‘Getting fundamentals right’…Korean development aid

0096I have just finished a couple of months designing, carrying out and writing up a Baseline Study for Korea’s pilot Saemaul Undong programme in the country where I work, as a sort of side project. The survey component was huge- 5 villages, 1100 households surveyed with a questionnaire that still makes my head boggle. It was in many ways a great introduction to how KOICA (Korea’s aid agency) does business (not to mention the wonders it has done for my confidence in quantitative analysis!)

The introduction to how KOICA goes about its work, however, leaves me a little less than impressed, and wondering if KOICA shouldn’t take a leaf from the old World Bank report praising Korea (among others) for ‘getting fundamentals right’.

The phrase ‘getting fundamentals right’ of course was first used in reference to macroeconomic fundamentals, but here I’m speaking about ‘development fundamentals’.  I found out through my long nights working with the KOICA team that, for instance, the Saemaul Undong programme has no results framework, no strategic framework, no logframes, no indicators, no monitoring mechanisms, no project activity design process to speak of, etc.

Not that logframes are or should be the end-all, be-all of development programmes. Not that these specific frameworks or mechanisms must be present for any success to be registered. No, the problem is more fundamental, really: there is no conception of planning. No one knows what results should look like, or who should be benefitted. There is no real logic in who is targeted. There is no idea of what should be measured, of what information should be gleaned out of activities. By extension, there is only a vague idea of what is actually successful, of what fails, and why.

The Saemaul programme is led by volunteers (think Peace Corps), who come over from Korea, live in the village in which they work and each take on (or share) one or more projects for the village in collaboration with the community.banner_koica

The programme is in its third year of pilot. As far as I can tell, the inception and design of a project goes something like this:

-“The villagers want to produce [crop]”

-“Really? Okay, sounds good. How much money should we put in it?”

-“How about [amount]?”

-“Great, when do we start?”

I am of course caricaturing, but the caricature is not that far removed from reality. This is to say that there is no systematic approach to projects- that as they come in, volunteers are asked what kinds of projects they would be interested in doing in the villages. Projects are documented by the volunteers, who send weekly reports and who conduct themselves, along with a KOICA officer in the national office, the evaluations.

So this baseline study will be the first of its kind for KOICA in this country- the first time that a rural development project incorporates baseline statistics and statistical analysis in decision-making on future projects.

A small step, maybe, but still one that could be built on at a faster rate. The Saemaul programme is just the tip of the iceberg…

So yes, fundamentals are important.

Incidentally the main critique of the famous 1993 World Bank report The East Asian Miracle was that it in great part overlooked the more state-driven factors in the economic success of the Asian ‘Tigers’ in favor of a more market-based, orthodox view of how the Bank thought development happened back then. So maybe in that same vein one could think that the ‘fundamentals’ that I mention here are also just the tenets of orthodox development practice, held up as truth. This would be the case if it weren’t so clear that no one has any idea where the programme I mention here is going. The solution, again, may be in logframes and it may not. But goodness, a little direction would not go amiss.

Special Economic Zones in Africa: What Lessons from China?

ChinafriqueThe government of Ethiopia announced earlier this month that the long-awaited and carefully planned Bole-Lemi Industrial zone (a Special Economic Zone, or SEZ) would finally be seeing light by the end of the fiscal year. The first government-lead economic zone of its kind in the country, it will cost an estimated 49 million USD to set up. And it looks like this is only the beginning; five more such zones are planned in the country. The trend is also visible a little to the south, in Tanzania and Kenya- also Nigeria. What could possibly be pushing this renewed interest in the Special Economic Zone, you ask? Because it’s not as though this is the first time (PDF-p.61) governments on the continent have warmed to the idea of SEZs. What makes the Ethiopian Minister of Industry so eager to tell the world that this new SEZ will be the “key for [their] industrialization”? Why the Chinese of course.

The Chinese?

