Bridging the divide

Development Policy12 Sep 2011Anthea Mulakala

In April 2011 the Development Assistance Committee (DAC) of the OECD released its statement “Welcoming New Partnerships in International Development Cooperation.” The main objective of this statement is to forge a closer partnership between traditional donors and new development actors, particularly non-DAC countries, such as China and India whose footprint on international development cooperation is increasing in size and impact. The statement was followed by an enhanced DAC Global Relations Strategy (June 2011) to reach out to these new actors. Clearly it will be a big win for the DAC if elusive cooperation partners like India and China accept the invitation and enter the Aid Effectiveness tent, following the example of Korea, the host of the Busan High Level Forum on Aid Effectiveness (HLF4). Whether they will do so is the subject of much speculation.

Over the past year, The Asia Foundation in partnership with the Korea Development Institute (KDI) has convened a series of dialogues on Asian Approaches to Development Cooperation to discuss the experience and perspectives of six Asian countries: China, India, Korea, Malaysia, Singapore, and Thailand. The dialogues, involving development cooperation officials and policy analysts, from each country, reveal intriguing similarities across these countries on the philosophy, purpose, and modalities of their assistance. They also provide insight on the relevance of current international aid frameworks for their approach to development cooperation and whether donor alignment around an agreed set of principles is desirable or possible.

Outcomes from the series suggest that it is unlikely that Asian donors currently outside the tent will respond to the overtures to welcome them in. Fundamentally, Asian countries conceptualize development differently from traditional donors. This largely stems from the following:

  • Their experience of being both aid recipients and aid donors — often simultaneously — often creates an aversion to using the donor-recipient dichotomy. “Aid” is rarely used to describe Asian cooperation partnerships and most countries do not consider themselves donors.
  • Millennium Development Goals (MDGs) are not often used to describe either the goals or indicators of development cooperation in Asia. Rather, Asian countries in many cases tend to focus on mutual benefit with partners, respond to partner country requests, and emphasize shared and sustained growth.
  • A more explicit linking of development cooperation with foreign and economic policy objectives, but with fewer policy conditionalities for cooperation partners;
  • Many Asian nations view the notion of development as an investment rather than an altruistic contribution. Development is viewed as more than aid, encompassing trade, investment, and technology as part of the cooperation equation.

Cooperation modalities and sectoral preferences are also dissimilar between Asian countries and traditional donors. Asian countries prefer interest free loans, concessional loans through Export-Import banks, export credits, and other hybrid forms of development finance to provide project support usually to economic infrastructure investments. Technical assistance and training in or by the Asian country is also a significant cooperation modality, particularly among smaller countries like Malaysia and Singapore. These preferences are in contrast to traditional donors’ use of grants and program aid to support social sectors and governance-related programming.

Given this gulf in philosophy and practice, it is perhaps not surprising that many Asian donors have an aversion to adopting aid effectiveness frameworks and principles that they did not conceive. Amid the complex aid architecture with differing bodies focusing on different issues and development paradigms (MDGs, OECD/DAC, G20, UNDCF, South-South Cooperation Forums), Asian countries struggle to identify which, if any, of these bodies align with their interests. Korea — an Asian donor and a member of the DAC since 2010 and host of the Busan HLF4 — holds a unique and potentially pivotal role in finding convergence between diverse actors. The Korean government has made explicit its commitment to a new global compact for development cooperation which is inclusive of increasingly influential countries outside the DAC and which links the UN narrative of MDGs with the G20 narrative on sustainable and inclusive growth. Though Korea’s development approach is more akin to those of its regional neighbours than its DAC counterparts, it has taken the bold step to influence development practice and thinking from inside the DAC tent. Some common ground is emerging. For example, China currently participates in a China-DAC Study Group and has released a White Paper on foreign aid. India has announced plans to establish a development agency. Neither country is interested to join the DAC, however.

Perhaps the greatest prospects for alignment will come from partner/recipient countries and the principle of country ownership. The diversity and complexity of aid, while straining national aid management systems has also expanded opportunities for developing countries. In Sri Lanka (a recipient participant in the Asia Foundation/KDI dialogue series), traditional aid programming is declining while non-traditional development finance is rising. The Sri Lankan government’s desire for fair, non-extractive partnerships that promote sustainable results and non-political interference is increasingly met from non-traditional partners like China and India. At the same time, the government wants to drive its own development agenda and manage its resources from all channels. Asian cooperation partners, alongside traditional donors, are encouraged to make their country strategies for Sri Lanka explicit and transparent so that the government can match donors to projects according to its preferences. The voice of partner countries at Busan could play an influential role on Asian country perspectives on alignment.

HLF4 advocates for a new paradigm and new partnerships in international development cooperation. With Korea as its host, HLF4 has already gone farther than previous forums to expand the space for new actors and their approaches. Space however does not guarantee consensus. If traditional donors are hoping that China and India will follow Korea’s lead and embrace a set of Busan principles, they may be disappointed.