Tangled Affair or Fruitful Relationship?
Foreign Aid Involvement in the Tourism Policy Process
Case Study of Lao PDR
Nadine Fiaux Master Degree Dissertation Tourism Destination Management September 2011
Tangled Affair or Fruitful Relationship?
Foreign Aid Involvement in the Tourism Policy Process
Case Study of Lao PDR
Master Program Tourism Destination Management Master Degree Dissertation September 2011
Nadine Fiaux Student at the NHTV University of Applied Sciences, Breda NL Student ID: 102390
I hereby declare that this dissertation is wholly the work of Nadine Fiaux. Any other contributors or sources have either been referenced in the prescribed manner or are listed in the acknowledgements together with the nature and the scope of their contribution.
PREFACE AND ACKNOWLEDGEMENTS
Throughout my studies in tourism the area of tourism policy and planning has always interested me. The huge importance that appropriate planning can have on the development of tourism destinations is intriguing, especially after having travelled to many countries and experienced examples of tourism development going wrong first hand. The task that tourism planners nowadays have if they want to develop their destination in a sustainable way is highly complex and challenging and personally I have always liked a challenge. This is the reason why it was clear to me that my dissertation was to be related to the topic of tourism policy, although I had not decided on which facet to investigate.
During the fieldtrip we did between February and April 2011 in the Asia-Pacific Region visiting Australia, Cambodia and Bali I fell in love with Southeast Asia making me want to stay in this region for my research. I chose Lao PDR as my preferred destination and started investigating into different possibilities for topics. The donor-recipient relationship and its influence on tourism policy seemed a great topic to investigate even though – or maybe exactly because – there was hardly any literature to be found on this topic. Researching this complex relationship suited me perfectly as it was challenging to look into a sparingly recognised but in my opinion crucial ‘new’ topic. It also allowed me to combine my preference for tourism policy with my passion for travelling and the love I had developed for Southeast Asia.
I am very satisfied with the final result of my research. In fact the three months I spent immersed in the country of Laos and the area of foreign aid using tourism as a tool for development have caught onto me so much that it is the path I can see myself going down in the future.
Writing this dissertation was definitely challenging. Living in a foreign culture and trying to understand it while searching for information on such a complex field of tourism was highly demanding. Luckily I have had many people supporting me without whose help it would not have been possible to achieve this result.
I want to thank all interview respondents who have been extremely cooperative providing me with valuable information and making it possible for me to get a deep insight into this sensitive topic. Without their openness and frank responses I could not have gotten the results I did.
A big thanks also goes to my supervisor, Carin Rustema, who supported me throughout the whole research period. Her constructive criticism hit me in the right spots and pushed me to give my best.
Finally, I want to thank my friends and family for being there for me whenever I needed them and encouraging me to keep going even when I felt that I could not finish it on time. Their strong support reached me also at points where I was halfway round the world for which I am eternally grateful.
It has been a great year with the TDM students with lots of learning experiences and unforgettable memories. Most importantly we formed friendships that will last.
Nadine Fiaux
I
EXECUTIVE SUMMARY
Background: What defines the effectiveness of foreign aid involvement in tourism policy? The answer is not easy as foreign aid involvement and the donor-recipient relationship are complex issues. Tourism policy is an important aspect of destination management as it can greatly influence the future of a destination which seems especially important for developing countries. The policy process is a topic widely discussed and it becomes apparent that it has an inherent set of challenges. Due to a lack of funding and expertise foreign aid can play an important role in policy of different industries in developing countries which can make them dependent on donor funds. Tourism is an area with high aid involvement as it is recognised as a tool for development and donors can greatly influence the way in which tourism is managed and with this tourism policy. It is likely that the involvement of foreign aid poses certain challenges for recipients. It would therefore be beneficial to give guidance for management to raise awareness among donors and recipients such that the relationship and the policy process can be improved. This report aims at filling a gap in the literature since the involvement of foreign aid in the tourism policy process and the effects of the donor- recipient relationship have not been researched before in this manner.
Research Objective and Questions: Based on the context of the research problem the research objective for this study and research questions have been formulated as follows: Analyse the effect of foreign aid involvement in tourism by assessing the impact of the donor- recipient relationship on the tourism policy process using the case of Lao PDR.
1 What role does foreign aid play in tourism policy and planning and destination management? 2 What characterises the relationship between donors and the recipient country? 3a Where (and how) does the donor-recipient relationship manifest itself in different aspects of the policy process? 3b In the case of Lao PDR how does the relationship between donors and recipient affect the policy process? 4a In the case of Lao PDR what areas for improvement can be identified to enhance the relationship and the policy process? 4b What are main areas for change to enhance the donor-recipient relationship making for a mutually enhanced policy process?
Methodology: The choice of methods for data gathering was based on the exploratory nature of the study. Secondary research was used to build a theoretical base of knowledge on the donor-recipient relationship and to gather information on the case. Primary research was based on a case study approach. Lao PDR was judged appropriate due to its representative characteristics of a developing country with high foreign aid involvement in tourism and in the policy process. Semi-structured interviews resulted in the gathering of qualitative data allowing for thick descriptions of a previously under-researched topic. This made observation and interpretation throughout the conversations possible giving indications of the intentions of interviewees. Interpretive methods were used for data analysis as the importance of meaning within the politically sensitive donor-recipient relationship was recognised. Subjects were identified through secondary research and snowball sampling by initial interviewees. They included donors, recipients as well as ‘outsiders’ giving objective views on the topic. Alternative research methods such as participative observations were used and triangulation was applied to ensure the validity of qualitative findings.
II
Conclusions: A main conclusion of this dissertation was that the donor-recipient relationship is the dominant factor that determines whether aid initiatives are effective or result in failures. Given this huge importance it is surprising that this aspect has not gotten more attention in the literature and this study therefore makes a call for giving more consideration to researching this crucial relationship and its facets.
The different aspects defining the donor-recipient relationship found in the literature were grouped into four main characteristics for this report. These are politics, priorities, power and commitment, all of which are interdependent and have an impact on the policy process. Politics mostly sets the boundaries for the relationship and defines the nature of effect on the policy process. Priorities can be harmful if there are clashes between recipients and donors. Power defines the proximity of the relationship and whether it is equal while commitment is crucial for its continuous stability.
Their importance changes throughout the policy process indicating that they all have to be managed continuously and their effects recognised by both parties to make the relationship most effective. The links between the relationship characteristics and the steps of the policy process makes this a highly complex task.
Three main areas have been identified which are affected by the nature of all four characteristics and define the effectiveness of the relationship. A lack of coordination can be harmful to recipients and donors by diverting attention and reducing leverage. Differing priorities lead to misconceptions and conflicts and hamper the success of inducing policy change. A lack of partnership building between donors and recipient leads to a dominated relationship reducing the benefits for both as recipient learning is reduced and policy changes are not adopted. If these aspects are not considered they will stand in the way of turning a tangled affair into a fruitful relationship to render it more effective.
Recommendations: The recommendations provided are based on the main areas for improving the donor-recipient relationship namely coordination for effectiveness, alignment of priorities and partnerships and are divided into actions for donors and recipients.
Donor Activities Recipient Activities • Establish tourism round table • Take lead in donor coordination Coordination • Multi-donor funds and initiatives • Internal culture of coordination Aligning • Negotiated conditionality • Align internal official and unofficial Priorities • Recognise unofficial priorities priorities • Participatory approach • Accepting of participatory approaches Partnerships • Role of mediator • True commitment
The results showed that it is impossible to manage the donor-recipient relationship through the formulation of rigid guidelines due to its complexity and outside factors impacting on it. The fact that there is not one ideal way indicates that there is a need for continuous research and adjustments of recommendations to make the relationship effective.
III
TABLE OF CONTENTS
PREFACE AND ACKNOWLEDGEMENTS I EXECUTIVE SUMMARY II LIST OF TABLES AND FIGURES VI LIST OF ABBREVIATIONS VII CHAPTER 1: INTRODUCTION 1 1.1 Problem Analysis 1 1.1.1 Tourism Policy and Planning 1 1.1.2 Foreign Aid Involvement 2 1.1.3 Importance of the Research 2 1.2 Research Objective and Questions 3 1.3 Research Approach 3 CHAPTER 2: METHODOLOGY 5 2.1 Secondary Research 6 2.1.1 Theoretical Background 6 2.1.2 Case Study Material 6 2.2 Primary Research 6 2.2.1 Case Study Area – Lao PDR 6 2.2.2 Data Gathering Methods and Sampling 8 2.3 Time frame 10 2.4 Complementary Research Methods 10 CHAPTER 3: POLICY PROCESS, FOREIGN AID AND DONOR-RECIPIENT RELATIONSHIP 11 3.1 Introduction to the Tourism Policy Process 11 3.2 Steps of the Policy Process 11 3.2.1 Policy Formulation 12 3.2.2 Policy Implementation 12 3.2.3 Policy Evaluation 12 3.3 Developing Countries and the Policy Process 13 3.3.1 Foreign Aid Involvement 13 3.4 Stakeholders in the policy process 14 3.5 Donor-Recipient Relationship Characteristics 15 3.5.1 Politics and Governance in the Donor-Recipient Relationship 15 3.5.2 Priorities or Agenda in the Donor-Recipient Relationship 17 3.5.3 Power in the Donor-Recipient Relationship 18 3.5.4 Commitment or Continuity of the Donor-Recipient Relationship 19 3.6 Conclusion 20 CHAPTER 4: THE DONOR-RECIPIENT RELATIONSHIP IN THE POLICY PROCESS OF LAO PDR 22 4.1 Affairs and Relationships in Lao PDR 22 4.1.1 Politics 22 4.1.2 Priorities 22 4.1.3 Power 23 4.1.4 Commitment 24 4.2 Forcing Change or Accepting Individuality? – Politics in the Policy Process 25
IV
4.2.1 Politics in Policy Formulation 25 4.2.2 Politics in Policy Implementation 26 4.2.3 Politics in Policy Evaluation 27 4.3 Muddled Intentions or Mutual Agreement? – Priorities in the Policy Process 28 4.3.1 Priorities in Policy Formulation 28 4.3.2 Priorities in Policy Implementation 30 4.3.3 Priorities in Policy Evaluation 31 4.4 Exploited Supremacy or Balanced Alliance? – Power in the Policy Process 32 4.4.1 Power in Policy Formulation 32 4.4.2 Power in Policy Implementation 34 4.4.3 Power in Policy Evaluation 35 4.5 Selfish Interests or Shared Ambition? – Commitment in the Policy Process 36 4.5.1 Commitment in Policy Formulation 36 4.5.2 Commitment in Policy Implementation 37 4.5.3 Commitment in Policy Evaluation 39 4.6 Changing Focus During the Policy Process 40 4.6.1 Policy Formulation 40 4.6.2 Policy Implementation 40 4.6.3 Policy Evaluation 41 4.7 Conclusion 42 CHAPTER 5: TANGLED AFFAIR OR FRUITFUL RELATIONSHIP? – CONCLUSIONS 44 5.1 Importance of Aid involvement in Tourism Policy 44 5.2 Four Characteristics Defining the Donor-Recipient Relationship 44 5.3 Important Effects on the Tourism Policy Process 45 5.4 Three Main Disrupting Factors 46 5.4.1 Disorganised Endeavours 47 5.4.2 Opposing Goals 47 5.4.3 Egocentric Rule Instead of Respectful Alliance 48 CHAPTER 6: PILOTING THE AFFAIR TOWARDS A RELATIONSHIP – RECOMMENDATIONS 50 6.1 Concerted Success – Coordination for Effectiveness 50 6.1.1 Donor Actions for Coordination 50 6.1.2 Recipient Actions for Coordination 51 6.2 Cooperative Goals – Aligning Priorities 51 6.2.1 Donor Actions to Align Priorities 51 6.2.2 Recipient Actions to Align Priorities 52 6.3 Shared Ambition and Mutual Trust – Building Partnerships 52 6.3.1 Donor Actions to Build Partnerships 52 6.3.2 Recipient Actions to Build Partnerships 53 6.4 Recommendations for Future Research 54 CHAPTER 7: DISCUSSION AND REFLECTION 55 REFERENCES 57 APPENDIX 69 Appendix 1 – List of Interviews 69 Appendix 2 – Interview Guide 70
V
LIST OF TABLES AND FIGURES
Figure 1 – Report Structure 1 Figure 2 – Flow of Research 3 Figure 3 – Research Question, Methods and Expected Results 5 Figure 4 – Map of Laos 7 Figure 5 – The Policy Process 11 Figure 6 – Multi-Level and Multi- Actor Complexities 14 Figure 7 – Relationship Characteristics 15 Figure 8 – Links of Characteristics 21 Figure 9 – Multi-Level and Multi-Actor Complexities in Lao PDR 24 Figure 10 – Change in Importance of Relationship Characteristics 43
Table 1 – Indicative Overview of Respondents 9 Table 2 – Aspects of Politics and their Effect on the Relationship 17 Table 3 – Aspects of Priorities and their Effect on the Relationship 18 Table 4 – Aspects of Elements of Power and their Effect on the Relationship 19 Table 5 – Aspects of Elements of Commitment and their Effect on the Relationship 20 Table 6 – Aspects of Politics and their Effect on the Policy Process 28 Table 7 – Aspects of Priorities and their Effect on the Policy Process 32 Table 8 – Aspects of Power and their Effect on the Policy Process 36 Table 9 – Aspects of Commitment and their Effect on the Policy Process 39 Table 10 – Change in Importance of Relationship Characteristics 41
VI
LIST OF ABBREVIATIONS
ADB Asian Development Bank AusAID Australian Agency for International Development CBT Community-Based Tourism ESAP Ecotourism Strategy and Action Plan 2005-2010 of Lao PDR EU European Union DIC Department of International Cooperation Lao PDR DED German Development Organisation Deutscher Entwicklungsdienst DP Development Partner GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (includes GTZ and DED) GTZ German Development Organisation Gesellschaft für Technische Zusammenarbeit GMS Greater Mekong Subregion GoL Government of Lao PDR IMF International Monetary Fund JICA Japanese International Cooperation Agency Lao PDR The Lao People’s Democratic Republic LATA Lao Association of Travel Agents LNTA Lao National Tourism Administration LuxDev Luxemburg Agency for Development Cooperation MPI Ministry of Planning and Investment Lao PDR MTDP Mekong Tourism Development Project NGO Non Governmental Organization NHEP Nam Ha Ecotourism Project Lao PDR NPA National Protected Area NSEDP National Socio-Economic Development Plan Lao PDR NTSL National Tourism Strategy of Lao PDR NZAID New Zealand Agency for International Development PPT Pro-Poor Tourism PTD Provincial Tourism Department DTO District Tourism Office SNV Dutch Development Organization Stichting Nederlandse Vrijwilligers STDP Sustainable Tourism Development Project UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organization VDAE Vientiane Declaration on Aid Effectiveness Lao PDR VDCAP Vientiane Declaration Country Action Plan WB World Bank WCS Wildlife Conservation Society
VII Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
CHAPTER 1: INTRODUCTION
The present paper investigates aspects of foreign aid involvement in tourism policy. It intends to fill a gap in the academic literature regarding the effect of the donor-recipient relationship on the steps of the tourism policy process. The characteristics of the donor-recipient relationship – politics, priorities, power and commitment – are examined and their effect on the policy process is evaluated. This is done at the case of Lao PDR. The study includes interviews with donors, recipients as well as independent observers of the relationship to examine benefits and obstacles of foreign aid involvement. The case study of Laos was chosen due to its nature of a developing country with a high level of aid involvement in tourism at all levels of government which makes it a representative case. Recommendations provided at the end are based on the results of both literature findings as well as case study material and may assist both donors and recipients in making their relationship more effective. The structure of the report is set out in Figure 1.
