From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: null; date: 23 June 2021
- Climate change — Collective security — Membership of international organizations — International organizations, practice and procedure
(p. 405) Chapter 19 Development
Notions of development have varied over time, and so an account of the international organizations concerned with its advancement must be accordingly elastic.
The roots of international organizations concerned with development lie in two aspects of global interconnectedness. The first is the propagation and management of a nascent technology for the global good. Thus were born the International Telegraph Union (now the International Telecommunication Union) in 1865 and the General Postal Union (now the Universal Postal Union) in 1874.
The second driver of international cooperation to achieve prosperity, articulated during the early 1940s, was the failure of the Treaty of Versailles and the League of Nations to protect the peace due to the ruinous economic reparations the Treaty imposed on Germany. This led to the severe economic and social distress that would lay the foundation for the rise to power of Hitler’s National Socialism and its revanchist agenda in Germany, which precipitated World War II.
Until the end of World War II, the principal intergovernmental organizations were not concerned with the poorest countries in the world, but with the consequences of poverty and marginalization among the warring nations of Europe. The Bretton Woods Conference toward the end of World War II foresaw the creation of three organizations, the third of which, the International Trade Organization (ITO), was stillborn, with the General Agreement on Tariffs and Trade (GATT) signed in 1947 to take on some of its functions. Here the imperative was to create and protect global References(p. 406) economic gains that would underpin a lasting peace. The idea of alleviating material poverty in the poorest countries (mostly still colonized in 1945) came only later.
The desired content of development in the Global South (those continents lagging the industrialized countries in economic prosperity as of the 1950s and 1960s) has been greatly contested, as have been the methods advocated and deployed to achieve it, not least in the preferred balance between poverty alleviation and social empowerment (although for many, these at times have seemed synonymous). This may account for the proliferation of international organizations purporting to promote some aspect of development, each with a strong constituency, at least for a time.
Recently, the success of the first wave of Asian “tigers” and the phenomenon of the “emerging economies” and Brazil, Russia, India, China, and South Africa (the BRICS) have resulted in fluidity in the client base of the principal postwar development organizations. Meanwhile, the funding base of these institutions and resistance to change in their internal governance continues to evolve. Nonofficial actors (mainly the American philanthropic foundations and the international nongovernmental organizations or NGOs) and newer formations (the vertical Funds related to health and nutrition, CGIAR—the international agricultural research system) and even new mechanisms (such as social or development-impact investment vehicles) have re-enforced the notion that poverty alleviation programming in poor countries has to be situated in the larger context of global cooperation and well-being, and lend itself to a variety of approaches.
In the wake of the international financial and economic crisis that has gripped much of the industrialized world since 2008, with sometimes delayed knock-on effects for some developing and emerging countries, the development landscape looks starkly different. Many of the traditional development donors of the industrialized world experience declining interest in development. In straitened circumstances, donor treasuries, exhausted from battling domestic banking and other systemic financial failures and in Europe more recently, from the exigencies of refugee resettlement, are not much focused on aid. Many developing countries, particularly in Africa, have performed better through this crisis period than might have been expected. This has called into question not so much the imperative of development, but the mechanics and the institutional infrastructure through which it has been pursued in the developing world. Thus, the “golden age” of international development organizations may be coming to a close, in part perhaps as victims of their own success. Even if they do not disappear, a recasting away from traditional poverty alleviation in poor countries to provision of global public goods (financial stability, climate change mitigation, and more controversially, security) is likely to accelerate.
We develop this hypothesis only partly in chronologic fashion. The second section of the chapter covers the results of the immediate postwar period, in particular the Bretton Woods organizations, the United Nations (UN) system, and the regional development banks. Their governance and (not coincidentally) the ideas and policies they favor merit special attention. The third section covers the parallel emergence of the foundations, the large NGOs with a global reach, and the more recent ancillaries to the (p. 407) established official organizations, such as the vertical funds and trust funds. The fourth section examines a constellation of international developmental actors, highlighting the transition that each subgroup within it is undergoing. The fifth section concludes that the prognosis for organizations caught in this transitional stage in global economic governance can only be uncertain. The challenge will be for the global community to craft what the 2013 Human Development Report calls “coherent pluralism.”1
The UN and Bretton Woods
The period between 1950 and 1975 has been termed the “golden age” of economic growth. During this period the world economy grew continuously and almost everywhere at an unprecedented rate, which seemed to prove that “development” was not only possible, but indeed achievable for the world as a whole, especially as the welfare state in European countries indicated that state intervention could lead to vast social improvements. This was the period when the “development cooperation experiment” took off and the mean annual economic growth across developing countries as a whole averaged over 5 percent, which was higher than the comparable rate in the industrial world. During this period, many international organizations were either created or expanded and came into their own.
