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Economic Growth : 1950-2004 Ten year moving average

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Title: Economic Growth : 1950-2004 Ten year moving average


1
Economic Development ltLecture Note 6gt 12.6.4
ED Development Assistance and Capacity
Development Some parts of this note are
borrowed from the references for teaching purpose
only.
Semester Spring 2012 Time Monday 900-1200
am Class Room No. 115 Professor Yoo Soo Hong
Office Hour By appointment
Mobile 010-4001-8060 E-mail yshong123_at_gmail.com
2
Development Assistance
  • - Development assistance would include
    multilateral governmental (or ODA), NGO, and
    private grants plus highly concessional loans
    (grant component)
  • - Official Development Assistance Net
    disbursements of loans (on concessional terms) or
    grants by governmental agencies for development
    purposes
  • - All aimed at transferring resources in
    currency or In kind
  • - All pro-developmental or emergency relief,
    not welfare oriented
  • - Non-commercial from donor perspective

3
  • History of Development Assistance
  • Marshall Plan
  • Cold war impetus
  • Gradual expansion to the1990s, decline then
    renewal
  • Citizen, Faith-based and NGO Initiatives
  • UN and the Millennium Development Goals
  • Reflection and Redirection of aid effectiveness

4
The Poverty Trap
Basic needs
Impoverished household
Decline in capital per person
Negative economic growth
ZERO
Household savings
(Negative)
ZERO tax payments
ZERO public investment budget
Population growth and depreciation
5
The Role of ODA in Breaking the Poverty Trap
Basic needs
Household savings
Economic growth
Impoverished household
Economic growth
Microfinance
Humanitarian relief
Public investment
(Negative)
Public budget
Official development assistance
Population growth and depreciation
Budget support
6
Forms of ODA
  • Development Assistance (ODA) may be
  • - bilateral given from one country
    directly to another
  • - multilateral given by the donor to an
    international organisation or EU
  • The proportion is about 70 bilateral and 30
    multilateral.
  • About 80-85 of total developmental aid comes
    from government sources as official development
    assistance (ODA). Germany and the European Union
    are major DC players.
  • The remaining 15-20 comes from private
    organisations such as NGOs, foundations and other
    development charities.

7
Considerations for Development Assistance
8
  • Donor Motives for Providing ODA
  • ? Political
  • - e.g. Commonwealth connections
  • - Win friend countries and influence people
  • ? Strategic/military
  • ? Commercial
  • ? Humanitarian
  • ? Ethical
  • - Ethical Justification Should high income
    countries provide aid to low-income countries?

9
ODA (Official Development Assistance)
  • ? ODAs are official flows of resources to or for
    developing countries that are provided
  • for developmental purposes
  • by the official sector (government, public funds)
  • as grants or
  • as soft loans

10
Examples of ODA Activities
  • Development projects schools, clinics, water
    supply systems, etc.
  • Emergency aid for natural or mkan-made disasters
  • Contributions to multilateral development
    agencies
  • Food aid, emergency and developmental
  • Aid to refugees
  • Debt relief outlined by Paris Club Agreement
  • Officially financed Ssholarships for students in
    developing countries

11
Non-Eligible ODA Activities
  • Military or security assistance
  • Cultural programmes for the donors nationals
    resident in other countries
  • Aid from NGOs financed from private sources
  • Foreign direct investment
  • Official export credits or other commercially
    motivated transactions
  • Guarantees on private export credits or
    investments
  • Reduced tariffs or other concessions on imports
    from developing countries

12
What is the DAC?
  • Development Assistance Committee (DAC) of the
    OECD
  • 23 Bilateral Donors, plus European Commission
    (EC)
  • Objective improve development assistance
    through coordination and collaboration with major
    stakeholder.
  • Collect and synthesize data on aid and foreign
    assistance and deliver the data to the public

13
DAC Subsidiary Bodies
  • Working Party on Statistics
  • Working Party on Aid Effectiveness
  • Network on Development Evaluation
  • Network on Gender Equality (GENDERNET)
  • Network on Environment and Development
    Co-operation (ENVIRONET)
  • Network on Poverty Reduction (POVNET)
  • Network on Governance (GOVNET)
  • Network on Conflict, Peace and Development
    Co-operation
  • Fragile States Group

