Is there good news for developing countries despite the crisis? Aid-for-trade experts agree that the answer is “yes”.
survey recently concluded by OECD and the WTO – the second of its kind –
demonstrates that the Aid-for-Trade Initiative is a success. Since its
inception in 2005, developing countries have given higher priority to trade
in their development strategies. Donors have responded by offering more
funds to help them overcome their supply-side constraints. This issue of
DACnews also looks at recent guidance designed to ensure that development
policies won’t have a negative impact on the environment. It features new
donor initiatives to help minimise the negative effect of the financial
crisis in developing countries and looks at how the experts on aid
effectiveness are realigning and stepping up their efforts to produce more
and better results by 2011. Finally, Eveline Herfkens offers a
thought-provoking look at Dead Aid, the book that has people talking about
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A recent survey carried out by OECD and WTO shows that despite the current economic crisis, there is good news for developing countries. The survey – the second Global Review of Aid for Trade – shows that in 2007, total aid for trade reached USD 25.4 billion - USD 4.3 billion (21%) more than the 2005 baseline. In the same year, non-concessional loans provided a further USD 27.3 billion in trade-related financing.
The additional funding not only helped countries to overcome hurdles on the supply side; it is particularly welcome because it did not happen at the expense of other assistance programmes. OECD calculations show that 9 out of 10 aid-for-trade commitments have resulted in actual aid-for-trade projects and programmes. Finally, funding for global and regional programmes – identified as an area for special attention by the first Global Review – has more than doubled in volume since 2005.
More and better aid for trade is particularly important in the context of the crisis. It can help to build the foundations of economic growth and poverty reduction that will enable developing countries to stand on their own and contribute to shared global prosperity.
Nearly 150 countries and international organisations took part in the second Global Review, designed to monitor the impact of the Aid for Trade Initiative that was launched in 2005. The results are clear: the Initiative has, indeed, helped. Developing countries are prioritising trade in their development strategies and clarifying their needs; and bilateral and multilateral donors are responding by improving the delivery of aid for trade and increasing their commitments.
What’s more, growth is happening where it is most needed. Low-income countries have seen their share of total aid for trade increase from 44% to 54%. And while Asia continues to be the biggest aid-for-trade recipient in overall terms, most of the 2007 additional funding went to sub-Saharan Africa, with an impressive growth of 59% (or USD 2.9 billion) compared to the 2005 baseline (see chart).
Developing countries are using these funds to overcome infrastructure bottlenecks and to build their capacity in trade-related fields: aid targeted for economic infrastructure dominates in terms of overall volume (53%), followed by productive capacity (43%). Trade-related technical assistance accounts for the remaining 4% of total aid-for-trade flows.
The analysis and outcomes of the second survey are presented in the joint OECD-WTO publication, Aid for Trade at a Glance 2009: Maintaining Momentum, which will be launched by the Secretary-General Angel Gurría at the Global Review of Aid for Trade meeting in Geneva on 6 July.
Climate change and development:
Adjusting the lens
To help achieve this, two flagship documents were endorsed at the meeting: a Policy Statement and associated policy guidance on Integrating Climate Change Adaptation into Development Co-operation. These will be important inputs from the OECD to the COP15 Climate Change Conference (Copenhagen, December).
Paul Collier, author of The Bottom Billion, gave a thought-provoking speech to participants, suggesting that with increasing water scarcity and the impacts of climate change, Africa should move quickly out of agriculture and toward industrial production. To improve the sustainability of agricultural production in Africa (or what remains of it), he recommended that Europe stop its ban on imports of GMO crops; this would enable Africa to benefit from low-irrigation and high resilience GMOs.
Other discussions at the meeting highlighted the importance of engaging all countries, including the poorest, in low-carbon development. In closing, the participants highlighted two priorities for continued action:
The meeting took place on 28-29 May and was chaired by Bert Koenders, Minister for Development Co-operation, Netherlands and Kak-soo Shin, Vice Minister of Foreign Affairs and Trade, Korea.
Globally, aid rose in 2008 to its highest level ever. While a few countries have slightly reduced the targets they set in 2005 for 2010 (at the Gleneagles G8 and UN Millennium +5 summits), the bulk of the commitments remain in force. However, reduced growth in 2008 and economic contraction in 2009 have shrunk the dollar value of these commitments (which are expressed as a percentage of national income).
