Brookings: Experts - Homi Kharas

Inequality and Inclusive Growth in Africa: A Conversation with South African Finance Minister Pravin Gordhan

Wed, 17 Apr 2013 16:00:00 -0400

Event Information

April 17, 2013
4:00 PM - 5:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

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Africa is the world’s second-fastest growing region, and South Africa is the continent’s economic leader. The country recently hosted the BRICS Summit and has been working hard to promote growth and encourage investment. Yet inequality has been a persistent challenge. As the economies of South Africa and the African continent continue to expand, governments in the region must ensure that such growth follows a sustainable model that creates wage-paying jobs and lifts citizens out of poverty.

On April 17, the Africa Growth Initiative at Brookings hosted a conversation with the Honorable Pravin Gordhan, minister of finance for the Republic of South Africa, on inequality and inclusive growth in South Africa and the African continent. Minister Gordhan’s remarks were followed by a panel discussion with Brookings Senior Fellow Homi Kharas, deputy director of Global Economy and Development. Brookings Vice President Kemal Derviş, director of Global Economy and Development, moderated the discussion.

You can join the conversation on Twitter using #Africagrowth.

Getting to Scale : How to Bring Development Solutions to Millions of Poor People

Laurence Chandy, Akio Hosono, Homi Kharas and Johannes F. Linn, eds. — Mon, 15 Apr 2013 00:00:00 -0400

Brookings Institution Press 2013 240pp.

The global development community is teeming with different ideas and interventions to improve the lives of the world’s poorest people. Whether these succeed in having a transformative impact depends not just on their individual brilliance but on whether they can be brought to a scale where they reach millions of poor people.

Getting to Scale explores what it takes to expand the reach of development solutions beyond an individual village or pilot program, but to poor people everywhere. Each of the essays in this book documents one or more contemporary case studies, which together provide a body of evidence on how scale can be pursued. It suggests that the challenge of scaling up can be divided into two: financing interventions at scale, and managing delivery to large numbers of beneficiaries. Neither governments, donors, charities, nor corporations are usually capable of overcoming these twin challenges alone, indicating that partnerships are key to success.

Scaling up is mission critical if extreme poverty is to be vanquished in our lifetime. Getting to Scale provides an invaluable resource for development practitioners, analysts, and students on a topic that remains largely unexplored and poorly understood.

ABOUT THE EDITORS

Laurence Chandy

Akio Hosono

Akio Hosono is the director of the Research Institute of the Japanese International Cooperation Agency.

Homi Kharas

Johannes F. Linn

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Scaling Up Programs for the Rural Poor: IFAD's Experience, Lessons and Prospects (Phase 2)

Fri, 18 Jan 2013 11:55:00 -0500

The challenge of rural poverty and food insecurity in the developing world remains daunting. Recent estimates show that “there are still about 1.2 billion extremely poor people in the world. In addition, about 870 million people are undernourished, and about 2 billion people suffer from micronutrient deficiency. About 70 percent of the world’s poor live in rural areas, and many have some dependency on agriculture,” (Cleaver 2012). Addressing this challenge by assisting rural small-holder farmers in developing countries is the mandate of the International Fund for Agricultural Development (IFAD), an international financial institution based in Rome.

The International Fund for Agricultural Development is a relatively small donor in the global aid architecture, accounting for approximately one-half of 1 percent of all aid paid directly to developing countries in 2010. Although more significant in its core area of agricultural and rural development, IFAD still accounts for less than 5 percent of total official development assistance in that sector.1 Confronted with the gap between its small size and the large scale of the problem it has been mandated to address, IFAD seeks ways to increase its impact for every dollar it invests in agriculture and rural development on behalf of its member states. One indicator of this intention to scale up is that it has set a goal to reach 90 million rural poor between 2012 and 2015 and lift 80 million out of poverty during that time. These numbers are roughly three times the number of poor IFAD has reached previously during a similar time span. More generally, IFAD has declared that scaling up is “mission critical,” and this scaling-up objective is now firmly embedded in its corporate strategy and planning statements. Also, increasingly, IFAD’s operational practices are geared towards helping its clients achieve scaling up on the ground with the support of its loans and grants.

