Managing Donors and Owning
Policies:
The East Asian Perspective of Ownershipand a Case of Vietnam

May 22, 2008
Izumi Ohno and Kenichi Ohno
GRIPS Development ForumHighlights
1.

Ownership concept2.

Type of ownership:3.

Conventional definition vs. the East Asian
perspective
Donor management
Development management (incl. policyownership)

Case study: Vietnam

11. Ownership Concept: ConventionalDefinition


Political commitment to and capacity for designingand implementing policies and development actions(Johnson & Wasty 1993, Morrissey 1999, etc.)

 Relatively new terminology (WB/OED 1991〜)

Originated from donor agencies? -- the lessons fromstructural adjustment programs and the past project aid

 Now, a guiding principle of aid relationships
Paris Declaration on Aid Effectiveness (OECD/DAC, 2005)

 Aid relationship as

black box (Jerve and Hansen2007); need for recipient perspectives

The East Asian PerspectiveManaging aid as integral part of thedevelopment process

Graduation as the ultimate goal of aid
receipt.


Aid relationship—just one component of development
management, as a means to realize nationaldevelopment priorities

Existence of exit plan from aid, with vision andrealistic measures for achieving self-sustainability

Development as a translative adaptation
process -- not unilinear modernization(Maegawa 1994)

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The East Asian Perspective (Example)<Malaysia and Thailand (esp. the 70-80s)>
Key role of central economic agencies -strategic core centers of development
management
Strategic planning and implementation coordination ofdevelopmental activities, including aid, intra-govt.
coordination, govt.-business partnership
Forming developmental coalition with leaders

Using aid for growth and graduation


Absorption of foreign knowledge & technologyÎinternalizationÎ institutionalizationÎ becoming donor
agencies
I. Ohno and Shimamura (2007)

http://www.grips.ac.jp/forum/pdf07/AidMgt.pdf

2. Type of Ownership (1)Distinguishing donor (or aid) management anddevelopment management (incl. policy ownership)
Donor management

Development management

 Capability of owning
relationship with the donorcommunity
 Can be exercised by arelatively small segment of thegovernment

 Capacity for owning policies(e.g., design, implement,monitor & revise as required) Execution of development
itself (of which aid mobilizationis only a part) Must be supported by theconcerted actions of alladministrative bodies—
horizontally and vertically.

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Development Management and Aid
RecipientCountries
DonorsIdentification of aid needs

Formulation of aid strategy

Donor (aid) Management
Aid relationship as part ofthe entire development process

Development vision
Development strategy & plan
Implementation (publicinvestment, service delivery)
Aid money Internal budget
Development effectiveness &sustainability

Achievement of strategic goals

Development Management

Type of Ownership (2) Policy ownership: managing policy ideas, aspart of development management
 Key questions: Who set the scope of policy choice andinterpretation?
 Is the government free to choose and own only
the set of policies already decided by donors ?
 Ownership of what?, by whom?

Cf. Helleiner (2002) Tanzania… some donors seem to believe that ownership exists
when recipients do what we want them to do but they doso voluntarily.

43. Case Study: Vietnam
 Vietnam: often cited as a country with“strong” ownership.

Question: What is the nature and levels of ownership demonstratedby Vietnam, especially from the East Asian perspective?
Our Analysis: Vietnam’s seemingly “strong” capacity for dealing withdonors should NOT be confused with capacity for managing
the entire development process.
 Vietnam has not yet developed an effective economic
policy-making structure and processes.

The Context of Vietnam s Aid andDevelopment (1)One of the largest ODA recipients
Active development partnerships (30+ donors pledging) Good progress in achieving MDGs and economic growth

The Importance of ODA in Macro-economy (2005)

Vietnam

ODA inflow(net), $bn

FDI inflow(net), $bn

Workers
ODA/GNIODA/Grossremittance,capital(%)
formation (%)
$bn

1.9

2.0

4.0

3.7

10.3

1.2

0.3

2.0

5.1

19.3

0.4

-1.2

5.8

20.0

1.5

0.4

0.2

12.5

65.8

(pc.GNI=$620)

