1 / 24

Robrecht Renard

The history of development cooperation Hasselt University Interdisciplinary Course North-South Crossing borders 16 February 2011. Robrecht Renard. Outline. The history of aid: the money The history of aid: the ideas Too many aid deliverers Donor collective action problems Conclusion.

glain
Download Presentation

Robrecht Renard

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The history of development cooperationHasselt University Interdisciplinary Course North-SouthCrossing borders16 February 2011 Robrecht Renard

  2. Outline • The history of aid: the money • The history of aid: the ideas • Too many aid deliverers • Donor collective action problems • Conclusion

  3. 2. The history of aid: the ideas

  4. 1. Ownership (Partner country) Results oriented management 2. Alignment (Donor-Partner) Establishing common arrangements Simplifying procedures Sharing information mutual accountability The 2005 Paris declaration Partner sets the agenda Aligning with partner’s agenda Using partner systems 3. Harmonisation (Donor-Donor)

  5. 3. Too many aid deliverers taxes ODA budget

  6. 3. Too many aid deliverers taxes ODA budget bilateral aid multilateral aid

  7. 3. Too many aid deliverers taxes private donations ODA budget bilateral aid multilateral aid private aid

  8. 3. Too many aid deliverers capital market taxes private donations ODA budget bilateral aid multilateral aid private aid

  9. 3. Too many aid deliverers capital market taxes private donations Sources of aid ODA budget Deliverers of aid bilateral aid multilateral aid private aid

  10. 4. Donor collective action problems • Excessive number of aid deliverers • signals a failure to collaborate • problem aggravated by what follows: • Principal-agent relationship • Samaritan’s dilemma • Warm glow effects • Missing feedback loops • Donors in pursuit of too many goals

  11. Me principal, you agent • Recipient governments often are not pursuing development in their countries • this is not a question of individual morality • but a question of institutional incentives • Aid is more and more being directed towards countries that are badly governed • well-governed countries manage well without aid • Principal-agent theory • requires strong principal who can sanction the agent • but aid sanctions do not hurt the right people

  12. The Samaritan’s Dilemma (J. Buchanan)

  13. Samaritan dilemma • If Samaritan is strongly motivated to help, recipient is in the more powerful position, and bad Nash equilibrium results • governments receiving food aid disregard agriculture • villagers do not maintain donor-funded infrastructure • Through a credible strategy of withdrawal (conditionality), a tough Samaritan may avoid the bad equilibrium occurring • Another effective strategy for the smart Samaritan may be to organize aid tournaments (selectivity)

  14. Warm glow • People feel good simply from the act of giving, irrespective of the results obtained • not to be confused with altruism • Although warm glow is a powerful incentive for international solidarity, it can hamper collective action • donors prefer tangible (photographs) and ‘attributable’ results (projects), even if this contributes to donor fragmentation • Northern citizens bypass intermediaries (NGOs) in order to increase the warm glow, even if this reduces effectiveness (transaction costs for delivery and supervision)

  15. Missing feedback loop • Makes public opinion easily manipulated • Gives undue importance to pressure groups • NGOs • universities • private sector (aid tying) • Suggests an increased role for Parliament • provided it is better informed than public opinion • provided it does not only listen to pressure groups

  16. Donors in pursuit of too many goals • Development • technocratic: econonomic growth, health, education,… • political: democracy • Global public goods • climate change • distress migration • drug trafficking • contagious diseases • Non-developmental selfish donor interests • commercial interests (aid tying) • geo-political interests • security interests

  17. Conclusions • High hopes of the aid approach that is advocated in the 2005 Paris Declaration are not being fulfilled • good principles • but naïve about incentives of major actors • But there is no brilliant new aid paradigm looming over the horizon • this is still the best game in town

  18. Thank you robrecht.renard@ua.ac.be http://www.ua.ac.be/dev/bos

More Related