Policy coherence for development : promoting institutional good practice

176 Pages·2005·2.407 MB·English

by  OECD

The Development
The Development Dimension
Dimension
Policy Coherence for Development
PROMOTING INSTITUTIONAL GOOD PRACTICE
Policy Coherence
Policy Coherence for Development: Promoting Institutional Good Practice is essential reading
for anyone interested in the role of OECD government policies in achieving internationally
agreed development goals, including those contained in the Millennium Declaration (MDGs). P for Development
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OECD governments are committed to helping achieve the MDGs, an ambitious set of targets
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for reducing world poverty and improving education, health and the environment by 2015. As IC
a result of concerted efforts, OECD country aid to developing countries has now reached over Y

$78 billion. In addition, flows such as foreign direct investment and remittances from OECD C
countries to the developing world are each around $50 billion. O PROMOTING INSTITUTIONAL
H
E GOOD PRACTICE
However, these flows to developing countries are dwarfed by OECD country spending on R
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such items as armaments and agricultural subsidies. Military expenditure has grown to over N
$950 billion in 2003, and total support to agriculture is about five times greater than amounts C
spent to reduce world poverty. The counter-productive effects of these and other policies call E

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for institutional mechanisms to ensure that OECD governments take account of development O
goals and impacts when formulating policies across the policy spectrum. While recognising R
the role of development co-operation, as well as the importance of developing countries’ own D
policies, today’s decision makers must address a wide range of domestic and foreign policies E
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that affect developing countries as much as, if not significantly more than, development E
policies do. L
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Policy Coherence for Development: Promoting Institutional Good Practice sets out the M
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latest thinking on institutional approaches to help governments achieve policy coherence
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in support of development. It provides a synthesis of lessons learned from peer reviews of T

OECD countries, specific case studies, and recent workshops involving senior government

officials. It offers practical ways forward for mustering political will, building analytical capacity,
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improving co-ordination mechanisms, and taking action in specific priority areas. It suggests o
an analytical framework to help assess and compare how well countries join-up policies m
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across government to meet agreed development goals. Achieving policy coherence is one of t
the most difficult political and economic challenges of development, and this book highlights in
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examples of good institutional practice among OECD countries in addressing this issue.
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ISBN 92-64-10854-8
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43 2005 15 1 P
The Development Dimension
Policy Coherence
for Development
PROMOTING INSTITUTIONAL GOOD PRACTICE
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
The OECD is a unique forum where the governments of 30 democracies work
together to address the economic, social and environmental challenges of globalisation.
The OECD is also at the forefront of efforts to understand and to help governments
respond to new developments and concerns, such as corporate governance, the
information economy and the challenges of an ageing population. The Organisation
provides a setting where governments can compare policy experiences, seek answers to
common problems, identify good practice and work to co-ordinate domestic and
international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the
Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand,
Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey,
the United Kingdom and the United States. The Commission of the European
Communities takes part in the work of the OECD.
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gathering and research on economic, social and environmental issues, as well as the
conventions, guidelines and standards agreed by its members.
This work is published on the responsibility of the Secretary-General of
the OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of the Organisation or of the governments
of its member countries.
Publié en français sous le titre:
La cohérence des politiques au service du développement
PROMOUVOIR DE BONNES PRATIQUES INSTITUTIONNELLES
© OECD 2005
No reproduction, copy, transmission or translation of this publication may be made without written permission.
Applications should be sent to OECD Publishing: [email protected] or by fax [phone]. Permission to photocopy a
portion of this work should be addressed to the Centre français d'exploitation du droit de copie, 20, rue des
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FOREWORD AND ACKNOWLEDGEMENTS –