Figure 1 - Report Structure
•Overview of Topic Chapter 1 •Research objec ve & approach
•Methods for data collec on Chapter 2 •Case study area introduc on
•Literature review of the tourism policy process & Chapter 3 donor-recipient rela onship aspects
•Case study of Lao PDR to: Chapter 4 Link rela onship characteris cs and the policy process
Chapter 5 •Conclusions
•Recommenda ons for improving the donor-recipient Chapter 6 rela onship
Chapter 7 •Discussion & reflec on
1.1 Problem Analysis 1.1.1 Tourism Policy and Planning Tourism planning and policy is an important aspect of destination management as it can greatly influence the direction of development (Erkus-Öztürk, 2010). The literature shows examples of negative effects on the destination in the environmental, economic and sociocultural spheres stemming from inadequate planning. This can lead to the degradation of the destination and dropping visitor numbers (Dredge & Jenkins, 2007; Hall, 2008). Hence appropriate tourism planning and providing a regulative environment for industry development in form of policy guidelines with a long-term focus seems crucial (Albrecht, 2010a). This appears to be especially important for developing countries where tourism is one of the major economic contributors and is seen as a tool for fostering development. If the growth of the industry in these destinations is not managed
1 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux effectively not only can it degrade the surroundings and environment but it may eventually remove an important source of income (Simpson, 2001).
The policy process is a topic widely discussed in academia and it becomes apparent that it has an inherent set of challenges (Nowlin, 2011). A crucial issue is the fact that often the policy making process results in a well-planned policy document, however there is an apparent gap between theory and actual practice during implementation (Lai et al., 2006; Liu, et al., 2011). In the worst case a tourism plan may be drafted but never implemented (Tosun & Timothy, 2001). It is important to distinguish between policies, plans and strategies. Plans and strategies are often based on underlying policies. However, the same stakeholders may be involved in the process of drafting them and hence for this study policies, plans and strategy documents are all considered as part of the policy process.
1.1.2 Foreign Aid Involvement Developing countries have their own set of challenges in the policy process of which the main ones are lacking expertise and funding (Sheikh & Porter, 2010; Agyepong & Nagai, 2011). Foreign aid can play an important role in these countries to foster their development and there is a danger that they become dependent on funds from foreign donors (Bräutigam, 2000; Pankaj, 2005). The process of giving aid is highly political and can be influenced by alliances or colonial history as well as by factors such as policy performance of the receiving country (Godfrey et al., 2002; Alesina & Dollar, 2006).
Tourism is an industry which can be highly determined by the provision of foreign aid. Governments may have more pressing issues on the forefront of their agenda which means donors can take more control over tourism (Stevenson et al., 2008). Due to this high level of involvement of foreign aid the relationship between donors and recipients could be a determining factor for the development of the industry (Hawkins & Mann, 2007). It may affect all areas of the policy process including the policy agenda, formulation and manner of implementation. Without foreign aid the pace of development in these countries would possibly be even slower. However it has to be acknowledged that foreign aid may bring with it a set of problems.
1.1.3 Importance of the Research It is likely that developing countries face certain challenges with regards to foreign aid involvement in the policy process. It would be beneficial to identify these issues and make donors and recipients more aware such that the relationship and the policy process can be improved. Since the involvement of foreign aid in the tourism policy process and the effects of the donor-recipient relationship have not been studied before in this manner this report aims at filling a gap in the literature. It provides recommendations that consider possible factors impacting on the process and suggests measures to deal with them while it is ensured that they are applicable and valuable to policy practitioners through primary research (Eriksson, 2005). Recommendations can then be adapted to the local context as there is no one size fits all approach. This might assist developing countries in using tourism as a tool for development more effectively through a well-managed industry regulated by policy documents that suit their priorities. This report draws on different methods one of which is studying the wider literature of different disciplines to build on a broad base for the theoretical background. Furthermore, the analysis of the case of Lao PDR is used to collect primary data. The final recommendations are hence a result of knowledge drawn from various sources enhancing their validity and reliability.
2 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
1.2 Research Objective and Questions Considering the context of the problem analysis set out in section 1.1 the chosen research objective for this study is to:
Analyse the effect of foreign aid involvement in tourism by assessing the impact of the donor-recipient relationship on the tourism policy process using the case of Lao PDR.
To achieve this objective the research questions set out below have to be answered:
1 What role does foreign aid play in tourism policy and planning and destination management? 2 What characterises the relationship between donors and the recipient country? 3a Where (and how) does the donor-recipient relationship manifest itself in different aspects of the policy process? 3b In the case of Lao PDR how does the relationship between donors and recipient affect the policy process? 4a In the case of Lao PDR what areas for improvement can be identified to enhance the relationship and the policy process? 4b What are main areas for change to enhance the donor-recipient relationship making for a mutually enhanced policy process?
1.3 Research Approach The research approach is based on the exploratory nature of this study. Figure 2 shows the flow of research. The study aims at analysing Figure 2 - Flow of Research the effects of the donor-recipient in •Literature from different disciplines on tourism policy to expand the theory in tourism, foreign aid and the policy process Gather this area by drawing from wider literature in other disciplines. Since •Donor-recipient rela onship characteris cs and the there is no literature specifically for nature of the policy process tourism the use of a case study is Determine appropriate to gather in-depth insight into the topic. The final findings and •Case study informa on from Lao PDR and combine the rela onship with the policy process recommendations could then be Analyse further developed through future research in other destinations of •Recommenda ons for improving the donor- recipient rela onship similar nature to test their Give applicability in other contexts.
The fact that the policy process as well as the donor-recipient relationship are of highly political nature makes for a challenging research setting. Qualitative data collected through interviews provide the best basis for data collection as it allows the researcher to engage with the respondents. Interpretive analysis has been chosen taking into account the importance of meanings and language in the policy process. This was deemed important to provide a holistic picture of the policy process and the effects of the donor-recipient relationship. The nature of the donor-recipient relationship is
3 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux likely to affect the answers of the respondents and may introduce bias to the research. The studied viewpoints therefore also include outside experts at the destination that are involved in tourism but not directly within the donor-recipient relationship. This broadens the research base and provides an objective view on the relationship.
The case study of Laos was chosen as a representative study area to enhance the theoretical findings and had to match certain criteria for the research. Its stage of development should be at a level where foreign aid involvement plays a large role for future development. The tourism industry should play an important role for foreign aid agencies to be interested in working in this area. The Lao Peoples’ Democratic Republic (Lao PDR or Laos) matches these criteria. It is a developing country and its tourism industry is currently the second biggest economic contributor. Many international organizations are involved in developing tourism in the country and are therefore likely to have an impact as tourism policies are influenced and formulated by donors. Although the data gathered in Laos is context specific it allows for generalisation as other developing countries are likely to experience the same issues. A more detailed description of the primary data collection can be found in the methodology in chapter 2.
4 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
CHAPTER 2: METHODOLOGY
The methodological framework is based on the nature of the study subject and the chosen methods were tailored to the research objective which is crucial to bring about valid results (Bryman et al, 2008). Figure 3 shows an overview of the methods used to answer each research question and the expected results. Figure 3 - Research Questions, Methods and Expected Results
Research Ques on Methods Results
1. What role does Rela onships foreign aid play in • Analysis of theore cal between tourism, tourism policy and discussion about policy in foreign aid and des na on different disciplines policy management?
2. What characterises Iden fy key • Analysis of theore cal the rela onship characteris cs and discussion about donor-recipient between donors and factors impac ng on rela onships the recipient country? the rela onship
3a. Where (and how) • Analysis of theore cal Link the does the rela onship discussion of donor-recipient rela onship manifest itself in the rela onships and the policy characteris cs to different steps of the process in other disciplines the policy process policy process?
3b. In the case of Lao • Use primary research with Establish impacts of PDR how does the interpre ve policy analysis and donor-recipient rela onship affect the interviews to show case of Lao rela onship on policy process? PDR policy in Lao PDR
4a. What areas for • Analyse, combine and Iden fy areas of improving the integrate findings from improvement for rela onship can be secondary and primary research Lao PDR iden fied in Lao PDR? to find aeas for improvement
4b. What are areas Areas of change for for change to improved donor- enhance the donor- • Use findings to establish main recipient recipient rela onship areas in need of change rela onships in and policy process? tourism policy
The research aims at uncovering the effects of foreign aid involvement and its context on the policy process. This entails critically examining the factors affecting the policy process and the underlying reason behind it. Due to the nature of the study the methods were drawn from the interpretive strand (Duncan & Reutter, 2006; Gephart, 1999). The study is of an exploratory nature as it aims to look into a sparingly covered topic in the literature. Due to this the results will not provide definite findings but preliminary answers that will have to be tested further in other contexts (Saunders et al., 2009).
A combination of secondary or desk research as well as primary research was used. The analysis of data was done continuously such that new aspects could be incorporated into the research process as they came up. The definitions of donors, foreign aid, development agencies, overseas
5 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux development assistance, development partners (DP) and international organizations do not necessarily coincide. However, in this report they are used interchangeably and generally refer to an organization from outside that provides some sort of assistance in tourism to a recipient. When reference is made to the government this is generally the government of the recipient and the policy process refers to the tourism policy process.
2.1 Secondary Research 2.1.1 Theoretical Background Secondary research was used during the first phase of research to develop an understanding of the literature and the concepts in academic literature of varying disciplines. This played an important role for the underlying study due to its exploratory nature. It was necessary to take into account and integrate methods, models and discussions from different disciplines to gather an understanding of the topic and relate it to tourism specifically. Information from journal articles, newspaper articles and books was considered. This allowed the researcher to develop a broad understandig of the context of the subject and laid the basis for the methodological framework. Furthermore, it assisted in understanding the information gathered through subsequent research methods (Saunders et al., 2009).
2.1.2 Case Study Material Secondary research was also used for the case study of Lao PDR. Donor-recipient relationships and its impacts were looked at through the analysis of official government documents related to tourism but also documents published by donor agencies in relation to Lao PDR. This includes their general strategies and intentions as well as strategies specifically for Laos. Furthermore, publications in newspapers or on websites provided additional information about the current state of aid involvement in tourism and policy. For the analysis of government strategies it was deemed appropriate to use similar techniques as in previous policy analysis studies. A method for content analysis was used in form of a checklist of topics to assess policies (Wang et al., 2009; Hyslop & Eagle, 2007). The content analysis of documents was also based on the concept of interpretive policy analysis as explained by Yanow (2007) described in more detail in section 2.2. Secondary research on Laos was used for a preliminary identification of stakeholders and actors relevant for primary research.
2.2 Primary Research 2.2.1 Case Study Area – Lao PDR Primary research was conducted as field research is identified as crucial for representative policy research (Mead, 2005). Using a case study allowed for gathering of primary data with an insight into and collection of recent information on the context of the research area. This was judged the best method to gather insight into this sparingly studied topic. The case study area of Lao PDR was chosen based on its representative characteristics as outlined by the background information described below.
