New Development Assistance: A New Agenda
Many emerging economies have been gradually evolving from recipients of Official Development Assistance (ODA) to new donors. While statistical information of their contribution varies due to heterogeneous definitions, criteria, and data availability, the impacts of emerging economiesâ increasing engagement in international development have become visible. Their growing role in international development does not just reflect a shift of the center of gravity of the global political economy toward the South and East, but has paved the way for rethinking and reforming ODA.
In early 2017, scholars of Fudan University and the London School of Economics and Political Science (LSE) with a common interest in international development assistance launched a joint project to explore the changing landscape that is stemming from the increasingly prominent donor roles played by emerging economies. The project evaluated the current practices of development assistance and their effectiveness; identified new patterns and challenges; and sorted out new concepts, norms, and activities to deliver policy advice to national governments, aid agencies, and multilateral aid organizations. In April 2017, scholars from both institutions met in the Old Building of LSE and coined the concept of New Development Assistance (NDA), with the ambition to establish a new analytic framework that would capture the attributes of emerging-economy development assistance realized so far which fundamentally diverge from those of conventional ODA. The following September, a forum on Development and Governance in BRICS was held at Fudan University with a roundtable on NDA. Members of the research project enthusiastically presented their research, which had been structured according to a general understanding of the ideas and practices of NDA. It was concluded that the changing global political economy had laid the socioeconomic background for reasonably definable and distinct patterns of development assistance to emerge that merit serious academic attention and exploration.
The New International Political Economy and New Development Assistance (NDA)
The post-WWII global political economy has undergone fundamental changes that have created new momentum and challenges for development assistance. ODA was first a response to a war-damaged Europe, then shifted its focus to developing countries, most of which had been European colonies before WWII. For a long period, ODA reflected the hierarchical global economic structure by being a major responsibility of developed countries in the Global North. Beyond a historically forged moral obligation, ODA brought with it economic, political, cultural, and other purposes and implications. As its magnitude continued to grow, ODA began to assume the function of âglobal redistributionâ contributing to development and sociopolitical stability in the Global South.
In the second half of the twentieth century, ODA passed through incremental changes and improvements. The economic boom of the 1960s and 1970s brought still more developed countries into the donor group. The Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) was established in 1961 to promote development assistance, coordinate cooperation, guide operations, and harmonize standards. In 1969, DAC first defined ODA to include three basic components: an official sector contribution, an economic development focus, and concessional financial terms. For decades, over 90% of worldâs ODA came from DAC members. Unsurprisingly, most ODA reflected the ideas, specifically neoliberalism, of the developed Global North regarding effective and legitimate ways of assisting development. Even though OECD was encouraging its member states to enhance borrowersâ ownership through the Paris Declaration and the Accra Agenda for Action, the OECDâs value-laden ODA practices still tended to reflect Western views of global political-economic governance. ODA conditionality, driven by a value consensus on economic marketization and political democratization, often confronted aid-receiving countries with a tension between external rule adoption and autonomous development. Although ODA alleviated some of the economic difficulties of aid recipients and brought them new opportunities, it was incapable of exerting a major influence that would empower countries with ingrained weaknesses in market infrastructure and political stability. ODA was based on the experiences of the Global North, and hardly provided an effective prescription for the North-South hierarchical political-economic structure.
The rise of emerging economies in the late twentieth century blazed alternative paths of development and subsequently new directions and resources for international development. In 2017, emerging economies accounted for 9 of the top 20 countries in terms of GDP, and their average GDP was 70% of the latter groupâs. Amazingly, Chinaâs GDP rose from 19% of Japanâs in 1980 to 247% in 2017. The G20 has been replacing the G7 as the worldâs main scheme of global economic governance. Despite their vast internal variation, the development paths of emerging economies have one thing in common, their deviation from the accepted Western precepts. The values underlying their development achievements were nicknamed the âBeijing Consensusâ in 2004 by Joshua Ramo (2004), a scholar at Kissinger Associates, to designate it as an alternative to the âWashington Consensusâ.
The growing productive capacity of emerging economies has significantly expanded their role as development assistance providers. The leading ones are big regional countries such as the BRICS, starting to provide development assistance long ago despite being recipients of it at the same time. Aside from regional geopolitical concerns, common motivations driving emerging economies to become donors before they were really rich enough were economic integration, trade benefits, cultural ties, and humanitarian rescue. Usually, the engagement of emerging countries was gradual in terms of aid amount, geographical coverage, and institution and capacity building. The Belt and Road Initiative (BRI) launched in 2013 and the Asian Infrastructure Investment Bank (AIIB) established in 2015 as part of Chinaâs grand global political economic strategy had a huge component of international development. As China and India are expected to have a GDP bigger than that of the US by the middle of this century (OECD, 2018), the development assistance potential of emerging economies is hardly negligible, and will surely become an important resource for bridging the huge gap between the supply of and demand for development assistance.
Notwithstanding that emerging economies have obviously learned from DAC rules and aid practices, their perceptions of development and of appropriate ways of external intervention are different. They usually lack strong market and social infrastructure and institutions, and their development trajectories may not distinguish a clear boundary between the economy and the state. Their political systems have difficulty in adopting and stabilizing Western democracy. Consequently, their aid actions are pragmatic and devoid of a value focus. As the new donors themselves had emerged from a history of colonial rule by Western powers, their assistance to other developing economies was not restrained by the moral obligations that traditional ODA carries, and tended to emphasize South-South cooperation and mutual benefit, which, in turn, was critical for domestically justifying their aid engagement and spending.
Systematic adoption of DAC rules by emerging countries was proved practically impossible. Although there is a clear trend of increasing engagement, they have not yet reached consensus on a given proportion of GDP as the goal for assistance inputs, unlike DAC countries. The standard of concessional ODA of 25% grant elements was not widely followed. International development funding from emerging donors was often unconditional, and lacking multilateral cooperation and due transparency by DAC standards. While a deficiency of institutionalization and good governance partially explains these differences, a better preference match between new assistance providers and recipients is also in play. The increasing aid from emerging countries has been a response to the fundamental limitations put upon aid governed by the DAC rules. The sustainable effects of New Development Assistance lie in its appropriate shaping of the relations between state, market, and society in recipients. The development philosophy of emerging donors may provide viable models complementary to the prescriptions offered by DAC.
The new donors, though an overall blessing for international development, bring complicated issues and challenges in their wake. The first issue is their aid governance capacity. A lack thereof will negatively affect aid effectiveness, and may cause a backlash from both donors and recipients. Emerging economies are still in need of better developed aid management institutions, more experienced aid experts and personnel, stable policy commitment, and adequate risk analysis and control. This is especially important for countries that are quickly expanding their engagement in international development assistance. The potential to learn from DAC is limited by the important differences mentioned above. A related issue is how development assistance can be coordinated in a way that maximizes the be...