CONTENTS

Foreword
Hideo Sato, Senior Adviser to the Rector, The United Nations University
Tsukasa Kawada, Director, United Nations Administrative Division, Ministry of Foreign Affairs, Japan

Global Partnership Towards the 21st Century: New Development Strategy and the Role of International Organizations
Hisashi Owada, Permanent Representative of Japan to the United Nations

Aid Effectiveness and Development Partnership
Joseph Stiglitz, Senior Vice President, The World Bank

The Role of the United Nations in Development
Patrizio Civili, Assistant Secretary-General for Policy Coordination and Inter-Agency Affairs, Department of Economic and Social Affairs, United Nations

Aid Coordination at the Field Level: Perspective of an Aid Agency
Carol Bellamy, Executive Director, UNICEF

Summary of Discussion
Hideo Sato and Tsukasa Kawada, with Julius Court, Programme Coordinator, Office of the Rector, The United Nations University

Annex

Foreword

On 22 June 1998, the Ministry of Foreign Affairs of Japan and the United Nations University (UNU) jointly organized a very important event in the UNU International Conference Hall: an "Open Symposium on Development Cooperation." This symposium was unique for two reasons. First, as the attached programme with the list of participants (Annex) indicates, it involved top-level officials of all the major UN and related organizations involved in development cooperation. Second, it involved high-level representatives of both donor and recipient countries.

The purpose of the symposium was to examine the various efforts being made by the international community in the area of development cooperation and to review how aid is actually coordinated in the field by donors and recipients, in an effort to maximize effectiveness and efficiency while minimizing duplication.

The symposium was opened by Prof. Hans van Ginkel, Rector of the United Nations University, and Ambassador Hideaki Ueda, Director-General of the Multilateral Cooperation Department of the Ministry of Foreign Affairs of Japan (who read the opening remarks of then-Foreign Minister Keizo Obuchi). This was followed by an introductory presentation about the symposium by Ambassador Hisashi Owada, Permanent Representative of Japan to the United Nations.

The symposium consisted of two sessions. Session 1 focused on "The Role of the United Nations in Development." The presenters for this session were Prof. Joseph E. Stiglitz, Senior Vice President of the World Bank, who spoke on "Aid Effectiveness and Development Partnership," and Mr. Patrizio Civili, Assistant Secretary-General of the United Nations, who addressed the session's central theme of "The Role of the United Nations in Development." In session 2, "Aid Coordination at the Field Level," Ms. Carol Bellamy, Executive Director of UNICEF, made a presentation on the topic from the perspective of an aid agency while Dr. F. D. Tay, National Development Planning Commission, Ghaha, addressed the same topic from the perspective of an aid recipient country.

This UNU Public Lecture Series publication reproduces the presentations made by Ambassador Owada, Prof. Stiglitz, Mr. Civili and Ms. Bellamy. Also included is a summary of the substantive discussion during the symposium. We hope this small publication will help to further stimulate discussion and debate on the vitally important topic of development cooperation in broad circles of academic, business and policy communities around the world.

Tokyo, June 1999

Hideo Sato
Senior Adviser to the Rector
The United Nations University

Global Partnership Towards the 21st Century:
New Development Strategy and the Role of International Organizations

Hisashi Owada
Permanent Representative of Japan to the United Nations

Ambassador Ueda, Director-General of the Multilateral Cooperation Department, Ministry of Foreign Affairs; Professor van Ginkel, Rector of the UN University; Ambassadors; representatives of international organizations; ladies and gentlemen -

Introduction

Today's "Open Symposium" has been convened to introduce the efforts that the international community, and especially the United Nations, has been making in the area of development - while also clarifying the contributions made by Japan - and to discuss some of the important issues that have arisen in the course of those efforts.

The international community is now facing major challenges in a world in which the post-World War II order - the Cold War - is no longer, and the twenty-first century lies just around the corner. It is a global challenge: How should the international community cope with the growing number of political and economic issues, and with the social disparities among sovereign states, in a world in which globalization is advancing thanks to rapid technological innovation and increasing interdependence? Some developing countries are taking advantage of the trend towards globalization, and are accelerating their rate of growth. Others risk being left behind. However, even those developing countries that are successfully achieving rapid economic growth within a short period of time, such as those in Asia, are still vulnerable to the massive power of private capital, which circulates with great speed in today's globalized markets.

If we fail to respond successfully to these developments, the disparities between rich and poor in the international community will only widen, and the world will become increasingly unstable in the coming century. On the other hand, if developing countries achieve a successful economic take-off and the world economy becomes fully integrated, the world economy, including that of Japan, will prosper.

It goes without saying that the stability of the international community cannot be achieved without economic prosperity and stability. For example, the regional conflicts in Africa that have frequently been on the agenda of the Security Council in recent years have their roots in development; it is not possible to discuss ways of preventing those conflicts without addressing economic and social development issues. The goal of integrating developing economies into the world economy, therefore, needs to be on the agenda of the international community, and should be considered from the perspective of the development of the world economy and stabilization of the world order.

New Development Strategy

Significance of the New Development Strategy

Although development issues are quite urgent and important in today's world with the growing trend towards economic integration, unfortunately they have not been at the top of the agenda of the international community for a long time - not since the end of the Second World War. During the long years of the Cold War, the issue of development was considered as a confrontation, one over which the North and the South confronted each other within the context of the competing political interests of East and West. Its true significance was often distorted in the atmosphere of ideological confrontation during the Cold War. The issue of development was held hostage to the East-West confrontation in the form of North-South confrontation, and it was difficult to address simply by means of cooperative and harmonious dialogue between the two sides.

However, the new environment that has materialized in the post-Cold War period has brought about a structural adjustment that enables the international community to work purely on development issues. At the same time, with this structural change, we are beginning to face certain problems in the development field that remained unsolved during the Cold War. Thus, for us as members of the international community, the issue of development presents at once a challenge and an opportunity to establish a social order based on a fully integrated international community. To successfully cope with the issue, we need a New Development Strategy, one behind which all the efforts of the international community should be united.

Initiatives of the Japanese Government on behalf of New Development Strategy

Japan has been among the first countries to take a number of initiatives to promote this New Development Strategy, which is an effort to establish a common framework for development in response to the structural changes that have taken place in this field. In 1993, Japan stressed at the Tokyo Summit the need for a new approach towards development in the post-Cold War era, and made an effort to have its idea reflected in the G7 declaration. Also, in 1993, Japan convened the Tokyo International Conference on African Development (TICAD I) under the joint auspices of the United Nations and Global Coalition for Africa (GCA) as a practical step toward the implementation of a new strategy in the field of development in Africa.

As a result, the report, entitled "Shaping the 21st Century: The Contribution of Development Cooperation," was adopted by OECD Development Assistance Committee (OECD/DAC) in May 1996, representing the consensus among the donor community on the framework for a common development strategy. As part of the process of implementing that strategy, in October 1998 Japan will host the second Tokyo International Conference on African Development (TICAD II).

Basic concept of the strategy

What do we mean when we say "New Development Strategy"? I would like to offer a brief explanation of our conception of the New Development Strategy, as it may be unfamiliar to some of you. The New Development Strategy is based on the understanding that the international community looks on development as an issue common to all countries, members of the donor community and recipient community alike. At its heart are the two principal concepts of "ownership" and "partnership."

First of all, it is important that developing countries themselves treat each development issue on their own. In other words, they should "own" the process of development so that the projects they undertake as part of that process will be successful. Ownership refers to the concept the Government of Japan has been promoting of self-help efforts by developing countries in the area of assistance activities.

Second, it is obvious that development based on ownership is not sufficient, however important it may be. A partnership is needed through which the actors engaged in development assistance - such as donor countries, international organizations, the private sector, and non-governmental organizations (NGOs) - coordinate their efforts and assist developing countries. Partnership, in other words, sustains ownership. Certainly, development can never take place if it continues to be viewed as the product of confrontation, in which one party bargains and takes, and the other makes concessions.

Content of the strategy

Development targets: One of the most important elements in the New Development Strategy is a set of output-oriented targets for development efforts. That is, 1) focus areas must be established for the implementation of a comprehensive strategy to embody the philosophy of development, 2) concrete development targets should be established for these focus areas, and 3) the development strategy should be elaborated by studying the ways in which these targets can be met. Development targets should therefore be indivisibly linked to the actual achievement of development.

Contrary to the hitherto-accepted quantitative approach in which, for example, a country was expected to allocate a certain percentage of its GNP for the purpose of development assistance, it is important that all development partners achieve output-oriented common development targets by adopting a qualitative approach. It is accordingly important to create a set of numerical targets for the outputs in economic and social development activities, such as those aimed at reducing the part of a population that is living in poverty, increasing school attendance, reducing infant mortality, or lowering the mortality rate for pregnant women. With numerical targets, it becomes possible to make the results of efforts visible, and to ensure that all players in the development process share a common vision and that there are effective incentives for both donors and recipients to make active efforts.

To date, such targets have focused on inputs, such as funding targets; for example, allocating 0.7 per cent of a nation's GDP to official development assistance (ODA). As a result, outputs, which have to do with the effectiveness of projects, have tended to be overlooked. The ownership of the development process by developing countries, as well as the partnership of all the actors of development, can be promoted by establishing concrete development targets and regularly monitoring the progress that is made towards them. This will also clarify the effects of ODA for taxpayers in donor countries, who thereby will gain a better understanding of the significance of their participation in development. One output-oriented target - reducing the population living in poverty by half by the year 2015 - was adopted at several summits sponsored by the United Nations. Along with other such development targets, this was incorporated into the OECD/DAC report that I mentioned earlier. What is crucial is that concrete targets be integrated systematically and comprehensively into the development strategy. We therefore regard it quite important to establish and review indicators that monitor progress toward achieving these targets, in order to make such efforts effective. Accordingly OECD, with the assistance of the United Nations and the World Bank, is currently following up the New Development Strategy by creating a set of core development indicators.