6 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
Lao PDR is a landlocked country in Southeast Figure 4 - Map of Laos Asia with a population of 6.2 million and is classified as a lower middle income developing country (WB, 2011a). This makes it eligible for deeply concessional loans as well as grant programs aimed at fostering economic growth (WB, 2011b). It is in the heart of the Greater Mekong Subregion (GMS) and borders Cambodia, China, Myanmar, Thailand and Vietnam (as seen in Figure 4, Source: Ezilon, 2011). Its state of development is both dependent on its location as well as its geographical features with only about 4% arable land and almost 40% forest cover (Luanglatbandith, 2007). There are big discrepancies in development between urban and rural areas. To address this Laos has a ‘National Socioeconomic Development Plan’ (NSEDP) as well as a ‘National Growth and Poverty Eradication Strategy’ (NGPES) oriented at the Millennium Development Goals (MDG). Both were prepared in cooperation with the United Nations Development Program (UNDP). They are aimed at increasing economic growth to boost development to leave the state of a least developed country by 2020 (GoL, 2002; MPI, 2010; UNDP, 2008). Their development strategies are based on priority industry sectors one of which is tourism. Lao PDR is an emerging tourism destination in Southeast Asia and has great potential. Tourism is seen as one of the most important industries to foster the development of the country as it is one of the three most important contributors to GDP in Laos. It was previously number one in 2007 before it was overtaken by mining and is now the second biggest contributor with tourism expenditure reaching about 382m USD in 2010. Arrival numbers have been steadily increasing to a little over 2.5 million in 2010 (LNTA, 2011), however most tourists come from the region of Asia and the Pacific accounting for almost 85% of all arrivals (Bhula et al., 2009).
Foreign aid involvement in Lao PDR: Lao PDR is a developing country that has high levels of foreign aid flowing into the country. The involvement of foreign development partners (DPs) goes back a long time and has shaped the development of the country (Paraxayavong, 2009). Foreign aid accounted for about 85-90% of public sector capital outlays in 2008 (ABD, 2009a; Cooper, 2009). A growing number of DPs are involved in Laos with 28 multilateral aid agencies and 22 bilateral donors as well as several international non-governmental organizations currently registered (INGOs) (MPI & DIC, 2006; 2008; 2010). The top five contributing donors represent a mix Western as well as Asian influence (MPI & DIC, 2010; RTM, 2011a). The officially recorded amount of foreign aid in 2009 amounted to about 543m USD, which has gradually grown over the years. However it is said that the actual figure might be even higher (UNDP, 2008). Laos strongly relies on this assistance to achieve its development goals.
The large number of donors and high volume of aid requires efficient coordination as is recognized by both the GoL and international donors (BMZ, 2011). The GoL makes efforts to lead donor
7 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux coordination through the development of a ‘Vientiane Declaration for Aid Effectiveness’ (VDAE) as well as the ‘Vientiane Declaration Country Action Plan’ (VDCAP) (GoL, 2004a; GoL, 2006a; GoL, 2006b). The implementation of this is continuously reviewed and the VDCAP updated (DIC & MIP, 2008; GoL, 2006b, RTM 2010). There is a Round Table Meeting (RTM) process lead by the Ministry of Planning and Investment (MPI) and its Department of International Coordination (DIC) with the help of the UNDP. The RTM is divided in several different subgroups for different areas of donor involvement.
Foreign Aid in Tourism: Looking at the importance of tourism it comes as no surprise that DPs in Laos are also involved in developing the tourism industry. They each engage in different areas of tourism but generally pursue goals of poverty alleviation and development. Compared to the total figure, the amount going to tourism is small (personal communication, Independent, June 10, 2011; Donor, June 14, 2011). The specific DPs that list tourism as one of their priorities are Luxemburg Development (LuxDev), the Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), the German agency GIZ, the United Nations Educational Scientific and Cultural Organization (UNESCO), the United Nations Development Programme (UNDP), the New Zealand Agency for International Development (NZAID), the Australian Agency for International Development (AusAID), the United Nations Conference for Trade and Development (UNCTAD), India, , Singapore, the Wildlife Conservation Society (WCS) and the World Bank (WB) (Manivong, 2007). Before phasing out of tourism this year the Dutch organisation SNV was also a major player.
Direct involvement of donors in tourism policy is not always the case, however through their advisory roles at the national and provincial levels they can have an influence on policies, strategies and plans. Their involvement can therefore have an impact on the direction of tourism development in Laos. How well their initiatives are coordinated is dependent on their cooperation and the amount of guidance and leadership taken by the GoL. There is no specific RTM for tourism, however due to the relatively small number of donors directly involved in tourism this might not be necessary (personal communication, Independent, August 10, 2011).
Looking at the context of Laos and foreign aid involvement in its tourism industry the use of Laos as a case study can be justified. Due to its current state of development donor involvement in Laos is manifold and the importance of tourism means that donors are highly interested to work in this area. Their involvement affects the local policy processes in direct or indirect ways. These features made Laos a representative case to investigate the effect of the donor-recipient relationship on the tourism policy process of developing countries.
2.2.2 Data Gathering Methods and Sampling The study overall aims at explaining what is happening and analyses information trying to find reasons why certain things happen – making it both descriptive as well as explanatory (Saunders et al., 2009). Due to the political and complex nature of the policy process and the importance of wording and its meaning interpretive analysis was used for data gathering. This is a discursive approach to policy analysis emphasising the meaning of wordings within policy documents and
8 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux throughout the policy process (Dixon & Dogan, 2004; Jacobs, 2006; Yanow, 2007; Glynos et al., 2009). It includes the immersion of the researcher in the wider policy context allowing for a detailed understanding of the circumstances. Reflection is an important aspect of interpretive analysis. The researcher has to be aware of the effects his or her presence and experiences can have on the collected data to mitigate this researcher bias. Policy documents and transcriptions from interviews were examined for their underlying meaning in relation to the situational context (Yanow, 2007). Interpretive analysis therefore made for a more holistic view allowing for its contextualization hence rendering the research more relevant and valid (Stein, 2001).
In-depth expert interviews were conducted with foreign and local stakeholders on the donor and the recipient side. This resulted in the gathering of qualitative, non-numerical data (Saunders et al., 2009). Qualitative research allowed for thick descriptions and was hence deemed the appropriate means of data collection fort his exploratory study (Bamberger, 2008). The subjects were initially identified through secondary research and then by interviewees who provided contact details of other relevant people. This entails opportunity as well as snowball sampling. Interviewees included managers of projects and integrated experts of development agencies in Lao PDR as well as their counterparts in the government agencies both of which are involved in the policy process.
Furthermore, interviews were conducted with people connected to but outside the donor-recipient relationship. This was deemed necessary due to the political nature of the policy process and possible effects of power differences resulting in biased responses of those that are directly in the relationship. The view of these independent ‘outsiders’ allowed for a triangulation of the results as they could give an objective view of the topic. Interviewees included people previously involved in development or government agencies in Lao PDR as well as members of the private sector with a connection to government or donors. This method enhanced the reliability and validity of the results. Table 1 gives an indicative overview of the type of people interviewed while a full list of respondents can be found in Appendix 1. Table 1 – Indicative Overview of Respondents
Donors Recipients Independent Asian Dev. Bank National Tourism Organisation Former advisors for ADB, govt. German GIZ Provincial Tourism Department Independent advisors in Laos Dutch SNV Associations Tour Operator with relations
The interviews allowed for interpretation and observations throughout the conversation giving indications to the attitudes and intentions of the interviewees (Bailey, 2007). As the policy process did not take place during the data collection period the analysis was based on personal accounts of those involved. The number of respondents was 19 which was judged reliable for the case study as all three categories were represented. Due to the political and hence sensitive nature of the topic under study respondents remain anonymous when cited in the report. Interviews were conducted face-to-face and through telephone conversations if the subject was not available for a meeting. They were of semi-structured nature with a predetermined list of topics to be addressed during the interview. This ensured that no important points were missed while giving the interviewee the possibility to raise new aspects. Recordings allowed the researcher to go back to the given information again such that no aspects were lost. The interview guide can be found in Appendix 2.
9 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
2.3 Time frame The research took place between May and August 2011. Interviews were conducted in two phases. The first phase took place in June 2011 focusing on opinions of the interviewees about tourism and foreign aid in Lao PDR to develop a first impression of the context of the study. This helped the researcher gain first insights into a topic that had not previously been studied in this manner. The second stage of interviews was conducted in July and August 2011 and focused specifically on identifying characteristics of the donor-recipient relationship and its effects on the tourism policy process. All interviews lasted between 30 and 120 minutes.
2.4 Complementary Research Methods Other applied methods were observations as well as spontaneous conversations (Bailey, 2007; Yanow, 2007). These were used to complement the other research methods gathering more information and establishing links between previous data. Observations were used in the form of participatory research engaging in activities in the case study area but also through non-participatory observations to gather more information about the research context and donor-recipient relationships.
Through a combination of these different research methods it was possible to gather extensive information from different angles on foreign aid involvement and the impact of the donor-recipient relationship on the tourism policy process. These different perspectives allowed for the method of triangulation. This meant that an investigation of whether results were supported by various sources as well as finding causes as to why there were contradictions between sources was possible. Triangulation makes for more valid and reliable results in qualitative research (Bailey, 2007). An evaluation of the research methods in light of the results is provided in the discussion and reflection in chapter 7.
10 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
CHAPTER 3: POLICY PROCESS, FOREIGN AID AND DONOR-RECIPIENT RELATIONSHIP
Chapter 3 reviews the current academic discussion in the literature which forms the theoretical basis of this report. General background with regards to foreign aid involvement in tourism, the tourism policy process and the donor-recipient relationship is provided.
3.1 Introduction to the Tourism Policy Process The policy process is widely discussed in academia and successful policies are what policymakers strive for (Nowlin, 2011; Ambrosie, 2010). Policies are guiding statements that set the frame for the direction of tourism development. They regulate directions of development set out during the planning process to reach intended outcomes and are implemented to provide the framework for tourism development (Goeldner and Ritchie, 2006). Tourism strategies are drafted to set guidelines on how to implement policies within a specific timeframe. Action plans can then be made giving details about specific activities that have to be undertaken to put the strategies into action. Tourism planning, which includes policy and strategy-making, is therefore a process, which involves deciding about future actions and goals to maximize the benefits of tourism to the society (Hall, 2007; Cooper et al., 2008). They are crucial for destination management to ensure future development and growth.
Tourism is not necessarily at the forefront of the agenda of government and planning often only occurs as a complementary activity (Stevenson et al., 2008). This generally depends on the development strategy of each country (Burns, 2005). However not engaging in tourism planning can be detrimental especially in emerging destinations and hence the focus of government should be to provide a well-established policy framework for the industry. This can only work if plans are also successfully implemented (Savio & Nikolopoulos, 2009).
3.2 Steps of the Policy Process There is an agreement that the policy process involves several sub-processes including agenda setting, issue definition, policy formulation, policy decision, policy implementation, policy evaluation and finally policy maintenance, succession or termination (DeGroff & Cargo, 2009; Turnhout, 2009). This step model of the policy process is debated as the stages do not always occur sequentially but are overlapping or might be left out completely (Hill & Hupe, 2003).
For the purpose of this report a simplified stage model including only formulation, implementation and evaluation was the most suitable to showcase the influence of foreign aid organizations, on the different aspects of the process. Policy formulation involves drafting Figure 5 - The Policy Process guidelines while the implementation process is concerned with how to Formulation turn these into practice usually through the formulation of a strategy set out to achieve the targets. Evaluation means monitoring the effects of policies and adjusting them if necessary (DeGroff & Cargo, 2009; Savio & Nikolopoulos, 2009). Figure 5 shows these steps of the policy Implementation process and the links between them.
The policy formulation and implementation processes are seen as the most important as these are the processes where policy directions and Evaluation outcomes can be most affected by foreign aid. However evaluation also has to be taken into account as this is where the effectiveness and
11 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux suitability of a policy is determined (Hurford, 2003). The following three subsections give a short overview of the steps, what they entail and what challenges might be.
3.2.1 Policy Formulation Several factors affect policy formulation including a need for integration of sub-policies with an overall government policy, coordination and communication between and within stakeholders, goal ambiguity, research and available information, commitment by stakeholders, need for evaluation and leadership by the policy-maker (Giacchino & Kakabadse, 2003; Mackie, 2004; McConnell, 2010; Marsh & McConnell, 2010; Stevenson et al., 2008; Spector, 1997). If managed badly these factors can be impeders to subsequent implementation (Alashloo et al., 2005; Howlett et al., 2011). An adaptive and flexible management approach and continuous stakeholder engagement together with a long- term focus, regulatory guidelines, a multisectoral and holistic approach to policy are said to improve the policy process (Dodds, 2007; Wang et al., 2009). The involvement of foreign aid can make policy formulation more complex and the donor-recipient relationship may affect the way policy is formulated as well as the direction in which it goes.
3.2.2 Policy Implementation Implementation means turning theory into practice. It does not only depend on the policy itself and on the interaction of stakeholders but also on factors outside the policy process such as laws, financial resources and political aspects of support and power (Liu et al., 2011). Policy formulation often results in a well-planned policy document, however when it comes to the implementation of policies there is an apparent gap between theory and practice. In the worst case policies or plans are not implemented at all. This has over time been reconfirmed by numerous studies of different policy areas in developed and developing countries (Albrecht, 2010a; Geerlings & Van der Sluis – Van Meijeren, 2008; Ioannides, 1995; Lai et al., 2006; Ongaro & Valotti, 2008; Saetren, 2005; Schofield, 2001). The fact that implementation is not always congruent with the formulated policy document is determined by issues such as stakeholder relationships, tensions around hierarchies, local versus national prorities and government legitimacy which are related to politics and governance and priorities (Krutwaysho & Bramwell, 2010).
