East Asian Perspectives of Ownership:

Managing Donors and Owning Policies

1. Ownership in the Development Process

There is a shared consensus on the importance of ownership in the development process, and numerous literatures discuss how the government and donors should better collaborate to promote ownership. Certainly, aid facilitates recipient countries’ access to finance, goods, and knowledge and technology, which are essential inputs to their socio-economic development. However, it is also true that there is a tension between ownership and aid because excessive dependence on aid may constrain recipient countries from exercising policy autonomy.

What is true ownership? What are the critical elements of ownership that developing countries should establish in order to sustain poverty reduction and growth? How have some countries succeeded in dealing with donors and exercising policy autonomy? How can donors foster (or hamper) true ownership by developing countries? These are the central questions to be examined in this lecture.

Development is an interactive process of “foreign” and “indigenous” elements (Iwasaki 1996, K. Ohno 2000). On the one hand, latecomer countries face the need to acquire the “foreign” elements—such as modern technology, knowledge, and organizational structure—in the form of aid, trade and investment by the private sector, and so on. On the other hand, each country has “indigenous” elements—such as values and social institutions unique to that country—because the “economy is embedded in society” (Karl Polanyi). Therefore, true ownership requires that while implementing policies and creating the necessary institutions and attitudes conducive to development, the governments of developing countries recognize the society’s unique initial conditions, identify bottlenecks and potential obstacles, deal with unexpected shocks, set long-term targets, and design comprehensive and concrete annual plans to achieve them.

Although ownership is a multi-dimensional concept, we concentrate on the level of national development strategies and policies, charged by the central government. This is because economic development is a process that must be undertaken with the nation-state as the implementing unit and in its early stages the central government must act as the initiator of change by establishing a development vision, translating it into practical measures within hard budget constraints, and interacting with external and domestic partners for resource mobilization, coordination and implementation.

2. East Asian Perspectives of Ownership—as Compared to Conventional Definition

“Ownership” is relatively new terminology in the development literature. But, during the 1990s, its importance has been increasingly recognized by the international aid community—largely driven by the lessons learned from structural adjustment programs and the past project aid (especially in Sub-Saharan Africa). Now, country ownership has become a guiding principle of policy formulation and implementation in developing countries (e.g., the Poverty Reduction Strategy Papers, initiated by the World Bank) and is regarded as the top hierarchy of development partnership between recipients and donors (OECD/Development Assistance Committee 2005).

Most literature defines ownership in terms of recipient commitment to and capacity for design and implementation of policy reform (Johnson & Wasty, 1993; Leandro, Schafer & Frontini, 1999; Morrissey, 1999). For example, Morrissey (1999) deconstructs government ownership into: preference, political capacity, political commitment, administrative capacity and institutional capacity. Earlier, Johnson and Wasty (1993) measured “borrower ownership” of adjustment programs using four independent variables: locus of initiative; level of intellectual conviction among key policy makers; expression of political will by top leadership; and efforts toward consensus-building among various constituencies. These variables were refined by Killick, Gunatilaka and Marr (1998) by adding “institutionalization of the measures within the policy system.” The above definitions are widely accepted and frequently cited in the literature of aid and development policies, including the recent World Bank publication on country ownership of Poverty Reduction Strategies (Entwistle & Cavassini, 2005).

However, we argue that the conventional definitions fail to capture the dynamic and interactive nature of catch-up process, and thus do not sufficiently recognize some of the essential dimensions of ownership to be aspired by latecomer countries. Despite the recently intensified global attention to country ownership, Japan has embraced such concept for long, phrasing it as “self-help effort.” This is closely related to Japanese aid philosophy, which stems from its own experiences in catching up with the West since the Meiji-era, reconstructing the nation after the World War II, and supporting East Asia’s successful economic take-off. We also believe that a spirit of “self-help effort” has been widely shared and practiced in East Asia.

The deeper understanding of the nature of the development process (as discussed above) and the East Asian experiences reveal the following essential elements of ownership that are insufficiently covered in today’s global debates.

• Willingness to graduate from aid, supported by an “exit plan”;

• Managing policy ideas, with selectivity and through “translative adaptation”; and
• Managing donors and aid, as part of the entire development process.

First, ownership should be based on the strong will and commitment of national leaders to build a self-reliant economy. Development plans and strategies should assume eventual “graduation” from aid and be supported by a concrete vision and realistic measures for growth promotion and domestic resource mobilization (an “exit plan”). Although most national development strategies embrace equitable and sustainable growth as their stated objectives, this should not be simply a slogan.