Okay, so it’s not just the Chinese. But if you look at who is funding many of the new SEZs popping up in African countries, or if you look at the countries who are hosting conferences on SEZs, those who are in the boardrooms and Prime Minister’s Offices, providing the policy advice, giving the lessons learnt and helping to draw up the master plans, you’ll find a likely group of suspects: China, Singapore, Hong Kong, and Japan and Korea (to a slightly lesser extent).

You’ll find no shortage of people to explain to you why this is exciting, not the least of who work in the World Bank. And they are right: the twist on South-South cooperation that is this African SEZ development in partnership with Asia has some great benefits that were not there beforehand. Take China. Not only does it have the experience setting up over 100 SEZs in its own country, Chinese politicians are playing for keeps, showing how serious they are about producing actual sustainable results in the zones they manage (Oh yes: you see, in addition to helping states set up SEZs, China has already set up a number of its own SEZs on the continent, run mainly by Chinese capital interests). Plus the Chinese are in large part subsidizing the establishment of these zones, making them more accessible to governments who previously who not have ventured that far into exploring this type of economic tool.

The real gains from partnering with East Asia

But (I know you felt this coming) all is not cotton candy and unicorns. This opportunity of learning from the East Asian development experience in this particular area is a real one, but one must be oh so careful when going down this road. After thinking it over, I’ve come to the following conclusion: the greatest benefit from East Asian collaboration on SEZ development for African countries is not the money they get to make the Zone, and it’s not the capital they attract. It’s not even the vaunted technology transfers that always make the list of plusses. The greatest benefit is the actual technical advice, the capacity gains one gets from being with a partner on the ground and seeing how they go about doing things. It’s the gains in policy-formulation, in learning literally how you write up a new law, who the best person or company is to talk to about X subject, and so on. You don’t need to copy your partner 100%, but you need to see what they are doing, who they are talking to…

Of course, the potential is there for gains from SEZs for the economy which come from the SEZ itself- that’s after all one of the reasons it’s being built. Chief among these are more competitive industries (ideally able to compete in global markets i.e. to export), technology transfers, skills acquisition, technology transfers, and so on. The expected benefits are certainly there. But the more one looks at it, the more one sees that the value from these gains is pretty ephemeral compared to the possible value of the technical know-how and policy-savvy that I mentioned earlier. This is certainly not the main line of reasoning that one hears in the papers, however. The real value of the partnership is not where it initially appears to be.

‘Leading Dragons’ is not enough

Partnering with Asian countries, especially with China, often leads to the following line of reasoning. Since wage rates in China are climbing, one can anticipate a very substantial shift of manufacturing jobs out of the Middle Kingdom and into the backyard of lesser developed Southeast Asia and Africa. Establishing SEZs with Chinese cooperation is a means of making sure that African economies get their share of this so-called ‘Leading Dragon’ effect.

But this is dangerous thinking. For one, this phenomenon isn’t a sure thing; it’s contingent on rising wages in China, but no one is sure if wages for these unskilled manufacturing jobs will keep rising at the same rates- imagine a slowdown in wage increases which lasts for a good 10 years. Where is your massive influx of manufacturing jobs now? The second point is that even if this is the case, and the demand for labor in manufacturing industries (along with the requisite relocation of said industries) actually happens, African countries still find themselves in a race-to-the-bottom competition. Without concrete gains in productivity, without harnessing the technology, then all these economic opportunities are little more than passing fancies; one cannot drive a shift in economic structure on another country’s costs of labor.

As it is, many of these Chinese-backed export zones risk becoming enclaves of special economic activity and subsidies, in unfair competition with the host country’s other domestic industries. What is more, in many cases the leadership/managerial roles in running these zones are left exclusively to the partners- that is, out of African hands. Who will ensure that the technology transfers will happen properly, that skills will be acquired, and that in short, the venture does not just become another ill-fated economic experiment? As it stands, the Africans run the risk of missing the possible high-tide brought on by the Chinese.