The focus of the UN Charter is on peace, human rights, and freedom. These words are generously used starting in the Preamble and then throughout the document. Chapter IX (on international economic and social cooperation) and Chapter X (on the Economic and Social Council) enshrine the view held strongly by Roosevelt and Churchill that peace had to be supported by economic cooperation arrangements that had teeth. But the work to create the related institutional architecture and ordain the means to bring these arrangements to life formally began a year earlier at the United Nations Monetary and Financial Conference, at Bretton Woods, New Hampshire.2
Article 57 of the UN Charter, agreed at San Francisco in 1945, urged that pre-existing “specialized agencies” with a role in the economic, cultural, and several other spheres be “brought into relationship” with the UN. One such agency was the References(p. 408) International Labour Organization, founded in 1919 in association with the League of Nations, which had, on request, provided advice to a variety of governments, with “technical assistance” (an early form of UN support for development). Nevertheless, the first major development program outside of the industrialized world to follow the creation of the UN, the Colombo Plan (1950, initially assisting several countries of South Asia, eventually coming to include some others), impelled at the outset by the Commonwealth, had nothing to do with the world organization. But as decolonization proceeded, bringing to independence a welter of very poor states during the 1950s and early 1960s, the UN was deluged with calls for support and assistance. Beyond the (initially modest) help, largely advisory, provided by several UN specialized agencies, the UN General Assembly in 1948 set aside $300,000 (even then hardly a princely sum) for “technical assistance” for economic development, soon followed in 1949 by the creation of a UN institutional umbrella, bringing together specialized agencies and programs known as the “Expanded Program of Technical Assistance.” By the end of the 1950s, this program was spending close to $35 million.
But, much more was required, and in 1966 the UN Development Programme (UNDP) came into being through the merger of two other UN entities, eventually becoming the UN’s largest broad-brush development actor which also nominally serves a coordinating role and most often underpins UN country representation throughout the developing world. Its 2012 funding levels, today under some pressure from donors, reached nearly $5 billion. The specialized agencies also provide developing countries with considerable program assistance.
With an ever growing array of UN institutional actors, generating oft-derided “UN sprawl,” competition among these entities for shrinking overall levels of traditional donor dollars, tends to generate counterproductive programmatic stampedes in whatever direction the donors seem to favor (however briefly), often forsaking their core mandates. The donors, in theory committed to high-minded principles enshrined in such worthy but nearly instantly discarded statements as the Paris (2005), Accra (2008), and Busan (2011) declarations, have rarely remained committed to strategies and priorities for long enough to establish basic proof of concept. Not surprisingly, during the current economic crisis, development assistance has become increasingly contested in parliaments of several formerly steadfast donors. Further, the 1990s and 2000s witnessed a growing trend among donors to fund telegenic emergency situations with many lives at immediate risk, rather than longer-term development that could benefit many more over time.3 UN agencies are more vulnerable to disruption in funding than are the Washington-based International Financial Institutions (IFIs) which generally enjoy support from donor Treasuries and aid ministries. In sum, donors and UN agencies make for unhappy bed-fellows, (p. 409) with the UN often spread too thin to achieve serious impact, with the exception of some narrowly focused, often innovative, and well-managed agencies such as the United Nations Children’s Fund (UNICEF).
The greatest contribution of the UN and its many agencies and programs almost certainly does not lie in the outcome of its “operational activities.” As argued by the superb UN Intellectual History Project, in its most vivid volume, UN Voices, it is in the field of ideas that the UN has most greatly distinguished itself, doubtless in part because of its plurality and because of the dogged attachment to them of a number of past and present staff members and national representatives.4 At the UN, ideas are constantly under challenge. This is healthy for them. Not coincidentally, it was at the UN that the concept of human development was embraced, as indeed were “sustainable development” and “democratic governance.” Both were more widely and enthusiastically embraced than were the tenets contained in the “Washington Consensus” centered on the International Monetary Fund (IMF) and World Bank, urging structural adjustment and other forms of retrenchment on countries. Related work on the Arab world, led by Rima Khalaf Hunaidi, foreshadowed the Arab Spring and documented the deficits and frustrations that led to this massive regional upheaval. The Millennium Development Goals, the most comprehensive statement on development and the global compact required to achieve it, are the net result of the UN system at work. That there is an active post-2015 agenda under construction is largely a testament to the power of ideas at the UN, and its capacity to convene global leaders.
The International Financial Institutions
The Bretton Woods Conference consciously avoided distinguishing between developed and developing countries (or indeed any other grouping of attendees); but in so doing it reinforced this distinction since nondistinction was not value-neutral.5
Preoccupation with material poverty in poor countries was underplayed at the Bretton Woods Conference held during three weeks in July 1944. The International Trade Organization, had it been created, was primarily intended to focus on the rules governing trade in wealthy countries. Of the twenty-three initial signatories to the GATT, only ten were developing countries. Only three more developing countries joined in the next ten years. The main reason was that Article XVIII, the only part of the accord concerning developing countries, which granted them exemption References(p. 410) from certain obligations, was deemed to be too onerous to actually implement. Instead, the developing countries joined their richer counterparts in using the balance of payments exception when they wished to apply trade restrictions. In trade as in finance, the aim of the Bretton Woods negotiators was to reconstruct war-torn Europe and ensure a liberal economic order within it and with the United States.
Figure 19.1 Regional Distribution of IBRD/IDA Lending Commitments
The International Bank for Reconstruction and Development (IBRD) was also geared toward supporting the recovery of the industrialized world from the ravages of war, but lending at market and near-market interest rates put IBRD resources out of the reach of most developing countries. Accordingly, its main clients remained European for the first few years after the Bretton Woods Conference ended (see Figure 19.1). Even the first major organizational change here, the creation of the International Finance Corporation (IFC) in 1956, was geared to identifying investible projects in the private sector, and thus complicated lending to developing countries during a period when a strong government hand in industry and enterprise prevailed there. It wasn’t until the creation of the Bank’s soft loan arm, the International Development Association (IDA) in 1962, that development concerns truly became preeminent in the operations of what was now The World Bank Group.6
(p. 411) The IMF was initially even further removed from the development realm than were the GATT/ITO and the IBRD. This organization was created to address the twin issues of the availability of international liquidity for trade and investment, and adjusting to balance of payments difficulties. The pivotal debate between John Maynard Keynes and Harry Dexter White on whether the core of the IMF’s functions should be driven by the hybrid bancor or the American dollar was a technical debate about the relative efficiency of various adjustment mechanisms and a political one about the cementing of status of the United States as the global hegemon.7 A suggestion by the delegation from India that an additional purpose of the IMF as set out in Article I be “to assist in the fuller utilization of the resources of economically under-developed countries” was rejected.8
With such roots, two things followed in all three Bretton Woods organizations. First, time, trends, and events related to decolonization and the wretched state in which the colonial powers left their former dependencies ensured that development concerns came to the fore dramatically during the early 1960s in all three cases. Second, they did so within institutions seen very much as creatures of the developed countries.
