Asia Pacific Consultation on Building Regional Evidence for the First High Level Meeting of the Global Partnership for Effective Development Cooperation Seoul, March, 2014

Development Cooperation with Middle Income Countries Don K. Marut South East Asia CPDE

MIC and Post-2015  Rather than focusing on MICs as a category of stages of development of countries, it is better to focus on sectoral aspects of development in each country:  Rural development  Urbanization gap  Infrastructure  Gender equity  Farmers and indigenous peoples  Education and Health sector conditions  Institutional aspects of economic growth in the countries categorized as MICs, to examine:  Industrial structures  Environmental Sustainability  Etc.  On the other hand, MICs categorization is also important for learning for other countries:  MICs have different characteristics in there structural and institutional setting.  MICs can share knowledge on certain strong aspects that contribute to steady growth.

MIC and Aid Dependency  Aid since the beginning has become part of the problem of development in the recipient countries, particularly MICs.  Aid dependency is accompanied by dependency in development policies and ruins in certain strategic sectors:  The overexploitation of natural resources that will become one of the big problems in MICs, is an integrated part of aid. Aid is tied to or conditioned to giving up natural resources to be exploited by corporations from the donor countries.  Infrastructure gap and institutional weaknesses are integrated parts of the programs supported by aid.  Human rights violation

Aid Flows and Non-Aid Financial Flows  Aid has been long part of business relations.  Aid come together with the increasing operation of corporations from the donor countries. The more a country receive aid, the higher the numbers and the volumes of investment from the donor countries in the recipient countries.  Aid flow still increase depending on the business interests of the donor countries or interests of those working in donor agencies. If the donor countries are in crisis, the MICs which are dominated by Transnational Corporations will also be threatened.  The question is: do the aid and non-aid financial flows help the development in the country? From Indonesia’s experience, the question is difficult to answer.  The industry producing capital goods are converted into company importing capital goods from the donor country.  Industrialization policies are more or less controlled by the donors  Energy and mining policies are more or less determined by donors.  The controls are hidden in the aid contracts. Eg. The project is allowed to purchase capital goods from domestic companies, but minimum 10% of the shares of the companies are owned by the companies from the donor countries. Slowly the companies from the donor countries control majority of the shares in the recipient companies and change the policies of the companies.

MIC, Aid and Structural Changes  Structural changes in a country are mainly determined by political decisions in the country, whether independently or supported by aid. Aid is only complementary. In MICs aid is only small proportion for the development budget. The problem is the accumulated debts from the past.  In some MICs, structural changes are parts of aid conditionalities. But “structural changes” have brought the MICs into more uncertainties in terms of economic development and social services. These kind of “structural changes” are the main causes behind the ” real structural problems” in MICs:  Debt burdens  Severe poverty and exclusion  Rent-seeking behavior and corruption  Dispossession of lands by farmers and local communities  Etc.

CSOs in MICs – South East Asia Cases  The governments in MICs controlled bigger budgets for development; and the governments seem not to need other actors in development or the governments are more authoritative or directing and controlling over other development actors, particularly over CSOs.  Enabling environment in MICs is in general shrinking.  CSOs capacities in MICs in South East Asia Sub-region are increasing and are ready to partner with other development actors in all levels. Vietnam and Cambodia are the countries in South East Asia with notable increase in capacities of CSOs.  The CSOs in MICs face financial difficulties, since the support from CSOs in donor countries decline.  CSOs-Private Partnership: INSIST Experiences  Clean water supply  Scholarship for farmers children  Conservation of watershed  Climate adaptation projects – SRI and expansion of organic farming  Capacity development for local governments: development management, budget transparency and disaster risk reduction management.  Support local health system strengthening o reduce:  Maternal death  Child death  Improving nutrition

Thank you!!