3.2.3 Policy Evaluation Policy evaluation is concerned with monitoring the effect of policies and giving feedback on its success to inform adjustments. This relates back to the process of policy formulation making the policy process a cycle rather than a linear process in the ideal case (Cochran et al., 2009). Evaluation is crucial for the policy process so that learning can occur and future policies can be more effective. However, this part of the policy process is often neglected (Hall, 2007). Policy evaluation is difficult as determining indicators for the success of policies is difficult. This is due to the complexity of the policy process with different stakeholders, intangible outcomes and a long-term focus. The elusiveness of success itself also makes it difficult to determine what exactly it entails (McConnell, 2010). Different ways of looking at success are likely to give different results as the success of policies means something different to each stakeholder (Hupe, 2011; Mosse, 2004; Nakashima, 2008; Porter & Shortall, 2009). There are therefore no definite criteria to determine success as each stakeholder gives a different weight to the outcome (Marsh & McConnell, 2010a).
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3.3 Developing Countries and the Policy Process The policy process in developing countries and its features are generally the same as in developed countries. However, there are certain specific aspects related to the characteristics of developing countries rendering the policy process more difficult (Huang et al., 2004). Firstly, due to their political structure planning is often highly centralized and other stakeholders such as the community and businesses are not consulted which results in rigid plans that are difficult to implement (Tosun & Timothy, 2001). This is partly explained by the fact that the mode and channels of participation are less developed (Mooij, 2003).
Another aspect is the lack of funding that often prevails in developing countries. Public budgets are small and policy processes lack professionalism. Necessary research or information gathering and education of staff suffer (Dodds, 2007). This inhibits the ability to engage in a participatory policy process as there are no funds to get all stakeholders involved. Another fact is that there is a lack of integration of different sectors in the national development policy. Often policy making is myopic and such that it only focuses on quick economic gains rather than integrating sustainable principles (Tosun & Timothy, 2001).
A lack of capacity means that foreign policy models are important and the dependence on foreign expertise is high. These factors also make implementation more difficult as local levels responsible for this have difficulties in assessing goals and choosing the right instruments (Agyepong & Nagai, 2011). It may also render the policy process inefficient as there is little culture of feedback learning (Saxena & Srivastava, 2009).
3.3.1 Foreign Aid Involvement These aspects provide the grounds for foreign aid involvement in tourism policy and are the underlying reasons why the effect of foreign aid can be rather large as recipient governments seek guidance from international institutions (Tomlinson et al., 2010). In developing countries tourism is often one of the top three economic contributors and is therefore important. Yet the way it is managed can result in foreign domination and dependency (Brohman, 1996; Scheyvens, 2007). Development aid is an important way of funding for tourism development and management. Donors and recipient countries both consider tourism a tool for fostering development which is a reason for development agencies to get involved and fund tourism activities (Cole & Morgan, 2010; Lindberg et al., 2001).
Foreign aid comes in various forms such as cash or grants as well as soft loans or technical assistance with knowledge and equipment transfer and can be given through multilateral or bilateral institutions or private NGOs (Jaradat, 2008; Martens, 2005). Although only a minor part of all aid goes to tourism many agencies have a long history of being involved in tourism development (Jamieson et al., 2004). Aid agencies take a development first approach integrating tourism in other activities to achieve wider development goals (Burns, 1999). Different ideologies about tourism and development influence the ways in which aid is provided. Their main focus is currently on alternative development and forms of tourism that include the poor through community-based tourism (CBT). They are trying to introduce structural reform to improve institutions at all levels of government (Evans, 2009).
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3.4 Stakeholders in the policy process The complexity of the policy process based on the myriad of stakeholders and their relationships is widely acknowledged (Cochran et al., 2009; Farsari et al., 2005; Hurford, 2003; Van Gossum et al., 2008). The policy process involves different stakeholders and different levels within these resulting in a wide variety of interests that have to be brought to a common objective. If this is not the case it will lead to ambiguous goals or conflicts and in the worst case policy failure (Chochran et al., 2009; Van Gossum et al., 2008). Stakeholders with influence on the policy process include policymakers themselves as well as pressure groups, society and international organizations and hence foreign donors. Their language, culture and approach to policy as well as power can all shape the policy formulation (Hurford, 2003; Vernon et al., 2005). The policy process always involves several layers of government (Hill & Hupe, 2003; Van de Riet, 2003). Foreign aid agencies infiltrate this system from the outside to enhance the processes and activities that take place within the recipient country. They are involved through experts that are integrated into the policy network shaping the policy discussion with their ideas and agendas. The high number of stakeholders gives an indication as to the complexity and politics of the process and the power plays that influence the outcomes (Brugha & Varasovszky, 2000). Furthermore, the tourism industry is of complex nature involving multiple sectors requiring cross-sectoral stakeholder collaboration to make the most effective policies (Farsari et al., 2011). The relationships between stakeholders will determine the outcome of policies. It is even stated that to understand policy one must understand policymakers and their relationships (Airey & Chong, 2010).
Figure 6 illustrates the policy process with its many stakeholders (multi-actor) as well as their different levels (multi-level) in a simplified form. The group of other tourism stakeholders is in practice very heterogeneous, Figure 6 - Multi-Level and Multi-Actor Complexities however since this group is not National the main focus of the report it is Government combined into one for simplification. While policies are Development Policy Formulation Agencies often generated at the national & Evaluation Other Tourism level they are implemented with Stakeholders the help of local organisations. Local The difficulty is that, the more Government complex the policy and the bigger the number of Policy Implementation stakeholders involved the more likely it is that the policy intentions will be distorted Tourism Sites during the policy process (Cochran et al., 2009). Collaboration between these diverse stakeholders is difficult to achieve because they each have their own individual interests to pursue regarding different aspects of the planning process (Timur and Getz, 2008). Aid agencies get involved at national and local levels of government and the donor- recipient relationship is therefore important.
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3.5 Donor-Recipient Relationship Characteristics There are some main aspects which characterise the donor-recipient relationship and define whether it is of collaborative nature or dominated from one side. The donor-recipient relationship is said to be of principal-agent nature with the donors being the principal and the recipients being the agent (Murshed, 2009). From the literature several factors emerge which characterise the donor-recipient relationship and determine its stability some of which are experience and skills, information and knowledge, autonomy versus dependence and most Figure 7 - Relationship Characteristics importantly trust (Albrecht, 2010b). For this report the different aspects named in the literature were collected and then grouped into four broad categories to enhance the structuring of the donor-recipient relationship. These four categories were Poli cs Priori es named politics and governance, power, priorities or agenda and commitment each of which has certain aspects within them Commit- (Figure 7). Table 2, 3, 4 and 5 provide a short overview of the ment Power elements of the four relationship characteristics and their effects on the donor-recipient relationship at the end of each section.
3.5.1 Politics and Governance in the Donor-Recipient Relationship Politics and governance are factors that often define the relationship in terms of the conditionality of aid involvement and the type of aid involvement which in turn determines the way that donor agencies are involved in the recipient countries. Governance amongst others is related to the degree of Poli cs Priori es hierarchy, decentralization, flexibility and participation all of which has an effect on the relationship (Hall, 2011). Governance also affects the Commit- Power other characteristics such as power and commitment. The way aid is ment given has been changing over time seeking to make it more effective (Kranenburg, 2010). Whether aid comes from a multilateral organization or through bilateral channels or from private sources can impact on the nature of the donor-recipient relationship (Jaradat, 2008).
For recipients it is easier to deal with a smaller number of multilaterals rather than a large number of bilateral donors. While a bilateral relationship might be more affected by political aspects and strategic or economic interests of the donor this is less so in the case of multilaterals as individual interests get diluted (Nowak-Lehman et al., 2009; Bobba & Powell, 2007). Furthermore they might have more leverage due to larger sums of funding (Jamieson & Nadkarni, 2009). Multilateral organizations are more likely to impose conditions on the recipient and foster policy reform as they develop overarching policy frameworks to be adopted by recipients. Loan conditionality hence entails the recipient agreeing to some sort of reform within their government structure or system (Ouattara, 2007). This is usually done to promote structural change to improve public sector governance in the recipient country (Pessali, 2011). Depending on the political ideology of the recipient these reforms might be difficult to accept and conditions hence not achievable in the often rather short period of funding (Dinica, 2006).
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Politics will determine the continuity of aid flows from the donor side. It is acknowledged that aid can be highly volatile which can hamper its effectiveness and require recipients to readjust budgets on short notice (Arellano et al., 2009). Disruptions in the aid flow can make the relationship relatively instable which can lead to a lack of trust from the recipient (Fredriksen, 2010). This is often outside the donors’ control so this effect is difficult to mitigate. Volatility is less likely to affect short-term projects as these will usually be continued until the end.
From the literature it appears that a large part of aid in tourism is project-tied focusing on using tourism either for natural resource conservation or poverty alleviation (Smith & Nemetz, 2009). Technical assistance not related specifically to projects usually means that a foreign expert is employed as advisor for a government agency at the local or national level. Direct budgetary support seems to be relatively rare. Regardless of the type of aid involvement the scope of the project, the responsibilities of experts and the use of funds are usually closely regulated (Easterly, 2007a).
Project-tied aid can result in a more distant donor-recipient relationship due to design and implementation resting mainly with the donor (Whitfield & Jones, 2008). The danger with project- tied aid is therefore that the relationship of donors and recipients is of rather formal and hierarchical nature. This can inhibit capacity building and it is likely that there will be less collaboration from the recipient side (Clarke et al., 2009). This kind of relationship can also make aid less effective as it may result in the project collapsing after the project term is over as it has not been integrated into local public sector systems (Simpson, 2008). Budgetary support will give recipients more possibilities to decide on activities that should be funded and how these activities should be designed. However, the fear of the money being misused is large and hence attached rules are stricter to mitigate this. The fear of corruption affecting the effectiveness of aid is often a reason why aid agencies tend to control the use of funds very closely (Stockemer et al., 2011).
With technical assistance or funding this kind of hierarchical relationship is less likely to happen as this is a closer relationship based on day-to-day interaction. The expert works alongside local staff within the agencies and can have a larger impact on capacity building but also more influence on agendas of government. Yet, there is still a danger that the expert will do all the work rather than building the capacity of the locals simply because it is easier (Jones et al., 2009). There is also less incentive to build local capacity due to the expert doing the work (Ouattara, 2007). If integration with local actors is weak it is likely that locals renounce their control and lose the capacity to think for themselves. They might also be unable to perform government functions as they are based on the foreign funds flowing in which in turn are controlled by the foreign experts (Easterly, 2007a).
Either type of assistance is likely to add bureaucratic layers to the government structure of the recipient due to the accountability to the donor. Recipients need approval from the agency to fund certain activities, for example hiring external experts funded by budget support (Bräutigam, 2000). Admittedly this kind of control may be necessary to ensure that the money is not misused but it has to be kept at a minimum giving recipient staff as much leeway as possible to make their own decisions after the funds have been approved (Bjørnskov, 2010).
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Table 2 - Aspects of Politics and their Effect on the Relationship
Elements of Politics Effects on Relationship Type of Agency • Multilateral = more hierarchical & dominating • Bilateral = more economic reasoning Loan Conditionality • Increased control by donor = unequal relationship Type of Aid Involvement • Project-tied aid = less integrated & more hierarchical • Technical assistance = closer relationship • Funding/ Budgetary support = tighter control Bureaucracy • Increased bureaucratic layers with aid involvement
3.5.2 Priorities or Agenda in the Donor-Recipient Relationship The priorities and agenda of both parties and the degree of compatibility between them can have a rather large impact. Development agencies focus on fostering good governance by changing and in their eyes improving public sector structure to Poli cs Priori es ensure a more democratic environment, poverty alleviation and environmental conservation using tourism as a tool for this Commit- Power (Murshed, 2004). It can be argued that at least the latter aspect ment coincides with the recipient government’s priorities as they too seek to use tourism to foster development (Scheyvens, 2007).
Embedded in these priorities is a Western way of working and mindset which means that the way to achieve this agenda may not be compatible with a recipient for example in Asia (Asanova, 2006). Donors’ expertise comes from developed countries and therefore they assume that they know the right processes and actions (Easterly, 2007b). Yet, initiatives for poverty reduction and conservation are very much context dependent. This means that there needs to be a degree of localization in the processes and instrument chosen to make them more compatible with local priorities (Crepsin, 2006).
With the Paris Declaration on Aid Effectiveness donor coordination to avoid these effects has become a primacy (OECD, 2005). Yet, even if donor coordination round tables exist a real degree of coordination especially between multilateral and bilateral organizations is difficult to achieve (Gulrajani, 2011). The current state of donor fragmentation and proliferation of projects results in an overlap between different projects or duplication of projects as well as conflicting priorities for development (Barrett, 2004).
If visibility of a project and its success is more highly valued than the long-term impact it has this can affect the relationship. Especially for bilateral organizations the future budget often depends on how well they performed. However, multilateral organizations are also prone to value reported success over actual impacts to ensure the continuous support of their members (Asanova, 2006). For recipients the priority does not lie in the short-term success of a project, although this is often a welcomed effect. They value the integration with government priorities, the long-term effect of capacity building and indirect spin-offs from the continuation of the project activities (Knack & Rahman, 2008). Visibility may also affect the design of the project, keeping most responsibilities on the donor side without involving the recipient and making it unsustainable in the future for example
17 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux due to high operational costs which cannot be covered after funding is terminated (Simpson, 2008). Collapsing projects should neither be in the interest of the donor nor the recipient (Varghese, 2010). Recipients are likely to put less effort in the relationship if they can see this focus on the short-term from the side of the development organizations.
