Financing Development 2008: Whose Ownership?

Financing Development 2008 asks: “Whose ownership?”. The authors take a variety of approaches to the ownership question. Inspired by the discussions and case studies presented at a workshop on “Ownership in Practice”, held in Paris in September 2007, Chapter One asks what developing-country ownership really means. From an effectiveness perspective, who should own development policies and who actually owns them? Related to these questions, Chapter Two looks critically at the international development finance system and finds that its complexity interferes with developing-country ownership.  Looking beyond governments, how might aid effectiveness principles apply to the activities of other actors? Chapter Three examines the role of non-governmental organisations in development financing by asking whether NGOs might need their own version of the Paris Declaration.  The relationship between ownership, investment and the private sector is the subject of Chapter 4.

This volume is the first of an annual series designed to support the OECD Global Forum on Development.

Chapter 2. Ownership in the Multilateral Development-Finance Non-System
The complexity of the international development-finance architecture is evolving as new actors and instruments enter the arena. This throws into question the capacity of aid to deliver development. This chapter highlights the current disorder and inconsistencies in the multilateral development finance system and the associated challenges: duplication, mission creep, loss of leverage and the heavy burden put on recipient-country administrations. To promote effective and democratic ownership of development finance, it identifies avenues for reform of the current system. It suggests streamlining the multilateral division of labour and country-based delegated-co-operation arrangements.

Chapter 3.  A Paris Declaration for NGOs?

International NGOs issue statements on the Paris Declaration on Aid Effectiveness and argue that the agenda does not go far enough in pushing official donors to harmonise and align their efforts. By means of a new dataset, this chapter shows that the size of Northern NGOs is much larger than had hitherto been assumed. This chapter argues that, consequently, Northern NGOs can also be considered as donors in their own right and that therefore the principles of the Paris Declaration ought to apply to them equally. In addition, it is shown that the current practices of international NGOs with respect to harmonisation, coordination, alignment and accountability leave much to be desired. This chapter shows how legal and financial imbalances between Southern and Northern NGOs contribute to this suboptimal performance by Northern organisations on central elements of the Paris Declaration, such as increased ownership for local actors and mutual accountability. This strengthens the main argument of this paper: that there is a need for a Paris-like Declaration for international NGOs. The chapter also highlights some remarkable changes made by some progressive actors, which show that in some quarters progress towards this desired Paris-like Declaration for NGOs is already being made.

Chapter 4.  Private Banks in Emerging Democracies

Private capital movements have risen in recent decades, and bank flows have been part of this story. Some empirical studies have analysed the political drivers of private international liquidity, but paradoxically very few have looked at the political economy of bank flows. Even less research exists on the role of politics in explaining cross-border banking movements towards emerging democracies. The present chapter provides an empirical investigation of the political economy of cross-border bank flows to emerging markets and tries to answer two questions. Do bankers tend to prefer emerging democracies? Do they reward democratic transitions as well as policy and political stability? One of the major findings is that politics do matter, and international banks tend to have political preferences; annual growth in bank flows usually booms in the three years following a democratic transition, especially in Latin America.