Philippa Brant is a Research Associate at the Lowy Institute. Danielle Romanes is a research assistant in the Lowy Institute's Myer Foundation Melanesia Program.
Since the beginning of this century the aid provided by the developing BRICS countries (Brazil, Russia, India, China, South Africa) is estimated to have grown ten times faster than that of the G7. OECD aid budgets are being slashed. With relatively strong economic growth still forecast for the BRICS, and much less impressive projections for the developed world, we can expect this shift in market share to continue. It is likely that the norms and institutional architecture of aid will shift along with it.
The Lowy Institute co-hosted the Future of International Development in Asia-Pacific conference (#FIDAP 2013) in Melbourne on 10 May, where we pondered the uncertain future of aid after 2015, when the Millennium Development Goals are due to expire. The conference brought together development experts from Asia, the Pacific, Australia, Europe, and the UK, to discuss the future of development and aid in the Asia Pacific.
The 'increasing muscularity' of emerging economy donors was a dominant theme. Despite their own domestic poverty problems these countries are providing an ever-growing share of international development assistance and financing. They are doing so largely outside the established international aid architecture, which is the cause of some consternation to traditional donors.
The established donors have previously sought to deal with the rise of new players by attempting to assimilate them into the existing architecture, with its attendant norms of transparency, good governance, untied aid and debt sustainability. Australia, for example, has called for more transparency in China's aid and has tried unsuccessfully to persuade China to sign on to the Cairns Compact for Strengthening Development Cooperation in the Pacific.
At the global level, the OECD has attempted to convince emerging donors to align their aid with Development Assistance Committee (DAC) guidelines. There was a somewhat resigned acceptance at this conference that the OECD had lost its battle and the international development landscape has now moved on.
Most of the emerging economy donors have resisted assimilation for predictable and understandable reasons. Established donors tend to work under a transparency norm, but Dr Rani Mullen from the Centre for Policy Research in Delhi noted that India is unlikely to domestically publicise the fact it feeds nearly two million Afghani children on a daily basis when 43% of its under-5 year olds are malnourished.
Similarly, the Chinese government faces awkward questions from citizens – particularly on the internet – about the scale of its international generosity given the ongoing high levels of domestic poverty, as Professor Sun Tongquan from the Chinese Academy of Social Sciences explained. Domestic political pressures constitute a key impediment to greater transparency.
As for norms of good governance and debt sustainability, participants noted that to conform to OECD criteria, the BRICS would forego their key selling point, which is that their provision of funds is largely demand driven and not conditioned by policy prescriptions. Even the term aid is eschewed, as emerging economy donors claim to reject the paternalism associated with charity.
Unlike traditional DAC aid, the BRICS assistance is strongly premised on 'mutual benefit'. Hence the reluctance to commit to the untying of aid, which would mean giving up a key tool for export promotion. For the BRICS, development assistance is explicitly designed to stimulate overseas demand for national industries and facilitate market entry for national companies. The mechanisms and practices of BRICS development assistance are designed to promote economic growth and development in other countries and for themselves.
On top of these practical motivations to stay away from full DAC membership are geopolitical reasons. As Dr Rani Mullen argued in her presentation, India as an emerging power wants to be a rule maker, not a rule taker. In particular, it does not want to participate in the established order when it is excluded from key seats of power, and is thus more enthusiastic about leading parallel institutions (such as a BRICS development bank) than conforming to the existing ones (such as the OECD DAC).
Emerging economy donors are thus providing complex challenges to the international development architecture. In this 'age of choice', as this report from the Overseas Development Institute has labelled the new aid landscape, it is developing countries themselves that will increasingly hold the power to determine the usefulness and desirability of existing international aid frameworks.
A longer summary and reflection on the conference proceedings by the conference organisers can be found here.