New framework for European development policy

‘Think Locally, Act Globally’: A New Framework for European Development Cooperation

Can development cooperation be defended at a time of economic austerity in Europe? The moral imperative remains strong, but contemporary events also illustrate the role of development cooperation in managing global risks and opening opportunities for prosperity and sustainability at home. The 27 Member States of the European Union can act independently or seek leverage through a variety of multilateral organisations, like the UN, the World Bank – or the institutions of the EU itself. What is the comparative advantage of the EU in development cooperation? What must change for us to achieve even greater impact?

The question of development indeed consists of three major dilemmas: How do we reform the development politics and re-frame the development itself? How do we mediate the response at the European level? And lastly, how can we make the case far more influential in countries which share sceptical view on the issues of development. These questions might seem essentially basic, though they provide pivotal opportunities for development policy if solved.

What can we learn from Ryszard Kapuscinski? Simple idea, “Think Locally, Act Globally”. It seems a bit different statement that we are used to, but it carries a strong message. There is no reason why the basic principles of our daily life cannot be implemented into a global perspective. Now, The European Commission is already one year in. How is it doing?

That is an important but specific question, since Andris Piebalgs has circumscribed responsibilities within the domain of development policy. Thus, there are separate Commissioners for trade, climate change, neighbourhood policy and even humanitarian action; as well, of course, as a Commission Vice-President and Council High Representative for external affairs. All have an interest in developing countries.

It is not difficult to imagine a worst-case scenario, in which the new External Action Service would have captured control of development policy and funding, and would be using it to pursue security and foreign policy objectives. The development Commissioner would be left managing implementation of others’ decisions, aided by a time-expired European consensus on development policy and a poorly structured and poorly functioning bureaucracy. Good news. The worst case has been avoided. In fact, there are positive stories to report at the end of the first year.

First, the worst predations of the foreign policy establishment have been dodged. Although the post-Lisbon External Action Service formally has the lead on aid programming, the Development Commissioner has joint authority. In practice, he also has under his control the development expertise on development issues, an area in which the EAS looks to be weak. This is as good an outcome as could have been expected, a victory for common sense, but also the result of good political management.

Second, Andis Piebalgs has begun to put his stamp on EU and EC development policy. The title of the Green Paper he published at the end of 2010, ‘ EU development policy in support of inclusive growth and sustainable development – increasing the impact of EU development policy’, summarises the main themes, and hints at others: growth, the private sector, energy, a focus on results, accountability.

Third, the Commissioner has established a good political foundation for further work. The key themes of the Green Paper resonate with other ministers around the EU Member States, all concerned with demonstrating the impact of aid at a time of fiscal stringency. The growth and private sector themes also resonate with many, including the new Government in the UK.
Fourth, there has been an important decision to restructure the bureaucracy, merging DG Development, which previously dealt with policy, and Europe Aid, which led on implementation. The creation a new ‘DevCo’, under the leadership of Fokion Fotiadis, offers the opportunity of better strategic leadership on policy, and more effective administration.

Fifth, there have been some significant moments on the ground, for example in negotiating a coherent EU response to the Haiti earthquake. The EU offered a coherent position at the MDG Summit in New York in September 2010. There have also been summits with Africa and Asia.

Sixth, the EU’s development programme has been ranked highly in recent comparative evaluations, for example by the Centre for Global Development in Washington. They score development agencies with respect to 30 criteria related to: maximizing efficiency; fostering institutions; reducing burdens; and transparency and learning. The EC scores above the mean on all four of these aggregate measures. That is a far cry from the situation of a few years ago, and far also from the jaundiced public view of EC performance.

Should the record have been even better? Obviously, the development community, this author among them, has expectations which can never be satisfied. The gravity of poverty in the world demands no less. The Commissioner has been in office a whole year, yet poverty still persists!

Realistically, there are certainly some items of unfinished business.

First, the agenda is overloaded with policy papers and consultations. Second, and paradoxically, the policy agenda is incomplete. Third, and again paradoxically, given the range of policy initiatives, the Commission is remarkably poorly staffed in the policy area compared to its peer group among the large international donors. The EC, remember, not the EU as a whole, but the European Commission, disburses more in official development assistance than the World Bank, and about as much as the whole of the United Nations. Its weight and influence in global policy debates falls far behind either the Bank or the UN – even allowing for the innovation of an annual European Development Report. Some argue that the EC should leave the thinking to others, but surely a 10 billion euro aid programme needs to apply to itself the principle of being learning and thinking organisation, even before bringing into the mix other areas like trade.

Fourth, the EC ‘talks the talk’ on cooperation with other regions, but is very unevenly vigorous in ‘walking the walk’. Africa takes pride of place, though doubts remain about whether Europe is as effective a partner, or as preferred a partner, as China. In other regions, Europe needs to accelerate the transition from an aid relationship to a true strategic partnership on global and regional issues. The Asia Europe Meeting (ASEM) offers unfulfilled potential in this respect.

Finally, the Commission still struggles with the core question of whether Europe is a forum for cooperation between Member States, with energy focused on setting standards and managing coordination on the ground – or a forum for consolidation, with a greater share of aid passing through the Commission. It is yet another paradox that senior policy-makers use the language of coordination, and express their preference for this way of working, while simultaneously funding the largest channel in the world for ODA.

Here lies the challenge – and the opportunity.

I have argued elsewhere that the Commission should stop playing poker with development policy and reveal its hand. Another way of saying this is that the Commission should stop trying to cover all topics equally, but state its priorities, including those to do with growth, the private sector and energy. Commissioner Piebalgs might be surprised by the extent of support. In any case, it would be good to speed up.

Next, tackle head-on the apparent contradiction between cooperativist thinking and consolidationist behaviour. This may be a high-risk strategy, but is essential to help frame the debate now starting about the Financial Perspectives 2014-2020. At present 20% of EU development spending goes through Brussels. Is this about right? Too large? Too small? How do grants relate to loans, for example through the European Investment Bank? And what can be learned from the experience of creating shock facilities, like V-Flex and the food facility?

Three items on the to-do list for 2011. That doesn’t sound impossible. Ministers of the EU-27 should support this level of ambition and engage in making change happen.

With some EU economies in crisis and others facing unprecedented fiscal retrenchment, the auguries are not favourable for new, large-scale financial contributions. Further, there is little appetite in certain quarters for EU engagement in multilateral initiatives, with some writing of a ‘zero-sum world’ and others of ‘Europe’s Decline and Fall’.

Nevertheless, few leaders would deny that development represents an existential threat to humankind. And all would recognise that tackling the challenge is a matter of politics not technical analysis. That is why leaders themselves need to engage. Development is too important to be left to environment ministers, or even to foreign ministers.

Solidarity – Made in Poland, Exported by Europe

Commissioner Piebalgs’ lecture, entitled “Solidarity – Made in Poland, Exported by Europe” was focused on the development aid in the context of human solidarity and Kapuscinski’s heritage. Before Mr. Piebalgs moved to the point he presented his reflection on 04/10 tragedy of Smolensk and conveyed condolences.

Commissioner Piebalgs started with the recognition of Polish successful transformation and noticed that solidarity, the one that was born in Poland as a movement of brave people, had a wider meaning and was a core of human willingness to help others in need. Speaking at Kapuscinki’s former university Mr. Piebalgs called over this brilliant journalist, writer and storyteller to demonstrate that it was critical to understand the world and its people. And encouraged to look at things in ways in which we had had not previously contemplated.

Then he evoked refugee camps and the rubble that was once homes, schools and hospitals – consequences of the devastating earthquake which struck Haiti on 12 January. The destruction and the tragedy he saw was immense. Nonetheless it let him realise the decency of mankind and the determination of countries to work together to overcome this humanitarian crisis. Since solidarity is a fundamental part of EU development policy Member States and the Commission – working with the Government of Haiti – united their efforts to make sure that aid was targeted in the most effective way, focusing on results and cutting out waste and duplication. However it was not just about spending money and providing people with food. Development policy, he noticed, must be a catalyst for change and help people in need build a better future. It is about learning from experiences, sharing ideas and understanding opportunities. Thus Poland – country so experienced with transition, democratic and economic reforms – has so much to contribute to Europe’s development policy thinking. Moreover, it could inspire further EU actions towards developing countries. Commissioner Piebalgs emphasized that there was no one-size-fits-all approach and that we have to respect and trust our partners. He also reminded of Nicolas Copernicus, the Polish astronomer who put forward the idea that the earth was not the centre of the universe to illustrate that the development policy, if we expect it to be sustainable, cannot be donor-oriented but must put the recipient in the first place. Considering that our world is interconnected – events and actions such as pandemics in Mexico and pollution from Indian industries affect other parts of the world and the globe as a whole – this policy has to be about long-term response to present-day threats and global challenges at the same time. Many of these, Mr. Piebalgs noticed, had their roots in poverty and under-development. He also observed that development and security were interdependent – there was no development without security and no security without development for every human being. And, even though some may think that eradicating poverty is impossible, we have to endeavour to succeed.