This was not always the case. For many years, IFAD stressed innovation as the key to success, giving little attention to systematically replicating and building on successful innovations. In this regard, IFAD was not alone. In fact, few aid agencies have systematically pursued the scaling up of successful projects. However, in 2009, IFAD management decided to explore how it could increase its focus on scaling up. It gave a grant to the Brookings Institution to review IFAD’s experience with scaling up and to assess its operational strategies, policies and processes with a view to strengthening its approach to scaling up. Based on an extensive review of IFAD documentation, two country case studies and intensive interactions with IFAD staff and managers, the Brookings team prepared a report that it submitted to IFAD management in June 2010 and published as a Brookings Global Working Paper in early 2011 (Linn et al. 2011).

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Authors

Arntraud Hartmann
Homi Kharas
Richard Kohl
Johannes F. Linn
Barbara Massler
Cheikh Sourang

Image Source: © Andrew Biraj / Reuters

Regulatory Reforms Necessary for an Inclusive Growth Model in Egypt

Homi Kharas and Ehaab D. Abdou — Tue, 27 Nov 2012 16:42:00 -0500

Egypt needs a new inclusive and equitable economic growth model. Unemployment has spiked since the 2011 revolution, clearing over 12 percent, a figure which is not expected to decrease for several years at least and the situation is even more dire for the country’s youth. While the likely IMF program will offer the macroeconomy a measure of relief, it cannot reverse decades of mismanagement. Egypt’s private sector may therefore not experience a recovery in the near future. The government’s situation looks similarly stressed as its gross debt is projected to rise from 73 percent of GDP in 2010 to 79 percent this year. Combined with the confusion surrounding the government’s structure and organization, it is unlikely that the public sector can fill the jobs gap or provide the needed high quality and affordable goods and services. However, the legal limbo surrounding inclusive business models (IBs) as well as intermediary support organizations (ISOs), which are supposed to provide the needed support to IBs, has unnecessarily shrunk this sector of the economy and disabled it from playing its necessary role.

In his inaugural speech, Egyptian President Mohamed Morsi portrayed himself as a president for all Egyptians, including the menial and underprivileged rickshaw drivers. The Muslim Brotherhood’s Al-Nahda Program emphasizes social justice and a consensus vision across all groups in society. The new leadership is committed to social innovation with “a national strategy to develop mechanisms to support innovation dealing with community issues.”

Although the constitution has not yet been drafted and there is currently no parliament, this moment in time contains a golden opportunity for the government of Egypt to capture the energy, civic engagement and entrepreneurial spirit in the country. Under Mubarak, Egypt’s economic growth and business policy reforms helped foster the private sector, but 85 percent of the population continued to live under $5/day and this ratio did not change during the decade of growth prior to 2008. Safeguards against abuse and incentives for inclusiveness were missing, and the economy became dominated by crony capitalism with wealth concentrated in the hands of a few. People’s perception of inequity and dissatisfaction with public services increased. The governance indicators of “Voice & Accountability” and “Control of Corruption” deteriorated from 2000 to 2010, even though there was a steady improvement in “Regulatory Quality.”

Egypt needs an enabling legal framework to promote a more equitable growth model. Such a framework should encourage forms of inclusive businesses (such as cooperatives) and ISOs that could help micro and small enterprises. These firms (with less than 50 employees) represent nearly 99 percent of all non-public sector, non-agricultural firms and provide about 80 percent of employment in Egypt. But their expansion has been restricted because of the weakness of the ecosystem of incubators, angel investor networks, microfinance institutions (MFIs) and impact investors necessary to allow young entrepreneurs to start up and grow. This policy paper argues that legal and regulatory reforms that encourage ISOs and allow new forms of inclusive business to register and operate are a necessary first step towards a new inclusive growth model.