The result: already weakened by the food and energy crises, low-income countries are suffering the most from the global downturn. And while these countries are the least responsible for the crisis, they are the least able to cope with its impact. The World Bank estimates that, because of the crisis, the number of people living on less than USD 1.25 a day will grow by 53 million.
This means that extraordinary efforts are needed to bring global aid performance back on track, especially for Africa. The major international institutions are responding quickly to emerging needs with the funds they have available, but there is a risk that this money will soon run out. On 28 May, the DAC donor community issued an Action Plan to ensure that these institutions will be able to count on the financial support they need to backstop developing countries over the medium term.
In the Action Plan, members of the Development Assistance Committee agree to assist developing countries by:
In September 2008, the Third High Level Forum on Aid Effectiveness (HLF3) sent out a clear message: it is urgent that we change the way we finance development. The validity of the agreed roadmap to achieve this – the Accra Agenda for Action (AAA) – was reaffirmed in December at the Doha Review Conference on Financing for Development. DAC members reconfirmed their commitments to the AAA, promising to keep up peer pressure for progress in implementing a series of “beginning now” issues, five actions for which the stakeholders committed to putting in place immediate change.
In this context, the DAC-hosted Working Party on Aid Effectiveness has not stood still. The motor behind the movement to make aid more effective since it was set up in 2003, the Working Party includes an ever-growing number of donor and developing countries, as well as civil society institutions, foundations and parliaments.
Since the High Level Forum in Accra, the Working Party’s programme has not only been refocused to concentrate on key roadblocks and opportunities identified there; it is also looking at critical issues that were not sufficiently addressed at Accra. A series of new “clusters” and networks will focus attention where it is most urgently needed: ownership and accountability; country systems; transparent and responsible aid; assessing progress; managing for development results; sector approaches to aid effectiveness; and South-South co-operation. At the same time, these groups will act as political drivers of change.
The Working Party is already beginning to prepare the Fourth High Level Forum on Aid Effectiveness (HLF4), which will be held in the Republic of Korea in 2011. This forum – and the analysis that feeds into it – will enable us to assess how countries have performed in delivering on their commitments.
Dambisa Moyo leads discussion at OECD
Dambisa Moyo, economist and author of Dead Aid, was at OECD recently to lead a discussion on international development and the importance of addressing the coherence of policies that go beyond aid. Participants at the meeting agreed that opening global trade and investment, reducing tariff barriers, and collecting taxes are fundamental if African leaders are to finance much needed jobs, healthcare, schools and infrastructure for their citizens. In a taped interview with Brenda Killen, Head of OECD Development Co-operation Directorate’s Aid Effectiveness Division, Moyo discussed a moratorium on development aid by 2050. Listen to the interview.
Without strong, reliable capacity at home, developing countries will never work their way out of aid. This is why, shortly after signing up to the Accra Agenda for Action, developing countries came together to form a strong, Southern-led coalition for capacity development. The CD Alliance will help political leaders to confront the challenges outlined in the AAA and develop priorities and mechanisms for addressing them. Members of the Alliance met in Berlin in May to forge an action-oriented and realistic work plan for 2009-2010, with a strong focus on inclusiveness and learning from experience. To this end, it will launch a learning platform in Africa.
3Cs: A Roadmap out of conflict and fragility
Coherence, co-ordination and complementarity – this is what engaged the participants in an international gathering around the complex issues that create roadblocks to development in states where there is conflict and fragility. The 3C Conference – as this meeting was called – brought together senior-level actors in foreign affairs, defence, development, humanitarian aid, finance, trade, peace keeping and justice (19-20 March, Geneva). Together they developed a Roadmap to help achieve sustainable peace, stability, statebuilding and long-term development.
The Conference was organised by the Government of Switzerland in association with the co-convenors OECD, United Nations, World Bank and NATO. Close to 300 policy- and decision-makers from 40 countries and international and regional organisations, as well as selected civil society representatives, took part in the event.
Investment in security: A penny now, or a dollar later?
“In times of economic crisis, and where the evidence base for success is thin, how can we continue to make the case for the enormous financial and human effort required to work in a comprehensive way on the security and development nexus?” This was the question raised by Stephen Groff, Deputy Director of the OECD Development Co-operation Directorate in his keynote address to the 8th International Security Forum in Geneva, 18-20 May 2009. “My response to this question, simply put, is we have no choice.”
Groff cited the cases of Guinea Bissau, where “the costs of prevention would have been far less than the costs of the country’s current crisis and the wide ranging spill-over effects in the international community.”
