Helen Clark: The Future of Development Co-operation: from Aid to Coherence?May 8, 2012
Belgian Development Days
Remarks by Helen Clark, UNDP Administrator
The Future of Development Co-operation: from Aid to Coherence?
8 May 2012
It is a pleasure to be here today to participate in the High-Level Session on “The future of development co-operation: from aid to coherence?” I thank the Belgian Development Co-operation for organizing this important dialogue.
Today’s discussion is timely. It takes place only a few months after the Fourth High-level Forum on Aid Effectiveness in Busan, only days after the conclusion of UNCTAD XIII in Doha, and only weeks before the United Nations Conference on Sustainable Development (Rio+20) next month. It offers a good opportunity to reflect on recent debates on better development co-operation and aid effectiveness, and to consider how greater policy coherence can help address development challenges.
Policy coherence for development is about ensuring that different policies – whether they relate to trade, national security, climate change, migration, agriculture, fisheries, or anything else - work in synergy with development co-operation to get development results. It is about eliminating the policy incoherence which can undermine or hamper development progress, and identifying other policies which can contribute positively to development.
The European Union recognized the importance of the policy coherence agenda earlier than many, and has since 2005 seen it as important in increasing the impact of its development assistance and accelerating progress towards the Millennium Development Goals.
The call for policy coherence for development is compelling – and can be supported from multiple perspectives:
- An ethical one; in a globalized world, the EU and other development partners have rightly recognized that they cannot turn a blind eye to the impact their policies have on the development prospects of the rest of the world.
- An economic one; in the current climate of constrained resources, taxpayers are demanding to see results and impact from development assistance. The coherence agenda can help ensure that development aid is not unintentionally undermined by other policies, and that limited aid resources can go further, and have greater effect working in synergy with other policies.
- A political one; recent uprisings in the Arab world and ongoing instability in other places demonstrate that political, social, economic, and human rights challenges are interconnected. Greater policy coherence and recognition of the development-security nexus can help ensure that development efforts contribute to building resilience and breaking negative feedback loops between fragility and under-development.
Combined, these perspectives provide persuasive arguments for pursuing policy coherence to help improve the effectiveness of development co-operation, and build its credibility. The converse is also true: incoherence can result in lack of progress, a waste of resources, and entrenched mistrust.
The straightforward message of the coherence agenda has led to a range of stakeholders embracing the concept. There is concern, however, that despite awareness of the importance of the agenda, there has been a lack of progress on policy coherence on the ground – a “gap between intentions and reality.”
My remarks will therefore focus first on the importance of moving beyond rhetoric to action on policy coherence. I will then offer some thoughts on how Rio+20 and discussion on the post-2015 development agenda can be vehicles for building consensus around the concept, and the mechanisms which could help implement it.
The Importance of Moving from Rhetoric to Action
Striving for policy coherence for development is hardly a new agenda. The first official discussion on it took place in 1991, during a High-Level Meeting of the OECD DAC. Over the last two decades, a number of important reports have been published on the concept, along with recommendations on how to operationalize it.
There appears to be a broad consensus that policy coherence is necessary. Indeed, MDG Eight – Develop a global partnership for development – recognized the need to consider development within this broader frame, and set broad targets on policies related to trade, debt, and access to new technologies and affordable essential drugs.
The UN 2002 Monterrey Consensus on Financing for Development and the subsequent Doha Declaration both call for enhancing the coherence and consistency of the international monetary, financial, and trading systems in support of development, recognizing that national development efforts must be complemented by an enabling international economic environment.
Yet, we are still far from seeing coherence in action.
Incoherence between a country’s domestic and external policies on the one hand, and achieving international development goals on the other, can have detrimental impacts on development, including in the areas of:
- Trade and finance: This is possibly the area where progress towards policy coherence has been slowest. Trade barriers are detrimental to the efforts of developing countries to grow their exports. The Doha Round of trade negotiations needs to be completed, with a strong development component as was envisaged when it was launched in 2001.
- Climate Change: Adaptation efforts are often funded whilst donors continue to invest in fossil fuel-based energy production, thereby concurrently investing in both the causes and consequences of climate change.
- Migration: Incoherence between migration and aid policies can be costly for donor countries and cause critical shortages of labour in developing countries. The OECD Development Center (2006) highlighted this incoherence – where, for example, Malawian nurses were recruited by the UK, contributing to a brain drain from their country, while UK development assistance policy simultaneously channeled sizable resources into the Malawian health-care sector.
Providing for orderly migration of unskilled labour can be positive for source countries because of the remittances generated, and for host countries. Putting up barriers to the movement of such labour, however, is common. Yet it is expensive in security costs for the receiving countries, and may deprive them of skills they actually need, as well as depriving developing countries of potentially valuable remittance flows.
- Investment policy: Although foreign direct investment is welcomed by many developing countries and can spur economic growth, environmental, labour, social, and fiduciary standards are often absent. Without such safeguards foreign direct investment may become exploitative of people, a country’s institutions, and the environment, instead of fostering sustainable development. The international community could help set and monitor such standards for business responsibility and ethical investment.
- Food security: Despite commitments by major development actors to promote food security, fears have emerged that other policies, like support for biofuel production in the global North to promote cleaner energy, contribute to raising food prices and jeopardize food security for food importing countries in the south.