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Authors

Homi Kharas
Ehaab D. Abdou

Image Source: © Nasser Nuri / Reuters

After the Spring: Achieving Inclusive Growth in the Arab World

Mon, 15 Oct 2012 12:30:00 -0400

Event Information

October 15, 2012
12:30 PM - 4:30 PM EDT

Tower Hall
Roppongi Hills Mori Tower 49F
Tokyo

What is the state of the Arab world nearly two years after the start of the revolutions? What role can donors play to support a successful transition to democracy? These were two of the questions debated at an October 15 workshop organized jointly by the Agence Francaise de Développement (AFD), the Japan International Development Agency (JICA) and the Brookings Institution. The workshop took place in Tokyo after the Annual Meetings of the International Monetary Fund and the World Bank, and was attended by a large number of senior representatives from Arab countries and the international community.

Mr. Ashraf El-Araby, the Egyptian minister of planning and international cooperation, summarized many of the many conclusions of the seminar in his remarks. He stated that improving the Arab world’s social situation is a major concern and that more projects that create jobs, particularly for young people, were needed. He noted that donors can also help in setting up social safety nets and social insurance schemes and stressed the importance of small and medium enterprises for employment and shared growth. Also, he explained how his government is working to improve the overall business environment of Egypt, paying particular attention to regulations affecting small businesses while also acknowledging that the Arab Spring countries are facing huge challenges on many fronts and need to work with development partners to enhance their institutional capacities.

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1115 joint research interim outputs

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Panelists

Harnessing Technology and Innovation in the Fight Against Global Poverty

Wed, 10 Oct 2012 15:56:00 -0400

This collection of policy briefs was commissioned for the ninth annual Brookings Blum Roundtable on Global Poverty, held in Aspen, Colorado on August 1–3, 2012.

There is growing excitement among governments, international organizations, the private sector, philanthropic organizations and civil society about the potential of technology and innovation to dramatically improve the lives of poor people around the world.

Mobile technology is giving poor people the capacity to transact, borrow and save through their cell phones. Connection technologies such as open source software are allowing people in Haiti and Pakistan to collect and analyze information about, and then respond to, violence, corruption and natural disasters. Myriad ‘green growth’ technological innovations across the globe are expanding access to electricity, increasing agricultural yields while also reducing harmful emissions.

But innovation in the service of development goals is not just about achieving technological breakthroughs. Recent research shows that new business models often matter far more than the technology of a given product when serving poor communities. Moreover, promising technologies do not bring about improvements in the lives of the world’s poorest people unless they are adequately invested in, rigorously evaluated, and then brought to scale, which typically requires the collaboration of many actors, including the private and philanthropic sectors and government.

The following policy briefs explore these issues in detail, lay out the challenges, and offer a range of specific recommendations on what needs to happen and why.

Image Source: © Suhaib Salem / Reuters

The Innovation Revolution and its Implications for Development

Wed, 10 Oct 2012 15:56:00 -0400

Laurence Chandy and Homi Kharas explore how technology-driven innovations in finance, management and accountability can catalyze scaled up development interventions that reach poor people around the world, but that this depends on the forging of partnerships between nonprofit and for-profit actors.

Publication: Harnessing Technology and Innovation in the Fight Against Global Poverty

Australia’s Future in the Asian Century

Tue, 28 Aug 2012 11:30:00 -0400

Event Information

August 28, 2012
11:30 AM - 12:30 PM EDT

Stein Room
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC

Australia’s economy and public finances have weathered the global slowdown in better shape than most of its peers, but the nation’s future is closely linked to Asia’s continued prosperity. The Asian century will reshape both the global and regional economy, and will have lasting and profound results. Australia is well placed to benefit from Asia’s mounting strength and the shifting global economic landscape, but there will also be challenges ahead.