Despite the disappointment around the results of the Kennedy Round (1964–7), developing country membership within the GATT continued to grow. More importantly, the global trading regime was increasingly seen as a vehicle that could benefit developing countries disproportionately if appropriately reformed. The creation in 1964 of the UN Conference on Trade and Development (UNCTAD) was meant to buttress the voice and capabilities of developing countries in trade policy and implementation matters. The Uruguay Round (1986–94) provided a perverse impetus to the development agenda by yielding disappointing results for developing countries in a range of issues—intellectual property, investment, agriculture, and services—that went well beyond the emphasis in previous Rounds on simple tariff reduction. These concerns and the creation of the World Trade Organization (WTO) with its dispute settlement mechanism set the stage for the Doha (“Development”) Round, launched in November 2011 in the shadow of the 9/11 attacks. But if this Round was supposed to be about winning “hearts and minds” by demonstrating the inherent advantages to developing countries of belonging to the liberal global economic order, it has failed. While the definitive assessment of why this is the case has yet to be completed, it appears that the rich countries could not bring themselves to make the sorts of changes to the status quo that the post-Uruguay Round development agenda implied, while developing countries, now with a clear set of “emerging” (p. 412) countries among them, still saw themselves as uniformly poor and deserving of concessions likely due only to a small number among them.
Figure 19.2 Sectoral Distribution of IBRD/IDA Lending Commitments
Developing countries are increasingly using the WTO’s dispute resolution system to litigate cases against developed countries and each other. But developing countries are also leaders in negotiating the approximately 550 regional trade and investment agreements in force or under negotiation which, whatever the rhetoric about their being WTO-conformant, suggests countries are hedging their bets when it comes to their reliance on the WTO.
In the World Bank Group (which in addition to the IBRD, IDA, and IFC also includes the Multilateral Investment Guarantee Agency, and the International Centre for Settlement of Investment Disputes) there is less ambiguity than there is in the cases of the WTO and the IMF about it being a developmental organization. Following the dominance of postwar reconstruction in Europe and Japan in the IBRD’s operations at its creation, and the success of the Marshall Plan and its Japanese counterpart, it appeared self-evident that the same route of infrastructure financing and policy development was the key to overcoming poverty in the poor countries of the world as well.9 The sectoral pattern of lending by the World Bank reflects the evolution of thinking on the development paradigm over time, from agriculture and infrastructure in the early years to the “soft” sectors including governance (see Figure 19.2).
Soon complementing the Washington-based IFIs were a range of Regional Development Banks (RDBs), starting with the Inter-American Development Bank, created in 1959, which, with the Asian Development Bank (1964) offers the greatest lending capacity among the RDBs. The African Development Bank, which (p. 413) in 2009 made total commitments of $12.6 billion, not far behind the others, has for the past decade been on an upswing of credibility and effectiveness, after years of internal wrangling and management dysfunction. These banks—lower-key, better integrated in their regions, and less preachy than the IMF and the World Bank—tend to attract less attention and to court less controversy than have the latter, sometimes unwittingly. Put another way, despite successive waves of management reform to turn them into “knowledge institutions,” the RDBs have not succeeded in breaking the dominance of the World Bank and the IMF in the arena of ideas, research, and outreach. Some of the regional economic commissions of the UN have been more successful in this regard, with the UN Economic Commission for Africa and that for Latin America and the Caribbean (ECLAC) renowned for their “think tank” and technical assistance roles. Ever since the pioneering leadership of Raul Prebisch, ECLAC, in particular, has come to define the “structuralist” school of thinking and more broadly the notion of a locally owned and credible institution that produces ideas that are counterpoints to externally driven visions of development.10
The question of how “development-oriented” the IMF is has persisted throughout its history. Controversy around the IMF does not center on whether it is a “development organization,” but on charges that it has imperfectly integrated such concerns into its approach to financial and macroeconomic policy and its operations. Although its external critics are legion,11 it is the IMF’s own arms-length evaluation office that has produced the most telling critiques of the organization. A report of the IMF’s relations with its member countries published in 2013 concludes thus: “The degree to which the Fund is viewed as a trusted advisor is found to differ by region and country type, with authorities in Asia, Latin America, and large emerging markets the most skeptical, and those in large advanced countries the most indifferent.”12 In the aftermath of the current economic crisis, the IMF has become more flexible—for example, on the degree of fiscal restraint that is required during adjustment, and in its historic antipathy to capital controls. But flexibility has come in the face of crisis in Western Europe, not the developing world, where the IMF is the junior partner in the troika of organizations addressing the rescue effort.