14
Current DAC Members

Australia France Luxembourg Sweden
Austria Germany Netherlands Switzerland
Belgium Greece New Zealand United Kingdom
Canada Ireland Norway United States
Denmark Italy Portugal European Commission (Multilateral)
Finland Japan Spain Korea
15
OECD DAC and BRICs
Development financing provided by BRICs can help
LIC(low income country)s alleviate some key
bottlenecks to domestic economic activity.
Despite its still relatively small volumes
compared to financing by OECD DAC members, BRIC
financing is highly significant in some areas and
in some countries. In the area of
infrastructure financinga key BRIC focusit is
now comparable to that from OECD DAC donors, and
is expected to contribute significantly to
electricity generation capacity and the
construction of roads and railways in many LICs.
16
  • From a Receiver to a Donner of ODA
  • Koreas Received Aid
  • -- Korea was an aid recipient up until the late
    1990s. Since entering the new millennium, Korea
    has become a donor. According to the OECD,
    Koreas official development assistance (ODA) was
    264 million in 2001. It increased to 672
    million in 2007, 0.07 percent of its GNI, but is
    still far below major donors, whose average
    donations in 2007 accounted for 0.3 percent of
    GNI.
  • Korea, which received 33.1 billion in assistance
    from advanced countries and international
    organizations since liberalization from Japan in
    1945, is an example of the miracle that outside
    help can create when combined with good
    development strategies.
  • It only took about a half century for Korea to
    become the worlds 15th largest economy. In the
    process, Korea had a lot of help from the United
    Nations.
  • The money was spent on building highways and
    factories, turning the 70 per capita income
    country into an industrial powerhouse.

17
  • ODA Strategies of Korea, Japan, and China
  • On top of humanitarian needs, developed countries
    around the world are using ODA to strengthen ties
    with recipient countries to build up their
    influence and reputation, considering it a form
    of long-term investment. ODA helps Korean firms
    find business opportunities in the recipient
    country.
  • Japan is the third largest donor in the world
    after the United States and the United Kingdom,
    but was one of the top two for a long time before
    the weaker yen pulled it down in the rankings.
  • It is also the second largest contributor to the
    regular U.N. budget after the United States, as
    it continues its bid for a permanent seat on the
    U.N. Security Council.
  • Japan's ODA strategies are serving to promote
    national interests on top of fulfilling
    humanitarian needs.

18
  • Japan is spending around 25 times more than
    Korea, and is concentrating on Asia and reaping
    the benefits. From Southeast Asia to Central
    Asia, Japanese firms are outrivaling others in
    getting major infra projects and gaining strong
    footholds in local markets.
  • If Japan was a traditional big hand in ODA, China
    has lately risen as a guru in the field ?
    securing resources is its basic motif.
  • As the demand for resources rises with global
    economic expansion, keeping close ties with the
    government has become crucial to secure
    resources. Now donor countries are vying to
    provide ODA to resource rich countries.
  • China, rapidly industrializing, has been the most
    aggressive player in the energy war. Though it
    never officially announces how much it spends on
    ODA, it is estimated to spend billions of dollars
    each year on such projects.
  • Koreas efforts to become an active donor are in
    line with its plan to raise its international
    status commensurate with its economic power.

19
  • China pledged to double its aid to Africa, and to
    provide 3 billion in preferential loans at the
    Forum on China-Africa Cooperation held in 2008,
    to which leaders from 48 African countries were
    invited.
  • It imports over a quarter of its oil from African
    countries such as Angola and Sudan. While China
    provided 3 billion in loans to Angola, Korea's
    ODA totaled only 30 million. Though China is
    also criticized for giving ODA to undemocratic
    governments, its strenuous search for energy
    sources and new markets draws the attention of
    rivals.

20
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21
Official Development Assistance, 1998-2008(Net
Disbursements, in billions of US Dollars)
By All Donors Source OECD Database
22
ODA, Net Disbursements, 1980-2008 (billions of
US dollars)
Source OECD-DAC Data base.
23
ODA by Recipient (from All Donors)
(Mill US
Dollars)
24
Official Development Assistance by Recipient
25
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26
  • Contributions of Assistance
  • Gap-Filling Role Foreign exchange, tax
    revenues, technological, managerial or
    entrepreneurial gap, etc.
  • Direct Basic Human Needs or MDG Filling Role
  • Emergency Relief Regional flood, famine,
    military, and political crisis relief
  • Reconstruction Role Promote re-construction of
    war-torn lands
  • An Investment in Shared Security as well as
    Prosperity
  • Capacity-Building Role

27
  • Negative Impacts of ODA
  • ? May permit recipients to pursue
    counter-productive or foolish policies
  • - May support an ineffective, counter-developmenta
    l and corrupt government
  • - May support dictatorial regimes that violate
    human rights
  • ? May Promote a Dependency Welfare Syndrome
  • - Leadership and responsibility may be abdicated.
  • ? May deform domestic policies to accommodate
    priorities of donors
  • ? May permit donor to exercise inappropriate
    influence on recipient
  • ? May permit recipient country to shift resources
    to other undesirable areas
  • ? Volatility of aid flows may be hurtful to
    recipient

