International Public and NGO Management

International Economic and Social Management

31 October 2023

In this session we will talk about the largest direct service provided by the United Nations system, international economic and social management, or what used to be called development assistance but is now much more.

In 1999, total expenditure for grants by UN system funds and programmes totalled $600 million.  In addition, there was $336 million  in concessional lending by IFAD, In 2001, the World Bank loaned $17.3 billion to its client countries.  The total in 2001 was probably close to $24 billion.  This would be the public budget of a middle sized country.

In 2006, the UN system funds and programmes (including IFAD) provided $15,364,000,000 (15 Billion) in grants. This was a 7 percent increase per year in constant dollars (e.g.adjusted for inflation). The World Bank probably contributed another $18 billion. The multilateral component of Official Development Assistance (ODA) is estimated at 30 percent.

These numbers have increased over the succeeding years, especially in the context of climate change where, under the Paris agreement, some $10 billion should be made available for adaptation and mitigation activities per year, but where the organizational modalities are not yet agreed and there are political issues with the United States.

The nature of the function, and therefore of the services provided by international organizations, is undergoing review and change.  I will argue that it is evolving into something that could be called international public investment, with a corresponding growth in international regulatory activities. And in that, there is a changing role of the United Nations system at the country level that was agreed in 2018.

To see that evolution, we have to start with some of the history of development assistance, where it came from and what it accomplished.

Development assistance in UN history

An examination of the Charter shows that the founders understood that the causes of war had to be addressed.  They perceived that these were economic and social in nature: poverty, hunger, unemployment.  This was derived from an understanding that these were the factors that led to the rise of fascism in inter-war Europe.

If one looks at the locus of conflict in our own time, it seems to share the characteristic that conflict occurs where there has been a precipitate decline in conditions of living, which can be caused by a growing number of factors, including climate change.

One can recall historian Crane Brinton’s thesis (in The Anatomy of Revolution) that revolution came not when the depths of poverty and oppression had been plumbed, but rather when, after a period of improvement, there was a sudden change for the worse. [Think the Tea Party in the US in 2010 and what happened in 2016 and 2023].

One might look at the conflicts in Africa, the Middle East and Eastern Europe in that context.  And also why there was no revolution in Afghanistan.

If things go wrong, easiest way out is to blame someone else who has distinguishable attributes (language, religion, race).  It is irrational but... And if there are doubts, look at ISIL (or ISIS) in Syria, Iraq and Afghanistan or in Mali.

Or, as another study suggests, it is a function of increased inequality that leads to failed states. See Acemoglu, Daron and James Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Random House, Inc. Kindle Edition, 2012.

The United Nations has been seeking to intervene in favor of development for most of its history.  The Fourth United Nations Development Decade was finished well over a decade ago. (In the UN, the decades started at year 1 and end in year 10).  There was no agreement on a fifth and the General Assembly decided to wait a couple of years (and to review some more Secretariat studies) before deciding on a new development strategy.  In the end, this was overtaken by the adoption of the Millenium Development Goals, which imply a kind of strategy. The MDGs were completed, mostly unsuccessfuly, in 2015 and the UN has now agreed on the post-2015 Sustainable Development Goals (an agenda through 2030).

At the intergovernmental level, the issue of the nature of the international role has been tied up in a debate with two dimensions: what is the focus, growth or equity?  And what is the responsibility of the developed countries to the developing. And this debate has now carried over to climate change.

I.  Development debate:  growth v. equity

A.  Basis of the debate

States need economic growth to provide jobs, incomes, tax revenue.  This is undisputed.

Development cannot succeed if benefits accrue only to the rich.  Therefore there is a need  for fair distribution.

The question is what comes first (or gets priority).  In some respects it is a battle of slogans.  A current slogan is sustainable human development.  [I wonder if this implies that previously it was unsustainable inhuman development. Before uttering a slogan, always ask what the opposite would be..]

The consensus international assistance package is related to whether the emphasis is on growth or equity.  If it is growth, then emphasize assistance to the productive sectors;  if it is equity:  emphasize assistance for ‘social development.’

It is somewhat a matter of the time perspective chosen:  the payoff in investing in a factory can be within a few years; payoff for primary education won't be for at least twenty years...

