commerce,
194–5
Jaccard, Mark, 175
James, Ron, 146
Janson, Johanna, 229
Jayasuria, Sisira, 197
Jiang, Wenran, 230
Jung, Woojin, 4, 6
Justin Yifu, Lin, 19–31
Kakkattil, Pradeep, 11, 115–34
Kamat, Sangeeta, 143, 144
Kararach, George, 8, 12, 241–66
Kaul, I., 265
Keane, Michael P., 196
Keating, Tom, 158–9
Kendall, Maurice G., 46
Kennedy, Mark, 175, 176, 177
Kent, Peter, 175–6
Kharas, Homi, 2, 4, 6, 7, 9–10,
63–82, 92, 97, 160, 165, 273,
274, 279
Killen, Brenda, 281
Kim, Myeong Hwan, 199
Kim, Soo Yeon, 197, 199
Kim, Soyeun, 277
Kindornay, Shannon, 1–13, 74, 125,
141, 166, 227, 266, 271–88
King, S., 243, 247, 248
Klein, Michael, 28
Klitzing, Espen, 27
Knack, Stephen, F., 69, 76, 160,
165
knowledge, see indigenous knowledge,
SSC and
Kostecki, Michael, 205
Kraay, Aart, 20
Kragelund, Peter, 277
Kurlantzick, Joshua, 224, 225
Laborde, David, 201
LAC, see Latin America and the
Caribbean (LAC)
Laing, Aislinn, 174
Lanz, Rainer, 196
Latin America and the Caribbean (LAC)
agricultural output in, 43–4
child and maternal mortality rates in,
44–6, 45t
economic and social progress in, 46–7,
47t
GDP and its growth in, 41, 41t
macro stability and, 37–8
malnourishment levels in, 40t, 43
poverty levels in, 40–1, 40t
World Bank aid in, sectoral
composition of, 50, 51t
Lawrence, Robert Z., 195, 201
Lawson, Andrew, 92–3
Léautier, Frannie, 8, 12, 241–66
Lee, Kelley, 53
legitimacy, criteria of
input legitimacy, 282–3
output legitimacy, 283–4
overview of, 281–2
throughput legitimacy, 282–3
Leipziger, Danny, 158, 165
Levchenko, Andrei A., 196
Levin, Victoria, 160
Lewis, D., 260
Lewis, W. A., 48
Li, X. Y., 217, 218
Lightfoot, Simon, 277
Limongi, F., 258
Lin, Justin, Yifu, 6, 9, 19–31, 222
Linn, Johannes F., 274
Lipsky, Michael, 154
Lisk, Franklyn, 115–34
listed domestic companies, 249–50, 249f,
250f
MacDonald, Michael, 170
macro stability, 37–8
Makino, Koji, 4, 6
Mallaby, Sebastian, 227
malnourishment, MDGs and, 39–44, 40t,
41t, 42f
managing for results, 74t, 90, 118
Marsden, Terry, 174
Martin, Frédéric, 7, 10, 55, 89–109, 252,
286
Martin, Matthew, 284
Masyrafah, Harry, 70–1

maternal, newborn, and child health
(MNCH)
Canadian multilateral agencies and,
158–9, 166–70
MDGs and, 44–6, 45t
Mattoo, Aaditya, 197
McCulloch, Rachel, 204
McInerney-Lankford, S., 259
McKeon, J. A., 70–1
McMillan, Leah, 167, 168, 170
Medium Term Expenditure Frameworks
(MTEFs), 107
Mendoza, Ronald U., 171
Middle East and North Africa (MNA)
child and maternal mortality rates in,
44, 45t
economic and social progress in, 46,
47t
malnourishment levels in, 40t, 43
poverty levels in, 40–1, 40t
regional GDP and its growth in, 41,
41t
World Bank aid in, sectoral
composition of, 50, 51t
Millennium Development Goals (MDGs)
child and maternal health and, 44–6,
45t
economic and social progress and,
46–8, 47t
education and, gender parity in, 44
genesis of, 37–9
Global Partnership and, 285–6
infrastructure investments and, 19–31
international institutions and, see
international institutions and
MDGs
MDG 1, 39, 242–3
MDG 8, 285
poverty, hunger, malnourishment and,
39–44, 40t, 41t, 42f
progress in meeting, 39–48
SSC and, 54–5, 247, 248
Ministry of Commerce (MOFCOM), 217,
221, 222
Ministry of Finance (MOF), 217, 218
Ministry of Foreign Affairs of the