Comprehensive approach and individual approach: The New Development Strategy employs two approaches - one that is comprehensive and another that is individual - to achieve development targets. It goes without saying that ODA plays a crucial role in development efforts. However, it is not appropriate to ascribe every success in this field to ODA alone. Financial flows through private investment and trade exceed total ODA by far, as long as it is viewed from the quantitative aspect as the source of development.

At the same time, ODA continues to play an important role in those instances in which profit-motivated private investment and trade may have a negative effect. It is indispensable for the advancement of development that all financial inflows into developing countries, including ODA, be considered as a whole, and that they be utilized in a systematic manner. It is also the case that development problems cannot be resolved only with financial inflows. Socio-economic infrastructure, too, is essential. And the creation of socio-economic infrastructure should cover both hardware and software - in this case, hardware being telecommunications and transportation systems, and software being human capacity building through education and public health, and institution building. Without software, clearly the hardware component would be of little value, as is obvious from the development process in South-East Asia where human development efforts (for example, through improvements in education and public hygiene), institution building, and promotion of good governance have played a crucial role. A country's development strategy should encompass a wide range of elements, integrating them as mutually reinforcing components of an appropriate policy mix.

This is what we refer to as the comprehensive approach. At the same time, this mix must be fashioned in response to the specific conditions and needs of each country. Thus, a comprehensive approach should be combined with an individual approach.

Model countries: It is not sufficient merely to establish the New Development Strategy as a theory. In order to ensure that the ideas underlying the strategy are reflected in its bilateral development assistance, Japan has worked with some developing countries that support those ideas before proceeding to the implementation stage. In seven countries - namely, Cambodia, Ethiopia, Ghana, Peru, Tanzania, Zimbabwe, and Senegal - Japan initiated donor meetings to discuss the basic direction of assistance, and in actually implementing such assistance has coordinated its efforts with other donors In October, Japan will host TICAD II in an attempt to realize the New Development Strategy in Africa. That conference will clearly identify the problems that stand in the way of the development of Africa and formulate a course of action for the international community to take in addressing them. Thus, TICAD II is an effort to realize the ideas underlying the New Development Strategy in the context of development efforts in Africa.

Aid coordination

Role of the United Nations system in development assistance

There remain various issues relating to the implementation of the New Development Strategy that should be discussed. However, at this symposium, the focus will be on the role of international organizations as key players in providing development assistance and on the issue of aid coordination among donors - international organizations among them. Although much attention is paid to the activities of the United Nations relating to international security, the UN system as a whole is also engaged in a wide range of development activities. As I pointed out earlier, from the perspective of conflict prevention, peace and development are closely related. As the only universal international organization, the UN treats the issues of peace and development confronted by the international community as one. Because of their expertise and neutrality, the international organizations active in this field, including the UN, play an important role in complementing bilateral assistance; thus, the development agencies of the UN system are key partners in the implementation of the New Development Strategy.

Hence, facilitating coordination among agencies working in areas related to development contributes to achieving established development targets efficiently. In this context, coordination between the UN and Bretton Woods Institutions, such as the World Bank and the IMF, which also play a large role in development, becomes extremely important. In order to make such coordination possible at the policy level, it is indispensable that these institutions and bilateral players alike agree on a common development strategy and establish development programmes with a view towards dividing the work among themselves so as to pursue their common policy targets.

Aid coordination at the field level

It is essential that any discussion of aid coordination be based on the reality of assistance activities at the field level in developing countries. Although this may sound obvious, coordination at the field level is by no means a simple matter, even if there is cooperation at headquarters or at the policy level.

What we should strive for is coordination based on ownership by developing countries and a global partnership among actors in the development process. Aid is coordinated well and effectively only when strong initiatives are taken by developing countries to formulate and implement development policies, and when these initiatives are then met by the initiatives of the providers of development assistance in support of those policies.

The structure and content of the symposium

It is with these goals in mind that today's Open Symposium on Development Cooperation has been organized. Before going on to the symposium itself, however, I would like to say a few words about its structure and content.

Session 1

The theme of Session 1 will be "The Role of the UN in Development." Mr. Joseph E. Stiglitz, Senior Vice President and formerly chief economist of the World Bank, who has extensive experience with policy relating to development and aid, will make a presentation on "Aid Effectiveness and Development Partnership." Mr. Patrizio Civili, Assistant Secretary-General of the United Nations, who has been involved in the coordination of development activities the at UN Department of Economic and Social Affairs, will make a presentation on "The Role of the United Nations in Development." Mr. Rafeeuddin Ahmed, Associate Administrator of the UN Development Programme, and Professor Ryokichi Hirono, Professor of Economics at Seikei University, will then comment on the two presentations.

The initiatives taken by the UN and other bodies to enhance the coordination of assistance will be reviewed once we have looked at the importance of effective implementation of assistance and how the partnership that will carry out such implementation should operate. Under the initiative of the Secretary-General, a UN Development Group has been established for the coordination of various UN entities as a part of the UN reform exercise. Progress has also been made in the dialogues the UN and the Bretton Woods Institutions have undertaken to the same end. Based on these advances in the UN's coordination efforts, we would like to discuss the importance of the role of the UN in development assistance and the significance of aid coordination.

Session 2

In Session 2, we shall enter into a more concrete discussion, taking up the subject of "Aid Coordination at the Field Level." Dr. F. D. Tay, National Development Planning Commission, Ghana, will make a presentation on "Aid Coordination at the Field Level: Perspective of a Country Where the New Development Strategy Is Being Implemented." Ms. Carol Bellamy, Executive Director of UNICEF, will make a presentation on "Aid Coordination at the Field Level: Perspective of an Aid Agency." Mr. Carlos Alfredo Magarinos, Director-General of UNIDO, and Mr. Yuji Mori, NGO Regional Focal Point of PARinAC, North Asia and the Pacific, will then offer comments.

The session is expected to review how aid is actually coordinated in the field by donors and recipients, and what efforts are made to avoid duplication or neglect of certain issues when many donors are involved. Based on this analysis, it would be useful to determine how a mechanism to realize the New Development Strategy might be established, and then look into the future.

As for Ghana, which has been selected as our case study, the Government itself is taking strong initiatives to promote its own development through the establishment of its Vision 2020 project. Ghana has been selected as a UNDAF (UN Development Assistance Framework) pilot country, a UN experiment in the field-level coordination; aid coordination among the UN agencies is consequently being implemented there. Thus, using Ghana as an example, we would like to have a broad discussion on the current situation of development assistance and the tasks it will be expected to perform in the future, as well as on the role of governments, international organizations and civil society, including NGOs.

Your cooperation will be most appreciated.

Aid Effectiveness and Development Partnership

Joseph Stiglitz
Senior Vice President, The World Bank

High-level Open Symposium on Development Cooperation
UNU Headquarters, Tokyo, 22 June 1998

It is good to be here, to address what I think is a set of very important issues. I want to thank the Ministry of Foreign Affairs of Japan and the UN University for hosting this meeting, and also for demonstrating the partnership between a whole variety of institutions - the World Bank, the UN University, and the various UN institutions - to address these important questions about international cooperation.

The specific question I would like to explore today is how we can maximize the benefits of development assistance. I believe that aid can play a major - indeed, a vital - role in facilitating development. But if aid is to fulfill its potential, we have to re-think what we do and how we do it. Aid has to be accompanied by supporting policies, not just in recipient countries but also in the donor countries. And in order to leverage aid's impact, donors and recipients must establish partnerships with each other and with other development actors who share their vision.

In my talk today, I want to set my discussion of these broader issues in the context of the myriad changes of the world that have occurred in the last 50 years, and the myriad changes and ideas that have influenced our thinking. And I especially want to talk a bit about the ongoing research that we're doing at the World Bank, and that others are engaged in, directed at making development assistance more effective in promoting growth and alleviating poverty. In my view, this research is vitally important and has far-reaching implications for the way development agencies do business.

Four major changes

Now, there are four changes in the world of ideas that I think have profound implications for how we ought to be thinking about aid. The first is the observation that development is "possible" but not inevitable. The fact is that more than 50 years ago, when people first began to think about development - or even 30 years ago, when I first began studying development - it wasn't clear that development was "possible." There were a few countries that had closed the gap a little bit, but there hadn't been any real large number of successes.

Over the past 50 years there have been a large number of successes, and I think that in itself is an important observation. But development is not "inevitable," because there are only a few successful cases. There remain many countries, many regions, that have not fully participated in these successes. And, so, the first observation is that we have to try to learn from the successes and from the failures, to try to make sure that development will occur in more of the countries of the world.

The second observation, which has already been referred to, is the fact that there are changes in the perception of "why" we give aid. The end of the Cold War has put aid on a new footing: it presents new problems, but it also gives us new opportunities. It is perhaps not surprising that given the end of the Cold War, net official development assistance from the major donors has fallen to just 0.25 per cent of GDP, the lowest level since foreign aid was institutionalized with the Marshal Plan more than 50 years ago.

At the same time that our aid budgets have diminished, our aspirations for aid have expanded. Fifty years ago, development focused on only one objective: increasing GDP. Economists and policymakers viewed capital accumulation as the only requirement for growth. Aid contributed to capital accumulation by facilitating the flow of capital from more developed to less developed countries. Official capital flows, whether in the form of loans or grants from developed countries or multilateral organizations to developing countries, were designed to overcome sometimes significant capital market imperfections, capital market barriers, that impeded flows. And according to these limited objectives, aid worked; it raised incomes in the less-developed countries and even served to raise worldwide income.

Today, we focus on a broader range of objectives. We seek increases of living standards, including improved health and education, not just increases in measured GDP. We seek sustainable development, which includes preserving our natural resources and maintaining a healthy environment. We seek equitable development which ensures that all groups in society enjoy the fruits of development, not just the few at the top. And we seek democratic development in which citizens participate in a variety of ways in making the decisions that affect their lives.

