Document(s) 7 de 11

Summary overview
Enduring and changing motivations for development finance and international cooperation
The shape of things to come: development-cooperation themes, organizations, and resources
Concluding remarks: an arduous transition

Development cooperation is undergoing an arduous transition. Decades-old habits of thought and practice are being discarded while new ones are still in the making. A large number of development-assistance organizations, most of them created in the three decades following World War II, are struggling to adapt to a vastly changed international context. After a brief review of the implications of the various changes, trends, and responses described in the preceding chapters, we examine the mix of enduring and new motivations for development finance and international cooperation, especially in light of the dominant role now played by private financial flows to developing countries. This is followed by observations on the arrangements for development cooperation that are likely to emerge in the first years of the 21st century. This chapter ends with some remarks on the need to redefine development and leadership in the transition to the 21st century.

Summary overview

The concept of development was articulated shortly after World War II and can be viewed as the latest reinterpretation of the idea of progress within the framework of the Baconian program (Chapter 1). After a period of widespread and well-founded doubts about the prospects for human progress in the first decades of the 20th century, the optimism that prevailed following the Allied victory in World War II, the success of the Marshall Plan, and the unprecedented period of world economic expansion of the next three decades brought a renewed faith in the possibility of human advancement. In the last half of the 20th century, the idea of development embodied the hopes and aspirations once associated with the notion of indefinite progress in the 19th century.

Implicit in the concept of development was the notion that purposeful interventions could lead poor countries to achieve in one generation the material standards of living that the industrialized West achieved in three or more generations and without the heavy social costs. The provision of financial and technical assistance by rich to poor countries was seen as a key instrument for reaching this goal, and this led to the development-cooperation experiment in the late 1940s. Spurred in part by the Cold War, a great variety of development-assistance agencies and programs were established in the following decades. However, by the early 1990s, the international context had changed dramatically, and the development-cooperation experiment was coming to an end.

Ideas and conceptions of development have changed over time. Although this should warn us against adhering rigidly to a particular set of views on how to achieve it (Chapter 2), it does not justify an “everything-goes” attitude toward development strategies and policies. There is an essential tension between recognizing the uniqueness and diversity of development experiences, on the one hand, and the need to identify some basic principles to guide development efforts, on the other. This underscores the importance of articulating shared conceptual frameworks for understanding, reinterpreting, and learning from the various routes that societies have taken to improve their living standards. The diversity of development experiences suggests that flexibility, willingness to admit mistakes, and open mind-sets are essential for fully exploring the range of options available to developing countries.

The main implications of the trends and changes shaping the new international context for development finance and international cooperation (Chapter 3) are summarized in Table 5. New security concerns make it necessary to adapt institutional arrangements to a more complex, fluid, and fragmented international context. Financial and economic interdependence require increased cooperation and improvements in the capacity of actors on the international scene to cope with globalized, rapidly shifting, and unstable economic and financial settings. Persistent inequalities between and within nations make it imperative to reduce extreme disparities in living standards and to protect the most vulnerable social groups to maintain a reasonable degree of social cohesion.

Table 5. Trends in the emerging fractured global order and their implications for international cooperation.
International security in a postbipolar world	Main implication: Need to modify institutional arrangements to adapt to a more complex, fluid, fragmented context, in which a greater diversity of actors with different objectives deal with new security threats Include additional state and especially nonstate actors in international cooperation initiatives Redefine intervention in the internal affairs of states to prevent violent conflicts and adequately deal with intrastate conflicts Possibly expand roles and responsibilities of supranational bodies Strengthen existing and create new mechanisms to promote, monitor, and follow up on international agreements and commitments Launch new initiatives to deal with emerging threats to security (environmental disruptions, mass migrations, organized crime, terrorism, weapons proliferation, among others) Establish international law-enforcement mechanisms to deal with transnational security threats
Economic and financial interdependence	Main implication: Need to improve the capacity of all actors on the international scene to adjust more rapidly and effectively to a globalized, constantly evolving, and often unstable economic and financial context Promote the adoption of standards and guidelines to foster economic and financial stability and to coordinate national economic policies (financial regulation, trade liberalization, monetary and exchange-rate policies, etc.) Move toward a more flexible, coherent network of international-cooperation institutions with clearly identified constituencies and a better division of labour between them Establish flexible, possibly temporary, spaces for dialogue, debate, and agreement between transgovernmental, transcorporate, and transassociational networks Explore systematically the varieties of market economies now in existence and the main lessons that can be derived from the ways they work
Persistent inequalities and economic uncertainty	Main implication: Need to address the inequalities both between and within nations and to improve the capacity of most vulnerable groups Differentiate types of assistance by constituency and increase financial and technical cooperation with those groups that need it most and can benefit significantly Complement development assistance initiatives with other policies that can have a great impact on the growth prospects of poor nations (for example, open markets of developed nations to products from poor countries) Devise mechanisms and instruments (for example, guarantee schemes, internationally agreed incentives) to promote private investments in poor countries and regions Establish and expand initiatives to assist small business, informal-sector enterprises, ethnic minorities, women, the elderly and other marginalized groups
Social conditions	Main implication: Need to agree on a set of minimum standards of social conditions to be guaranteed for all human beings and to explore new institutional arrangements at all levels (subnational, national, regional, international) conducive to reaching and putting into practice such an agreement Devise social policies that take into account demographic considerations (age structures, expectations, and needs of different social groups) to achieve standards of living compatible with human dignity Promote the idea of joint social responsibility (the state, the private sector, and civil-society organizations) for the provision of basic social services to the population, especially the poor Engage civil-society organizations and business associations at local, national, regional, and international levels in initiatives to improve social conditions Devise initiatives and mechanisms to strengthen the social accountability of NGOs and the private sector Given the threat of extensive and persistent unemployment, explore new institutional mechanisms to provide basic goods and services to those who do not have access to jobs Incorporate social-impact considerations into the design of economic-development strategies and of development-assistance initiatives, rather than focusing on measures to compensate for the negative social impacts of economic policies Explore new financing mechanisms for social development (for example, trust funds to complement government expenditures on social services; debt relief and debt swaps for social purposes; reallocation and decentralization of public expenditures to allow citizen participation in decisions and monitoring of social expenditures)
Culture, religion, and ethical concerns	Main implication: Need to design and establish institutions and mechanisms to construct bridges across cultures, religions, and ethnic groups Promote consideration and respect of cultural characteristics (the affirmation of cultural identity should be viewed as an integral part of the development process) Foster international dialogue — especially among representatives of religious institutions, ethnic minorities, and grass-roots organizations — on preventing violent forms of cultural assertion Work with mass-media representatives to better understand, and find ways of dealing with, the tensions between the processes of globalization and the reaffirmation of cultural identity
Governance and democratic practices	Main implication: Need to establish collective learning process to improve governance structures at all levels while respecting diversity of conditions prevailing in developing regions Agree on basic universal principles to guide the search for legitimate and more effective forms of democratic governance that respect human rights but also take into account different historical and cultural circumstances Establish mechanisms at the regional and international levels to monitor agreements and commitments pertaining to democratic governance Create spaces to foster dialogue, debate, and consensus among representatives of the public sector, private sector, and civil society and link these spaces to governmental decision-making at all levels Explore and experiment with new governance structures and mechanisms at the international level to address global problems and development cooperation in particular Strengthen accountability, openness, transparency, and the rule of law, at the international level, in industrialized and developing countries, private corporations, and civil-society organizations
Knowledge explosion and knowledge divide	Main implication: Need to establish national and international-cooperation mechanisms to address the growing “knowledge divide” between nations that have the capacity to generate and make use of modern S&T and those that do not Review and redefine concepts of development and progress from a knowledge perspective, focusing on the key contribution of S&T capabilities to standards of living Make S&T capacity-building one of the key objectives of international development cooperation during the next several decades Experiment with ways to make available on a more equitable basis the knowledge and financial resources necessary for poor countries to take advantage of S&T advances (with the participation of government agencies, private corporations, and academic institutions from developed nations) Expand existing and create new institutional and financial mechanisms to support endogenous S&T capacity-building efforts in developing countries Explore the “leapfrogging” potential of poor countries in specific fields of S&T, particularly in those linked to improvements in social conditions (health, education, nutrition, environmental protection) Strengthen S&T education in developing countries and use technological advances to make education more accessible and improve its content
Note: NGO, nongovernmental organization; S&T, science and technology.