28
Criticism on Development Assistance
  • Aid to developing countries is strongly
    criticized.
  • - Scholars and policymakers increasingly
    express doubt that development aid will
  • Increase economic growth
  • Alleviate poverty
  • Promote social development
  • Foster democratic regimes
  • Have a positive sustainable impact
  • ? On Balance
  • - Aid alone can not achieve sustainable
    development
  • - A useful support for domestic or national
    effort
  • - Responsibility may more rest with developing
    countries themselves, not aid donors.
  • - Perhaps neither sufficient nor necessary
    but useful

29
  • Desirable Factors
  • Governmental commitment to development objectives
  • Reasonably incorrupt government
  • Equity orientation of public policy
  • Sound economic policies to strengthen and sustain
    an indigenous economic foundation
  • An enabling environment so that people can
    improve their own situations for themselves

30
Africas Aid Dependency
  • World aid per capita has increased over the years
    from about US1.4 to in 1960 to about US12.3
    in 2003
  • The level of aid per capita to SSA has increased
    even more from about US2.6 to about 34.3 over
    the same period
  • The result is that by 2003, almost one-third of
    all aid comes to SSA, compared to about 15 in
    1960

31
Trends of ODA, Non-aid Official Flows and Private
Flows to Africa, 1993 - 2003
32
The Tale of Two SSA Countries-Foreign Aid
Highest aid to Botswana in 1989 was about 160m
compared to 717 for Ghana
  • - Aid to Ghana has been consistently and
    significantly higher than that to Botswana.
  • Aid to Botswana averaged about US 66 million
    annually compared to US 303 million for Ghana.

33
The Tale of Two SSA CountriesPer Capita GDP
Botswanas GDPPC of over 3500 is about 13 times
that of Ghana which is about 276
Ghanas GDP of 280 is marginally higher than
that of Botswana of 253
  • - It is not too difficult to see which country
    has performed better in terms of growth.

34
The Evidence
  • SSA countries have received almost a third of
    total world aid.
  • SSAs growth and development have been anything
    but impressive.
  • Ghana has been significantly more reliant on aid
    compared to Botswana.
  • Botswana has performed significantly better than
    Ghana.

35
  • Fundamental Questions
  • ? Can More Aid be Absorbed or Used
    Effectively?
  • Would high levels of aid institutionalize
    dependence?
  • Would it lead to a collapse of domestic effort
    (e.g. taxation,foreign exchange earnings, etc.)?
  • Would it promote Dutch Disease
  • Would it sap indigenous efforts and initiatives
  • Could it be used effectively?
  • Would donor priorities take over?

36
  • Improvement of Development Assistance
  • ? Increase the Quantity of Development
    Assistance
  • - More grants and fewer loans
  • - Link aid more directly to need
  • - Further debt service reductions?
  • Recipients
  • - Pursue wise, equitable and effective
    development strategies
  • - Make a major domestic effort
  • - Take Charge and Own the Program
  • - Improve budget management and
    accountability combat corruption
  • - Ensure effective management
  • - Avoid currency appreciation due to aid
    inflows (Dutch Disease)

37
  • ? Donors Improve the Quality of Aid
  • - A Partnership philosophy and approach
  • - Orchestrate programs to avoid chaos Use a
    consortium approach
  • - Reduce administrative burdens placed on
    recipient governments
  • - Minimize aid volatility and unpredictability
  • - Reduce the tying of aid to donor suppliers
  • - Increase untied budget support? Increased
    Program Aid not Project Aid
  • - Emphasize capacity building

38
The Paris Declaration Pyramid
  • 56 Action-Oriented Commitments

39
12 Indicators to Monitor Progress
INDICATORS INDICATORS SURVEY REVIEWS
Ownership 1 National development strategies ?
Alignment 2 Quality of country systems ?
Alignment 3 Alignment aid is on budget ?
Harmonisation 4 Coordinated support for capacity development ?
Harmonisation 5 Use of country systems ?
Harmonisation 6 Parallel PIUs ?
Harmonisation 7 In-year predictability of aid ?
Harmonisation 8 Aid is untied ?
Harmonisation 9 Programme-based approaches ?
Harmonisation 10 Joint missions analytic work ?
Managing for Results 11 Results-oriented frameworks ?
Mutual Accountability 12 Reviews of mutual performance ?
40
The Number of Donors Per Country
Donor programmes cover many countries (EC,
France Germany over 100 countries each). 37
countries host more than 24 donors.
Quartile distribution of number of DAC and major
multilateral donors by country
41
Capacity Development
  • ? What is capacity?
  • - Capacity is the ability of a human system to
    perform, sustain itself and self-renew.
  • Capacity development is
  • the activities, approaches, strategies, and
    methodologies which help organizations, groups
    and individuals to improve their performance,
    generate development benefits and achieve their
    objectives
  • ? This definition makes clear that capacity is
    not a static state or quality. It is about
  • Creating some form of added value for members and
    the outside world (perform)
  • Staying alive and active (sustain)
  • Adjusting and developing over time (self-renew)
    on the basis of external pressures and internal
    drivers.