The research programs at the IMF and the World Bank, nominally the drivers for the tone and content of these organizations’ lending and technical assistance activities, have also recently come under criticism for being varied in their technical (p. 414) merit, “message-driven,” and often lacking in their understanding of local context.13 This contrasts with an earlier era when these institutions were seen as leaders in areas like the framework for macroeconomic analysis, cost–benefit analysis, and the interplay between growth and distribution.14
Both the IMF and IBRD were tarnished by backlash against the so-called Washington Consensus of the late 1980s and early 1990s that paid too little attention to local conditions, income distribution, regional differences, and what disciplines other than economics might have added to their analysis. Both institutions were unprepared for the international storm they unleashed. The narrow-bore economistic outlook of the IMF is hardly surprising or inappropriate, but as several of the IBRD’s recent presidents have noted, the World Bank Group’s staff, enjoying a wider remit, has not been sufficiently multidisciplinary.
Paradoxically, the Bank and the Fund were right at the level of principle and practice in arguing that sound financial management needed to be restored as a cornerstone of any long-range development plan. And while their staffs can be assessed in many ways, flattering and otherwise, it is worth noting that many of the most impressive leaders of the developing world have served on the staff of one or the other, sometimes both. Indeed, perhaps the greatest contribution of the IBRD to development has been in shaping several generations of technocrats and leaders who brought evidence-based policy to bear on the challenges of their countries when given an opportunity to do so.
Complicating any attempt to evaluate the performance of the IFIs lies their unbalanced and increasingly controversial governance structure—effectively the power relationships—at the apex of the IMF and the World Bank, heavily favoring the industrialized countries (which explains the preference of the latter for these institutions over UN agencies and programs in which the developing countries have greater voice). Each organization is run by a board comprised of countries that are allocated voting shares based on a formula that combines size of GDP, wealth, and openness. Quota reform has been contentious throughout the history of these organizations, and not surprisingly, requires the assent of both gainers and losers. As a result of the inherent inertia in this process, and the anxiety aroused in key Western capitals over the emergence of serious competition for international influence, the United States and (particularly) Western Europe continue to be overrepresented at the expense of the emerging economies in the developing world. With some nods toward a more open and transparent selection process, the headship of (p. 415) each organization is still determined as if it were 1950, and at the end of the day, the World Bank head is reliably an American national, and that of the IMF a Western European. In today’s world, particularly in the wake of the financial crisis of 2008 originating in and severely damaging the industrialized world, this state of play undermines the global standing of the IFIs. Indeed, it demeans both institutions.15
Further irritating the sensitivities of countries rapidly emerging from poverty to global significance (while often still harboring many poor individuals) was the trend established in the 1970s for the meetings of the consultative Group of Five, then Seven, then Eight to establish, subtly and otherwise, policy priorities for the IFIs and to commission work from them. The creation of the Group of 20 (including a number of “emerging” powers) at the country leader level in the heat of financial and economic crisis in 2008, intended to play a similar role, has produced disappointing results after a promising start, but serves as a signal of accommodation with the Global South not yet reflected in such bodies as the UN Security Council.16
Although private money—meaning the combination of investment, philanthropy, and remittances—has always operated alongside official flows to developing countries, its size and impact has grown in recent years. Technically, it surpassed official flows during the 1990s,17 but this is mostly due to the growth in remittances and investment, which responds to an invisible hand relative to the deliberate programming of development institutions. However, the activities of the major American Foundations do bear mention as they have been impactful, albeit during certain periods and in certain sectors, in a manner that is disproportionate to the size of their operations.
(p. 416) The activities of philanthropic organizations domiciled in developing countries and operating nationally are increasingly important but beyond the purview of this chapter. Although reliable data is scarce, it is unlikely that they yet compete seriously with the funding levels of other actors such as the IFIs and the American Foundations.
Of $39 billion in total US philanthropic flows for development in 2010, Foundations accounted for $4.6 billion or about 12 percent.18 But unlike the atomized nature of the other 88 percent of nonofficial American international assistance, a few well-organized, determined, and effective organizations have been instrumental in creating the “brand” that this stream of aid and impact has come to represent. The Carnegie Corporation (established in 1911), the Rockefeller Foundation (1913), the Ford Foundation (1936), and the MacArthur Foundation (1970) have broad remits to advance human welfare, unconstrained by strictures on the geographic or thematic scope of operations. The Bill and Melinda Gates Foundation, initiated in 1994, eventually building the largest endowment of any private Foundation, is motivated by the ethos embodied in its slogan “all lives have equal value,” and with its bold approach to programming allied to the quest for quantifiable results, is today a field leader influencing also the views of government donors.
In practice, this has resulted in sustained investments in a limited number of well-defined program areas, supported by strong staff and management and excellent governance structures at the apex. During its formative years, the Rockefeller Foundation supported research on malaria, hookworm, and yellow fever, starting with pilot sites in Arkansas and Mississippi, and soon expanding to twenty-five sites across the developing world. In China, it created the China Medical Board to modernize the health system in that country. This seminal work still has echoes in current efforts to eradicate tropical and neglected diseases.
Similarly, the first Green Revolution that saw agricultural productivity rise in Mexico and South Asia, particularly in the late 1960s, began twenty-five years earlier as a series of initially uncoordinated and later coordinated investments by the Ford and Rockefeller Foundations. A second generation of this effort, this time focused on Africa, is being led by the Bill and Melinda Gates Foundation and the Rockefeller Foundation. The Ford and Rockefeller Foundations, along with the World Bank, the Food and Agricultural Organization (FAO) and Canada’s International Development Research Centre (IDRC), were also instrumental in the creation of the Consultative Group on International Agricultural Research (now known just by its acronym CGIAR), a network of fifteen research centers around the world working on the science and policy of agriculture. Such donors and some aid ministries have worked hard to support the creation and expansion of indigenous capacity for policy formulation in developing countries across a wide range of (p. 417) fields, including economics, for example through the African Economic Research Consortium and the Economic Research Forum of the Arab world in Cairo.