This brought the speaker to the Millennium Development Goals. Commissioner Piebalgs presented some achievements such as significant reduction of tuberculosis incidences, increase of safe drinking water availability, increase of educational institutions and number of students. Nevertheless there is still a large number of victims of HIV/AIDS and other diseases and ca. 1.4 billion people live in extreme poverty. Thus a lot has to be done and international community has to redouble its efforts. One of them is EU’s 12-point Action Plan aimed to help developing countries achieve the Millennium Development Goals. It calls EU countries to increase aid, regardless of today’s economic and financial environment. EU credibility in development policy area is fundamental for trustworthy and successful partnership with developing countries. EU actions in this area need to ensure better value and more effectiveness. In this sense solidarity is the basis of the Action Plan that also affects other EU policies such as trade and migration also work for development. European Union, that accounts for over half of development assistance in the world, calls the rest of international community to undertake actions and get involved in tackling poverty. EU, with its potential and experience, may lead the rest of the world and export to the world the solidarity that was made in Poland. Hopefully forthcoming United Nations Summit in New York will help to achieve this goal.

Last but not least Commissioner Piebalgs emphasized the key role of Poland in the EU in the second half of 2011. Poland will also organize European Development Days in 2011. Mr. Piebalgs wished Poland, inspired with Kapuscinski heritage, would use this opportunity to raise the profile of development. In his opinion it was not too late for making the difference and implementing the Millennium Development Goals.

Solidarity for development

Solidarity – foundation of EU integration

Solidarity is a polish symbol – „Solidarność”. Solidarities’ deep roots in Europe. The beginning of the European integration, continent was in ruins. At the end of the war, physically damaged, destroyed cities, hate were between people and disagreements, indifference, loss of hope. This is what Europe looked like. Europeans understood that after the 2nd World War, without the close cooperation, Europe cannot be rebuilt. Not only in the physical sense, but also mentally.

Community building and cooperation aimed not only to rebuild the Europe which was in ruins, but also to repair mutual relationships and to make sure that such conflict will never happen again. And Europe was rebuilt on the foundations of solidarity. Solidarity means cooperation against the logic of force. This is the European understanding of solidarity. Prosperity and peace based on community to restore dignity of citizens. Dignity of individuals.

Solidarity – as a key rule of EU policy

The history of European integration is also defending common values. Freedom and human rights – we should never forget about it. It is also to provide social security, this after all, dignify life, is also life free of hunger. This is all about solidarity, this is the principal of European policy understood as need to build community, not only the internal community, but also the global community.

The experience of solidarity as the experience of the entire EU

The experience of solidarity as the experience of the entire EU. Our Polish or Central-European experience of solidarity harmonizes with the European experience. This is not only the experience of our democratic transformation, it is the experience within the entire EU after 1989, and we see it today, better than ever. And we also know that our revolution of Solidarity restored again the bright to the word of the solidarity in the EU and it gave this word a new meaning and the recent changes in northern Africa show that it refrains to the European experience of this solidarity, it’s clear.

Solidarity – New committment of „New” EU member states.

Countries such as Tunisia or Egypt would like to draw on of the experience of the transformation in Central Europe and looking for such experience sometimes they approach directly of countries as our but they also approach to EU as I have this experience recently when I visited Tunisia and Egypt in March. As a Pole and as a man of the EU. I spent lot of time there as an official foreign visit in cooper with other such visits. So it means that countries of our region are no longer thought about these new member states. As a Pole a was treated as a as a man of the EU and from an African perspective, there is no difference between those who acceded several years ago and those who acceded 40 years ago. We have a special role and there are no bad associations with us so it all means we have a special commitment, we Poles. And there, in Tahiri square, everyone knew that Poles have a special experience in building community and society. A society based on solidarity. Without solidarity our transformation in Eastern Europe would not have succeeded and today our European Community again founds its response of to northern Africa on solidarity. What is the lesson here? It is now time for member states, such new member states and I begin thinking solidarity not only in terms of receiving (aid which we continue to receive from the richer European countries) but also in terms of providing to others countries of our region are strong advocates of internal European solidarity and you will hear about it soon

Countries of our region are strong advocates of this sort of European solidarity, It’s good, it’s important. It makes our community continue but it is not only about the survival, it is about the global meaning of our community. It is the key matter I want to address. Because problems of Europeans and problems of Poles need often to be solved beyond our continent (the crises which was imported to Europe and also problems with the energy sector, terrorism, and many other problems).

Development Policy – long term investment and long term commitment

Development policy is long term investment and commitment. Development policy fallows not only on the moral commitment because this is obvious. It results from such interest we have. Development policy is an investment in building peace and prosperity in all over the world, investment in democratic values, development policy is our key instrument in relations to less developed countries. It is the way of solving global challenges because we already know today that permanent and long-lasting balance will not be possible without democracy and growing prosperity.

Development Policy – our own interest.

Sustainability is only possible when we provide foundation of democracy and we make it possible for the living conditions to improve. Development policy may and should be such a instrument to achieve those goals. So this is about our own interest not only about normal human commitment, moral commitment. The crises, climate changes, job migration, the afraid of terrorism, all of this we see in Europe today, but today the problems of one region effect directly the situation of other corners of the world and we import many or most of the problems to Europe. We are the largest donor as a community so also I would like also to get other powers to involve to our policy.

Development Policy – unfulfilled commitment.

Act to development policy is also one of the commitments. In 1970s (then we didn’t dream about Solidarity and independent trade unions), EU countries committed to spend 0.7 % of GNP on official development assistance and now it is only Sweden, Luxembourg, Denmark and Holland which fulfilled the commitment with EU and 30 years ago. On the European forum we adopted the Millennium Development Goals. These are specific goals, with deadlines. In 2005 few countries have adopted the European consensus on development at that time we were already new member. The consensus was targeted at 0,7% of GNP for development aid is to be reached gradually. Countries which joined the EU in 2004 and 2006 are in worse economic situation so this target is spread for them. By 2010 our development assistance was to reach 0,17 % of GNP and in 2015 this to account 0,33%. These targets are much lower compared with other new members. For them it is 0,51 and 0.7 %. Our commitment is to take into account actual possibilities, but still this is a distant target.

Opportunity for Poland – need for work.

There is an opportunity for Poland because it’s in our interest to invest in this. So on the one hand we have the experience of solidarity and we also understand the importance of ways of development policy and we fill it particularly well in relation to countries which are on the east of Poland which is natural and soon we will take over the presidency in the EU. We also have an unfulfilled commitment to put on pour Polish presidency. If we are to be perceived as a serious partner which has a effect on many decisions of the EU we must only fulfill our commitment but also motivate others, so we are proud of it experience of solidarity. We would like to build the Europe on the foundation of the solidarity, we must live in accordance with solidarity ourselves. It is not only about promoting internal solidarity associated with the EU budget, it is about remembering that our interest, not only the moral commitment is going far beyond the EU and we must make development our top priority. It is not about making of this the top priority but we should not spend the least money from all the EU countries per capita. We must also spend the money well, we need the appropriate legal regulation, coordination on the international level, we need support of politicians, polish politicians and the entire society. This is not about making a development policy the main priority, this it about making solidarity for development and new dimension of Polish activism within the EU. Let us to look for the niche within the development policy the EU, to share the experience of transformation, to mobilize the civil society with collaboration with NGOs, political foundations, universities, medias (well known representative is present here). We need support, huge political or national spirit to make it our great message. This is not a challenge for 6 months of presidency, but our presidency is a good opportunity to begin that. If we can do that, after the Polish presidency something permanent and great will survive. Within the presidency we need to coordinate the operations and working of 27 members states on the summits, this include the development policy. We will propose concrete solutions but our work should not end on the 31th of December.

Prof. Buzek shared his reflection on meeting with Bill Gates in Strasbourg, in the EP in April. He came to EP to promote the Living Proof campaign, this is series of documents and publications showing specific cases, specific people whose lives changed thanks to development aid so they could positively affect the lives of others nearby who also needed assistance. BG is involved in helping them. Someone will say, BG is the billionaire and he is the one of the richest men in the world and he can help but there are millions of us and we can also help. This is what solidarity is about, that together we can do great things, we can change the world together. And if so – how should we decide to not to do this. It is to try just as 31 years ago we tried to win by organizing Solidarity. We had no idea if we will succeed but we did it.

EU partnership with Africa: model lost in translation?

Professor Bach addressed the relationship between the European Union (EU) and Africa. While emerging market countries have recognized the opportunities Africa holds, Bach queried the EU’s appreciation of the strategic importance of Africa. Africa is still too often viewed as a ‘dark continent’, made up of neo-patrimonial, quasi-states which offer few prospects for development. A victim narrative has been constructed whereby Africa is believed to epitomise the pitfalls of globalisation. This has given rise to a moralistic and humanitarian approach to Africa by the EU, which while well-intentioned, has not, arguably, been in the best interests of Africa. Failing to define Europe’s geo-strategic interests in Africa has fostered the impression in EU circles that Africa is a ‘dispensable continent’ when it comes to setting the agenda of world affairs. Bach argued that the EU’s vision of Africa needs to change if Europe does not wish to be sidelined in the future development of Africa.