Today, we know that there is more to success in development than just accumulation of capital. Many countries have had high, sometimes forced, savings rates yet have not managed to achieve comparable increases in per capita income.

Capital has to be put to good use. Investment in human capital (especially in a well-trained labor force), robust financial markets, and a good policy environment are among the most important conditions for economic growth. Research has identified many of the ingredients of a good policy environment: stable macroeconomic policies, transparency, accountability, good governance, and outward-oriented competitive markets. The countries that have fostered this kind of environment, in which the government and private sector complement each other, have succeeded in reducing the gap between themselves and the developed countries. I will return to these things later, but while more than capital accumulation is important, it is still the case that capital accumulation remains an important part of development.

And this brings me to the third major change. This capital accumulation is increasingly funded by private flows originating in developed countries. Over the past five years, flows of private capital have overtaken and dwarfed official flows. In 1996, private capital flows exceeded US$240 billion, and they are now nearly six times greater than they were at the start of the decade. And these private capital flows are themselves dwarfed by the savings done within the developing world itself. For example, low income countries now save 30 per cent of GDP, up from only 22 per cent in 1980.

Although most capital flows originate from private sources, the majority of developing economies rely more on official flows than on private flows. The reason for this apparent paradox is that just a few countries receive the vast majority of private capital; in 1997, nearly three-quarters of all private capital flows went to 10 mostly middle-income countries. Many low-income countries continued to rely almost exclusively on official flows. Also, not all developing countries are able to generate the high rates of domestic savings.

Moreover, the experience of the last year has demonstrated the volatility of private capital flows and the impact this has on economic growth. Because private capital flows and domestic savings have uneven, lumpy coverage (because they are volatile), exclusive reliance on these new sources of capital would not be sufficient for many countries. Official aid must continue to play an important role.

The fourth major change that has occurred is that there have been major changes in our understanding of the development process itself. I have already alluded to one of these, the fact that not only is capital accumulation important, but "knowledge" as well. Closing the knowledge gap between the developed and the less-developed countries is one of the central lessons, I think, that comes out of the "East Asian Miracle." The importance of knowledge has been stressed in a variety of ways at the World Bank. For instance, the World Bank is increasingly referring to itself as a "knowledge bank," a point I will come to again later. The "World Development Report" for this year is going to focus on the issue of knowledge for development.

Just as we have become aware of the importance of the free flow of goods for successful development, so too have we become aware of the importance of the free flow of knowledge. In some ways, knowledge is more important than money, as it can help to develop better institutions and spur more creative ideas. The transfer of knowledge has the potential to help everyone without making anyone worse off. As Thomas Jefferson pointed out almost two centuries ago: "Knowledge is like a candle. Even as it lights a new candle, the strength of the original flame is not diminished." Or, in the language of economists, knowledge is an international public good; one person's use of knowledge does not diminish other people's ability to use that same knowledge.

How much knowledge developing countries and donor agencies gain is an important criterion for judging the success of aid projects. Often, projects are deemed to have failed if they do not lead to better services; but this definition of success may be too narrow. Projects should be judged not only on whether, for example, a road is built, but also on whether the local participants learned about better road design; whether policies were implemented that guarantee maintenance of future roads; and whether the project helps participants manage their transportation sector more effectively. Judged by these standards, projects once considered failures can be reevaluated based on broader indicators of success. Knowledge is just one of the many ways in which our understanding of the development process has changed. We also, as I mentioned before, have focused on the importance of policies, of social development, and a changed perception of the role of the state. The "World Development Report" that the World Bank issued last year focused particularly on that issue.

Now, let me summarize what I have said so far. The changes in events and ideas over the past 20 to 30 years necessitate rethinking of our aid strategy as we approach the new millennium. First, development is possible, but not inevitable. Second, the end of the Cold War has necessitated a redefinition of aid; it has reduced support, but led to new opportunities that are reflected into the broader goals and require new means and instruments. Third, private capital flows also necessitate a redefinition of aid strategy. And fourth, the understanding of development has changed in important ways. It is more than capital flows; it includes knowledge, renewed emphasis on policy in the private sector and social development, and a more balanced view of the role of the state.

Judging the effectiveness of aid

Let me now turn, more narrowly, to focus on aid itself. Implicit in my talk so far is the premise that aid can actually work. Some, however, have questioned this premise, arguing that aid is not only ineffective but often counterproductive.

Let me be frank: Some aid has been counterproductive. For instance, in some cases, food aid has been motivated by the desire to get rid of mounting agricultural surpluses, the result of misguided and distortionary agricultural policies in many developed countries. The consequence, in many cases, has been a decrease in agricultural prices in the developing world, which has contributed to poverty by robbing farmers of their livelihood. At times, aid has supported projects that have not been sensitive to environmental effects. Also, aid may have in some cases created a culture of dependency, and discouraged countries from helping themselves.

But anecdotes, either of success or failure, do not paint a complete picture of the role that aid has played and can play. For that, we need to look systematically at the data. This has been the objective of our research programme on aid effectiveness.

Rather than starting with the question "Does aid work?" we instead began with the question "When does aid work?" This new focus on the circumstances under which aid works also forces us to ask different policy questions. Rather than arguing for more aid or less aid, this line of research implies that we should promote more-effective aid and scale back on less-effective aid.

How do we determine "when" aid is most effective? In the first instance, we need to consider the link between aid growth and the policy environments in recipient countries. Research has shown that there does not seem to be a relationship between aid and growth, when looking in a very broad way. One calculation, for instance, looked at the relationship between aid as a fraction of GDP and growth over the 1970 to 1993 period. The trend line indicates that, if anything, countries receiving a larger inflow of aid tended to grow more slowly. The variation, however, is enormous. Looking at the points representing countries that received aid flows at more than 5 per cent of GDP, we see outcomes ranging from very strong growth in some countries, like Botswana and Seychelles, to very weak growth in other countries, like Zaire (Democratic Republic of the Congo) and Zambia.

This picture, of course, suppresses a myriad of other factors that influence growth, including initial income, institutional and political variables, and economic policy. Even when all these are included, however, we still fail to find any effect of aid on growth. This result should not be very surprising. If aid has been dissipated in unproductive investments, or been siphoned off by government officials and consumed, it cannot be expected to promote growth. What really matters is the interaction between aid and policy.

In particular, we would expect that aid would benefit countries with sound economic management while failing to provide any boost to countries with unsound policies. The data supports this intuition. We have found that better policies, measured in terms of inflation, budget deficit and tariff levels, are associated with higher growth rates. Other researchers have reached the same conclusion.

More intriguingly, additional aid is associated with higher growth in, and only in, countries with sound policies: when the policy environment is right; when countries follow a prudent fiscal and net policy and maintain an open-trading regime; and when the public sector focuses only on those areas where it is needed. When the state works in partnership with civil society to deliver the basic necessities to its citizens, the effects of aid can be dramatic. An additional percentage point of GDP in aid can lead to an increase in the growth rate of 0.5 percentage points. At the World Bank, we have also found that projects in those countries which have undertaken sound policies yield higher returns.

There is strong evidence, then, that aid increases growth in and only in the context of sound policies. One can draw two implications from this finding. One implication is that donors can achieve greater returns for their resources in terms of growth and poverty reduction by shifting money from countries with unsound policies to countries with sound policies. This is called "donor selectivity." The second implication is that donors need to exercise greater selectivity of projects, ensuring that these are chosen to yield substantial economic returns regardless of the overall policy environment.

Although the idea of more carefully selecting projects is appealing - indeed, much of the operational work of the World Bank is consumed with just this - I would like to argue that it has only a limited ability to break the link between unsound policies and aid ineffectiveness.

Let me start with a simple example. Suppose donors take over the funding of a rural health project from a recipient government. This frees up resources for the government to use elsewhere, either as additional spending or tax reduction. Donors, especially when they focus exclusively on projects, have little control over this additional spending. This is the principle that economists refer to as "fungibility." With fungibility, the net benefits of aid depend on its consequences for spending in other areas.

Of course, project-oriented foreign assistance can often promote projects that the recipient would not otherwise have undertaken. For example, it is unlikely that river blindness would have been eradicated in West Africa if the world had not targeted it directly.

But focusing on fungibility shows why greater selectivity of projects is unlikely to contribute to growth in countries with unsound policies. Instead, it highlights the importance, both for recipients and for donors, of assessing the public sector's entire expenditure programme, not simply expenditures on particular sectors and projects. Funding projects, however, might actually be the best way to get a seat at the table for broader discussions about public expenditures.

Aid is more than increased income. Official assistance is not just an attempt to close the object gap - the gap in physical and human capital that I referred to earlier. It is also aimed to closing the "ideas gap," the gap in knowledge that separates poor countries from rich countries. By transferring knowledge and expertise, aid increases a set of feasible projects and technologies.

Let me say a few words about how we at the World Bank think about this. We view ourselves as an enormous repository of knowledge, a "knowledge bank" as some have called it. One of the biggest assets we have is our technical expertise in knowledge of good practices, which has been honed through our experience with similar projects in different countries. These projects and techniques, however, are not of the "one side fits all" variety; they need to be combined with the recipient country's knowledge, particularly the familiarity with local conditions and local needs. We're constantly struggling our best to do this.

Let me be clear. The issues of development are complex, and there will be disagreements. But only when there is an open discussion of the kind that hopefully we'll have today will successful strategies be formulated. Developing countries often tend to rely on an overly centralized provision of services with relatively little participation by local government and civil society. Channeling aid exclusively to or through central governments has exacerbated this tendency. Aid agencies and non-governmental organizations have experimented with ways of providing decentralized support and encouraging community participation in the selection, design and implementation of projects.

Until recently, the emphasis on participation was only supported by anecdotal evidence and some case studies. Although suggestive, this research was not definitive. At the World Bank, we have recently been conducting careful systematic studies of the evidence in participation. The results are striking.