On August 28, Global Economy and Development at Brookings hosted a discussion on the transformation of the global economic landscape and challenges and opportunities for Australia and other countries in the Asia-Pacific region. Senator the Honorable Penny Wong, minister for finance and deregulation for the Commonwealth of Australia, delivered a keynote address, and was joined by Brookings Senior Fellow Barry Bosworth for a panel discussion following her address. Senior Fellow Homi Kharas, deputy director of Global Economy and Development, moderated the discussion.

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Australia’s Future in the Asian Century

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20120828_australias_future

The Money Trail: Ranking Donor Transparency in Foreign Aid

Homi Kharas and Anirban Ghosh — Thu, 09 Aug 2012 11:31:00 -0400

Editor's Note: The following piece appeared in Transparency and Public Procurement, a thematic supplement to the 2011 Annual Statistical Report on United Nations Procurement.

Introduction

There is growing consensus that aid transparency must be improved in order to increase aid effectiveness. According to Moon and Williamson, aid transparency can be defined as “the comprehensive availability and accessibility of aid flow information in a timely, systematic and comparable manner that allows public participation in government accountability.”

This includes not just how much money is given, but how that money is spent, and as such is of great importance when studying the public acquisition of goods and services in countries which receive Official Development Assistance (ODA). In this paper, we look at elements of transparency that are needed to improve aid coordination and accountability, from the donor to the procurement officer.

The Accra Agenda for Action, a document summarizing the deliberations of the 3rd High Level Forum on Aid Effectiveness held in 2008, called on all donors to disclose aid information in a timely manner. The International Aid Transparency Initiative (IATI) was launched at the same forum. IATI brings together donors, recipients, aid experts and non-governmental organizations to create a common and universally agreed method of sharing aid information between all stakeholders.

Importance of transparency in aid effectiveness

Complete transparency means that everyone can see how much aid is being given by each donor, to whom, for what projects and when.

Over the last ten years, the number of new aid projects has skyrocketed, and their average size has shrunk drastically. This fragmentation of ODA makes it even harder for aid agencies to coordinate their activities and duplication and waste could be growing.

Transparency is also valuable in combating corruption. In one beneficiary country in Africa a public expenditure tracking survey found that only 20% of donor-funding for education programmes was actually reaching schools. As a result of an information campaign making transparent what each school was supposed to receive from the ministry, the funds flow increased to more than 80%.

Greater transparency affects all major stakeholders in development assistance programs:

Donor country taxpayers can understand how their taxes are being used, and thus become more engaged in and supportive of aid.
Donor country governments can evaluate their aid programmes more effectively.
Recipient country citizens can hold their governments to account over any discrepancies between aid received and aid spent on the public procurement of goods and services.
Recipient country governments can plan their budgets and their procurement needs better. This is especially true for aid dependent countries, where ODA forms a large part of their budget.

Improving transparency will require additional investment and organizational changes by donors. These costs are mainly administrative, adapting IT and reporting systems to global standards and also staff time spent on training and the reporting of aid activities. But the savings on automating provision of aid data alone would more than offset the costs of investing in better transparency systems. The case against transparency thus seems to be fundamentally political - a reluctance to automatically release information that could potentially be damaging to an organization.

The need for a transparency index

A transparency index serves as a quantitative measure that is comparable across countries or agencies. A benchmarking system assesses a donor against what others are actually doing in practice rather than against an abstract notion of ‘good’ behaviour. A secondary purpose is to enable research to document the importance of making progress on the transparency agenda.

Almost everyone pays lip-service to the importance of transparency but without specific indicators it is hard to hold donors and implementing agencies accountable for putting their commitments into practice. A transparency index fills this gap by generating a dialogue on which donors are putting a transparency agenda on aid into place and how aggressively they are moving to implement such an agenda.

The transparency index data and methodology

To create a useful transparency index, we need to focus on data that agencies provide to publicly available, comparable databases.

There are three defining characteristics of a strong transparency index. First, it should only use data that donor agencies proactively put in common databases, such as IATI, so that it can be accessed and compared with other donors. The notion is that transparency implies data that is readily available, useful to others and comparable across donors so that it can be a tool for greater coordination and accountability. Information buried in an agency’s annual report or web-site does not meet the requirement of crossdonor comparability.