Growing social demands, particularly in countries and regions unable to satisfy them, are creating additional international tensions and require new initiatives to reduce poverty and improve the provision of basic social services. The renewed importance of culture, religion, and ethics (largely ignored in the thoroughly secular decades of the development-cooperation experiment) has made it necessary to consider nonmaterial issues and values in debates about development. The new salience of democratic governance, together with the variety of its forms around the world, has raised the issue of how to establish a collective learning process to improve the prospects for democratic practices. Finally, the advent of the knowledge society, along with the abyss separating countries with the capacity to generate and use modern science and technology and those without it, has created the urgent need to devise mechanisms to build bridges across the knowledge divide.

Several interpretations have been offered to account for these trends and changes, and the concept of a fractured global order has been proposed to characterize the new international context emerging at the close of the 20th century (Chapter 4). This inherently paradoxical order is the result of processes that are putting all of us in contact with each other throughout the planet but are at the same time creating profound divisions and cleavages between and within social groups. Three partially overlapping domains configure the fractured global order: the global, the networks, and the local. Development cooperation works primarily in the domain of the networks, and its main task is to help to bridge the fractures that are emerging and deepening in the global order. The rise of transgovernmental, transcorporate, and transassociational networks, together with the vastly increased and more complex interrelations between and within them, has made the context for development finance and international cooperation much more complex and difficult to deal with. As a consequence, the capacity to design and implement measures to keep the unfavourable consequences of globalization in check — and to exploit the opportunities offered by the fractured global order — will be an increasingly valuable asset for developing countries.

The ODA squeeze, the questioning of aid and its impact, and the new demands placed on the international-cooperation system are now stretching to the limit the response capacity of the organizations in the development-assistance community (Chapter 5). Their reaction has been marked by much confusion, reorganization, counterreorganization, and operational changes that are often modified before they can yield results.

All of this calls for a new perspective on the restructuring of international cooperation for development during the next decade. Uncertainty, instability, paradox, and ambiguity are configuring a turbulent field in which the transformation of development assistance is taking place (Emery and Trist 1965). In this situation, there is no time for leisurely academic research aimed at improving organizational performance. It becomes necessary to learn while doing and to engage in real-time policy-oriented inquiries. Organizational structures, procedures, and practices must be monitored, evaluated in light of results, and adjusted as new circumstances emerge. Strategic planning needs to be integrated into day-to-day management to reduce lags in adaptive behaviour, and the organization must become an inquiring and learning system.¹⁴ Such an exercise must begin with a reexamination of the reasons for engaging in development finance and international cooperation, which should guide the process of “creative destruction” that renews institutional arrangements in the international development community.

Enduring and changing motivations for development finance and international cooperation

Motivations for private firms to invest in developing regions, for private foundations and individuals to support programs in developing countries, and for rich countries to provide financial and technical assistance to the poorer nations have changed over time. Although many of the reasons for engaging in these activities have endured over decades, new motivations have been added as a result of the transformations in the international context.

The main motivation for investing in developing countries, or, for that matter, for investing anywhere, has always been the desire to obtain the maximum possible returns over a specified period and subject to a determined level of risk. The globalization of financial markets has made the search for higher returns much more complex, and private investors now face a wide range of options for placing their investments worldwide. Portfolio flows, which move quickly from one market to another in response to slight changes in the perceptions of returns and risks, are now engaged in a global search for the highest possible profits. However, identifying the stocks, currencies, bonds, derivatives, and other financial instruments to allow investors to obtain the optimal reward–risk combination is a difficult task that requires highly specialized knowledge and information. Few investors have the capacity to analyze in detail the options available, and most rely on the information and analyses provided by rating agencies, consulting firms, and investment advisors. This has given the largest and most visible of these organizations (Moody, Standard & Poor, Duff & Phelps) a significant influence on the direction of investment flows. This influence is heightened by what has been called the “herd mentality” of the players in financial markets, which amplifies fluctuations and increases instability.

The contribution that portfolio flows can make to developing countries depends on the quality of their domestic macroeconomic policies, the soundness of their local financial institutions, and the stability of their economic and political system. Few developing countries have the capacity to absorb short-term flows in large amounts without experiencing macroeconomic problems (for example, local currency appreciation). As a result, the development impact of volatile and highly concentrated portfolio flows is likely to be rather small and temporary, except in a few developing nations where such flows might provide significant balance-of-payments support.