One study of a 121 aid-financed rural water projects showed that two-thirds of the projects with substantial local participation met the Bank's criterion for success, while only one-tenth of the projects without substantial local participation were successful. Other studies have shown that projects with more local participation tend to be more sustainable. People maintain and protect what they have helped to create. Participants do more than contribute relevant local knowledge; they're also an integral part of the development process. Participation increases involvement, involvement increases commitment, and commitment increases effort and the likelihood of long-term success.

We have come a long way from the view embodied in textbooks of a quarter-century ago that sought a trade-off between democratic preprocesses and economic growth. Russia, it was argued, had chosen to sacrifice freedoms to obtain more rapid growth. As it turned out, the countries under Communism sacrificed both freedom and economic growth. Let me summarize and broaden my discussion of the implications of our research and the four observations I made earlier about the changing world and changing ideas for aid. First, aid works with good policies, local participation and ownership. This is particularly true if we want to promote democratic, sustainable, equitable development that can survive the vicissitudes of the political process. Second, focusing on knowledge and capacity building has to be a central part of the aid process. Projects need to be looked at from this perspective, especially once one recognizes the importance of the fungibility of funds. Third, we have a special responsibility to focus aid on global international public goods, goods like the environment, knowledge and international economic stability. And fourth, partnerships and coordination are essential, a point I will return to in a few minutes.

Selectivity and conditionality

But before turning to that, there are two issues that I want to discuss. First, I want to discuss some unanswered questions. Although we have learned a great deal from our research on aid effectiveness, I would like to highlight two unanswered questions about how aid can be most effective. The first concerns the issue of "selectivity." In all likelihood, there will be countries with unsound policy environments. If our sole objective in providing aid were to maximize aggregate growth in the less-developed countries, the implication of our research would be that we should provide the most aid to those countries with the best policy environments, and no aid to those with the worst policy environments. But we need to remember that successful growth requires long-run investments. An investment in the health and education of a pre-school child, for instance, does not begin to yield economic returns for decade or two.

If we can design a way to ensure that our aid actually gets delivered to the people who need it, then the fact that the government is pursuing misguided economic polices should not deter us from providing today assistance that increases the chances of developing the kind of society in which good policies can be pursued tomorrow. These investments could put the economy in a position to flourish when those policies are instituted. The fact that in the past we have not succeeded on average in finding effective delivery mechanisms in unsound policy environments should not, I think, deter us from continuing our search in the future.

The second unanswered question concerns the issue of "conditionality." The econometric results suggest the conditionality has not been very effective, at least as practiced in the past. The quantity of aid given has had no significant effect on policy. Again, if we took these findings at face value they would suggest that we abandon the attempts to impose conditionality in our aid programmes. After all, designing conditionality takes an enormous amount of highly scarce resources from both the donors and the recipients, and often creates ill will. On the other hand, in some sense, we have never seriously attempted conditionality. The distribution of efficient development assistance has always been more dependent on the strategic interest of donors than on policies or needs of recipients. There are some reasons, I think, that conditionality may not have worked in the past. First, it was imposed from the outside and, as a result, lacked ownership. Second, it focused on governments, not on the broader range of civil society. Third, all too often it took what might be called a "Christmas tree" approach. In some cases, more than a 100 conditions were imposed. Rather than setting priorities, it actually led it to a diversion from a clear articulation of a development strategy.

There are, I think, some bare essentials if conditionality is to work. First, the country must be put at the centre of the development strategy - and development strategies ought to be thought of like corporate strategies, as setting goals and priorities. Second, ownership on the part of government and broader segments of society is vital. Third, the conditions have to be arrived at and agreed to in open and transparent processes. We ought to be wary of secret agreements, secret negotiations... With these conditions, whether conditionality can help remains, I think, an open question.

The failure of conditionality to work in the past provides a note of caution. When properly designed, conditionality may enhance the chances of better policies and stronger private capital flows. If the private sector believes that conditionality is effective, then business is more likely to go to those countries that have agreed to the appropriate conditions as part of their loan agreements. Appropriately designed conditionality may serve both as a signal and as a commitment mechanism. Conditionality can affect the outcome of internal political debates, provided it's credible. So far, I have concentrated on policies in developing countries. But policies adopted by developed countries are just as important. Aid cannot be seen in isolation. The developed countries have increasingly recognized that it is in their economic interest to provide aid. This economic rational is often highlighted by noting that developing countries have become the worldwide engine of economic expansion.

Unfortunately, many developed countries view trade liberalization only as the process of opening up foreign markets. They view trade as good, but imports as bad. Tariff barriers are being replaced by even more invidious non-tariff barriers, such as those associated with standards, dumping, countervailing duties, searches or the allowance of anti-competitive practices that restrict entry. Many developed countries remain relatively closed to imports of agricultural goods, raw materials like aluminum and uranium, and inexpensive clothing. These are precisely the products for which the developing countries have comparative advantage. By ignoring agriculture, the widely praised Uruguay Round of the GATT might even have hurt Africa, the poorest continent.

The messages sent by trade restrictions are as damaging as the direct economic cost. When the economies in transition are told to become market economies and enter the world market, but then find developed markets closed to their major exports such as aluminum and uranium, what lessons are we teaching them? These policies are not simply uncharitable. They damage developed countries by increasing the prices of a wide range of consumer goods, from computers to clothes.

Partnerships for development

Let me now turn to the main theme of this conference, which is partnerships for development. The same pressures that prompt us to consider how aid can be most effective have led us to a new international consensus on the need for better development partnerships. Partnerships improve the efficiency and effectiveness of development assistance and help deliver better results on the ground. Although they have always been a core feature of development, we now have to expand our vision of partnerships to match our expanded goals of development.

These new development challenges can be tackled only through partnerships. The first - and, in my view, perhaps the most important - ingredient for successful partnerships is that the government and citizens of development countries must be in the driver's seat. This idea is not new or revolutionary, but is fundamental to successful, lasting development. Development will not occur, and assistance will not prove effective, unless developing country governments and their people are stewards of their development process. Developing countries must take charge of defining, designing and implementing their national development strategies. Development partners, in turn, must consult with each other to determine how their funds, knowledge or ideas can support these national strategies. To do this, a primary emphasis needs to be placed on capacity building.

Partnerships operate best when they include all major categories of development actors - governments, private sector, civil society and aid agencies. The private sector is a relatively new addition to the list of development partners. This partnership depends on a careful balance between development impact and business benefit. Businesses have begun to realize that fostering vibrant and prosperous communities in developing countries is in their commercial interest. With this potential for mutual benefit, businesses are increasingly becoming social actors.

Another ingredient of a true partnership for development effectiveness is "donor coordination." Donor agencies have the best chance for making their aid effective if they "coordinate" their efforts. The current system of delivering development assistance can, at times, be extremely fragmented. Some heavily aid-dependent countries receive assistance from more than a hundred bilateral, multilateral and non-governmental organizations, each with its own priorities, procedures and reporting requirements. Without proper coordination, this proliferation of actors can contribute greatly to inefficient aid.

When donors work at cross-purposes, they waste scarce resources and place unnecessary burden on recipient governments. In some extreme examples, lack of donor coordination actually undermines development by fragmenting a developing country's own efforts. Donors committed to effective aid should make their procedures more consistent with those of other donors and recipient countries.

Our findings are heartening. Development is possible. Aid can work. But aid cannot accomplish goals by itself. It can only assist governments and societies in pursuing their objectives. Even the best designed foreign assistance cannot succeed if it is being provided to governments that are uninterested or incapable of delivering public services to the poor. The literature on fungibility shows that even if aid agencies could ensure the success of every single aid-financed project, the overall impact in a country could be offset by government actions elsewhere. Consequently, we need to pay attention to the composition of government spending more broadly.

Effective public investment is only one aspect of a successful growth strategy. Our research has also shown that it needs to be combined with fiscal prudence, monetary restraint and outward orientation. Without these, it is unlikely that aid can make contributions to growth.

We have not only learned what kinds of projects are more likely to succeed, but also how to design institutions and mechanisms to make success more likely. We've also become more aware of the environmental effects of our projects, and the nexus between environment and growth. Also, we now have a better understanding of the role of the state and the complementarity between good public policies, official capital flows and private investment. As a result, our aid can be more effective in leveraging investments from the private sector.

Today, we not only recognize the importance of the policy environment, but we're beginning to understand what comprises a good policy environment and how we can get more local ownership of sound policy ideas. We can put these advances in knowledge and understanding to work to enhance the quality of the policy environment and to improve the mix of policies. If we succeed, the expected returns in our projects, and thus of aid more generally, will increase. The mistakes of the past should, however, induce a modicum of humility. The issues we will face in the coming decade - what I have called the "Post-Washington Consensus" - are even more daunting than the comparatively straightforward debates of the past.

But let me end on a note of optimism. We now know that development is possible, that countries can move from the ranks of the less developed countries into the ranks of developed countries. In the process of development, poverty can be reduced, the environment maintained, civil liberties increased and civil society strengthened. We know that aid, when properly designed, can be of enormous assistance in accomplishing these goals. Our challenge, a challenge which I'm convinced we can and will meet, is to translate this knowledge into more effective practices ensuring that our aid will be even more effective than it has been in the past.

Thank you.

The Role of the United Nations in Development

Patrizio Civili
Assistant Secretary-General for Policy Coordination and Inter-Agency Affairs
Department of Economic and Social Affairs, United Nations

High-level Open Symposium on Development Cooperation
UNU Headquarters, Tokyo, 22 June 1998

Thank you, Mr. Chairman. Let me begin by expressing, also on behalf of my other colleagues in the United Nations Secretariat, our deep appreciation to the Government of Japan and the United Nations University for this most welcome and very timely initiative.

The initiative could certainly not be more timely in terms of the institutional dynamics in the United Nations itself. Let me explain briefly why this is so, at the level of the United Nations Secretariat and in relation to the work of the United Nations inter-governmental bodies - the Economic and Social Council and the General Assembly.

