1. Introduction – why does aid need a governance system?
The economic development of nations and poverty reduction within them are essential parts of multiple contemporary objectives of global cooperation. Climate change, combating terrorism, and global trade are issues to which economic development and poverty reduction are useful if not essential dynamics.
Since Truman’s 1949 speech signalled the beginning of ‘the development project’, there has been a very clear North-South flow, primarily bilateral and governed by national donor priorities (Parpart & Veltmeyer, 2004). The issues caused by bilateral flows are that, if economic development and poverty reduction represent the genuine intentions of aid, they compete with, displace, and distort one another and national systems of provision (Easterly, 2006 among others).
When discussing the potential benefit of international cooperation, one must assume shared goals – or at least an agreement on the values in a transaction of goals - as a pre-requisite. That is to say that both parties need not agree on an objective, but they must at least agree on the value of that objective in respect of an objective of their own; a financial or non-financial price for exchange. Shared, here, means both between donor countries and recipients and amongst donor countries themselves. The shifting power dynamics discussed in Gridlock have fundamentally altered the degree to which these goals are shared, particularly in the last two decades. The objectives of Western donors were previously valued far more highly by recipient governments in the absence of alternatives. The introduction of new donors and new means of fundraising with less restrictive conditions has resulted in a reduction in the relative value of Western money in an aid transaction (Purushothaman, 2017).
Taking rhetoric at face value, however, donors and recipient governments want to see sustainable improvements in health and education; improvements in nutrition and the ability of people to cater for their basic needs; reductions in carbon emissions and increases in the use of greener technologies; an improvement in the role of women in society and a reduction in all inequalities, and a reduction in conflict and the causes of conflict, including terrorism, amongst other objectives. Some bilateral donor mission statements include:
We partner to end extreme poverty and promote resilient, democratic societies while advancing our security and prosperity (USAID, 2018).
And:
We are tackling the global challenges of our time including poverty and disease, mass migration, insecurity and conflict. Our work is building a safer, healthier, more prosperous world for people in developing countries (DFID, 2018).
The effective pursuit of these objectives requires international cooperation.
Global governance of development aid allows for the leveraging of resources to target aid effectively towards these ends. It allows for transparency, minimising the risk of free rider problems. It reduces the chance of rent-seeking through aid and the expropriation of natural resources. Perhaps most importantly, in utilising a common framework for the targeting of aid, it increases the chance of aid addressing the more structural constraints to its effectiveness (de Haan, 2009).
2. Is the governance system around aid effective?
2.1 The successes
The first step in solving any problem is recognizing there is one (Sorkin, 2012)
A clear success for the global governance of aid is in recognising that it is important. In 2003, the Rome Declaration on Aid Harmonisation was endorsed by 40 key donors and 28 of the largest aid recipients and aimed to increase aid effectiveness in the pursuit of the objectives outlined above through better international coordination. The Paris Declaration followed in 2005 in which two key pillars – alignment of objectives through using local systems and harmonization to avoid duplication – set the framework for more effective global governance of aid. This was reaffirmed and extended in 2008 with the Accra Agenda for Action, which included more countries as signatories. Finally, in the Partnership for Effective Development Cooperation in Busan in 2011, the commitments made in previous high level fora were once again committed to paper.
One of the primary outcomes of these aid effectiveness fora has been an increased drive towards the measurement of results. However, this has not had a significant impact in terms of large scale economic development (Deaton, 2015). Results measurement has been focused on easily evaluable solutions – pills and products, rather than approaches which acknowledge the complex realities of developing economies and the realities of poor people (Taylor, 2013). The result has been that instead of donors pursuing pet projects with their own objectives, there is a perception of objective and acontextual truth meaning donors all rush to do the same thing which the latest randomised control trial has branded ‘effective’. The result is no more coordinated or focused on sustainably addressing the structural and institutional causes of poverty but a commoditised distortionary short-term drive for politically saleable impact.