Foreword
Meeting the challenges of development requires developing and
developed countries to work together in partnership. For nearly a decade, the
OECD has advocated more effective partnerships. In Shaping the
21st Century (1996), the Development Assistance Committee (DAC) set out
the partnership approach as the basis for development co-operation. This
vision received new impetus from the Millennium Summit (2000) and the
international conferences in Doha (2001), Monterrey (2002), and
Johannesburg (2002). In these conferences, the international community set
out key goals for sustainable development and poverty reduction, as well as
a series of ambitious international commitments to achieve the goals.
The majority of these commitments require developing countries to
undertake policy reforms, since development results will depend primarily
on the success achieved by these countries as they integrate into the world
economy. At the same time, OECD member countries have to address these
challenges as their part of the grand bargain on development partnership. In
line with principles of partnership, OECD and developing countries have
agreed to mutual accountability for meeting these commitments.
Accordingly, OECD countries aim to increase the funds allocated to
development co-operation. They have also committed themselves to try to
address aspects of incoherence in their foreign and domestic policies that
can have an adverse impact on developing countries. Known in the OECD
as policy coherence for development, this commitment has attracted
increased OECD attention over several years.
The 2002 Ministerial Statement, “OECD Action for a Shared
Development Agenda” (see Annex), points out that, when formulating
policies across the policy spectrum, OECD countries should take account of
the potential impact on developing countries. At the same time, developing
countries should be responsive to policy lessons of OECD countries. This
mutual listening and respect of different policy communities can apply
across virtually all areas of OECD policy work. For example, developing
countries could integrate into their own policies OECD principles of good
governance and experience in investment, trade, migration and environment.
POLICY COHERENCE FOR DEVELOPMENT: PROMOTING INSTITUTIONAL GOOD PRACTICE – ISBN-92-64-10854-8 © OECD 2005
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– FOREWORD AND ACKNOWLEDGEMENTS

In response to the 2002 Ministerial Statement, the OECD launched a
programme on policy coherence for development. Its main purpose is to
facilitate and support efforts of OECD countries to encourage systematic
promotion of mutually reinforcing policy actions relevant to developing
countries, creating synergies across government departments and agencies.
Building on the OECD’s strength in bringing together work in different
policy areas, the programme strives to strengthen policy coherence, to help
fill gaps in relevant analytical work, and to gain a better understanding of
institutional arrangements in OECD countries designed to address these
issues.
In 2003 the Development Co-operation Directorate (DCD) launched a
process aimed at drawing lessons from the peer reviews undertaken by the
Development Assistance Committee (DAC), as a contribution to the OECD
programme on policy coherence for development. Following a technical
workshop in autumn 2003 for OECD staff from different directorates, DCD
initiated an informal seminar series to address different aspects of policy
coherence for development, focusing on issues identified by other policy
areas. This series culminated in May 2004 with an international policy
workshop. Bringing together senior officials from different policy
communities in OECD and partner countries, as well as representatives of
NGOs and OECD staff, this workshop addressed the institutional
approaches of OECD members for addressing policy coherence for
development. Participants at the workshop discussed lessons gathered from
recent peer reviews and the informal seminar series, specific case studies
and specially commissioned papers.
The present publication, Policy Coherence for Development: Promoting
Institutional Good Practice, sets out the key lessons learned from this
process. It focuses on how OECD/DAC governments organise themselves to
respond to the challenge of policy coherence for development. It describes
some current institutional approaches of DAC members for bringing
together all aspects of policy that impact on developing countries, giving
examples from recent DAC peer reviews. The publication also highlights
emerging good practice among DAC members.
POLICY COHERENCE FOR DEVELOPMENT: PROMOTING INSTITUTIONAL GOOD PRACTICE – ISBN-92-64-10854-8 © OECD 2005
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FOREWORD AND ACKNOWLEDGEMENTS –

In order to achieve its aims the OECD has set up a number of specialised
committees. One of these is the Development Assistance Committee, whose
members have agreed to secure an expansion of the aggregate volume of resources
made available to developing countries and to improve their effectiveness. To this
end, members periodically review together the amount and the nature of their
contributions to aid programmes, both bilateral and multilateral, and consult each
other on all other relevant aspects of their development assistance policies.
The members of the Development Assistance Committee are Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain,
Sweden, Switzerland, the United Kingdom, the United States and the Commission of
the European Communities.

The Peer Review Process
The OECD programme on policy coherence for development addresses
macroeconomic, sectoral, regional and country issues, as well as institutional
aspects. The results of the work are published in the development dimension
series. The current publication is a contribution of the DAC to this series. While
the other volumes in the series deal with substantive policy issues (trade,
agriculture, fisheries, etc.), the current publication focuses on the institutional
approaches taken by OECD DAC members to coherence issues. It draws its
evidence mainly from the DAC peer reviews undertaken during 2001-2003,
supplemented by other material available to DCD.
The DAC conducts peer reviews to improve the individual and collective
efforts of DAC members. Each peer review team comprises two DAC members,
acting as examiners, and staff from the Secretariat. The DAC examines five
programmes annually; there is a review of each member every four to five years.
In the course of the peer review, the team gathers information about aid policies
and strategies, the volume of aid, its distribution and management. Since 1996, the
peer review teams have increasingly described and analysed other domestic and
foreign policies that may have an impact on development, and the institutional
arrangements by which the reviewed country addresses the challenges of policy
coherence for development. There have been DAC publications on specific
coherence issues such as aid untying, trade and development, global environment,
and the broader development dimensions of information technology, investment,
and conflict.
As well as organising the DAC peer reviews, DCD monitors the efforts made
by OECD countries in other ways. These monitoring exercises also address issues
of policy coherence for development. For example, DCD monitors the collective
effort of the Global Partnership for Development (Goal Number 8 of the Millennium
Development Goals).

