The Donors’ Dilemma: A Wrap up of the Debate

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This column by Andy Sumner and Tom Kirk is the last chapter of Global Policy’s e-book, ‘The Donors’ Dilemma: Emergence, Convergence and the Future of Aid’, edited by Andy Sumner. You can read the other chapters here or join the debate on Twitter #GPfutureofaid.

The challenge laid down to contributors to Global Policy’s first e-book began, in the editor’s introduction, with an optimistic observation that the number of aid dependent countries is falling and that aid, as a portion of recipients’ GDP, may be becoming less and less relevant. Furthermore it was speculated the potential post 2015 development goal of ending extreme poverty, however defined, could be a reality by 2030 if not before. At the same time, however, it was noted such trends leave aid donors with a double dilemma: what do donors do if the remaining poor are left in countries in which aid is insignificant compared to GDP, such as India or Indonesia, or in weak states within which the use of aid in meaningful and productive ways is a tough call, such as Afghanistan or DRC.

How did commentators respond? The e-book’s contributors chose to emphasise the context these changes are taking place in, the cooperative mind-sets required to address issues that transcend borders and the practices that are already being explored to keep aid, or development cooperation more broadly, relevant in the face of such changes. Nonetheless there was a discernible sense that aid, if it even makes sense to continue to call it ‘aid’, will have to work on two interconnected levels: The first is concerned with global threats that affect everyone regardless of where the risk originates; the second is at the local level within countries that are likely to remain poor for the foreseeable future, such as conflict affected countries, or those that, despite great advances, face rising inequalities. In what follows we explore how the distinguished and diverse set of contributors suggest aid may be able to work at these levels.

Perhaps the biggest area of convergence among contributors’ arguments is the suggestion that ‘traditional’ aid, meaning Overseas Development Assistance (ODA) or resource transfers has little future and, as Tony Addison and Finn Tarp put it, a ‘quantum leap’ of some kind is required.

This quantum leap could push in various ways. One way would be towards more ‘lines of credit’ as per India’s new aid agency, discussed by Vivan Sharan. Alternatively, and potentially complementary, aid could bolster and support the provision of global public goods (GPGs). As Myles Wickstead suggests, GPGs can be broadly understood as things for ‘which having more benefits everyone, without disadvantaging anyone’. While a focus on renewable sources of energy and a reduction in climate change immediately spring to mind, they also include problems that aid has long grappled with such as the eradication of diseases or design of better techniques for managing shared global resources. To support such a focus, Inge Kaul calls for the elaboration of a theory and practice of ‘global public policy’. Indeed she argues that GPGs are substantively different to current modes of ODA, both in terms of the unashamedly selfish incentives that will increasingly drive their provision and the fairness that international cooperation to tackle complex global issues demands. With this in mind many of the contributors linked the call for a focus on GPGs to a need to reform, or create better, international institutions that more equally represent the interests of all countries. At the same time, however, Jose Antonio Alonso suggested that international cooperation should devise new ways of leveraging resources and incentivising actors within developing countries to address the practices that give rise to global issues.

Yet within the focus on GPGs, to paraphrase David Ritter and Jessica Panegyres, climate change makes the ‘more optimistic scenarios for the future of aid – including those mentioned in this series – redundant’. Indeed, for Asuncion Lera St. Clair, climate change is the phenomenon that should cause development analysts to abandon GDP as a measure of progress and unite with the hard sciences to devise appropriate strategies to mitigate its already evident affects. In search of steps in the right direction, attention was drawn to the policies for adaptation promoted by the United Nations and the finance that is increasingly earmarked to support developing countries struggling to green their economies. Nonetheless, for Jonathan Glennie, much more must be done to generate pools of ‘international public finance’ that can go towards tackling common problems and move aid beyond a narrow focus on poverty reduction. This includes discussing the mutual benefits that rich and poor countries alike could derive from efforts to address climate change. In the meantime, Edward R. Carr argues that aid must become ‘climate smart’ and harness local adaptations if it hopes to offer a bulwark against its effects on things like food production and resource management. In this sense, the contributors understand climate change as requiring both major changes in mind-set at the global level and contextually sensitive solutions at the local level.

At the same time, it was recognised that global collective action raises important questions; namely who should bear the bulk of responsibility and who should lead the charge for change. With respect to climate change it seems self-evident that more developed countries have been responsible for most of the damage done to date; however for transnational issues such as terrorism or pandemics it is harder to attribute cause to one or another party. Furthermore, as Nancy Birdsall highlights, providing GPGs may take a level of infrastructure and technological sophistication that many developing countries do not have. Thus although developing countries may benefit from a focus on global issues in the long-run, they may loose-out when financial transfers are made to those with the capacity to provide GPGs in the short-run. Thus traditional debates over responsibilities and the politics of who receives what are likely to be just as present in the provision of GPGs as they have been in aid’s more traditional forms of assistance.