It is true that in recent years there has been a move by the EU to chart a new course in EU-African relations. The Joint Africa-EU Strategic Partnership (JAES) which was adopted in 2007 following the second Africa-EU Summit in Lisbon, has significantly altered the tone of the dialogue. Bach argued however that the JAES has, up till now, not been very successful. It has suffered from both a lack of funding and weak enforcement capacity. Furthermore, the African Union (AU) – the key organisation for EU-African engagement- suffers from a ‘fallacy of composition’. Its members are often also party to other organisations, treaties and frameworks which at times compete with the stated aims of the AU. Bach therefore called on the countries of the AU to rationalise their membership in order to strengthen the negotiating power of the AU.

When it comes to institutionalising a model for regional integration and cooperation, the EU model has been highly successful. The lure of the benefits of EU membership has spurred on liberalising and democratising reforms and conferred upon the EU project a sense of ownership and legitimacy. It remains to be seen however whether this model can be transposed onto other settings such as Africa in order to serve as a catalyst for development as well as a framework for North-South dialogue. The situation in Africa is for example not analogous to that of Eastern Europe during the time of the EU’s expansion – the weakness of many African states is much greater. Region building in Africa will therefore be as much about state building as anything else.

However, emulation of the EU model for African development and EU-Africa dialogue is not simply a matter of state capacity building. Bach argued that the EU model has been undermined by the contradictory policy orientations of the EU towards Africa. Economic liberalisation and integration in Africa has for instance been undermined by EU protectionist policies and an unwillingness to treat Africa as a single market. Democratisation in Africa meanwhile has largely been sacrificed in favour of enforcement of the status quo. Lastly, the concept of ownership is pursued along narrow security parameters. In the interest of European border control, Africa is expected to regulate its migration outflows, while European peace keeping forces steadily retreat from the continent. In sum, Bach argued that the EU’s strategic partnership with Africa is not simply a model lost in translation; it is a model which has not even ever been implemented.

The choice is not between a ‘no strings attached’ versus a Washington Consensus model of engagement between the EU and Africa. What is needed is a true strategic partnership between the EU and Africa based on a dialogue of equals, articulated in a coherent set of policies. If this does not happen, the provincialisation of Europe rather than the marginalisation of Africa is at stake.

Responding to global threats

During his lecture, Emeritus Professor Jan Pronk touched upon key issues of the current and future international system from an interesting perspective laying at the intersection between international relations and international development.

Jan Pronk opened his lecture by reminding the audience of the core message of a lecture held by Kapuscinski at the University of Krakow in 2004. In that occasion Kapuscinski regarded as a crucial issue the respect of the dignity of each human being, regardless cultural differences and engaging oneself in dialogue, aiming at mutual understanding and a sense of togetherness; the respect, in short, of The Other.

This plea made by Kapuscinski in 2004, Jan Pronk suggests, is key to understand current threats and to tackle future ones. Indeed, international institutions inspired to dialogue and mutual understanding are crucial to uphold those global values that Kapuscinski identified.

Professor Pronk recalled the international system that was created after the second World War. From that new order, a era of globalisation that spread beyond economy and technology reaching the realm of values and institutions began. Professor Pronk recalled six key objectives that stood among the others: peace, security, stability, development, freedom and protection of human rights. These ambitious objectives could only be reached by relying on an integrated system, the United Nations.

Globalisation grew to maturity, Professor Pronk suggested, in 1989 when the divisions between North and South and between East and West started fading resulting in a real world market, enhanced possibility for movement of goods, people and technology as well as knowledge and ideas. It is after 1989 that, according to Professor Pronk, the sky became the limit.

Nonetheless, Jan Pronk warned that despite steady economic growth has been occurring since the 1990s, poverty has hardly decreased and globalisation enhanced inequality among countries and regions and the objectives set by the Millennium Development Goals at the beginning of the XXI century will not be met by 2015. The last two decades have witnessed conflicts in many regions of the world, spread of international terrorism, the arising of a new confrontational scenario between the West and the rest and more and more pressing environmental threats. The recent financial crisis contributed to make the landscape even more alarming. In other words, Professor Pronk suggests, the sky, although being still the limit, is rather cloudy.

What has been lost, according to Jan Pronk, is the spirit that drove the change in the mid-XX century, i.e. consensus on global values and international institutions able to enforce those values. International institutions are becoming weaker mainly due to a shift in the perception of security which is no longer regarded as a public good but rather as a private commodity. Security has nowadays become something that can only be achieved by excluding The Other.

How to revert this trend? This can only be achieved by a strong reassessment of values and reform of international institutions. This should be done not only in the interest of ourselves, but also in the interest of The other, that should be regarded as the humankind as a whole, bringing together, as suggested by Joseph Conrad, “the dead and the living and the living with the yet unborn”.

How reduce poverty – aid that works

During the lecture, professor Hulme introduced ideas from his recently published book “Just Give Money to the Poor”. In this book he describes a different way of development aid; he called it “a development success story.” Many parts of the book are available on the Brooks World Poverty Institute website.

Cash transfers or broader concept of how social protection is provided for the populations has been slowly spreading across the world. It is not mentioned in the Millennium Development Goals. However, this concept is rapidly growing and in 2010 at „MDGs + 10 meeting” which was held in New York, there were frequent references to the need for cash transfers, to having social protection and social platforms for population. These days’ cash transfers are used by more than 110 million families in at least 44 countries; that is approximately 750 million people benefiting from cash transfers in low income and middle income countries. This number even increases as China introduces this concept, too. So, it may reach 1 billion people in low income and middle income countries. The ideas and impetus to introduce cash transfers have not come from aid donors or rich world, but it has came from the Global South, more specifically South Africa, Brazil, Mexico, India, followed by Indonesia and China. Professor Hulme stressed the need for political consensus in order to promote these programs; politics and cash transfers have to go hand in hand.

Professor Hulme introduced what he was going to talk about. The message was 4 findings, 2 debates and 5 principles. The findings are that recipients in low income and middle income countries use money well, although these are only small sums of money. It is also an efficient means of reducing poverty in a short term. People can increase household income, reduce hunger, improve nutrition and get children go to school. However, there are also long term benefits. This concerns literacy, physical well being of children and of populations. Cash transfers can also contribute to the economic growth and make it more pro-poor. There is also some evidence that it can help with the political evolution of countries. Professor Hulme mentioned affordability of cash transfers, too. He argued that it can be afforded on a modest scale and then it can be developed over time.

Professor Hulme introduced two debates, about conditions and targeting. There are two kinds of evidence. Both, conditions and targeting can be good and bad. So, it needs to be debated and it has to be approached very contextually. One has to think about the country, locality and objectives of the programme. These programmes of cash transfers can go ahead if they are fair, assured, practical, make a difference also with a small amount of money and if they are popular in political terms.

Cash transfers are payments which are regular (people get them on a regular basis, usually monthly), long-term (people can get them for a few years or for a whole life), rights based (people are entitled to have them, it should not just be a charity) and tax-financed (ideally financed from the domestic tax, donors can help in establishing the schemes and financing them in the early years). They should be a form of a social assistance not a social insurance or a labour market regulation.

There are 5 types of cash transfers: social pensions (people are entitled to get them reaching a certain age), child benefits (e.g. in Southern Africa countries), family grants (for poorest families), disability allowances (in African and Asian countries), and cash for work programs (people get money for working on public works such as in India).

South Africa is a good example to be used as a case study. It has social pensions and child benefits. Around 2,3 million people, this is 85% of people aged over 63 get the social pension although they have not contributed to it. Child benefits have expanded a lot over the last four years. 8,5 million people receive them which is over 55% of children under the age of 16. In this case, there is targeting, but it is unconditional. Although, it is a big sum of money (3,5% of the GDP), there are benefits of reducing poverty in a short term. These schemes are diffusing across the Southern African region. Namibia, Lesotho and Botswana already use the scheme of social pensions and there are other countries in the region which are considering their introduction. Professor Hulme noticed that South Africa has enormous problems with not generating employment, so the cash transfers are not enough in themselves. Other fundamental changes in the macroeconomic structure are needed.

Another example, which professor Hulme used, was Brazil. He introduced the scheme of Bolsa Familia which goes to around 11,6 million families with per capita income under 30% of minimum wage, so it is targeted and there are conditionalities, too. Social pensions go to 6,6 million of people. So, all in all, 39% of the population gets cash transfers (it is 1,5% of its GDP). Brazil has had excellent economic growth over the last ten years, and inequality and poverty has reduced.