What is perceived as the excessive mobility of capital flows has been severely criticized by, among others, Jagdish Bhagwati, a staunch supporter of trade liberalization. Bhagwati has been particularly against lifting all restrictions on portfolio-capital flows, which he has distinguished from direct foreign investment and trade in goods and services. In his view, a combination of ideology and interests is driving the process of financial globalization beyond what would be reasonable and prudent. Bhagwati has argued that despite the evidence of the inherent risks of free capital flows, a “Wall Street–Treasury complex” (Bhagwati 1998, p. 7) — analogous to the military-industrial complex denounced by President Eisenhower in the 1950s — is operating behind the “self-serving assumption that the ideal world is indeed one of free capital flows, with the IMF and its bailouts at the apex in a role that guarantees its survival and enhances its status” (Bhagwati 1998, p. 12). Considering that emerging markets in developing and transition economies are where returns to portfolio flows can be rather high, the excessive mobility of capital flows creates special problems and risks for these countries.

Commercial banks lend to developing-country governments and firms at rates that cover the interest paid on deposits, administrative costs, a “risk premium,” and profits. The risk premium is charged because of what banks perceive as a greater probability that developing-country borrowers may default on their loans. In addition, when lending to subnational governments, state enterprises, and private firms, commercial banks often require a central-government guarantee to ensure repayment. Private bank loans to developing countries have followed boom and bust cycles, which are best exemplified by the lending binge of the 1970s and early 1980s (primarily to recycle petrodollars), followed by the debt crisis the 1980s and another lending boom during the early 1990s.

During the 1970s, commercial banks raced past each other to lend to developing-country governments, often charging hefty risk premiums and frequently without examining the soundness of the projects and schemes to be financed. Beginning with Mexico in 1982, many borrowers defaulted on their loans and created serious problems for American, European, and Japanese commercial banks.¹⁵ The “Baker plan” was launched in 1985 to deal with what was perceived as a liquidity crisis, and additional loans were provided by commercial banks, multilateral financial institutions, industrialized-country governments, and bilateral aid agencies to help developing countries restructure and honour their obligations. This considerably helped commercial banks, which were given time to strengthen their financial positions and absorb loses. This was followed in 1989 by the “Brady plan,” which institutionalized the idea of burden-sharing between creditors and debtors by making banks take losses, reducing the total amount of debt, and establishing a rigid repayment schedule for the reduced obligations.

A few years later commercial bank lending to developing regions resumed in earnest. Many firms in East Asian countries obtained loans from private American, European, and Japanese banks, once again without close scrutiny of the uses to which they were put. As revealed after the 1997–98 financial crisis, many of these loans were not reported to government authorities; most were short term; and borrowers did not cover themselves against currency risks. Even though no government guarantees were provided for these loans, in countries like Indonesia, South Korea, and Thailand, their total volume required determined government intervention and support from multilateral institutions and bilateral agencies in unprecedented amounts to avert financial and economic collapse.

Provided that loan terms are reasonable and aligned with the activities to be financed, commercial bank lending can help developing-country governments and firms with resources to finance investment projects, cover temporary income shortfalls, and provide working capital. But for this system to work, borrowers must be prudent and exercise restraint in their dealings with commercial bank lenders.

Because direct foreign investment seeks a continuous stream of profits over the long and medium term, firms are prompted to locate where they can reduce production and distribution costs for their products and services. Although low labour costs remain a main attraction for many corporations to place their production facilities in developing countries, many other factors also play a role. The desire to secure access to natural resources, such as hydrocarbons, minerals, and land, have been among the traditional motivations for firms to invest in developing regions, to which has been added the desire to secure access to genetic resources linked to biodiversity has been added during the last decade. Less stringent environmental regulations have also played a role in the location of some manufacturing activities, and the availability of highly skilled labour has now emerged as a main motivation for high-technology firms to place their production and service facilities in a few developing countries (for example, electronic manufacturing in East Asia, software production in India, and computer customer-service facilities in Costa Rica).

With the globalization of product and service markets and the rise of strategic alliances between international firms, strategic positioning for global competition has also emerged as a main motivation for firms to invest in developing countries. This is particularly the case in certain fast-growing sectors of the world economy (air travel, banking, energy, electronic goods), in which the leading corporations design their strategies at the global level. Developing countries with large populations, particularly those with relatively stable and growing economies, have become a place of choice and a highly contested ground for direct foreign investment.

This type of investment can make significant contributions to development through increases in production and exports, creation of jobs, and technology transfers. Moreover, pressures from international environmental and civil-rights organizations have influenced the conduct of transnational corporations to the extent that issues of corporate social responsibility have come to the fore in recent years. This may improve the behaviour of at least those large corporations that are vulnerable to consumer boycotts. New standards for social and environmental accountability, coupled with programs to foster corporate citizenship and strategic philanthropy, can enhance the contribution of direct foreign investment to development (DRI 1998). The potential benefits to be derived from foreign investments can be considerably enhanced by appropriate government policies to reduce their possible negative impacts on the environment and the possible abuse of local labour. However, because of the high mobility of international capital, many developing countries are competing with each other to attract foreign investment. Tax breaks and incentives are regularly offered to induce foreign investors to locate their plants and facilities, which reduces government revenues. Environmental and labour regulations are frequently waived or even dismantled, which has a negative impact on social conditions. In some cases, these inducements are complemented with offers to provide the physical infrastructure (roads, ports, energy, water supply) required to operate the foreign plants, which further strains public finances.

The increased mobility of international capital, which can easily migrate to where it is treated more favourably, and the willingness of governments to outbid each other with tax and other incentives to attract foreign investors are undermining the capacity of governments to generate public revenue. As a consequence, many governments are facing what Rodrik (1997, p. 6) called “the unappetizing option of increasing taxes disproportionately on labour income” to maintain a reasonable level of public expenditure compatible with preserving social cohesion.

The motivations of grant-giving foundations, philanthropic organizations, and individuals include altruism, international solidarity, religious proselytism, and the desire to obtain social recognition. These flows are directed primarily to humanitarian relief, the protection of human rights, health and family planning, education and nutrition programs for children, cultural activities, environmental conservation, and building local capacity in a variety of fields. Because they are free from the constraints faced by bilateral aid agencies, international financial institutions and private firms and foundations can support more adventurous programs and engage in experimental activities that official donors and private investors would find too risky or controversial. The amount of funds channeled through grants may not be very large, but they can play a key strategic role in exploring new directions and testing programs that are later adopted by other organizations. In addition, private corporations occasionally contribute to development programs through grants, primarily with the purpose of improving their public image.

