Thu, Feb 25, 2010 page9

• New development donors, new hope: the globalization of aid

  Emerging economies like Russia are channeling billions of dollars to developing countries and deserve to be a part of the decision-making process

  • By Alexei Kudrin and Robert Zoellick
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  In 2006, when Russia’s government hosted a G8 meeting on cooperation with emerging development donors, it planted a seed that had great growth potential. Today, new development partners are increasingly prominent in the global architecture, providing steadily rising aid contributions of different types.

  That is why this week’s Moscow meeting of these new development partners points toward the future. In Moscow, development organizations and recipient countries, both long-standing and newer partners — including Russia, China, South Korea, Turkey and Poland — will meet to share best practices, consider innovations in development and find ways of using aid more effectively to respond to shared global challenges.

  The rise of new development partners — emerging markets that are channeling billions of dollars to developing countries — opens possibilities for fresh ideas and resources to help overcome poverty, sustain inclusive economic growth (including through a dynamic private sector) and address global issues such as food security and climate change.

  But there is a risk that developing countries, already burdened by dealing with numerous donors, will face an even greater fragmentation of aid efforts. New donors can lessen the load on the world’s poorest and increase effectiveness by working together through multilateral channels. In Moscow this week, both newer and traditional aid donors, as well as multilateral organizations — such as the World Bank Group and the Organization for Economic Cooperation and Development (OECD) — will discuss improving transparency of aid, coordination of assistance and enhancing effectiveness by targeting results.

  The conference will advance the “Moscow Process,” an expression of Russia’s desire to play an active role in forging new partnerships to shape the evolving global aid architecture. Russia recognizes that newer donors have experiences, ideas and resources that can help all countries climb up the ladder of opportunity. The World Bank wants to learn from these donors, catalyze deeper cooperation and build a stronger and deeper multilateral system.

  The Russia Education Aid for Development (READ) program offers a good example of this fresh approach. Its goal — to improve the measurement of education quality and learning outcomes — is pertinent to developed and developing countries alike. Improved learning leads to better jobs, greater productivity and higher incomes in every society.

  In partnership with the World Bank, the OECD and several recipient countries, the Russian-inspired effort will support the development of educational institutions and the ability to measure progress in learning. Stories of cooperation such as READ illustrate how old notions of assistance need to be re-examined and challenged.

  Effective development assistance is not a one-way street from donor to recipient or from North to South. It requires local ownership. We need to apply global experience, yet with customization for local circumstances.

  For the World Bank, the Moscow conference marks a welcome step in building a more globalized aid architecture that recognizes a variety of contributions from aid donors and organizations, including through private-sector development. Since the full fury of the economic crisis hit in mid-2008, the World Bank has delivered a record US$88 billion of assistance for infrastructure, targeted safety nets and private-sector investment to cushion the most vulnerable and to spur job creation. The bank created special facilities to assist with food security, rapid crisis response, trade finance, micro-finance, public-private infrastructure, bank capitalization and restructuring business loans.

  This year, it will set another record for investment in developing countries. To sustain its vital role, it is working with its shareholders to strengthen its capital base. A well-capitalized World Bank leverages all its shareholders’ investments by pooling them and then raising five times the capital by borrowing in financial markets. It then uses these funds in cooperation with aid partners, old and new, public and private.

  We feel an especially strong sense of urgency as we approach the deadline of 2015 for achieving the Millennium Development Goals, which aim to reduce extreme poverty, hunger and child mortality. The next few years will be critical. The G20’s call for ambitious replenishment of the International Development Association, the World Bank’s fund for the poorest countries, is vital if we are to make headway.

  At the dawn of today’s multilateral system in 1944, 44 countries gathered in the US at Bretton Woods, New Hampshire, to design the World Bank, the IMF and a system for international trade. At that time, power was concentrated in a small number of states. The great waves of decolonization were just stirring; the few developing countries were seen as marginal players in the global system — not as central actors or agents of history. Before long, allies in the war against fascism split apart in a Cold War.

  That world is long gone. The new realities of the global political economy demand a different system. Developing countries and newer market economies are part of the solution — so they must also be part of the conversation and decision-making process. We hope that this week’s discussion in Moscow prompts a broader international dialogue with new development partners. We urge other donors and international organizations to join us in contributing to the “Moscow Process” as we modernize multilateralism.

  Alexei Kudrin is deputy prime minister and minister of finance of Russia; Robert Zoellick is president of the World Bank.

  COPYRIGHT: PROJECT SYNDICATE
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