Similar concerns were shown by those sceptical of current modes of aid’s ability to alleviate poverty, let alone tackle global issues: For example, Jason Hickel reminds us that development is far from a one way process and Karl Muth’s dystopian future suggests that aid will likely continue to provide developed countries with opportunities to extend their influence beyond their borders. Both also highlight the structural impediments to changing the conditions and terms under which aid is delivered. Thomas Pogge argues these impediments can be tackled with institutional reforms which, among others affects, expose the transactions that disproportionality benefit multinational corporations operating in developing countries, address patterns of weak governance that allow leaders to sell natural resources or agree to debilitating loans for little public benefit, and challenge the protectionist trade policies that favour the developed world’s interactions with the developing. Indeed, although critical, these authors share a conviction that the impediments to equitable development have been designed by humans and that, despite the opportunity cost reforms wold impose on global elites, change is possible. Indeed Ravi Kanbur discusses the concept of a global moral responsibility and raises the question of whether this global responsibility is conditioned by the nation state in which the poor live? He then applies the discussion to middle income countries and the World Bank’s policy on graduation from concessional lending.

Calls to reform international institutions such as the World Bank increasingly go hand in hand with discussions of socio-economic inequality. Indeed Dhananjayan Sriskandarajah goes as far as to declare that aid is a manifestation of a world that suffers from spiralling levels of inequality. To have any hope of addressing this it is argued that aid must move away from its associations with charity and embrace a notion of social justice.

For her part, Linah K. Mohohlo suggests poor countries must abandon a view that aid is an entitlement in return for colonial history. However many of the contributors doubt these changes can happen without a radical reform of international institutions originally designed around assumptions of rich countries’ superiority and poor countries’ inferiority. Mohohlo even suggests that the lack of voice poor countries have in institutions such as the World Bank and International Monetary Fund calls their legitimacy into question. More optimistically, Erik Solheim posits that once extreme poverty has been eradicated aid’s next major goal should be relative poverty, including its gender and environmental dimensions. In support of such ideals he highlights initiatives such as the Global Partnership for Effective Development Co-operation that aims to allow a diverse range of actors from developing countries, the private sector and civil society to be heard in international deliberations. He also points to how aid can tackle inequality and get more ‘bang for its buck’ at the local level by focussing on reforming redistributive mechanisms such as tax collection.

To support the move from focussing on poverty to inequality Duncan Green suggests aid must acknowledge the existing obstacles to equitable development. These can be found both within the policies that powerful countries use to gain advantages over weaker ones and in the ‘exoticism of aid’ that directs attention away from the everyday problems of ordinary people. However Green does not shy away from complexity, instead he encourages it to be acknowledged and ways of understanding progress in such areas as governance and empowerment to be developed. This echoes Ben Ramalingam’s discussion of aid’s bias towards to unworkable linear, technical, fixes and the need to understand the limits of outsiders’ ability to impose change. Indeed both suggest aid must focus on creating the space for local adaptations and innovative solutions to complex problems. In this sense they are less concerned with global cooperation and urge efforts to build upon what is already known to work in specific contexts. To create space for local solutions, Shanta Devarajan argues aid must ‘disrupt’ the political incentives that cause politicians to block progressive change. Yet he suggests that to achieve such disruptions more money and better policies are not needed. Rather citizens should be armed with the information that can shift public opinion against, and bring pressure to bear on, politicians. Through the protests and the ballot box, this may force changes in long-run patterns that are detrimental to equitable development. Such arguments follow a growing acceptance among practitioners that aid must work ever more politically if it hopes to tackle the challenges posed by complexity and dwindling traditional aid budgets.

All of which resonates with calls for a clearer narrative and brings the debate to how development ministries should change and the future of multilateralism. For instance, John Podesta points to changing how we think of development. Development is not a zero sum game where goals and targets simply get price tagged and then the expectation is a donor will pick up the bill. The future of aid ought to be framed in terms of opportunities and building inclusive economies rather than as a means to pay for the ill effects of failing to promote shared global prosperity. In keeping with this, Simon Maxwell argues that if aid agencies do not want to follow the Canadian and Australian path to oblivion they need to adapt and building stronger networks across government.

In sum, think perhaps of a horizontal ministry of global affairs or global policy (rather than a traditional vertical ministry or national agencies of foreign aid). It would work across government and be mandated to focus on global issues in a coherent, cross-government way. Think of negotiations and architecture building for GPGs rather than traditional ODA. Think of objectives of supporting equitable global development rather than focusing largely on the reduction of extreme poverty. Think of building fairer global governance rather than post-colonial charity. And finally, think of working catalytically – i.e. politically discrete – rather than simply enduring long running and time consuming discussions of the allocation of likely falling aid budgets. That perhaps is the foreign aid agency of the future.

We’d like to thank all the commentators for their contributions.

Please look out for the complete e-book in the near future.

Andy Sumner, Co-Director, King’s International Development Institute, King’s College London and Editor, 'Emergence, Convergence and the Future of Foreign Aid: A Global Policy Debate'. Twitter @andypsumner.

Tom Kirk is Global Policy’s Online Manager and a Research Officer at the Justice and Security Research Programme at the London School of Economics and Political Science.