Table 3 - Aspects of Priorities and their Effect on the Relationship
Elements of Priorities Effects on Relationship Types of Governance • Western versus Asian ways of working Donor Fragmentation • Donor Fragmentation = clashing priorities & Project Proliferation relationship less close Visibility of Aid Initiative • Donor focus on short-term success • Less involvement of local staff Differing Priorities • Unofficial versus official priorities = conflicts • Donor versus recipient priorities = conflicts
3.5.3 Power in the Donor-Recipient Relationship Politics and governance as well as priorities have an impact on the power discrepancies within the relationship and these are crucial for the relationship (Mosse, 2004). This is due to the principal-agent nature of the relationship as the recipient usually relies both on the Poli cs Priori es funding as well as the expertise of development organisations. This gives donors power based on finances or resources as well as Commit- knowledge. It has been argued that the relationship between donors ment Power and recipients should give recipients more leeway, however this does not seem to be the case in practice (Ostrander, 2007). Power does not have to be obvious as it can be exerted in a covert form hidden behind rhetoric notions of trust and collaboration used to promote interest through manipulation of the weaker partner (Clarke et al., 2009; Pforr, 2006). Despite donor power from resources the recipient government possesses more legitimate power within the country to influence final impacting decisions.
However the power relationship is not as straightforward as it might seem. Academics have stated that recipients know which donors they can ‘reel in’ for which projects and types of support (Djankov et al., 2008). This is noticeable especially with increased donor fragmentation (Knack & Rahman, 2008). Most academics still agree that donors have more power due to loan conditionality (McCormick & Schmitz, 2011). However, it is also stated that donor funding seldom gets stopped if the recipient does not adhere to donor regulations due to negative connotations for the donor agency (Araral, 2007). This shows a mitigation of donor power over the recipient.
The goal of donors getting involved is to provide funds for local activities and transfer knowledge and build capacity on the local level (Koutra, 2005). Through donor-driven project identification, design and execution local expertise gets crowded out and capacity cannot be enhanced (Blunt et al., 2011). This can result in outside processes being superimposed creating parallel institutions to existing ones (Whitfield & Jones, 2008). If donors dominate the relationship and they keep funds flowing it can create an aid-dependent mentality among the recipient eroding local creativity and innovation as
18 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux well as undermining activities and institutions (Shiferaw & Hailu, 2010). The effect can be increased through a reliance on western experts integrated into local systems to give advice and manage the projects (Knack, 2001).
It is not to be said that foreign aid involvement always has a negative effect, there are many examples like South Korea or Taiwan where foreign aid managed to strengthen governments and establish strong local institutions (Bräutigam & Knack, 2004). This is reliant on an appropriate management of the power inequalities and hierarchies in the donor-recipient relationship. Foreign experts need to have trust in local skills and take into account that sometimes doing things might take longer if they involve locals (Easterly & Pfutze, 2008). If the relationship is equal and projects are demand-driven rather than substituting foreign for local expertise then foreign aid can be more effective (Hope, 2011; Menocal & Mulley, 2006).
Table 4 - Aspects of Power and their Effect on the Relationship
Elements of Power Effects on Relationship Hierarchies • Increased donor power = hierarchy and control Degree of Dependence • Increased dependence = Increased donor power Loan Conditionality • Increased donor power Donor Fragmentation • Increased fragmentation = less donor power Project Proliferation Recipient government • Increased centralisation = more spread of aid initiatives • More decentralisation = involvement at all levels Type of Aid Involvement • Technical assistance = less donor power • Budgetary support = power over use but not activities • Project-tied aid = more donor power
3.5.4 Commitment or Continuity of the Donor-Recipient Relationship The commitment and continuity of the relationship is mainly a result of aspects of the other three characteristics. Long-term commitment from donors would be more beneficial for the recipient but these can Poli cs Priori es often not be made due to the volatile nature of future support from ‘home’ for donor organisations. This volatility hence affects the Commit- Power commitment of both sides of the relationship (Fredriksen, 2010). ment
It is also easier for development organizations to commit to short- term projects because they can more readily show short-term success in numbers. Long-term projects are unlikely to show much change after two or three years which might reflect badly on the donor (Whitfield & Jones, 2008). Results have to become visible fast and it is often easier for experts to do the work themselves rather than involving locals. Furthermore the interaction of recipient and aid agency staff is limited to a short period of time before often personnel changes take place which makes it difficult to build a relationship of trust (Celasun & Walliser, 2008).
Donor fragmentation and project proliferation are other aspects with an effect on commitment. With many different donors involved and various projects at the same time it is difficult for recipients to show real commitment to all. Donor coordination can reduce the number of intermediaries a
19 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux recipient has to work with and therefore allows for more commitment to a smaller number of projects (Gulrajani, 2011). Furthermore, aid agencies cannot offer incentives to recipients keeping them from pursuing quick economic gains in other activities. Commitment is hence hardly as big as necessary and aid agencies may at best hope for partial fulfilment of their expected results (Murshed, 2004).
A lack of commitment from the recipient side can also come from power and political aspects of the donor-recipient relationship. If design and implementation of initiatives is done by aid agencies there is a lack of ownership among the recipient (Godfrey et al., 2002). Ownership however is necessary for aid to be effective and for project initiatives to continue after aid agencies leave. Recipient governments need to be committed to continue their work but they also needs to be able to do this based on their limited resources. That is why it is crucial for the recipient government to be more involved in aid initiatives (Colclough & De, 2010). There is a fine line between giving recipients real ownership and the possibility to lead the development agenda and hence getting more commitment and having control over their use of funds (Menocal & Mulley, 2006).
Table 5 - Aspects of Commitment and their Effect on the Relationship
Elements of Commitment Effects on Relationship Aid Volatility • Increased volatility = less commitment Donor Fragmentation • Strain on resources = less commitment Project Proliferation Short-Term Initiatives • Donor short-term focus = less commitment (Visibility) versus Long- • Less involvement of local staff = less recipient Term commitment Political Aspects • Increased hierarchy = less recipient commitment • Increased control = less (or ‘fake’) recipient commitment Priorities • Clashes = less recipient commitment Power • Increased donor power = less recipient commitment
3.6 Conclusion This chapter introduced the policy process, its different steps as well as the involved stakeholders and their relationship characteristics. The three steps Formulation of formulation, implementation and evaluation appear to be the most important. The different levels of government as well as donors are involved in the policy process and bring in their own interests and agenda at all stages of the policy process. The nature of their relationships is hence Implementation crucial throughout the whole process.
For developing countries the relationship between donors and recipient Evaluation government are essential for the policy process. The four relationship characteristics of politics, priorities, power and commitment each have different aspects which determine their importance and effect during the duration of the relationship. It seems that these four characteristics are linked and interdependent as seen in Figure 8. Politics affects the priorities as the motivations and political aspects of aid impact upon the
20 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux processes and instruments used for pursuing goals in the recipient country. Priorities on the other Figure 8 - Links of Characteristics hand can influence power and commitment if there are conflicts between stakeholders and power struggles emerge or recipients have different priorities and hence lower commitment to donor initiatives. Power influences the degree of commitment with a Poli cs Priori es donor-led relationship usually leading to less commitment from the recipient side. It is affected by politics and priorities of each Commit- party determining the degree of equality in power distribution. Power ment Finally, commitment is affected by all other characteristics. Together they determine the degree of collaboration between the donor and the recipient and therefore define the nature of the relationship.
The specific effect of the four relationship characteristics on the tourism policy process cannot be found in the literature and is hence examined at the example of the case study in chapter 4.
21 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
CHAPTER 4: THE DONOR-RECIPIENT RELATIONSHIP IN THE POLICY PROCESS OF LAO PDR
The characteristics of the donor- recipient relationship – politics, priorities, power and commitment – Formulation manifest themselves in the different Poli cs Priori es steps of the policy process. This Implementation section analyses research findings Commit- ment Power from the case study area of Laos to Evaluation determine the effects of these aspects on the steps of the policy process.
4.1 Affairs and Relationships in Lao PDR 4.1.1 Politics The political structure as well as the prevailing culture and involvement of foreign aid all shape the tourism policy context of Lao PDR. Through their one-party system with the Lao Peoples’ Revolutionary Party as the only political party the policy process is rather centralized and non- participatory (Smits & Bush, 2010; Stuart-Fox, 2006; RTM, 2010a; 2010b). The socialist system makes for a slow progress of reforms even despite donor demands for change (St John, 2006). The GoL engages in non-participatory planning processes to stay in control of development. The government in Laos is increasing its capacity yet embedded political structures can mean that capable staff of the ‘newer government generation’ may not have the power to make changes or disseminate changed processes (personal communication, Independent, August 12, 2011). The structure is still very hierarchical and increased capacity is not necessarily supported. This also indicates that aid agencies have to be careful as to who they choose to work with.
Policies and plans are often not developed in a holistic manner even within government which can be related to the fact that there is no communication between departments. The prevalent lack of government funding and human resource capacity is another issue that hinders innovative and holistic planning (Marquart, 2006). A controversial issue is the level of corruption within government. Laos is ranked 154 of 178 countries with a score of 2.1 in transparency. Statistics suggest that comparatively corruption has increased over the years, although only slightly (WB, 2006; Transparency International, 2010). The government intends to fight this through its anti corruption law fostering more transparency and good governance (WB, 2007a, MPI, 2010).
4.1.2 Priorities Overall it is argued that for tourism the ADB, UNESCO and SNV were the most influential development partners (Harrison & Schipani, 2007; 2008). The ADB with its Sustainable Tourism Development Project (STDP) in the GMS is a large-scale donor involved in all levels of government and varying areas such as infrastructure development, development of CBT areas as well as consultancy (ADB, 2008a; 2008b; 2009a; Khanal & Babar, 2007). SNV focuses on CBT in different provinces but was also responsible for drafting the ‘Ecotourism Strategy and Action Plan 2005-2010’ and was hence directly involved in the policy process. Currently the only agency directly involved in the policy process is LuxDev who drafted the ‘Tourism Human Resource Development (HRD) Strategy’ for Laos in 2009 (LNTA & LuxDev, 2009a). Other large multilateral agencies such as the
22 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
UNDP and the WB mainly focus on capacity building at the national level to ensure knowledge about planning processes which also has affects policies (Lamb & Gilmour, 2003). As a result of the VDCAP donors are making an effort to align their own policies and strategies with the priorities of the GoL (WB, 2006). However, the current RTM meetings are not judged as effective as they could be (WB, 2007a).
A major interest of DPs is capacity building at national, provincial and local levels as well as fostering types of tourism that help environmental conservation and rural development. A focus for them is therefore on niche products in the areas of ecotourism, CBT and generally pro-poor tourism (PPT) (Donohoe & Needham, 2006). Aid agencies can pursue this direction in Laos where the tourism industry is not yet developed and its network of about 20 national protected areas (NPA) provide an ideal base (International Centre for Environmental Management (ICEM), 2003; personal communication, Independent, August 12, 2011). The inherent values of balancing demand and conservation as well as impacts on communities make for the importance of appropriate policies and planning for ecotourism (Oula, 2006).
These priorities are not necessarily what the GoL sees as a priority for development. Their first and foremost objective still seems to be increased income. CBT focusing on low volumes of tourists might not bring as much income as other economic activities. Mining as well as rubber plantations and hydropower dams can still surpass tourism in terms of priorities of the government even within NPAs. These clashes of priorities between donors and recipients become apparent at the local levels within provinces but also at the national level between ministry policies (personal communication, Independent, August 29, 2011).
4.1.3 Power Most initiatives in Laos are donor-driven although local government agencies are starting to approach donors with the Donor Control: request for assistance (JICA, 2011). The centralized system and “Donors need to have control socialist structure poses challenges as well as offering through experts. The danger opportunities for the effect of donor influence as policy of donor money being dialogue almost exclusively occurs between the GoL and misused is very high.” donors (Bush, 2004). It also means that local levels of Recipient government have less influence on policies in Laos (Baird & Shoemaker, 2007). The lack of transparency makes it difficult to see through the policy process as an outsider. Corruption is an issue that affects the relationship within and between government departments and especially the relationship with donors (Tomson et al., 2005). Donors tend to have less trust in the correct use of their money, imposing more conditions with aid, and using parallel institutions rather than existing government institutions to channel aid flows (personal communication, Independent, August 29, 2011).
23 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
The organization of tourism is Figure 9 - Multi-Level and Multi-Actor Complexities in Lao PDR rather hierarchical (Lyttleton & Allcock, 2002). This is shown in LNTA a simplified manner in Figure 9. The LNTA is the ministry of Development tourism which was integrated Policy Formulation Agencies into another ministry to form & Evaluation Other Tourism Stakeholders the Ministry of Information, PTDs Culture and Tourism (MICT) DTOs earlier in 2011 (LaoVoices, 2011a). Both provincial tourism departments (PTDS) Policy Implementation and district tourism offices (DTO) are accountable to the LNTA. Most planning occurs at Tourism Sites the national level, however PTDs and DTOs have some amount of autonomy over policies for their districts (personal communication, Independent, July 22, 2011; Donor, August 27, 2011). Despite this, provincial and district plans are generally aligned to national plans. Tourism is regulated through the tourism law and the National Tourism Strategy (NTS) (GoL, 2005a). The LNTA intends to attract a growing number of tourism while aiming for sustainable growth (LNTA, 2006).