As you all know, last December, the General Assembly acted on a comprehensive reform programme launched by Secretary-General Kofi Annan. The programme encompassed all dimensions of the work of the United Nations, but had, as its major focus, the role and effectiveness of the Organization in development, and linkages between its development mission and its political, humanitarian and human rights activities. We have had only a few months of experience in its implementation. But the reform is taking roots within the Secretariat at a remarkably rapid pace - a pace that I, as a 30-years veteran in the Organization, believe is quite unprecedented. This means that I, and my colleagues from the United Nations, can speak here not only of intentions but already of concrete results. At the same time, the process is obviously still flexible enough so that we can bring back from this Symposium, and the Conference that will follow it, insights that can help shape it and reinforce it.

Secondly, at the inter-governmental level, the work of the Economic and Social Council is showing, this year, a new depth and a new vitality. The agenda it will address at its forthcoming session in July relates to crucial issues of policy direction and coordination - from the follow-up to recent United Nations global conferences and summits and the relationship between humanitarian and development activities to the cooperation between the United Nations and Bretton Woods institutions, all issues that will certainly be pursued at this Symposium. Here again this means a timely opportunity for the Symposium to influence the directions of United Nations work and United Nations reform.

And I should add parenthetically here that the reform of the Economic and Social Council is in my view, and I believe also in the view of many other observers of the Organization, a major part of the overall reform of the United Nations role in development cooperation. The Economic and Social Council has traditionally been viewed as a weak link in the United Nations institutional machinery. Yet, its policy coordination role, as the hub of a network of expert commissions on a range of key issues, from statistics and population to social policy and sustainable development, together with its policy management role vis-à-vis the governing bodies of the operational Programmes of the Organizations - UNDP, UNICEF, the United Nations Population Fund (UNFPA) - and its coordination mandate in relation to the wider United Nations system - make it a potentially crucial point of reference in the governance of the United Nations contribution to development. And there are many hopeful signs, this year, of a new effectiveness by the Council in the exercise of these functions: the Secretary-General's reform initiatives have undoubtedly given new impetus to the Council's work; recent global conferences and summits - the Rio Conference on Environment and Development, the Copenhagen World Summit on Social Development, the Beijing Conference on Women - have provided it with a renewed policy framework to guide its activities; and there appears to be a new political will on the part of both the industrialized and the developing countries to utilize the Council in a positive, consensual way to advance common development objectives.

As for the General Assembly, an important engagement, this year, will be the triennial policy review of operational activities that the Assembly will conduct in the Fall. The review will cover the governing structures of the United Nations development system; new approaches to the programming of operational activities; and resource and funding modalities. A main concern will be how to integrate more closely United Nations development support activities with national efforts. Again, I am sure that the insights we will gain at this Symposium will enrich the contribution that all of us will be called upon to make to these Assembly discussions.

This Symposium is also very timely in relation to what is happening in the wider United Nations system. The Bretton Woods institutions, and practically all the specialized agencies of the system, have been undergoing major reform processes, which affect, in different degrees of intensity, their role in development. The Secretary-General and all Executive Heads of the system, meeting in the Administrative Committee on Coordination, decided last March to launch a comprehensive review of the implications of these reform processes for the place - the comparative advantage - of each organization within the system, and in terms of their impact on the overall effectiveness of the system in development. The outcome of this review will be fed into the preparations for the Millennium Assembly in the year 2000. Your initiative, Mr. Chairman, should be viewed as an integral part of this process.

Finally, this Symposium is also very timely in the overall effort to promote convergence between the United Nations system processes I have just outlined and the processes of reflection underway in the wider development community on approaches to development cooperation. I have in mind, in particular, the work that has been carried out within the OECD, leading to an extremely useful document on "Shaping the 21st Century: the Contribution of Development Cooperation." I was very pleased to see how deeply that document is rooted in the policies and commitments embodied in the outcomes of recent United Nations conferences and summits. At the same time, the document is a very useful bridge and an important contribution to what the United Nations must do next: to translate the policies and commitments of recent conferences and summits into concrete development strategies to guide our development work. The analytical work of my Department - the Department of Economic and Social Affairs - is increasingly being geared to focus on this objective, particularly the all-important task of developing indicators that can measure progress being made in accomplishing these strategies at the country level, and to assess the impact of the United Nations system's contribution to this process.

Four institutional myths

Let me now turn more specifically to the topic I have been asked to introduce: the role of the United Nations in development. I have been given a near-impossible place in your list of speakers, after the very compelling presentation of Mr. Stiglitz, and a near impossible topic to address, simply because of its breadth and complexity. All I can do, in the time available, is to share a few personal reflections on the subject, focusing, in the first instance, on the institutional problematique, rather than the economic dimensions involved that have been so ably addressed by Mr. Stiglitz.

Let me begin by addressing some institutional "myths" that seem, somehow, to continue to linger and should, I believe, be dispelled if we are to have a meaningful, positive discussion of the road ahead. The first such "myth" is that development cooperation was not part of the original concept of the role of the United Nations under the Charter, and therefore that the basic structures envisaged in the Charter are not geared to an effective performance of that role by the United Nations.

Although the term "development cooperation" as such does not appear in the Charter, the Preamble of the Charter speaks eloquently of the determination of the peoples of the United Nations "to promote social progress and better standards of life in larger freedom" and "to employ international machinery for the promotion of the economic and social advancement of all peoples." Article 1 of the Charter also provides, as one of the most basic purposes of the United Nations "to achieve international cooperation in solving international problems of an economic, social, cultural or humanitarian character, and in promoting and encouraging respect for human rights and for fundamental freedoms for all ..."

There is, then, a whole chapter of the Charter devoted to "international social and economic cooperation," which sets out the broad objectives that should inform the coordination role of the United Nations vis-à-vis the specialized agencies. These range from promoting "higher standards of living, full employment, and conditions of economic and social progress and development" to solving "international economic, social, health and related problems" and "international cultural and educational cooperation."

My point here is that, while the operational machinery to undertake development cooperation was not yet in place at the time of the framing of the Charter, the overall framework that would guide such cooperation - in terms of the recognition of the central role that economic and social cooperation is called upon to play in advancing peace and human progress; in terms of the scope of development cooperation that must encompass in an integrated way economic, social and human rights dimensions; and in terms of the governance framework centered around a universal body, the General Assembly, and a "dedicated" body, the Economic and Social Council, operating through a decentralized network of specialized institutions acting in a mutually reinforcing way in the pursuit of common purposes - was well established in the Charter itself.

I would go further. In evolving development cooperation policies over the years, from the integrated treatment of economic and social dimensions, to the concept of people-centred development, to the recent emphasis on human rights and governance as an integral part of development, all we have been doing, in many ways, has been to re-discover principles and approaches that were very clear to the framers of the Charter.

The second in my list of what I have called "myths" is that the structure of the United Nations system is much too diffused and complex for it to be an effective agent of development cooperation, particularly in a situation that demands ever greater focus and coherence.

The system comprises some 14 distinct agencies, working with the United Nations on economic and social and development issues. They include the World Bank and the International Monetary Fund, and cover the basic sectors of the economy: labour; food and agriculture; science and education; health; infrastructures such as post, telecommunication, meteorology, and maritime transport; etc. Their number is not larger - it is, in fact, smaller - than the number of ministries in most of the national governments to which they have to relate. And most of these agencies were established by separate international treaties that pre-existed the United Nations, or were ratified in the early years of the Organization.

The picture becomes somewhat more complex if one adds to this list various Funds and Programmes that the General Assembly itself has established over the years. They comprise basically three types of entities: the operational Programmes (UNDP, UNICEF, UNFPA and WFP) that provide the backbone of the United Nations' own contribution to development cooperation; entities, such as UNCTAD and UNEP, that were established by the General Assembly to promote and pursue causes that cut across the traditional sectors covered by the agencies; and thirdly, major humanitarian programmes, such as UNHCR and UNRWA. The establishment of these entities should be seen as an important part of the effort of the United Nations and its General Assembly to adapt to new circumstances and meet new requirements as they have emerged. They include, as I have mentioned, the basic mechanisms put in place by the Organization to undertake, finance and coordinate development cooperation; as such, they provide, in many ways, the roots of the Organization and ensure its vital presence in the field, and they are an important part of both the image of the United Nations in the world and of what the United Nations means concretely for development practitioners, whether they be in governments or part of civil society.

At the same time, they have undoubtedly complicated the United Nations institutional picture. While they were all conceived, in different ways, as instruments of coordination on behalf of the Organization, and they have all made a distinct contribution to this end in their various fields of competence, they have, obviously, in other ways, added to the coordination challenge. And it is in this respect that the reform programme launched last year by Secretary-General Kofi Annan has made one of its key contributions. The reform has addressed the common misconception that these Programmes were, for all practical purposes, independent agencies, and has taken as its starting point a definition of the United Nations Organization that fully encompasses all of these Programmes and Funds. It has re-defined the functions of the totality of the Organization around four key objectives: peace and security, humanitarian assistance, economic and social affairs, and development cooperation. And it has established new management mechanisms to provide policy and administrative guidance for the entities operating in each of these sectors, as well as mechanisms to ensure overall coherence across these sectors.

In the development cooperation area, in particular, all United Nations operational entities are now functioning within the framework of the so-called "United Nations Development Group." This is not only an instrument of coordination. It is affecting in a very direct and significant way the day-to-day work of these Programmes at both the policy and managerial levels, and is leading to important progress, particularly in relation to country-level coordination. This renewed effort at coordination in the field, through new instrumentalities I will mention in a moment, is constituting a pole of attraction that is serving to advance significantly field cooperation, not only within the broader United Nations system, but also with bilaterals, NGOs and other development cooperation agents in the country.

My third "myth" relates to statements one hears that development cooperation is in crisis. We have indeed witnessed, in recent years, temptations, in some quarters, to retreat from multilateralism which, if not resisted, would extend to development cooperation. Also, in the euphoria that followed the end of the Cold War, there were some who thought that the forces of the market, once freed, would take care naturally of all problems. An unmistakable fact has been a definite decline in aid budgets. This is not unrelated to a sense that private flows should increasingly replace official development assistance, but was, in the first instance, in many cases, the outcome of contingent budgetary pressures in many donor countries.