The second important characteristic of an index is that it differentiates between complete and partial reporting. In this way, we are able to make judgments on the overall quality and comprehensiveness of aid information and make more nuanced judgments on the degree of transparency.

Third, it should explicitly compare donors to each other, thereby creating a ‘best in class’ measure and a base year measure of transparency.

The data for the transparency index can be taken from two main sources: the Development Assistance Committee’s Creditor Reporting System’s database; and AidData, a data source for aid activities launched in March 2010 as an independent organization not affiliated with any donor group.

The existing datasets are poor in a number of regards. First, the datasets are incomplete, especially with regard to coverage of the most important donors from emerging economies and of private aid. Also, variables like disbursements cannot be accurately matched with commitments, so it is hard to know if projects are actually implemented. Second, the datasets are not timely, with up to two years’ delay. Third, there are areas which could be important for transparency but where all donors do poorly. Two such examples at the time of writing in 2011 are geo-coding and beneficiary feedback.

The transparency index we designed is one component of a broader effort at assessing aid quality introduced by Birdsall and Kharas that is continually being updated. In its initial construction, our transparency index was an equally weighted average of six indicators, each of which is directly actionable. They were chosen to reflect what can best be thought of as a ‘culture of transparency’ that we believe is linked to aid effectiveness. The indicators are defined as follows:

Whether the donor is a member of the international aid transparency initiative (IATI) - an initiative to agree on common standards and reporting to facilitate sharing of aid information.
Proportion of projects for which the project title, its long description and its short description are filled out in the AidData database.
Average character count of the project long description in AidData. Although lengthy descriptions are not needed, in general the more detail on the aims of the project is better.
Percent of projects reporting the aid delivery channel. It is important to know whether a project is to be implemented by the government, an NGO, a multilateral or another agency.
Completeness of project level commitment data. In our analysis, we have found a discrepancy between the reported amount of aid at the aggregate level (what the donor claims to have donated in total to a given beneficiary in a given period) and the sum of aid at the disaggregated, project level (reported disbursements for all individual projects taken together in the same period). The missing or unaccounted aid is not transparent by definition.
Share of net ODA that donors give to recipients with a good monitoring and evaluation framework. This indicator rewards donors that support countries with good monitoring and evaluation frameworks.

Useful findings revealed by a Transparency Index

Based on these indicators, it is possible not only to rank and compare donors but also to spot overall trends. For example, in our initial compilation in 2011 there did not appear to be any strong, systematic difference between multilateral agencies and bilateral donors on transparency. There was a very low correlation between the size of donors and the transparency of their activities. Several large donors were also poor performers on transparency. By 2012, we found that some donors had made a forceful effort and overall global transparency was being improved at a faster pace than any other dimension of aid quality.

Donors who are members of the IATI score higher on other dimensions of transparency as well, suggesting that IATI members are broadly committed to transparency. Indeed, 13 of the top 15 most transparent donors in 2011 were also members of the IATI. View the full ranking and other related research on www.aiddata.org.

Conclusions

It is not straightforward to measure transparency, partly because norms and standards are still not universally accepted and partly because transparency is an elusive and shifting concept that resists an easy definition.

This paper proposes an index of transparency based on six indicators. We hope that the benchmarking provided by these indicators will help to ‘move the needle’ in the transparency of agency activities. The downside of the chosen indicators is that we are restricted to available information, which is currently limited in scope.

Greater transparency in aid would help reduce overlap, waste and the lack of coordination between donors. It would also help beneficiary countries plan their public procurement needs and hold their procurement officers, and other holders of the purse strings, to account. Lack of transparency also leads to a lack of opportunities to learn what really works in aid, thus inhibiting rigorous research on aid effectiveness. Because aid is increasingly fragmented, norms and formalized systems of transparency are becoming more important. Informal knowledge sharing among a few large players is no longer a viable alternative, as ever more players need to know what others are doing.