People’s Republic of China
(MFAPRC), 217
Miroudot, Sebastien, 196
Moreno-Dodson, Blanca, 23
Index 305
Morgan, Peter, 94, 99, 100
Morrison, David R., 160, 165
Moyo, Dambisa, 99
multi-bi funding, 166, 172, 173
Multi-Country HIV/AIDS Program for
Africa (MAP), 116, 122, 123f
multilateral aid, Canadian, 160–6
multilateral development cooperation,
9–12
aid-effectiveness agenda and,
89–109
Canada and, 158–81
cases in, 89–208
challenges in, 10–12
HIV/AIDS funding trends and, 115–34
NGOs in, 138–55
state of play in, current, 9–10
WTO in, 189–208
multilateral institutions in aid
architecture, 63–82
coordinating assistance and, 70–2
development knowledge and
international aid norms and, 72–4
donor fragmentation and, 64–7, 66f
economies of scale and, 67–70
effectiveness of, 74–7
global development assistance and,
77–82
Multilateral Investment Guarantee
Agency, 27–8
multilateralism
aid delivery approaches and, 215–31
content of, 6–8
context of, 1–5
HLF4 on Aid Effectiveness and, 271–88
introduction to, 1–13
multilateral development cooperation
and, 9–12
SSC and, 241–66
in twenty-first century, 12–13, 215–88
Muskoka Initiative on MNCH, 159,
167–70, 180, 181
mutual accountability
in Busan Partnership, 121, 126, 279, 284
country ownership and, 96–7
in DCF, 275, 282–3
in Global Partnership, 279
in Paris Declaration, 72, 74t, 90, 118
in UNAIDS model, 129–30
Mwanangombe, 255
306 Index
Naidu, Sanusha, 3, 7, 229, 277
Naim, Moises, 4, 277
Nam Theun 2 Hydropower Project, 26
National Expressway Network, 24
National Infrastructure Reinvestment
Bank, 22
National Rural Employment Guarantee
Scheme, 55
NATO (North Atlantic Treaty
Organization), 229
of the South, 258
Navaretti, Giorgio Barba, 199
Navarro, Peter, 217
N-11 countries, 2–3
newborn health, see maternal, newborn,
and child health (MNCH)
New Economic Partnership for African
Development (NEPAD), 223, 248
New Normal, 21
NGOs, see non-governmental
organizations (NGOs)
non-agricultural market access (NAMA),
201
Non-Aligned Movement (NAM), 247
non-core programs, 77, 78
non-governmental organizations
(NGOs), 138–55
capacity champions, 145–6, 147–9
conclusion, 151–5
emergence of, 139–40
grassroots champions, 146–7, 150–1
introduction, 138–9
policy champions, 146, 149–50
vehicles in, 142–3
see also development aid
non-profit organizations (NPOs), 139
Nurkse, Ragnar, 48
official development assistance (ODA)
African, 218
budget support and, 97
Canadian, see Canadian ODA
Chinese, 216
development effectiveness and, 126
donor fragmentation and, 64–7, 66f
economies of scale and, 67–70
efficiency of, 75, 75f, 76
financial crisis and, 116
inefficient allocation of, 70–1, 71f
international norms and standards for,
72
multilateral, 77–81, 80t
new aid entrants and, 244f, 275,
277
NGOs and, 142
resource gap and, 98–9
role in financing investment, 26–7
to technical cooperation, 94
Olender, Michael, 8, 158–81
100 Women Initiative: Empowering Women
and Girls through International
Exchanges, 256
Organisation for Economic Co-operation
and Development DAC, see
Development Assistance Committee
(DAC)
Organization of the Islamic Conference
(OIC), 244–5
Otto, Dianne, 140, 142
output legitimacy, 283–4
Overseas Development Institute (ODI),
246
ownership, see country ownership