It is also a matter of determining what can be achieved by the market and what requires action by the State.  This tradeoff, as expressed by Robert Lindblom in Politics and Markets, is an essential element in public economic policy.

B.  The strategy debate

This has been illuminated by the main emphases of the various strategies:

Development strategies are somewhat backward looking:  no strategy has survived the first couple years after its formulation.  The strategies tended to codify what had really happened in the previous decades.  Perhaps in tribute to the difficulties, we never had an International Strategy for a Fifth Development Decade.

1.  DD1 – 1960’s

Not a strategy at all.  It was a General Assembly resolution passed early in the 1960's (reflecting the Kennedy administration's view of development) and contained mostly principles.  Implicit, however, was notion of countries helping themselves, with some external push.  The emphasis on growth and on domestic reform.

2  DD2 – 1970’s

The strategy was the result, inter alia, of Pearson Commission in 1968 (whose report was entitled Partners in Development), one of a series of blue ribbon independent international bodies that tried to find common ground between the donors and the recipients..  It reaffirmed international responsibility:  partnership, but still emphasized domestic responsibility.  It had a greater concern with equity than the first strategy.

As was being implemented the first  oil crisis changed the parameters.  Something called the New International Economic Order emerged.

3.  DD3 – 1980’s

The DD3 strategy really reflected the end of the 1970's.  It included the notion of international transfers and responsibility:  emphasis on growth, South-South cooperation, cartels, etc.  It was dead on arrival, because, of course, the oil crisis ended in the global recession of the early 1980's.

4.  DD4 – 1990’s

Moving in the direction of equity, cooperative model, some emphasis on governance (domestic responsibility).

5.  DD5 - 6 – The Millennium Development Goals

The lack of consensus on what development really implies in the new century is reflected in the fact that the General Assembly could not agree even to have a new development strategy or decade.  Instead, the Millenium Development Goals set out a sense of what ought to be achieved, but begged the question of how to achieve them, although they were monitored.

6. Beyond 2015 to 2030.

As a result of the UN Conference on Sustainable Development (Rio+20) in June 2012, that adopted a new approach called The Future We Want, the General Assembly adopted the seventeen Sustainable Development Goals, including, especially, dealing with climate change as set out in the Paris Agreement.

C.  The Agenda for Development

Eschewing a new international development strategy, debate in the UN during the 1990's centered on the Agenda for Development, seen as the counterpart to the Agenda for Peace (intending to define the United Nations role).

This can be illustrated with advancement of women.  One of the development services is studies that help shape policy:  Women in the World Economy:  the 1994 the World Survey on the Role of Women in Development.  That document argued that globalization, structural adjustment, debt and development were interrelated, but had to be addressed by looking at people (in this case women) as assets rather than victims, and adjust policies to take advantage of their capabilities. 

The main elements:

1.  Globalization

There is a recognition that increasing interdependence has changed the nature of the development debate.  As the President of the GA stated after the World Hearings on Development In 1995:

“Market-driven globalization for better or worse, appears to be an irreversible trend which affects al countries.  Its full implications are not yet clear but it obviously erodes the autonomy of nation states and their ability to control their economic destiny.  Non-state actors with a global reach have important roles in the network of international cooperation that is emerging.”

There have been changes in patterns of trade:  it is no longer a matter of primary goods to North, finished goods to South. Often, it can be finished goods from the South, primary goods (especially food) from the North.

Experiencing a growth fueled by labour-intensive manufacturing where finished goods are produced in the South using Northern technology, while much of North-South trade is in primary goods.

For women, growth in participation in labour market, especially in high growth countries.  (There was enough evidence  to allow the UN in the World Survey on the Role of Women in Development (which I directed)  to call the growth “women-led”.)

Importance of free trade is clear:  GATT and the future of the WTO.  [The debate on “trade not aid” has been a staple in international economic policy dialogues for decades.].

There is also the role of ODA (Official Development Assistance).  As stated by the President of the General Assembly,

“Market driven forces are increasing the supply of capital in a growing albeit still limited number of developing countries.  For other, which still lack adequate access to development capital and other resources, official development assistance remains necessary.  In such cases, more innovative ways of development financing have to be explored.”