42
Capacity Development
  • ? Which capacities need to be developed?
  • The capacity to engage with stakeholders and
    create consensus around a policy, a bill or a
    plan
  • The capacity to articulate the mandate of the
    institution or to vision the trajectory of an
    organization or even a society
  • The capacity to develop a strategy, translate it
    into a plan and prepare a budget
  • The capacity to implement a program or a policy
    and the capacity to monitor its implementation
    and evaluate results
  • ?These are all fundamental capacities that
    organizations, institutions and societies need in
    order to be effective and function well.

43
Capacity Development Process
44
Capacity Development
  • Concept to put emphasis on holistic approach to
    capacity building and technical assistance
  • Four drivers of change to yield significant and
    lasting gains on capacity
  • Institutional creating capable institutions
  • Leadership building smart leadership
  • Knowledge increasing technical knowledge
  • Performance tools for measurable improvement

45
Capacity Development vs. Capacity Building
  • Capacity building
  • process that supports only the initial stages of
    building or creating capacities
  • is based on an assumption that there are no
    existing capacities to start from
  • less comprehensive than capacity development
  • can be relevant to crisis or immediate
    post-conflict situations
  • OECD/DAC
  • suggests a process starting with a plain
    surface and involving the step-by-step erection
    of a new structure, based on a preconceived
    design.
  • Experience suggests that capacity is not
    successfully enhanced in this way.
  • (UNDP Capacity Development
    June 2009)
  • Capacity development
  • process of creating and building capacities and
    their (subsequent) use, management and retention
  • driven from the inside and starts from existing
    capacity assets
  • living process, multi-dimensional, relational,
    adaptive.

46
Evolution of Development Assistance
  • Technical Assistance
  • 1970s and 1980s
  • Capacity Building
  • 1990s early 2000s
  • Capacity Development
  • Current approach

47
Capacity Development - Analogy
  • Lao Tzu - "Give a Man a Fish, Feed Him For a Day.
    Teach a Man
  • to Fish, Feed Him For a
    Lifetime.

Assistance
Give a Man a Fish
Capacity Building
Teach a Man to Fish
Capacity Development
Sustainable fishing industry meeting societal
needs
48
Growing consensus on aid effectiveness and
capacity
The 2005 Paris Declaration on Aid
Effectiveness Calls for capacity development to
be an explicit objective of national development
poverty reduction strategies
The UN Millennium Project and the Commission for
Africa Challenges the world to treat capacity
development with greater urgency
The New Partnership for Africas Development
(NEPAD) Identified capacity constraints as a
major obstacle to sustainable development
Capacity Development One of the most
important elements of aid effectiveness
Without sufficient capacity, development efforts
will not succeed
49
Importance of Capacity Development
Two connected observations
Country Ownership is the cornerstone of aid
and development effectiveness
Country capacity is the key to
Development Performance
50
Challenge
  • In recent years more than US15 billion (1/4th of
    donor aid) went to Technical Cooperation, most
    of which dealt with capacity development
  • Despite these investments, development of
    sustainable capacity development remains one of
    the most difficult areas of international
    development practice
  • Capacity Development one of the least responsive
    targets of donor assistance
  • 2004 Global Monitoring Report for MDGs reveals
    that public sector capacity lagged behind all
    other MDG benchmarks

51
Basic Understandings
  • Capacity the ability of people, organizations
    and society as a whole to manage their affairs
    successfully
  • Generic capacities the ability to plan manage
    organizational changes service improvements
  • Specific capacities for e.g., public financial
    management or trade negotiations
  • Capacity Development
  • The process whereby people, organizations and
    society as a whole unleash, strengthens, creates,
    adapts and maintain capacity over time
  • Not the same as capacity building which
    suggests a process starting with a plain surface
    and involving the step-by-step erection of a new
    structure, based on preconceived designed

52
  • The process whereby people, organizations and
    society as a whole unleash, strengthens, creates,
    adapts and maintain capacity over time
  • Not the same as capacity building which
    suggests a process starting with a plain surface
    and involving the step-by-step erection of a new
    structure, based on preconceived designed

53
Capacities by Entity
  • Recipient government
  • Capacity to own, manage and implement.
  • Donor agencies
  • Human and institutional capacity to deliver
    assistance in an effective manner.
  • Other key stakeholders (e.g. civil society,
    private sector)
  • Capacity to complement government advocate for
    effective use of aid, and exert ownership over
    development processes.

