ABSTRACT
During the 1990s and early 2000s, much of the scholarly and policy-oriented literature on aid effectiveness suggested that aid had done little to promote economic growth in developing countries or had had a positive impact on growth only in countries that had ‘sound’ policies and institutions (Dollar and Pritchett 1998; Burnside and Dollar 2000; Easterly 2006). At the same time, several scholars produced evidence to suggest that policy conditionality had been ineffective in promoting economic policy reform in developing countries – in one influential study, for instance, Dollar and Pritchett (1998) found that conditionality did not guarantee that reforms would be carried out, or be successful or sustainable once they were. The result was a new consensus that policy conditionality needed to be reduced or even abandoned in favour of greater country ownership of aid programmes if aid was to become more effective in promoting economic growth in developing countries. In March 2005, this new consensus led to donor governments and the international financial institutions (IFIs) – that is, the World Bank, the International Monetary Fund (IMF), and the regional development banks – (hereafter referred to collectively as ‘donors’) signing the Paris Declaration on Aid Effectiveness (hereafter the Paris Declaration) along with a host of leading development NGOs and governments from many aid recipient countries. This declaration lists country ownership as the first of five key principles of aid effectiveness, the others being alignment, harmonization, managing for results and mutual accountability. It also outlines a series of measures aimed at realizing the principle of country ownership (and the other principles) in practice and sets specific related targets for donors and aid recipient countries to achieve within specified timeframes (OECD-DAC 2005). In September 2008, the signatories to the Paris Declaration reiterated their support for greater country ownership at the 3rd High Level Forum on Aid Effectiveness in Accra, Ghana, and committed to further measures aimed at realizing this principle in the Accra Agenda for Action (OECD-DAC 2008a). Indeed, the Accra Agenda for Action arguably gave greater prominence to the notion of country ownership, noting that it was the international development community’s ‘first priority’ with regards to aid effectiveness. The purpose of this chapter is to examine the way in which this principle has informed
donor strategies for engaging with developing countries, in particular within Southeast Asia. It is argued that there is a conflict between donors’ expressed commitment to country ownership and the political imperative they face to promote neo-liberal policies in developing countries. Plans for country ownership in reality confront the influence that business and security interests in donor countries have over donor aid policies and the imperative that this generates for
Western governments and the IFIs (whose governing bodies are dominated by these governments) to pursue market outcomes. A key challenge for donors has thus been to work out a compromise between these competing agendas. To illustrate this inherent conflict and to explore the nature of the emerging compromise, I examine two current donor strategies from the Southeast Asian region: the World Bank’s strategy for engaging with Indonesia for 2009-12 and the Asian Development Bank’s (ADB) strategy for engaging with fragile states (which was formulated in 2007). Between them, these strategies suggest that donors have subordinated the principle of country ownership to that of promoting neo-liberal forms of governance where the two have been in conflict, indicating that the emerging compromise is one that favours the interests of business and security elements in donor countries over concerns about aid effectiveness. In presenting this argument, I begin by examining the nature of the country ownership
principle as outlined in the Paris Declaration and Accra Agenda for Action and the way in which it conflicts with the neo-liberal agenda. I then examine the way in which this conflict has been resolved in the World Bank’s strategy for engaging with Indonesia and the ADB’s strategy for engaging with fragile states. The final part of the chapter considers the implications of this outcome for development trajectories and the effective use of aid within the Southeast Asian region.
