Emerging Donors and Post-Conflict Reconstruction
BY AGNIESZKA PACZYNSKA 1
The last two decades have witnessed fundamental shifts in international economic dynamics and the gradual reshaping of global political relationships and collaborations. In particular, emerging powers in the global south are now playing a much more prominent role in the global economy and are beginning to rewrite transnational political frameworks. As their economic clout has grown, these emerging powers have also begun playing a more important role in providing development assistance to other countries in the global south. They have become more visible in extending humanitarian assistance following natural disasters such as the 2004 Indian Ocean tsunami and the 2010 Haiti earthquake. Increasingly, these emerging powers are also supporting countries emerging from civil conflict and beginning the process of reconstructing their polities, economies and societies.
What are the consequences of these changing patterns of development assistance for recipients in post-conflict states? How are they affecting and shaping collaboration between traditional and new donors in post-conflict settings and with what consequences for peacebuilding initiatives? What is driving the growing involvement of emerging powers in post-conflict reconstruction assistance? What economic, political and ideological goals and interests are are shaping this involvement? What kind of activities are emerging donors focusing on when intervening in post-conflict states? How much funds are channeled into these countries and into which sectors? And finally, how is the entry of emerging donors affecting and shaping reconstruction processes?
Current debates about the challenges of post-conflict reconstruction have paid scant attention to the growing role of emerging powers in these processes, focusing their analytical lenses on issues such as the effects of liberal peacebuilding model, the power dynamics between traditional donors and post-conflict states, and various technical issues, including sequencing of policies and donor coordination, among others. I argue that while in many post-conflict settings traditional donors continue to account for most of the assistance funds, nonetheless, the entry of new actors is beginning to reshape the processes of post-conflict reconstruction and their impact is likely to be felt more keenly in the years to come as the engagement of emerging powers grows.
Recent studies are increasingly acknowledging the growing role of emerging powers in development and humanitarian assistance as well as in supplying investment capital to the countries of the global south. Yet, despite this increased focus the picture of this changing assistance and investment landscape remains unclear. This is especially true of emerging powers involvement in post-conflict countries. In this article, I draw some conclusions based on currently available data.
The emergence of new donors has often made the traditional donor countries of the Organization for Economic Cooperation and Development (OECD) visibly uncomfortable. Likewise, some international development nongovernmental organizations (NGOs) question the types of assistance that emerging powers are providing and the mechanisms through which they disburse their assistance. As I will show in this article, however, the available evidence indicates that impact of external assistance, whether from traditional or emerging donors, on developing countries, including post-conflict states, is much more complex than donor rhetoric suggests. However, the paucity of available data means that we do not yet have a complete picture of this changing environment.
A CHANGING ECONOMIC ARCHITECTURE: SOUTH-SOUTH INVESTMENT AND TRADE
In the 1990s, most of the global output was generated by the industrial economies of the global north, with roughly 39 percent coming from developing countries. In 2010, emerging economies accounted for 49 percent of the global growth domestic product (GDP) and by 2015, they are expected to generate more than half of the world’s output.2 Emerging economies are also becoming increasingly significant sources of outward foreign direct investment (FDI) flows, accounting for about 17 percent of the world’s total.3 At the same time, the direction of FDI flows has changed significantly in the last ten years, with a notable shift in the composition of FDI flows to the global south. Increasingly, countries of the global south are investing in each other’s economies while there is a simultaneous decline in global north’s investment in the global south. Between 1995 and 2000 south-south direct investment tripled from $14 billion to $47 billion and in 2008 south-south trade comprised over 26 percent of total global trade.4
Figure 1
Inter-regional South-South trade flows in 2008 (Billions USD)
THE CHANGING ROLE EMERGING POWERS IN ASSISTANCE DELIVERY
While emerging powers have become more prominent donors in recent years, it is important to remember that south-south assistance and collaboration is not a new phenomenon. These relationships can be traced back to the early 1960 and the formation of the Non-Aligned Movement. Spearheaded by countries such as Egypt, India and Indonesia, the Movement sought to chart an independent path for countries emerging from colonialism and who did not want to align with either the United States or the Soviet Union in the intensifying Cold War between the two superpowers. At the core of this movement and its opposition to imperialism and foreign domination was the principle of non-interference in domestic affairs of member states and the respect for their autonomy and state sovereignty.
