Lessons learned from structural transformation in least developed countries

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By Daniel Gay[1], Inter-Regional Adviser on LDCs, UN Department of Economic and Social Affairs

To learn more about countries’ strategies for economic transformation, including a session on Least Developed Countries (LDCs), follow the 10th Plenary and High-Level Meeting of the OECD Initiative for Policy Dialogue on Global Value Chains, Production Transformation and Development in Paris, France on 27-28 June 2018 

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Bangladeshi garments workers in Dhaka, Bangladesh. Photo: Shutterstock.com

At Leather Wings, a small shoe-making outfit based in central Kathmandu, four women sit in a small room cutting up bright red cowhide imported from India. Next door, a dozen of their colleagues stitch the shapes together on sewing machines. The owner Samrat Dahal says the boots, designed by a German expat, sell via the Internet in India, China and Italy.

The company, founded in 1985, sums up some of the issues facing the Nepalese economy: entrepreneurial leaders at the helm of a committed workforce making a competitive and quality product for which overseas demand is ample. The problem isn’t finding buyers; it’s scaling up production to meet that demand. Exports by the handful of players in Nepal’s shoe industry totalled only USD 23 million in 2015. The task of boosting production in Nepal is doubly pressing given that the country already meets the criteria to graduate from the least developed country (LDC) category, something that the government wants to happen as soon as 2022. Nepal’s productive capacity predicament is typical of many LDCs. Moving onto a path of long-term prosperity requires structural transformation that expands production via manufacturing, services and higher-productivity agriculture.

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Multilateral action for sustainable development: How to build on the strength of ODA?

By Jorge Moreira da Silva, Director, Development Co-operation Directorate and Charlotte Petri Gornitzka, Chair, Development Assistance Committee

Multilateral wheelIn the backlash against globalisation and multilateralism and despite tightening national budgets, OECD countries’ combined Official Development Assistance (ODA) remains strong. While some criticise recently-released ODA figures for stagnating, steady commitment has been undeniable.

Indeed, ODA has remained politically resilient, steadily increasing since the turn of the century and doubling since 2000. In 2017, net ODA stood at USD 146.6 billion or 0.31% of gross national income (GNI). While this aggregate figure reflects a slight drop of 0.6% compared to 2016, previous figures were artificially high due to the refugee crisis that increased donor spending within their own borders. That spending subsided this year, and when in-country refugee costs are excluded, ODA increased by 1.1% from 2016 in real terms.

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Statebuilding without the State: Getting beyond “chicken and egg” in Somalia

By Dan Honig, Assistant Professor of International Development, Johns Hopkins SAIS, and Sarah Louise Cramer, UN-World Bank Aid Coordination Officer for Somalia

The credibility of the Somali Government hinges largely on its ability to deliver for the Somali People.” International partners clearly recognise the importance of using country systems to achieve broader statebuilding goals, as this line, taken from the May 2017 Communiqué of the London Conference on Somalia, indicates. Yet, international partners continue to deliver aid primarily through parallel systems, as the Government struggles to raise sufficient domestic revenue to deliver tangible results for its people.

DW: Lessons for Peace in Somalia 

Of an estimated USD 1.75 billion in official development assistance (ODA) for Somalia in 2017, only USD 103.9 million was delivered on budget (approximately 6% of total ODA). Excluding humanitarian aid from this calculation, the proportion of on budget aid rises to 14%, which still lags significantly behind the use of country systems in other fragile states. For example, donors delivered between 28-44% of development-focused aid on budget in the Central African Republic, Mali and Liberia in 2015.[1]

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The New World of Development Foundations

By Simon Scott, Counsellor, OECD Statistics and Data Directorate

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One of the compensations of growing old is that you may eventually find out what you always wanted to know.

Fifteen years ago I wrote an OECD study on Philanthropic Foundations and Development Co-operation which – despite its many glowing virtues – was decidedly thin on systematic financial and sectoral detail. Most of all, I found it almost impossible to get a handle on what the biggest development philanthropy of all, the Bill and Melinda Gates Foundation, was up to.