The East Asian Miracle- Ignored

The real value of these Africa-Asia SEZ cooperation initiatives is not, I said, where it initially appears to be. This is also because a very partial and partial (this play on words sound better in French: partiel and partial) account of how these Asian countries have used SEZs in their development seems to be privileged when it comes time to explain the role of these economic zones in East Asian countries’ development. These conferences on the subject that are held seem to drive past the larger development experience and come right down to the point: ‘How did China/Singapore succeed in establishing and managing its SEZs?’

But when you look, especially in the Chinese case, at the history, you find that it tells you more than what is being said today (it seems so at least). Case in point: Chinese establishment of SEZs was the result of and a response to gains in factor accumulation (mostly capital, some labor) as its economy enlarged, not the other way around. Now, it’s true that with 7-10 million people in Africa’s least developed economies entering the job market each year, there is a chance that smart, adaptive policies and the right type of capital inputs can bring about large economic expansion. But this isn’t really what the Chinese did, nor does it take the lesson that the Chinese example is giving.

Then there is the standard argument that the likes of Dani Rodrik have been giving against the export-led model of growth, which applies in part here too: for the East Asian Tigers, first came gains in productivity, then exports-oriented industrialization, not the other way around. Exports played a smaller role than often thought in the actual economic takeoff of the likes of Korea and Taiwan. Both these points come to the same (cautious) conclusions: 1) SEZs are the result, not the start, of a certain economic process, and have been effective in Asian countries which have already seen important gains in capital and labor inputs. 2) Economic zones have led to globally competitive domestic industries (mostly) after these industries have gained in productivity (usually through gradual competition with industrialized countries’ exports in the domestic market).

It is not clear at all that this same dynamic is taking place in East Africa. Rather, the SEZs appear to be treated as the solution in and of itself to the question of factor accumulation and total factor productivity.

The Most Important Factor

I attended a talk by Japanese professor (and industrial policy scholar) Kenichi Ohno last summer in Korea, and he said something which really gave me pause. He said that, in the process of advising the Prime Minister of Ethiopia’s office on how to set up Special Economic Zones, he received what he considered to be the best question, from some Ethiopian official. It was something like: ‘Can you show us an example of a well-written proposal? What should go in it? What does the Table of Contents look like?’

This was the best question because it was precisely with information like this, Ohno said, that the government would build the expertise necessary to successfully manage a Special Economic Zone. Once this know-how is transferred, no matter the partner -be it the Chinese, the Japanese, the Europeans, or other Africans- Ethiopia would have the tools necessary to achieve their goals- whatever those be. It struck me as a very true point. The know-how, the technical skills, the transfer of concrete experience goes miles beyond the ideology, the money, the ‘comprehensive development experience’ and the pitfalls of debates that inevitably turn to a meaningless merry-go-round of “developmental state or free market? Import substitution or export orientation?” etc.

It remains to be seen how well this know-how and these tools will be transferred and used by African countries, but this is without a doubt the richest experience that can be gleaned from these new SEZ partnerships.

Originally posted on NYU Development Research Institute:

What if US development happened in line with approaches today? Here would be some landmarks along the way to success:

July 4, 1776

“We hold these time-bound Development Goals to be self-evident”

1789

Poverty Reduction Strategy Paper ratified by the 13 states

1789-1861

Development takes off based on micro-credit to women to produce handicrafts

View original 100 more words

Korean Aid: from ‘Development Experience’ to ‘experience development’

I have recently changed jobs, leaving the ‘scary D.C. organization’ I was at for the more moral-hazard-free (haha) shores of the United Nations here in East Africa. I am working on implementing a project funded by KOICA, the Korean aid agency. The past few weeks have been a time of adjustment (to the new country, to work) and my first discovery of how Korean aid operates on the ground. It is too early to come to any conclusions, but safe to say that there are many interesting questions and doubts to follow up on. I look forward to doing this as I move along in my writing here.

So, the ‘new’ donors. Or the ‘once alienated, slowly being brought into the fold’ donors. Japan. Korea. Brazil. South Africa….others.