As forms of institutionalized philanthropy, foundations have actually had a very long history and played important roles in ensuring the welfare of individuals in societies around the world. For instance, private philanthropy in 18th-century United States was responsible for large areas of education, medicine, culture, science, and others outside the scope of a small government. As the developing nations approach the 21st century within a context of economic liberalization and scarce ODA flows, a large space is opening up for foundations to once again play key roles in development. However, foundations have been a source of controversy throughout history as they have experienced periods of mismanagement, fallen behind the times, or been used for political purposes. Despite its being recognized that foundations may be the independent centres of initiative and pluralistic diversity needed by a democratic society, the major US foundations in the early 1970s were described as “lethargic and outmoded” (Nielsen 1972, p. 434) while controlling enormous resources.

Motivations for ODA have changed in parallel with the evolution of development thinking and of institutional arrangements for development cooperation. Cold War political interests and altruism were the main reasons for launching the development-cooperation experiment in the late 1940s, but over time a more varied range of motivations for development assistance began to emerge. As motivations changed, conditions for access to financial and technical assistance were redefined. Political loyalty to one of the two opposing camps in the East-West confrontation gave way to conditions of tied purchases of goods and services, access to markets, economic policies, institutional reforms, democratic practices, environmental conservation, and respect for human rights. Cross-conditionality between development assistance agencies and multilateral institutions increased significantly, and private banks often conditioned their loans to developing-country governments on the adoption of policy reforms advocated by the IMF or the World Bank.

Table 6 presents a summary of the main motivations for providing development assistance.¹⁶ There has been a gradual progression from narrowly defined notions of donor political and economic self-interest — complemented by moral concerns and altruistic motives — to broader conceptions of the common interest and the stability of the international system. However, self-interest still prevails, and political and commercial objectives continue to influence the levels and allocation of aid budgets, as can be seen in the USAID Strategic Plan (1998) and in Japanese aid to Latin America (Katada 1997).

 

Table 6. Motivations for ODA.

Strategic and security interests (which respond to geopolitical and military considerations of donor countries) National level — The geopolitical importance of specific developing countries is a factor Regional level — The interests of regional alliances or treaties are a consideration

Political interests (which focus on obtaining political support for foreign and domestic policies) Foreign constituencies — Support is given to former colonial territories and other areas with special historic and cultural ties to the donor country with a view to obtaining international political recognition and support Domestic constituencies — Support of immigrant lobbies and ethnic groups in the donor country is sought

Economic and commercial interests (which emphasize direct commercial and financial benefits to the donor country) Benefits for the donor — Aid can lead to export opportunities, employment, support of domestic producers (through food aid), security for investments in developing countries, access to resources (oil, strategic minerals), access to a pool of highly qualified potential migrants (through fellowships), and future demand for exports (created through technology transfers)

Economic interdependence (which stresses the role of aid in promoting developing-country growth that helps donor countries indirectly) Investment in the future — Higher world economic growth, increased trade flows, and expanded private investment benefit not only developing economies, but also donor countries (by providing opportunities for economic expansion and a larger market)

Emergence of global problems (which concern both donor and recipient nations) Environmental sustainability — Global warming, destruction of the ozone layer, loss of biodiversity, tropical deforestation, etc., affect developed countries directly World population growth and imbalances — These are now seen as global problems requiring financial and technical assistance from donors Health threats (AIDS, epidemics) — These are also seen as global problems requiring financial and technical assistance from donors Crime, drug traffic, and terrorism — These problems call for international cooperation and the support of donors

Altruism, ethical, humanitarian, and religious concerns (which highlight the moral obligation of donor countries to assist the poor in developing countries) Human suffering — Donors wish to alleviate human suffering and express solidarity with fellow human beings Disasters — Humanitarian and emergency relief helps countries cope with natural and people-caused disasters Religious proselytism — The desire to win converts to a particular faith may be a concern

Stability of the international system (which aims at securing a stable world order to foster the long-term interests of donor countries) Political stability — Aid is used to prevent and contain local and regional conflicts and to promote the spread of democracy through peacemaking and peacekeeping initiatives, monitoring and supervision of elections, support for democratic practices and institutions, etc. World economic stability — Donors promote policy reforms in developing countries and take measures to avoid major disruptions of international finance and trade (provide funding to help defuse the debt crisis, the Mexican peso collapse, the East Asian crisis) Social stability — To eliminate the need for international migrations, donors sponsor programs to reduce population growth, combat poverty, promote human rights, and improve the situation of women in the developing regions Responsibility — Aid shows that rich countries are willing to accept responsibility for assisting the less fortunate in a global society International agreements — Donors help developing countries improve their participation in international agreements to make them more equitable, stable, and effective

Source: Adapted from reports prepared by Susan Ulbaek (Ulbaek 1989) and Izumi Ohno at the Strategic Planning Division of the World Bank in the late 1980s. See, in particular, Ohno (1990). Note: ODA, official development assistance.

Different motivations interact closely with each other, either as complements or trade-offs. In some cases, human-rights concerns may override the purely economic or political interests of donors, whereas in others the opposite may be true. Development financing may be made conditional on adopting political reforms, as exemplified by the loans provided by the EBRD, whose articles of agreement state the promotion of multiparty democracy is one of its objectives. Environmental and security preoccupations may also reinforce each other, as in the case of assistance to the countries of Eastern Europe and the former Soviet Union to upgrade their nuclear-power installations and dismantle their nuclear missiles. In general, increased interdependence and the process of globalization, added to the multiple fractures that characterize the emerging world order, have made the political, economic, and social stability of the international system a growing concern of donors.

Taking into account private flows, grants by foundations and individuals, and ODA, it is possible to see that the structure of financial flows to developing countries is now skewed in favour of highly concentrated and mobile private investments and not geared toward the long-term development-finance needs of developing countries. Moreover, the vastly increased mobility of international capital limits the capacity of most developing-country governments to tax capital flows and profits. This makes it difficult to maintain a level of public expenditures commensurate with the growth of social demands, especially in the poorest countries. In terms of the fractured global order, the logic of financial capitalism in the domain of the global, operating through transgovernmental and transcorporate entities in the domain of the networks, does not often coincide with the interests of developing societies in the domain of the local.

From this perspective, a possible additional motivation for ODA may be to compensate for the negative impact that financial globalization has on economic stability and social cohesion. However, the initiatives taken by the high-income industrialized nations in various international forums point clearly in another direction. In addition to giving rather weak support for ODA, developed-country governments are actively promoting international agreements on foreign investment that would further tilt the balance in favour of international capital and against developing countries. These initiatives are being pursued through the Multilateral Agreement on Investment at the OECD, which gathers the high-income economies that provide a home base for most international investors, and through the Multilateral Investment Agreement at the WTO as a follow-up to the Uruguay Round negotiations on trade-related investment measures.