There is no evidence to interpret these declines as challenges to the concept of, or the need for, development cooperation, or as resulting from a sense that development cooperation does not work. Indeed, study after study, from the recent OECD document I have mentioned earlier which represents a consensus within the donor community, to the comprehensive study prepared by the World Bank, to which Mr. Stiglitz has referred, indicate that development cooperation does work, and has achieved and can continue to achieve significant results in the interest of all. What is undoubtedly happening is a healthy revisiting on the part of both donor and recipient countries of modalities of development cooperation, so as to maximize the impact of scarce resources, to ensure that development cooperation reaches those that should be reached and has a multiplier effect, creating the conditions that would attract and sustain private capital flow.

A fourth, related "myth" is that international development cooperation is an esoteric science for a small group of specialists: international bureaucrats, a few internationally minded, mostly "bleeding heart liberal," politicians and some university professors. This is in part the fault of us, international bureaucrats, who have created a jargon of our own to address a problematique which is fundamentally not different from that of basic national politics.

The strategic choices that have to be made at the national level and that are the bread and butter of national politics and of national debates on public expenditures - financial policies and their impact on employment, stimulating and freeing private initiative while protecting the poor and avoiding growing disparities and marginalization - are the same strategic choices that have to be made at the international level, in determining the level and direction of international public expenditures. One of the most frustrating experiences for us in the United Nations has been to launch international initiatives on issues such as employment or social integration - issues that are debated on the front pages of national and local newspapers, and that determine the rise or fall of national governments - and then to see these initiatives receive scant attention in the media, as if only what is happening at the national level is real, and what happens at the international level academic, or at least directly affecting others, not us.

There have been breakthroughs in this respect, though. There are issues such as the environment that are now widely perceived by the public as both global and very real. And with the implications of globalization, the internationalization of markets and the technological revolution being increasingly understood by the public at large, international development and development cooperation are bound to increasingly move to the forefront not only of the international but also of the national political discourse.

This will not be without tension. To me, the ideological angles from which the issue is addressed are less important than the fact itself of international development being given the attention it deserves. It should be the stuff not of bleeding heart liberals but the stuff of all far-sighted politicians and governments, realizing that they cannot, in a globalizing world, ensure justice and sustained economic well-being for their own people unless they do their share of contributing, and contributing now before it becomes too late, to international development. Timeliness has never been as important as it is now. One of the major dilemmas we are facing at the moment is that while development cooperation requires long-term approaches, the time horizon keeps shrinking, given the sudden upheavals we witness in different parts of the world, and the immediate ripple effects they have on other parts of the world.

A sense of compassion and international solidarity greatly helps. But we should be able to argue in favour of development cooperation also coldly, strictly in terms of investment. What is obvious at the national level - that an environment must be created conducive to growth and private investment, and that development cannot be sustained if disparities become too great and if certain groups are increasingly marginalized - must become equally obvious at the international level.

But "obvious" does not necessary mean easy to address. We are going through a period of very rapid change. New balances must be established, between the role of government and the role of the private sector, and between the role of government and that of civil society. The new wisdom and the new balances we find - the lessons we are learning - at the national level must be applied at the international level. We cannot afford international cooperation falling behind. And, perhaps, international cooperation can also be the source of valuable lessons to apply at the national level.

Three essential conditions

Three conditions are, in my view, essential. One - farsightedness - I have mentioned; two others - flexibility and comprehensiveness - I have implied.

Farsightedness is not the normal stuff of politics. But people increasingly demand it of their leaders. This is true at the national level, as it should be at the international level. And the boundaries between the two are increasingly blurred. One interesting development we have noticed in the United Nations is that the private sector is in many ways showing such farsightedness, sometimes ahead of political leaders. The private sector is increasingly interested in the work of the United Nations, in its contribution to creating the long-term political, economic and social conditions where growth can take place and business prosper, very much in the same way as, at the national level, business demands of governments, together with financial rigour, action to create a conducive economic and social environment.

The importance of the second requirement - flexibility - is obvious at a time of rapid economic and social change. But flexibility in responses is effective if it does not take place in a vacuum, if policy choices and interventions, while being adapted to individual countries' requirements, take place within an accepted framework of agreed principles and agreed objectives.

The third requirement - comprehensiveness - is not new, but is increasingly emerging as a must. Interdependence among nations is one side of the coin. The other side is inter-dependence among issues. To have a lasting impact on development, it is essential to act simultaneously on a wide range of financial, economic, social and environmental factors, and on both the external and the internal factors, including what appear to be increasingly key linkages between development and good governance and the respect and promotion of human rights.

All these requirements clearly point to the need, and I personally believe the inevitability, of giving a more central place in the political discourse to development cooperation, not only in terms of solidarity but also of national interests, as a farsighted investment in future prosperity. East-West competition provided in the past an important incentive for ODA but also limited and distorted its intent. In a globalizing world, but also in a world where there is growing consensus of what makes for successful development, ODA, far from loosing its significance, acquires a new and much more potent justification of laying the ground for ensuring that all can benefit from globalization and liberalization of markets, and that all can contribute to global prosperity. The chances of ODA making a significant impact in the new circumstances also grow immeasurably.

The last two requirements I have mentioned - flexibility and comprehensiveness - also point to some of the key dimensions of the comparative advantage of the United Nations and the United Nations system. Flexibility, first. The functioning, methods of work and structures of the United Nations system, combining a strong capacity for consensus building on policy choices and policy mixes, as demonstrated by the major global conferences and summits of the past few years, with an extensive field network that can carry forward the policy prescriptions and commitments reached at these conferences and support governments in adapting them to individual country situations, is ideally suited to operate in the coherent but flexible way that current circumstances demand. The new instruments launched as part of the Secretary-General's reform programme, which include the preparation of integrated, result-oriented United Nations Development Assistance Frameworks, based on common country assessments, have been designed to enhance inter-agency coordination, while, at the same time, ensuring flexibility and providing a new instrument for a continuous dialogue with the government which will ensure country ownership of the assistance programme. Beyond these specific new instruments, the reform processes, and indeed the important processes of reflection underway throughout the system, are proof of a renewed capacity for flexibility and adaptation.

Let me turn to the other requirement - comprehensiveness. If, as Mr. Stiglitz has reminded us, the effectiveness of development cooperation depends largely on the impact it has on recipient countries' policy choices and on the broad spectrum of government spending, beyond the specific area which is the subject of any given project or programme, it seems to me that the United Nations system, which covers the whole spectrum of the policy concerns to be addressed, is ideally suited to advance this objective in the interest of all, both donor and recipient countries. The system is also a unique - uniquely extensive - reservoir of knowledge and information which is perhaps, in the present circumstances, the most crucial resource that can be transferred, with the least outlay of financial resources and maximum impact on development.

Thus, the scope and breadth of the United Nations system, while posing issues of coordination, becomes, in the circumstances, also its best asset. Equally important is the system's capacity to utilize the comprehensive policy framework generated by recent global conferences and summits, and the policy and other commitments they embody on the part of all countries, both donor and developing countries, not only as an instrument of internal policy coherence based on a common set of values and shared objectives, but also as an instrument for a continuous, sustained dialogue with Member States - governments, the private sector and civil society at large. The United Nations system has long been committed to achieving national ownership of its development support. We now have new instrumentalities for doing so, and for putting in place the necessary strategies to link international commitments with national action.

The outcomes of the conferences and summits I have mentioned so often in this presentation may have ultimately been hammered out by diplomats in the United Nations; they were the result of unprecedently broad debates at all levels - local, national and international - involving the broadest spectrum of civil society, and in different, but to ever-growing, extents the private sector. And they were ratified at the highest level of government. The same inclusiveness, the same sincere search for best practices, for what works, and the same degree of political will need now to inform their implementation at the country level, through innovative, committed development cooperation.

Two concluding observations

Let me make two concluding observations. One is that effective development cooperation is a necessary but not sufficient condition for progress. I can think of no better way of making this point than by quoting from the OECD document I have mentioned earlier:

"There are many areas where policies of the industrialized countries can complement or frustrate development efforts. Fiscal deficits of industrialized countries can influence both the cost and the availability of capital for developing countries. Environmental, sanitary and other restrictions on imports can sometimes operate as non-tariffs barriers. The promotion of military exports can drain limited resources away from development priorities. On the other hand, industrialized country policies can foster trade and investment flows, can facilitate the sharing of technology, and can in many other ways advance development objectives. The ramifications and opportunities of policy coherence for development now need to be much more carefully traced and followed through than in the past. We should aim for nothing less than to assure that the entire range of relevant industrialized country policies are consistent with and do not undermine development objectives."

My very last point is to pay tribute to the leading role that Japan has been playing and continues to play in conceptualizing and defining priority areas for United Nations development assistance, and as an invaluable partner of the United Nations in advocating development as a priority on the international agenda. By making development cooperation a priority in its contribution to the overall effort of reforming and strengthening the United Nations system, Japan has is giving an excellent example of the farsightedness I have been advocating in that presentation.

Thank you.

Aid Coordination at the Field Level:
Perspective of an Aid Agency Carol Bellamy
Executive Director, UNICEF

High-level Open Symposium on Development Cooperation UNU Headquarters, Tokyo, 22 June 1998

Thank you very much. I, too, would begin by extending, on behalf of UNICEF, our sincere thanks to the organizers of this event, and our particular appreciation to Ambassador Owada for the leadership that he has shown in shaping development policy for the future.

Before I speak about some of the coordination modalities and mechanisms for the field, some of which have already been mentioned today - indeed, I think they've all been mentioned - I would like to begin by addressing the obvious: that there is the need for coordination at the field level. But since I do have the wonderful opportunity to head up UNICEF, I would like to address this need from a human perspective.

