DEVELOPMENT: The Future of Cooperation Hangs in Balance

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Eckhard Deutscher*

Security affected all areas of policy-making in the twentieth century; in the current century, development will. Communication, therefore, needs to make clear what development cooperation is really about in a fast changing world.

But the existing global aid system does not reflect the degree of change in this world. It does not take into account the pressing fact that the global balance is shifting rapidly towards emerging economies. So, the future of global cooperation and development lies in more multilateralism and less bilateralism.

These are some of the headlines of ten theses the outgoing Chair of the Development Assistance Committee (DAC) of the 33-nation Organisation for Economic Cooperation and Development (OECD) based in Paris has formulated and placed at the disposal of IDN-InDepthNews and Global Perspectives, monthly magazine of international cooperation.

Here DAC Chair's ten theses:
1. In the twentieth century, security affected all areas of policy-making -- in the twenty-first century, development will. All major challenges for human society in this century -- from climate change, desertification and water, to migration and food security -- can only be met if their development dimensions are being dealt with. All areas of government policy will increasingly be concerned and have to internalise these dimensions. Policy coherence for development and global public goods are central to the ability of governments to deal with these challenges and to increase the quality of policy making. Traditional donor agencies need to leave their traditional comfort zone and accept to lose some control -- this is the price for the ability to leverage aid resources and gain influence on non-aid policies that have a key impact on development prospects.

2. Communication needs to make clear what development cooperation is really about. Support for development will only be sustained if the public understands what development cooperation means and what the rationale for development policies are. It should be clear that development cooperation is no charity, but a strategic investment to make development happen – as a matter of enlightened self-interest beyond 'mere’ solidarity. Technocratic "development speak" fails to communicate effectively and relate to political and public audiences. It needs to change, as it continues to hold back progress and reform towards better development policy and stronger results.

3. The existing global aid system does not reflect the degree of change in this world. It continues to work in a way that is too expensive, complex, slow and paternalistic. The times of donor-recipient schemes are over. Development co- operation can only remain relevant if partner countries see donors as trusted and committed partners and co-investors in their development efforts, where they are the main stakeholders and decision-makers. Whether donors will be seen as such trusted partners will depend crucially on meeting international commitments, without diluting ODA, as the most immediate and basic gauge of donor credibility.

4. The global balance is shifting rapidly towards emerging economies. The divide between the traditional aid system and development actors from emerging countries needs to be bridged. So far, there has been too much focus on what differentiates their approaches at the expense of concentrating on results and combined impact. Emerging economies need to be on board for the international development effort to succeed. The DAC needs to be unambiguously open to and welcoming of their participation, contribution and ideas – and indeed to those of other key development stakeholders beyond government.

5. The future of global cooperation and development lies in more multilateralism and less bilateralism. There is a natural bias towards bilateralism that everybody has to come to grips with: re-nationalising aid appeals to notions of national control and policy preferences; but it risks rendering the instrument increasingly unable to deal with the development challenges it is meant to address. A trend towards stronger re-nationalisation of development policy is closing the eyes to the scale and complexity of the global challenges that make internationally coordinated and multilateral approaches ever more important. Donor countries should define a policy and base their choice for bi- or multilateral aid on a systematic analysis of how to best achieve development objectives.

6. Demonstrating results needs partner countries. The results agenda will be a defining priority for donors for years to come -- but it will only be meaningful for development if donors work closely with partner countries in documenting and demonstrating the impact of aid towards development progress. External development partners must appreciate that results have to be the responsibility of partner countries. They are only credible as country-owned results, and cannot be micromanaged by others. Crucially, working jointly on results, and through the local systems that underpin the broader development process, will be central for making the transition from aid to development effectiveness.

7. Donors will neglect fragmentation at their own peril. Fragmentation is a problem of donor inconsistency that partner countries which are most dependent on aid are made to suffer. But donors bear the ultimate risk: loss of relevance due to resource inefficiency and reduced clout. The EU is best placed to move decisively to reduce fragmentation and enhance impact and relevance of their aid. Instead of pursuing 27 plus 1 development policies, EU Members should bundle and concentrate resources and competencies at the European level, including with the long-term creation of an 'EU Development Bank'. This would give the EU and its Members the leverage commensurate with their status as the biggest donor, and radically reduce the problem of fragmentation.

8. Division of labour is a key to reducing transaction cost in the short term and institutional complexity over the long term. However, this is not just donor business, but needs to include partner countries. Moreover, the ability to divide labour will depend on such labour being comparable and conferrable. Modalities matter. Where delivery of aid is linked to individual donor mechanisms or conditions, the feasibility of progress will be scant. Conversely, delivery through local programmes and systems will be key for moving decisively on division of labour. Again, the scope for action and for practical experience in this area is greatest in the EU, in compliance with the EU code of conduct.

9. Better information is central to addressing the complexity of aid architecture. A grand redesign effort is neither feasible nor the right approach, as it would address a dynamic problem with a static response. In a rapidly changing world, evolution and change to the development system are inevitable. The best chance to address the failure of dealing with a mushrooming architecture is to equip market participants -- donor country governments and citizens as investors, and partner countries as clients -- with transparent information on performance and results. The system will change when this information will begin to be used for taking well-informed decisions as individual donor-investors or recipient-clients.

10. Aid is a strategic investment -- development cooperation needs to adopt more of an investment mindset. This means a stronger emphasis on innovation, on taking risk and piloting new approaches. It also means focusing on maximising returns in terms of development results -- partner countries are tired of "receiving aid". Development partners need to wake up to the high opportunity cost of attempting to maximise risk control: the consequence is significantly diminished returns on aid resources. Sharing risk is a basic principle of partnerships, and as co-investors and minority stakeholders, donors need a higher risk tolerance. Eventually, partner countries will always bear the greatest risk, as they have the most at stake in the development partnership. If donors are serious about results and maximising returns on aid investments, they need to act more in line with this ambition.

*Eckhard Deutscher was Chairman of the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD).

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