The main objective of these two initiatives, which are strongly opposed by most developing countries, is to establish international agreements that widen and strengthen the rights of foreign investors far beyond those they currently have in most developing countries and to severely curtail the rights of governments to regulate the entry, establishment, and operation of foreign companies and investors. For example, foreign firms would acquire the right to enter and establish themselves, without any restrictions and with 100% equity, in all sectors of the economy; would be given the same treatment as local firms; and would also be given additional rights, such as the right to full and unrestricted repatriation of profits. In essence, these agreements seek to lock-in at the global level, preferably in a binding way, the benefits obtained by foreign investors in those places that provide most favourable treatment to international capital. In view of the asymmetries between foreign firms and the vast majority of local enterprises, this could create difficulties for the development of a strong domestic private sector in many developing countries.

These attempts to give greater security to international capital and increase the rights of foreign investors have to be seen in relation to the growing disparities in living standards between and within nations, the rise of global crime and drug traffic, the emergence of new security threats, and the increase of ethnic violence, which have all been related to the deterioration of social conditions in many parts of the world, particularly in the developing regions. With a little bit of hyperbole it may be possible to say that in the process of making the world safe for capitalism, economic and financial globalization is making it unsafe for capitalists and for just about everybody else.

The shape of things to come: development-cooperation themes, organizations, and resources The combination of enduring and emerging motivations for development finance and international cooperation ensure that these activities will continue, although in a much changed way, during the coming decades. However, development assistance will remain a peripheral concern for the rich countries, especially as they focus their attention on solving their own internal problems (unemployment, inequality, crime), coordinating their economic policies to maintain the stability of the international economic system, improving their competitiveness, and easing the transition of the former centrally planned economies toward democracy and the market. The arguments advanced in this book allow one to anticipate the shape of things to come in the turbulent field of development finance and international cooperation. We venture some ideas on what will emerge when the development-cooperation experiment of the past five decades is superseded by new organizational arrangements and resource-mobilization mechanisms. Themes The wide variety of areas covered by the expanding field of international cooperation for development will cluster around several main themes, primarily as a result of the need to find common ground and identify shared interests among a large number of actors with diverse objectives. These clusters of themes will cut across organizational boundaries and become the focus for initiatives involving government agencies, international institutions, foundations, private firms, and civil-society organizations. Among these main clusters of themes it is possible to identify the following: Stabilizing the international financial and economic system — This will require concerted action by governments, international institutions, and private financial institutions. A main theme in this cluster will be how to create the conditions to harmonize the interests of private investors and developing countries. Among other things, this requires designing national and international policy regimes to ensure that private financial flows contribute effectively to development objectives. Addressing global and regional problems that affect several countries — This will require increased collaboration between countries and adaptations in the way national sovereignty is exercised. Environmental deterioration and the sustainable use of natural resources figure prominently in this cluster, which also includes the issues of international migration, internationalization of organized crime, and the spread of drug traffic. Providing humanitarian assistance and emergency relief to deal with natural and human-made disasters — When violent conflicts within countries prompt the need for relief efforts, it will be necessary to intervene in the internal affairs of sovereign states and to modify the prevailing conceptions of national sovereignty. Providing technical and financial assistance to promote economic growth and social improvement — This has been the main focus of traditional forms of development cooperation. The specific themes to be addressed in this cluster include the provision of technical assistance in fields such as agriculture, industry, and energy, as well as education, health, family planning, and poverty reduction. The provision of balance-of-payments support is also included in this cluster. Establishing and strengthening institutions in developing countries — This includes capacity-building for government policy-making in the social and economic fields, institutional reforms, and strengthening democratic practices and institutions. These issues require long-term and flexible interventions carefully designed to involve and empower developing-country partners in the public and private sectors and in civil society. Creating and consolidating scientific and technological capabilities in the developing regions — This will become a major cluster of development-cooperation initiatives in the early years of the 21st century. In particular, support will grow for the establishment of local research facilities and the acquisition of technologies in the areas of information and communications, environmental sustainability, and biosciences and biotechnologies. Preventing deadly conflict between and within states — While conflict prevention has received increased attention in recent years, it will take some time before a broad and coherent set of initiatives is launched, primarily because of our inadequate understanding of the combination of factors that lead to violent conflicts and how to prevent the eruption of deadly violence. Embarking in a collective effort to redefine “development” and “progress” as we enter into the post-Baconian age — The widespread uneasiness that has become evident with the current conceptions of development, the challenges posed by different civilizational outlooks, and the new salience of value and spiritual concerns will make it necessary to launch a joint cross-cultural effort to explore these important questions in the early years of the 21st century. These clusters of themes will bring together different combinations of government agencies in developed and developing countries, private corporations, academic institutions, NGOs, and other actors on the international development scene. Whereas some large multilateral institutions and bilateral aid agencies may have a stake in several of these clusters, most development-cooperation organizations will focus on just a few. Organizations Institutional inertias and the accumulated strains of incremental adaptations will prompt a major redesign of most international development organizations, some of which have already embarked in such an undertaking. In addition, attempts will be made to define a reasonable interinstitutional division of labour and to identify redundant and missing institutions. Although these attempts will be resisted by some senior officials in these organizations, the combined pressures of new demands and diminished resources will ultimately prevail and lead to a rationalization of organizational arrangements for development cooperation. Development-cooperation organizations will improve their efficiency and become more open and transparent, and their impact will be closely monitored and evaluated. Tighter conditions will be placed on intermediaries of development assistance (particularly NGOs) and on recipients to ensure better accountability. Programs will become more focused; greater emphasis will be placed on decentralization and the delegation of responsibility; and entrepreneurship and the exercise of creative leadership will be rewarded. Information systems will acquire greater importance as ways to foster new styles of work and as means to retain organizational memory. Temporary programs and organizational structures, with clearly defined expiration dates, will gradually replace the permanent organizations that were the norm in the early decades of the development-cooperation experiment. The more effective development-assistance agencies will become learning organizations, but many will have to become first “unlearning organizations” to forget past practices and work habits. Those that fail to do this will either disappear or be reduced to irrelevance over the next two decades. The development-cooperation organizations of the future will adopt the form of flexible networks focusing on specific themes. They will combine several institutions in coalitions, although thematic networks will also emerge as subsets of large organizations. A prototype thematic network would incorporate the following entities: A Thematic Network Board — This would comprise representatives of government agencies from developed and developing countries, multilateral and bilateral assistance institutions, private corporations, foundations, academic institutions, NGOs, and other entities with a stake in the specific theme of the network. All board members would have the same voting rights, and the task of the board would be to decide on specific programs to be pursued by subsets of network members. Each member of the Thematic Network would contribute an assessed amount (determined according to preestablished binding criteria) to cover the operating costs of the Network Secretariat. A small Network Secretariat — The only function of the Network Secretariat would be to help identify and launch programs of interest to subsets of Thematic Network members. It would comprise a few staff on fixed-term contracts, supplemented by consultants, and would work largely through electronic mail and other forms of telecommunications to minimize overhead. It would be largely financed by the assessed contributions from the Thematic Network members and would regularly submit proposals to the Network Board. Several program subnetworks — These would comprise only the members interested in each specific program. The launching of the program subnetwork would be decided by the Network Board, based on the proposals submitted by the Secretariat. The proposals would define the terms of reference for the program, its duration, and organizational and financing arrangements. Participation in the program subnetworks would be voluntary and restricted to the Thematic Network members. Participants in a Program Subnetwork would also have to agree on