2.  Sustainability

The United Nations Conference on Environment and Development (UNCED) in 1992 in Rio basically agreed to a concern with interdependence in the environment:  question of trade-off between growth and environment.  Basis of the compromise was:  the South would accept the sustainability as criterion; the North would provide more money. This was renewed, if restated, at Rio+20.

There is an issue of long-term v. short-term perspective.  In looking for gender factors in the environmental debate, we found that women would make different choices relating to the environment than men: they took a longer-term perspective..

Also involves notion that sustainability in the North is dependent on development in south:

“The key perspective of the Hearings is that sustained growth in developed areas of the world depends also on raising living standards in developing areas of the world.  Development should therefore be seen as an aspect of the management of the world economy as a whole in which the real interests of poor countries as well as rich countries are taken seriously into account rather than, as before, niche for the negotiation of financial and technical assistance.  In the same vein, emphasis should be put on mutual interest in international development cooperation rather than obligations of some for the benefit of others.”

3.  Human development

We need to note importance of UNDP's Human Development Report:  which demonstrates every year that investing in people is a basis for development.

Without investing in people, there is no growth, no functioning market.

As the GA president put it:

“Development aims at more than growth in production.  It involves the broad empowerment and participation of people, women equally with men, in the enlargement of their choices.  The notion of people-centered development includes a greater investment in their own development and well-being...”

Reflected in the results of the 1994 Cairo conference with its emphasis on investing in women as a means to population control.

It was also reflected in the three themes of the 1995 Social Summit: poverty, employment and what was called social integration (which was originally intended to be called social cohesion and emphasize how to keep societies from falling apart).

4.  Governance

Early development thinking did not deal much with the kinds of governments that existed.  (The notion that they should be democratic and honest was confounded by the fact that one person’s democracy was another’s dictatorship; there was also resistance to allowing international anything interfere with national sovereignty.)

The reality was that some corrupt governments could undermine development (e.g. Zaire, now a Least Developed Country and called the Democratic Republic of the Congo, was a significant contributor to the economic growth of Switzerland).

Moreover, the reality was that Governments were at least partly responsible for the debt crisis (though not wholly..e.g. Mexico).

As president of GA stated:

“The shift towards greater reliance on markets in all continents has been so swift and so strong as to raise concerns that the fundamental roles and responsibilities of government may be neglected or slighted and the uniform approaches are being tried where they are not appropriate.  Countries in early stages of development have special need of strong government capable of doing what markets do not do to provide infrastructure, ensure education and health, and, indeed, to make markets work.”

The 1993 World Conference on Human Rights had as a major outcome that there were universal norms of governance.

Whether governance (or corruption) should be included in the development paradigm was elated to issue of conditionality, whether donors could or should place conditions on how their funds were to be used. [In some ways it is part of an international system of rewards and punishment.]  Of course, most development assistance, especially bilateral, was always conditional.  The issue was whether aid through multilateral sources should be.

II.  Who is responsible

There has been no doubt since the beginning of the United Nations that there is a global responsibility for development.  The initial efforts, by the United Nations regular program of technical assistance and by the World Bank involved contributions by all members.

But there was an ability to pay criterion.  And this is the heart of the issue:  how much should be paid by whom and on what basis.

Moral obligation, voluntary payment

Current system is based on voluntary funding of development agencies.

Most of the development consensuses make a target that developed countries (however defined) should give 0.7 percent of GDP in development

The notion that development assistance should be voluntary reflects fear that a poor, numeric majority could bankrupt the rich if development assistance were to be financed by assessed contributions.  They could increase the share of development assistance in the budgets of multilateral agencies and pass the cost on to the major contributors.  This was recognized as early as 1947, when both the US and the USSR, then the largest contributors to the United Nations budget, objected to including technical assistance in the regular assessed budget of the UN.  (The compromise was that a small share would be made available for "advisory and training" services, an amount that has not grown as a percentage of the budget since then).

The voluntary nature is clear in case of UN agencies but is also true of the Bretton Woods institutions, where  the International Developoment Association (IDA), Bank's soft loan window,  is funded by voluntary replenishments.

Recipient sovereignty or conditionality?

At its founding, the UNDP model was based on national autonomy:  in this sense was the last bastion of the realist model.  Each country would have a share of the total pie, which it could allocate itself according to its own policies.  This didn't last.  Donors were not willing to turn their funds over for expenditures that might set up economic rivals or development projects that they didn't like.

