Where ‘North’ And ‘South’ Learn From Each Other

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By Ramesh Jaura | IDN-InDepth NewsAnalysis

BERLIN (IDN) - The Cuba missile crisis was moving towards a peak when President John F. Kennedy proposed in May 1961 the creation of a Development Centre at the Paris-based Organisation for Economic Cooperation and Development (OECD) to bridge the industrialised nations and the developing world. The Centre has meanwhile developed into a forum not only for South-South but also South-North and North-South cooperation, enabling the industrialised countries “to learn from, and maybe import, some of the policy experiences of the South”, says its director Mario Pezzini.

“Such mutual learning will become increasingly important as the interdependence of the world intensifies and the wealth shifts from the OECD region to the larger emerging economies continues,” writes Pezzini in the publication commemorating ‘50 years of Sharing Knowledge’. “This process,” he says, “has created new demands on governments that go beyond growth, which alone does not bring prosperity or progress. One of the major tasks going forward is to help countries translate their increasing capacity for growth creation into social and economic progress on a wider scale.”

Such a forward-looking view apparently emerges from the fact that the Centre is an institution where governments, enterprises and civil society organisations informally discuss questions of common interest. Its Governing Board includes 24 of the 34 OECD countries and 18 developing and emerging economies as full members.

The OECD members of the Development Centre, established by decision of the OECD Council on October 23, 1962 are: Austria, Belgium, Chile, the Czech Republic, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Korea, Luxembourg, Mexico, the Netherlands, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey and the United Kingdom.

The 18 non-OECD members, comprising developing and emerging economies are: Argentina, Brazil, Cape Verde, Colombia, Costa Rica, Dominican Republic, Egypt, India, Indonesia, Israel, Mauritius, Morocco, Panama, Peru, Senegal, South Africa, Thailand and Vietnam.

Of these, countries as diverse Indonesia, Mauritius, Peru, South Africa and Thailand together with five OECD members constitute the Bureau of Ten with Germany in the Chair – offering a valuable forum for South-North cooperation in search of innovative solutions to the global challenges of development.

“At its outset, the Centre sought to help spread the strong economic growth in OECD countries of the post-war boom to the countries in the South – this was the primary goal of development work. In the last half-century, many of these countries have shown strong economic performance, on par with and even exceeding the performance of OECD countries. The magnitude of the accompanying shift in wealth is self-evident. During the 1990s, 12 developing countries achieved growth rates equivalent to double the OECD average. Over 2000-10 that number rose to 83,” notes Pezzini.

No one-size-fits-all

A Professor in Industrial Economics at the Ecole Nationale Supérieure des Mines de Paris as well as in U.S. and Italian Universities, Pezzini adds: “Beyond such poignant statistics lies a more nuanced story: there is no single trajectory for pursuing economic growth, no one-size-fits-all solution to development gaps and middle-income traps. The diversity and complexity of successful policies for development demand new analysis of what works and what doesn’t – and in which context. To inform this analysis, the Centre put in place channels for policy dialogue within the OECD that had hitherto been unimaginable: giving developing countries a direct voice at the table.”

Such statements by Pezzini sound logical, considering that he is the first director of the Development Centre with roots within the OECD where he held several senior management positions before joining the Centre in 2010. He was Deputy Director of the Public Governance and Territorial Development Directorate, and prior to that, Head of the Regional Policy Division, covering policy analysis on urban development, rural development, regional competitiveness and public governance.

Underlying this ‘no one-size-fits-all’ approach is the recognition that institutions and geography matter as much as markets. Which means that the same policy implemented in different areas, or in similar places but with different institutional frameworks, will have a different outcome.

A conversation with Pezzini during his visit to Berlin reveals his firm conviction that this situation demands a new thinking on policy-making and recommendations that reflect the context and challenges of implementation. In the light of this, the Centre serves as a vehicle for developing and disseminating tailored policy recommendations that reflect the specific assets and obstacles of a given country or region. Making reform happen is the Development Centre’s objective.