4.1.4 Commitment The government states that their aim is to gradually lessen the dependency on foreign aid (GoL, 2002). Yet aid flows are increasing and dependence in Laos can go so far that they see it as a right to receive aid. This does not apply to all staff but due to the large number of donors the GoL can choose which donors to accept depending on their priorities which can spread this attitude (personal communication, Donor, Aid-Dependency: July 21, 2011; Independent, July 22, 2011). On the other “Lao people rely on donors. hand some donors as well as recipients also state that staff in They think that donors will Laos is welcoming of outside help and collaboration is good come and fix everything. But (personal communication, Donor, July 16, 2011; it is not that easy.” Independent, August 29, 2011). The fact that donors provide Donor financial incentives for local staff to cooperate can be an issue if it results in them neglecting local responsibilities. In the worst case donors build capacity and then hire the trained local staff for their own projects, a controversial activity termed ‘poaching’ (personal communication, Recipient, August 10, 2011; Knack & Rahman, 2008). The commitment from donors varies from agency to agency with some long-term projects for example by the ADB while others focus more on short-term impacts.
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4.2 Forcing Change or Accepting Individuality? – Politics in the Policy Process 4.2.1 Politics in Policy Formulation Depending on the type of assistance foreign aid can have a direct or indirect effect on policy. The politics and governance aspects are generally framed by the donors’ country strategies. These strategies and project documents set out their own principles according to which Laos has to use funds. This can be related to aspects such as environmental conservation but also human resources and is therefore likely to influence the activities of the GoL (ADB, 2008b). Quarterly reviews by donor staff ensure and monitor compliance with these donor policies (ADB, 2011). International organisations like the UNESCO or the WCS push for the inclusion of aspects such as environmental and heritage conservation and an even distribution of benefits. The ‘Law on National Heritage’ as well as the ‘National Biodiversity Strategy and Action Plan’ and the ‘Law on Tourism’ in Laos are all likely to have been influenced by this in terms of their content (GoL, 2004b; GoL, 2005a; GoL, 2005b).
The aspect of politics within the relationship can have a direct influence on policy formulation with project-tied aid and therefore technical assistance building capacity. Direct involvement in strategy formulation at the national level in Lao PDR was the case in the examples of SNV with the ESAP in 2004 as well as LuxDev with their current project for the tourism human resource development (HRD) strategy for Laos (LNTA, 2005; Lanith, 2009). In both cases the task of formulating a strategy was clearly defined to be undertaken by the donors and the GoL could only approve the drafts. Donor involvement in policies and strategies is even more common at the provincial and site-specific levels. Examples are the Xe Pian NPA and the master plan for Vang Vieng which were part of donor projects and formulated by foreign experts (Eshoo, 2009; Hansen Partnership, 2009; LNTA, 2007).
Foreign aid involvement can change the entire process of policy formulation in terms of instruments used and stakeholders that are involved and may therefore result in a different manner of formulating policies (personal communication, Donor, July 21, 2011). This can be positive as it brings in new ideas and improvements in efficiency. Donors generally judge the involvement and consultation of local staff in the cases of the HRD strategy and the ESAP as rather inclusive as it is generally demanded by their policies. Looking at the formulated documents this type of involvement seems to be fruitful in producing holistic policy documents (personal communication, Donor, June 25, 2011). However, through the constant involvement of foreign experts the structure of the recipient’s policy process might be distorted especially if the recipient is not familiar with the way that aid agencies approach this (personal communication, Independent, August 10, 2011). The bureaucratic aspect becomes important if government has to seek approval from the agency. This results in the time of the whole policy process cycle being increased making it less responsive to outside changes (Asanova, 2006). Furthermore, adding more layers and more stakeholders will make it more difficult to find consensus on the final policy document.
Another example of relatively direct influence on policy formulation is loan conditionality attached to aid initiatives which multilateral donors generally base on international policy frameworks. Especially the WB, UNWTO and UN institutions have been recognised as being influential DPs in this respect in Laos (Bush, 2004). The IMF acknowledges that the GoL is generally accepting of conditions and requests for policy reform (IMF, 2011). The STDP project by the ADB serves as an example imposing specific conditions on the local government of Vang Vieng for sanitation and waste management facilities of tourism businesses and transport systems. These had to be fulfilled within 12 and 36 months of receiving the grant (ADB, 2008b). Subprojects addressing these measures were put in
25 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux place to ensure the enforcement of their conditions. The Vang Vieng government obeyed and regulations were issued within the requested time period (ABD, 2011). Whether these are enforced in the long-term depends on the priorities and commitment of the local government.
The donor-recipient relationship has shifted from advice on economics to actual guidance on the policy process affecting formulation (Singh, 2009). Required policy reforms are related to governance changes and affect the policy content (personal communication, Independent, July 22, 2011). Donors see this as especially important due to the political context in Laos with highly centralized public policy decisions. In their country strategy the WB stresses the importance of and their support for the ‘Strategic Plan on Governance’ that the GoL is working on. This will affect the policy process in terms of transparency and participation of stakeholders as well as ensuring their enforcement and implementation (GoL, 2006c; WB, 2007b). For tourism these changes can be related to natural resource management as well as more pro-poor orientation in policies in line with donor objectives. These aspects are noticeable in policies in Lao PDR although it is difficult to judge in how far this came from their own initiative and how much is a result of reform requests by donors, although it is more likely to be the latter.
A more indirect political effect is noticeable when experiences from aid projects become incorporated in policy formulation at a later stage (Bond, 2001). The focus of the National Tourism Strategy (NTS) of Laos changed over time including more aspects of environmental conservation and PPT through sustainable principles (LNTA, 2006). This is related to the experiences that Laos gained with a growing Indirect Effects: tourism industry that has gained in importance (personal “Without aid projects fostering communication, Independent, August 12, 2011). Indirect CBT and PPT government influence on policy formulation in this respect is hardly policies would probably still planned by aid agencies but will be welcomed by them and not include these aspects.” can result in fewer conditions tied to aid as the policies move Independent more into the direction of their goals.
4.2.2 Politics in Policy Implementation If donors fund policy formulation they are often inclined to fund policy implementation as well. Even in the case of policies being formulated by the recipient donors might fund implementation as they recognise the importance of an appropriate tourism policy framework for it to be a tool for development (Okech, 2010).
Most aid agencies providing technical assistance will be involved in policy implementation. In Laos, DPs involved in the LNTA as well as the PTDs assist with the implementation of their tourism plans. The GIZ is an agency that provides technical assistance at the national as well as the provincial level. At the national level the assistance is more indirect through the Marketing & Promotion Board whose establishment was based on donor advice. At the provincial level the involvement GIZ advisors assist PTDs with planning itself but also implementation (GIZ, 2011a; GIZ 2011b; personal communication, Donor, August 18, 2011). The NZAID project focuses on assisting the LNTA with implementation of the NTS through technical assistance (NZAID, 2009; NZAID, 2010). Both can influence tools as well as processes through their involvement. PTDs acknowledge that the LNTA has the capabilities necessary for implementation, while PTDs are autonomous but lack capacity. DPs recognise this and advise at the local level to give recommendations especially in terms of the process of implementation. The
26 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux involvement of donors in implementation is therefore spread out and is likely to impact at national as well as local levels (personal communication July 27, Recipient, 2011; August 18, Donor, 2011). The LNTA is likely to deal with larger donors while PTDs have smaller projects (personal communication, Independent, August 11, 2011).
Conditionality of aid is likely to have an impact on policy implementation as donors expect visible results when they tie aid to policy reforms. They try to Reason for Conditionality: ensure that recipients actually follow through with the “Laos is a country where people reform and do not only formulate a policy document but are cooperative and assure that also implement it hereby changing processes (Knack, they will do as you say. But in the 2001). Conditionality is more difficult to ensure when it is end people do not always do tied to implementation. Internal political factors can be a what we expect them to do.” reason why the GoL cannot follow through with this. The Donor effect of conditionality is also mitigated as donor projects do not get stopped when implementation is not followed through and no sanctions will be imposed (personal communication, Donor, August 10, 2011). However donors such as the ADB acknowledge that the GoL often takes leadership in implementing reforms and is cooperative (ADB, 2009b).
Bureaucracy is likely to lead to a more centralized manner of policy implementation. It can make the implementation process less adaptive to local circumstances despite adaptivity being a crucial feature (Airey & Chong, 2010). This seems to be mitigated in Laos where DPs are also involved at the provincial level making them more aware of local needs for implementation. Yet, much work regarding implementation processes is done by the LNTA at national level which can mean less adaptation (personal communication, Independent, August 29, 2011).
4.2.3 Politics in Policy Evaluation Aid agencies are likely to try and establish evaluation processes independent of whether they give budgetary support, project-tied aid or technical assistance setting indicators to evaluate the effect of policies (Castellani & Sala, 2010). Evaluation of policies and other government activities would most likely not take place in Laos without donor involvement. This is because the ‘Western’ way of planning including not only policy formulation and implementation but also evaluation is often not familiar to locals (personal communication, Independent, August 29, 2011). The UNDP puts emphasis on capacity building in this area as its ultimate goals is that the GoL will be able to plan, implement and monitor the progress of its own policies. In fact, they devote almost half of their funds to the development of good governance (UNDP, 2007a; UNDP, 2007b). They are involved at national and especially provincial levels to establish evaluation processes.
Another aspect that could impact on evaluation processes is the JICA project assisting the GoL with the promotion for ‘Visit Laos Year 2012’ (JICA, 2011). They will assist Laos with promotion activities and depending on how Laos is promoted and which aspects are sold to tourists therefore affecting policy frameworks in these areas. To make sure that what is promised to tourists is also delivered a stronger enforcement of for example environmental policies could be the case. JICA will want to make sure that their project is called a success. This requires the GoL to evaluate existing policies and if necessary adjust them and increase their extent of implementation throughout the provinces.
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Aid agencies tend to evaluate existing policies that are considered as hampering development and suggest changes. This is more common than for them to evaluate those policy directions and effects that they foster (Varghese, 2010). Evaluation is generally done independent of government and used to justify and design future aid involvement or loan conditionality (UNDP, 2007b).
Table 6 - Aspects of Politics and their Effect on the Policy Process
Relationship Aspect Policy Formulation Policy Implementation Policy Evaluation • Multilaterals: • Different preferred • Different indicators Type of Agency governance reforms methods & processes & frameworks • Direct involvement: • Direct involvement: • Direct involvement: impact on content & changed processes focus on evaluation process, donor as and tools for & indicators main actor implementation, set • Indirect effect: Type of Aid • Indirect impact: by donor Evaluation processes Initiative experiences • Indirect involvement: similar to aid incorporated in advice on appropriate projects policies by tools and mechanisms government but no enforcement • Centralized, time & • Centralized & often • Centralized & Bureaucracy hierarchical layers less adaptive formalized increase • Direct effect on • Focus on appropriate • Emphasis on results Conditionality content implementation of reforms
4.3 Muddled Intentions or Mutual Agreement? – Priorities in the Policy Process 4.3.1 Priorities in Policy Formulation The aspect of priorities mainly manifests itself through conflicts in policy formulation in terms of content. Negotiations are likely to happen as priorities differ and recipient governments want support for their policy priorities while aid agencies might want to pursue their preferred agenda. Development agencies see the underdevelopment in recipient countries as proof that the current policies are not working and their frameworks should be adopted. However the effectiveness of this mindset has been questioned, as policies need to take the local context into account (James & Lodge, 2003). Often recipients do not have much choice but to adhere to what aid agencies expect them to put in the policies (Conteh & Ohemeng, 2009). Yet, accepting the donors’ terms in policy formulation does not mean that recipients actually follow this direction in implementation.
Donors agree that ultimately a form of consensus should be found in the middle. Donors accept this because they are tied through the Paris Declaration on Aid Effectiveness to follow recipients’ priorities. However this does not mean following them completely. Policies in Laos have already been affected by international policy frameworks and their priorities are oriented at the MDGs which donors also support. Ultimately the recipient has to implement the policies and therefore has to approve of their content. This is unlikely to happen if there is a conflict of priorities and no consensus is found (personal communication, Donor, June 14, 2011; Donor, June 16, 2011; Independent, August 11, 2011). Differing priorities may also be beneficial as it introduces new ideas improving the policy
28 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux environment (Asanova, 2006). Internal conflicts can be reduced if different ministries have donors demanding a certain policy direction as donors generally aim to develop their respective industries in a similar manner. Bilateral donors however can be interested in fostering conflicting priorities. An example are emerging donors like China, often driven by economic objectives. Despite tourism being an important industry sector other activities might bring the government more money more quickly and hence they will support those (personal communication, Independent, July 22, 2011; Independent, August 12, 2011).
Yet sometimes DPs are missing focus. They are pushing policies in terms of CBT and ecotourism while tourists Priorities for Development: to Laos are mainly Asians from the region (about 80%) “We are developing CBT all over the and are not interested in these aspects. It can country but the main tourist market therefore be detrimental if donors impose their coming to Laos, which are Asians, priorities too much or are too one-sided and time and are not interested in this. ” money is wasted this way (personal communication, Donor Donor, August 18, 2011; Independent, August 29, 2011).
