Future Calling Blog by Peter Konijn
This policy paper looks into the challenges and opportunities for traditional donors, like the Netherlands, that arise from the role of emerging powers in the developing world. It argues that most of these challenges and opportunities are the result of different approaches to development in low-income countries.
The approach of traditional donors is aid-centred and mostly de-linked from commercial flows of trade and investment, with an emphasis on social development and good governance.
The emerging powers have a business-oriented approach in which aid is a minor ingredient of large, integrated packages of (concessional) loans, trade and investment, with an emphasis on natural resources extraction and infrastructure development.
The emerging powers challenge the aid-centred approach as they provide large-scale development financing - not necessarily aid! - on competitive terms. They engage low-income countries on the basis of political equality and do not attach political conditions to their financing. This contrasts sharply with the approach of traditional donors characterised by a hierarchical donor-recipient relation and political conditionality. The emerging powers compete with traditional donors for political influence and access to natural resources and markets.
There are also opportunities for cooperation as emerging powers have a positive impact on economic growth in many developing countries. The approaches can be seen to complement each other. The investment in human capital and institutional capacity by traditional donors may complement the financing of economic hardware and infrastructure by emerging powers.
The policy brief first describes how emerging powers are changing the context of international cooperation: transformation of world economy, changing global distribution of poverty, aid architecture and concept of development. The policy brief then looks into South-South cooperation and ends with a discussion of the main implications for traditional donors.
By Peter Konijn, Knowing Emerging Powers Foundation
Download the policy paper "International Cooperation in a Multipolar World: The Role of Emerging Powers" here.