54
Relationship between Technical Assistance
Capacity Development
Facilitating access to knowledge
Brokering multi-stake-holder agreements
Capacity Development
Technical Assistance
Participating in policy dialogue advocacy
Providing incremental resources
Creating space for learning by doing
55
Level of Analysis
Individual level (experience, knowledge
technical skills)
Organizational level (systems, procedures rules)
Systemic factors, i.e., relationships between the
enabling environment, organizations and
individuals
Influences by means of incentives it creates
Enabling environment (institutional framework,
power structure influence)
  • Successful capacity development requires not
    only skills and
  • organizational procedures, but also incentives
    and good governance

56
History
  • Capacity and capacity development issues on the
    development agenda for ages, starting in the
    early 1950s
  • Seen primarily as a technical process, involving
    transfer of knowledge from the North to the South
  • Overestimated the ability of development
    cooperation to build capacity in the absence of
    national commitment
  • LESSON LEARNED To be effective capacity
    development must be part of an endogenous process
    of change, with national ownership and leadership
    as the critical factors
  • One of the most important element of the new
    consensus Capacity Development is primarily the
    responsibility of partner countries with donors
    playing a supportive role

57
Agreement on DAC Principles for Effective Aid
(1992)
Shaping the 21st Century OECD DAC
paper outlining a new paradigm (1996)
Paris Declaration (2005)
The New Consensus Capacity development is the
prime responsibility of partner countries, with
donors playing a supporting role
Rome Declaration (2003)
Comprehensive Development Framework (CDF) (1998)
Poverty Reduction Strategy Paper
(PRSP) Initiative (1998)
58
Role of Partner Countries and Donors in Capacity
Development
  • Partner Countries
  • Lead the process
  • Set specific
  • objectives in
  • national
  • development
  • plans
  • Implementation
  • through country-led
  • strategies
  • Donor Countries
  • Mobilize financial
  • analytical support around
  • partner countrys objectives,
  • plans strategies
  • Make full use of
  • existing capacities
  • Harmonize support
  • for capacity development

59
Forces Influencing Capacity Development
BLOCKING FACTORS - NEGATIVE FORCES
Systemic factors, i.e., relationships between the
enabling environment, organizations and
individuals
Capacity Development
FACTORS FAVOURING - POSITIVE FORCES
60
Conditions that Make Public Sector Capacity
Difficult to Develop
  • Lack of a broadly enabling environment
  • Lack of human security presence of armed
    conflict
  • Poor economic policies discouraging pro-poor
    growth
  • Weak scrutiny of the legislative branch on the
    executive branch
  • Lack of effective voice of the intended
    beneficiaries
  • Entrenched corruption
  • Entrenched widespread clientelism or
    partimonialism

61
  • Aspects of government ineffectiveness environment
  • Fragmented government with poor overall capacity
  • Absent, non-credible and/or rapidly changing
    policies
  • Unpredictable, unbalanced or inflexible funding
    staffing
  • Poor public service conditions
  • Segmented compartmentalized organizations
  • Only a formal commitment to performance-oriented
    culture

62
Conditions Favoring Capacity Development in
Organizations
  • Strong pressures from outside
  • Top management provides visible leadership for
    change, promotes a clear sense of mission,
    encourages participation, established explicit
    expectations about performance rewards
  • Change management is approached in an integrated
    manner
  • A critical mass of staff is involved
  • Organizational innovations are tried, tested
    adapted
  • Quick wins are celebrated
  • Change process is strategically proactively
    managed

63
Lessons
  • Capacity development involves three levels -
    individuals, organizational and enabling
    environment - which are interdependent.
  • Capacity development goes well beyond Technical
    Cooperation and training approaches.
  • Incentives generated by organizations and the
    overall environment is critical for using skilled
    personnel.
  • Capacity development is necessarily an endogenous
    process of change.
  • Focusing on capacity building of organizations
    make success more likely.

64
Understanding the International and Country
Contexts
  • A good understanding of context is fundamental.
  • Country political economy studies provide a
    valuable first step.
  • Important to get beneath the surface of the
    organization, looking for both forma land
    informal, hidden aspects
  • Identify the relevant stakeholders.
  • Donors should consider whether their own
    governments policies are part o the problem.
  • Consider the role of the diasporas.

65
Identifying and Supporting Sources of
Country-owned Change
  • Country ownership needs to be treated as a
    process.
  • The interaction between donors and domestic
    actors can generate either vicious or virtuous
    circles of change.
  • Donors should encourage the effective demand
    for public sector capacity.
  • Modalities of donor support should encourage and
    strengthen initiatives benefiting from country
    commitment.
  • Capacity needs assessment a useful entry point.
  • Choosing the right organizational cope is as
    important as selecting the right organization.
  • Some organizations are more crucial than others.