Oya, C., 260
Ôzkan, M., 248
pandemics, 160
Paris Declaration on Aid Effectiveness
AAA and, 118, 119, 120, 275
aid effectiveness and, 90–1, 93, 94
capacity gaps and, 98
country ownership and and, 72, 74t,
90, 91, 95–7, 118, 228
overview of, 72
principles of, 74t, 118
surveys on monitoring, 90–1, 97, 276
transaction costs and, 97
WP-EFF and, 274
Paulo, Sebastian, 277
Perkin, Emily, 154
Perroulaz, G., 5
Pfutze, Tobias, 165, 182
Picciotto, Robert, 158, 165, 166
Ping, Ai, 221, 225
Plehwe, Dieter, 2
policy banks, 225
policy champion NGOs, 146
CICC as, 149–50
HRW as, 149
 Index 307

policy gap Roemer, Michael, 20

addressing, 106–7 Rogerson, Andrew, 70, 273, 277, 279,
identifying, 100–1 281
Post-Busan Interim Group (PBIG), 278–88 Rome Declaration on Harmonization
Global Partnership and, 280–3 country ownership and, 273
WP-EFF and, 279–81 DAC and, 273
see also High Level Forum on Aid HLF4 and, 273
Effectiveness, 4th (HLF4) WP-EFF and, 273, 274
post-HLF4 governance structure, 279–87 Ronalds, Paul David, 142, 143
capacity to engage in, 286–7 Rose, Andrew K., 199
input and throughput legitimacy in, Rosenstein-Rodan, Paul N., 48
282–3 Rostow, Walt W., 48
output legitimacy in, 283–4 Rübbelke, Dirk T. G., 178
ownership and Global Partnership in,
284–6 Samanta, Sayan, 46
Post-Washington Consensus, 215, Samy, Yiagadeesen, 271–88
216 Sawadogo, W. R., 261
poverty, MDGs and, 39–44, 40t, 41t, 42f Scheinman, David, 256
President’s Emergency Plan for AIDS Segarra, Monique, 138, 141
Relief (PEPFAR), 116, 121–2, 123f, Seitanidi, Maria May, 143, 146
126, 128 Sen, Amartya, 38
Pritchett, Lant, 29, 255 Servén, Luis, 24, 28
Protheroe, David R., 159, 160, 161 Servén, Perry, L., 24
Przeworski, A., 258 Severe Acute Respiratory Syndrome, 160
public-private partnerships (PPPs), 27, Shafaeddin, Mehdi, 201
28, 66 shared responsibility
in Busan Partnership, 121, 126
Quan, Julian, 174 in UNAIDS model, 129–30
Quisumbingi, C., 260 Shaw, A., 252
QuODA review, 74–5 Shaw, T., 242, 261
Shivji, Issa, 5
Radelet, Steven, 64 Sino-Africa Cooperation Forum
Rahman, Aminur, 69 (FOCAC), 223, 226
Ramachandran, Vijaya, 4 Smith, Gordon S., 167, 168
Ramirez, M., 26 Smith, Joanna, 169
Ramos, Howard, 150 Smith, Kimberly, 99, 277
Ravallion, Martin, 19, 31 Smith, Stephen, 154
Regional Development Banks, social progress, MDGs and, 46–8, 47t
69f, 77t South America-Africa-South Asia (SASA)
regional integration, 30, 243f, 248, 250, cooperation, see South-South
252–3, 264 cooperation (SSC)
regional technical assistance, 261 South Asia (SA)
Reisen, Helmut, 1, 277 agricultural output in, 43–4
remittances, 50, 99 child and maternal mortality rates in,
resource gap 44–6, 45t
addressing, 104–6 economic and social progress in, 46–7,
identifying, 98–100 47t
restricted funding, 2, 51, 172–3 GDP and its growth in, 41, 41t
Ricardian rest, 197–8 gender parity in education in, 44
Rodgers, Kathleen, 150 HIV/AIDS in, 115, 121
308 Index
South Asia (SA) – continued
importance of aid in, declining, 49–50,
49t, 50t
intra-regional investment in, 249,
249f
macro stability and, 37–8
malnourishment levels in, 40t, 43
poverty levels in, 40–1, 40t
poverty reduction in, 41–2, 42f
World Bank aid in, sectoral
composition of, 50, 51t
