Industry Overview
International Development: Size, Organization, and Evolution
It is difficult to estimate the real size of the international development industry because statistical data is only available in a few areas. The most comprehensive data is on the size of official development assistance (ODA), which is tracked by the Organization for Economic Co-Operation and Development (OECD). There is a very specific definition for ODA, and, as a result, some sources of funding are not included in these data. ODA includes money given or lent to developing countries for the promotion of economic development and welfare. Loans must be concessional, meaning at least 25 percent of the value is provided as a grant and not repaid. In addition, funds for certain activities, such as military aid, are not included. For more information, and a detailed description of ODA, refer to the OECD website. Other types of development assistance from governments includes other official flows (OOF) for funds that don’t meet the requirements of ODA but are still focused on development, and private flows, containing funds from private sector sources rather than governments. Funds for international development have risen significantly in the past 15 years, although very few developed countries are currently meeting internationally agreed targets to donate 0.7 percent of GNP to economic development. As a measurement of the size of the international development industry, this data has become less reliable in recent years than in earlier periods. The reason can be traced to the increasing amount of money for international development coming from non- ODA sources, such as foundations, civil society organizations, and the private sector. While these sources of funding are not as significant as ODA, they are growing rapidly and changing the face of the industry. A few examples from recent years include: • The funds that NGOs receive from governments are incorporated in the OECD’s ODA calculations, but funds received from the private sector are not. In 2006, these contributions were estimated at $11 billion, or more than 13 percent of ODA. • There are more than 100,000 private sector sources around the world, many of which provide funding for international development projects. Although there is no statistical data on these funds, they amount to a huge source of money for development. The Bill & Melinda Gates Foundation alone, the largest charitable foundation in the world, disbursed more than $2 billion in 2007, or 3 percent of ODA. South-South cooperation Historically, most funds for development went from developed countries in the northern hemisphere to developing countries in the southern hemisphere. In recent years however, some of these “southern” countries have began to provide development funds in addition to receiving them. Among the leaders in south-south cooperation are the Arab countries, which provided over $2.5 billion in ODA in 2006. China has also announced a south-south strategy of ODA support for Africa. Although these flows are still small relative to other ODA, they are a growing force and a positive indication of the importance all nations place on global development. For more information on this topic, refer the UNDP’s Special Unit for South-South Cooperation: tcdc.undp.org. Beyond these donor statistics, there is very little data available on international development as an industry. Employment figures, for example, are difficult to estimate because there is no definition of which organizations are engaged in international development. Most countries have an official non-governmental sector (like the non-profit sector in the United States), but there is no data on which of these organizations focus on international development rather than on domestic issues. In addition, there are no industry-wide groups that estimate employment or growth. ORGANIZATION AND EVOLUTION Most of the industry-based support for international development has been, and continues to be, within focus areas rather than across the development field. For example, people working on the prevention of transmissible diseases in developing countries are more likely to utilize the resources of the health care industry than the international development industry, whether attending professional conferences, publishing in industry journals or pursuing continuing education. The same is true of other focus areas including economic, environmental and social. International development has only recently begun to take on the characteristics of a single industry, and it is still only certain aspects of international development that are shared across focus areas. Fortunately, the job hunting process and many issues of career management are some of the similarities among all types of development, so the concept of a development industry is useful for this book. What unites the world of international development is: • Professional groups for the promotion, sharing, and creation of industry-specific knowledge International development currently has very few industry groups shared across different practice areas. There are many such groups within economic and social development, but these tend to focus exclusively on single areas. Some industry-wide groups are beginning to grow, mostly related to job hunting or education and research. • An educational foundation or body of knowledge common to the industry There are now many university programs at the undergraduate and graduate level to study international development. Most of these include a strong technical component in a specific practice area, but also industry-wide courses on the history of development, key skills in development and area studies. These programs are also actively creating new knowledge in international development and contributing to the advancement of the supporting foundations of the industry. • Skill sets that are transferable among different organizations There are an increasing number of specializations within