World Bank lending was based on meeting the Bank’s criteria, which were minimally good economic policies.  The voting system guaranteed that funds could only be used for purposes with which the major donors could live.

UNICEF had a different method.  By focusing on children, it automatically obtained donor support (who is against children?), but by using the resources essentially for equipment, it could leverage the assistance to obtain favorable policies and programs.  (If you, government, conduct vaccination campaigns, we'll give you all the material and throw in a lot of vehicles as well).

OECD

Early in the development debate, the donor countries saw utility in coordinating policies, both among themselves and especially in their dealings with developing countries.

Formed the OECD. Membership is the de facto definition of a developed country.  Some countries have graduated from the Group of 77 to join (e.g. Mexico, South Korea, Chile and soon Colombia and Costa Rica).

Reflects importance of bilateral programs in development assistance (which obey national interests...)

Three important functions:  regime of agreements on certain economic issues, development of policy positions for larger debates and development of assistance fashions.

OECD policy analysis is particularly important since, not only is it intended to shape the policies of the Members but also because it becomes a basis for development assistance.  One of their concerns is social and welfare issues. 

G-77

There is no organizational entity of developing countries that is like the OECD, but a partial one is the G-77.

Named for the original caucus group that met in Algiers prior to UNCTAD I to consolidate positions (and, at that point, there were 77 countries who were members).

A consortium of delegations at main UN headquarters to agree on negotiating positions on development issues.  Rotating chair.  The current chair is Ecuador (it is Latin America’s turn).  Positions are set out in the Second and Third Committees of the General Assembly, usually as starting positions for negotiations.  You can see an example from twenty years ago in the Statement by Ambassador Vicente Vallenilla, Deputy Permanent Representative of Venezuela to the United Nations, in the Second Committee of the 57th regular session of the General Assembly of the United Nations (New York, 30 September 2002) at the Second Committee’s general debate. The statements have not have changed much this year, at the 73rd regular session.

A central concern:  how effective is assistance

For different reasons, both North and South are concerned with the effectiveness of development assistance.

North:  Is it good value (in interest terms) or “money down a rathole”?

South:  Is it a reflection of real needs and priorities?  Does it build endogenous capacity?

Have to look at the current practice.

III.  Instruments of development

In practice the tangible instruments are limited:  research and policy setting studies, mostly for intergovernmental consumption or to set new fashions in criteria.  Direct provision of financial assistance for capital development.  Provision of technical assistance.  And a particular type, use of ODA to leverage national policies.

A.  Policy research

There are a large number  of reports and studies that help fuel the international policy debate.  E.g. the World Bank's World Development Report, UNDP's Human Development Report, , the UN Department of Economic and Social Affairs' World Economic and Social Survey , and UNCTAD's World Investment Report.

B.  Financial assistance

The issue of foreign exchange is critical.  This is closely related to interdependence.  The main function of financial assistance is to provide foreign exchange resources for development investment.

The IMF is not considered a development agency, but in a funny way it is.  This is because its lending can determine the direction that development takes and its conditions can affect the extent to which a given recipient government is able to invest in development. And it also provides funds to developed countries (like Greece over the past few years) to stabilize the global financial system.

There has been an issue of whether lending should be to projects or to programs.  Initially, it was assumed that lending would be project based (i.e. focused on such observables as dams, electric grids, agriculture or highwasy).  Later the notion of program lending, where funds would be made available for whole programs to be used as seemed necessary (structural adjustment loans)

Filling gaps and setting priorities.  One approach is to use international financial assistance to fill gaps, but then there have to be priorities.  The current focus of the Bank is on poverty eradication (a return, in some ways, to the 1970’s when Robert McNamera discovered poor people).

The Bank has developed an appraisal methodology based on social cost benefit.  Nevertheless, there have been difficulties in implementing this because while costs can be calculated, benefits are harder to estimate in monetary terms (e.g. how much is a human life worth?)

C.  Technical assistance

The rationale was that  transfer of technology would build up self-development.  It was assumed that with knowledge, capital would flow naturally.

My personal best example of good technical assistance was Tommy Persson. 