South-South cooperation (SSC), 241–66
collaborative projects in, 55
conclusion, 265–6
explained, 242–6
gender equality and, see gender
equality, SSC and
graphical structure of, 243f
introduction, 241–2
MDGs and, 54–5, 247, 248
Special Unit for, 244–5
South-South development cooperation
(SSDC)
Busan Partnership and, 276–8
country ownership and, 285
Global Partnership and, 278–9
legitimacy gap and, 271, 272
output legitimacy and, 284
Paris Declaration and, 74t
post-HLF4 governance structure and,
280
Sovereign Wealth Funds (SWFs), 27, 92
Special Unit for South-South
cooperation (SUSSC), 244–5
Steering Committee, 280, 283, 286
Steer, Liesbet, 96
Stiglitz, J., 247
Stone, Diane, 2
Strout, Alan M., 46, 148
Stupnytska, Anna, 2–3
Subramanian, Arvind, 196, 198
Sub-Saharan Africa (SSA)
agricultural output in, 43–4
child and maternal mortality rates in,
44–6, 45t
economic and social progress in, 46–7,
47t
GDP and its growth in, 19, 41, 41t
gender parity in education in, 44
HIV/AIDS in, 115, 121
importance of aid in, declining, 49–50,
49t, 50t
intra-regional investment in, 249,
249f
macro stability and, 37–8
malnourishment levels in, 40t, 43
poverty levels in, 40–1, 40t
poverty reduction in, 41–2, 42f
World Bank aid in, sectoral
composition of, 50, 51t
Sundberg, Mark, 65
surveys on Paris Declaration
2008 Monitoring Survey, 275
2011 Monitoring Survey, 276
sustainability
in China, 229
debt, 221
of democracy, 258–9
environmental, 205, 255f
fiscal, 29, 102
in global AIDS response, 119, 121,
129
Sutherland, Peter, 189, 200, 201
Tandon, Yash, 96
Tapp, Stephen, 160–1
Taylor, Ian, 229
Thérien, Jean-Philippe, 159
Thiele, Rainer, 150
thinking twice policy, 67
‘Three Ones’ principle, UNAIDS, 119,
128–9
throughput legitimacy, 282–3
tied aid, 228, 277
Tjønneland, Elling N., 223
Tok, Sow Keat, 224
Tomlinson, Brian, 91
Toornstra, Franke, 7, 10, 55, 89–109,
252, 286
top-down development, 144
Touzenis, K., 261
trade, see global trade
Trade Policy Reviews Mechanism
(TPRM), 202–4
trade-related aspects of intellectual
property rights, 129
transaction costs
in aid effectiveness, 97–8
IDA study on, 92
 Index 309

vs. number of donors, conceptualizing, HLF4 and, 119

65 investment framework for use of scare
ODA and, 65–6, 66f resources and, 120
transfer of technology model for model, 117, 127–30
training, 73, 108 strategy for 2011–15, 117
triangular cooperation, 92 ‘Three Ones’ principles, 119, 128–9
Tussie, Dianna, 204 United States (US)
Tvedt, Terje, 142 Chinese collaboration and, 224,
two gap models, 48 225–6, 228
2008 Monitoring Survey on the Paris education and, 148, 256
Declaration, 275 Exim Bank, 228
2011 Monitoring Survey on the Paris global AIDS response and, 116, 121,
Declaration, 276 122f, 123, 123f
Infrastructure Bank, 25
United Kingdom (UK) infrastructure investments in, 21–2
Chinese aid program and, 218, 220, Interstate Highway System, 24
221 voluntary contributions from,
Department for International 53f, 54
Development, 68 unrestricted funding, 51
multilateral institutions assessed by, untied aid, 228
79, 80 Uruguay Negotiation Round, 202
Overseas Development Institute, 246
United Nations (UN) value for money (VfM), 120–1, 126, 130,
agencies, operation of, 51–4 131
DCF, 274–5 Vandeninden, Frieda, 92