Venture Philanthropy

The Development Centre published a landmark study in February 2014, titled Venture Philanthropy in Development: Dynamics, Challenges and Lessons in the Search for Greater Impact, undertaken by the one-year old Global Network of Foundations Working for Development (netFWD), by way of a first step towards offering an in-depth insight on how foundations working for development are evolving in their search for greater impact.

Introducing the report, Pezzini says: “Although this trend emerged about a decade ago, the prominence of new ways to invest philanthropic capital are now well established and influencing the development ‘galaxy’. The recent economic crisis confirmed this trend further, with both high net worth individuals and well-established as well as new foundations committing to funding development challenges using innovative tools and approaches such as impact investment, and marginally compensating for governments’ budget cuts in official development assistance (ODA).”

G8 Leaders acknowledged the relevance of impact investment at their 2013 Summit, resulting in the creation of a G8 Social Impact Investment Taskforce. On its part, the Development Centre has been closely observing and following this movement, given the potential implications for developing countries, particularly as a large share of venture philanthropic flows and innovative business models target developing and emerging economies.

Pivotal in the Post-2015 context

The study offers insights into an innovative and cutting-edge development theme, which is becoming pivotal in the Post-2015 context and in discussions on financing for development. “Beyond being an important contribution aimed at foundations envisioning a similar transformation towards venture philanthropy, its potential also lies in helping bridge the knowledge and cultural gap between foundations and governments,” says, adding: “The latter often lack an in-depth understanding of the philanthropic sector, its drivers, actors and influence.”

Bridging this is particularly timely, in light of the efforts that have taken place since the Accra and Busan High Level Fora to “enlarge the tent” of development cooperation to new actors and move from aid effectiveness to development effectiveness, stresses Pezzini. In that sense, the Mexico Ministerial of April 2014 will be a stepping stone, given that it will be the first time that foundations are invited to the table, he adds. “The study and netFWD more broadly, confirm the role that the OECD Development Centre plays as convener and platform for policy dialogue between development stakeholders.”

Another important report by the OECD Development Centre is the annual Economic Outlook for Southeast Asia, China and India 2014, which says that the region will continue to play an important role in global growth. Indonesia is projected to be the fastest-growing ASEAN-6 economy with an average annual growth rate of 6.0% in 2014-18, followed by the Philippines with 5.8%. Real GDP growth in Malaysia and Thailand is projected to increase by an annual 5.1% and 4.9% respectively, led by domestic demand, especially in infrastructure investment and private consumption. Singapore’s economy is forecast to grow by 3.3%. Cambodia, Lao PDR, Myanmar and Viet Nam are expected to grow at a robust pace over the medium term.

Emerging Asia

Commenting the report, Development Centre’s director Pezzini says: “While Emerging Asia has made remarkable economic progress over the past four decades, some of the middle-income developing economies face difficult challenges to sustain their long-term growth and move beyond the middle-income trap. Indeed, success will require fundamental changes in economic structure and further development of the modern services sectors.”

In the “best scenario”, if fundamental changes are applied, China and Thailand could become high-income countries within 20 years. On the other hand, Viet Nam and India will need more than 40 years to reach the high-income group. An important finding of the report is that to grow beyond the middle-income trap, these Emerging Asia countries need to shift away from growth that is driven primarily by factor accumulation. “They should rather embrace growth based on productivity increases driven by improvements in the quality of human capital and innovation.”

The Outlook examines policy insights for China, India, Indonesia, Malaysia, the Philippines, Thailand and Viet Nam that come from the development experiences of other advanced Asian economies such as Japan, Korea and Singapore, thus lending South-South dimension to the study. [IDN-InDepthNews – March 23, 2014]

Photo: OECD Development Centre Director Mario Pezzini | Credit: OECD

2014 IDN-InDepthNews | Analysis That Matters

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