From aid to public investment: 5 shifts to transform development cooperation
14 December 2020
Rishi Sunak, the UK’s chancellor, recently announced a cut in foreign aid because, in moments like this, we can’t afford too much charity.
But spending on our global common welfare is not a question of charity that can be cut when the economy tightens. Rather it is one of sensible and necessary investment in mutually beneficial objectives. Just like public sector spending at the national level, which is redistributive and public-spirited, but which we don’t describe as “charity”.
In my new book, I propose a new way to think about, talk about and manage the public money spent by governments to support global development objectives. This new approach, which I call global public investment, builds on the best of the traditional understanding of aid, as well as the main critiques of it, and responds to the new global reality we all face.
I suggest five major paradigm shifts to underpin the next fifty years of financial development cooperation.
1. Ambition of development cooperation
Foreign aid has been primarily intended to reduce poverty, both individual’s and whole countries’. But this focus, while important, has led to an incredibly stingy understanding of human obligations, as if the job of international solidarity is done when minimum (very low) welfare standards are met.
The challenge of eradicating extreme poverty remains, but today tackling inequality and enabling all countries to converge with relatively high living standards is a bolder aim, in line with the Sustainable Development Goals (SDGs).
Furthermore, global and regional public goods are moving centre-stage, especially with the call for a Global Green New Deal to combat climate chaos and ecosystem destruction and the realisation that we need an internationalist approach to public health. Both of these will require vast sums of money to achieve.
2. Function of public money globally
Fine, so we need to find more money. But won’t private money do? And can’t poorer countries pay with their own tax take? And can’t billionaires help out with their philanthropy? Foreign aid has traditionally been considered nothing more than a stop gap: necessary only in exceptional circumstances to fill a gap in a country’s finances. As other types of finance become available, this temporary support comes to an end.
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But public finance has a unique set of characteristics, at the international and national levels, which mean it cannot simply be replaced by private, domestic or philanthropic funds. Even when other funds come on stream, a system of global public investment is still often the best type of finance for some interventions. It is not a last resort, but a first thought, prodding societies in the right direction and promoting global benefits.
It is not just the quantity of a particular type of money that matters, but its unique qualities as well. Importantly, this special kind of money can play a role in all country types, not just the poorest, as well as help deal with cross-border challenges.
3. Geography of development cooperation
This paradigm shift is already well underway. Changes in global wealth and power have shaken up international development practice for the better. Emerging economies are contributing more than ever to global objectives, even as they continue to receive financial support.
This makes no sense in our current paradigm, which splits the world into rich countries - “donors” - and poor countries - “recipients”. But this shift is a fundamental element of the new approach we propose. All countries, even the very poorest, should contribute funds for global sustainable development according to their ability to do so. And all, even the very richest, should receive, according to their need.
Some will see this as a radical idea. They will be surprised to see that this is increasingly the new normal. The global public investment proposal is not only a call to action. It is also simply a better description of today’s reality.
4. Governance of global investment
This links closely to the fourth paradigm shift, on governance. While aid has often been a force for good, it has also been misused and wasted, in part due to the institutions and processes through which it is managed.
Aid governance is stuck in the 20th century, with a handful of countries taking the major decisions and contributions fluctuating depending on “donor” circumstances. At this time of flux, there is a moment of opportunity to reorder the way the world manages development cooperation.
An improved system of global public investment requires more democratic decision-making about the size, purpose and accountability of contributions. We need to move away from a donor-recipient mentality, and towards more horizontal partnerships with all countries and other stakeholders (including civil society) at the decision-making table.
There is no easy answer to the problem of global governance. But, if we get it right, global public investment could push new types of partnership that could be the difference between an era of global progress and one in which we are unable to curtail nation states jostling for supremacy, to the detriment of marginalised communities and our planet.
5. Narrative of development
The final paradigm shift is in how we talk about development cooperation. Words matter. They can convey respect or condescension – and too often in the world of “aid”, it is the latter. The commonly-used language of the aid sector is outdated and colonial, misleading the public, patronising recipients and entrenching an embarrassing saviour complex.
A new vision for global public investment must be accompanied by a narrative more appropriate to today’s reality. It should be an obligation, not a voluntary gift. And while it should expect a return, that return is not a financial one, but rather social and environmental impact for our global common good.
In the words of Helen Clark, “the global public investment approach is our best bet for modernising international public finance for the 21st century.”
You can buy Jonathan's book at all the usual online sites or at your bookshop: