Tuesday, 3 May 2011

Emerging Partners: Anything but ‘Rogue Aid’

Moisés Naím, the former editor of Foreign Policy magazine and currently a fellow at the Carnegie Endowment for International Peace, a fortnight ago received Spain' s prestigious Ortega y Gasset Award for Journalism. Let’s hope for the Award jury that he did not get the prize for his 2007 Foreign Policy article  “Rogue Aid”, which has become infamous as a blatant misnomer for the cooperation of emerging partners, above all China, with poor countries. Emerging partners neither provide  ‘aid’ nor is it ‘rogue’, it turns out.
At its April 2011 Senior Level Meeting, the old Western aid donor cartel - the OECD Development Assistance Committee (DAC) -  sounded almost enthusiastic (or a touch subservient?) in its  declaration WELCOMING NEW PARTNERSHIPS IN INTERNATIONAL DEVELOPMENT CO-OPERATION” , acknowledging the essential role that major nations from beyond their membership have had in global progress towards the Millennium Development Goals.

Doesn’t sound that rogue, does it? It is not aid either.

As another sign of ‘Shifting Wealth’, the number of non-DAC countries that today provide development cooperation rose steeply to more than 30 during the first decade of the twenty-first century. The shift manifests itself mostly in decreasing OECD shares in bilateral trade, export credits and direct foreign investment.  Joint with migration and technology transfer, all these integration vehicles are increasingly South-South.

There are critical differences in the way development cooperation is provided by traditional and emerging partners. For the latter,  aid is only one element of a broader economic engagement toolbox. Whereas the Western “charity” model is focused on the notion of “assistance” seeking primarily a reduction in poverty, the “Asian” model emphasises to a larger extent the partner’s potential seeking to create mutually beneficial cooperation, just as Japan cooperated with China* in the past, in a investment-for-resources swap, and as China, India, Korea, Malysia, or Turkey practice these days.

Chinafrica: Change of Ownership!

Until recently, a collection of blames against China’s and other new partners cooperation programmes, including by the DAC  invariably warned that they amounted to

violation of corporate and national governance standards
free riding on debt relief
unfair company competition
scramble for extraction rights and resource curse.
These accusation smelled sour grapes as the ‘chasse gardée’, as the cartoon visualises nicely, had been opened by the appearance of new players. Moreover, the growing relevance of ‘Eastern donors’ is weakening the efficiency of Western soft-law standards in the field of development co-operation and raises the question of how compliance with these standards can be assured in a changing donor landscape. 

Experts give a cautious but rather positive assessment about the impact of the emerging partners on poor countries' development*. There is increasingly less evidence to suggest that the new players are hindering poor countries' industrialisation, debt sustainability or governance. Prospects have improved for the transfer of technology, diversity of financing sources and policy space.It can be expected that poor countries will also find more voice in global governance as the world is moving to multipolar governance under the headline of US-Sino rivalry.

* Paulo, Sebastian and Helmut Reisen (2010), "Eastern Donors and Western Soft Law: Towards a DAC Donor Peer Review of China and India?," Development Policy Review, Overseas Development Institute, vol. 28(5) 535-552, 09.

Sung Jin Kang , Hongshik Lee , Bokyeong Park (2010),Does Korea follow Japan in foreign aid? Relationships between aid and foreign investment”, Japan and the World Economy 23 (2011) 19–27.

UN OSAA, 2010. Africa’s Cooperation with New and Emerging Development Partners: Options for Africa’s Development. New York: United Nations Office of the Special Adviser on Africa.

UNCTAD, 2010a. South South Cooperation - Africa and the New Forms of Development Partnership. Economic Development in Africa Report 2010. Geneva: United Nations Conference on Trade and Development.

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