Not only priorities but also differing mindsets between development agencies and recipients can manifest themselves in policy formulation. Aid agencies insist on a more participatory policy formulation whereas the GoL prefers a more centralized process (Ridde, 2009). Even though the GoL tends to accept the donors’ requests for more participation stakeholder consultations are often still government-led. Private sector stakeholders for example complain that their views are not taken into account when the final policy document is formulated (personal communication, Independent, August 3, 2011; Independent, August 9, 2011).
The emphasis on visibility of the results in aid involvement can impact on policy formulation. They are likely to try and influence policies and reforms such that these are coherent with their own priorities as they expect to see certain results. This can mean that formulated policies are not compatible with local priorities or contexts (Vernon et Visibility: al., 2005). Visibility aspects can also be noted when “The results of projects are the looking at the difference in visual aspects and contents most important. If donors support of strategies formulated by donors through projects something and nothing happens such as the ESAP and the HRD strategy for Laos as they will not come back” opposed to those formulated predominantly by Recipient government such as the NTS (LNTA, 2005; LNTA, 2006; LNTA & LuxDev, 2009b). Policy documents formulated by DPs have a highly appealing format and visualisation in both English and Lao while those that are formulated by the GoL are often only available as unofficial translations in English and are rather plain and to-the-point. Besides the visibility of the documents the formulated strategies, although based on local context and stakeholder consultation, seem to be highly aspirational for example in the case of the ESAP. It might hence be more beneficial to devise strategies that are more suited and achievable otherwise it is difficult for the targets to be reached by recipients (personal communication, Recipient, August 12, 2011). Especially the HRD strategy is a crucial element due to the lack of skilled tourism staff prevalent in Laos. However in its current situation it may not be
29 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux feasible for Laos especially not after the donor project ends its financial support. Although, ultimately the goal for Laos will of course be to achieve these aspirational goals.
4.3.2 Priorities in Policy Implementation If the agenda and direction of donors and recipients are in line and the government is involved in policy formulation the government is likely to put effort into implementation. With direct donor involvement as in the ESAP and the HRD strategy in Laos implementation is included in donor projects. They prioritise goal achievement as stated in the strategy, are likely to specify the instruments of implementation and foster stakeholder cooperation for a successful implementation. This is set out in the strategy documents determining the processes and instruments of implementation (LNTA, 2005; LuxDev, 2009).
Differences in priorities are noticeable especially after donor projects end. This became apparent in the case of the ESAP when the project lost funding during the implementation phase. The highly participatory processes including all levels of government – although effective while they lasted – were too expensive for the GoL to pursue and hence the implementing Ecotourism Task Force fell apart (personal communication, Donor, June 10, 2011). However it was stated that the GoL would be Actual Priorities: able to raise the money for something they are really “Losing funding from donors should interested in. Implementing the ESAP was hence not be a problem. If the government probably not their priority (personal communication, sees the area as a priority they will Independent, July 22, 2011; Independent, August 25, make sure it happens.” 2011). A reason may have been that there was not Donors enough profit in it for the GoL.
Another aspect is that making correct processes the main priority can hamper implementation as every stakeholder has their own interpretation of policies and how its goals could be achieved (Spillaine et al., 2002). If goals are not clear to all Adaptability: stakeholders the implementation process is likely to fail “Donors tend to copy and (Zhang et al., 2011). An important issue to consider in terms paste initiatives that have of priorities and process focus is the contextual nature of worked elsewhere rather than implementation where each location requires almost a adjusting to the local context.” tailored implementation strategy (Dekker et al., 2007). This Donor is important as the standard implementation processes and activities often used by aid agencies might not be applicable to all contexts.
LuxDev recognises this issue and focuses more on results rather than on correct processes. This is one step towards aligning their way of working with that of the recipient (LuxDev, 2011). However they still focus on what they see as priority outcomes and success even if this is not necessarily what the GoL aspires. Hence conflicting priorities can still arise during the implementation process. In the case of Laos the provincial governors are relatively autonomous and if their priorities are not considered during policy formulation it is likely that they resist to implementation (Gujadhur et al., 2008; personal communication, Independent, July 22, 2011). Furthermore, due to a lack of communication, PTD staff is not always familiar with their vision. The area of Luang Namtha and its NPA where the Nam Ha Ecotourism Project (NHEP) took place is an example. Policies for tourism
30 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux focus on environmental conservation and community benefits while rubber plantations are another important source of income for this area (Schipani, 2006). These two aspects are not compatible and implementation of tourism policies fostering conservation is hampered.
The official and unofficial priorities of local government, but also villagers, might differ which can hinder policy implementation. Conflicting Priorities: Which priority outweighs depends on national compared to local “Nam Ha is famous for its power and which activity brings more (personal) economic gains ecotourism as well as its (personal communication, Independent, August 25, 2011). This is rubber plantations” partly linked to the fact that government staff is generally not Independent paid a living wage. A result of this may be a lack of sustainable planning at government level in favour of quick economic gains – from rubber plantations or mining. This is despite the fact that tourism is rather high on the agenda of the governments within the GMS (Marris et al., 2003).
A possible impact of the high number of donors and projects is that resources needed for policy implementation are instead used for the various different projects. The effect of this can be relatively large as failed implementation and enforcement of policy will Capacity: lead to a lack of regulatory environment for the industry “There are a number of (Lancaster, 2009). It can therefore be beneficial to defer [local] people who have great more of the implementing activities to provincial levels. capacity. It is more about However, the capacities to implement the aspirational how much one person can do strategies that donors devise are limited in PTDs. The LNTA and commit to.” and donors are trying to change this through sending LNTA Donor trainers to train provincial staff (personal communication, Donor, August 18, 2011). There is hence a great need for donor coordination in which the GIZ and NZAID set examples by designing their initiatives to complement those of the ADB-LNTA cooperation (personal communication, Donor, June 16, 2011; Donor, August 18, 2011). Despite the small number of donors in tourism the coordination of donors could be improved to make their initiatives even more effective, especially in terms of continuation of previous projects as well as the integration of local staff and institutions (AusAID, 2009).
Too many different strategy documents at different levels can also result in conflicting priorities being imposed on the recipient. Within the GMS STDP of which the STDP Laos is part the ADB has developed a tourism sector strategy for the whole GMS as well as a development action plan for the north-south economic corridor within this (ADB, 2005; ADB, 2010). Both of these include Laos and the tourism strategies for these areas will be disseminated through the STDP Laos. These strategies are introduced to local governments on top of national, provincial and site-specific strategies. This can lead to government staff being unsure about which strategy to follow or disregarding strategies completely.
4.3.3 Priorities in Policy Evaluation If the process of policy evaluation is promoted by donors the result might be affected by their priorities due to the subjectivity of success discussed in section 3.2.3. If donors and recipients have different priorities they are likely to have different definitions of success (Porter & Shortall, 2009). Donors might rate policy instruments or policy effects as unsuccessful during evaluation and suggest
31 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux policy reforms when local government see policies as effective. A consensus has to be found on the goals of the policy between donors and recipients with aligned priorities such that the evaluation of policies and the resulting suggested changes can then be implemented. Furthermore recipients are prone to focus on new aid projects rather than evaluating old policies as was the case with the ESAP. Hence the learning effect can be hampered. The ESAP was formulated with goals until 2010 and SNV inquired with LNTA staff whether they wanted to review the strategy but no interest was shown (personal communication, July 16, 2011). The reason could be that ecotourism elements are incorporated in the NTS already and hence there is no need for a separate strategy. However it may also be the case that there are many new projects consuming the time and capacity of LNTA staff and hence reviewing the strategy is not a priority (personal communication, Donor, June 10, 2011; Donor, July, 16, 2011). It is also related to the fact that a revised strategy would have to be funded by the government itself while there are other projects for which they can get donor support.
The issue of visibility in donor projects can be beneficial for evaluation as it is to the donor’s benefit to determine the effect of their policies (Knack & Rahman, 2008). This is definitely true for cases where strategy formulation and implementation are part of project-tied aid. However it has to be acknowledged that policy implementation is a medium-term process with goals going 5 to 10 years in the future. Aid projects with long-term focus on one project are rare and hence it is possible that the project ends before an evaluation has been done. Yet, visibility in this case could be ensured for the donor because evaluations are not done after the end of the project and hence no failures are reported. Evaluation is more likely to be undergone with aid projects that are not related to policies directly as the impacts are more tangible (Gujadhur et al., 2008).
Table 7 - Aspects of Priorities and their Effect on the Policy Process
Relationship Aspect Policy Formulation Policy Implementation Policy Evaluation • Different content & • Different processes & • Varying importance Type of Governance processes mechanisms of evaluation • Differing donor • Clashes in policies • Different standards priorities = clashes • Resource scarcity = = different results between donors and less focus on • Fewer resources Donor Fragmentation within government implementation available Project Proliferation • Duplication of • Many levels of policies strategies = incomplete implementation of all • Emphasis on content • Focus on processes • Emphasis to Aid Visibility & visualization hamper local showcase success implementation • Conflicts in content, • Implementation • Evaluation suffers Priority Differences less for processes suffers from clashes from clashes
4.4 Exploited Supremacy or Balanced Alliance? – Power in the Policy Process 4.4.1 Power in Policy Formulation The most pressing effect of power is that if power is tilted towards the donor they can impose their policies on the recipient (Bhatta, 2011). Often multilateral agencies such as the ADB and the WB have
32 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux developed overarching policy frameworks that they like to see in recipient countries (Dreher et al., 2009). These frameworks often become the central reference for national policy making in recipient countries (Bhatta, 2011).
Power shapes the interactions of organisations trying to influence tourism policy (Yasarata et al., 2010). This effect becomes apparent with direct involvement of DPs in the policy process. Aid conditionality can aggravate this effect as there is a request Government Power: for reform before aid is granted. Yet, donor power can be “What goes into the policy is mitigated through the high number of aid agencies in Laos. still very much dictated by the This is the case especially for the PTDs which are in government’s interest.” touristically interesting areas such as in Luang Prabang. Here Independent the recipient has increased power as they can choose which project to accept and only take those that they are interested in or derive most benefits from (personal communication, Independent, July 22, 2011).
The aspects of politics and power decide on at what levels of government formulation and implementation occur and whether there are aspects of co-formation between different government levels (Hill & Hupe, 2003). Direct involvement of foreign aid in policy formulation is likely to lead to a top-down directed approach to policy formulation. This is related to a rather hierarchical structure where donors formulate policies and then get them approved by government (personal communication, Donor, July 21, 2011; Independent, August 29, 2011). Ultimately the recipient government has the power to determine the content of policies and they will not implement policies they disagree with. On the other hand their reliance on donor funds means that they are often willing to accept changes (personal communication, Independent, August 10, 2011; Independent, August 29, 2011).
In Laos the policy process is centralised as most planning takes place within the LNTA. Donors are aware of this and try to influence policies at the national level (personal communication, Donor, July 16, 2011; August, Independent, 29, 2011). Donors recognise that the provincial level plays an important role and that the relationship has to be equal rather than top-down. SNV used to have a rather hands-on approach with regards to the PTDs but then realised that it is important for provincial departments to have more authority (personal communication July 16, 2011). Working Relationships: Technical assistance often means a closer “Working close together is a strength and working relationship. Yet working with recipients a difficulty. Recipients take more advice on a colleague level can result in less respect from donors coming in every few months from the recipient side. This is possible especially than one that is seen as a colleague.” with growing expertise and capacity of the Donor recipient.
There are powerful autonomous provinces within Laos who may defer from plans that have been formulated without their involvement (personal communication, Donor, June 16, 2011; Bevir & Richards, 2009; Zheng et al., 2011). AusAID and the UNDP are trying to mitigate this by improving governance and weak legal and institutional frameworks aiming for a more participatory policy process (AusAID, 2009). This is done to a certain extent through integrating foreign experts at lower levels of government (Bevir & Richards, 2009). Donors foster this in Laos where many DPs have
33 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux experts integrated at the PTD level ensuring the dissemination of national policies. Furthermore, they encourage communication and cooperation with donors at the national level and introduce participatory planning processes (personal communication, Donor, August 18, 2011; Independent, August 25, 2011). If interests of local level government are not in line with donor interests DPs are often forced to accept that conflicts will exist.
Both centralised as well as decentralised models have Power: strengths and drawbacks. Hierarchical forms often fail to “Power actually means deliver their outcomes due to stakeholder conflict occurring cooperation. If you do not in the implementation phase if their views are not considered work together neither party during formulation (O’Toole, 2004; Smit, 2003). This is has power to induce change.” especially prominent in a working culture where Donor communication and collaboration is not omnipresent. With little collaboration between government levels in Laos the formulation of holistic strategies is difficult hampering their implementation as well. On the other hand the centralised manner of working in Laos and the legitimacy of powerful people can be an advantage. If the GoL is really interested in a donor project as it will use its power to get it accepted – even through slightly illegitimate practices (personal communication, Independent, June 15, 2011).
New ways of governance are emerging that mix centralised and decentralised models and turn the policy process into a network in line with the theory of complex adaptive systems. Networks of this sort aim at improving the interaction and collaboration of all actors and focus on evening out power differences between the actors (Dredge, 2006; Zheng et al., 2011). Improved interaction can be achieved both through vertical integration across government levels as well as horizontal integration across sectors which might be helpful if a policy problem requires actions by multiple ministries, which is the case for tourism (Dovers & Hezri, 2010). The GoL assures that they take this into account as policies are based on provincial needs and the cross-sectoral nature of tourism is considered (personal communication, Recipient, August 12, 2011).