The CGIAR is emblematic of a number of hallmarks of the Foundations’ role in international development. One—a start via a farsighted well executed pilot investment—has already been noted. The other is the capability to attract larger less agile players (in this case the FAO, the World Bank, the US government and later a host of other official bilateral funders) to bring an initiative to true scale. A third is for the creation to become its own entity, not just through its financial strength but through its own operations and ideas. In many parts of the world, the CGIAR is seen as a “funder” and/or international organization just like its procreators. Finally, the activities of the Foundations are known to value and draw on local participation and ownership in ways that many projects of the bilateral funders and the IFIs are not. This local institutional development is largely what the Foundations are valued for most in countries such as Brazil and India in which they have established a long track record.
In addition to investments in health and agricultural research, some Foundations have come to be known—and sometimes criticized—for their support for liberal visions of society and democracy. Through subtle modalities such as scholarships in Western universities and support for future leaders but also through more explicitly political means such as the creation of or support for existing civil society organizations dedicated to human rights, freedom of speech, and democracy, the Carnegie Corporation and the Ford and MacArthur Foundations (and more recently the Soros Foundation/Open Society Institute) have nurtured communities that hold liberal Western mores on social and political matters.19 Their offices in many parts of the developing world are hubs for the small though influential elite preoccupied with such concerns. A classic example of this facet of the Foundations’ activities is the support the Ford Foundation (along with the IDRC) provided to academics and civil society leaders and their organizations in the Southern Cone of Latin America during the years of dictatorship there in the 1970s and 1980s, support experienced personally and later recalled by several presidents who came to power in the region after the dark years.20
(p. 418) In recent years the Foundations have been parties to organizational innovation in development in two other instances that bear mention. The first is in the creation of the so-called “vertical” or “global” funds, of which the two largest are the GAVI Alliance (formerly the Global Alliance for Vaccines and Immunization) and the Global Fund to Fight AIDS, Tuberculosis, and Malaria. These funds have accounted for much of the increase in foreign aid in recent years and almost all of it in health. In keeping with principles on aid coordination and effectiveness agreed to by the world’s major development funders, these funds bring together a variety of funding organizations to work on a particular sector or subsector in a limited number of countries. By its very nature, such a fund is both a complement to and in competition with the more established multilateral development organizations, and typically bypasses existing national governments and agencies. Their newness and their nature has meant that it would be premature to place any weight on the early evaluations of these endeavors which, not surprisingly, highlight the tentative nature of successes, if any, and the teething pains of a new organizational forum superimposed on rather than genuinely integrated with an existing one.21
A second innovation is the bringing to proof-of-concept stage of an idea first proposed in 2004 by Michael Kremer,22 to use public funds to “pre-create” a market for advances in health where the risks to invest in R&D without such a guarantee are too high for private sector firms. The first such Advance Market Commitment (AMC)—for pneumococcal vaccines—was funded by five countries and the Bill and Melinda Gates Foundation. Initial reports indicate that vaccines suited to developing country conditions have indeed been forthcoming, and that the main constraint is excess demand relative to supply. The principle underlying the AMC approach is a broad one and can be applied to other areas, for example agriculture and energy, both of which have featured in commentary on the subject. To be sure, the question is one of the availability of resources, but the more fundamental question is organizational. The first two conclusions of Bezanson et al.’s review of the vertical funds bear mention here too—(1) “Think twice: global action does not necessarily mean a new vertical fund” and (2) “Use existing institutional capacity.”
With such a changing ecology, the Organisation for Economic Co-operation and Development’s (OECD) Development Cooperation Directorate (DAC), comprising (p. 419) twenty-seven official donor agencies from the traditional, rich countries, is anachronistic as a forum for anything more than the generation of data on development assistance. No “table” exists that brings together the traditional players with the new official and established nonofficial funders and, if it were required, it is not obvious that the OECD would be the obvious host. The DAC’s credibility has suffered from the whiplash-inducing correctives to aid policy its members advocated in Paris (2005), Accra (2008), and Busan (2011), suggesting incoherence at best and near-panic at worst, perhaps brought about by the relentless short-term (and often domestically driven) perspective that OECD political figures have brought of late to debates on aid.
That the world, including and especially the developing world, is a different place today than it was when the world’s economic statesmen convened at Bretton Woods in 1944, let alone in 1913 when the Rockefeller Foundation started work in China, is an axiom. The ecosystem of international organizations that address development has also evolved, though the evolution has been additive not integrative. Although examples abound of changing priorities and even “exits” from a certain line of work or region, few of the major organizations have “gone out of business.” And this is a serious problem, confusing publics, dispersing resources, and often underperforming relative to the potential impact of leaner and more focused machinery, such that in much of the developing world (and elsewhere) “internationals” are often seen as essentially a privileged parasitical class profiteering from the poverty of others, a frequently unfair caricature, but one rooted in inescapable perceptions. Increasingly, these perceptions attach also to some humanitarian NGOs.23 This is mainly because after sixty years in the business of fighting poverty, poverty remains (albeit less severe and in relatively smaller concentrations within countries and developing continents).
