Busan HLF4: A New Global Compact for Development?

November 30, 2011

By Anthea Mulakala, David D. Arnold

In the 60 years since The Asia Foundation began, the global development landscape and accompanying aid architecture has changed dramatically. Tackling the challenge of global poverty reduction seems to be on track. In the early 1980s, more than half of people in developing countries lived in extreme poverty. Today, this figure is around 16 percent and falling. Asia is largely responsible for these dramatic figures. Asia has experienced one of the most rapid paces of development in human history and, hence, it is no wonder that political and economic pundits have dubbed this era “The Asian Century.”

Many countries in Asia also share the unique experience of being aid recipients and donors, often simultaneously. Asian countries as donors are now contributing to significant shifts in global aid architecture.

Alongside this success, however, the Asian Century faces looming challenges. These include climate change, the global financial crisis, food security, humanitarian crises resulting from devastating natural disasters, and persistent pockets of conflict and fragility. For many countries in Asia, the challenge is how to maintain a positive development trajectory, while tackling these challenges and avoiding the middle-income trap. It is fitting that the Fourth High Level Forum on Aid Effectiveness (HLF4) is being held in Asia. As host, South Korea provides a valuable, concrete example of how aid can be an effective catalyst of development.

Many countries in Asia also share the unique experience of being aid recipients and donors, often simultaneously. Asian countries as “donors” are now contributing to significant shifts in global aid architecture. Two decades ago, aid from the Organisation for Economic Cooperation and Development‘s (OECD) Development Assistance Committee (DAC) member countries constituted 80 percent of total aid. Today this amount is closer to 50 percent. Contributing to this change in composition of global development assistance is the significant increase in assistance from non-DAC countries, notably China and India.

Although often characterized as new or emerging donors, many of these countries in fact have a long history of development cooperation that has simply fallen under the radar of traditional aid frameworks for many years. Beyond resources, these emerging actors bring distinctive philosophies, expertise, partners, and modalities to their cooperation. Many operate outside of the DAC. At the same time, there has not been an effective mechanism that reflects this diversity that brings together the different interests and perspectives of the current broad range of development actors. To address this gap, for the past year, The Asia Foundation has been collaborating with The Korea Development Institute (KDI) to convene a series of policy dialogues on Asian approaches to development cooperation. This dialogue, involving development cooperation officials, policy analysts, and partners from China, India, Korea, Malaysia, Singapore, and Thailand has revealed some intriguing similarities – as well as some important differences – among these countries with regard to the philosophy, purpose, and modalities of development assistance. They have also provided insights on the relevance of current international aid frameworks for Asian approaches, and whether donor alignment around an agreed set of principles and approaches is desirable or possible.

To continue this dialogue, this week in Busan we brought together experts from China, India, Vietnam, and Korea to discuss emerging Asian approaches to development cooperation and to share mutual experiences as both aid recipients and aid donors. The event – “Emerging Asian Approaches to Development Cooperation” – was hosted by The Asia Foundation, KDI, and Vietnam’s Ministry of Planning and Investment.

In addition to the rise of important new government actors, the phenomenal growth in private philanthropy and non-government development assistance has also transformed the basic architecture of the international aid system. It is estimated that private philanthropic aid (which includes contributions to NGOs and broader civil society organizations) from developed countries ranges from $65-75 billion annually. Indeed, some INGOS are larger than some DAC donors. In 2008, private philanthropy constituted 32 percent of total aid composition. Non-state development cooperation partners bring enormous intellectual capital, financial flows, technical capacity, and decades of experience to development work. They also provide valuable access to local networks, leaders, and communities.

INGOs and CSO efforts complement traditional ODA – which tends to focus on national-level plans and building state capacity – by offering innovative, locally grounded, and responsive programs, including extensive work with local civil society organizations. When brought together these two approaches provide a more robust definition of country ownership to the dialogue on development effectiveness.

This exciting new aid ecosystem, however, poses incredible challenges for coordination, management, and measurement of effectiveness. Diverse approaches have led to increased fragmentation in aid and a proliferation of aid instruments. As the volume of aid and number of donors has increased, so has the number of projects. Moreover, projects are becoming smaller. More than half of all donors projects amount to less than $100,000. The diversity in development actors has led to new coordination forums and expanding mandates for existing ones. These include MDG Summits, OECD/DAC, G20, UNDCF, among others. While many of these forums have overlapping mandates and membership, this diversity of organizational structures is perhaps a natural outgrowth and reflection of the dynamism and innovation now taking place in international development conventions.

Ultimately, the greatest prospects for effectiveness and coordination will come from the developing countries themselves. The diversity and complexity of aid, while straining national aid management systems, has also expanded opportunities and choice for developing countries. More resources, commitment, and trust are necessary to enable countries to set their own development agendas and manage development resources accordingly. In this regard, much can be learned from the experience of Asian countries, especially Korea.

HLF4 advocates for a new paradigm for development cooperation and one that is inclusive of increasingly influential countries outside the DAC. Moving forward, Busan’s global compact has all the ingredients to establish new milestones in aid and development effectiveness.

David D. Arnold is The Asia Foundation’s president and Anthea Mulakala is the Foundation’s country representative in Malaysia and regional advisor for donor relations. They can be reached at [email protected] and [email protected], respectively. The views and opinions expressed here are those of the individual authors and not those of The Asia Foundation. 

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