Development: This time let's get it right!

Secretary-General of the OECD
Page 3 

This is the year of development! The Monterrey Summit on Financing for Development, the OECD Ministerial starting 15 May, the African Initiative of the G8 Summit and the World Summit on Sustainable Development in Johannesburg: all are largely focused on poverty reduction and effective development assistance.

This 10-point strategy could help them: 1. Create a framework for free and equitable international trade. 2. Promote mutually beneficial flows of foreign private investment. 3. Establish a better partnership, a clearer purpose and a greater coherence in development aid. 4. Increase the volume of aid. 5. Meet the problem of mounting debts. 6. Make aid administration more effective. 7. Redirect technical assistance. 8. Slow the growth of population. 9. Revitalise aid to education and research. 10. Strengthen the multilateral aid system.

I wish I could take credit for this solid strategy, but I cannot. It is drawn from the Report of the Commission on International Development entitled “Partners in Development” and was delivered to Robert S. McNamara, then president of the World Bank, in 1969! It sounds familiar because many of these ideas are present in today’s “new” development strategies, including the importance of NGOs and foreign direct investment. The report clearly remains valid. The same commission proposed that developed countries should increase their Official Development Assistance (ODA) to 0.7% of gross national income “in no case later than 1980”. By 2000 only five countries had attained the goal. There are no doubt examples of good aid programmes, but how effective have most of them really been? Not very, which is why development remains high on the global agenda.

In Sub-Saharan Africa, incomes per capita rose in the 1960s and 1970s, but have fallen back ever since to some US$80 above their 1960 level (at 1995 prices). Even counting population growth, this record is dismal. Where have we failed in our development strategies? Many development advocates today prescribe more aid, even doubling it to some US$100 billion. If we go down this path, we should make sure that this time we do it right. For that, we have to learn the lessons of history. One lesson is to avoid the trap of “conscience money”, which is how I would characterise much of our aid over the past 40 years. When I was minister in the Canadian government of Pierre Elliot Trudeau, the cabinet spent little time discussing the quality of official aid. Our main worry was how our effort, given the 0.7% target, compared to the performances of other countries. Trudeau was passionate about development, but when a nation’s aid contribution is measured against its GNP, and not the aid’s effectiveness, it becomes conscience money, not development finance. We might claim we have “done our part”, but have we? In 1988, I worked on a parliamentary committee examining Canada’s aid programmes, including in relation to national suppliers.

We published a comprehensive, but little-known report, appropriately called “For whose benefit?” This provocative and important question still needs to be answered. One of our recommendations was that Canada adopt a charter setting forth goals for our development assistance: to help the poorest countries and people in the world; to work always to strengthen capacities of developing countries to solve their own problems in harmony with the natural environment; to ensure that development priorities always prevail in setting objectives for the ODA programme. Well-intentioned declarations like these abound, but after a look at the record, I admit to a little cynicism. Nevertheless, there is good reason to believe a fresh start can work. Since 1969 a global economy has emerged where trade and investment can deliver immense benefits to the developing world. There are tremendous opportunities for business in developing countries, provided the conditions are right. ODA can be concentrated on achieving those conditions by nourishing human capital and institutions of good governance. This in turn will attract FDI at a pace unimagined 30 years ago.

I am convinced that the leaders of our international institutions sense a crucial opportunity before us. The Millennium Development Goals focus aid donors on building the human foundations for development. Jim Wolfensohn at the World Bank is promoting a comprehensive development framework for effective ODA, beginning with “good and clean governance”. Mark Malloch Brown, heading the UNDP, has demonstrated the leadership needed to move development to a new plateau. And the WTO’s success at Doha underlines the importance of making multilateral trade and investment work for development.

The title of the first chapter of the 1969 report was “A question of will”. I would exhort our political leaders to show that will, if they are serious about reducing poverty and promoting development. In that line, I would like to offer a provocative, even radical, suggestion: channel all your financial aid through multilateral development institutions, especially the World Bank and regional banks which have demonstrated capacity. The benefits would be many: substantial savings on national bureaucracies that administer bilateral aid; reduced burdens on developing countries of complying with complicated donor requirements; enhanced effectiveness of aid; reduced political pressure on governments to tie aid to satisfy national suppliers, etc. The Development Assistance Committee (DAC) could bring donor countries together to monitor the aid programmes of multilateral institutions and co-ordinate much-needed technical assistance. Another step would be for donor governments to appoint a senior minister for development, to demonstrate priority and make development happen. The UK is a good example.

More effective aid is in the interests of us all. We must put the days of “conscience money” behind us.

©OECD Observer No 231/232, May 2002

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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