With increases in private capital inflows and remittances, the financial resources of the organizations cited in this chapter (effectively the items marked IMF and public multilateral debt in Figure 19.3) form a dwindling proportion of international flows into developing countries. This, coupled with the increase in developing countries’ own capacity to mobilize finance, suggests that the leverage international organizations possess derives not mostly from money but from their ideas and their way of pursuing outcomes.(p. 420)
Figure 19.3 The Evolving Magnitude and Composition of Developing World Financial Inflows (Low and Middle Income Countries, Net % of Regional GDP, 1970–2012)
Consider the Bretton Woods twins. So far, the World Bank has successfully transformed itself numerous times, from financing infrastructure and leading in the intellectual contributions to development thought to managing debt relief to sector-specific lending and policy advice and more recently, to harnessing information and communications technologies for development and adapting to climate change. But it is not clear where exactly the World Bank dominates relative to its varied competitors, or what its comparative advantage is and will be going ahead. The regional development banks, the private financial sector, the Foundations, other official bilateral funders, and developing countries themselves all have considerably more financial and intellectual capacity (thanks in part to the World Bank) than they did when the Bank was created sixty-five years ago. It might be the very success of the development enterprise that has created this state of affairs. If current President Jim Yong Kim’s prediction that, save for a core 3 percent afflicted by war and natural disasters, global poverty (defined as living on $1.25 or less per day) can be ended by 2030 comes to fruition, then the question about the organization’s future is already a live one.
The IMF is in a similar existential situation though for different reasons. Unlike decreasing poverty levels that make the World Bank’s remit shrink, the frequency and magnitude of financial crises is not decreasing unambiguously.24 But following (p. 421) the crisis in Asia in 1997, many countries have been “voting with their feet” and self-insuring by ramping up their own reserve holdings rather than relying on the IMF to tide them over through a similar event in the future. They are augmenting this capacity with regional reserve pooling and currency-swap arrangements such as the Chiang Mai Initiative in East Asia, an additional cushion before they might ever have to access IMF resources in future. In Europe, it is not clear what meaningful contribution the IMF can make as the guardian of the global financial system when it plays third fiddle there to the European Commission and the European Central Bank, and telegraphs publicly both its resentment of, but also its powerlessness to seriously influence, these larger players.25
Both the IMF and the World Bank experienced their heyday in the aftermath of the fall of the Soviet Union and its satellite countries in the late 1980s. Fraught as that period was—and discussion of it remains contentious—money and ideas flowed from them early and effectively to transform the region. No such global grand challenges remain where the IMF and the World Bank can or do play a central role in transformation. This includes such contenders as climate change and global inequality, where the nature of the problems and the level and type of resources required to address them obviate any single institution taking the lead in resolution. As Leipziger points out, “intellectual leadership has migrated away from the IFIs” just as “the development paradigm offered by both IFIs has lost its glamour.”26 A 1997 study of the World Bank and the regional development banks, aptly titled “Titan or Behemoths?,” prophetically reached a similar conclusion: “The banks were created, after all, as means to certain desired ends. The question, What are the desirable outcomes of development? is no longer as simple as it used to be, and thus, does not command the same degree of consensus.”27
Regaining past prominence will require a regression in poverty of epic proportions or an insight into development that is both unique and not amenable to “borrowing” by other organizations. None of these is a likely scenario. If poverty did suddenly and universally increase, it is not clear that the world would turn back the clock and vest its financial resources in one or two institutions. And the advances in development practice and in financial management have not come from the World Bank or the IMF but, in keeping with a multipolar world, from everywhere. The role of marshaling these for the global good and adapting them for local needs requires a global institution, but this would be a far cry from what currently exists.
(p. 422) Never having been a primarily financial institution, the WTO is in a happier space, providing a forum for multilateral trade liberalization (though this too competes with the plethora of regional trade initiatives) and, more solidly, the creation of a basis for global case law via the dispute settlement body. Perhaps a lesson from the WTO is that it is easier to gain global consensus around facilitation of the use of a new technology or norm than it is to “bring about” development via a master plan.
By dint of their smaller size (though at about $2.6 billion the annual outlays of the Bill and Melinda Gates Foundation rival those of some mid-sized national foreign aid budgets) and innovative corporate culture the Foundations might well continue to thrive internationally, and indeed spawn counterparts in the developing world. This would be in keeping with the notion that it is ideas not money that matters most to development, currently and in the future.
Our discussion of IOs focusing on development has necessarily been primarily institutional. But we should point out that transformational individuals can galvanize organizations, indeed whole communities, well beyond organizations. Even the most hidebound organizations can yield to a strong drive for change and reform, as the UNDP did under the energetic leadership of Mark Malloch-Brown. Sadako Ogata was a superb advocate, and defender of principle, when serving in the thankless position of UN High Commissioner for Refugees. Government leaders of all types quailed at her approach and she admirably energized a seriously overworked team. Melinda Gates complements with independent insight her husband’s technocratic drive, and together they take impressive risks for development supported by their admirable philanthropic investment. Robert McNamara largely redeemed his tarnished reputation as a dangerously indecisive US Secretary of Defense with a superb, thoughtful run as World Bank President. Jim Grant’s fifteen years at the helm of UNICEF are still considered the agency’s “golden age.” All down the line, in international organizations as elsewhere, individuals matter crucially.
The familiar world of IOs principally devoted to development has been upended by two phenomena: the emergence of sustained economic success in the developing world (mostly in Asia, but increasingly also in Africa and, in a less spectacular way, in Latin America), amidst compelling continuing need among the world’s poor, many of them located in India, a rising power. Also, the slow-moving and very serious financial and economic crisis of the industrialized world since 2008, which has (p. 423) reordered priorities in many of their capitals toward domestic spending and away from costly international projects, has abetted this process of upending.