The economic and social crisis that is presently gripping much of East Asia illustrates a unique phenomenon of the late 20th century: that is, the lightning-fast spread of global suffering and insecurity. East Asia's problems alone threaten to impoverish another 30 million men, women and children, and worsen the plight of millions more who are already living in extreme poverty. The situation may well be a model for the kind of "wildfire" threats to children and to their families that I believe we will continue to confront in coming years.

These threats grow out of the sheer persistence of poverty, which continues to entrap millions of children even as the global economy continues to expand. They grow out of deepening inequalities of wealth and access to basic services, both within and between nations, and they grow out of the steady erosion of many societies' capacity to maintain social safety nets for the poorest and the most disadvantaged, certainly including children.

The situation can only grow worse amid the crushing debt burdens carried by many low-income countries and the precipitous decline in overall development assistance to developing countries - which, as has been mentioned, has now dropped to its lowest point in history. Indeed, in the midst of a $30 trillion global economy, 1.3 billion people are living on less than a dollar a day in conditions of almost unimaginable suffering and want. Half of those people are children.

In response, the United Nations and its agencies are actively promoting a variety of approaches to this crisis of development while at the same time, in the process, searching for ways to dramatically enhance development cooperation. It is clear that the long-term success of the efforts of the UN system will hinge on the strength and coordination of aid, especially at the field level. While I think it is true to say that this has always been an objective of the United Nations, often it has been more in word than in action. Certainly, with the deep commitment of Secretary-General Annan, it is starting to become reality. And in the current global situation, there is an especially urgent need to expand the capacity of countries to plan and to manage national programmes as well as manage the contributions of international development partners.

The modalities of assistance

So let me turn, if I might, to a brief description and brief discussion of some of the modalities that are either in place or now being put in place. And I'm cautioned by the fact that it was suggested in the morning session that coordination was excellent, but then also noted that, "Well, there's a long way to go." I think both characterizations are true. I do think there is indeed real commitment to coordination at this point, but I do believe, too, that there is still a great deal of work to be done.

The UN reform process, I think, is now well underway, and it is providing new and stronger support to the task of enhancing aid coordination at the field level. This is chiefly occurring through several instruments. There is the Country Strategy Note (CSN), there is the Common Country Assessment (CCA), and there is the United Nations Development Assistance Framework (UNDAF). UNDAF has now been introduced on a pilot basis in 19 countries, and I would point out that Ghana is one of those countries. Indeed, Ghana was also the country where the first CCA was concluded.

The CSN is a document that sets out the key issues on a national agenda that require UN support. Both the Country Strategy Note and the Development Assistance Framework are based on a Common Country Assessment that pulls together available data and information about the country, and about transfer, social, economic and human rights issues. We are dealing with one country, so each agency doesn't have to go out and do its own analysis. As agencies, we may emphasize different parts of the analysis, but this Common Country Assessment is an important way of beginning to bring more coherency to the process.

The UN Development Assistance Framework is a single planning framework designed to promote the complementary and mutually enforcing components of the discrete country programmes of the various UN agencies and particularly, I would point out, the UN funds and programmes. I will speak about some of the other agencies and their relationship to that in a moment. The UNDAF thus takes work with governments a step further, defining the framework within which the United Nations will actually provide support to national priorities.

To illustrate using UNICEF, we find our own work is increasingly being seen against the backdrop of harmonized UN development activities. I would point out that the UNDAF, the Development Assistance Framework, is not only a mechanism for altering the way that we work at the country level or at the field level, but it is also changing how the headquarters of each of our agencies interact with our field representatives.

To facilitate the operational changes during this pilot phase of the 19 countries where the UNDAF is being put in place, a group of facilitators representing each of the funds and programmes and also representing the UN Development Group (UNDG) visits UN Country Team members to help them understand the central purpose of the UNDAF and to test the process that was described in the provisional UNDAF guidelines issued last August. The process of developing this UNDAF pilot strategy and of training and working together as UN teams, has, I believe, already created a new culture of collaboration. We've already begun to see some positive levels of interaction because of the UNDAF, and we expect to see more as we analyze the results of the pilot phase, which is a process that should be completed by year's end. And, indeed, I believe this analysis will also show us whether there are difficulties and where there are problems that need to be confronted and overcome.

While the funds and programmes represented in the UN Development Group are specifically committed to testing and developing the UNDAF - in other words, the Secretary-General's UN reform plan specifically noted that the funds and programmes would participate in this - I think it is important to point out that the Secretary-General has also sought the active support of the specialized agencies in this process. And, I would say, on a reasonably ad hoc basis this is increasingly happening at the field level. Specialized agencies - or, at least, some of the specialized agencies - are now also participating in this Development Assistance Framework, trying to bring more coherency.

This being said, it is very important to emphasize that a large share of responsibility for the coordination effort to produce results - and this was a very important point made this morning - rests with the government of the country being assisted and with the bilateral donors that are active there. National government support and active participation, including the articulation of national priorities and needs, are essential conditions for effective coordination in the field among UN agencies. By the same token, those who bring substantial resources to developing countries also need to plan their assistance within the framework of the coordinated country approach.

The Bretton Woods Institutions are, of course, major actors in development cooperation, and I would particularly note they are beginning to function as part of the UN Country Team, although the modalities of that coordination still need to be further developed. In Mali and Viet Nam, to give a couple of other examples, the World Bank has begun working with its partners in the UN system to develop the Development Assistance Framework and the country assistance strategy. And, as I said, in Ghana the UNDAF process is making some very interesting contributions to public policy development.

Other important tools for improved coordination of the UN at the field level and for improved support to national priorities are the Sector Investment Programmes (SIPs) and the Sector-Wide Assistance Programmes (SWAPs). These are being promoted by the World Bank. These programmes seek to assist national and sub-national authorities to outline clearly their priorities in specific areas. For example, the areas in which they've worked most effectively so far are the areas of education and health. Thus, the prioritization is done with the World Bank, other UN agencies, NGOs, bilateral agencies, and embassies in the country.

These programmes represent, in another key way, that all partners at country level can be closely involved in development activities, particularly in the social sectors, and move forward together in an agreed vision for the future. For the health and education sectors, these combined efforts (CSNs, UNDAFs, SIPs, etc.) have meant that such difficult issues as recurrent cost (an example would be teachers' salaries) are now being discussed as part of an overall reform of education, something that was rarely done in the past. It is increasingly clear that the more we improve internal UN collaboration, the better the UN will be able to serve national development goals and create the partnerships that are vital to achieve them.

Opportunities for coordination and cooperation

Let me just briefly touch on a few other new opportunities for coordination and cooperation at the field level. I believe that technological innovations of our information-driven world offer new and expanded opportunities for collaborations among our colleagues working in different parts of the world - opportunities that will allow the UN system to act as a broker of knowledge on a global level as it never has before. So I was delighted to hear the mention of the use of technology this morning.

The UNDAF is already showing that it is a mechanism that can make effective use of the extensive body of knowledge and experience that the UN has accumulated in its more than half-century of hands-on work. The potential linking of our practical field experiences among staff around the world, - and in this I would include not just UN staff and the extended UN family, but other development partners as well - the linking around the world of staff and, through them, to our development partners at the country level offers, I believe, exciting possibilities. However, it must be understood that the knowledge of the UN is based largely on our field level operational activities. So these activities will have to be strengthened to service our capacity to generate and to share knowledge.

The conferences, summits and conventions of the 1990s have, as again you've heard today, provided the UN with a clear, globally accepted set of agendas that will remain valid well into the 21st century. These agendas are the foundation for an effective system of development cooperation in the field. For UNICEF, again to illustrate, the 1990 World Summit for Children as well as the nearly universally ratified Convention on the Rights of the Child have lent momentum to the goals for children and development, because they underscore the fact that basic needs are matters of human rights.

With respect to other activities, I would note the strategies and objectives of the OECD's Development Assistance Committee, DAC, which reflect the emerging consensus in development cooperation and include concrete goals for the first part of the next century. And the TICAD conferences, the second of which will be held in Tokyo later this year, are also helping to sharpen the focus for international cooperation in Africa.

Well, I've mentioned a number of things that I think are in place and are starting to make a difference in some ways. But I would say that, beyond these, there is still much to be done. We must continue to strengthen the role of national and local governments in defining priorities and in real implementation of development programmes away from a project orientation. And this will require, as well, the understanding and support of bilateral agencies, who often will fund on a project basis.

We also need to enhance the role played by people as actors in their own development, a goal that again is often talked about but less frequently realized. But it is an increasingly extremely important objective, since it is only through people's commitment to change that long-term development takes place. I was pleased to hear the strong reference made to "participation" this morning. I believe that's very important and, again wearing my UNICEF hat, I would remind everyone that participation also means participation of young people as well.

The roles of NGOs and the private sector - indeed, of civil society generally - all need greater attention when it comes to coordination, as does the role of donor coordination. All these substantive issues surrounding development priorities and strategies pose new opportunities, but new challenges as well, for a coordinated country-based approach. From UNICEF's perspective, we are confident that the advent of UN reform and the strengthening of aid coordination at the field and headquarters levels which the UN reform processes are already bringing about will help not only to improve the chances for effective and efficient development, but also will actually bring "child rights" ever closer to the centre of all the work of UN system. And we believe that with the development agenda anchored in the rights of children, that in fact development will be strengthened throughout the globe.

Thank you very much.

Summary of Discussion
Prepared by Hideo Sato and Tsukasa Kawada, with Julius Court

This section summarizes some of the main topics raised in the discussions.

Three levels of coordination

The coordination challenge exists broadly at three levels in the area of development cooperation: philosophy and broad objectives, policy cooperation, and practice on the ground.

First, we have seen a remarkable convergence in recent years in cooperation on philosophy and broad objectives through the objectives of the UN conferences, through the distillation at the OECD in producing "Shaping the 21st Century, " and through some of the follow-up activities such as UN reform and the new partnership approach being adopted by the World Bank. There's very strong agreement on the main development objectives.