their financial contributions to the program and on their respective voting rights. An ad hoc Program Board would be established to supervise and evaluate the conduct of the program, and a Program Secretariat would be temporarily established to coordinate and execute program tasks. Both of these would be disbanded on the completion of the activities, and each program would have a clearly defined termination date to avoid its being extended indefinitely. Several program subnetworks would be operating at any given time, and the Thematic Network Board would have responsibility for assessing the overall progress of the various programs and the performance of the Network Secretariat and its staff. Several entities already exhibit some of the characteristics described for the thematic networks and subnetworks, and many of these entities have come into existence in recent years. The Consultative Group on International Agricultural Research was jointly established in 1971 by the World Bank, several bilateral agencies, and private foundations; and a number of international secretariats focusing on specific issues (for example, micronutrients, tropical diseases, AIDS prevention) have been created with the support of bilateral agencies, multilateral institutions, and foundations. However, these initiatives have had rather limited participation from the private sector and civil-society organizations, and some of these network-like organizations have inherited the limitations of their multilateral and bilateral supporters. The UNDP may be gradually moving in the direction of supporting programs of interest to particular combinations of donors and recipients, which would resemble the thematic network programs described above. An indication of this shift is that, for the first time in its history, the UNDP’s noncore resources (over which donors can exert more control) exceed core resources in its budget (allocated primarily according to criteria defined by the Governing Board, representing all UNDP members). The World Bank recently established five functional networks focusing on themes such as environmental sustainability, finance and private-sector development, human development, and poverty reduction. There is still much confusion about the way these networks will interact with the various regional and country teams, as well as with technical departments, but the World Bank’s creation of these networks signals its intention to focus professional capacities more sharply and to work across regional and country boundaries in an effort to improve organizational learning. Other initiatives have combined the private sector and multilateral institutions, such as the World Bank’s Infodev program to support information-technology initiatives in developing countries; NGOs and regional development banks, such as the joint program between the Nature Conservancy and IDB to fund initiatives for sustainable development; academic institutions, government agencies, and the private sector, such as the CYTED (Programa Iberoamericano de Ciencia y Tecnología para el Desarrollo [Ibero-American program of science and technology for development]), launched to coordinate scientific and technological activities between Latin American, Portuguese, and Spanish institutions; and private corporations, semipublic institutions, and developing-country government agencies, such as the Shell Corporation joint program with the Smithsonian Institute to monitor the environmental impact of Shell’s Peruvian operations. The point is that there are many experiences to draw lessons from in designing institutional arrangements more appropriate to the fractured global order. Richard Sack has proposed the name “structured informality” (1998, p. 4) to characterize several institutional arrangements that approach the organizational ones outlined in this section. As Executive Secretary of the Association for the Development of Education in Africa (ADEA), he has emphasized the importance of moving beyond established institutional channels to improve lateral communications between professionals and policymakers, respond more rapidly to the demands of policymakers and other users of the services provided by ADEA, and operate flexibly. All of this has led to low transaction costs for the members of the ADEA network (primarily government agencies and bilateral donors, but also individual professionals and international institutions). ADEA functions with a steering committee, working groups, a bureau and caucus of ministers, and a secretariat. It is hosted at the International Institute for Educational Planning of the United Nations Educational, Scientific and Cultural Organization. Sack noted that Club du Sahel (attached to the OECD Secretariat in Paris) has functioned as an informal coordination group for donor agencies working in the Sahel for more than two decades and that its model corresponds to structural informality. Another example is GWP (hosted at the Swedish International Development Agency), which is concerned with the management of freshwater resources in developing countries and has been referred to as a “reinforced network” and a “virtual organization, with a minimum of formal structure.” Johan Holmberg, Executive Secretary of GWP, described the network as characterized by informality and flexibility to avoid spending much time and attention on the preparation of rules and regulations. Membership should be voluntary and open to all organizations interested in water resources management. Decision-making should be by consensus and avoid the political posturing that would quickly result from a formal voting system. There should be an emphasis on scientific excellence. GWP should have a decentralized structure and a philosophy of shared responsibility throughout the system. (Holmberg 1998) The process of organizational renewal in the international development-cooperation community could be considerably helped through the creation of an Independent International Commission on the Future of Development Finance and International Cooperation. This commission would have a broad mandate to review the operations of a wide range of public, private, and civil-society organizations at the national and international levels and to make suggestions on how to restructure institutional and financial arrangements for development cooperation. It should be made up of prominent members of the international community, developing- and developed-country governments, the private sector, academic institutions, and organizations of civil society and should produce its recommendations after about 2 years of work. Several important precedents have been set for such an initiative, most notably Lester Pearson’s commission, which issued the 1969 report, Partners in Development (Pearson Report 1969). More recent examples are the Ford Foundation project on the United Nations and the Carnegie Corporation Commission on Preventing Deadly Conflict. However, these commissions have focused on narrower sets of issues, and they draw their membership primarily from governments and international agencies. In all probability, private foundations will take the lead in supporting an independent commission to help chart the course for institutional reforms in development finance and international cooperation. Resources Development-financing arrangements will be renewed over the next decade or two as the inadequacies of existing schemes become obvious and unbearable. The changes are likely to be gradual, and governmental aid budgets will continue to play a major role, particularly in some of the thematic clusters. At the same time, there will be a great deal of experimentation with new financing mechanisms, and some innovative schemes will be tried on a pilot scale. The most successful of the institutional innovations in development finance of the last five decades has been the establishment of multilateral development banks. To finance their regular lending programs they issue bonds, borrow from private-capital markets on rather favourable terms, and then lend those resources, with a modest markup, to developing countries at rates below what private markets would charge them. The distinction between “paid-in” and “subscribed” (or “callable”) capital allows multilateral development banks to play a very efficient intermediary role between private-capital markets and developing countries. Shareholders have only to pay in cash a fraction of their share of total subscribed capital but are committed to contributing the full amount in the unlikely event that massive defaults from borrowers threaten these institutions with bankruptcy.17 This allows the multilateral banks to appear extremely conservative by maintaining a maximum of one-to-one gearing ratio between their subscribed capital and their obligations to bondholders, which considerably reduces the cost of borrowing (even though they have a much larger gearing ratio between paid-in capital and outstanding bond obligations). In effect, this constitutes an intergovernmental guarantee scheme that has worked very well for more than five decades, partly because the financial management of multilateral development banks is prudent and the preferred-creditor status of these institutions ensures prompt and preferential payment by their borrowers. Multilateral development banks and other development-finance institutions are now exploring other types of guarantee schemes, particularly to reduce the risks to private investors in developing countries and transitional economies. Some of these involve bond issues, securitizing existing developing-country obligations, and the use of exotic financial instruments. There has also been much discussion of special funds to soften the financial conditions of loans to the poorer countries by reducing interest rates and extending grace and repayment periods. Some of these initiatives will prove successful and will be launched during the next several years, thus expanding the range of options for development finance. In addition, investment banks are joining forces with multilateral institutions to raise investment capital in some specific sectors, particularly for infrastructure. Private firms in the more advanced emerging economies that can attract private-capital flows will also expand their access to the stock markets of industrialized nations, usually with the help of private investment bankers. Some kind of automatic resource-mobilization mechanism will be put in place during the next two or three decades, at least on a pilot basis. The balance between the large potential benefits and the small costs of such schemes is so favourable that the resistance to “international taxes” cannot hold up their implementation indefinitely. A great deal of work has been done on the feasibility of the Tobin Tax on international capital movements, and more recently it has been suggested that a “bit tax” be imposed on international electronic commercial and financial transactions. Some type of “cybertax” on information transfer may actually become necessary as the volume of Internet commerce becomes large enough to threaten national tax bases. However, care must be taken to ensure that tax schemes