Interestingly, the current rhetoric of emerging donor assistance reflects these earlier principles of non-interference in internal affairs of other states. In fact, emerging powers largely eschew the language of assistance used by traditional donors preferring to frame their relationships with developing countries in collaborative and cooperative terms. Emphasizing solidarity, their common history of domination by colonial powers, and the shared struggled in forging an independent economic, political and cultural path, emerging donors do not attach conditionalities favored by traditional donors, regarding such issues as the implementation of democratic reforms, environmental regulations or human rights norms as unwarranted interference.
Traditional and emerging donors have very different views about particular types of aid conditionalities, how aid should be disbursed, what it should prioritize and even how it should be defined. In spite of these differences, the relationships between different types of donors are not always as tense as some of the public rhetoric would suggest. In some cases, traditional and emerging donors are working together in post-conflict settings. For instance, USAID and Embrapa, the Brazilian Agricultural Research Corporation, work jointly on a development program in Mozambique bringing together agricultural research from both nations and extending their expertise to aid Mozambique. Brazil has also teamed up with the Japan International Cooperation Agency to develop and implement poverty reduction programs in Mozambique. In Liberia, China—which provides about $20 million in annual assistance (focused primarily on building infrastructure, education and healthcare)—participates as an observer in various donor coordination bodies.5
WHO ARE THE DONORS?
Assembling accurate data on how much emerging donors are providing and what kind of sectors and projects they support is difficult. Unlike the traditional donors who report to the Donors Assistance Committee (DAC) of the Development Co-Operation Directorate of the OECD, most emerging donors do not share information through DAC mechanisms.6 Many emerging donors are not collecting and reporting data systematically. Often emerging donors disburse assistance not through a single agency but rather through a variety of institutions, making it more difficult to track allocated funds. Finally, the cooperative ventures emerging donors establish with recipient countries often do not conform to how development assistance is measured by DAC donors. In other words, in this new donor landscape it is not at all clear what exactly should be counted as aid. Further complicating the pictures is that details about new trade, investment and lending arrangements between emerging donors and recipient countries are also often difficult to come by. Despite the difficulties of assembling precise figures, it is possible to provide at least rough estimates of the volume of south-south assistance.
The new economic powerhouses, such as China, Brazil, and Russia—and other emerging economies such as India, South Korea, South Africa, Turkey, Mexico, Indonesia and a number of Arab Gulf states, in particular Saudi Arabia, United Arab Emirates, and Kuwait—are playing a growing role in providing assistance to other countries in the global south. While in comparison to the traditional donors most emerging donor levels of assistance are still relatively small, the volume of assistance over the last decade has rapidly increased. For instance, between 2000 and 2009 South Korea’s development assistance (excluding bilateral debt relief) grew from $233.31 million to $825.8 million or more than 250 percent. Its bilateral assistance to Sub-Saharan Africa grew especially rapidly, increasing by 465 percent. By 2010 its development assistance amounted to $1.2 billion.7 Turkey’s development assistance between 2001 and 2010, increased from about $64 million to $966 million. Brazil’s bilateral and multilateral aid according to some estimates reached $1 billion in 2010. At the same time, emerging donors are forging their own partnerships outside the OECD framework, through organizations such as the India Brazil South Africa Forum (IBSA) or the BRIC (Brazil, Russia, India, and China) grouping.
Table 1 8
As noted earlier, much of emerging donors’ assistance philosophy rhetoric contrasts sharply with that of traditional donors and is generally couched in language of solidarity, mutual support and experience-sharing while preserving the principle of non-interference in the internal affairs of recipient countries. Examination of patterns of emerging donor assistance, however, reveals a much more nuanced picture than the one suggested by official rhetoric. These patterns indicate that, not surprisingly, multiple agendas and interests drive emerging donor decisions about where to funnel money, deepen trade relations and encourage the entry of private investors. In other words, despite the rhetoric that prioritizes solidarity, cooperation and mutual support the relationships that are forged between emerging powers and recipient countries suggest that what is driving south-south connections is also national security and economic interests.