66
Delivering Support
  • The enabling environment is still relevant when
    specific design issues are considered.
  • Technical cooperation is effective when pooled
    and coordinated.
  • Donor-instigated Project Implementation Units
    (PIUs) should be avoided whenever possible.
  • Agreeing the desired outcomes of capacity
    development is crucial.
  • South-South learning should be encouraged.
  • Large new investments in training capacity may be
    justified.

67
Lessons Learned about Capacity Development
through Long-term Training
  • Better to aim at institutional changes in key
    organizations than focus on improving the
    capacity of individuals
  • The gains in long-term training includes work
    attitudes, critical thinking, self-confidence,
    etc.
  • Having a critical mass of staff in the same
    organization trained abroad in the same country
    make changes more possible
  • Costs and benefits of different training options
    must be determined
  • Follow up support in organizations essential
  • Long-term commitment by donors is critical

68
Learning from Experience and Sharing Lessons
  • Capacity development initiatives should maximize
    learning.
  • Further lessons must be extracted about what
    works and what does not in terms of changing the
    enabling environment.
  • Monitoring should also look into whether donor
    support is delivered in a way that assist country
    ownership.
  • An independent form of monitoring, capable of
    generating objective judgments is required.
  • Select and apply measures of achievement.
  • Collect the views of intended clients or
    end-users.
  • Individual assessment is not just about skill
    enhancement.

69
Fragile States
  • Most difficult aid environments that are being
    neglected by the international community.
  • Countries recovering from conflict
  • Regimes that are chronically weak or in decline.
  • Capacity development must prioritize on reducing
    fragility.

70
General Principles for Working in Fragile
Development Environments
  • Development partners need to be highly selective
    in the instruments they use for capacity
    development.
  • Must understand the country context and focus on
    an approach suitable in the specific
    circumstances.
  • Must be realistic about their expectations.
  • Donors need to identify likely partners and work
    with them consistently over the short, medium and
    longer term.s

71
Lessons Learned from Working on Capacity
Development in Fragile States
  • Capacity development efforts must selectively
    focus on core state functions, so that they can
    effectively provide for their people.
  • Planning tools developed for post-conflict
    environments may be useful.
  • Respect the principle of endogenous change and
    foster country leadership.
  • New capacity development initiatives must not
    erode or duplicate existing capacities in
    individual, organizational or enabling
    environment terms.
  • Sectoral selectivity or partial alignment can
    deliver strategic pay-offs.
  • Modest capacity development can be achieved even
    in states with acute governance challenges.

72
Experiences of the Past Five Decades
  • Donors must align with and support country-driven
    approaches and systems for capacity development.
  • Significant efforts are required.
  • More creative thinking is needed.
  • Moving from right answers to a best fit
    implies a better understanding of country
    contexts, identifying sources of country-owned
    change, designing appropriate forms of support
    and sharing lessons learned.

73
Unfinished Business of Capacity Development
  • Consolidating consensus on capacity development
    as an endogenous process of unleashing,
    strengthening, creating and maintaining capacity
    over time.
  • Identifying and addressing the systemic factors
    that discourage country-owned efforts
  • Donors provide support which encourages,
    strengthens and do not replace initiatives by
    leaders and managers in partner countries
  • Integrating human capital formation and technical
    cooperation with institutional changes and
    organizational reforms
  • Developing policy-relevant disaggregated
    technical cooperation statistics

74
Vicious Cycle of Empowerment
see bad results as confirming weak capacity and
commitment
DONORS
fail to claim ownership refuse responsibility
entitlement attitude
perceive standards as unrealistic, irrelevant
fill leadership gap, set boundaries and logic
suspicious establish evaluation standards,
emphasize quantity
RECIPIENTS
the get-most-out-of-the-system attitude
lack of control perceive inequities, friction
mistrust
advocate and set priorities
control implementation, staff procurement
perceives disconnect with needs and preferences
inability to question or refuse logic
conceive, write and present plan
Source UNDP, Ownership, Leadership and
Transformation, New York (2003), p.42/43
75
Virtuous Cycle of Empowerment
perceive growing assertiveness capacity
development
DONORS
claim ownership assume responsibility
perceive agreed standards as relevant draw
lessons
exercise respect, restraint listen
help improve evaluation standards
RECIPIENTS
develop evaluation standards growing
partnership trust
Reform system that works for development
support national efforts, priorities, systems
processes
take some risk provide support on demand
control implementation, staff procurement
conceive, write present plan
constructive critique and long-term commitment
based on agreed conditions
Source UNDP, Ownership, Leadership and
Transformation, New York (2003), p.42/43
76
Capacities for Utilizing AID
InstitutionalCapacities Policies, strategies
andimplementing tools are inplace to ensure
efficientcoordination andmanagement of aid.
Human Capacities Skilled, trained personnelare
in place to implementpolicies and
strategies,and to maintain thegovernment-donori
nterface.
Capacities
Structural / Economic Capacities Capacity of the
recipient countrys economyto absorb additional
aid with minimaldistortion (Dutch disease) etc.
77
Capacity Building Dimensions
  • National policy institutions
  • ST organizations - universities, public and
    private RD institutes/technology diffusion
    institutions
  • Enterprises - both users of knowledge and
    creators of new knowledge
  • Labor Force