There is something fascinating about countries that have paid their dues to the World Banks and IMFs and then turned around to become worldwide donors, regional powerhouses, or even to add a brick or two to the mosaic of countries and agencies with their own little niche in the world of international cooperation.

The most fascinating element is probably how these countries use the knowledge and lessons, the know-how gained throughout their history in their development programmes. Some countries are more high-profile about it than others. Some countries prefer sticking to policy advising, others like very technical advice, others still prefer direct, on-the-ground action. But there is one thing in common with all ‘development experience’-related programmes from new donors: they are all new.

Take a country like Korea. I will spare you the story behind Korea’s economic development. But it was just in 2010 that Korea joined the OECD’s Development Assistance Committee, and it was just two years ago that its Knowledge Sharing Program got off the ground. Everything is still in planning. Here and there, scattered in Southeast Asia and Africa, one can find Korean-aid funded ‘pilot projects’ with grand visions of scaling-up once they get the ‘Korean development model’ down pat (good luck).

Because all of these initiatives are new (yes, you can also find older initiatives as well, the best example of which is Brazil’s social protection/school feeding know-how being exported), and because the road ahead is not paved, there is often a lack of clarity in how one gets from the experience of development to the packaging of an aid/development programme.

I used to be a big fan of discourse analysis, so if we order things by ‘frame’, we get something like this:

  1. The development itself. This is the string of policies, the events, people and decisions that drove economic growth and that produced whatever result we see. Needless to say, this is an ephemeral concept, and not really analyzable in and of itself, if not to make a simple statement: Korea’s GDP went from X to Y in A years.
  2. The perception of the development experience. How do countries order and understand the course of their economic and social, political and cultural history? How do they perceive the ‘success’ and ‘failures’ of policies after the fact?  To what do they attribute it? We can add to this one more dimension, that of ‘who’? Who perceives a policy as a success? The state? Civil society? Scholars within the country? This is in my mind one of the key points that will inform what road new donors’ aid (and especially Korean aid) goes down over the next decades.
  3. How these countries’ different actors make the leap between their understanding of how their country developed and their ‘aid philosophy’. To what are development successes attributed, and do related policies form part of the plan when the higher-ups decide where the money goes? Are there countries that retain one discourse about their own development and employ greatly differing or non-sequitur aid allocation strategies?  (The short answer, from what I know of Korean aid, is yes)
  4. The packaging of the development experience. That is, how aid-related ideas are perceived to travel in space and time. What is seen to travel well and what is not. There may also be an interesting variation by region (ie. Different policy advice, different programs etc. depending on the region the recipient country is in, and not depending so much on similarities in economic, political or social structure).
  5. The actuation of the development experience. The concrete policies and programs that come out of the ‘packaged development experience’ and their effects. The idea, when one hears talk about a ‘model’ (the ‘Korean model’, and so forth) is that repeating the same experiment will lead to fundamentally similar results. To my knowledge there has been very little literature looking closely at this question. (Should you know of any though, I would be happy to hear about it!)

United States Military Engagement in Africa: More Engagement, Less Military

africom1

Africom- via Newsone

I read a nice blog post at the Center for Global Development recently on US military engagement on the African continent, the main points of which can be summed up as follows:

“1.Africa is not a threat to the United States
2.Terrorism is a tactic, not an enemy
3.Unintended consequences cause serious harm [drones + militarized aid]
4.Stable, accountable states are ultimately the highest interest of the United States in Africa.”

The piece concludes:

I welcome US military engagement with African militaries in support of developing more professional, accountable African security forces that protect and defend their citizens rather than prey upon them. Ultimately, this contributes to stable, inclusive, and accountable states and best serves US interests in Africa, including with respect to counterterrorism.

Yes and No.

The counter-terrorism agenda in Africa is seriously harming the continent, never mind US relations with African countries. AFRICOM is facing tough times within the U.S.  Department of Defense itself, not to mention the tough resistance it is facing from other African states.