Second, ownership should include the capacity to reinterpret relevant elements of /exogenous models(s) of development strategy (“translative adaptation” by Maegawa 1994) and adapt them to the prevailing conditions in a particular developing country. But, it is often the reality that “some donors seem to believe that ownership exists when recipients do what we want them to do but they do so voluntarily” (Helleiner 2002). We believe that true ownership should mean the capacity of a developing country to choose from alternative policy prescriptions—even if they are not granted by the international aid community. When a country decides to rely on external advice or foreign models, policymakers and technocrats must conduct a thorough assessment of alternatives and carefully adapt the policy content and sequencing to the country-specific context at both the design and implementation stages.

Third, ownership should be viewed as the capacity to manage the entire development process and hence coordinate aid as part of its own coherent development effort. The government should initiate and formulate a national development plan and strategy, identify specific needs to be financed by aid, presents its aid requests and negotiates with donors, matches aid programs and projects with its own internal resources, implement various developmental activities, and monitors and evaluates results. Here, the aid relationship is just one component of development management, a means to achieve a national goal of promoting growth and establishing wealth-sharing mechanisms on a nation-wide scale (‘shared growth’).

3. Two Types of Ownership

Based on this understanding, we consider it important to distinguish two types of ownership: (i) donor management; and (ii) development management (including the management of policy ideas), which is concerned with managing the entire development process by recipient governments.

Donor management refers to the capacity of owning the relationship with the donor community. This requires the leadership in policy dialogue, coordination of diverse requests, selective adoption of donor advice, handling friction with diplomatic grace, and maintaining national pride. This capacity is required and exercised mainly by a relatively small segment of the government, namely the administrative body in charge of aid receipt. By contrast, development management is concerned with owning development policies. This requires the capacity for identifying national development goals, rallying human and nonhuman resources toward these goals, setting coherent and realistic action plans and timetables, executing them without delay, responding to unforeseen situations, coping with income gaps and other problems generated by growth, management of globalization and associated risks, and so on. As such, it is a much broader task than donor management. It calls for the execution of development itself, of which the mobilization of ODA is only a part. It must be supported by the concerted actions of all administrative bodies both horizontally and vertically. In fact, intra-governmental coordination is the prerequisite for owning policy autonomy and content. In heavily aid-dependent countries, it is not easy in practice to draw a line between the management of aid resources and that of the country’s own development. Nevertheless, the two are conceptually different.

Figure 2 illustrates two extreme types of ownership. Type 1 (on the left) is where the government is capable of managing the entire development process and hence coordinates aid as part of its own coherent development effort. The government initiates and formulates a national development strategy, identifies specific needs to be financed by aid, presents and negotiates its aid requests with donors, matches its own internal resources with aid programs and projects, implement various developmental activities, and monitor and evaluate their results. By contrast, Type 2 (on the right) is where the government and donors assume “joint responsibility” for managing the development process. Due to capacity constraints, the government faces fragmented aid, as well as difficulty in formulating and presenting policy content. In this case, the government and donors jointly decide the content of development policy and the allocation of budget including aid money, and conduct the monitoring of entire development activities. Development management becomes increasingly a process of donor coordination, rather than government coordination of aid resources.

In our view, the East Asian “miracle” economies—including South Korea, Taiwan, Singapore, Malaysia, Thailand—had pursued and accomplished the Type 1 ownership. Although the “miracle” governments did not necessarily have sufficient institutional basis at the initial stage of development, they made strenuous efforts to establish core government institutions for strategic planning, resource management, and coordination and to build a cadre of economic technocrats insulated from narrow political pressures (World Bank, 1993). Under strong political leadership, such economic technocrats formulated and implemented growth-oriented economic policies—for example, by diversifying and upgrading industrial structure—while addressing social and equity concerns. These governments selectively utilized aid and managed it as integral part of the development process. The economic technocrats absorbed, internalized foreign knowledge, and eventually institutionalized it into the local context. Many of these governments are now emerging as donors, too.

In reality, most developing countries fall between Type 1 and Type 2. Especially the governments of heavily aid-dependent countries, where aid accounts for the substantial part of development financing and donors possess the greater financial power, are constrained from exercising genuine autonomy. Nevertheless, to establish true ownership, the government must be at the center of development process, and it is vitally important to develop a vision for promoting shared growth, build country systems for mobilizing financial and human resources, and nurture local expertise in managerial and technical skills to realize the Type 1 ownership. In this regard, we are concerned that recent donor discussions of ownership tend to focus on aid relationship. Such discussions assume that donors dominate development policy agenda and that the development process in recipient countries is almost identical with aid relationship.

