Institutions in Development - Introduction

• "Rules of the game in society" that shape relations behaviours and practices, whereas organisations are more akin to the players of the game or "groups of individuals bound together by some common purpose to achieve objectives"
• Douglas North, 1991

Douglas North, 1991

• The role of history
• The wider global context
• The domestic political, economic and social context in the donor country
• The importance of key individuals and "champions" - leaders and staff

In 1990 - around $40 billion

In 2005 - around $315 billion

In 1990 - around $35 billion

In 2005 - $160 billion

In 1990 - around $40 billion

In 2005 - around $80 billion

Continued rising from $40billion to $250billion in 2000 before rapidly decreasing to $160billion in 2002, before rising to $315 billion in 2005

Slowly increased from $35 billion in 1990, where it increased more rapidly since 2001

Remains fairly stable at around $40 billion level until 2004, where it increased to $80 billion

• Harmonisation and coordination among the DAC donors: aid challenged
• South-south cooperation and the rise of non-DAC donors
• Multilateralism under threat (except the WB?)
• The "private sector" in aid: philanthrocapitalism, Corporate Social Responsibility, NGOs, direct giving (peer to peer giving)
• Changes in the "poverty caseload". Poverty n "middle income countries"
• The growing role of religiously motivated aid
• The merging of aid and security
• The emerging role of climate finance

• Consensus: Make Poverty History, MDGs, SDGs, Paris Declaration, international commitments
• Talking the same language: partnership, participation, empowerment and citizenship

"The idea of development stands like a ruin on the intellectual landscape"

Sachs, 1992

• Tied and military aid
• Debt forgiveness
• Commitments vs expenditure
• The growth of "non-traditional aid"
• Definitional issues
• Tracing the flows

Organisation for Economic Cooperation Development

Official Development Assistance

• OECD
• ODA
• OECD started to monitor aid flows over half a century ago
• ODA is a term coined by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure aid. The DAC first used the term in 1969
• Geography of poverty has changed dramatically and so has the finance 
• Countries like Brazil, China, Korea are growing richer and pulling millions of people out of poverty and using their new wealth to help poorer countries
• Blurring lines between donors and recipient countrues
• ODA countries provide $130 billion dollars a year in public development aid
• 7x now flows as foreign direct investment, bank loans and private philanthropy
• Gaining increase focus in private development flows - $307 billion in private flows at market terms; $30 billion in private grants; $127 billion by ODA; $10 billion by other official flows
• Poor countries are improving tax systems and using money to fund their own development programmes

Over half a century ago

1969

ODA is a term coined by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure aid. The DAC first used the term in 1969

Countries like Brazil, China and Korea are growing richer and pulling millions of people out of poverty and using their new wealth to help poorer countries

Blurred the lines between donors and recipient countries

$130 billion

7x that of ODA countries money, now flows as foreign direct investment, bank loans and private philanthropy

• $307 billion in private flows at market terms
• $30 billion in private grants
• $127 billion by ODA
• $10 billion by other official flows

$307 billion

$30 billion

$127 billion

$10 billion

Improving their tax systems

In July 2011, the average remittance price to Africa was 10.9%

About $60 billion in remittances was sent to the African continent in 2012. More than $7 billion was drained in fees

More than $7 billion was drained in fees

Impoverished countries, especially those with war and conflict. They rely much more on aid

Tracked criteria set decades ago which was organised by major donors

Excludes what most countries spend on peace and security - key economic focus for some countries

Modernise and measure how we develop and work with the UN goals

• Tracking development progress
• Updating the definition of ODA - reflects more of an effort to modernise
• Creating measure of aid to include new types of support - support for adapting to climate change
• Tightening loan criteria to reflect current market conditions
• Ways to ensure to go to countries that most need it, spend efficiently and contribute to domestic resources like taxes to move further away from old world of aid

2011 - Anti-government protests developed into a civil war that has ground to a stalemate, with the Assad government, the so-called Islamic State group, an array of Syrian rebels and Kurdish fighters all holding territory

Government forces concentrated in Damascus and the centre and west of Syria are fighting the jihadists of Islamic State and al-Nusra Front, as well as less numerous so-called "moderate" rebel groups, who are strongest in the north and east. These groups are also battling each other.

£1.2 billion

£2.3 billion

Housing most of the 4.6 million refugees

Turkey, Jordan and Lebanon

The EU has pledged £2.3 billion this year (2016) and intend to "maintain this level of financing" for 2017

• Attended by 30 world leaders
• Had been hoping to raise $9billion - a total made up of a UN appeal for $7.7 billion and about $1.3 billion requested by regional host governments

• UN appeal for $7.7 billion
• $1.3 billion requested by regional host governments

Only 43% of the $2.9 billion pledged to the UN's 2015 appeal has been funded

• US - $315 million
• UK - $260 million
• Kuwait - $110 million
• European Commission - $90 million

• 2012
• Received $0.22 billion of $0.35 billion

Received $0.96 billion of $1.41 billion

Received $1.12 billion of $2.26 billion

Received $1.25 billion of $2.89 billion

2005

More than 100 signatories

56 partnership commitments aimed at improving the effectiveness of aid

Lays out 12 indicators to provide a measurable and evidence based way to track progress

• Ownership
• Alignment
• Harmonisation
• Results
• Mutual Accountability

The aid process was still too strongly led by donor priorities and administered through donor channels, making it hard for developing countries to take the lead

Reforms have led to improved cooperation and more effective

22 developing countries and 18 donor countries

• Independent nations just needed "a few years support"
• Yet they had to build governments from scratch and had little local capacity

• Donors used to give directly to the people and by-passed national systems
• Programmes from the West assumed good results would follow if the money was given

Harmonised approach and using systems for a long term, will be strengthened and achieve common goals - greater efficiency

• Minimise the number of projects to gain effective use of money
• Should focus at a country level - each country is diverse
• Should bring on the emerging donors such as China

"The idea that you can avoid risk is an illusion"

Almost 90% of donor countries had untied their aid

More than 1/3 of developing countries surveyed had improved their systems for managing public funds

1/3 of aid is disbursed on schedule - making it hard to plan ahead

OECD

• More than 100 signatories - How can aid be made more effective? Contains 56 partnership commitments aimed at improving the effectiveness of aid. Lays out 12 indicators to provide a measurable and evidence based way to track progress
• Ownership, alignment, harmonisation, results and mutual accountability
• The aid process was still too strongly led by donor priorities and administered through donor channels, making it hard for developing countries to take the lead
• Reforms have led to improved cooperation and more effective
• Country evaluation - 22 developing countries and 18 donor countries
• Independent nations just needed "a few years support" - had to build governments from scratch and little local capacity
• Pre-Paris - donors used to give directly to the people and bypassed national systems
• Programmes from the West - assumed good results would follow if the money was given
• Post-Paris - harmonised approach and using systems for long term, strengthened and common goals - greater efficiency
• Minimise the number of projects to gain effective use of money
• Should focus at a country level - each country is diverse
• Should bring on the emerging donors such as China
• "The idea that you can avoid risk is an illusion" Bernard Wood
• More than 1/3 of developing countries surveyed had improved their systems for managing public funds; almost 90% of donor countries had untied their aid
• Progress was still too slow to reach the 2010 goals
• The predictability of aid flows also remains low (1/3 of aid disbursed on schedule) making it hard to plan ahead