The basic needs of the remaining poorest countries will continue to command support globally, but calls from the industrialized countries for increased burden-sharing from emerging powers, for example in mitigating climate change, have not yet been answered while several industrialized powers continue to cling to outdated privileges within a number of international forums that should open up to reflect a new world order. A new set of institutions (the BRICs Bank if and when it comes into being, the Chiang Mai Initiative, new philanthropic foundations centered in developing countries) will complement but not soon supplant the activities of traditional multilateral actors. Failure to reform governance in traditional international organizations is bound to lead to the rise and strengthening of the alternatives. The prognosis for institutions caught in this transitional stage in global economic governance can only be uncertain.
One challenge for the field of development, as for national governments, is that policy success responding to a given set of ideas simply yields new policy challenges requiring new ideas and methodologies. This is one of several reasons that the project of development is often viewed by cynics as perpetually disappointing. A new interest in quantifying development outcomes relating to specific spending in part arises from a desire to effectively challenge critics of the “development biz.” However, in our experience, development is somewhat mysterious, responding in different ways to the same therapies in different parts of the world and in different circumstances. The quest for certainty favors a “deep drill” approach (often an expensive one) to development research informing policy, but one that may be relevant only to a small area or community and thus potentially misleading more widely.28
Informing this insight is the reality that the globe’s development success stories are very different from each other. During their boom years, China and India had little in common, and each of them even less in common with Brazil. Consequently, the quest for a single “model of development” may always have been a fool’s errand, one too often indulged within development organizations devoid of sufficiently robust internal challenge functions. Overarching statements, such as the Millennium Development Goals (MDGs), put a spotlight on the issue. But what issue? The MDGs ignore important elements of the development enterprise, such as freedom and technological innovation, while framing a mostly basic needs agenda. With the objective itself contested, little wonder that neither an overarching statement about development like the MDGs nor a common table à la OECD-DAC is (p. 424) likely to be central to the discourse and action around international development in the future.29
Development organizations doubtless face a significant shakeout generated by traditional donor governments’ intent on cutting their contributions to international causes while they tend to their fellow citizens on the domestic front.30 Emerging countries, themselves beset by varying degrees of economic uncertainty, are unlikely to pick up the slack for now. Logically, this shakeout should take on a Darwinian edge, with many smaller, weaker institutions disappearing or merging with others while the stronger ones hunker down and retool as best they can. In the long run, the outcome of such a rationalization may be a positive one, even if, for now, anxiety and fear stalk the international sections of the development community. If the dysfunction of excessive sprawl in the institutional architecture of international development research, policy, and programming is effectively addressed in years ahead, few beyond those immediately affected will complain.
* We wish to thank, without implicating, Keith Bezanson, Barry Carin, Gerry Helleiner, and Ravi Kanbur for their comments on earlier versions of this chapter, and Liliana Araujo and Kevin English at CIGI for excellent research assistance.
1 UN Development Programme (2013), see especially ch. 5.
2 There was extensive prior preparation, and even precedent in US–Latin American relations, as described by Eric Helleiner, Forgotten Foundations of Bretton Woods: International Development and North-South Dialogue in the Making of the Postwar Order (Ithaca, NY: Cornell University Press, 2014).
3 This syndrome came to be known as the “CNN effect” due to that global television network’s introduction of nonstop news cycles often focusing on famine, war as pestilence of various sorts, impelling publics to exert pressure on their governments, and the governments in turn on the UN to “do something” in response. The 2010 earthquake in Haiti is an example of this syndrome at play, with very little lasting impact of international intervention to relieve the suffering and rebuild.
4 Thomas G. Weiss et al. (eds.), UN Voices: The Struggle for Development and Social Justice (Bloomington, IN: Indiana University Press, 2005).
5 Helleiner, Forgotten Foundations of Bretton Wood, is an important exception to this view. He argues that developing countries, particularly Latin American countries, had strong representations at the conference and previously, in their dealings on this subject with the Americans. However, once the conference was over, “the world changed quite dramatically in the immediate aftermath of the Bretton Woods conference. Very quickly after the war, US officials turned their backs on much of the development content of the Bretton Woods agreement … ” In any case, the end result remains that developing countries were a disaffected group after the Bretton Woods order was established.
6 The early years of the World Bank are covered in Devesh Kapur, John P. Lewis, and Richard Webb, The World Bank: Its First Half Century, 2 vols. (Washington, DC: Brookings Institution Press, 1997); for the evolution in lending patterns see Table 1-1 therein.
7 Although accounts of the discussion at the conference abound, see Raymond F. Mikesell, The Bretton Woods Debates: A Memoir, Essays in International Finance No. 192 (Princeton, NJ: Princeton University, 1994), for a readable, first-hand memoir.
8 Harold James, “History and Nature of the Role of the IMF in Low-Income Countries,” in James M. Boughton and Domenico Lombardi (eds.), Finance, Development, and the IMF (Oxford: Oxford University Press, 2009), 16.
10 For an account of the interplay between leadership, ideas, and organizational development at ECLAC and UNCTAD, see Edgar J. Dosman, The Life and Times of Raul Prebisch, 1901–1986 (Montreal: McGill-Queen’s University Press, 2008), especially chs. 12, 13, and 18.
11 The G24 Research Program has produced the longest-standing (since 1971) and most compelling critical analyses of the IMF and the World Bank. A representative compendium is Ariel Buira, The IMF and the World Bank at Sixty (London: Anthem Press, 2005).
