Busan High-Level Forum: From Dead Aid to Better Development?

Current Issues in U.S.-ROK Relations

December 14, 2011


The Busan High-Level Forum (HLF)—which met from November 29 to December 1 and involved more than three thousand delegates from nearly one hundred sixty countries as well as representatives from international and civil society organizations, businesses, and foundations—agreed to establish a new development architecture. The forum was originally convened to evaluate the progress made since the adoption of the Paris Declaration for Aid Effectiveness in 2005. However, unprecedentedly broad participation made the HLF a truly universal gathering of traditional and emerging donors. This breadth of participation resulted in a compromise that goes beyond aid effectiveness to establish a new framework for development cooperation.

Emerging donors like China, Brazil, Russia, and India contend that traditional donor standards should not apply to them.

The Paris Declaration concluded with fifty-six partnership commitments and twelve evaluation indicators that donor and recipient countries agreed to implement by abiding by five core principles: ownership, alignment, harmonization, managing for results, and mutual responsibility.

Hyuk-sang Sohn

Professor, Kyng Hee University, Seoul, South Korea

But the 2011 survey and evaluation of the Paris principles revealed that only one of the twelve indicators had been fully implemented. The Busan Outcome Document (BOD) also declared that progress was "uneven and neither fast nor far-reaching." In contrast with the 2008 Accra Forum, which based its Agenda for Action on the Paris principles, the Busan HLF concluded that these principles are too process-oriented, technical, and not focused on poverty reduction. Terms like "dead aid" were used to reflect this growing skepticism toward aid effectiveness. Moreover, the European financial crisis has weakened aid commitments from traditional donors.

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Against this backdrop, the diversity of views among participating countries made it more difficult to achieve meaningful consensus. Traditional donors, especially the European Commission, asserted that the principles of aid effectiveness are "the best we have yet" and favored bolstering the Paris principles over refashioning aid norms. Emerging donors such as China, Brazil, Russia, and India contended that traditional donor standards should not apply to them. They argued that existing international agreements regulating north-south cooperation should be viewed separately from those that govern south-south cooperation.

Developing nations insisted on untying all aid by 2013 and making their country systems (e.g., public finance management and local procurement) the default option for aid implementation. Civil society groups such as Better Aid and Open Forum argued that human rights provisions and the Rights-Based Approach should be included in the principles of the BOD. Both South Korea and the United States took a more flexible stance toward aid effectiveness, advocating a new approach designed to achieve significant poverty reduction. South Korea desired to maximize the Busan Forum's impact, attempting to forge a new global consensus around "development effectiveness" as an alternative to "aid effectiveness."

But the BOD ultimately reflected compromise among these various positions. The attempt to expand the scope of the Organization for Economic Cooperation and Development Development Assistance Committee (OECD DAC) discussion from aid to development was reflected in the title of the BOD: "Global Partnership for Effective Development Cooperation." The South Korean government proposed that the concept of development effectiveness encompasses effective institutions, gender equality and empowerment for development results, the active involvement of emerging donors and the private sector in development cooperation, and a monitoring framework set with UN collaboration.

Another example of an effort to accommodate opposing views was the decision to make the declaration voluntary rather than binding. China is not a signatory to the Paris Declaration and does not uphold existing principles on aid effectiveness. Though several traditional donors argued that China must abide by established aid norms, China argued that there are differences between north-south and south-south cooperation. Furthermore, it opposed the notion of "differentiated responsibilities" in regard to development. To satisfy China and other emerging donors, the phrase was changed to "differential commitment."

Tied aid was another issue on which compromise limited success. An earlier draft of the BOD included a clause on untying 100 percent of aid by 2015. But the United States and Japan objected based on U.S. concerns regarding the impact of possible aid cutbacks and Japanese interests in sustaining aid recipient demand for technology. Consequently, all reference to a time frame on untying aid was removed from the BOD.

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South Korea led the promotion of the 'from aid to development' paradigm shift.

As the financial crisis constrains the ability of traditional donors to expand their aid levels, there is an additional need to mobilize private finance (e.g., foreign direct investment, public-private partnerships). However, emphasis on private sector donors also drew criticism. Concerns were expressed that an enhanced private sector role would shift responsibilities from traditional donors to private actors, and that development cooperation would degenerate to profit-driven motives.

Another area where consensus could not be reached was on the question of how to build the future aid architecture. The OECD DAC Working Party for Aid Effectiveness—which spearheaded the execution and monitoring of aid effectiveness—sought agreement on a new global framework. Opinions differed on how to institutionalize the monitoring of Busan agreements. Lacking consensus, the Working Party's mandate was extended to June 2012, by which time it would establish monitoring indicators and advise on how diverse development actors including businesses and emerging donors can converge to form a global partnership.

Despite these many disagreements, South Korea's role and contributions as the host country were widely acknowledged. Among post–World War II independent countries, South Korea is the only nation to have transformed from an aid recipient to a donor country, demonstrating that aid does indeed have a positive effect. South Korea received more than twelve billion U.S. dollars in aid from 1945 to the 1990s. With its own development experience of using aid successfully as part of its development and modernization, South Korea led the promotion of the "from aid to development" paradigm shift. South Korea also helped to achieve agreement on "differential commitments." South Korea, with the United States, played leading roles in the inclusion of gender empowerment in the BOD. Moreover, South Korea acted as a bridge between emerging and traditional donors. South Korea will also help include UN agencies like the UNDP and UNDCF in the processes for establishing the Global Partnership.

Overall, how would one evaluate the final outcome of the Busan HLF? While expectations of a binding agreement were dashed, a new development cooperation framework (e.g., south-south and triangular cooperation) that consists of an inclusive partnership with emerging donors and private sectors was established. Thus, the Busan HLF provided momentum for a major shift in the discourse on aid effectiveness that can strengthen the impact of poverty reduction in developing nations. However, only time will tell whether the compromises made for this inclusive partnership will result in sincere efforts by all parties to implement their nonbinding commitments.

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