The experience of Botswana shows that high levels of aid dependency do not always undermine the development of good leadership and effective public administration. A combination of good leadership and policies that boost self-reliance can ensure that high levels of aid are well-used to promote a national development strategy (Brautigam and Botchwey 1999). National development planning and its integration with the annual budgetary process has been the foundation of Botswana’s development management machinery, and the basis for managing its mineral rent and foreign aid. Moreover, the Botswana government took control of the aid process right after independence and made sure that aid was integrated into its own national budgeting and planning procedures. Botswana refused donor proposals that did not fit well with its own priorities and insisted on tailoring donor activities to the government’s way of doing things (Hopkin 1994, Rakner 1996, Nordas et. al. 1998).

Being a latecomer country, Vietnam is yet to achieve the Type 1 ownership on a full-scale. But, the country exhibits strengths in donor management and is distinguished from Type 2. For example, the Vietnamese government is strongly committed to “modernization and industrialization” and wishes to develop a self-reliant economy. It has managed donor relationships fairly well and attracted substantial amount of aid without losing control of the course of policy discussions. The government is also keen to listening to external advices, but mindful of the need to adapt them to the country-specific context. All these are commendable for a low-income country. Nevertheless, we consider that there is much to be desired in the second dimension of ownership (development management)—when compared to the level exercised by advanced East Asian economies during their economic take-off. While the Vietnamese government rightly recognizes the general direction of desirable development strategies, it lacks the capacity to translate them into concrete policy measures and actions.

For historical and political reasons, Cambodia is more handicapped than Vietnam. The total destruction of institutions and human resources by Khmer Rouge left devastative impact over the country. Moreover, massive aid infusion during the post-war, reconstruction period has made the government extremely reliant on donors. Thus, Cambodia remains close to the Type 2 ownership. The country struggles for regaining ownership from donors as it moves from the reconstruction period to the development process. Cambodia is still heavily dependent on external assistance—not only financial assistance but also foreign technical assistance in designing development policy, programs, and development projects. Development policies and programs are essentially conceived, prepared, and proposed by donors in Cambodia because many foreign advisers and consultants supplement and even substitute for the work of government officials. Therefore, building capacity for donor management is the first challenge faced by Cambodia.

4. Examples: International Comparison

In the lecture, we will discuss the comparison of East Asian countries—Vietnam, Cambodia, and selected East Asian Miracle economies (e.g., South Korea, Thailand, and Malaysia) in their catch-up era—in light of the two types of ownership mentioned above. In particular, we pay attention to how each country has managed donors and the development process, covering both achievements and the challenges they have faced.

Source: GNI and ODA data based on the World Bank.

These countries vary significantly in terms of their initial conditions, not only economic but also historical and political ones. Thus, our intention is not to rank these countries, as if they had been at the same starting point. Our intention is to illustrate variations in ownership type through concrete examples and discuss the nature and levels of ownership that should be aspired and ultimately established by developing countries.

Lastly, we would like to stress that the concept of ownership should be viewed from a dynamic, not static, perspective. Although we have illustrated the challenges faced by Cambodia and Vietnam, it is true that these governments have been making genuine efforts to foster true ownership in the development process. Furthermore, the existing literature reveals that the “East Asia Miracle” economies did not necessarily have strong development policy, planning and coordinating capabilities in the early stage of aid receipts.

References

Department for International Development (2005) Partnership for poverty reduction: rethinking conditionality, A UK policy paper, March 2005.  download
　

Entwistle, J., & Cabassini, F. (2005). An Operational Approach for Assessing Country Ownership of Poverty Reduction Strategies, Volume 1: Analysis and Implications. Washington D.C.: Operations Policy and Country Services, World Bank.

Johnson, J. H. & Wasty, S. S. (1993). Borrower ownership of adjustment programs and the political economy of reform (Discussion Paper No. 199). Washington DC: World Bank.  download

Morrissey, O. (2001). Pro-poor conditionality for aid and debt relief in East Africa. Paper prepared for the WIDER Development Conference on Debt Relief, Helsinki, 17-18 August 2001.  download

Ohno, I. (2005) Ed. True ownership and policy autonomy: Managing donors and owning policies. Tokyo: GRIPS Development Forum.  download

Ohno, K. (1998). Overview: creating the market economy pp.1-50, Chapter 1, Japanese views on economic development: Diverse paths to the market (In K.Ohno and I.Ohno (Eds.))