3 Transition strategies in middle-income
countries
16. UKAN, like other witnesses, also recognised aid
"as an important part of the equation in middle income countries
(MICs) where a growing majority of the world's poor and marginalised
and excluded communities live."[15]
An estimated 80% of world's poor live now not in poor countries
but in MICs.[16] Ben
Jackson, the Director of the BOND coalition of NGOs, told us that
"our members are quite clear that the focus of aid should
be on poverty and need […] not defined simply by whether
the overall economy is low income."[17]
Adam Smith International commented that
As recent events have shown, problems can flare
up in MICs just as easily as poorer countries. Recently DFID has
had to open a programme in Libya, and reopen one in Ukraine as
well as restarting activities in Iraq. Where the next problems
will emerge is not easy to predict. If DFID had been running a
substantive, high quality programme in Syria for some years, such
that real reform was attempted, would it have been possible to
avoid the conflict there? Conflict can be expected to continue
to flare up in new countries and regions, with rapid increases
in poverty as a result.[18]
17. Barder and Evans added that "all five of
2014's highest fatality conflicts so far are in MICs; many other
MICs are affected by violence ranging from rural insurgencies
to endemic urban violence that blurs the line between organised
crime and conflict."[19]
More generally, others emphasised the importance of not neglecting
poverty in MICs. The importance of building new development relationships
with previous UK aid recipients, including China and India, was
emphasised. For example, Professor Melissa Leach talked about
mutual learning between the UK and China on renewable energy:
the UK has the opportunity to learn from China, but also to influence
China's internal and external policy in this field.[20]
'South-south co-operation', whereby emerging powers such as Brazil
and China share their expertise with developing countries, was
also emphasised.[21]
18. DFID's Secretary of State, Rt Hon Justine Greening
MP, emphasised that DFID recognised the importance of getting
transition strategies right: "We are not in a marathon here
where a country starts off poor and then we get to the end of
the race and it is suddenly developed. It is more like a relay
race […] We need a transition strategy. […] Even if
an economy is rapidly developing, human rights do not always progress
along the same path; you get some things surging ahead and other
things lagging back."[22]
19. We asked the Secretary of State about India,
which is now a MIC, but where one-third of the country still lives
in extreme poverty on under $1.25 a day.[23]
She said that the UK's relationship was changing into one of partnership:
When [India are] spending—I think I am
right in saying—around $50 billion themselves on health
and education, the most effective thing we can do is work with
them, with our technical expertise, to get the most out of their
budget. Alongside that, as their economy grows, we can look at
some of the so-called returnable capital investments in the poorer
states still—so, targeting it, but rather than simply having
grants, we have investments that we have a chance of getting back
that we can then recycle. […] What we have worked hard in
DFID to do over the last two years is to develop that transition
where we hand the baton over, where it moves gradually from aid
to trade.[24]
20. Witnesses recommended a number of possible actions
for DFID in India following the withdrawal of the bilateral aid
programme in 2015. World Development Movement said "DFID
should make more complex judgements and also consider what expertise
and experience the UK has to offer. For example, can we help India
build its own version of the NHS?"[25]
UKCDS recommended UK science and technology research and policy
funders focus on opportunities in India.[26]
The Independent Commission on Aid Impact (ICAI) drew on its 'DFID's
Livelihoods Work in Western Odisha' evaluation which looked at
a DFID-supported project to reduce poverty by improving very poor
communities' water resources, agriculture and incomes. ICAI told
us
The impact of DFID's support in this environment
depends less on the volume of financial support and more on its
ability to act as a purveyor of development excellence, helping
its partner countries to identify innovative solutions to their
economic and social challenges. For example, in our Odisha report,
we saw that DFID had developed a very good demonstration project
for a development initiative that was subsequently and widely
taken up by the Government of India. The project involved quality
engagement with the intended beneficiaries, which took time to
achieve but proved to be a key success factor. This is an area
on which we have consistently recommended that DFID put more emphasis.
DFID India was also good at identifying opportunities for policy
dialogue and technical assistance to make a real difference. This
kind of engagement, based on knowledge partnerships rather than
on large-scale funding, is likely to become more important in
less aid-dependent contexts.[27]
21. As grants
of aid become less appropriate in some countries, so new forms
of development co-operation are necessary.
