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Editorial
03/2003
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New development strategies
"The Elusive Quest for Growth" is the title of a book published in the United States at the end of 2001. In it, author William Easterly, a research economist of 16 years standing at the World Bank, lists all the things that so far haven't worked: "The list of failed panaceas includes foreign aid, foreign investment, education, family planning, big infrastructure projects, conditional aid, debt forgiveness, and so on." All those activities are futile, Easterly says, as long as a particular requirement is not met: certain political institutions are needed for development to be possible – institutions such as rule of law and corruption-free government.
Development policy is radically changing. It is suspected of having failed. And it does not help that those who defend it object that it never claimed to be a solution to the world's problems. For one thing, that is exactly what it did claim. One needs only to read Harry S. Truman's inauguration speech of 20 January 1949, which sets out in its famous point 4 the premise on which all development policy is founded: "For the first time in history, humanity possesses the knowledge and the skill to relieve the suffering of these people [the poor] ... this program ...can raise substantially their standards of living." Secondly, the poor have a right to expect solutions to their problems. If we are not prepared even to try to provide them, why are we engaged in development cooperation at all? Surely not so we can say 75% of our projects are successful but sorry, the gap between rich and poor in the world has widened once again!
We have been conducting this debate since 1985. That was when Gunnar Myrdal, one of the fathers of international cooperation, called for all development aid to be stopped because there was no evidence of it doing anything to aid development. And in Germany, Brigitte Erler wrote her book "Tödliche Hilfe" (Deadly Aid). All the criticisms she hurled at development policy were instantly rejected, but at BMZ Michael Bohnet set about checking her claims and published a study called "Learning from mistakes". Ten years later, in March 1995, Hansjörg Elshorst wrote a highly acclaimed article in E+Z ("The consequences of a critique") affirming that Brigitte Erler's book had triggered a much-needed debate. In the meantime, Elshorst went on to say, development policy has had to face up to "the question of its relevance".
The beginnings of a rethink were also seen elsewhere in the mid-1980s. World Bank and IMF launched their policy of structural adjustment. What was supposed to adjust were the institutions in the developing countries, especially state budgets. Unfortunately, adjustment started at the wrong end. Spending was simply cut, predominantly in sectors relevant to development: education, health, the whole social sector. Defence spending remained untouched, as a rule. Since then, however, WB and IMF have learnt a thing or two: in more recent concepts, such as poverty reduction strategies (PRS), education and health are given special attention.
If development promotion is to focus on institutions, it can no longer be confined to conventional small projects. It needs to influence entire systems, create sector?wide capacities. That means: not just support a health centre here and there but bring about health system reform; not just help get the odd micro-credit bank off the ground but support the development of a national banking system. That kind of institution-building is not possible where hundreds of aid organisations in a country are competing with one another. Hence the idea of pooling the resources of several donors so that bigger programmes can be financed (basket financing) and the partner can be spared the need to negotiate with a different organisation every day. And what is particularly important, however, is support for the development of planning and management capacities on the partner's side. Those capacities are another institution vital for development.
These perceptions are being translated into action in donor countries all over the world. In this issue, Ronald Meyer describes the ways in which development policy has been reformed in the Netherlands and United Kingdom. The measures taken include reducing the number of partner countries so that more extensive programmes can be financed, promoting sectoral programmes – also by budget support – rather than stand-alone projects, creating partners’ capacities and assigning responsibility to them, and establishing units with decision-making authority in partner countries. The development ministers of both the UK and the Netherlands are women and they, together with their like?minded female colleagues from Germany and Norway, created the Utstein Group, to make more of an impact by working together. In Germany, the reform process had a more tentative start, encountering greater resistance, but taking the right direction. Now, a major effort is being made to implement action that was previously shelved (see interview with permanent secretary Erich Stather, p. 119).
But there are also obstacles which still need to be overcome. Large-scale programmes would be easier to implement if the resources of the big multilateral organisations could also be harnessed for them. But many of those organisations have a reputation for inefficiency. Helmut Asche analyses the problem and comes to the conclusion that making the multilaterals more efficient must have priority. Michael Dauderstädt, for his part, looks east, wondering if the development and adjustment programmes used to prepare the Eastern Europeans for EU membership could be a model for others. The answer he arrives at is no.
Reinold E. Thiel
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