POLICY COHERENCE FOR DEVELOPMENT: PROMOTING INSTITUTIONAL GOOD PRACTICE – ISBN-92-64-10854-8 © OECD 2005
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– FOREWORD AND ACKNOWLEDGEMENTS

Acknowledgements
The DCD Review and Evaluation Division organised the policy workshop
“Institutional Approaches to Policy Coherence for Development” in May 2004.
Readers can find more information on the OECD website accessible at
www.oecd.org/pcd/institutionalapproachesworkshop/.
We extend our thanks to all those workshop participants who provided
papers and acted as key speakers in panel discussions and breakout groups,
notably Kiyo Akasaka, Haidari Amani, Sergio Amaral, Tom Arnold, Guido
Ashoff, Thierry Béchet, Anne Bordé, Niels Breyer, Jean-Daniel Gardère, Otto
Genee, Eveline Herfkens, Rolph van der Hoeven, Ruth Jacoby, Margaret
Kakande, Masahiro Kawai, Gunvor Kronman, Richard Manning, Alan
Matthews, Vincent Mazauric, Ida McDonnell, Mark McGillivray, Dianna
Melrose, Saraswati Menon, Matthias Meyer, Apollinaire Ndorukwigira, Michael
Roeskau, Sayuri Shirai, Antoine Simponpietri, Veli-Pekka Talvela, Alexandra
Trzeciak-Duval, Christian Valenduc, Jan Vandemoortele, Klemens Van de
Sand, Zia Qureshi, and David Roodman. We are grateful to them and to the
authors of the workshop papers for permission to quote their work here: Sara
Dahlsten, Ebba Dohlman, Jude Fransman, Stephany Griffith-Jones, Ethan
Kapstein, Lyndsay McLean-Hilker, Marjolaine Nicod, Robert Picciotto,
Caroline Silberztein, and Henri-Bernard Solignac-Lecomte. The Bibliography
includes these authors. Thanks are also due to many staff from across the OECD
development policy community who contributed to the success of the workshop
by acting as chairs or moderators of discussions and note-takers. Particular
thanks are due to Sean Conlin, ably assisted by Sara Dahlsten and Katie Taylor,
who took the initiative to organise the policy workshop and the preceding
seminars. We greatly appreciate the generous voluntary contributions of
Canada, Ireland, Japan, the Netherlands, Sweden, and the United Kingdom,
which made possible the workshops and other preparatory studies.
A team of OECD staff prepared this publication. Sean Conlin was
responsible for the overall design and editing. To prepare the individual
chapters, Sara Dahlsten, Lyndsay McLean Hilker, Andrea Liverani, and
Alexandra Trzeciak-Duval synthesised many written workshop papers and
summaries of workshop discussions. Rose McAllister gave assistance with
technical aspects of the publication. Finally, Carola Miras and Katie Taylor
prepared the document for publication. We thank them all.
POLICY COHERENCE FOR DEVELOPMENT: PROMOTING INSTITUTIONAL GOOD PRACTICE – ISBN-92-64-10854-8 © OECD 2005
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TABLE OF CONTENTS –

Table of Contents
Preface...............................................................................................................15
Executive Summary..........................................................................................17
Chapter 1 Meeting the Challenges of Development Today..........................21
Improving the policy responses of rich countries to global challenges..........22
What is the progress in meeting commitments at the global level?................23
Partner country efforts to meet challenges and commitments....................25
Progress of OECD countries in meeting commitments..............................26
What is policy coherence for development?...................................................27
What are the current challenges for achieving policy coherence
for development?............................................................................................30
Build political will to adopt coherent policies that are supportive
of development............................................................................................31
Coherent policies for development need good analysis and
co-ordinated policy-making........................................................................31
Ensure concrete actions on key coherence issues, especially trade
and agriculture............................................................................................32
Achieve greater balance in the global governance architecture..................33
What is the way forward to ensure policy coherence for development?........34
Chapter 2 OECD Interest in Policy Coherence for Development...............37
Increasing importance of policy coherence for development for the DAC....38
The importance of institutional mechanisms for policy coherence
for development..............................................................................................43
Working towards an analytical framework for assessing
institutional capacity.......................................................................................45
How can political leadership be effective in promoting policy
coherence for development?.......................................................................46
How could countries build capacity in the policy-making process?...........50
Are countries overcoming institutional challenges in different
policy areas?................................................................................................54
Assessing the results of policy coherence efforts........................................54