Engagement with African militaries in support of better security forces is most certainly needed, and if the United States is one country able to answer that need in a correct manner, then sure, why not. But the predatory nature of security forces on the continent, their inefficiency, lack of communication, accountability and outreach are all problems with their counterparts in what some call the broader security system and others call the security sector.

So if these problems are addressed solely by the Department of Defense, it is missing the systemic nature of many security issues. Rule of law, good governance and accountability within the military and police, but also within the justice system, informal policing bodies, local government and others are inextricably connected to security. To leave that to DoD, as it is being done, is just as much part of the problem.

The Africa Center for Strategic Studies (ACSS) at the Department of Defense is one example of a more soft power approach to African security relations, which incorporates elements of human security in their outreach programs to African countries. All well and good, but its very military-centric approach means that there are very few non-’traditional’ security sector actors (non-military, non-police, non-gendarmerie) at their workshops. The discussions they have and the recommendations they make are rather shallow, and have little resonance when it comes to questions of governance or human security.

But imagine if DoD research and engagement centers cooperated more, not with AFRICOM like they do, but with the State Department, with civil society actors on the U.S side, such as the National Democratic Institute to systematically engage African partners year after year on holistic security concerns… then maybe I would agree more with the author of this otherwise very on-point piece.

Memories of Busan: HLF-4 and the Private Sector

A new paper by the Canadian Council for International Co-operation and the think-tank the North South Institute, as well as an insightful Oxfam blog post have inspired this look back at what Busan got wrong with the private sector, and how to fix it.

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In November of 2011 I received the opportunity to volunteer at the Busan High Level Forum on Aid Effectiveness (HLF-4)…’s Global Civil Society Forum. It was a 3-day Forum bringing together the voices of civil society in preparation for the actual High Level Forum. Speaking English, French, Spanish and Korean with the participants, sitting in on plenary sessions, helping to translate the final document, or interpreting for a Guatemalan participant during his presentation were definitely some of the highlights for me.

Many different agenda were brought together in the plethora of plenary and splinter sessions, but two main ideas kept coming up. The first was the need to shift the aid paradigm to a discussion on ‘development effectiveness’ and not ‘aid effectiveness’. The second was born out of concern that further involvement of the private sector in bilateral aid could be dangerous to sustainable development and democratic ownership of the development process.

These concerns reflected an apprehension that the agenda set for the HLF, along with the blueprints for a ‘global partnership’ for aid and development were all really just an excuse for donor countries to justify ‘privatizing ODA (Official Development Assistance)’ and partnering with the private sector to offset their declining aid allocations.

“Effective Use of Declining Aid Resources”

me at busan

Me (far right) translating for a Guatemalan delegate during a Busan Civil Society Forum session

The result, after several days of meetings, was the Busan Global Partnership for Effective Development Cooperation, a mouthful of a name. But for all its good language, the actual High Level Forum’s final document did not take civil society’s concerns very seriously. There is certainly progress in the discourse and focus of the international aid community. Busan did make some positive steps:

  1.  It put forward the idea of a global partnership for development
  2.  It embraced a discourse of ‘development effectiveness’ and ‘democratic governance’
  3. It emphasized several core values and rights placing people closer to the center of development processes.

It really failed to impress on certain other counts, though:

  1. It failed to speak specifics about the nature of the partnership it was supposed to build
  2. It did not reach a clear conclusion on the nature of BRICS and NIC involvement in the new aid architecture
  3. It pushed for increased private sector participation in development aid without sufficiently defining the parameters and expectations, the dangers and safeguards that need to go along with it. (The non-binding, sidelined Joint Statement (pdf) was a good first step)

This last point struck me as the most important at the time; the private sector is the bulk of most economies, the driver of growth and creator of wealth, but is also a potentially harmful partner in a development context. Moreover the shift to the private sector seemed to be more about donor country funds shrinking with the onslaught of the financial crisis, and less to do with a sudden discovery of how awesome private sector actors were.