In sum, these aid effectiveness focused fora have disappointed many with the degree of change they have been able to affect (Hill et al, 2012; Martini et al, 2012). One area in which an important clarification is necessary, is in the sphere of relief (as opposed to longer term economic development), where there have been notable successes in a more effective form of global governance. Here, the disaster relief effort after the 2004 Tsunami in Asia and the Haiti earthquake in 2010 were important moments in emergency relief efforts (Akl et al, 2015; Weisenfeld, 2011; VanRooyen, 2013). Widely heralded as abject failures, donor inputs were slow, duplicative, worked around national systems, and in some cases were destructive. The links between delays in delivery and the cost to life is far clearer and more immediate in emergency relief programmes when compared with economic development programmes. As such, there has been a far greater emphasis on coordination of relief efforts. UNOCHA and CERF coordinate action and funding respectively and aim to ensure the effectiveness of intervention. This agenda is reflected in the Inter-Agency Standing Committee’s Transformative Agenda.
2.2 The failures
In short, the failures arising from a lack of effective governance - if one makes the purposeful misassumption that the objective of development intervention is solely economic development and poverty reduction - have be too numerous to count. Choose a country, choose a sector, choose an objective, and you will find numerous donor and NGO programmes not collaborating to achieve change, but competing for it, trading off genuine transformation for short term politically or personally astute impact. Neighbouring regions will be tasked with creating jobs or raising incomes through competing for the same share of an export market. Often the lack of understanding of an individual donor can lead to a cognitive dissonance whereby mutually exclusive objectives are simultaneously and self-destructively pursued (Leiderer, 2015).
2.3 Future challenges
The failures of the aid governance system look set to continue. The realpolitik of aid means that there are increasing pressures for reduced coordination which belie the political rhetoric of the aid effectiveness agendas. As examined elsewhere in this paper, the influence of parties with non-developmental agendas in developing countries continues to grow which will only serve to exacerbate the lack of coordination, or in fact competition, between donors in pursuit of their objectives (Grindle, 2001; Gibson, 2005).
The primary source of ‘hope’ comes perhaps from a more honest dialogue on development. In recent years, more countries have begun to identify their self-interest more overtly in order to win domestic political support, captured in microcosm by the rightward shift in British and American politics moving from “not balancing the books on the backs of the world’s poorest” to “America first” and “trade not aid” . Migration and trade have moved up the agenda of justifications for aid over altruism. This should at least provide a more transparent discourse for developing countries to negotiate their engagement with international donors, but it is likely that significant gaps will emerge in the groups of people and needs that are addressed.
3. What are the causes of ‘Gridlock’ in overseas Aid?
3.1 Multipolarity: A fragmentation of power and viewpoints
Multipolarity in the aid world has led to a further fragmentation of objectives. Previously, the benefactor got to dictate to what ends and under what conditions aid was given. It is now increasingly the case that aid donors stand to gain more from aid than the recipient governments that permit them the license to operate and it is now a process of negotiation as to whether they will be allowed to do so. The well-publicised impact of aid on the education sector which is a source of significant political capital for donors is not born out empirically. Developing countries spend an average of 4% of their budgets on education and aid to education makes up just 4% of that figure (Taylor, 2016).
The downfall of the Washington Consensus would not have been so rapid if it were not for countries like India and Ethiopia seeing the restrictive conditions imposed as less attractive than the soft capital offered by new players such as China in exchange for minerals and other potential and real commodities (Woods, 2008). To traditional, Western/Northern donors, aid (in theory) buys political capital in terms of liberal and diaspora votes, it contributes to a hearts and minds exercise against terrorism, it suppresses the demand for immigration and asylum, and it buys international good-will and credibility. There is then, of course, the rhetorically dominant objective of moral obligation (Grindle, 2001). In the post-crash climate, these objectives are all now couched in an austerity discourse of ‘value for money’, meaning whichever of these objectives you are seeking, it must deliver relative to its financial cost (Jackson, 2012).
It is not just bilateral donors, or bilateral funds funnelled through multilateral institutions, which have added to the diversity of interests. New sources of philanthropic or socially-oriented funding have emerged in recent years, each of which comes with its own set of objectives. This further alters the relative importance of interests between traditional donors and recipients, who now have alternative avenues for raising capital, but also adds a further set of defined objectives which may limit the effectiveness of development work by other institutions. Large sums of money in development are now controlled by charitable foundations and patient capital, the majority of which is geared towards a specific objective such as the eradication of malaria (Jackson, 2013).