When I was an Assistant Resident Representative in Pakistan during the mid 1970's, the Resident Representative was Kurt Jansson, a Finn who had been head of his country’s veterans disability program.  He toured the medical facility that provided orthopedic appliances to wounded veterans in Pakistan, the Fawji Foundation Hospital,  and discovered that they were using technologies to produce artificial limbs that were more appropriate to the Crimean War than the late 20^th century (they were, quite literally, wooden legs).  He thought that a small addition of modern orthotic and prosthetic technology could enable Pakistan to join the 20^th century.  The expert that was sent was a young Swede, Tommy Persson, who was himself disabled (from an industrial accident) and, instead of being a doctor, was someone who learned his craft on the shop floor.  He was able to work with both the doctors and with the craftsmen who staffed the workshop.  He showed them some new medical developments about how sockets should be carved, ordered new equipment (carving machines) and showed them how to use them.  Most importantly, he reorganized the work process so that it was efficient and taught the workmen an ethic of service to their clients.  When he was finished, the government asked him to stay on to develop a network of workshops.  He declined.  He said, you have people at the Fauji Foundation who can do that and you don't need a foreign expert.

Sometimes technical assistance worked because it dealt with an area that the Government didn’t really want to touch and the international assistance could provide an incentive:  One of Pakistan’s problems was that the rate of post harvest losses was very high (40 percent) due primarily to rodents eating stored grain.  The usual method of dealing with this was pesticides, but these had very negative side effects on a relatively fragile ecology.  The UNDP financed (and FAO executed) a project entitled the Vertebrate Pest Center.  The project was based on the notion that to control the pests that were eating the crops (bats, birds and rats), you should study their habits and try to find non-chemical ways of controlling them.  Without the UNDP support, the Government would never have used that approach.

In the 1970’s, there was a move to respond to the fact that most countries had developed national technical capacity by arguing that rather than bring in foreign experts, there should be national execution of projects.  This was adopted as a policy, but wasn’t very popular with donors.  It had the advantage of reducing costs (national experts cost less than international experts) but had the disadvantage of essentially using foreign exchange where the same expertise could be gotten using local currency.

It could be argued that technical assistance succeeded and is now less of a focus. Only some 44 countries still use the development model in defining their needs for assistance. The rest are "middle income" countries.

D.  Leveraging assistance

UNICEF.  UNICEF primarily provides equipment.  But it uses the supply of equipment to convince governments to adopt sound policies regarding children.  In effect, it makes a bargain: if you set up health or education services for children, we will give you vehicles and equipment.

UN-Women, or its predecessor UNIFEM, works the same way, but by giving local groups contracts.

UNFPA has a similar process with regard to family planning devices.

[We will discuss this further during the session.]

E. Country-level action

The United Nations system has had a country presence almost since the beginning, either as country representatives (WHO had them for years) or through the United Nations Development Programme. Initially these were administrators, but over the sixty-five years the size of teams of staff posted to the country-level has increased and an issue of coordination has emerged. There are now 137 UN system country teams. In only about 44 is the development assistance model actually being used. Most of the rest are what are now called "middle income" countries, where the role of the UN system is different.

I led an evaluation of the country-level system's management and accountability system as well as an evaluation of the field-level structure and operations of the ILO. Many of the recommendations of UN systemevaluation, after further discussion, have been included in the Secretary-General's 2016 recommendations in the context of his report on Operational Activities of the UN System that is on your reading list and even further in 2017 in the discussions on operational activities in the Second Committee.

The evaluations suggested several problems at the country-level. One was finance: the staffing of country-offices was funded mostly from UNDP using core resources which were declining in amounts. There had been a conflict of interest between the roles of the UNDP Resident Representative and the UN System Resident Coordinator (who were the same person) with implications for coordination. Getting organizations to participate in country teams was less problematic and in the some 137 teams, the average number of organizations participating was 16. Moreover, what the country team members were doing in terms of service provision was less "development assistance" than helping countries interact with specialized international bodies. For some organizations (like WHO or ILO) this had been a long-standing function, while for others it was new.

The agreement spelled out in General Assembly resolution 72/279, Repositioning of the United Nations development system in the context of the quadrennial comprehensive policy review of operational activities for development of the United Nations system, clearly indicates how this was to be addressed.

