Daniel Runde, of the Washington-based Center for Strategic and International Studies (CSIS), has just lobbed a firecracker into the debate over the future of aid and development. Now is the time, he says, for donor countries to shift their focus away from alleviating poverty. It is time, instead, he says, to concentrate on helping developing countries reach a position from which they can end poverty and deliver social goods for themselves.
In the latest paper from CSIS, Combating Global Poverty, Runde looks at some of the ways the world has changed over the past 20 years. In that time, some developing countries have managed to emerge from poverty, and more domestic resources have become available, including in much of sub-Saharan Africa. But, he argues, donors and the aid community really have not come to grips with the new situation.
“We are a minority shareholder in the business of development,” he told a meeting at London's Chatham House on 5 December. “Some of it is about oil, gas and mining revenues - we're going to get a lot more of that. Some of it is about an emerging middle class in Africa which is paying taxes - we are going to see more of that. And we're seeing more companies participating in the formal sector. There's going to be a lot more of this kind of money available. So the role of assistance and expertise is going to change. It's not going to be about the most money on the table but about the best ideas, the best solution to a problem.”
The help that is needed now, Runde thinks, is in the fields of economic growth and governance. At the moment, these areas receive a very small part of the aid budget from his own country, the US. What little money is available for growth and governance goes largely to Afghanistan and Pakistan, where the US is engaged in major nation-building efforts; very little is left for the rest of the world.
Far more resources currently go to health, education and other projects geared towards what his report calls “the delivery of public goods.” With continued pressure on budgets resulting from the global financial crisis, these large-scale aid programmes to support the delivery of basic services will be increasingly difficult to justify, the report argues.
While the report endorses the building of democratic institutions, it focuses on more mundane aspects of governance.
There is a “tendency among donors to view programmes aimed at building democracy (ie, the political process, strengthening of parliaments, elections, etc.) as the same as programmes improving governance… To be sure, democracy and strengthening the democratic process is part of the puzzle, but donors often focus on these areas to the detriment of the governance issues that most impact growth,” the CSIS report says.
Going forward, Runde says there should be more focus on issues such as tax collection, commercial law, contract enforcement and secure land tenure - matters he describes as “not really very sexy - it takes a very long time to see results, it's hard to measure, and it's working on a lot of plumbing issues that are not emotionally compelling and are hard to generate a political constituency for.” Still, they are very important in terms of making governments work better.
These ideas were greeted politely at the London meeting, but with considerable reservations, with many attendees saying the links between economic growth, good governance and poverty reduction are not as obvious as they might seem.
Sabina Alkire, director of the Oxford Poverty and Human Development Initiative, says poverty and deprivation is about more than just low cash income. She points out that economists Francois Bourguingon and Stefan Dercon found a significant relationship between economic growth and people who live on less than a dollar a day, but they found no little or no correlation between growth and any one of the non-income Millennium Development Goals, such as child nutrition, girls' education or the number of children in school. “I am an economist,” she says. “I was trained as an economist to expect that they would be associated, so this is a surprise.”
Claire Melamed, who leads the Growth, Poverty and Inequality Programme at London's Overseas Development Institute, raises the tricky issue of China, the country which she says has done more than any other in terms of reducing income poverty. “Clearly the forms of governance in China leave enormous amounts to be desired in terms of our normative views of good governance... and yet the Chinese state is obviously enormously effective in terms of being able to do some of the things that we require states to do.”
Window of opportunity
Runde remains convinced that the move away from an emphasis on poverty is an idea whose time has come, with the High Level Panel on the post-2015 development goals recommending the inclusion of targets on both livelihoods and governance.
“There is a political window, very much driven by the UK. But also there is UN cover for this conversation,” he said. “So, dollars to doughnuts, we are going to have some sort of offialized MDG 2.0 on governance, and there's going to be a big window for the donor community to think more strategically about this, as a result of its being blessed by the UN system.”
Melamed is not so sure about that. “There is a lot of opposition within the UN system,” she said. “One can imagine who that comes from. The negotiation is a state-driven process, and it's not very hard to see which governments might not be so keen as perhaps the UK and the US on the idea of a governance goal... We certainly shouldn't see this as a done deal by any means.”
Meanwhile Stephen Brandon, who has made his career in the private sector, but has a long-standing interest in development issues, sees problems at a practical level. He told IRIN, “Even if there were a consensus among the researchers and the policy thinkers, and it was bought into by the governments that drive the official aid, you still have to get on board the people who are involved in raising funds in the private sector. And that includes both at the corporate level and on the street, and you have to get the people who are actually going to be in the front line, working. There's probably a whole pool of people for whom now governance is a recognized problem, and something they would like to see fixed, but how many are willing and able to go and make change to governance? I really don't know.”
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