ECOSOC, 140, 142 variable geometry, 202
FAO, 43, 51–2, 52t vertical funds, 66, 67f, 69t, 73, 76, 78–9,
Global Compact on Corporate Social 165
Responsibility and, 222
MDGs and, 51–4, 52t, 53f, 53t, 120 Wade, R., 2
Millennium +5 Summit and, 98 Walz, Julie, 3–4
NGOs and, 140 Wang, G. L., 218
OIC/SUSSC and, 244–5 Wang, Zhen, 235
Programme on HIV/AIDS and, see Wanjiru, R., 244
United Nations Programme on Warmerdam, Ward, 7, 8, 12, 215–31,
HIV/AIDS (UNAIDS) 243, 277
Security Council and, 3, 258 Watts, Richard, 284
Special Climate Change Fund and, Wei, Shang-Jin, 196, 198
176 Weinstock, J., 244
UNDP and, 36–8, 163, 164f, 222, 246, Wells, Paul, 169
278, 280, 283, 286 Williamson, Claudia, 75
UNICEF and, 163 Wilson, Dominic, 2
United Nations Development Wissenbach, Uwe, 222
Programme (UNDP), 36–8, 163, Wood, Bernard, 72, 91, 94, 96,
164f, 222, 246, 278, 280, 283, 286 275–6
United Nations Programme on Woods, Ngaire, 3–5, 91
HIV/AIDS (UNAIDS), 115 Working Party on Aid Effectiveness
establishment of, 116 (WP-EFF)
global AIDS response and, 115–34, AAA and, 275–6
122f, 123f, 124f Busan Partnership and, 276
310 Index
Working Party on Aid Effectiveness
(WP-EFF) – continued
capacity development ranked by,
103
DAC and, relationship between, 273
DCF and, 274–5
evolution of, 272
function of, 271
Global Partnership and, 271–2, 278–9,
286
input and throughput legitimacy and,
282–3
PBIG and, 279–81
Rome Declaration and, 273, 274
World Bank
Afghanistan Reconstruction Trust
Fund and, 166
aid flows from, 48, 49t, 50t, 51t
Canadian multilateral aid and, 160,
161, 163–6, 164f, 167, 171, 173,
176
Chinese collaboration with, 222, 224,
227, 229
in conceptualizing development, 72
development knowledge and, 73,
81
Doha Development Round and,
201
Doing Business data, 250
Education Quality Improvement
Project in Afghanistan and,
166
effectiveness of, 76
food security and, 17, 173
IDA, see International Development
Association (IDA)
implementation gap and, 108–9
indigenous knowledge and, 256
Infrastructure Finance Center of
Excellence and, 26
infrastructure investment initiative
and, 27–8, 29
macro stability and, 37–8
Memorandum of Understanding and,
222
MNCH and, 167
Multi-Country HIV/AIDS Program for
Africa and, 116, 122, 123f
Multilateral Investment Guarantee
Agency and, 27–8
NGOs and, 141, 144
Paris Declaration and, 274
Pilot Program for Climate Resilience
and, 176
policy gap and, 106–7
representation and legitimacy and,
272–3
voting rights and, 3
WDR and, 38
World Development Indicators (WDI),
249
World Development Report (WDR),
38
World Food Programme (WFP), 160,
163, 164f, 166, 170–3, 172f, 173f,
180
World Health Organization (WHO)
global AIDS response and, 122, 133
growth standards and median weight,
40t, 42–3
program budget, 51–4, 53t
World Trade Organization (WTO),
189–208
conclusion, 206–8
Dispute Settlement Body and,
204–5
free trade mandate and, 12, 197, 198,
200, 205, 207, 247
global trade and, 190–200
introduction, 189–90
negotiation rounds and, 200–2
trade policy reviews and, 202–4
trade-related technical assistance and,
205
see also General Agreement on Trade
and Tariffs (GATT)
Xu, Jiajun, 228
Zhang, Mianli, 217
Zhang, Yuhui, 220
Zheng, Yongnian, 224, 235
Zhu, Zhiqun, 224
Zimmerman, Felix, 99, 277