do not slow down or discourage the growth of the Internet or put access to the information society out of the reach of many individuals. In fact, such tax revenues could “be directed towards improving access to the Internet, educating individuals to become acquainted with the Internet and providing additional needed bandwidth” (Soete and ter Weel 1998, p. 867). Although these taxes are still a long way from becoming feasible options, they have stimulated a great deal of interest and many negative reactions from developing-country governments and firms. Rather than establishing a global tax system, such schemes are likely to be tried first on a limited basis, most likely through voluntary agreements between private firms, government agencies, international institutions, and civil-society organizations, at the regional level (Najman and D’Orville 1995). Along similar lines, it would be interesting to explore the possibility of creating an international “gene tax,” which would be levied on the profits made by international agricultural and pharmaceutical firms through the sale of products with genes from developing-country organisms. Initiatives involving tradable permits are also on the table. The most notable of these is the “Clean Development Mechanism” agreed to at the Kyoto Conference of Parties to the United Nations Convention on Climate Change, which will allow developing countries to sell their unused carbon dioxide emissions rights to countries and firms that exceed their allowances. The first operations under this mechanism were under negotiation in 1998, with Costa Rica planning to sell about $20 million in emission offsets to private investors. Debt swaps and debt forgiveness will also play an increasing role in development finance, especially for the poorer countries. In addition, the Roman Catholic Pope has proposed that poor countries’ debts be forgiven as part of the Year 2000 Jubilee, and several religious organizations are actively lobbying their governments to support such an initiative. There is also discussion of creating regional and national trust funds with donations from private corporations, developed- and developing-country governments, foundations, and wealthy individuals. A few regional trust funds with a focus on specific themes will operate at a modest level during the first two decades of the 21st century. To a certain extent, the experience of “Counterpart Trust Funds,” several of which were established in Latin America during the 1980s and 1990s with resources from bilateral debt swaps, provide small-scale examples of how regional trust funds might operate. Wealthy businesspeople and artists are also becoming involved in international philanthropy to a growing extent. In the age of megamergers that make a few individuals incredibly rich, their example may draw still other wealthy persons to become more engaged in financing international development. Ted Turner’s $1-billion gift to the United Nations, George Soros’ hundreds of millions of dollars in contributions to Eastern European NGOs and academic organizations, Elton John’s donation of more than $100 million (from royalties of his record in Lady Diana’s memory) for the removal of landmines, and the tens of millions of dollars raised by rock musicians in support of causes as varied as famine relief in Africa and AIDS prevention indicate that the role of private giving is likely to grow in the near future. In addition, Microsoft’s Bill Gates, the world’s richest man in 1999, set up two foundations in recent years to give away hundreds of millions of dollars annually. One of these institutions, the William H. Gates Foundation, stands as the United States’ sixth wealthiest foundation, with $5.2 billion in assets (Fortune 1999). Finally, there have also been proposals to establish lotteries to raise funds for international development. One such scheme links airline travel to card games and a lottery to raise funds for sustainable-development initiatives in developing countries. Although private-investment flows and developed-country budget allocations will continue to dominate the scene of development finance and international cooperation, new financial mechanisms involving combinations of private investment, multilateral and bilateral lending, grants from foundations and individuals, and income from trust funds will acquire a growing importance in the early years of the 21st century. Combined with new organizational arrangements and identification of clusters of themes, these new schemes for mobilizing financial resources will radically alter the shape of development finance and international cooperation in the near future. Concluding remarks: an arduous transition A former high-level United Nations official once referred to development assistance in the following terms: An important experience, without precedent in modern history, is coming to an end. It will have lasted much less than was expected. Born in the midst of contradictions, it dissipates in ambiguity. It means renouncing an ambitious but ill-conceived enterprise. Its original noble intentions have been progressively submerged by other considerations which, inevitably, have led to mutual recrimination and disillusion. (Tibor Mende 1972, cited in Jaworski, 1994, p. 28) The official was Tibor Mende, and the year was 1972. He was reflecting on the failure of development assistance to live up to the high expectations it had raised and on the perceived danger of its becoming an instrument of a new form of colonialism. Neither these hopes nor these fears were fully realized, but the quote underscores that development assistance has long been kept under close scrutiny. If the demise of the development-cooperation experiment was prematurely announced in the early 1970s, might not the same be happening in the late 1990s? Probably not. In the first place, the transition from the 1960s to the 1970s did indeed see an “end” of sorts that signaled the full emergence of multilateral channels for development assistance and substantive changes in bilateral aid. Second, the magnitude, scope, and intensity of changes accompanying the emergence of the fractured global order in the late 1980s and the 1990s are much greater than those at any time during the last half century. Although it may end, not with a bang but a whimper (and maybe lots of whining), there is little doubt that the development-cooperation experiment as we have known it during the last five decades is coming to an end. And yet, as motivations endure for private firms to invest in the developing world, for foundations, private philanthropy, and religious groups to reach beyond their home bases, and for rich countries to help the poor nations, development cooperation will continue its arduous process of transformation and evolve in directions corresponding more closely to the spirit of our times. Its main objective will be to bridge the multiple fractures defining the emerging global order. Although there are critics who see development assistance as widening, rather than bridging, these fractures, most of those concerned with improving the situation of the poor agree that development finance and international cooperation can play a significant and important role in the future. Therefore, it is not surprising that many proposals have already been put forward during the last few years to renew development cooperation.18 Grant-making organizations, particularly private foundations, have a special role to play in the renewal of international development cooperation. In contrast to international financial institutions, which have to be conservative to preserve their financial standing, and bilateral cooperation agencies, which are instruments of foreign policy, private foundations can take greater risks, engage more readily in experimental programs, choose their areas of interest more freely, support initiatives for longer periods without having to show immediate results, and operate flexibly, without overbearing administrative or political constraints. They are also free from the private-sector need to show direct financial returns in the short term. Private foundations and development-cooperation agencies with considerable autonomy, such as IDRC, have demonstrated throughout their history the capacity for leadership in areas considered too risky, politically charged, or complex for the larger financial and technical-cooperation institutions, and, in doing so, they have been a catalyst for major global efforts (for example, the Green Revolution, contraceptive research, tropical diseases, science and technology policy, conflict prevention). The transition to the post-Baconian age is a momentous period of human history in which reality is being reconfigured for all of us. In diverse ways and at diverse speeds, most societies are beginning to recognize that humanity has embarked on an uncertain transition toward something that cannot be visualized clearly as yet. Advances in knowledge during the last four centuries, particularly during the last five decades, have created remarkable opportunities to improve standards of living in ways undreamt of by our ancestors. But we need to devise new ways to take advantage of these opportunities for the benefit of all humanity. At this special time in history, when we are embarking on the transition to a post-Baconian age, conceptual advances must proceed hand in hand with institutional experimentation. This suggests the need for carefully designed large-scale interventions, or “institutional experiments,” involving public, private, civil-society, academic, and international organizations to address the problems emerging as a result of the fractured global order. A concerted international effort is needed to explore the meaning of development as Bacon’s program becomes exhausted and as we enter the post-Baconian age. Although there are prominent analysts who view cultural conflicts as inevitable and possibly violent, institutionalized dialogue between cultures and civilizations can help to peacefully redefine what we mean by development and progress and devise ways of achieving them. Such dialogue is also essential to determining the direction of the initial steps to the design of a new program to guide human efforts in the decades and maybe centuries to come. Finally, it is clear that these new times require a new style of leadership, much more flexible and capable of adaptation than the one we had during most of Hobsbawm’s Short Twentieth Century, especially during the Cold War. To cope with the uncertainties, unsettling features, and anxieties of the transition to the post-Baconian age, as well as to take advantage of the extraordinary opportunities it offers, we need leaders who empower others and guide with a light touch, who are prepared to restrain their ambition and advance collectively by sharing power, and who are men and women of vision and practical imagination. They will be like the people the late, eminent social scientist, Eric Trist, described so well in calling for “resourceful, resilient people who can tolerate a lot of surprise and ambiguity emotionally while continuing to work on complex issues intellectually” (OCQWL 1982).