Guinea Bissau, where rampant poverty created fertile ground for drug trafficking – is not unique. And it showcases the complexity of security and development questions that require early, complex, holistic and comprehensive responses. “The many drivers of conflict, plus the hostility, fear and humanitarian fallout in places like the Swat valley in Pakistan today or the Gulf of Aden off the coast of Somalia require a very sophisticated and nuanced response from the international community,” said Groff.
In his address, Groff stressed the importance of the work of the OECD DAC’s new International Network on Conflict and Fragility (INCAF) in taking forward and promoting whole-of-government/system approaches based on in-depth studies of successes and challenges in the past.
Better results for women and men
At a June meeting of the DAC Network on Gender Equality (GENDERNET), speakers from Ghana, the Philippines, Morocco and Tanzania shared their experiences in reforming public financial management to deliver improved development results for women and men. South Africa also participated for the first time in GENDERNET, sharing their approach to gender-responsive budgeting. Another workshop in the framework of this event looked at the impacts of the financial and food crises on women. The delegation from Korea, which included representatives from the Korean Women’s Development Institute, made a strong commitment to work with the GENDERNET to systematically integrate gender equality and women’s empowerment into the planning for the Fourth High Level Forum on Aid Effectiveness in 2011.
Statistics at the core of development
While the challenges to development are many, there is now international consensus on the fact that without efficient national statistical systems, developing countries lack the solid information they need to develop their own poverty reduction programmes. To address this need, some 400 high-level participants will gather in Dakar, Senegal in November 2009. There, policy makers, statisticians, analysts, civil society and private sector representatives will discuss statistical capacity building in developing countries and the continuing role of the PARIS21 Partnership. A key output of this PARIS21 Consortium meeting, organised jointly with the Government of Senegal, will be a Dakar Declaration on Statistics for Development.
Austria: Commendable efforts
Development Co-operation Report 2009: In his introduction, the DAC Chair focuses on the new environment for development assistance, making a call for heightened collective action. The report also reviews the outcomes of the Third High Level Forum on Aid Effectiveness and the need to step up our efforts to make aid work better for developing countries. It addresses the fragmentation of aid and its predictability. Finally, it offers five lessons on how the Paris Declaration can be used to make the link between development policy and human rights, environmental sustainability and gender equality. Read comments made at the DAC Chair’s presentation of the Development Co-operation Report 2009.
Better Aid series has
three new titles:
has three new titles:
Managing Aid: Practices of DAC Member Countries: Outlines what individual donors are doing to fulfil their development co-operation ambitions and their part of the international agreements – reached in Paris in 2005 (Paris Declaration) and Accra in 2008 (Accra Agenda for Action) – to make aid more effective.
Aid Effectiveness: A Progress Report on Implementing the Paris Declaration: This report is a mid-term review of progress towards the commitments embodied in the Paris Declaration on Aid Effectiveness, drawing on the 2008 Survey on Monitoring Paris Declaration and the Evaluation of the Implementation of the Paris Declaration Synthesis Report, among many other sources.
Managing Development Resources: The Use of Country Systems in Public Financial Management: This publication takes stock of progress in strengthening public financial management systems and provides recommendations on how best to facilitate achieving the 2010 targets set out in the Paris Declaration. It argues the benefits of and rationale for using country systems, assesses progress in meeting the Paris Declaration targets, and reviews the landscape of public financial management reforms in partner countries.
The first two titles in the new publication series “Conflict and Fragility” are now available:
Preventing Violence, War and State Collapse: The Future of Conflict Early Warning and Response: Despite the recent evolution of early warning systems, the international community today is hardly in a position to avoid recurrence of genocide, as witnessed in Rwanda, for instance, in 1994. This publication aims to support the efforts of OECD-DAC members and other organisations active in the field of conflict prevention and peacebuilding to better integrate conflict early warning analysis and response into their programming. Do we have the tools we need? Listen to an interview with David Nyheim, the author of this publication.
Armed Violence Reduction: Enabling Development: Every year some 740 000 people die across the world because of armed violence. This publication warns that urban violence, youth gangs and criminality will continue to rise unless we all start to deal with the causes of violence, and provides advice on how to go about it.
Report on Multilateral Aid: This report offers an overall picture
of multilateral aid. It maps out patterns, financial flows, and strategies
and policies. The report also touches upon the fragmentation of aid and the
effectiveness of multilateral organisations and reform processes,
incorporating the views of partner countries.
DAC job opportunities
For more information on this vacancy and how to apply, please go to OECD job vacancies.