Results of many studies showed that poor use money wisely, mainly on family, that there are benefits for the next generation (regarding nutrition, education, etc.) and it does not discourages the work. Cash transfers can offer short-term and long-term benefits. Concerning short-term benefits, the grants are used by whole family, around a half of it is spent on more and better food, children are taller and healthier with increased school attendance and higher potential to learn, and it contributes to the reduction of inequalities, e.g. in income, food consumption and access to education. The most important long-term advantages are that the money is spent locally. Other people are probable to get employment as money is spent for buying local. So, it stimulates the local economy, it increases investments and it encourages job seeking.

There is an existing stereotype that cash transfers make people lazy. Professor Hulme argues that it is not true. He said that cash transfers provided a necessary base for poor people. They know how to invest money locally to have a profit. The problem is that they lack cash to take opportunity. Cash transfers also reduce risk aversion. Poor people are conservative about taking risk. But households which get cash transfers can think about taking small risks. Closely related to risk is also planning. Risk represents an enormous problem for poor families; very often they would face questions such as will my family starve if I try a new crop and I fail? Should I risk buying a fertilizer? Or, can we afford a bus fare to look for the job? Therefore, cash transfers are very important, because they represent a guarantee of the future income, it permits risk taking and it provides a sort of insurance in the case of failure. Cash transfers also allow small farmers and entrepreneurs to take a micro-credit, because in the case of failure it may be paid by cash transfers.

There are 4 assumptions that have to be taken into account if the political leaders or aid donors decide to implement this strategy. Is poverty partly caused by lack of predictable income? Are opportunities available? Can we trust poor? Is giving money to the poor ethically right? Professor Hulme thinks that if cash transfers are applied contextually the answer to all the questions is yes and therefore cash transfers should be introduced.

There has been a change in the elite or middle class attitudes in the last decade in developing countries. There is a gradual rejection of the attitude that growth is enough, that the poor are lazy, that we cannot afford welfare or social protection. And there is an increasing consensus that if a country wants to have national development, there is a need for growth, human development and human security. It is accompanied by understanding that poor are good “economists”. A very important fact is that costs of social protection constitute only 0,5 -2,0 % of GDP and therefore it should not represent a real problem for the economy.

Among scholars there are 2 ongoing debates: conditions and targeting. There are arguments for and against conditions. In Mexico, there are highly conditional programs. In South Africa, programmes are unconditional. Arguments for are that one can improve the long-term impacts and change the culture of certain social groups. On the other hand, paternalism and low quality of existing services are main arguments against conditions.

Targeting is the second part of the debate. If you target you can give money to those who need it most. Targeting is different from country to country as well as from program to program, i.e. South Africa: pension is untargeted; meanwhile child benefit is targeted on poorest half. Arguments against targeting are that it is difficult to do it accurately, it is divisive and may be seen as unfair, it brings opportunities for corruption or manipulation and it represents additional administrative costs. The problem with targeting is also when you try to target the poorest of poor, i.e. in Africa it has proved to be problematic as people can say “we are all poor”. Professor Hulme in this case emphasized the necessity to apply contextual knowledge and to avoid taking extreme sides for or against it.

Cash transfers need to be seen as fair. This means that most citizens must agree on “who gets grants”. They need to be assured on a weekly basis, a monthly basis or annually. It needs to be practical, so you have to be able to deliver it. It needs to be more than a few cents. It should make at least 20% of poor household income. And finally, they should be popular and politically acceptable. Politicians, middle class and elites should support them. They should not just be a single programme, but they should become a part of an evolving social policy framework.

Professor Hulme thinks that cash transfers provide immediate poverty reduction and social protection; they may increase good governance and reduce risk. They increase investments and impact next generations. They are a necessary step on the way to a national welfare system. However, it must be seen as developmental, not as safety nets. Therefore, the main message is to give money to the poor. However, not as a charity or out of helicopters, but as a carefully designed programs deriving from national decision-making and experience and there is a role for donors and international agencies to support it with cross-national learning, help countries to recognize the affordability and joint financing, particularly in low income countries in Africa.

Development policy towards 2030 – Europe’s role

Prof. Dirk Messner during his lecture explored linkages between global climate change and development. Prof. Messner argued that it would be impossible to solve problems related to poverty and inequality without addressing the issue of climate change successfully. European Union (EU) has assumed global leadership in both tackling climate change and providing development aid to developing countries. However, devising adequate mechanisms of global governance is also necessary in order to achieve development and to reverse climate change.

Prof. Messner began his lecture by looking at four possible scenarios of global governance that may or may not be fostered by the global economic crisis. The first scenario represented re-engineering of the current Western-centric model. The second scenario represented a regression to fragmentation and protectionism. The third scenario prescribed financial regionalism, while the fourth scenario was the most positive in terms of global governance because it apprehended the model of rebalanced multilateralism. Prof. Messner claimed that the success or failure of development cooperation policy and putting a stop to climate change largely depended upon well-functioning multilateral institutions therefore the fourth model was seen as a necessary precondition for developing efficient global governance structures. Also, he argued that it was necessary to remodel global governance structures because the economic balance of power was very likely to turn upside down until mid-21st century.

Prof. Messner highlighted the role of the EU member states in global development cooperation. EU countries can make a difference despite the fact that most of them are small or medium-sized states. 60% of international official development assistance (ODA) is European, and 65% of bilateral donors are Europeans. Development aid is provided mostly because of the existence of enlightened self-interest on the part of European donor countries. Although European countries have already made significant contribution to global development, the time has come to decide between two conceptions of development policy. The first conception foresees a narrow focus on achieving MDGs, and it is largely aimed at helping the poorest of the poor (the bottom billion). The second conception, however, has a broader focus, and development is seen as part of strategies aimed at improving global governance (improvement of socio-economic conditions in developing countries, tackling world problems such as state fragility, insecurity and climate change, strengthening governance capacity of developing countries, facilitating development of relevant international regimes). Prof. Messner was in favor of the second conception of development policy because it was broader in scope and was better suited for meeting the multitude of global challenges (such as sustainable development, clean water, population and resources, democratization, global convergence of IT, transnational organized crime, energy, status of women, etc.) that humanity faces.

Climate change was singled out by Prof. Messner as being by far the most important of many global challenges. It was stressed that without addressing climate change problem it would be difficult to achieve development and meet MDGs. According to Prof. Messner, there are four fundamental prerequisites for development: soil and food, atmosphere and climate stability, energy, water. Although all four fundamentals are essential for development, their accessibility and availability is likely to be seriously eroded with the growing impact of climate change. Models that have been developed by climate scientists indicate that increasing numbers of population in developing countries are likely to face water stress, desertification, droughts, soil degradation and depletion of resources. Models exhibit that it would be difficult to satisfy demands for water, energy and food of the already existing population, but it is almost certain that world’s population will reach the 9 billion mark by mid-century. Largest population increases are expected in those regions that already have food, water, energy, and soil shortages. Climate change would only aggravate such shortages. Thus, it is almost impossible to achieve global development without addressing the problem of climate change.

De-coupling of energy use and development is an ambitious but necessary target, otherwise global warming would exceed the 2°C. Prof. Messner argued that there is little time left for curbing emissions in order to meet this goal (in order to reduce CO2 emissions by half until 2050). Although this is an ambitious goal, the EU countries should assume responsibility for bringing together both developed and developing countries in order to improve global governance, facilitate long-term thinking during policy preparation process, and write development and climate change objectives into decision-making mechanisms. Europe should also push ahead with the global climate change negotiations, build a low carbon economy, advocate for a MDG-plus development agenda, protect global forests and build low carbon partnerships with Africa, China and India.

Prof. Messner emphasized that the current challenges are enormous, but he was optimistic about the possibility of meeting these challenges successfully because threats, risks and vulnerabilities emanating from global challenges are real. Thus, international cooperation should be possible to achieve. Curbing climate change and achieving development is a collective effort that would require life-style change, new conceptions of wealth, radical improvements in terms of carbon and resource efficiency and transition from the era of national governance to the era global governance. In short, the present model of development is not sustainable therefore humanity should complete transition to a different model of development that is sustainable, and Europe has a key role to play in facilitating this process.

Lessons from 50 years of aid giving

During her talk prof. Lancaster highlighted the issues that a new donor country should take into consideration in building its own state aid program and used the more than fifty years experience of the USA, but also her own decades of involvement both as an academic but also as a practitioner in the field and a high ranking administrator, to demonstrate good practice but also the things to avoid. The main theme of the talk is that foreign aid for development is a discrete activity, involving trained and experienced professionals and effective business practices. How and where such a function is organized is also important to the effective functioning of aid, and therefore, each donor country taking into consideration the prevailing environment, available resources, other constraints and the international best practice should develop its own state aid program.