78
Technological Capability
  • Definition of TC
  • Technological progress is often (misleadingly)
    identified with major breakthroughs and movement
    of the frontier in the conventional neo-classical
    literature. This highly restrictive view has come
    under serious attack on grounds that it ignores
    that minor (as opposed to major) innovations are
    more likely to occur and act as a vital and
    continuous source of productivity gains in
    practically all industries.
  • Define technological capability in developing
    (TC) countries as their capacity to select,
    assimilate, adapt and improve given technologies.

79
ST Capacity Building Strategic Policy Options
  • Creation of new knowledge vs. import adaptation,
    diffusion, and adoption of knowledge created
    elsewhere
  • Enhance supply of knowledge vs. stimulate demand
    for knowledge
  • Hardware vs. software
  • Horizontal policies vs. vertical policies

80
Levels of Innovation
81
Levels of ST Capacity Building
RD
Science Development and Creation
Design Engineering
Technician Craft Skills Capabilities
Science Use, Operation and Maintenance
Basic Operators Skills and Capabilities
-These all need human capacity.
82
Five Dimensions of STI Capacity
National (and local)government capacity to
formulate and implement coherentST programs
and policies
Enterprise capacity toutilize knowledge to
innovate and producehigher value
added,globally competitivegoods and services
Production of newknowledge via RD
Import, adapt, andadopt knowledgeproduced
outside thecountry
Technologically andscientifically
skilledworkforce trained to equipment
andproduction processes
Source Ansu, Yaw, 2007
83
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84
STI Capacity Development Stages
Creation
Improvement
Assimilation
Acquisition
Imitation
internalization
generation
STI Capacity Focus
Developing Country
Newly-Industrializing Country
Advanced Country
Development Stages
85
Korea Patent Trends (1965-2006)
Source United States Patent and Trademark Office
(USPTO), 2007
86
Removing Barriers is Necessary But Does Not
Automatically Build STI Capacity
High Barriers High
Capacity
Low Barriers
High Capacity
Capacity for technology absorption and diffusion
High Barriers
Low Capacity
Low Barriers
Low Capacity
Sub Saharan Africa
Barriers to technology absorption and diffusion
87
  • Technological Capability and Groups of Firms

88
National Technological Learning
ST learning capacity
ST learning opportunities

Knowledge generation capacity
Knowledge absorption capacity
Diaspora and Expats
Internet
Capital imports
Licensing
Education
Export Customers
RD
Inward FDI
ST Networks
89
High Tech Does Not Always Equal High Income
Source World Development Indicators, 2007
90
Cross-Cutting Nature of STI Capacity Building
Infrastructure (develop transportation for
perishable goods power for processing units
and cold storage)
Education and Human Resource Development (develop
higher education, TVET, on-the-job training)
Building Capacity in Food Processing Industry
Standards and Quality Assurance (develop
capacity for testing, certification and
compliance)
Agriculture and Rural Sector Development (develop
cottage industry for packaging material from
fiber crops)
Private Sector and Industrial Development (stream
line informal food processing units)
Business Regulatory Environment (improve ease of
doing business, trade freedom, FDI incentives)
91
Capacity Development Needed at All Skill Levels
Skill Levels Required Tasks
Required Skills
  • Hydrological Analysis of Surface and Underground
    Water

Hydrology, Geology, Limnology, Geochemistry, GIS
and Remote Sensing
  • Watershed Conservation and Pollution Control

Environmental Engineering, Chemistry, Soil
Science, Geology
RD
  • Well Boring and Pumping Underground Water

groundwater engineering, Construction, Masonry,
Pump operation, maintenance
Design Engineering
  • Harvesting Rainwater Run-offs from Roofs and
    Fields

Geology and Hydrology Construction and Masonry
Technician Craft Skills Capabilities
Civil Engineering Construction, masonry (for
tanks, reservoirs, pipes)
  • Water Storage Distribution Infrastructure