Authors

Homi Kharas
Anirban Ghosh

Publication: United Nations Office for Project Services

Image Source: Nayef Haslamoun / Reuters

The Group of Twenty: Origins, Prospects and Challenges for Global Governance

Homi Kharas and Domenico Lombardi — Thu, 02 Aug 2012 00:00:00 -0400

At the height of the global financial and economic crisis of 2008–09, the Group of Twenty was elevated to country leaders’ level and acknowledged itself as the “premier forum for ... international economic cooperation.”

This self-acknowledgment reflected the long-felt need to institutionalize the dialogue between the advanced and emerging economies in a more effective setting. However, the ad hoc nature of the G-20 and the extent to which an informal and self-selected club of nations can provide a stable framework for facilitating global cooperation has been questioned.

Against this backdrop, the study traces the G-20’s historical evolution, situates the dynamics of its institutional arrangements, and reviews the emerging literature on G-20 reform. Building on this analysis, the study then assesses the expansion of the G-20’s scope to global development and appraises the Group’s evolution in the broader context of the current global governance framework.

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Development, Aid and Governance: Connecting the Empirical Dots

Daniel Kaufmann, Homi Kharas and Veronika Penciakova — Tue, 17 Jul 2012 17:58:00 -0400

In today’s discussions about global development often insufficient attention is paid to what we can learn from the data. What we can observe about trends over time, differences across countries, and relationships between various dimensions of development, such as how corruption impacts growth, is critical in helping us find solutions to some of today’s most pressing development challenges.

Anyone committed to evidence-based policy analysis needs to have access to data in an easy-to-manage form. Public access empowers students, experts, civil society advocates, and champions of reform within government who monitor development progress and promote further change.

It is in this spirit that we are launching the Development, Aid and Governance Indicators (DAGI), an interactive platform and databank that features indicators developed by scholars from the Brookings Global Economy and Development program. Some of these indicators on aid quality and governance have been developed in collaboration with partners (the Center for Global Development and The World Bank, respectively).

Our new interactive platform includes data on the following indicators:

Country Programmable Assistance (CPA), which measures the amount of foreign aid available to developing countries to implement projects and programs that contribute to long-term development;
Quality of Official Development Assistance (QuODA, produced with Center for Global Development), which assesses four dimensions of aid quality for each DAC donor country;
Vulnerability of Aid Indexes (VAI), which measure the risk that each dollar of development aid disbursed ends up in corrupt or misgoverned recipient countries;
Worldwide Governance Indicators (WGI, produced with the World Bank), which assess the quality of governance in economies on six dimensions of governance;
Middle Class measures, which provide historical estimates and forecasts of the number of people living in the middle class, and the consumption expenditure of this group
Poverty measures, which provide historical estimates and forecasts of the number of people living below a poverty line of $2 and $5 a day.

A number of commonly used and readily-available development variables— such as GDP per capita, maternal mortality ratios and primary school enrollment rates— have also been selected to increase the scope for analysis and to highlight the links between the indicators above and conventional development variables.

An important aim of this tool is to allow users to see and show, in interesting, powerful and graphic ways, how development indicators interact with each other, differ across countries, and change over time. Here are some examples of what can be done with this new interactive database:

You may be interested in seeing where the world’s poor might reside in 2025. In our baseline scenario we find that high growth and demographic change in dynamic middle income countries will help them make significant progress against poverty in the coming years. However, as we see in the world map, in fragile countries, concentrated mostly in Africa, poverty will remain a critical challenge. Consequently, the global poverty problem might increasingly become an Africa problem by 2025. This growing concentration of poverty in fragile developing countries will undoubtedly have important consequences for issues like foreign aid.