During our recent visits to countries like India, we have noted
how the UK could act as a partner in a very wide range of areas,
including health, law, education, culture, planning and transport.
We recommend that the UK Government increase its efforts to facilitate
links between the UK and MICs in these areas, and use a new set
of approaches and financial mechanisms, a number of which we explored
in Phase 1 of this inquiry.
22. We support the UK's principled stance against
tied aid, but this should not stand in the way of building links
between middle income countries and UK institutions. We recommend
that the UK be confident about its decision to continue its 'beyond
aid' engagement in middleincome countries. The UK may no
longer have a traditional aid relationship with these countries,
but it is spending ODA in Brazil, India and China-and is rather
diffident about admitting this. We believe the Government should
stand up for this course of action, rather than giving its critics
opportunities by obfuscating about its—perfectly
legitimate—activities in these countries.
23. We recommend that DFID think creatively about
other ways in which it could develop non-aid forms of co-operation
between the UK and MICs such as India, for example by linking
up with smaller organisations, and by exporting UK knowledge in
a wide range of areas. We remind DFID of ICAI's report on the
Department's livelihoods work in Odisha state, which demonstrated
how very good demonstration projects can have significant impact,
especially when taken up by the Government of India. We support
ICAI's recommendations that DFID focus on knowledge partnerships
in the poorest states.
24. While we should continue to grant aid in some
middle-income countries, we believe that—as we have
argued in previous reports—the substantial and growing
DFID spend in conflict-affected middle-income countries like Pakistan
must not divert funds from poorer African countries. We encourage
DFID and other Government Departments responsible for aid spending
to maintain continuous improvement in management and accountability,
so that well-informed, evidence-based decisions can be taken about
when and where to use aid.
Global institutions
25. Professor Ngaire Woods of Oxford University told
us that the growing prominence of the BRICs countries means global
structures, and global institutions in particular, must adjust.
She said
The BRICs Bank is two things: first, a development
bank owned and run by the BRICs; and, secondly, a reserve currency
fund owned and run by the BRICs. This is a direct competitor to
the IMF. If the IMF and World Bank were functioning well, we would
not need these new organisations, but they are emerging fast.[28]
Professor Woods said that modern, efficient and inclusive
global institutions were a crucial route towards dealing with
the current set of global problems:
Do we have the capacity multilaterally to respond
to Ebola or these new security challenges? Where is it that the
world will have discussions on that? Last week the G20 Finance
Ministers did discuss Russia and Ukraine to a limited degree,
but to me there is a case for thinking about how to ensure the
world does not become two parallel systems, but somewhere in the
middle there is a multilateral system that works and that China,
South Korea, Brazil and India, as much as Britain, feel they can
trust […] What would it mean to make the IMF, World Bank
or the World Trade Organization into an organisation where Indians
could say, "We trust that organisation as much as the British
do"—it might not be a whole lot—and there is
a parity of trust and distrust and ownership of those international
organisations? We should have been doing it 10 years ago. We did
not. The parallel system has now emerged, but it is not too late.
We can do it with resolve. I think DFID and Britain have done
a pretty good job at trying to push for some of the changes. Britain
should […] use its capacity to present a coordinated
across-government role and its diplomacy, including aid diplomacy,
to push its partners to change these institutions faster. If we
do not, they will simply be left by the side of the road.[29]
- The growing profile of shared
global problems, and global public goods, means we must be sure
global institutions are fit for purpose. The international financial
institutions must seek to include the needs of the BRICS and other
emerging powers, or they will risk irrelevance.
The UK Government must continue to push for reforms to the IMF
and World Bank, in particular, to ensure they meet the needs of
emerging powers as much as developed countries.
15 UKAN submission, p.2 Back
16
Andy Sumner, written evidence to International Development Committee, Post-2015 Development Goals inquiry,
October 2012 Back
17
Q 7 Back
18
Adam Smith International submission Back
19
The five highest fatality conflicts so far this year are Syria,
Iraq, Nigeria, north west Pakistan, and Ukraine. Barder and Evans
submission Back
20
Q 8 Back
21
Q 179 and Saferworld submission Back
22
Q 181 Back
23
World Development Movement submission Back
24
Q 181 Back
25
World Development Movement submission Back
26
UKCDS submission Back
27
ICAI submission Back
28
Q 3 Back
29
Q 3 Back
|