Basic Operators Skills and Capabilities
Water Purification and Water Quality Control
Chemistry, Microbiology, Public Health,
Environmental Science, Laboratory Assistance
92
ST Capacity Building-Actors
National Policy Making Government organizations, Technology diffusion institutions Technology foresight
ST Capacities in Universities and RD Institutes Laboratories Centers of Excellence
Enterprises In-house research Supplier development Innovation capacity improvement
Labor Force Vocational training, secondary ed. Skills Development Centers Life-long learning
Education Sector Primary education Secondary education Higher education
93
Enterprise-based model of STI Capacity Building
PPP Options
Farmers and Outgrowers
Farmers and Outgrowers
Entrepreneur (Diaspora, FDI, Expat, Local, NGO)
  • Strives for product and
  • process innovation through
  • Technology Searching
  • Technology Acquisition
  • Technology Adaptation
  • Meets Standards and
  • Quality through
  • Engineering
  • Production techniques
  • Field and lab testing
  • Uses and invests in well-
  • trained manpower through
  • On-the-job-training
  • Vocation schools
  • Universities

Produces Saleable products and services
Information from market research and from buyers
Market (Local, Regional, Global)
94
Network Objectives
95
ODA Principles, Suggested
  • ? ODA should contribute to a sustainable,
    human development conducive to the improvement of
    peoples living conditions
  • ? ODA should contribute to a national and
    international enabling environment (capacity
    building and (womens) empowerment, good
    governance, fair trade)
  • ? ODA should do no harm (Latin primum
    non nocere)
  • ? ODA should be an incentive for good
    performers (performance-based allocation)
  • ? Sometimes it is better to stay engaged
    instead of let them fail

Mary B. Anderson (1999) Do No Harm How Aid
Can Support Peace - or War, Boulder/London
Tobias Debiel et al. (2007) Stay Engaged statt
Let Them Fail (INEF-Report 90/2007 -
http//inef.uni-due.de/cms/files/report90.pdf
96
  • References
  • Holtz, Uwe. 2011. Official Development
    Assistance-Development Coopreation by Germany and
    EU in MBA Modul International politics (Google,
    PPT).
  • Sawada, Yasyuki. 2010.Official Development
    Assistance Views from Japan and East
    Asia
  • Spire Research and Consulting. 2007.The Rising
    Tide of Asian
  • Investment in Asia. (Google)
  • Todo, Yasuyuki. 2010. Is Foreign Aid a Vanguard
    of FDI? The
  • University of Tokyo and RIETI.
  • Watkins, Alfred. 2008. Building STI Capacity for
    Sustainable Development and Poverty Reduction
    (Google, PPT).
  • WMO. Capacity Development Strategy and
    Preparation of Guidance Document (Google, PPT).
  • Zimmermann, Felix. 2008. The Paris Declaration
    on Aid Effectiveness (Google, PPT).

97
Appendix. Emerging Consensus to Better
Practice for CDUNDP
98
A framework for capacity development
Not a single, once-only sequence
STEPS LEVELS LEVELS LEVELS
STEPS Individual Organizational Enabling environment
Understanding the international and country contexts
Identifying supporting sources of country-owned change
Delivering support
Learning from experiences and sharing lessons
A flexible, best fit search for supporting
capacity development
99
Individual level
STEPS STEPS
Understanding the international and country contexts How is the availability of skilled committed individuals shaped by global local push pull factors? Under what conditions could diasporas contribute more strongly to capacity development at home?
Identifying supporting sources of country-owned change Are individual professionals able to be mobilize? Are donor sufficiently responsive to restoring salary levels in key posts?
Delivering support Do training components take full advantage of the potential of ICT? Are the training components linked to increasing organizational effectiveness and putting new skills to use?
Learning from experiences and sharing lessons Does the follow u goes beyond knowledge livelihood benefits? Is it tracking the effects on organizational capacity performance?
100
Organizational level
STEPS STEPS
Understanding the international and country contexts How are capacities currently shaped by the informal political aspects of organizations? Are these features generalized or variable across organizations or organizational spheres? Are there private-sector pressures resources that can be mobilized?
Identifying supporting sources of country-owned change Is capacity development an explicit objective of a plan or policy benefiting from country ownership? Is there effective ownership initiatives within particular organizations or organizational spheres?
Delivering support Have the objectives been clearly defined in terms of desired capacity development outcomes? Have the inputs service providers selected with the view to cost effectiveness or the decisions been supply-driven?
Learning from experiences and sharing lessons Is the achievement of outcomes effectively monitored fed back into the process? Do the monitoring arrangements include proxy measures with appropriate involvement of clients or service users?
101
Enabling environment
STEPS STEPS
Understanding the international and country contexts What are the historical contemporary factors underlying weak political will? How are power structures formal informal institutions changing and with what effects on politicians incentives?
Identifying supporting sources of country-owned change Does the interaction between donors and country actors form a virtuous circle or a vicious circle? Are there ways donors can encourage effective demand within the country for capacity development?
Delivering support Are the donors promoting changes in the institutional environment for capacity development? Is support being delivered in ways that enhance, or undermine, the possibility of organizations learning y doing?
Learning from experiences and sharing lessons Is there monitoring of changes in institutional rules how it has come about? Is there independent, objective monitoring pf the mode of delivery?
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