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Policy Brief January 2011

Developing Effective Donor


Partnerships for Achieving
the MDGs
Problem Recommendations & Actions
The new U.S. Global The U.S. is wisely establishing a “whole of government” approach to development, which
Development Strategy should include coherent, mutually reinforcing official development assistance, trade and
has begun aligning investment policies and practices, and debt relief. It should also involve civil society organi-
development assistance, zations in the U.S. and developing countries in strategic planning at the country level and in
debt relief and trade design, implementation and evaluation programs. U.S. policies should support the develop-
and investment. It also ment of representative, well-governed states that can meet the needs of their populations
creates much-needed by providing decent work, ensuring the fair and inclusive treatment of all peoples, and pro-
space for civil society moting gender equity and a healthy environment. Consistent with Millennium Development
involvement; however, Goal 8 on effective partnerships for development, the U.S. should take the following actions:
execution is a work in • Trade:
progress. It is unclear »» Expand full duty-free and quota-free market access to all exports from the Least
how much development Developed Countries (LDCs).
will be elevated, »» Eliminate rules of origin that restrict input sourcing to increase market access for
partnerships advanced, LDCs.
trade policies aligned to »» Encourage and support South-South and regional trade.
support development, »» Ensure U.S. trade and agriculture policies do not undermine U.S. development objec-
and additional resources tives and support decent working conditions.
allocated to poverty- • Debt:
focused development. »» Work to expand the Multilateral Debt Relief Initiative (MDRI).
U.S. and European trade »» Promote debt relief for heavily indebted poor countries facing exogenous shocks from
policies need to support the continuing global financial crisis.
development in the least »» Reduce odious debt.
developed countries. • Partnerships:
The U.S. needs to adopt »» Implement the Paris Declaration and Accra Agenda for Action principles on aid effec-
a country ownership tiveness and broaden the ministerial table of the OECD Development Assistance
strategy that works Council (DAC) to include foundations, three private aid donors from the North and
with civil society in three of their civil society counterparts from the South.
developing countries and »» Decentralize the strategic planning process, moving it to the country level, and re-
the U.S. to incorporate invigorate USAID missions as the lead development agency for country-level plan-
transparency and ning that will include local civil society and international NGOs with extensive local
accountability measures partnerships.
into programs. »» Work with U.S. and local civil society to strengthen local ownership and capacity.
»» Improve U.S. inter-agency coordination on development programming.
www.InterAction.org

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Results
Suite 210 These steps will produce U.S. preference programs for LDCs that allow for
Washington, DC 20036 future sustainable economic growth and development.
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Background debt crisis. The U.S. can press the World Bank to expand
the Multilateral Debt Relief Initiative (MDRI) to include all
The U.S., along with other developed nations, has signed countries that qualify for International Development Asso-
on to the Millennium Development Goals (MDGs). These ciation-only2 support from the World Bank. The U.S. can
ambitious and important goals commit the U.S. and others also promote debt relief for heavily indebted poor coun-
to a clear set of targets to significantly reduce poverty and tries3 facing continuing exogenous shocks from the global
improve life for the poorest of the poor around the globe by financial crisis. Some LDC debt has accumulated due to
2015. Each of the eight MDGs tackles a specific issue such irresponsible borrowing and lending for ill-conceived proj-
as extreme poverty or education. Unlike its counterparts, ects, illicit gain by leaders and geo-political influence. The
MDG 8, the last of the goals, focuses instead on the opera- Administration can work to reduce odious debt by promot-
tional means needed to create systems that will help ensure ing mutually-agreed upon and binding terms for respon-
efforts to meet the other goals are done in a sustainable sible lending and borrowing to ensure transparency, atten-
way that will maximize effectiveness and local ownership. tion to human rights and consumer protection.
To this end, MDG 8 requires donor countries to develop
a global partnership for development. It calls on the U.S. Partnerships
and other developed countries to reform the international The U.S. can partner more effectively with recipient
trade and financial system and their own international trade countries by implementing the Paris Declaration and Accra
and development practices in ways that are more balanced Agenda for Action principles on aid effectiveness. U.S. aid
toward the least developed countries. Implementing such programs increasingly emphasize country ownership and
measures, in the context of a U.S. global development country-led approaches. To facilitate this, the U.S. can
strategy that brings cohesion, coherence and predictability develop a shared definition and criteria for country owner-
to U.S. trade and development policies and funding, and ship with host governments and civil society organizations,
will redefine U.S. leadership in the fight to reduce global focusing on democratic ownership that specifically includes
poverty. It will also provide developing countries with sub- a country’s citizens in formulating a national development
stantial additional resources that can be directed to their strategy rather than simply ownership by the state. This
efforts to meet the targets for the first seven MDGs. would enhance the growing trend of U.S. aid programs that
emphasize country ownership and country-led approaches.
Trade The U.S. should also decentralize its strategic planning
Trade preference programs (TPPs) for Least Developed process, moving it from Washington, D.C. to the country
Countries (LDCs)1 can include full duty-free and quota- level, and re-invigorate USAID missions as the lead devel-
free market access. They can expand to include all LDC opment agency for such planning. To operationalize coun-
exports, including labor-intensive industries like agriculture try ownership, USAID missions can use a development
(sugar, peanuts, dairy and tobacco), textiles and apparel. assistance planning process that actively engages U.S.
The reform of programs that restrict input sourcing can and local civil society as well as national and local govern-
eliminate rules of origin that raise costs and impede market ment stakeholders. The U.S. can work with local civil soci-
access for LDCs. LDCs will then be allowed to “cumulate”— ety, both directly and indirectly through U.S. civil society,
i.e., count inputs imported from eligible countries as local in meaningful partnerships with an emphasis on capacity
content as long as significant processing occurs within the strengthening. This will strengthen local ownership and
LDC. The U.S. can also encourage and support South- build national capacity while making it possible for local civil
South and regional trade. It can also ensure that U.S. trade society to contribute its expertise to the formulation, design
and agriculture policies, including agricultural subsidies, do and implementation of U.S. development assistance. The
not undermine U.S. development objectives and achieving U.S. can also improve U.S. inter-agency coordination on
the MDGs while supporting decent work. development programming.

Debt
The global economic crisis has landed developing coun- 2 The International Development Association, IDA, is the World Bank’s
Fund for the Poorest. One of the world’s largest sources of aid, IDA pro-
tries in a serious recession and much of the assistance they vides support for health and education, infrastructure and agriculture, and
have received from the international financial institutions economic and institutional development to the 79 poorest countries.
has come in the form of loans, which may lead to a new 3 The HIPC Initiative was launched in 1996 by the IMF and World Bank,
with the aim of ensuring that no poor country faces a debt burden it
1 The least developed countries (LDCs) are a group of countries that have cannot manage. Since then, the international financial community,
been identified by the UN as “least developed” in terms of their low including multilateral organizations and governments, have worked
gross national income (GNI), their weak human assets and their high together to reduce to sustainable levels the external debt burdens of
degree of economic vulnerability. the most heavily indebted poor countries.