Evaluating the Private Sector in Development Since Busan

So this Canadian Council for International Co-operation report on bilateral donor approaches to development cooperation is certainly edifying in this respect. It discusses how top OECD donors have incorporated (‘partnered’ with) the private sector into their bilateral aid programs, and what this has come to mean for development effectiveness, especially in a post-Busan context.

The paper looks at the type of private-sector partnership and promotion aid, and notes that it focuses mostly on macro-level interventions (the famous business-enabling environment), on firm-level projects, including public-private partnerships. The conclusions it reaches speak to the fears that were present at the Busan Civil Society Forum, namely that partnering with private sector actors in development, in its current form:

  • Tends to favor economic shifts driven from outside the beneficiary country
  • Tends to forgo local capacity building and offers little incentive for funding mechanisms to favor the domestic private sector
  • Tends to confound private and public results
  • Does not lend itself well to evaluation due to a lack of data and to the various mechanisms though which private-sector aid takes place

A notable point that came out of the research: despite many references to rights, to sustainability and to gender, it is not clear at all that these issues were given special consideration on the aggregate.

IFC_Logo

Oxfam: “The World Bank’s private sector financing arm doesn’t know the environmental and social impacts of nearly half its portfolio”

Case in point: a recent audit released by the World Bank’s Compliance Advison/Ombudsman says that the World Bank’s International Finance Corporation (IFC) is very poorly informed about the environmental and social impacts of its financial market lending portfolio. The logic of lending to financial markets is very clearly not coupled with principles of sustainable development, social or environmental impact.

Questions

Erinch Sahan at Oxfam asks an important question “can aid money be a meaningful driver of growth?” That is, can bilateral assistance, partnering with the private sector, become part of the solution?

On one hand I think that we have yet to see a country in which aid, in general, has become a meaningful and sustained driver of economic growth (never mind equitable distribution of wealth). What we do have are countries that have successfully used growth strategies to achieve (more or less) inclusive growth.

Partnering with the private sector certainly has its benefits. But one of the more serious side effects that it comports is to evacuate the donor country from the aid process (take a look at how European multilateral public-private partnership funding mechanisms like the Africa Enterprise Challenge Fund are structured- it’s just layer after layer!). In so doing, this tends to also evacuate the recipient (‘partner’) state from the processes of its own development. This was the big argument brought against the World Bank’s PPIAF, that it put pressure on governments to do business with international firms, and then to concede to often disastrous changes in the provision of social goods, like water or electricity.

So, we know the dangers. We can see the evolution of the involvement of private sector actors in bilateral aid (more of them, with ever more diverse mechanisms of action, centered on macro and firm-level interventions).

postbusan seoul civsocfor

The 2nd Seoul Civil Society Forum, one of the many Post-Busan evaluation conferences

Busan’s HLF-4 was one step on the road to consolidate and legitimate what evidently turned out to be an ad-hoc appeal to new sources of money, or new ‘partnerships’ to use the pretty term. It reached out to Chinese and other emerging economies’ capital, just as it did to companies, in order to buttress lagging ODA numbers. In its haste to create the semblance of unity in the form of a partnership, it gave no more than lip-service, non-enforceable, if-you-don’t-mind-sir recommendations on how to properly integrate these new sources of funding. And even those didn’t make it into the final document.

Before the Private Sector Party Jumps Off…

Okay, but what are the responses? What specific private sector funding mechanisms have worked and in what context? How can governments preserve policy coherence all while harnessing the financial power and access to financial markets that private sector partners can provide?

Answers to questions like these are needed, like, yesterday. Because for one, the Post-Busan Partnership Framework is proving to be a slow, slow process. Another reason is that new and emerging donors like South Korea are more and more eager to jump on the private sector bandwagon, but not as conscious of its pitfalls.

A year and a bit after Busan, I can’t help but regret that the Civil Society Forum’s voice was given so little weight.