As well, subsidized agricultural production and exports in the Global North can undercut the economics of production in the Global South.
- Taxation: Incoherent tax and aid policies, including the presence of ‘tax havens’ in the North, have been criticized for enabling multinational companies and wealthy individuals to shift income to avoid (or evade) taxes in the countries where they operate or reside. For poor countries, this missing tax revenue represents missed development opportunities. This lack of transparency can in extremis facilitate money laundering, which in turn may be used to fuel corruption, fund illicit arms flows, and destabilize countries.
These are just some of many examples we could discuss today. While the need for policy coherence is obvious, more research is needed to better understand the relationships between policies, and greater political commitment is needed to move from rhetoric to action.
Now, the how
As a former Prime Minister, I well understand the political challenges involved in reform, especially when there are diverse interest groups with conflicting priorities, and when the costs of reform are borne in the short-term with benefits accruing only well into the future.
Yet there is growing awareness that many of the most pressing challenges we face, from climate change to the spread of epidemics, the consequences of financial crises, and the forced displacement of people, require global solutions. Official development assistance (ODA) will do little to protect our ‘global public goods.’ Indeed, ODA itself constitutes a diminishing share of the resources available for development.
The actions of diverse actors, from multinational corporations to philanthropic foundations and NGOs, can greatly impact on development results. A wide range of stakeholders must therefore be brought into the conversation.
From Busan to Rio
In Busan it was agreed that to keep pace with changes in development co-operation, the focus must shift from aid effectiveness to development effectiveness.
For development partners, that must mean striving for more coherence in their policies across trade, agriculture, migration, development assistance, and other areas – as I have suggested. Development effectiveness will also require developing countries to maximize the use of all resources available to them - whether they be from aid, foreign direct investment, climate finance, concessional or commercial loans, or domestic resources – and will require capacities for integrated policy-making at the national level.
Building on the shift of focus from aid effectiveness to development effectiveness, I believe the discussions at Rio+20 and on the post-2015 development agenda can help further the broader policy coherence agenda.
I have been calling for a paradigm shift in development discourse in which reducing poverty and inequality, generating growth, strengthening democratic governance, building resilience, and achieving environmental sustainability are seen as strongly interconnected: in pursuing one, we can advance, slow, or stall progress in the others.
The policy coherence agenda - in being precisely about maximizing development impact through synergistic policies - is critical for achieving sustainable development and building the trust necessary between developed and developing countries to tackle global development challenges together. The ongoing discussion on defining sustainable development goals (SDGs) offers opportunities to move the development paradigm towards universal commitments and to highlight the need for multilateral approaches to protect and deliver global public goods.
Having a single, unified, and universal framework for development goals, can help ensure that there is an agreed set of priorities for the future we want, and increased coherence in our approach - which can then be reflected at the regional and country levels.
To move from concept to action, we would need effective global policy co-ordination and monitoring mechanisms which track progress on a future agenda based around sustainable development goals.
Within countries, institutions such as high-level co-ordination bodies can help bring coherence between the three strands of sustainable development – economic, social, and environmental. Singapore’s Inter-Ministerial Committee on Sustainable Development (IMCSD), for example, formulates national strategy for sustainable development, and has senior ministers in its membership, both from sector ministries and the Ministry of Finance.
Setting up such co-ordinating bodies, however, is not enough. In practice coherence requires us to think beyond co-ordinated planning, to implementation and monitoring of outcomes - both intended and unintended.
The Belgian Government, I understand, has committed to establishing an “inter-ministerial conference” to ensure greater policy coherence for development, and is considering setting up institutional mechanisms to ensure results on the ground. This is commendable.
There are many other initiatives which can be highlighted. The Centre for Global Development, for example, an American think tank, has created the Commitment to Development Index (CDI) which ranks industrialized countries on a number of policy areas where incoherence is often noted, including trade, looking specifically at tariffs and agricultural subsidies; foreign aid; policies which promote investment; migration policies; security policies; environmental policies; and support for technology transfer.
Through its multi-stakeholder dialogue, the UN’s Development Co-operation Forum is helping countries distil and apply best practices in development partnerships. In doing so, it is helping to address the “unfinished business” of aid effectiveness, as well as to fulfill the international community’s commitment to achieve MDG 8 and establish global partnerships for development.
Let me end by reiterating three ‘take-home’ messages, which I hope can be part of the discussions during this afternoon’s workshops and with the Belgian community of development stakeholders:
- While ODA has become relatively less significant in that it constitutes an ever smaller part of the total resourcing available for development, reaching the 0.7% of GNI target for ODA is still important. ODA will be most effective when it catalyzes broader development efforts, including through policy coherence.
- Today’s development challenges are cross-cutting and respect no national borders. They require coherence at every level - global, regional, and national.Policy coherence can also no longer be seen narrowly as referring only to government policy, since actions by other stakeholders – the private sector, NGOs, civil society, and others - can have significant impacts on development. It is important that these stakeholders too are involved in building consensus around the policy coherence agenda.
- Rio+20 and the discussions on the post-2015 agenda offer an opportunity to broaden the discussion on policy coherence for development. The EU, with years of experience of considering this agenda, can give leadership to this discussion. New global sustainable development goals are likely to be universal, acknowledging that we face common challenges, and that we share responsibility for tackling those challenges in a coherent way.