IV.  International public investment

I have not seen development assistance referred to at all as a regime.  Although I suspect that it could be conceptualized as a regime, the fit would not be a very good one:  a characteristic of a regime is its narrowed focus to what, in practical terms, is common interest.  Development assistance has been seen as a tool for a concept "development" which is so broad as to defy practical definition in terms of principles, norms, rules and procedures.

An alternative formulation of development assistance, still maintaining the analogy to a tool, is as international public finance for different regimes.

Public finance, in a national context, has a clear meaning and function:  public savings are acquired largely through taxation and are applied to public investments in areas which, in market economic terms, are not considered profitable, but which, in terms of longer-term goals or the exercise of values, require investments.  Areas of public finance include roads, dams, bridges, school buildings, national parks.  They also include investments in research and the development of regulatory capacity.

               Public finance is sold to national publics based on an acceptance that the investments are normatively right and therefore the savings through taxation is legitimate.

               There is no reason why international public finance cannot be 'sold' to national publics on the same basis.  In a curious sense, this already happens in some areas, where what is called development assistance is, in fact, presented as public investment to support a regime.  A case in point is a regime that I would call 'child survival' and the continued support given to UNICEF.  The regime can be said to have been agreed at the Summit on Children in 1991.

               An embryonic example might be the Global Environment Facility, which is consciously a public finance extension of the regime outlined at UNCED. It is currently being tasked with providing investment resources to deal with climate change adaptation and, since the UNCCD COP-15 in Poznan, with transfer of technology for climate change. And to it can be added the resources of the Green Climate Fund, a new organization set up under the UNFCCC.

               Seeing development assistance as public finance in a system that goes beyond the nation-state model changes some of the parameters of the debate about it:

1.         There is no issue of conditionality:  the conditions are established by the terms of the regime, not of the imposition of the norms of one group of nation-states on another;
2.         There is no issue of "national interest" to be sold in donor States;  their interest is bound up in the common good set out in the regime.
3.         The issue of additionality takes on a new meaning:  additional in terms of what?
4.         The discourse on decision-making changes from issues of who votes with what weight to how is the consensus arrived at.

               The question then comes, what about operational functions, direct delivery of services.

1.      In the commons, international organizations already delivery services directly:  in refugee camps, for emergency food relief, in the provision of buffer forces in peacekeeping.
2.      What remains to be defined is the role in international public finance, as an alternative to multilateral development assistance.  Some elements of that role are already present:
3.     The appraisal process of the World Bank and IFAD has characteristics of the checking of investment against generally accepted standards.
4.      The process followed by UNICEF in helping States to comply with their commitments to children through the planning and use of equipment support is a form of norm-enforcement.
5.      The work undertaken by UNDP to package national requests for assistance is similar to the advisory service function that can be performed to link national perceived needs for international public investment to the larger normative framework
6. The issues relating to financial transfers for climate change mitigation and adaptation.

V. International Financial Management

The International Monetary Fund was undergoing a crisis of identity by 2008, when it appeared to be increasingly irrelevant in the context of the private-sector driven globalization of financial transactions. The global credit and financial crisis that started in September 2008 has given the IMF a new role in maintaining the stability of the global financial system, as their work in Europe has shown. Their most recent report suggests that global growth is slowing and threatening a new crisis.

VI. International Social Management

Since the late 1990's, the international system has begun to intervene directly in what might be called "social management". This refers to the use of international institutions to regulate behaviors above the Nation-State system. A key example is the work of the World Health Organization in dealing with pandemics and contagious disease, where the WHO can now order countries to act in particular ways. The WHO role in dealing with the SARS epidemic was one of the first. The recent efforts to deal with the potentially devastating Avian Influenza outbreak is another. A third is the response to the ebola epidemic in West Africa. Similarly, the role of the UN Office on Drugs and Crime in dealing with issues like transnational organized crime and money-laundering opens the door to further work, as does the national outreach work of the Office of the High Commissioner for Human Rights. This can only be expected to grow over time. There is also the matter of human rights and other international obligations. An increasing number of agencies. like the ILO, provide direct assistance through country teams to help countries connect with the global normative system.

VII. Non-Governmental Organizations

We will discuss the relative roles of international organizations and NGOs in development during the sessions. Good examples, however, include CARE and World Vision.

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Last updated on: October 12, 2023