12 Independent Evaluation Office (IEO) of the IMF, The Role of the IMF as Trusted Advisor (Washington, DC: International Monetary Fund, 2013), 1.
13 See IEO of the IMF, Research at the IMF: Relevance and Utilization (Washington, DC: International Monetary Fund, 2011); and Angus Deaton, An Evaluation of World Bank Research, 1998–2005 (Washington, DC: The World Bank, 2006).
14 For a recent account of the heyday of intellectual leadership at the IMF and World Bank see Danny Leipziger, “The Role and Influence of International Financial Institutions,” in International Development: Ideas, Experience, and Prospects, ed. Bruce Currie-Alder et al. (Oxford: Oxford University Press, 2014).
15 There exists one salient case from a previous generation of an imperfect but not failed attempt to deal with changing global power structures. The still well-regarded International Fund for Agricultural Development was created in 1977 largely to recycle petrodollars to the developing world and, in its governance structure and operations, to provide a large role for the oil-producing world. A less desirable development in this regard is the growth in the number and size of Trust Funds at the IFIs. They are an inefficient way to account for the rise of “other” powers as they multiply objectives, funders, and procedures.
16 Ironically, further to severe financial strains within the EU in the run-up to 2012, emerging countries agreed then to contribute additional funds to the IMF (for the second time since 2009) in order to meet any contingencies that the institution might face in supporting crisis-riven countries, while Canada and the United States declined to do so, arguing that European actors had done too little to help themselves to warrant further outside support.
17 Hudson Institute, Index of Global Philanthropy and Remittances 2012 (Washington, DC: Hudson Institute, 2012), 15 and Figs. 4 and 5.
19 They are today joined by local philanthropists with similar aims such as Mo Ibrahim in Africa and Nandan Nilekani in India.
20 Bruce Muirhead and Ronald N. Harpelle, IDRC: 40 Years of Ideas, Innovation and Impact (Waterloo, Canada: Wilfrid Laurier University Press, 2010), 147–52. For an account of the evolution of the main Foundations see Carol Adelman and Yulya Spantchak, “Foundations and Private Actors,” in International Development: Ideas, Experience, and Prospects, ed. Bruce Currie-Alder et al. (Oxford: Oxford University Press, 2014); Verne S. Atwater and Evelyn C. Walsh, A Memoir of the Ford Foundation: The Early Years 1936–1968 (New York: Vantage, 2012); Edward H. Berman, The Influence of the Carnegie, Ford and Rockefeller Foundations on American Foreign Policy: The Ideology of Philanthropy (Albany, NY: State University of New York Press, 1983); John Bresnan, At Home Abroad: A Memoir of the Ford Foundation in Indonesia 1953–1973 (Jakarta: Equinox, 2006); John Farley, To Cast Out Disease: A History of the International Health Division of the Rockefeller Foundation 1913–1951 (Oxford: Oxford University Press, 2004); Raymond B. Fosdick, The Story of the Rockefeller Foundation (Piscataway, NJ: Transaction, 1988); and Inderjeet Parmar, Foundations of the American Century: The Ford, Carnegie & Rockefeller Foundations in the Rise of American Power (New York: Columbia University Press, 2012).
21 See Keith Bezanson, Paul Isenman, and Alex Shakow, “Scaling Up in Agriculture, Rural Development and Nutrition, Learning From the Experience of Vertical Funds,” IFPRI Brief No. 18 (Washington, DC, 2012); and Paul Isenman and Alex Shakow, Donor Schizophrenia and Aid Effectiveness: The Role of Global Funds, IDS Practice Paper 5 (Brighton, UK: Institute for Development Studies, 2010) for a meta-assessment of evaluations of the individual funds.
22 Michael Kremer, Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases (Princeton, NJ: Princeton University Press, 2004).
23 The title of a recent piece by Kathie Klarreich and Linda Polman on the subject is telling: “The NGO Republic of Haiti,” The Nation, November 19, 2012.
24 Two titles by Carmen M. Reinhart and Kenneth S. Rogoff, namely This Time Is Different: A Panoramic View of Eight Centuries of Financial Crises (Princeton, NJ: Princeton University Press, 2009) and From Financial Crash to Debt Crisis, NBER Working Paper 15795 (Cambridge, MA: NBER, 2010), contain the most comprehensive historical analysis of financial crises currently available.
25 The discussion of this plays out daily in the financial press—and will for some time. For a snapshot, see “Eurozone Should Relieve the IMF,” Financial Times, August 1, 2013.
27 Roy Culpeper, The Multilateral Development Banks, Titans or Behemoths? (Boulder, CO and Ottawa: Lynne Rienner Publishers and the North-South Institute, 1997), 166.
28 The current vogue for Randomized Control Trials (RCTs) as a means of establishing developmental “proof” and “truth” may prove ephemeral, particularly if the zeal of its proponents succeeds in marginalizing other research instruments and methods. RCTs are a valuable asset in the research tool-kit but reliance only on them would seem shortsighted if not narrow-minded.
29 Equally deleterious has been the tendency of aid organizations to stampede in whatever directions are temporarily favored by funders (who tend to run in a pack, influenced by one or two field leaders). This has provoked organizations to overlook their core mandate and to invade each other’s turf, with, for example, a large number of UN agencies whose mandates have little to do with humanitarian relief claiming a mission to provide it.
30 Even some US Foundations chose, during the recent crisis, to accentuate domestic rather than international grant-making.