What Cyprus can do is to assist people in need after a natural disaster or national emergency or people in the middle of war or fleeting war zones. This is a critical role for Cyprus and in the past few years has repeatedly contributed assistance, aid, shelter and medical support. The proximity of Cyprus to the Middle East and the long term relations with the people of the region enable Cyprus to be of assistance in times of need. Such examples include the recent war in Lebanon where thousands of people found refuge in Cyprus; assistance, aid and medical support and supplies to Palestinians in the Gaza Strip the victims of Tsunami in East Asia, and the peoples of Armenia, Georgia and Nagorno Garabah among others.

In the case of Cyprus a small, new donor with no tradition in the field the Government prefers to channel aid through NGOs active in the field such as the Red Cross, Ayia Sofia Foundation and the Volunteer Doctors of Cyprus. This is fine provided that the organizations implement effective business practices as described below.

They need to have effective business practices: systems that permit them to plan interventions effectively, contract and implement them, monitor their progress and assess their outputs, outcomes and impact. Monitoring and assessment is important but often a weakness of aid agencies. There needs to be a degree of independence in the latter function from the aid agency for best results. At the same time part of the aid should go into strengthening the administration and accounting functions of the NGOs as means to ensure sound and transparent administration and accountability. Along the same lines the legal framework that allows these organizations to function should be strengthened and external audit from qualified accountants should be reinforced for all projects.

The organization and location of an aid agency is also important: should it be part of the foreign ministry (as in Cyprus) or autonomous? When it is the former, foreign policy considerations can come to drive aid allocations to countries and decisions on their use. Of course in the case of Cyprus initiatives, guidelines and/or projects undertaken by the EU also influence the process. In the US (which has claimed a world leadership role), this can be problematical, leading to a loss of the development mission. In a smaller country this is not so much of a problem.

Finally, all democratic aid-giving governments need to be able to create a political coalition of support at home for annual aid expenditures (including within government, the legislature and the general public) to ensure that these annual expenditures have an adequate political base to sustain them. These are the challenges facing Cyprus today as it begins its journey as a donor as well as a recipient of foreign aid.

World economy and development

The structure of the world economy and the interaction between overall world growth and development has been changing. The great crisis of 2008 underlined global interdependence. It is also clear, however, that many developing countries weathered the crisis much better than many advanced countries. Looking ahead, are we finally entering the age of convergence? Which factors are going to cause convergence or divergence? What do these structural factors imply for development cooperation, the pursuit of the MDGs and global economic cooperation?

In his lecture, Dr. Kemal Dervis shares his perspectives on the world economy and shows the role of emerging markets in the new world economic order. How emerging market economies weathered the crisis much better than the advanced countries, how most of these economies have bounced back rapidly from the 2008 crisis.

To start his lecture Dr. Kemal Dervis refers to three quotes and wonders if they still reflect the reality of the economic situation:

– The first one from Sir Arthur Lewis’ Nobel Prize Lecture in 1979: “For the past hundred years the rate of growth of output in the developing world has depended on the rate of growth of output in the developed world. When the developed world grows fast, the developing world grows fast, when the developed slow down, the developing slow down. Is this linkage inevitable?” in [The Slowing Down of the Engine of Growth];

– The second one from Pr. Elhanan Helpman in 2004: “Although the differences in income per capita among rich countries have declined in the post-World War II period, the disparity between rich and poor countries has widened. At the same time the number of middle income countries has dwindled. We now have two polarized economic clubs: one rich, the other poor.” in [The Mystery of Economic Growth];

– The third and last one from a foreword by Angel Gurria, from OECD report “Perspectives on Global Development”, 2010: “This Report shows that the ‘rise of the rest’ is not a ‘threat to the west.’ Overall it is good news for the global economy”.

Using the GDP indicators, he demonstrates that the sets of figures prove that the emerging markets have gained weight more rapidly than the advanced countries.

He compares the ratio of per capita income of the richest countries compared to the ratio of emerging countries. The income gap started to widened during the 1990’s, going from about 2 to a peak of about 4 in the past two years in favor to the emerging markets. This trend got interrupted by the Asian crisis, but continued until 2008 and it is now at an accelerated rate and Dr. Kemal Dervis declares this trend will continue for the next 5 to 10 years.

After a long period of divergence, there have now been several decades of convergence reinforced by a more rapid growth in the emerging markets in term of GDP per capita and by a lack of acceleration in the advanced countries.

But it is difficult to explain how the growth processes in the advanced countries and the emerging markets are linked or de-linked. The fact that the emerging markets have gained much weight in the world economy, does not mean that there will be de-coupling of growth in the coming years. If the advanced markets experience a more serious slowdown than what is currently projected, with growth averaging less than 1.5 percent in the 2008-2009 period, the consequences will be severe also for the emerging markets. Pr. Olivier Blanchard reminds this point in: “The Initial Impact of the Crisis on Emerging Market Countries” – Brookings Paper on Economic Activity – Brookings Institution Press, Spring 2010 – “One of the striking characteristics of the financial crisis that originated in the United States is how quickly and how broadly it spread to the rest of the world. When the crisis intensified, first in the United States and then in Europe, in the fall of 2008, emerging market countries thought they might escape more or less unharmed. There was talk of decoupling. This was not to be.” There is a decoupling if we look at the trends, but if the cyclical components are taken in account, there is a very strong coupling.

Dr. Kemal Dervis has two main explanations to this phenomenon:
– Technology which works for convergence and no longer for divergence
– High savings rates

He explains this phenomenon is due to the fact that the emerging countries managed to build effective institutions which were capable of absorbing technology. However, in this sense, Dervis says how important it is to distinguish Asian development (with a forecast growth of 8% over the next five years) from other emerging countries (4.5%). He also shows the importance that ‘saving’ has for these countries. In the last decade, emerging countries in Asia have saved about 37% of their GDP – figures for China are above 44% – which inevitably makes them less vulnerable and less dependent on foreign finances. The Asian economies did very well.

Dr. Kemal Dervis draws also the audience’s attention to the role of the financial sector in the events of the last two decades. Over this period capitalism in the rich countries has increasingly changed its nature from one where the lead sector was manufacturing, to one where the role of traditional industries has declined, the share of services has increased and the financial sector is playing a leading role.
Emerging market economies as a group have done remarkably well but there are differences across emerging market economies in 2009. Some of them did rather well; some of them were hit very hard (Greece – Irlande for example). The European countries were hit very hard as they were more exposed to foreign banks.

Although the economies are still tied to each other, a slight dissociation has been produced in the world. While western powers struggle to overcome the crisis, the growth forecasts for the emerging countries are, however, positive.

Emerging markets economies are becoming more important players in the world economy and maturing rather rapidly. In term of trends Dr. Kemal Dervis says it’s good news and explains the role of development cooperation and organizations in term of perspectives.

Dignity and responsibility in international development

HRH Crown Prince Haakon of Norway, UNDP Goodwill Ambassador, offered the keynote lecture entitled “Dignity in Development: Our Common Responsibility to Reach the Millennium Development Goals”.

First, he presented a series of statistics related to word population and the distribution of income, which showed that the large majority of the world population is deeply poor, a fact that is damaging to both world economy and human dignity.

The intervention continued with a brief introduction of the MDGs – what they are, when they were adopted and what is the current level of achieving them.

To illustrate better what the human development means and how one may really relate to MDGs, he chose the child mortality rate statistics, identifying for the audience several examples and telling the story of Norway’s several generation efforts to reduce child mortality.

The key to achieving goals such as MDGs, HRH told the audience, is to think about the persons in less favourable situations similarly as if they were persons one knows, not just statistics. The reason for following such goals, he continued, is to preserve “human dignity”, one of the few values that can have universal appeal.

He concluded the lecture with several examples from his Goodwill Ambassador work, encouraging the audience to think about one definite goal each of them may and could achieve during the next year in order to improve his/her life and make the world a better place.

Rethinking development: new role for Europe

The Lecture was preceded by an introductory address by Dr. Michael Frendo MP, former Minister of Foreign Affairs of Malta and current Chairperson of the Maltese Parliament’s Foreign and EU Affairs Select Committee. In this address Dr. Frendo dwelled first on his experience in introducing Malta’s first ever Overseas Development Aid policy as Minister of Foreign Affairs when Malta joined the EU. He explained how prior to EU accession Malta had never had an Overseas Aid policy and in fact was more used to the notion of being an aid recipient rather than a donor.In fact initially there were difficulties in attracting enough support from all the relevant government departments. The phenomenon of illegal migration which began to hit Malta at the time, paradoxically, was a useful instrument to focus attention on the conditions prevailing in the outside world. It also helped all the relevant authorities realise that investing in overseas development was in Malta’s interest. The policy that Dr. Frendo eventually piloted and which became the basis of Malta’s development aid governance was drafted by taking into account Malta’s size and limited resources but also its geographical location and well-established expertise in certain niche araeas such as ICT, education, tourism, water management etc.