Now, in my dotage, my questions are answered by an excellent new study, Private Philanthropy for Development, a joint project of the OECD’s Development Centre and Development Co-operation Directorate.

How large is private philanthropy’s financial contribution to development? Answer: USD 24 billion from 2013 to 2015 inclusive, or USD 8 billion a year. What is the share of the Gates Foundation? 49%, which goes mostly to health, with agriculture next. And, by the way, the authors of these figures are not just guessing: they developed a special new data survey completed by 77 philanthropies and also gathered publically available information on many more. All the data – partly aggregated to protect confidentiality – are available here, and constitute a major new information resource.

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Disentangling urban and rural food security issues in West Africa

By Richard Clarke, Consultant, Sahel and West Africa Club Secretariat

The rapid growth of cities in West Africa poses significant challenges across development dimensions. In particular, as the location of poverty spreads from rural to urban areas so have issues of food insecurity and malnutrition. Indeed, the potential impact of growing food insecurity in urban areas was highlighted by the widespread rioting over food prices in 2008.

The West African region is set to experience a further doubling of its urban population over the next 20 years, having grown from 6 million to 170 million between 1950 and 2015. This growth will place greater demands on regional food systems, which themselves are increasingly exposed to adverse global climatic and economic conditions, to provide cities with their nutritional needs.   Continue reading

Paradigm Lost

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By Helmut Reisen, Scientific Advisor to the Perspectives on Global Development 2019


This blog is part of an ongoing series evaluating various facets
of Development in Transition. The
2019 “Perspectives on Global Development” on “Rethinking Development Strategies” will add to this discussion


lost-paradigmEconomics has adopted an introspective mindset since the global financial crisis erupted ten years ago. The ´markets-work-wonders´ formula of the 1980s embraced such characteristics as state withdrawal from public services, curtailment of social benefits, deregulated and borderless finance, privatised pensions, and weakened workers’ bargaining rights. At times imprecisely dubbed ´neoliberalism´1 it had a bland aftertaste. Growth in advanced countries was slow, crisis prone and unjust, failing the bottom third. Today, absolute poverty by global standards hits more than 12 million people in the European Union and the United States alone.2

The free market paradigm had been oversold as the only way to achieve prosperity, resulting in liberal delusion. The ´End of History´3 — Western civilisation as the natural order of the modern world — didn´t materialise. Instead, we witness state-led prosperity in Asia, but backlash against globalisation and rising populism in market democracies4. Middle-income class concerns in advanced countries have identified bottlenecks, particularly with respect to research and development, upgrading, and skills development. Industrial and place-based regional policies are back on the table.

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Normatively weak institutions can be functionally strong: A surprising lesson from China

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By Yuen Yuen Ang, Associate Professor of Political Science at the University of Michigan and the author of “How China Escaped the Poverty Trap


This blog is part of an ongoing series evaluating various facets
of
Development in Transition. The 2019 “Perspectives on Global Development” on “Rethinking Development Strategies” will add to this discussion


 

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Guangzhou, China. Photo : shutterstock.com

For the past decades, policymakers and development practitioners have clung to the idea that “good governance” is the solution to poverty. If only poor countries could eradicate corruption, enforce laws, hold leaders accountable and achieve a checklist of best practices, their economic and social problems would be resolved.

This thinking, however, runs into a chicken-and-egg problem: in the first place, it’s hard for poor countries to quickly and meaningfully establish good governance. Indeed, if it were easy to achieve good governance, poor countries would have done it long ago.

But if insisting on one-size-fits all good governance is not the solution, then what is the alternative? My research on China’s development reveals a surprising lesson: normatively weak institutions can be functionally strong. Seen through first-world lenses, the norms and structures found in low-income, pre-industrialised countries are often regarded as “weak” or “backward,” that is, as impediments to development. In fact, these institutions can be creatively adapted or repurposed to kick-start development.
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