Sri Lanka(pc.GNI=$1170)

Nepal(pc.GNI=$300)

Tanzania(pc.GNI=$340)

Source: World Bank Development Indicators (2007)

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The Context of Vietnam s Aid andDevelopment (2) Transition to the market economy

Economic reform “Doi Moi” (1986); collapse of ex-Soviet
Union (1991） Îgovt. decision to open its economic
relations to the West; WTO membership (2007)
 But, the organizational structure of govt. remains largely
unchanged from the era of centrally planned economy
 Central role of the Ministry of Planning &Investment (MPI, ex-State Planning Commission)Development planning, development budget, public
investment planning; and Centralizing all kinds of aid through a single window Lessons from Vietnam War and Soviet aidNational independence and pride (Forsberg 2007)

Donor Management
 Case 1: CPRGS formulation and expansion
 PRSP as supplementary document to the existingdevelopment strategy and plan (the stated goal:“modernization & industrialization by 2020”)
 Making PRSP growth-oriented, by including large-scale
infrastructure Integrating CPRGS II into the Eighth Socio-Economic
Development Plan (2006-2010)
 Case 2: Aid harmonization
 Managing aid harmonization by donor group (e.g., 5Banks, LMDGs, EU, UN) Adding diversity to harmonization and modality debatesÎ Skillful management of donors, laudable for alow-income country.

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PRSP as a Primary Document
Existing dev.
plansymbolic
PRSP
governSector plans,budget, MTEF,aid procedures

PRSP: Poverty Reduction Strategy Paper
MTEF: Medium-Term Expenditure Framework

PRSP as a Supplementary Document
Existing dev. plangovern
PRSP(VN: CPRGS)

Sector plans

supplementBudget

CPRGS: Comprehensive Poverty Reduction and Growth Strategy(Vietnamese version of PRSP)

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Policy Design and Implementation
 Case 3: Challenges of internal harmonization
Incompatibility between ODA management and internal
administrative systems
 Complicated web of vertical & horizontal authorities (e.g.,domestic vs. external accountability, central ministries vs.
provincial governments, intra-ministerial coordination)
 Case 4: The content of growth strategies
Lack of realistic industrial vision; unpredictable and inconsistentpolicies; limited govt.-business dialogues
 Insufficient strategic coordination within decentralized decisionmaking structure (e.g., MOIT, MPI, MOF, MOSTE) Eg. import duties for automobiles & parts (2008)
WTO
Î Weakness in development management, compared to moreadvanced East Asian economies

Source: Kenichi Ohno

Multilayered
Model

Drafting Industrial Master Plans in the East Asian Context

Malaysia
Organization
for drafting
IndustrialMaster Plan8

Source: Kenichi Ohno
Drafting Industrial Master Plans in the East Asian Context

Central Coordination Model:
Thailand under Thaksin 2001-06
Policy direction
to be concretizedStrong
Prime Minister

Master plans
Policy actions

Order

Relevant
Ministry

Industry-specificCommittees

DirectinputsIndustry-specificInstitutePrivateSectorExperts

Source: Kenichi Ohno
Drafting Industrial Master Plans in the East Asian Context

Vietnam: Traditional M/P Drafting Process
PrimeMinister
Review forapproval

Order

SubmitInterministerial
review

Drafting
TeamMinister

MPI & other
Ministries

Submit

Data

Internal
review

MPI & other
Ministries

GovernmentAppeal letter toPrime Minister whenproblems ariseContactMinistry whennecessary

Interviews,symposiums(sometimes)

Technicalassistance(sometimes)

Internationalexperts

Business Community
No permanent channel for continuous policy dialogue(case-by-case, temporary, ad hoc)

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Synthesis Ownership concept: need to go beyond aid

relationships (Í too narrow) The role of donors?

Should recognize that domestic factors do matter.
 Importance of identifying entry points for effective
assistance; carefully target and integrate aid in govt’sown agenda.
 For fostering true ownership in Vietnam?

Increase policy debates and stimulate domestic policy
research & training, across agencies and stakeholders.
 Long-term investments in human resources, for thesecond generation of policy makers and officials.
THE END

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