You may have been surprised by the upheavals in Tunisia, Egypt, Libya, Syria and elsewhere in the Middle East. Perhaps we would all have been less taken aback had we paid closer attention to the extremely low and deteriorating quality of governance in many countries in the region. The Worldwide Governance Indicators show that on the eve of the Arab Spring there was a growing democratic governance deficit in the countries where protests emerged. The column chart shows just how quickly democratic accountability and citizen voice deteriorated from already low levels in Tunisia between 2000 and 2010. If we look closely at other countries experiencing unrest, such as Egypt, Libya, Syria and Yemen, we observe the same trend over the past decade. It was in large measure this growing democratic governance deficit that spurred unrest in the Middle East.

If you are interested about the increasingly important role of mobile technology and social media in global events, aspects of this can be explored in our interactive databank. We often consider mobile technology and social media as resources in countries with a well-developed middle class. Yet, we saw the power of these tools during the Arab Spring in countries with relatively small middle-class populations, such as Egypt, Syria and Yemen. As we see from the graph, mobile technologies have also penetrated countries where the middle class is just now developing. We can probably therefore expect these types of technologies to play an important role in future events in developed and developing countries alike.

These examples are just a small sampling of the many questions that can be analyzed using new indicators available through the DAGI interactive platform and databank. Which donors allocate the greatest share of aid as country programmable assistance? How effective is the aid disbursed by the largest donors, and how vulnerable is it to corruption and misgovernance in recipient countries? Can significant changes in governance happen in the short term? Which countries are expected to experience the sharpest declines in poverty and greatest increases in the middle class in coming years? This new empirical tool enables any student, scholar, policymaker and advocate to ask these types of questions and explore possible answers by using the data. After all, as Lord Kelvin once said, “if you cannot measure it, you cannot improve it.”

Authors

Daniel Kaufmann
Homi Kharas
Veronika Penciakova

Horizon 2025: Creative Destruction in the Aid Industry

Homi Kharas and Andrew Rogerson — Tue, 10 Jul 2012 16:00:00 -0400

Editor's Note: This paper from the Overseas Development Institute aims to stimulate debate on the future of the international development architecture and explores how far some of today’s major development agencies are likely to be exposed to the resulting pressures to change.

Report Summary

The global economic landscape has evolved dramatically since 2000: developing and emerging economies have been driving global growth, new sources of development finance have mushroomed and the diversification of actors, instruments and delivery mechanisms has continued. Transformations in the poverty map and new forces on the supply side of development finance are challenging the international development architecture. This paper aims to stimulate debate on the future of this architecture.

The authors project that, by 2025, the locus of global poverty will overwhelmingly be in fragile, mainly low-income and African, states, contrary to current policy preoccupations with the transitory phenomenon of poverty concentration in middle-income countries. Moreover, a smaller share of industrialised country income than ever before will potentially close the remaining global poverty gap, although direct income transfers are not yet feasible in many fragile country contexts.

Against this backdrop, new institutions, business models and practices are challenging long-established ‘aid industry’ actors. Agencies providing development finance for improved social welfare, for mutual self-interest in growth and trade and for the provision of global public goods will find that, in each area, disruptors to their programmes may force a change in positioning.

The paper focuses on one such disruptor for each of these three complementary rationales for development cooperation. The key disruptor we discuss in the first area is high-impact philanthropy and non-governmental giving channels; in the second, South–South cooperation combining trade and finance, and blended public–private funding in general; and in the third, the power of climate change finance, particularly its quite different country and project allocation logic.

From this analysis, this paper explores how far some of today’s major development agencies are likely to be exposed to the resulting pressures to change course, emulate the disruptors or face irrelevance.

The authors construct an index of vulnerability, presented in a traffic-light ranking, based on recent shares of each agency’s operations going to, first, middle-income and low poverty gap countries and, second, purposes linked respectively to social welfare, growth and global public goods, with appropriate weights.

These assessments are offered not as predictions but as possible stress test tools for further, context-specific analysis. The paper ends with questions for further research.

