Policy Coherence for Development

 What is PCD?
The concept of PCD aims to exploit positive synergies and spillovers across all public policies to foster development. A meaningful working definition of PCD goes well beyond minimizing the adverse impact that public policies can have in developing countries; it entails the systematic application of mutually reinforcing policies across government departments and integration of development concerns to help promote the achievement of the internationally agreed development goals along with other global and national policy objectives. One useful definition from the DAC Journal of Development Co-operation (Development Co-operation Report 2001, The DAC Journal, OECD), notes ‘Policy coherence means different policy communities working together in ways that result in more powerful tools and products for all concerned. It means looking for synergies and complementarities and filling gaps among different policy areas so as to meet common and shared objectives.’ The work on PCD should help policy makers reflect on questions such as: ‘Do our trade policies reinforce our development co-operation policies, or do they work at cross purposes?’, ‘Do our migration policies, such as in the health care sector, potentially undermine prospects to achieve health related MDGs in sending countries?’, or ‘How can we promote economic growth at the same time as environmental sustainability in the developing world?’  
 Why is PCD critical for development?
 While improving the quantity and quality of aid remains critical to foster development, there is a whole range of domestic and foreign policies beyond aid that can impact on the ability of developing countries to make sustainable progress - including trade, investment, agriculture and fisheries, taxation, security, innovation, and migration. The multiple crises of recent years have had an impact worldwide which demonstrates our global interdependency. In a globalising world, the impacts of policies put in place by any one country are felt far beyond that country’s borders. This is especially true for OECD countries and emerging powers. For example, the impact of agricultural subsidies on world prices and the high tariff barriers in place in OECD countries limit developing countries’ ability to benefit from exporting agricultural produce, thereby undermining their development prospects. Increased coherence across policies would also result in more efficient policies and thereby a better use of public money to the benefit of all citizens.  
 What is the link between PCD and development effectiveness?
ODA remains a crucial means to address poverty in least developed as well as in many middle-income countries, and the DAC continues to have an important role here. The focus has broadened, however, to aid quality, and increasingly, to development results or development effectiveness. Development effectiveness could be defined as the achievement of a range of political, economic and social changes, through collective and mutually reinforcing policies and actions, which significantly and sustainably improves people’s lives, particularly the poorest. PCD is a key component in this process: we need to use all means at our disposal and mobilise a range of mutually complementary policies and instruments in a consistent and coherent manner - i.e. strengthen PCD across all policy areas - to achieve sustainable development outcomes. Indeed, the MDG Summit emphasised the need to ensure coherence with other agendas (e.g. sustainable development, financing for development), and to pursue the MDGs in a holistic and comprehensive way. PCD was also one of the main themes during the Second UN ECOSOC Development Cooperation Forum (DCF), held on 29-30 June 2010. However most of the policy coordination mechanisms are informal and aid policies are designed separately; there is a need to make PCD a higher priority on the political agenda.  
 Which countries and stakeholders are concerned?
In a context of shifting wealth from developed to emerging economies, PCD relies on the active participation of all countries, developed, emerging and developing countries. Achieving PCD requires actions at two complementary and mutually reinforcing levels: - Intra-country coherence, meaning consistency in one country both within development co-operation policies (e.g. between bilateral aid, multilateral aid, technical assistance, and aid channelled through non-governmental organisations or the private sector), and between aid and non-aid policies. This calls for the participation of stakeholders at the local and national levels. In particular, parliamentarians are key players in the political economy of reform and in ensuring a whole-of-government approach; they play an essential role in communicating the benefits of coherence to their constituencies and could be critical in promoting PCD.
- Inter-country coherence, meaning consistency across countries between aid and non-aid policies, to ensure for example that aid for trade provided to developing countries is coherent with their domestic investment policies. It also means coordination across countries to agree on international development objectives. Inter-country coherence requires enhanced bilateral and multilateral partnerships on an equal basis for all countries; international organisations have a role to play in fostering these partnerships for mutual benefits. Civil society organisations can bring the ‘voices’ of the public by working closely with policy-makers and thereby play a crucial role in raising awareness and sustaining visibility of PCD at the national and international level.
 What is the current status of PCD among OECD countries?
 While improving the quantity and quality of aid remains critical to foster development, there is a whole range of domestic and foreign policies beyond aid that can impact on the ability of developing countries to make sustainable progress - including trade, investment, agriculture and fisheries, taxation, security, innovation, and migration. The multiple crises of recent years have had an impact worldwide which demonstrates our global interdependency. In a globalising world, the impacts of policies put in place by any one country are felt far beyond that country’s borders. This is especially true for OECD countries and emerging powers. For example, the impact of agricultural subsidies on world prices and the high tariff barriers in place in OECD countries limit developing countries’ ability to benefit from exporting agricultural produce, thereby undermining their development prospects. Increased coherence across policies would also result in more efficient policies and thereby a better use of public money to the benefit of all citizens.  
 What are the challenges to PCD implementation?
The implementation of PCD is challenging, particularly due to the following constraints: • PCD concept: The concept of PCD is still not sufficiently understood in many countries, particularly outside of the development policy communities. This can result in a lack of political interest and will to implement PCD.