So there is a multipolarity of interests between donors and recipients which impedes coordination. However, there is a perhaps more pernicious issue when it comes to coordination between donors caused by individual donor’s divergent objectives in accordance with those outlined above. While donors might agree that a disaster relief effort requires coordination for effective delivery to ensure aid is delivered to the right people in the right way as quickly as possible, this conflicts with individual pressures within donor countries and, in the majority of cases, this self-interest leads to destructive action. If a given government is under pressure from their electorate to act more quickly in an emergency situation, a measured and coordinated effort does not have the same impact as branded cargo ship depositing tons of food, shelter, or medical supplies (Kripke, 2005).
And so it is with longer term development efforts. A long-term coordinated relief effort to work through national systems to improve education on sexual health together with demonstrating market opportunities to local prophylactics manufacturers can be undermined overnight by the need for an election good news story in a single country, resulting in the direct and free one-off supply of 23m condoms on an African market place (DFID, 2013). A coordinated donor effort to sustainably develop a production and distribution system for anti-malarial bednets in Tanzania collapsed based solely on the efforts of certain donors seeing a moral obligation to deliver nets to all for free (England, 2007).
Coordination is fragile and can easily be disrupted by the multipolarity of interests.
3.2 Harder problems: increasing complexity of key dynamics
Poverty reduction has always been a ‘hard’ problem, but it is only recently that development has begun to recognise it as such. Economies are complex, and the causes of poverty within them even more so. However, the technocratic approach to development of the last half century has attempted to simplify problems into a range of predefined and prescribable solutions (Ramalingham, 2013).
Just as in the recent recognition of the need for better coordination of aid, here too, there has been a recent increase in the recognition amongst donors that problems are ‘hard’. Again, the first step towards fixing a problem is acknowledging it and, as such, one could argue that the problem has actually become ‘softer’. Complexity discourse has gained traction in recent years and there are some concrete commitments to programming that is cognisant of it, addressing these hard problems with flexible and analysis-driven approaches (DFID/USAID, 2016).
That said, the competing interests outlined above serve to confound any ambition to achieve systemic change in poverty reduction. The cognitive dissonance of individual donors, quite aside from the lack of coordination between them, serves to eliminate the potential for addressing the newly acknowledged ‘hard’ problems in any meaningful way (Taylor, 2013). One donor programme will attempt to build up support systems for building governance capacity within schools while a separate programme from the same donor - in the same place, at the same time - will be directly parachuting in experts to selected schools to ‘fix’ the problem (Hargreaves et al, 2014). Hard problems are anathema to the necessity for politically expedient simple messages.
3.3 Institutional inertia
In the same way as with other areas of international cooperation, aid institutions have not necessarily responded to changing contexts. The institutions and the power structures that govern them, while logical at the time of construction given the challenges of the time, can be seen as anachronistic. These structures continue to influence the current state and remit of the organisations. It is difficult to determine what the World Bank, IMF, OECD, IFC and WTO would look like if they were set up today with a more equitable or representative power structure and what the impact of that would be on development (Krueger, 1997; Ramamurti & Doh, 2004; Vestergaard & Wade, 2015). One could, of course, question whether they would have been set up at all. Are there sufficient shared interests to demand global coordination or is trying to improve it simply a legacy of its creation in a time when shared interests were greater?
It would appear as though a turn towards shared interests is imminent. Leaders of the World Bank, IMF, and WTO have recognised that inequality is both inherently undesirable and a threat to the dominant economic political and economic structures of our time. They have also recognised that their attempts to address the problem have been unsuccessful, while stopping short of acknowledging their role in its creation (Elliott, 2016; Sahn et al, 1999).
The role of institutional inertia in addressing global problems is clearly impactful but it’s also highly explicable. Global institutions charged with making progress in development haven’t changed, but that is not as much through a failure to modernise as it is an unwillingness to do so (Milner, 2005; Chorev & Babb, 2009) .
3.4 Fragmentation in institutional fora
There is a proliferation of institutional fora but that is not the primary reason for the absence of effective global governance in the aid arena. These fora, to some degree, represent groupings of interests among nations. Indeed, closer alignment of interests amongst a grouping reduces the potential for individual interests to reduce the effectiveness of that institution. While nationally based, the Disaster Emergency Committee in the UK is a good example of how a representative body has the power to govern action more effectively when interests can be grouped (Burkle & Hayden, 2001). The inertia of the UN agencies on the other hand, demonstrates how too diverse a set of interests can result in ineffective governance (Balcik et al, 2010).