Lecture by Simon Maxwell, Senior Research Associate, Overseas Development Institute, London on ‘Rethinking international development: a new role for Europe’. Dr.Maxwell started his lecture by referring to the figure of Ryszard Kapuscinski and his contribution to the telling of ‘the development story’. He then went on to develophis argument in three steps, firstly that we live in a difficult and increasingly complex world, secondly that we need to reframe development cooperation and finally that there is a new role for Europe in the development aid structures. He also added a postscript i.e. that we should not be defeatist because a lot of progress has been achieved over the past decades.

On the ‘new age of uncertainty’, Dr. Maxwell referred to the international community’s struggle to reach the Millennium Development Goals (MDGs). The situation was not an easy one with a number of geographical areas struggling to reach the goals and certain goals being behind schedule overall. These difficulties are compounded by the recent fuel, food and financial crises which made achieving the MDGs all the more hard. Furthermore other challenges to the international community are already present including climate change, resource scarcity, demographic pressures and rapid urbanization.

In the context of re-framing development cooperation he pointed out that this had to be understood within a framework which recognized development aid as both a moral imperative and a common interest. He then went on to explain the current thinking in development policy on issues ranging from the role of the state and public expenditure to collective action. The emphasis was laid on the importance of maintaining aid volumes, pushing for aid effectiveness, a holistic approach by governments, focusing on fragile states and investing more in multilateralism. It was precisely in the context of multilateralism that the EU had a comparative advantage and should ensure that it used this to its fullest extent. Finally Dr Maxwell stated that the situation was not as bad as is sometimes claimed and a lot of progress has been achieved in many aspects.

The Lecture was followed by a panel discussion with Mr. Alfred Agius (Desk Officer,Development Unit, Ministry of Foreign Affairsof Malta), Mr. Vince Caruana (Assistant Lecturer at the Centre for Environmental Education and Research at the University of Malta and Chairperson of SKOP) and Dr. Omar Grech (MEDAC). Mr. Caruana stated that he wished to make a few comments in his capacity as a civil society representative given that he was involved in a Non-Governmental Development Organisation in the run up to Malta’s membership of the EU. He spoke about the main concerns of Maltese NGDOs in contributing to Malta’s ODA policy. Mr. Agius described Malta’s approach to ODA and re-affirmed the Government’s commitment to development cooperation. Dr. Grech emphasized the importance of development education as the bedrock to ensure popular support for development aid.

Inequality barrier to human development

The past two decades have seen dramatic gains in human development. Poverty is falling, child survival rates are increasing, and education indicators are on a rising trend. During the same time period new modes of development ideas and practices have evolved that include local communities and the poor in finding solutions, and, in addition, points to partnering with business to address systemic challenges such as poverty, environmental degradation and climate change. Yet, wealth distribution within countries is diverging – and persistent inequalities in opportunity are holding back progress in health, education and employment. This lecture addresses these dilemmas and discusses possible ways forward, from both a human development perspective and a business perspective.

Making cities fair

Starting with questions about what an increasingly urban world implies for fairness at the national or global scale in the 21st century, the geographical reference points for this investigation of “fair cities” are both northern and southern urban places. This lecture traces the divergent and contradictory intellectual and practice based traditions that the notion of fairness in the city implies, including the work on urban equity (rights, opportunity, access, affordability); justice (electoral; procedural, distributional, enforcement and); redistribution (urban welfare and post conflict); the public good and the good city.

The central point is to demonstrate that ideas and practices about fairness in the city vary over time and space and that while there is appropriate concern about rising exclusion and the withdrawal of social protection in some centres, typically older more affluent cities, from new urban nodes, largely in the global south, there are counter tendencies and new innovations that support the utopian aspiration that cities will provide a better future for the millions of new residents that will call them home over the decades to come.

Women in development

The lack of trust in leaders and the urgent challenges of poverty, inequality, conflict and climate change demand a new model of leadership and development. The 21st century is the time for inclusion and women’s full and equal participation. An effective post-2015 development agenda requires a focus on promoting human rights, ensuring public participation and tackling structural inequalities.

What would Kapuscinski make of development today?

Ryszard Kapuscinski exposed an Africa to his readers in which he punctured the pretensions and follies of rulers and officials while showing an intense emotional identification with the continent’s then underdogs, its people. Mark Malloch-Brown asks would he see the current state of Africa as a further triumph of the elites he exquisitely skewered or, the redemptive emergence of a new more participatory and just continent.

The introduction to the lecture was delivered by Ms. Christine Dalby, Acting Head of the EU Representation in London.

Emerging donors – way out of or into the crisis?

What is the role of the European emerging donors in global development cooperation, particularly in times of crisis and budgetary cuts? How could countries like Estonia, Latvia, Poland or Slovakia support developing countries in eradicating poverty? What transition experience can these countries share with nations which go through similar social, economic or political transitions?

Those and other questions were discussed at the Kapuscinski development lecture in Tartu with Dr. Vaira Vike-Freiberga as the keynote speaker of the event.

„Development aid can effectively reach its aims if and only if both donor and recipient are on the same wavelength” – Vaira Vike-Freiberga.

Poor economics – why some poverty reduction policies work and some don’t

Prof. Abhijit Banerjee began his presentation by honoring one of his intellectual heroes, the Polish reporter and writer Ryszard Kapuscinski, after whom the series Kapuscinski Development Lectures is named. By quoting a significant phrase[1] from Kapuscinski’s book, The Shadow of the Sun, Prof. Banerjee emphasized the fact that unsuccessful rulers are often the victims of their own “thoughtlessness”. In order to demonstrate this belief, Prof. Banerjee referred to Kapuscinski’s example of Samuel Doe, the 21st President of Liberia. The latter was a greedy man who had absolutely no idea on how to rule a country or even how to remain in power. As Kapuscinski describes in his book, Doe’s complete lack of ideas and action should be regarded as the main cause of his downfall.

A.  Political economy

After having introduced Kapuscinski’s way-of-thinking, Prof. Banerjee continued his lecture by presenting a fairly dominant view among political economists, namely the institutionalist view. On the basis of Acemoglu and Robinson’s book, Why Nations fail, Prof. Banerjee explained that a nation’s economic success is hugely determined by its political institutions. This institutionalist view argues that good politics will enable good policies while bad politics will generate bad policies. In this light, Prof. Banerjee stressed the importance of the vision of history by design. In other words, the political system (whether good or bad) will determine the choices made by the politicians and thus the policy of a country.

Prof. Banerjee then carried on by contrasting the view of “history by design” to the one of “history by accident”. He argued that a lot of things are the consequences of “accidents”, i.e. people, who have no idea on how to make important decisions, find themselves at the wrong place and at the wrong time. In short, they are simply there by accident. By looking at the evidence on the ground, Prof. Banerjee’s strongly believes that the view of “history by accident” is the more current one.

Indeed, he argued that “history by design” is not always correct: good politics do not necessarily translate into good policies and bad politics do not necessarily generate bad policies. Prof. Banerjee’s argument is based on the fact that there is nothing inevitable about bad or good politics. If you believe in this broad inevitability, then countries that are stuck because of bad institutions (and politicians) will simply remain stuck.

In order to change the order of things, Prof. Banerjee proposed several different views:

  • Paul Romer argues that the only way to get out of this problem is to subcontract a part of your country to people who know how to do it.
  • Paul Collier believes in invasion or military intervention.
  • William Easterly maintains that countries and people should be left alone to find their own way.

With these views in mind, Prof. Banerjee argued that there is a lot of slack within the political game and “that even taking the politics as given, there is tremendous slack for better policy”[2]. He continued by emphasizing that even small interventions can create the biggest institutional changes. Even in autocratic countries, like Brazil, Mexico and China, small democratic changes can happen. For example, in China, it was demonstrated that poor policies (such as the one-child policy) were implemented differently in villages where elections had been held.

Prof. Banerjee also pointed at failures within good institutions and provided the audience with the example of Brazil, which transitioned into a democracy twenty years ago.

At this point, one might think that democracy has been established. Nevertheless, Brazil had a complicated paper ballot system, which caused to be a problem for illiterate people and led to 11% of the votes being rejected. As a consequence, Brazil then introduced an easier electronic ballot system. Suddenly, these 11% of votes were taken into consideration. Such a change resulted into an increase of health expenditure as poor people’s votes were taken into consideration. Prof. Banerjee’s point was that we should not always take as given the fact that good systems are good simply because there is a democracy; but because there are a lot of details that enter into the making of such a good system

Prof. Banerjee then carried on with another example: ethnic voting. According to some, democracy is not always sufficient as some people might cast their vote based on ethnicity. He provided the audience with a field experiment conducted in Benin by Prof. Leonard Wantchekon. During the democratically contested presidential election, Prof. Wantchekon chose one candidate who was sure to win and asked him to deliver an ethnical-oriented message in one village and a public-policy message in another one. There seemed to be no difference, suggesting that democracy might not work in these places.