Second, at the level of policy cooperation, we have also seen a remarkable willingness on the part of different agencies to pool their common agenda, to pool their efforts together. There has been remarkably good cooperation between the World Bank and the UN family as well as the OECD and many other agencies, and developing countries themselves, to try and come down to a manageable list of priority policies for poverty reduction.

The third level is the level of practice on the ground. And, perhaps not surprisingly, this is the weakest level of the three, although enormous efforts are now being made. These include the Special Programme for Africa, the UN Development Assistance Frameworks UN Development Assistance Frameworks exercises, the World Bank's country assistance strategies and the European Union exercises specifically aiming for intensified coordination in their own programmes.

Aid coordination

There is clearly a great need for aid coordination. Aid coordination is not an end in itself but a means of improving the impact of limited aid resources. The large number of donors, each with different priorities and practices, places a huge burden on developing country bureaucracies. International agencies and bilateral donors agree on the importance of coordination - but nobody wants to be "coordinated." Similarly, despite the acknowledged importance of decentralization, many donors are not moving significantly in this direction.

The importance of ownership

There has been much concern about the issue of aid dependence, particularly in Africa. The debate has tended to focus on the amount of aid, expressed as a proportion of income. However, there is also increasing concern about a lack of "ownership" in terms of the capacity for policy formulation. Bureaucrats across the continent indicate the strong impact of external actors, particularly the BWIs, on economic policymaking.

The principal challenge for coordination is actually getting the developing country in the driver's seat. One key is for developing country partners to "get their flags down." Different donors are all intent on having their "flag" on their own project, and at the end of the day that can be extraordinary difficult to manage for a developing country which, by definition, is likely to be overloaded anyway. This means the donors stepping back and recognizing that development is primarily the recipient's business, and that our business is primarily helping them to move toward their objectives. The Development Assistance Committee of the OECD has came up with an 11-point check-list for strengthening development partnerships.

But, rather than expecting donors to coordinate themselves, recipient governments should take the initiative. Development management capability at recipient level is the key issue: the capacity to (i) formulate a realistic strategy, (ii) implement it and (iii) evaluate and, if necessary, adapt it. However, many recipient countries note that they do not yet have the capability for "ownership," and that capacity building is a key issue.

UN reform and challenges

Ever since he has come into office, Secretary-General Kofi Annan has implemented a major fundamental programme of institutional reform in the United Nations. The central objective of these reforms is to increase the "unity of purpose" among the various component parts of the United Nations to enhance the organization's ability to pursue its goals coherently and strategically. It is crucial that the UN promotes its successes (e.g., the importance of the global conferences in promoting debate) and its particular strengths (e.g., neutrality, universality and commitment to the poorest).

A great deal has been accomplished within the past year, especially in the area of development. The United Nations Development Group is working at the policy level, at the programme level on management issues, and at the country level. Moreover, an excellent dialogue is underway between the United Nations and the Bretton Woods Institutions to improve collaboration both at the policy and operational levels. There has also been a renewed commitment by forging new partnerships with the international business community. The Secretary-General, for example, has engaged in a series of dialogues with the International Chamber of Commerce (ICC) at general policy levels, but also has asked the ICC to contribute operationally - for example, by financing the writing of investment guides for countries in sub-Saharan Africa.

A great deal has been accomplished, although much more needs to be done. Some of the main challenges for the UN include (i) changes in the nature of funding from core to earmarked funds, (ii) the overlap in purpose between organizations, (iii) the challenge of improving cost effectiveness despite the burden of an archaic personnel policy and (iv) the barriers imposed by national policies towards the UN. Also, in comparison to the World Bank, the UN system does not attract the best economists and does not contain a critical mass of economists for the key task of providing policy analysis and advice. The lack of capacity to do serious work has led to the situation that the UN is not providing sound advice, is not taken seriously by development partners and, therefore, is marginalized in coordination efforts.

The possibilities of open debate

One of the most significant consequences of the end of Cold War has been that it has become possible to have an honest discussion about development, about what works and what doesn't. Prof. Stiglitz mentioned the critical role of the domestic policy environment in recipient countries as a fundamental feature of making aid work.

Secretary-General Kofi Annan recently went even further, in his well-received report to the Security Council, on the causes of conflict and conditions for sustainable development in Africa. The Secretary-General pointed out in his report that it is not only the policy environment but the very nature of political systems, the very structure of political rule, which in many instances can be an impediment to development or can prevent the sustainability of development where it has taken off. Such a discussion would have been inconceivable only a few short years ago.

Transforming aid

It is increasingly clear that aid will have to be massively transformed if it is to serve as a major instrument for mediating developing countries' future relationships with the world. The impact of ODA is constrained by procurement restrictions and conditions unrelated to development, and high transaction costs as well as poor donor coordination. There is also a need to rethink conditionality, which has not worked well.

There seems to be a strong argument that better selection of countries is one key to aid effectiveness. But what are the most useful objective criteria for selectivity and monitoring? Aid is more likely to be effective if sound general economic policy and institutional foundations exist. First, there is certainly increasing evidence that aid works better in a good policy environment. Second, there would also seem to be a good case for including institutional criteria, such as political commitment, bureaucratic quality, rule of law and property rights.

But there should be at least two modifications to these recommendations. First, disaster relief should be exempted. Second, in countries with poor foundations, different types of aid should be prioritized. These could concentrate in particular on the longer term issues of basic health and education, and on technical assistance towards improving the policy and institutional foundations.

Reducing the debt burden

Total external debt for Africa alone increased from US$84 billion in 1980 to US$226 billion in 1995, with a debt service ratio of 14.5 per cent, a debt/GNP ratio of 81 per cent and a debt/exports ratio of 241 per cent. Sixteen African countries were categorized as unsustainable and possibly distressed. While these countries are eligible for debt relief under the HIPC (Heavily Indebted Poor Countries) initiative, the real challenge is to find more substantial and wide-ranging approaches to debt relief. The implications of the debt burden for development are far-reaching. Many countries have to allocate considerable amounts of budgetary expenditure to external debt servicing. For example, the Tanzanian government has to allocate 30 to 35 per cent of its budget for debt servicing, which is equivalent to 9 times that allocated for basic education. The debt burden is obviously enormous in relation to many least developed countries' debt servicing capacity, and it has become a major inhibiting factor for the realization of recovery of growth and exports.

Easing the burden of unsustainable debt would free government resources for more productive developmental activities, reduce transactions costs (which are a massive burden on policy makers) and help restore macroeconomic stability and investor confidence. A dollar of reduced debt is therefore likely to be more valuable than an additional dollar of conventional aid. There is an overwhelming case to be made that significant further reductions in the external debt of debt-distressed low-income countries would improve growth prospects in the highly indebted poor countries, particularly if the resources made available are truly additional.

The international economic order and development

We need to address the weaknesses of the current international economic order. Prof. Stiglitz referred to trade barriers and the illogic of recommending export-oriented development strategies and then slamming the door shut. But in recent months, we have also seen that volatility in international financial markets can wipe out the development efforts and sacrifices of many years.

As part of the agenda of the new development strategy, we must include various malfunctionings of the international economic order. This is a subject that has become, unfortunately, unfashionable because of the euphoria that was a by-product of the unchallenged victory of market rationality in the 1990s. One effective mechanism for integrating the least developed countries into the global economy would be for OECD countries to guarantee open markets for their exports. This is particularly important for key sectors such as agriculture and textiles. This is where least developed countries' comparative advantage lies, yet these are the most protected markets.

Annex

Schedule

Participants

Chairman: Ambassador Hisashi Owada, Permanent Representative to the United Nations, Japan
Mr. Joseph E. Stiglitz, Senior Vice President/Chief Economist, World Bank
Mr. Patrizio M. Civili, Assistant Secretary-General for Policy Coordination and Inter-Agency Affairs, Department of Economic and Social Affairs, United Nations
Mr. Rafeeuddin Ahmed, Associate Administrator, UNDP
Prof. Ryokichi Hirono, Professor of Economics, Seikei University
Prof. John Gerard Ruggie, Special Adviser to the United Nations Secretary-General
Dr. Ferdinand D. Tay, National Development Planning Commission, Ghana
Ms. Carol Bellamy, Executive Director, UNICEF
Mr. Carlos Alfredo Magarinos, Director-General, UNIDO
Mr. Bernard McCarthy Wood, Director, Development Assistance Directorate, OECD
Mr. Yuji Mori, NGO Regional Focal Point of PARinAC, North Asia and the Pacific, National NGO Focal Point of PARinAC, Japan

Annotated Agenda:

Session 1: Role of the United Nations System in Development Assistance

It is important that the United Nations system, which encompasses a wide range of development organizations, enhances coordination among them to improve efficiency and effectiveness as a system in the field of development. Coordination with Bretton Woods Institutions (BWIs) is equally important. Coordination among the UN organizations is already in progress, as is the dialogue between the UN system and BWIs. Therefore, the time is ripe to consolidate coordination among different international organizations in the field of development. In order to do so, the following points should be addressed:

• comparative advantages of, and complementarity among, the various international organizations;
• tangible results of measures for enhancing coordination within the UN system, such as UNDG or UNDAF, which have already been implemented;
• ways and means of achieving effective coordination between the UN and BWIs; and
• coordination centered on development of a core set of indicators in order to implement the "new development strategy"

Session 2: Assistance Coordination at the Field Level

The UN and other bodies have taken initiatives to enhance coordination at the field level. As a case from the field, Ghana's experience in successfully carrying out a structural adjustment and its current "Vision 2020" project are deserving of note as models of how a country may exert ownership over its own development, hence establishing a sound basis for better coordination at the field level. The Secretary-General's initiatives in establishing UNDAF will also contribute to improved coordination in the field. The involvement of UN special agencies and BWIs in field-level coordination through such initiatives might be addressed. With the participation of NGOs, discussion at this session would be enriched by taking up such issues as whether NGOs should be involved in the coordination efforts of international organization and, if so, to what extent.

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