Read the full paper at www.odi.org »

Authors

Homi Kharas
Andrew Rogerson

Publication: Overseas Development Institute

Image Source: Goran Tomasevic / Reuters

The Global Partnership for Effective Development Cooperation

Homi Kharas — Thu, 21 Jun 2012 14:51:00 -0400

INTRODUCTION

These are important times for how the world manages the annual flow of around $200 billion in development cooperation assistance to developing countries. A number of changes in global international development cooperation are in the offing: within a one month span, development issues will be taken up by the G-20 at the Leaders’ Summit at Los Cabos, by the United Nations at its Rio+20 Summit, and by Jim Kim upon taking over as the first ever development professional to become president of the World Bank. The key issues on the table are implementation of the Millennium Development Goals, building consensus on a new set of post-2015 Sustainable Development Goals, implementing a New Deal on fragile states, and closer integration of environmental, security, trade, investment and development agendas.

There is now an opportunity to establish a new paradigm and governance structure for coordinating the many state and non-state actors engaged in development cooperation. A new Global Partnership for Effective Development Cooperation is taking shape, backstopped by the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) and the United Nations Development Program (UNDP). Establishing this partnership was one of the key outcomes of the Busan High Level Forum on Aid Effectiveness held in December 2011.

On June 28-29, 2012, the Working Party on Aid Effectiveness, a DAC-supported international partnership for aid effectiveness, will hold a plenary meeting in Paris which should conclude with three consequential outcomes: (i) it will bring into being a new Global Partnership for Effective Development Cooperation with a governance structure that truly reflects the multi-stakeholder nature of development today; (ii) it will dissolve itself, marking one of the first times that a multilateral structure is actually replaced by a more suitable mechanism; and (iii) it will adopt a set of indicators for monitoring global progress towards more effective development cooperation.

Already, the outlines of the new partnership are becoming clear, thanks to a transparent process of meetings and dialogue. There is much to be encouraged about, but as with most efforts for institutional change, the devil is in the details. At first glance, while the Global Partnership promises to deliver substantial and significant improvements in governance, its proposed new monitoring indicators are still rooted in the past and do not reflect the new style of development cooperation that is expected in the next decade. This policy paper explores the approach to building indicators and suggests improvements to ensure better development cooperation.

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Homi Kharas

The G-20 Has Disappointed on International Financing

Fri, 08 Jun 2012 14:48:00 -0400

Homi Kharas contends that to date the G-20’s focus on the international financial architecture has largely been concerned with stability issues rather than growth. Kharas maintains that in order to strengthen and sustain global growth the G-20 should urgently consider whether the existing institutional structure is adequate for promoting the huge flows of capital that developing economies need for critical infrastructure investment.

Publication: The G-20 Los Cabos Summit 2012: Bolstering the World Economy Amid Growing Fears of Recession

Rio+20: Coalitions Driving Bottom-Up Change

Fri, 08 Jun 2012 15:32:00 -0400

Representatives from world governments, civil society and the private sector will gather in Rio de Janeiro on June 20-22 to address the many environmental challenges facing the global community. The Rio+20 Summit will mark the 20th anniversary of the 1992 United Nations Conference on Environment and Development, and although many gains have been achieved over the past two decades, the climate change agenda continues to move at a glacial pace while at the same time climate risks are increasing. As the Rio+20 approaches, the challenge will be to reenergize international will for meaningful progress in addressing climate change, achieving sustainable growth and development, and protecting the environment.

The United Nations Conference on Sustainable Development (UNCSD), or Rio+20, has identified seven key priority areas for discussion: decent jobs, energy, sustainable cities, food security and sustainable agriculture, water, oceans and disaster readiness. Green growth as a pathway for sustainable development has been proposed as an element to integrate these priorities. Other issues to be discussed include establishing a new development agenda to replace the Millennium Development Goals (set to expire in 2015) with the Sustainable Development Goals, and finding new sources for climate and sustainable development financing.

Joining the debate on the challenges and expectations for the Rio+20 Summit, experts from the Brookings Institution explore the critical issues and offer policy recommendations for leaders to consider in order to promote sustainable growth in both the developed and developing world.

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