Emerging aid architecture

In summing up our review, the numerous changes in the global setting for aid effectiveness have produced an aid architecture that bears little resemblance to its predecessor from the 1950s and 1960s. Today’s architecture is different in structure and organisation, breadth of relationships, range of aid actors, ODA rules and guidelines, and new aid delivery modalities. The following eight points capture the essential features of the new architecture.

 First, there has been an explosion in the number of aid providers and recipients during the past 50 years or more. From 5 to 6 “donors” and 20 to 30 recipients in the late 1950s, these numbers now refer to more than 250 development agencies and more than 190 recipient countries.

These countries, which seemed fairly homogeneous in the immediate post-war years, as they shared most symptoms of underdevelopment, have since taken different paths to development and experienced widely differing political and economic conditions, in addition to being exposed to events that have impacted their pace of progress. These changes have required aid providers to fashion more tailor-made aid policies and approaches to meet varying development needs.

 Second, aid policies shifted from being tentative and informal initially to become increasingly formalised, more structured and more complex.

They are now managed by aid-specific agencies that have bureaucra-tised aid practices through guides, manuals, directives and the like.

Though the same process has occurred in recipient countries at a slower pace and with less-complex structures, if only because of limited means.

 Third, evolution has gone beyond an increase in numbers and been influenced by the emergence of new and different players, with the rise of emerging economies and middle-income countries, who are challenging traditional ODA providers in terms of policies and practices. Recent years represent a period of transition in which North and South are beginning to engage in a more serious dialogue for the exchange of experiences and mutual learning.

 Fourth, the early days of ODA were dominated by bilateral agencies, which accounted for the lion’s share of ODA. However, the past two decades have seen the rapid growth of multilateral organisations – reaching more than 250 and still counting! In addition to the majors (WB, IMF, UN, etc.), the majority vary in size, functions and special focus. Multilaterals are changing key features of development cooperation through sheer numbers and different delivery practices.

Although this enriches the aid options, it also adds complexity to what is already a complex architecture.

 Fifth, the rise of private foundations and the increased significance of innovative development financing are contributing a welcome increase in development assistance resources while posing challenges to recipients and traditional providers alike. The independent status and management style of these foundations allow them flexibility and rapid decision-making abilities to achieve set goals, but there has been a lack of coordination with other development partners and inadequate harmonisation with recipient countries’ priorities.

 Sixth, recipient countries have undergone enormous changes in terms of their abilities to articulate and express development priorities, what they need from aid and how they deal with providers. This has been a gradual and sometimes slow process, but it has picked up pace in the past decade and is likely to continue as more recipient countries gain

confidence and reap the benefits of structural and policy reforms started two decades ago or more. This is affecting the balance of powers between providers and recipients.

 Seventh, the aid industry has expanded beyond anyone’s expectations.

In addition to bilateral and multilateral aid agencies, global funds, CSOs and NGOs, there are thousands of consultants, experts and practitioners providing advisory services and performing functional tasks – from design to implementation and evaluation. This industry growth is due largely to the much larger volume of aid and greater diversity of actors and activities. Nevertheless, there are obvious inefficiencies through increased bureaucratisation and duplication. The industry has also given rise to many vested interest groups in both developing countries and their development partners. At issue here is not only the question of efficiency but the more serious question about the tendency to perpetuate the status quo instead of working to help these countries exit from aid dependency.

 Eighth, the early years focussed on helping developing countries deal with poverty and other causes of underdevelopment. Poverty remains a priority challenge. At the same time, new concerns and priorities have emerged, including global financial crises, food shortages and HIV/AIDS – and more recently, topping the list are Ebola epidemics, climate change and security issues. In addition, the structural changes in the global economy, the global slowdown and the failure to make progress in trade negotiations are “facts of life” to be reckoned with.

ODA cannot – and is not intended to – deal with all these challenges, but the persistence of these global problems underlines the importance of greater collaboration among international institutions to achieve greater policy coherence.

It is against many of these challenges that the DAC and the WB organised the first High Level Forum to discuss aid effectiveness in Rome in 2003.

Adding to these challenges is the forthcoming post-2015 development agenda, which will build on whatever has been accomplished under the MDGs and expands its objectives to address emerging challenges.

Table 7: ODA in constant 2012 US$ ’000 000 (1960–2013) Key ODA providers

Year Total

ODA Bilateral Multilat.

agencies DAC

DAC-EU US Japan

1960 36781 31651 --- 36781 16997 16566 1759 1965 45047 38618 --- 45047 16747 33564 3098 1970 46160 39393 1519 42217 18187 14517 4374 1975 77177 62874 3059 50714 23056 13916 5592 1980 92028 67899 3356 63894 29118 16871 9549 1985 89384 67121 4914 75345 36820 17230 10471 1990 102527 77010 4580 86114 42509 17898 14233 1995 84936 59807 7054 76369 40288 10259 14203 2000 92041 63417 8457 81944 42086 12764 15561 2002 102882 74919 8730 89157 47119 16407 12768 2004 111800 80185 10159 97519 49739 23213 10929 2006 138879 105548 11414 122092 65464 26060 15042 2008 145657 109516 12269 124873 67557 27973 11789 2010 153502 112635 12682 134046 71425 31490 11827 2011 156500 116194 16288 131454 69450 31460 10723 2012 150916 111030 17479 126949 64724 30687 10605 2013 --- --- --- 134692 68117 31081 14486 Source: Based on OECD QWIDS International Development Statistics (DAC1) 2014, online at: http://www.oecd.org/development/stats/idsonline.htm

Table 8: ODA / GNI for selected DAC countries (1960–2012)

1960-69 1970-79 1980-89 1990-99 2000-09 2012

Australia 0.52 0.52 0.44 0.31 0.28 0.36

Belgium 0.54 0.53 0.5 0.36 0.47 0.47

Canada 0.23 0.48 0.46 0.38 0.29 0.32

Denmark 0.19 0.57 0.84 1.00 0.87 0.84

France 0.87 0.43 0.57 0.53 0.41 0.46

Germany 0.40 0.37 0.32 0.33 0.33 0.38

Italy 0.16 0.11 0.23 0.19 0.19 0.13

Japan 0.24 0.23 0.31 0.27 0.22 0.17

Netherlands 0.42 0.76 0.98 0.82 0.80 0.71

Norway 0.20 0.71 1.04 0.96 0.91 0.93

Sweden 0.22 0.74 0.87 0.86 0.92 0.99

Switzerland 0.09 0.18 0.29 0.35 0.40 0.46

UK 0.48 0.43 0.33 0.28 0.40 0.56

US 0.50 0.25 0.22 0.13 0.16 0.19

Total DAC 0.45 0.32 0.33 0.27 0.27 0.29

Source: OECD DCD/DAC (2011k, Annex B, p. 227), and OECD DCD/DAC (2013d, Annex A, Table A1)