However, an experiment in India, conducted by Prof. Banerjee and his team, demonstrated that some people do not determine their votes on ethnicity but on casts. Indeed, in some villages, they even delivered the message: “do not vote on casts, vote on issues”. As a result, they noticed a drop in ethnic voting. Prof. Banerjee explained that it is often believed that democracy cannot function in one country while it can in another because of people’s behavior. According to him, the real problem is information: voters know very little or nothing about the candidates. Another experiment in the city of Delhi proved him right: when report cards on the candidates in randomly chosen locations were handed out, a sharp drop in votes for the candidates who did not spend money in the interest of the people was noticed.

Prof. Banerjee then went back to the example of Brazil, where Claudio Ferraz and Frederico Finan studied the impact of random audits held in municipalities to fight corruption. Overall, when the results were revealed after an election, the voting pattern did not change, whereas that happened before, had a bigger impact. This indicated that voters had no idea of what was going on.

Prof. Banerjee argued that rather than thinking in terms of good or bad systems, we have to accept that all systems are potentially bad and that we should try to make them better. According to him, we tend to think too much in systemic terms. We theorize things without actually looking at what is driving them.

B.  Economic policies

Prof. Banerjee also stressed that bad policies do not just happen because of bad intentions. He argued that corruption and inefficiencies are caused by a lack of understanding and attention to details.

In order to exemplify his argument, Prof. Banerjee referred to the health checks organized by the health administration in the state of Bihar in India. The number of government teams sent to carry them out was, however, too small and this resulted in very few information being collected in the end. The program had not been designed well enough.

With his second example, Prof. Banerjee argued that corruption is not always the main reason for the country’s undeveloped status. India has several anti-poverty programs that allows poor people to receive aid from the government. Along with his team, Prof. Banerjee was asked to design a way to target the poor. In one village, they asked the village elite to point out the poorest people, while in another one they held a meeting with all the villagers. Overall, most people could not identify the poorest ones of their village. Prof. Banerjee explained that they had theorized the problem wrong. They had thought that the problem was corruption, whereas in fact it was the process of ranking the rest of the village that was tiring. Prof. Banerjee stressed that one of the dangers of thinking in terms of good and bad politics is that the problem often lies elsewhere.

C.  Against political economy: from good policies to good politics

Prof. Banerjee started his argument with an example about women leaders in India, where there is a lot of male and female prejudice against women, particularly in politics. As a result, quotas exist for women to be the head of local governments. In the villages that had a woman as chief, men tended to switch their opinion completely. In other words, as Prof. Banerjee explained, such a policy change involving imposed quotas will expose people to women leaders and ultimately change their view.

Coming back to the example of Benin, Prof. Wantschekon hosted a conference where candidates discussed policies with several experts and crafted their own policy set. They then delivered an ethnical-oriented message while presenting a full package of policies for the country. The latter had far more success. Prof. Banerjee claimed again that while we take the political system for granted it is also as much subject to intervention.

D. Conclusion

To put in a nutshell, Prof. Banerjee declared that people get themselves into an intellectual trap when thinking into these absolute categories of institutions. Indeed, there are all kinds of failures, even within the “good” institutions (see examples above). Prof. Banerjee concluded that if we take the institutions of these countries as given and basically make ourselves buy standards rather than saying most countries have bad policies, not particularly by design but because of accidental failures, we delay the process of removing poverty by many years. For this reason, he emphasized that we need to be present and wisely intervene on an intellectual level, and not simply overbear through the policy process.

[1] “[…] history is so often product of thoughtlessness: it is the offspring of human stupidity, the fruit of benightedness, idiocy and folly. In such instances, it is enacted by people who do not know what they are doing.”

[2] Prof. Abhijit Banerjee: “Policies, Politics, Can evidence play a role in the fight against poverty?”. Power Point Presentation. Slide 3. May 2011.

Unfinished business of Millennium Goals

Over the last decade, the Millennium Goals have spurred action across the globe. Many developing countries’ governments have improved their policies and governance; and developed countries have taken some – not enough – steps to increase the level and effectiveness of their aid. Progress across a large number of countries and indicators has been the result. The key achievement of the MDGs is the extent to which they have mobilized public and political sup­port for development. Any post-2015 agreement needs to maintain popular momentum. And, as the goals’ objectives were limited to reducing “by half” or “two thirds”: even if achieved, there is a large unfinished post-2015 agenda. But in the run-up to 2015 we should evaluate how to improve the instruments to achieve the Goals.

Three issues deserve attention:

  • The most important shortcoming of the MDG framework is that it ignores inequality issues, as progress is measured in global and national averages
  • A clearer poverty focus should be built into the design
  • A way to achieve this is to expand social protection, focused on the poorest and most

The Millennium Goals were a great start amongst others to take action against poverty. The turn was on developing countries, they had to do the greatest efforts, but those countries could not face the achievement of MDGs alone by themselves. Many developing countries needed and still need help to implement the goals. Although many steps were already taken, the goals need further action. Many of the goals were achieved by this time, but if we take a look at those which were not reached by now, there is still a significant work to do.

One of the problems is that states are not aware of shifting over all efforts for the implementation of the goals to developing countries. The aim of MDGs is not described as solo transformation of the ideas in every single country, but to implement the goals within a community. This movement within a global community can be seen in the mobilization of people. It is on the citizens to hold their governments responsible for keeping their promises under the mandates. Citizens are empowered to ask their governments for the practical translation of the Millennium Goals and force them to start acting. So it is also a matter of political will to achieve the goals and 2015 is coming really close now. The question is what will happen afterwards and what will happen with the great public support the MDGs enjoy currently. The movement of citizens should not be thrown away. It was the public support which e.g. helped to collect proper data, where there was none before, and which promoted efforts for further research. An important factor for this development of people is the access to social services.

Another aspect in reaching the MDGs is the incorporation of sustainable development until 2015. Although the currently ongoing Rio+20 conference will not save the earth, it will show the gap between north and south, because when Europeans speak about sustainable development the developing countries are left out of this mind cluster. These developing states are too suspicious towards the north and the north is not taking further actions towards sustainable development, which can be seen in the current European food prices. So how should the north and the south reach consensus or even be confident in e.g. greening economies? In these situations there is a need for actions by ourselves. One suggestion would be to open markets for agricultural products, and support the change in international trade rules. For example Austria could support more local corporations on trade matters.

The number one issue is here for donors, namely the rich countries, to accept that developing countries develop themselves, because the small uncoordinated projects, organized by northern countries collapse when the donors left the developing countries. Then problems occur, for instance who is paying the teachers in the newly built schools.

Here it is again on the governments to transform the Millennium Goals while keeping their promises of financial support to developing countries. Again for reaching the MDGs it is an important contribution that the citizens hold their governments accountable for further implementation of the goals. The issue here is about raising voices.

Complexity and innovation in development

Owen Barder argued that development should be understood as an emergent feature of a complex adaptive system, which usually have the following five characteristics:

  • Its evolution is difficult to predict
  • It cannot be pinned down to a component
  • It can have a broad shape, but it remains largely unpredictable when it comes to details
  • It tends towards greater complexity
  • It does not tend towards equilibrium

The argumentation was built around the ideas that evolution would generate more efficient solutions, that society and economy are outcomes of adaptive processes, habits, products, institutions, and individuals, and that change is possible through adaptation.

In supporting his claims, he gave examples from fields as diverse as psychology, climate studies, economics and engineering.

The last part of the lecture consisted of seven policy recommendations:

  • Resist social engineering (because evolution outperforms design) and avoid isomorphic mimicry (new institutions would not have the drivers for evolution to perform)
  • Resist fatalism
  • Promote innovation
  • Embrace creative destruction (there is a feedback loop that selects those performing)
  • Shape development
  • Embrace experimentation
  • Act globally

Europe’s role in development of Africa

Professor Paul Collier stressed the historic ties between Europe and Africa, which, according to him, make the two continents the natural partners in economic as well as social development. With Africa becoming the fastest growing continent, especially due to the vast amount of its natural wealth, Europe should proactively cooperate in its development. Africa’s prosperity is Europe’s opportunity, said Collier. Many of the European countries are reviving their ties with different African countries. Since Africa on the other hand is still very poor and faces many societal problems, Europe can through its actions in development cooperation and its policies, help Africa meet these challenges. This does not necessarily start and ends with money: there are several other ways EU can help Africa, primarily through helping the countries to improve their governance capability.

The tripod that Africa needs to build combines the correct economic rules and reform, improvement of its institutions and the development of effective implementation capability. One of the main difficulties faced by African governments is to have a good knowledge of their natural resources: a good public geological survey. This will enable the governments to have credibility and knowledge in the negotiating processes with extraction corporations. Today it still happens that the estimate on the resources is given by the corporations, often to the disadvantage of the country.

