Why the world needs a new way to tackle poverty

Can development become smarter, more equitable and more in tune with the shifting distribution of wealth between traditionally rich countries and emerging economies? I am convinced that it can.

How countries work together on development issues is not only a question of official development assistance (ODA) – what we traditionally call “aid” – although it is certainly still part of the equation. ODA is an international mechanism for the transfer of flows, whether of money or expertise, from one country to another, with specific conditions and objectives. Historically, ODA – provided principally by members of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) – was seen as the principal source of funding for development.

Today, however, the number and type of organizations involved in development cooperation are multiplying, as are the sources of development financing. Increased domestic taxation lets poor countries finance health and education; growing private investment is fuelling economic growth and employment; remittances from a country’s diaspora enable families to lead a better life.

Because of this, the relative importance of ODA is declining, and this is a good thing. But we must also remember that in a large number of poor countries – as well as in countries immersed in or just emerging from conflict, such as Liberia, Sierra Leone and Burundi – ODA is still a crucial source of financing. Without ODA, these countries would be set back many years in their struggle for development.

This raises the question of whether an increasing share of ODA should be targeted at the countries that struggle to secure financing from other sources. This would help to level the playing field and offer them a more equitable shot at development.

But development cooperation is not only about money. Apart from financial transfers, development cooperation is also about the transfer of knowledge and experience. This is particularly important when we consider that the poor are increasingly found not only – or even principally – in the poorest of countries. The proportion of poor in the world today is weighted towards countries that have grown rapidly, crossing over from low-income to middle-income status, and this trend is likely to continue. It is estimated that half the world’s extreme poor are found in India and China, one quarter in other middle-income countries like Nigeria, Pakistan, and Indonesia, and the remaining quarter in low-income countries. So again, the question is: Whose job is it to ensure that growth is equal? Is poverty something to be addressed globally, or is it a national, or even local, responsibility? I believe the answer is both.

Development cooperation provides good examples of how knowledge sharing between countries can help tackle poverty. Countries that have managed to balance their development and growth to become more equitable have a lot to offer those that are still struggling to do so. Tried and tested solutions from one country can help others strengthen their capacity to deal with their own poverty problems. These solutions could be anything from technology that identifies vulnerable households, to an index measuring women’s empowerment. These and other examples of what it takes to promote equitable growth are highlighted in the OECD’s Development Cooperation Report 2013: Ending Poverty. ODA may still be needed to get some of this going, but in much smaller sums.

Taking this a step further, an approach known as “triangular cooperation” taps into the power of collaboration. The traditional “donor” promotes and supports the sharing of one country’s successful development experience with another. There is no single model for triangular cooperation – anything goes if it serves to capture opportunities and share lessons. An example may work best to illustrate the point.

Japan and Sri Lanka had a successful bilateral cooperation programme to improve the quality of Sri Lanka’s hospital management. Recognizing that the innovative process put in place by Sri Lanka could be helpful in Tanzania’s hospitals, Japan helped Sri Lanka replicate the model. After achieving good results in its own hospitals, Tanzania then shared the lessons with neighbouring countries, again with Japanese support. The key to success was that each of these initiatives was opportunistic, identifying and capitalizing on openings to promote knowledge sharing among countries with similar challenges.

Lastly, there is the question of burden sharing. Should development cooperation only be the obligation of traditionally rich countries, or should countries graduating from poverty to prosperity also have an obligation to provide development cooperation? In 2010, Korea – a country that used to be a major recipient of development assistance – joined the OECD DAC. In 2013, five more members joined, signalling their preparedness to accept this obligation. Should they serve as an example for other countries?

To return to the initial question: Can development cooperation be more effective and just, while responding to shifting economic dynamics? Yes. Smarter use of ODA, increased knowledge sharing and a focus on making sure that nobody is left behind can make it happen.

Author: Jon Lomøy is Director of the Development Co-operation Directorate at the OECD.

Image: A boy stands on a road at dawn in Freetown, Sierra Leone. REUTERS/Susana Vera