EMERGING POWERS AND POST-CONFLICT STATES
As the most recent World Development Report notes, assistance to countries emerging out of violent conflict has grown significantly in the last couple of decades. And in the last ten years traditional donors—who have tended to dominate post-conflict reconstruction efforts—have been joined by new actors. “The past decade,” World Development Report points out, “has brought with it new energy, resources, and influence from a wider set of players. Middle and new higher-income countries have become important donors, investors and diplomatic and trading partners for countries affected by fragility, violence, and conflict. They bring with them additional resources, lessons from their own economic and institutional transitions and strong regional connections.”9
Emerging donors often invest especially heavily in their immediate geographic region. Thus, Russia pays particular attention to Central Asia; India has funneled much of its assistance to Afghanistan, Sri Lanka, and Nepal; Brazil has been an important actor in reconstruction of Haiti; South Africa has concentrated overwhelming majority of its aid in Sub-Saharan Africa and in particular the Congo; and the Arab Gulf countries have prioritized assistance to Somalia, Sudan and the Occupied Palestinian Territories.10
Although emerging donor assistance initially focused primarily on their immediate neighborhood, most are now looking to expand their reach. The Arab Gulf states also provide assistance to countries with large Muslim populations outside of the Middle East, for instance Bosnia-Herzegovina and Tajikistan. Brazil has been establishing much closer relationships with a number of African countries, in particular former Portuguese colonies. Likewise India and increasingly Turkey have been expanding their presence in Sub-Saharan Africa. Saudi Arabia has also become an increasingly important donor to the World Food Program.
Figure 2
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The types of assistance that emerging donors provide also differs. India often focuses on infrastructure development, education, and health. Brazil, on the contrary, tends to target agricultural development and provides technical training. South Africa often supports government capacity development projects and democracy promotion, while the Arab Gulf states tend to support infrastructure development and reconstruction projects. At the same time, unlike traditional donors, emerging powers generally do not engage post-conflict countries through DAC-type assistance programs but through active engagement of the private sector. Using private or mixed-ownership corporations, they invest heavily in various extractive industries, infrastructure development and agriculture.
The preliminary analysis of the available data therefore suggests that the impact of emerging donor assistance in post-conflict countries is more complex than either the traditional or emerging donor rhetoric suggest. Recipients of emerging donor assistance often appreciate the immediate impact that such assistance can have, in particular when it is in the form of infrastructure construction. They contrast it with traditional donor aid which focuses on capacity building and whose effects are often not particularly tangible to targeted communities. On the other hand, private and private/public investments from emerging donors to post-conflict countries has met with mixed reactions among communities in these states. While in some cases the newly created jobs are a welcome addition in these high unemployment environments, these firms also contribute to popular frustration with unequal distribution of benefits, concerns over environmental degradation and labor rights. However, placing all emerging donor into a single category obscures more than it reveals. These donors are an extremely diverse group of actors, with differing histories, aspirations and interests, distinctive political and economic systems and different regional and international ambitions. These differences in turn affect the policies these emerging powers pursue in post-conflict environments.
Agnieszka Paczynska is an Associate Professor at the School for Conflict Analysis and Resolution at Mason.
ENDNOTES
- I would like to thank Sasidaran Gopalan for his research assistance on this project and in particular for the data analysis of emerging donors ‘engagement in post-conflict countries. [↩]
- International Monetary Fund. World Economic Outlook, October 2010. [↩]
- Accenture. Flow of Capital. https://microsite.accenture.com/mpw/concepts/Pages/FlowOfCapital.aspx. [↩]
- http://www.one.org/report/2010/en/country/emerging/ [↩]
- Africa Economic Outlook 2011. [↩]
- Many emerging donors did not contribute to the development of the DAC reporting mechanisms and therefore see little reason to participate in the organization. [↩]
- http://www.one.org/report/2010/en/country/emerging/ [↩]
- Humanitarian Policy Group. [↩]
- World Development Report 2011, 183. [↩]
- Harriet K. Rudd and Tonje M. Viken, “Changing the Face of Aid,” Perspectives, no. 1, 2011, 13. [↩]