POLICY COHERENCE FOR DEVELOPMENT: PROMOTING INSTITUTIONAL GOOD PRACTICE – ISBN-92-64-10854-8 © OECD 2005
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– TABLE OF CONTENTS

Chapter 3 Effective Political Leadership.......................................................57
Effective political leadership is crucial...........................................................58
How does the political system help or hinder policy coherence
for development?............................................................................................58
Other political and institutional considerations..............................................62
Advocacy role in promoting policy coherence for development
in government.................................................................................................63
How can public support be mobilised?...........................................................66
The importance of coherent policy frameworks.............................................71
Chapter 4 Building Capacity In Policy-Making Processes..........................79
Importance of capacity to implement policy...................................................80
Five implementation capacities......................................................................81
Building policy analysis capacity is vital....................................................81
Stakeholder consultation throughout the policy process.............................84
Building policy co-ordination mechanisms across institutions...................87
Importance of a coherence-friendly administrative culture........................93
Building effective negotiation skills...........................................................96
Capacity in developing countries: effective advocacy of policy coherence
for development..............................................................................................98
Chapter 5 Institutional Approaches to Strengthen Coherence
of Key Policies..............................................................................101
Coherence and incoherence of policies.........................................................102
Trade and investment....................................................................................103
Significance of trade and investment for development.............................103
East Asia and the trade/investment nexus.................................................107
Significance of Agricultural Trade Liberalisation for Development............109
Private capital flows and international financial reforms.............................114
The shared responsibility for development of taxation.................................117
Importance of migration as a global socio-economic issue..........................119
Towards institutional analysis and action in key policy areas......................122
Chapter 6 Assessing the Results of Policy Coherence Efforts...................131
From aid effectiveness to development results.............................................132
Tools for assessing policy coherence efforts................................................133
Ranking the rich with the Commitment to Development Index...............133
Assessing donor efforts at policy coherence in DAC Peer Reviews.........135
MDG8 reporting........................................................................................137
Mutual accountability: engaging partner countries in assessing
policy coherence efforts............................................................................140
From aid evaluation to development evaluation...........................................141
Current attempts at evaluating policy coherence for development...........143
POLICY COHERENCE FOR DEVELOPMENT: PROMOTING INSTITUTIONAL GOOD PRACTICE – ISBN-92-64-10854-8 © OECD 2005
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TABLE OF CONTENTS –

Challenges involved in assessing Policy Coherence efforts.....................144
Laying the base for future action..............................................................145
Selecting avenues for future work.............................................................146
Way forward.................................................................................................148
Chapter 7 Strengthening Institutions to Promote Policy Coherence
for Development...........................................................................149
Building on lessons learned..........................................................................150
Summary of lessons learned.........................................................................151
Definition and focus of policy coherence for development......................151
Political leadership and public support to meet challenges.......................152
Building capacity in policy-making processes..........................................153
Institutional action in specific policy areas...............................................155
Building capacity to assess results of policy coherence efforts................158
Next steps......................................................................................................159
How could OECD governments build on current institutional
approaches?...............................................................................................159
How could the OECD Secretariat provide support?.................................161
Bibliography....................................................................................................165
Annex OECD Action for a Shared Development Agenda..........................171

Tables
Table 5.1 Net private capital flows to developing countries 1996-2002......115
Table 6.1 Commitment to Development Index, 2004 results and
2003/04 rankings.........................................................................136

Figures
Figure 1.1 Population living on less than USD 1 a day..................................24
Figure 1.2 Global progress at mid-point.........................................................24
Figure 1.3 Improvements of different policies in partner countries................25
Figure 1.4 Potential income gains from reducing barriers to trade.................33
Figure 1.5 Need to resolve external and fiscal imbalances.............................34
Figure 2.1 Analytical framework for institutional process of policy
coherence for development in OECD countries............................47
Figure 3.1 What could reduce world poverty, according to the
Swedish public?.............................................................................68
Figure 3.2 Declining support for economic co-operation
in Japan 1993-2003........................................................................69
POLICY COHERENCE FOR DEVELOPMENT: PROMOTING INSTITUTIONAL GOOD PRACTICE – ISBN-92-64-10854-8 © OECD 2005