14 These concepts were advanced a long time ago by several pioneers in management science, many of whom were associated with the “Philadelphia School of Planning” that emerged at the Wharton School of the University of Pennsylvania in the late 1960s and the 1970s. See, among others, Emery and Trist (1965), Vickers (1965), Perlmutter (1965), Beer (1966, 1972), Friend and Jessop (1969), Ackoff (1970, 1981), Churchman (1971, 1979), Ozbekhan (1971), and Schon (1971). For more recent restatements of their ideas see, for example, Senge (1990), Schwartz (1991), Ackoff (1994), and Trist et al. (1997). Return 15 At an international conference organized by the Department of Economics of the University of Pennsylvania in 1986, a senior commercial bank manager argued that developing-country governments had behaved “like children in a candy store” and borrowed unwisely during the 1970s and 1980s. My reply was that many commercial bank officials had behaved “like drug pushers in a school yard.” Return 16 The table has been adapted from reports on the prospects for ODA in the 1990s prepared by Susan Ulbaek and Izumi Ohno at the Strategic Planning Division of the World Bank in the late 1980s. See, in particular, Izumi Ohno’s (1990) report Donor’s Aid Motives: Implications for Multilateral Concessional Aid. Return 17 Paid-in capital represented 20% of the subscribed capital when the IBRD, the regular lending arm of the World Bank, was established in the 1940s. Subsequent capital increases, in which the paid-in component was lowered, brought the ratio of paid-in to subscribed capital to about 6.5% in the early 1990s. In the early 1950s, IBRD management concentrated its efforts on obtaining a triple-A rating for its bonds, thereby ensuring good access and favourable borrowing terms to tap international capital markets. This helped to legitimize the model of the multilateral development bank for development finance and paved the way for the creation of the regional development banks (Kapur and Webb 1994). Return 18 Among the proposals advanced to reform development cooperation during the 1990s are those of Feinberg and Boylan (1991), Carnegie Commission on Science, Technology and Government (CCSTG 1992), Jaworski (1994), Serageldin (1993), Griffin and McKinley (1994), Hewitt (1994), Futures (1995), UNDP (1995a), Valderrama (1995), Van de Walle and Johnston (1996), Dollar and Pritchett (1998), and Overseas Economic Cooperation Fund of Japan and the World Bank (OECF and World Bank 1998). Return

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