• Political will: Governments pursue a wide range of policy objectives, trying to balance interests and priorities of domestic constituencies with longer term foreign and development policy objectives. These may, in the short term, appear to be competing or even contradictory objectives. But in an increasingly interconnected world, neglecting development may undermine the achievement of domestic objectives. National security, for example, can be enhanced by fostering development in fragile states to strengthen their capacities to fight terrorism or trade of illicit products.
• Evidence-based PCD: Evidence-based PCD is critical to foster political support. In an increasingly complex world, the links between policy levers and policy impacts are unclear and thus challenge the reliability of evidence about how best to achieve results. Even if coherent policy goals are set and clear outcome indicators selected, there are still choices to make among alternative courses of action. These choices may be constrained by inadequate knowledge and time pressures. The importance of PCD and the costs of incoherence should be widely communicated to the global public and in governance fora to enable political debate and momentum.
• Global governance architecture: PCD can only be achieved as a collective effort and through an open and inclusive framework, based on the active involvement of emerging economies, developing countries and international organisations. Greater balance in the global governance architecture could be critical to achieve an effective PCD.  
 How does the OECD promote PCD?
The OECD is well placed to bring together policy-makers from all public policy areas with development experts and analysts to promote greater coherence. Since the early 1990s, the OECD has played a pivotal role in promoting PCD. OECD’s work on PCD was mandated at the 2002 OECD Ministerial Council Meeting as part of the ‘OECD Action for a Shared Development Agenda’. OECD Ministers renewed their commitment to PCD in June 2008 by issuing a Ministerial Declaration on PCD  in which they encourage continuing best practices and guidance on PCD promotion and improved methods of assessment of results achieved. An ‘Annual report on OECD work on PCD’  was published in 2009, and a flagship report in 2011. The OECD promotes PCD at four complementary levels: 1) Whole-of-government: The OECD identified building blocks to guide OECD countries in implementing PCD  based on the lessons learned from DAC peer reviews. These reviews provided the basis for a good practice guidance endorsed by the Council in April 2010 as a Council Recommendation on Good Institutional Practices in promoting PCD.  
2) Analytical: The OECD has also developed analyses and case studies on the potential or actual impacts of policies on development in a range of areas - including macroeconomic policies, ICTs, Internet, innovation, environment, agriculture, fisheries, health, trade, aid for trade, human rights, tax, and migration. 
3) Assessment methodologies: A tool for policy makers “Policy Framework for PCD” has been developed to guide policy makers, first on a sectoral basis covering fisheries, agriculture and environment, and second drawing on impact assessment methodologies. Further consultations will be carried out with a view to broadening and deepening this guidance.
4) Whole-of-OECD: At the 50th Anniversary of the OECD Ministerial Council Meeting, Ministers welcomed a new comprehensive approach to development and endorsed the Framework for an OECD Strategy on Development. This work, which was initiated through the so-called ‘DevGoals exercise’, aims to deepen the development dimension across all policy areas of OECD’s work, and give more coherence to existing OECD development work beyond aid. It focuses on four priority areas: (i) innovative and sustainable sources of growth; (ii) mobilisation of resources for development; (iii) governance for development; and (iv) measuring progress for development. A dedicated PCD unit The coordination function of PCD within the Secretary-General’s office since September 2007 has enhanced OECD-wide coordination on development. The PCD unit is under the responsibility of the Deputy Secretary-General responsible for development and policy coherence, Mr. Rintaro Tamaki. The unit contributes to strengthening PCD at the OECD level and in member countries, and to enhancing the impact and relevance of OECD’s work on development. An enhanced OECD strategy on development is being developed, led by the PCD unit, to enhance whole of OECD perspectives on development, and provide greater opportunities for sharing experiences and peer learning with developing and emerging economies. This new impetus will enable the OECD to better respond to the evolving needs and priorities of developing countries and better guide its members on development-related issues. It will also increase the accessibility and visibility of its collective expertise to a wider range of countries and actors and enhance its relevance to contribute to global development.  
 What are the next steps to strengthen PCD?
PCD implementation is a challenge requiring the active involvement of a diverse range of stakeholders. Several issues should be addressed to promote PCD effectively: • Raising awareness on the costs of policy incoherence: Even if fully coherent policies might not always be feasible, incoherent policies can have a high cost for poor countries and waste taxpayers’ money in donor countries. Decision-makers need to be well informed about the impact and costs of their decisions before disbursing public funds or adopting policies.
• Improving PCD impact assessments: PCD impact assessments are complex and time-consuming. They could however be improved by strengthening linkages between ex-ante and ex-post evaluations, and by enhancing multi-stakeholder monitoring and dissemination of PCD impact.
• Building political momentum: Achieving PCD is a political process; diverse strategic interests are involved and multi-stakeholder processes leading to PCD are complex. The global public (e.g. civil society, the media) and governance fora (e.g. the UN, the WTO) need to be systematically informed on the importance of PCD and the costs of incoherence, in order to enable political debate and momentum.
• Developing a proactive PCD network: An informal network of PCD national focal points was created in July 2007 for enhanced communication and impact. The PCD team at the OECD is currently in the process of establishing an international platform for PCD to enhance opportunities for the sharing of experiences, knowledge and information on PCD at the operational and strategic levels. The active role of developing and emerging countries will be vital in this endeavour for a better design and implementation of PCD solutions.

 

 

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