“Game the same. Just got mo’ fierce…”

Before, we settled things with a game of chess...

"Before, we settled things with a game of chess..."

Duncan Green recently did an interesting post charting the evolution of DfID’s thinking on aid since it was first created in 1997, through four White Papers. To summarise crudely, he suggests that the first two DfID White Papers were dominated by economics; the third was a step change in the understanding of development by incorporating ‘governance’, which he describes as politics without the power analysis; and the most recent paper takes this forward even further, reintegrating power and politics into the policymakers understanding of development.

I really cannot stress how strongly I agree with Duncan’s ultimate conclusion, that

DFID and its achievements may be one of the lasting legacies of the Labour Government.

DfID have a good reputation as one of the more thoughtful aid agencies and in my personal experience, DfID staff tend to be genuinely committed to change and self-improvement, despite the occasional feather-brained idea (in the interests of transparency: I have never worked for DfID, though they have funded me in the past).

Despite this, I’m pessimistic that really substantial changes are occurring in the aid game. DfID are at the vanguard of one stream of thinking among official development agencies internationally, For want of a more precise adjective, I’ll term these the ‘softer’ agencies, those that focus on social development and governance these days, primarily the bilaterals and the United Nations agencies. The World Bank are at the vanguard of a second stream, carrying the flame of new thought for the (mostly multilateral) agencies that take a more overtly economic view of the world, and producing a great deal of economic research to inform policy.

Though these two groups of aid agency differ in approach, both are in their major attributes part of the same tradition of development work, one which hasn’t really undergone any kind of step change in thinking about development for quite some time. I don’t deny the observed change in focus towards governance and institutions that Duncan highlighted. Rather, I would suggest that if we put this in historical context, it is simply part of a longer-term pattern, one which isn’t entirely encouraging.

Since around the 1960s, development work has been increasingly concerned with ‘aid packages’, by which I mean they have become more and more focused on providing support to compartmentalized interventions. An element of this has always been evident in aid agencies’ modus operandi, and we can trace the evolution of this aspect of development work among the Western aid agencies: first, the concept of a ‘green revolution’ was king, lending itself to discrete packages of agricultural support; after this offered no panacea, infrastructure became the word; once infrastructure showed insufficient returns, we moved on to structural adjustment. At this point the two streams of development agencies begin to separate, given the controversial nature of the liberalization and structural adjustment programmes pushed by the Washington Institutions. From this point, the multilaterals moved into a broader portfolio of large project-interventions, while the bilaterals started focusing on social development, both looking at discrete interventions. From here, the two streams begin to join up again, as all players begin to push a governance agenda, though often without any clear conception of what ‘good governance’ means or looks like in different places, and an increasing acceptance of direct budget support, which is non-earmarked support to a Government. (I may have forgotten some of the phases, feel free to remind me of any I missed).

What all of these trends have in common is that they represent a conception of development work that is essentially self-contained. Aid agencies tended to pick up on an interesting idea and follow it full steam ahead, often displaying a herd mentality with most donors pushing the same things at the same time. This approach now dominates the North’s approach to development. The key characteristic of this approach to development is that the concept du jour tends to be pursued without much, or any, contextualization against the other possible reforms that may be outside the scope of financial aid. As such, the shifts in thinking I’ve mentioned above are simply changes of emphasis within a structure of development assistance that isn’t changing. Part of the reason for this is that development has been depoliticized from the donor perspective – we are trying to divorce our development policies from our own internal economic politics and our self interest. This is a forlorn hope. ‘Aid’ packages can be largely depoliticized, but other forms of support cannot be so easily.

It hasn’t always been thus, however. Development interventions after the Second World War were sometimes much more inclusive, and in many ways much simpler. They did not focus on specific sectors or types of intervention, but provided large sums of money to support economic (re)generation, often with few conditions and a clear desire to ensure that support would contribute to a self-sustaining boost to the economy so that the recipient countries would no longer need outside support after some time. The Marshall Plan is the biggest example, being an enormous post-War intervention in support of both demand and supply in Europe. The early spending under the plan was used to boost demand, while the later stages supported the reindustrialization of Europe. This was not a unique intervention. Post-War American presence in Japan had a very similar effect, with heavy investment in reconstructing what was basically a sound economy, and a fixed exchange rate to the dollar that under-valued the Yen – in effect an export-subsidy for Japanese businesses. South Korea received vast amounts of Western aid for industrialization and demand stimulus because of its strategic importance to limit the spread of Eastern Communism. We can find other examples of such support as well.

Apart from being broader-based than the current portfolio of aid interventions, another difference is observed. These support programmes were reinforced by policies to increase regional trade; to increase access to developed markets for importation of machinery, know-how and raw materials; and to export the final goods. They also explicitly sought to industrialize the recipient economies with a view to export. This marks a stark contrast to development work today: aid is kept separate from trade, and the basic structure of the economy in any given country is rarely discussed. Part of the reason for this is political expediency in the donor countries. Donors could pump huge amounts of money into South Korea or Japan, and give them access to markets and technology because these interventions were explicitly political. The donor country had a great stake in the stability and prosperity of the recipient in each case we’ve discussed, and the trade-off between concessions on trade and geopolitical considerations were clear.

I’m not arguing that Africa needs a Marshall Plan, or that the key to South Asian development is an undervalued exchange rate, but I do think that a return to a holistic approach to development is needed, and this requires that the donors acknowledge that the kinds of development intervention that can be undertaken and will work depend on their own political priorities and imperatives as well as those in developing countries. If we do this, and conclude that development is important enough for us to pursue it wholeheartedly, aid interventions will need to be paired up with programmes on trade and purely economic support. If not, I suspect we’ll just continue in the tedious cycle of fashions that we’ve been going through for the last thirty years or so.

This sounds a little pessimistic, so let me add a post-script. There is hope. Progress might come from three sources:

It’s possible that these fashion-driven aid interventions might, in sum, be enough to create the structural changes needed to transform African and other low income economies and societies into more dynamic entitities, capable of creating, sustaining and constantly improving good standards of living through their economies and Governments. Given the lack of clear coordination evident among these interventions, I think this is a bit of a long shot.

The second hope is that the mode of delivering aid, rather than the policies pursued by donors, might stimulate change. Budget support is being used more, though I sense a retrenchment these days. The idea of budget support is actually very similar to that of the Marshall Plan – you come up with the plan, we fund it. The only problem is that we spend way too much time trying to influence the plan, which usually results in a strange amalgam of what donors want and what Governments want, often not sufficiently satisfying the intentions of either party. New ways of organizing budget support need to be worked out, but the potential is there.

The other source of hope is potentially the biggest. South-South cooperation is not bound by the same strictures as North-South cooperation. There is history here, but less of it; and the potential for a new way forward in development cooperation is huge. We are witnessing increasing Chinese interest in Africa; India is also offering loans; and African countries are starting to work together, though much more can still be done. This is an exciting time, because Chinese and Indian interventions are based on mutual interest, as obviously are the African ones. Things could still go wrong, and there is need for skepticism about the intentions of all parties involved, but we’re essentially drawing on a clean slate. We might not have the resources for a new Marshall Plan, but we also don’t have the restrictions of an established structure or a desire to somehow inoculate development from politics or self interest. That alone is cause for hope.

Comments are closed.