3.5 And…incentives
While Hale and Held break the issues down further, at a high level Gridlock can be explained by two factors – the incentives to change and the power to act on those incentives. Fragmentation and complexity reduce the power of reformers to affect change. Institutional inertia is largely driven by the absence of incentive for change, and multipolarity captures both; an increasing variety of actors with different incentives but with an increasing degree of power to act so as to realise them.
While multipolarity examines the forces pulling in opposite directions leading passively to uncoordinated behaviour in the provision of aid, here, the positive incentives to contribute to and adhere to a more effective global system of governance for aid are examined. If coordinated action is taken to develop a national system of provision then one donor circumventing that has the potential to make the whole system collapse. There is no effective institution operating in this space and that is because the true consequences of a lack of cooperation and not born by any of the contributing actors.
While the lofty goals of global prosperity, reductions in instances of terrorism etc are acknowledged, the short-term personal and institutional incentives mean that if development is not achieved due to a lack of cooperation, the consequences are externalised. No individual donor or key decision maker therein will suffer as a result poor development outcomes. They might suffer if they don’t keep budgets tight or get the right headline at the right time, but true transformation is not a key performance indicator for development actors.
Coordination within any given system arises from the incentives of those involved to achieve it. Members of a business membership association will seek to cooperate rather than compete when they can derive private benefits from coordination which they could not derive individually. Here, mistakes are costly to those seeking coordination. In international development, mistakes cost the rhetorical objects of development – poor and disadvantaged people - far more so than the donor. The donor’s incentives outlined above exist in the absence of sustainable large-scale change. In fact, many of donor incentives are aligned with not delivering large-scale sustainable change, which might be less visible and take longer to achieve.
4. Conclusion: The implications of Gridlock
4.1 For institutions
The long-term and esoteric objectives of global cooperation are so intangible that they can be at once espoused and annulled. The implications for existing institutions are, therefore, none. Until such a time as skepticism and accountability to rhetoric in long-term perspective takes the place of a moral glow in the eyes of the general public to whom institutions of global cooperation (or components thereof) are ultimately accountable, these institutions are unlikely to overcome the current gridlock. Discursively, the desire for systemic change, acknowledging of the ‘hard’ problems that development poses, has begun to emerge. However, the time when the necessary changes in behaviour required to bring such change about are accepted is a distant goal.
4.2 For countries
The key implications of the current gridlock are for developing countries. If there are new and alternative sources of finance available, economies are growing, and it is clear that the paradigm of the last half century has not delivered the sustainable poverty reduction and transformation at scale that it promised, then why expose your government, your economy, and your people to potentially damaging consequences. The terms of the trade in the aid transaction are changing.
For donor countries the implications, in the absence of greater accountability for discursive objectives, are few.
4.3 For different social groups
The real and tragic consequences come when examining the impact on different social groups. Some of the world’s most disadvantaged people live in states where they are politically voiceless and where politicians have no incentive to cater to their interests. Good development purposively selects the systems in which these excluded individuals operate and tries to improve their position within them. As David Booth argues:
The assumption is tacitly made that most countries already have development-oriented political leaderships...that assumption [is] untenable (Booth, 2012; iv).
While trade and communications are increasingly globalised, concepts of morality remain culturally defined. Indeed, if modern concepts of morality espoused within aid today were applied retrospectively within donor countries, many issues, such as gender equality and the protection of the vulnerable, would be found wanting (Nardin & Mapel, 1992). One cannot, therefore, rely on a shared moral compass to deliver the pro-poor development sought by donor countries when power shifts solely towards national government priorities.
If aid, therefore, cannot be not the driver of social inclusion as its power reduces, we cannot expect national government policies to take its place. The key to ensuring the future of the vulnerable within society is demonstrating the effectiveness of aid in addressing their needs in a sustainable fashion. This can only happen through a change in approach to one with global cooperation at the heart of it. The approach must recognise and respond to the complexity of the problem at hand including the diversity of incentives of actors and institutions involved in its creation and alleviation.
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* This article was originally posted on the Springfield Centre website. Please cite the article as Taylor, B., 2018, Gridlock: that Failure of Global Governance for International Development, The Springfield Centre, Durham.