The second step needs to be more decisive taxing natural resources’ exploitation: this is the wealth, where the resources should come for investing in social infrastructure. There are several cases where the government offers tax holidays to the extraction companies. This means that the countries don’t benefit from their resources. In addition, the extraction often leaves depleted environment, leads to fraud and corruption. The extraction companies should be requested to pay proper compensation for the damage they cause to the local population. Of course Africa is not USA – Collier mentioned the case of oil spill in Mexican gulf and the attitude of BP there. This kind of proactive response to the damage would never be experienced in any other country. The ineffective legal environment in African countries leads to extraction companies not even following already poor environmental legislation. What the governments need to assure is transparent distribution of income derived from natural resources. Also, the benefits of the natural resources need to be preserved for the future generations: this is often disregarded by the current governments.

If African countries can benefit from significant earnings from the extraction of their resources, where should they invest the earnings? Collier cited Norway as an example of investing oil money in different projects even outside Norway (China, Brazil) to assure earnings for the future. African countries should build the capacity to invest correctly the money from natural resources. Even prior to investment, one needs to develop the capacity to invest. To do so, you need rules, decision-making system and good governance. According to Collier, Europe comes in twice: it can help African countries with fighting the corruption, and it can open its doors to African products. The corruption needs to be stopped with the extraction companies themselves- not in Africa, but at their home countries in EU and USA. The resolution of the EU Parliament on illegality of paying the African governments is a good move in the right direction, the only problem is that it has not authority. USA Finance Act is much more direct: it requires from all the companies listed on the stock exchange to reveal any illegal payments. This has a much more direct effect. Activities in this area need to be further supported by EU.

African society needs help in increasing their knowledge on resource management. The ideas and principles of Natural Resource Charter, which is a global initiative, need to be more widely promoted. The NRC was adopted by NEPAD, but NEPAD needs money to build the capacity for the implementation of the Charter. Here EU aid could help- not many resources are required, yet the impact could be immense. With modest steps the EU could help to make sure that Africa fully benefits from its natural resources.

The second African opportunity is the industrialisation of its economy- so far it hasn’t done it. Here Collier draws attention to the global manufacturing phenomena by giving a “lecture” on the economics of buttons> two thirds of world’s buttons are made in China in one single town, No comparative advantage can explain this. The synergy effects, deriving from a cluster set-up, where the production chain is developed as well as the economies of scale, make it very difficult for a newcomer to break in the business. Only with gradual increase of wages in Asia, Africa may have a chance with labour intensive sectors. Where EU can help is by keeping open markets and relocate some of its labour intensive business to African countries. EU can help by giving a privileged access in our own markets over the goods coming in from Asia. We do it, but in a patchy way- we should also open the markets to the better of African countries.

Dignity and development

The Millennium Development Goals were rightly set, there is progress in their implementation however it is too slow. There is still much to be done – said the Crown Prince Haakon of Norway during his Kapuscinski Development Lecture at the University of Warsaw on 8th December 2011.

The lecture provided an opportunity for the Polish students to learn about the UN Millennium Development Goals (MDGs). During his lecture entitled “Development and Dignity” the Crown Prince described the MDGs and their priority target to halve the proportion of people living in extreme poverty by 2015. He stressed the progress achieved so far in bringing at least 400 million people out of extreme poverty compared to 1990. On a global scale the poverty rate in developing countries decreased from 46 to 27%. According to the Prince Haakon also the primary education improved among boys and girls, the number of new HIV infections is going down.

The Crown Prince described most thoroughly the goal related to child mortality which aims at decreasing the rate by two thirds by 2015. Twenty years ago over 12 million children before the age of 5 were dying annually from preventable diseases. In 2010 this number decreased to 7.5 million. This presents an obvious progress however we will most probably not achieve this goal by 2015 – said the Crown Prince.

Prince Haakon presented the linkage between income per capita and the child mortality rate. When my daughter Ingrid was born in 2004, Norway was at the level of Singapore in these statistics. When I was born, in 1973, Norway was at the current level of Malaysia. When my mother was born, in 1937, we were at the current level of Peru. When my grandmother was born, in 1898, this was the position of Uganda and at the time of my great grandmother’s birth in 1831 Norway was at the level of Mozambique. This shows how reducing child mortality is a difficult and a long-term process. But this is feasible – said Prince Haakon.

According to the Crown Prince the least progress was achieved in implementation of the goal related to decreasing maternal mortality and building global partnership for development. Prince Haakon focused part of the lecture on the issue of human dignity and its relation to development. The Prince is a founder of the “Global Dignity” initiative.

In 2003, Crown Prince Haakon was appointed Goodwill Ambassador for the United Nations Development Programme (UNDP) with a particular focus on the UN Millennium Development Goals and the effort to cut global poverty in half by 2015. In this capacity he has travelled to Tanzania, Cambodia, Sierra Leone, Guatemala, Burundi, Mongolia, Botswana and Nepal.

Sustainable impact of development aid

Ambassador Walter Fust’s Kapuscinski Lecture focused on the subject of “Successful Development Cooperation. “Success” was defined by Ambassador Fust in terms of innovation. The lecture began with a review of basic approaches to development cooperation. One major question asked: “How can we move from development aid” to “development cooperation?” Ambassador Fust paid specific attention to the issue of conditionality and its place in development cooperation regimes. He asked whether conditionality is an “old sickness of development actors”?

In response to these questions, Ambassador Fust contended that development cooperation should be based on an investors approach. He weighed the costs and benefits of grants/charity versus local resource mobilization. Arguing in favor of the latter, Ambassador Fust raised important issues related to local contributions to development cooperation. Namely, he asked “What are appropriate shares of local contributions? Should these contributions be financial or in-kind? How should local partners be selected? What criteria should be utilized to choose partners and invest in them?”

During this part of the discussion, a debate was raised related to governance and the organization of relationships between development cooperation agencies and non-governmental organizations (NGOs). Ambassador Fust told the story of how he cut structural support for Swiss development NGOs because the Swiss government wanted to use its economic contributions (which had represented 70-80% of the budgets of many NGOs) as a means to censure criticism from the non-governmental sector. Ambassador Fust limited the government’s contribution to 50% of an NGO’s total budget in order to protect their autonomy. Having said this, Ambassador Fust also questioned the motives of some NGOs recognizing the heterogeneous nature of civil society active in development cooperation.

Ambassador Fust also discussed frameworks for investment-based cooperation. He compared the strengths and weaknesses of program versus project-based approaches. He also questioned recent trends towards pilot-based initiatives. According to Ambassador Fust, partnerships are the key to development cooperation. In order to establish successful partnerships certain criteria must be pursued. First, proper incentives must be identified. Which incentives work? How can we respect local cultural contexts and mobilize indigenous knowledge? Second, what conditions best exemplify proper risk governance? How can risks be assessed? How can they be validated? How can they be governed? Finally, Mr. Fust’s discussion addressed monitoring and evaluation. He claimed that these tools needed to be defined before the conceptualization of development initiatives. Moreover, they should be lighter tools as “less can be more.” Ambassador Fust highlighted the need to balance the costs and benefits of monitoring and evaluation tools.

In closing, Ambassador Fust discussed the topic of sustainability of development cooperation. First, he examined the issue of measurability. He made the point that output is not outcome but that impact matters. Following this remark, he addressed impact assessment. What tools should be utilized and how to they account for a diverse range of views. For example, Ambassador Fust addressed the issue of accountability and questioned how to approach both donor’s accountability and actors’ accountability. The issue of time horizons is especially important to this concept as Ambassador Fust contended that continuity is a key element of successful development cooperation. Thus, in summary, Ambassador Fust defined successful development cooperation as people-oriented partnerships that are characterized by lasting impacts, local ownership, accountability and continuity.

Resetting the global development agenda

Helen Clark’s keynote speech discussed sustainable development with the aim of going from shared principles to practice. It included the threefold development agenda which addresses social, economic and environmental concerns. Clark referred to the post-2015 development framework and environment, the SDGs and the role of governance and political leadership in sustainable development, the different measures of development (e.g. GDP versus HDI), and the prospects of the Rio +20 conference. The cause to be advanced at the Rio+20 UN Conference on Sustainable Development is to figure out how to accelerate human progress while sustaining the planet’s ecosystems. Sustainability should not be treated merely as an environmental issue.

Clark called for Rio+20 to be practical, to connect aspirations for a sustainable world with what is needed to realize them. Before discussing what could be accomplished in Rio, Clark discussed the evolution of the concept sustainable development from the 1970s to the current era. Despite the progress made in this field over the decades, Clark identified the inconvenient truth to be that ending poverty remains a vast and unfinished agenda, and that inequality is further increasing.

There is an urgent need to put shared principles into practice as risks caused by unsustainability have increased and for example extreme weather phenomena have been a cause for major humanitarian crises in the past years. Poverty can reinforce cycles of environmental destruction also. In a world where inequality expands, population rises and environmental degradation accelerates, and old economic models falter, sustainable development should be seen as an opportunity to address urgent global challenges.

Clark also discussed UNDP’s triple win policies and programming, which are advancing economic, social and environmental objectives simultaneously.