development that are required in all focus areas. These include business development, monitoring and evaluation, project management and, of course, all the administrative functions of development organizations such as HR, accounting and IT. • Donors All industries are shaped by their clients, but in development, the number of sources for funds is much smaller than most other industries. As a result, a wide range of administrative and operational processes are shared among all types of development organizations because they are required by donors. For example, the semi-annual donor reports that a human rights NGO completes for its donors are very similar, if not identical, to those completed by a microfinance NGO. Donors are also more actively shaping the monitoring and evaluation of development projects, which is another major area of similarity among NGOs. As the industry continues to evolve and adapt to new trends, it is likely to become both more dependent upon specialized knowledge, and also more uniform in the implementation of projects with donor funds. Due to this, the industry-wide foundation of development will become stronger and it will take on more of the characteristics of a united industry. Why do developed countries spend money on international development? It is often assumed that development assistance is wholly altruistic but, in fact, governments get a number of benefits from their development spending. There is a fine line between capturing the auxiliary benefits of development assistance and spending on development for explicitly political purposes. In practice, this distinction is never clear, and there is constant debate about the appropriateness of certain countries’ development spending or policies related to their spending. Some of the benefits that come from development spending include: • Better relationships with recipient countries Development assistance is an effective way for a government to build relationships with other countries. In many cases, international development assistance is also less political than other forms of cooperation between countries, and can be used to slowly build better relationships between governments. There is, however, a fine line and there are many examples of international development assistance being traded for political favors. For example, a donor country might agree to spend tens or hundreds of millions of dollars in a developing country in exchange for mining rights, or an agreement to support a vote in the United Nations, or even in exchange for the government limiting its relationship with another government. • Goodwill Similarly, major donors of development assistance earn goodwill from recipient countries and other nations for their generosity. This has many benefits for governments. A particularly generous sponsor of development assistance in a specific area would earn some leadership status within that field. In addition, development assistance goodwill can be used to offset negative impressions of a donor country in the region of the assistance. • Stability One of the major justifications for development spending is global stability. This idea of stability, often associated only with political upheaval, illicit goods trade and terrorism, applies to a much wider range of activities. Indeed, the importance of stability applies to nearly every sphere of development, from finance to health to the environment. For example, the case of the SARS outbreak in China in 2002, demonstrated the importance for every country, rich or poor, having a modern health screening and diagnostic infrastructure along with the capacity to manage it. It is simply too easy in today’s interconnected world for a sick person, collapsing economy or ecological disaster to threaten the stability of worldwide social and economic systems. Therefore, wealthy countries are more willing to spend on development assistance to limit the potential consequences of such an event. • Access to new markets International development is also good for the private sector of donor countries. As developing countries grow economically, they become potential consumers for goods and services exported by donor countries. In addition, government development spending usually comes with requirements that equipment and employees used to implement projects with the funding are from the donor country. Therefore, citizens and businesses of the donor country are direct recipients of some of the development spending. Monitoring and evaluation One of the key challenges of international development is assessing its effectiveness, evaluating development projects and learning from mistakes. As an industry, international development seeks to improve economic, social and environmental conditions in places that are, by definition, among the world’s most challenging environments in which to work. In addition, the impact of many development projects takes years to materialize, and during that time any number of external factors can and do affect the development project. Imagine a rural economic development project to teach accounting and marketing to tourism companies. The project should result in more employment and economic growth for the companies and the region, but these results may take a few years before the companies can apply what they have learned and reach potential tourists with their message. If those results materialize, the reason could be that the project made a positive contribution or it could be due to wider economic and travel trends. If the tourism industry does not expand, the project might not have been well-designed or was poorly implemented, or maybe there was an internal or international conflict that discouraged tourism, or a neighboring country may have launched a reform to its own tourism industry, increasing competition. There is simply no reliable method to show a causation relationship between a development project and the long-run impact.
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