The Changing Context and Content of Aid Policy

David Malone, IDRC President spoke on, ‘The Changing Context and Content of Aid Policy’, other emerging issues, and alternative paradigms, on Friday, 23 April, 15:00 hrs at the ICIMOD Headquarters in Khumaltar, Kathmandu, during the 2nd ICIMOD Knowledge Forum.

“Crossing the River by Touching the Stone”, Reflections on Development by David Malone

Canada’s International Development Research Centre (IDRC) President David Malone was in Nepal recently and shared some of his insights and reflections on development in general, and Nepal in particular, at an ICIMOD Knowledge Forum. Below are some excerpts from the talk. A short video clip will soon be posted on the ICIMOD Youtube site.

On Nepal (a country close to Mr Malone’s heart, as he was its non-resident Ambassador for a few years): Nepal lies geographically between two of the fastest growing economies (China and India) in a subcontinent where growth is the norm. Yet it is not growing, well-intentioned though its development system may be. Sometimes major political reforms are followed by economic reforms, and some countries have been able to grow despite conflict. This has not been the case here.

But Mr. Malone does not think that Nepal’s economically strong neighbours are keeping it from growing. It is in their best interest if Nepal grows along with them, so that they may engage it more for greater trade, among other things.
Remittances are more important to the Nepalese than development assistance. But a remittance economy, just like an aid-dependent economy, is not a firm foundation for any country.


 

Is development illusory? No. But progress is not irreversible, it is fragile.
On the ideal development model: There are many different models of success including, for example, the very different models adopted by China, India, and Brazil in recent years. China decided in the late 1970s to focus first on agricultural reform, then on manufacturing (including the national infrastructure required to move inputs for production and finished products for export), while India in 1991, suffering from an acute balance of payments crisis, adopted reforms affecting fiscal policy (to boost government revenues), trade and investment policy (to like increase foreign financial inflows) and measures aimed at encouraging its private sector.  (Its green revolution of the 1960s and 1970s proved to have been engineered at a high cost environmentally and in terms of water management and ceased to produce significant productivity gains in recent years.) India and China have completely different economic models and political systems except for one common ingredient – the quality and industriousness of their human capital.

There is no one-size-fits-all model or a universal template for development. In his years in development work, Malone says he has come to value the importance of specificity.

“The specifics are always different for every society; and even within a country (for example, In India, Bihar, still very poor although newly growing very fast, and Himachal Pradesh, a small but impressive success story); no two circumstances are alike.”

He is, thus, against generalisations and wary of single solutions.

“Beware of ‘monomaniacs’ proposing a single model to address all situations. Conventional thinking is sometimes dangerous; dissenting views can turn out to be accurate - they deserve a respectful hearing. Always keep an open mind.”

“On agriculture, Deng Xiao Ping was not top-down but very experimental, ‘crossing the river by touching the stones,’ (a Chinese saying) – an experimental approach at the local level worked well.”

On development:

“Without local commitment and buy-in, projects will fail. Local commitment either exists or does not it is hard to induce it through externally provided incentives. No matter what the supply side (donor) does, if the development process is not driven by the demand side (communities), it will be challenging and often sterile.

On development research:

Evidence-based research within developing countries is often the best foundation for improved policy.  Helping build the capacity for such research, supporting individual and collective research projects and encouraging dissemination of the results to policy-makers and civil society is a privilege that IDRC and its Board much value.

On inequity:

How much inequity can societies can tolerate varies tremendously.  To a degree, in some countries, the poor would like to emulate the rich rather than seek their elimination. 

Inequity has been growing not just within developing countries, but also, very much so, within industrialized countries in recent decades, and thus has affected many communities, not just immigrant workers and other minority groups.

On the future of development aid:

“In the industrialised world, the recent economic and financial crisis has produced very significant government deficits that need to be addressed urgently (although this has been less pronounced in several countries, such as Canada and Australia).  Because pools of cash within government accounts are few and far between, development assistance will be under pressure in many cases.   The development “biz” may be in for some lean years ahead.”

But on the other hand, this opens the doors to looking harder for cost-effective measures; better regulation, for example, which is deficient in most of the countries where IDRC works, and which needs cost very little.

On regional development and the regional approach:

IDRC is a great believer in regional development, regional approaches, cross-border thinking, and researchers learning from one another. We support several global, as well as regional, networks of top-flight, policy-oriented researchers from the developing world in a variety of fields and the results of their exchanges are often extremely impressive. The ‘Asian Tigers’ and China all learned from each other in the 1980s and 1990s, and Latin American networks of researchers have been strikingly successful at times. Today, scholars from China, India, South Africa, Brazil and Argentina are learning from each other in the fields of administrative and economic law, and many other countries can benefit from their conclusions.


- Joyce M. Mendez, IKM, jmendez@icimod.org