The issue in the GoL is that it still seems to be common for industry policies to be developed without stakeholder consultation. In arrear government agencies notice clashes but by then it is too late to make changes (personal communication, Recipient, August 12, 2011). To some extent the involvement of donors in Laos can mitigate this as they foster participatory policy formulation. Working Relationships: However, they acknowledge that because this is “In the end work is done the ‘Lao way’. It not the usual ‘Lao way of working’ it is difficult to would be nice if the government opened maintain (personal communication, Donor, up a little to meet in the middle between August 18, 2011). Clashing ways of working and the two working styles ” struggles on both sides to get their priorities Donor engrained in policies are detrimental to the relationship.
4.4.2 Power in Policy Implementation The power impact of donors is less strong during the implementation phase as they have to rely on local actors as well as national government to implement and enforce the policies. This and the limited number of experts involved prevents them from bypassing government (Lancaster, 2009).
34 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux
Generally lower levels responsible for implementation can retain flexibility to adapt their instruments to achieve the intended outcomes (Ohemeng, 2011).
With more donor involvement the implementation process is likely to be more participative encompassing more stakeholders which is related to a higher level of available funds. In the case of the ESAP an Ecotourism Task Force was responsible for implementation consisting of staff from the LNTA as well as PTDs and other ministries such as the Ministry of Forestry and Agriculture (personal communication, Donor, June 10, 2011; Rogers et al., 2005). This would probably not have been the case if Setting examples: implementation had been the responsibility of “The Ecotourism Task Force was government. It was not the power of the donor that very effective in implementation. forced the government to go along with this but the We had all levels of government donor provided the money for the government to be able cooperating resulting in a high to implement the policy this way. This changed rapidly level of capacity building.” when funding was lost and the task force stopped Donor meeting despite its effectiveness.
International policy frameworks are often used as reference resulting in a top-down approach to implementation. Despite these being adapted to local context they are made without the involvement of recipients and these therefore often lack the capacity to implement them (Scheyvens, 2007). This may be another reason why the ESAP failed in Capacity and Suitability: implementation. The tools and processes used for “Donors sometimes push implementation were not designed for a country like standards like in developed Laos. This shows that for policies to be implemented countries. This is hard and correctly a close working relationship with equal power is unsuitable for the local context.” necessary. However this can be difficult for donors as the Recipient local way of working is unfamiliar for them while local staff are more used to ad hoc initiatives rather than long processes of planning (personal communication, Donor, August 18, 2011).
4.4.3 Power in Policy Evaluation The power aspect of the donor-recipient relationship is least impactful in the evaluation process. This is due to the overall limited involvement of donors in policy evaluation. Since evaluation mostly occurs because it is required by donors they also take the lead in how the evaluation process is undergone.
LuxDev for example took the lead in evaluation for their project of developing the tourism HRD strategy. Part of the project document is a review or evaluation of the current situation on which their strategy would be based (LuxDev, 2009; LNTA and LuxDev, 2009b). Similar evaluations took place before the ESAP was developed to see where current policies were lacking. It is likely that donors will push for an evaluation of the HRD strategy in the future as they recognise HRD as a crucial factor for tourism.
The GoL places emphasis on policy evaluation for more general government policies such as the NSEDP where a continuous evaluation of progress is done although this is likely to be influenced by donors. However with regards to tourism evaluation seems to be lacking and donors do not seem to
35 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux exert any power over the GoL to do this. The problem may be that few donors are directly involved in the policy process long enough to enforce this.
Table 8 - Aspects of Power and their Effect on the Policy Process
Relationship Aspect Policy Formulation Policy Implementation Policy Evaluation • Donor power: • Local stakeholders • Donors request impose content & required = evaluation: processes decentralization hierarchies for Hierarchies • Flat hierarchies: reporting equal negotiations • Defines participation • Increased • Increased dependency • Increased Degree of dependency = = more donor power dependency = Dependence increased donor donors push influence evaluation • Impose content & • May hamper • Push evaluation to Conditionality processes implementation check compliance • Increased • Increased • More donors = less Donor Fragmentation fragmentation = less fragmentation = fewer focus on evaluation Project Proliferation donor power resources • Centralised planning • Importance of local • Less interest in Recipient & decisions actors = more evaluation Government recipient leverage • Project-tied aid = • Project-tied aid =more • Project-tied aid = increased power influence on process more power to Type of Aid Initiative • Technical assistance design but little on push evaluation = more equal actual results relationship
4.5 Selfish Interests or Shared Ambition? – Commitment in the Policy Process 4.5.1 Commitment in Policy Formulation Commitment is recognised as a crucial aspect in the donor-recipient relationship. Limited ownership of policies will most likely lead to limited commitment and hence hamper implementation in the future (Faust, 2010). Through the Vientiane Declaration on Aid Effectiveness the GoL aims to enhance its involvement in policy formulation. They recognise the importance of having ownership of policies and it gives them more control over donors through increased coordination and Capacity and Ownership: alignment of priorities (RTM, 2011b; 2011c). “The LNTA does not necessarily have the However it still seems to be common that foreign capacity to formulate and implement experts do most of the work and then hand the policies. However if donors do it for them almost finished policy documents to the there is a lack of ownership with government for approval and seem to be willing consequences for implementation.” to accept the resulting limited ownership. Independent
Proliferation of and conflicts between donors are likely to affect the commitment of recipients and might provoke them to disregard advice (Powell & Bobba, 2006). It was stated by donors that especially at the provincial level the lack of capacity and different mindset might be an issue. On the
36 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux other hand it can also imply that the recipient is not committed to the area that the donor has designated as important (personal communication, Independent, July 22, 2011; Independent, August 10, 2011 ). Aid volatility should not have a large effect on policy formulation as this process is relatively short-term. With indirect involvement through technical assistance volatility can have an impact if DP personnel has to leave before being able to transfer needed skills. Due to a short-term commitment donors may be inclined to transfer blueprints to recipients instead of adjusting policies to the local context (Shiferaw & Hailu, 2010). The effectiveness of a policy depends on the commitment of donor staff on the ground and their personal willingness to commit and truly adapt to the local context (personal communication, Independent, August 12, 2011).
Commitment is seen to manifests itself in policy formulation and is affected by the other three relationship characteristics. An important aspect is that it affects how well the different steps of the policy process are linked. Commitment from the recipient side will increase with more involvement of the recipient in the policy formulation process, an alignment of priorities in policies with the recipient government priorities and an equal power relationship. With commitment in policy formulation it is more likely for policies to be implemented and have the desired effect.
4.5.2 Commitment in Policy Implementation The aspect of commitment is crucial during policy implementation. It is argued that implementers are not necessarily equipped with the skills needed for implementation but learn them during the implementation process (Schofield, 2004). The involvement of foreign aid and its extent of long-term commitment has an effect on this aspect as the provided expertise can foster this type of learned implementation. This results in a greater degree of capacity building (personal communication, Independent, August 10, 2011).
Motivation and commitment are essential and related to an ownership feeling of the policy by implementers (Matthews et al., 2008). Perfect compliance and achievement of implementation is almost unattainable through a top-down approach (Ison & Rye, 2003). This is due to the fact that there is less ownership among implementers if the policy is only passed down (Hupe, 2011). Donors see the LNTA as a cooperative partner with trust and commitment between donor and recipient increasing with an increased length of relationship. The Swedish International Cooperation Agency (SIDA) together with UNDP recognises the importance of ownership. Their program for introducing governance reforms with regards to more participation had a subproject focusing specifically on increased ownership especially of provincial governments of these policy reforms to increase effectiveness in implementation (SIDA & UNDP, 2011).
The nature of aid and its volatility have an effect especially in the form of budgetary support or integrated experts (Fredrikson, 2010). Following the economic crisis in 2007 actual disbursed aid volumes were lower than expected which lead to the government having to adjust its budget on short notice (ABD 2009b). It appears that Western countries continue to give aid despite their financial situation (LaoVoices, 2011b). A secured continuous support of aid is needed for implementation processes, especially in the case of a donor-formulated policy or one that is strongly based on international policy frameworks (ADB, 2008c).
Policy implementation is a relatively long-term process and long-term commitment by the recipient to formulated policies is hence important to ensure success. Commitment from the recipient side is
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never guaranteed as they are likely to ‘follow the Recipient Commitment: money’ when new projects come in. At the same “It is only fair that locals focus on new time true commitment from donor agencies for projects. Government are not paid a living the long-term is also difficult (personal wage and hence aid initiatives are an communication, Independent, August 29, 2011). opportunity for them” One problem is the relatively high staff turnovers Independent within agencies where new staff might bring different expertise and hence priorities and commitment. They will introduce projects based on their expertise rather than continuing old ones (personal communication, Donor, June 10, 2011). Since donors generally work towards their own redundancy they should focus on long-term commitments to maximise capacity building such that they can phase out and implementation can be taken over by recipients (RTM, 2010b; 2010c).
To foster aid coordination Laos has Round Table Meetings (RTM) assisted by the UNDP although tourism does not have its own RTM (personal communication, Independent, August 11, 2011). The fact that a relatively small number of donors is involved in tourism means that it should be easier to coordinate projects, however this ultimately depends on agencies (personal communication, Independent, August 9, 2011). Commitment is made more difficult for recipients due to this lack of coordination. For its STDP project the ADB has separate project implementation units within the Conflicting commitments: PTDs as well as a project coordination unit at “All donors want the same human national level each with a number of staff from resources. They are trying to build local agencies (ADB, 2009b). It is likely that other capacity but because they are donors intend to use the same staff for their competing for it they fail at their task” projects and implementation units leading to a lack Independent of resources and hindering commitment the same people need to handle many different projects.
Efforts are made by donors for greater coordination through multi-donor funds ensuring consistent forms of assistance (RTM, 2010a). The ADB and NZAID for example designed their projects to complement each other (personal communication, Donor, July 16, 2011). This makes it easier for the recipient to deal with donors and increases capacity building opportunities as less time is lost on learning the processes of different donors and more time can be spent on actually implementing plans. The WB and ADB engaged in a joint meeting with stakeholders to align their priorities to that of the GoL as well as aligning the respective Setting Examples: priorities of both donors. This is a step towards “Today’s consultations are an important better donor coordination (WB, 2011c). This was milestone. All stakeholders in Lao PDR’s the plan for the ESAP where SNV was trying to development process have discussed key ensure future funding from NZAID. However, issues in an open and frank manner.” NZAID disapproved of the tools of ADB Laos (WB, 2011c) implementation and funds were directed somewhere else (personal communication, Donor, June 10, 2011). There is hence room for more coordination in the long-term between donors.
Recipient commitment is also not always guaranteed due to local political aspects. The GoL is continuously engaged in ad-hoc planning meetings at sectional or provincial levels keeping
38 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux knowledgeable local staff occupied (personal communication, Donor, August 18, 2011). This indicates that recipients might not be able allocate the necessary time and resources to work with the donor. However for an appropriate relationship between donors and recipients commitment needs to be present on both sides otherwise effectiveness is hampered.
4.5.3 Commitment in Policy Evaluation If there is true longer-term commitment from the aid agency side policy evaluation should be fostered. If there is not enough ownership by the recipient towards these policies then, if they get implemented at all, is unlikely that an evaluation process will take place.
The LNTA did not have enough commitment to the ESAP to evaluate this after it ended in 2010 (personal communication, Donor, June 14, 2011; Independent, July 22, 2011). The issues that lead to this are related to both the donors not pushing evaluation and recipients having other priorities. Due to this interdependency between the commitment from the donor and the recipient side it is crucial that there is more coordination between donors as Long-Term Commitment well as between and within the recipient government “It is not a matter of donors coming departments. Both should make more long-term in, assisting and building capacity for considerations of what is necessary for the future 6 months or one year. It should be development of tourism such that the focus of policies long-term planning from both sides. can be on essential areas mitigating a waste of Always.” resources and ensuring the incorporation of Independent evaluation.
Table 9 - Aspects of Commitment and their Effect on the Policy Process
Relationship Aspect Policy Formulation Policy Implementation Policy Evaluation • Less effect as • Support for • Little impact Aid Volatility short-term implementation stops
Donor Fragmentation • Clash of resource • Resources diverted • Resources diverted Project Proliferation use away to other projects away • Less effect as • Donors = short-term; • Less likely as long- Short-term versus short-term implementation = term Long-term long-term hence less support • Project-tied aid: • Donor dominated • Project-tied aid: Political Aspects more donor formulation = less commitment to commitment commitment evaluation • Conflicts = less • Clashing priorities • More commitment if Priorities commitment by hamper area is government recipient implementation priority • Donor domination • Donor domination in • Less impact, donor = less recipient formulation = less may enforce Power commitment commitment in evaluation implementation
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4.6 Changing Focus During the Policy Process 4.6.1 Policy Formulation During the first step of policy formulation the two aspects of politics and power seem to be most determinant. With direct aid involvement donors can influence contents and processes. Aid conditionality can impose policy changes that recipients would Poli cs Priori es otherwise not have undergone. Formulation Commit- Power Many developing countries are very much aid-dependent due to ment their own lack of resources. This means that they are willing to accept policy reforms to secure assistance. The fact that policy formulation is a short-term process makes it easier for donors to control the whole step and its outcomes and it is the easiest step for them to induce change. Although, the high number of donors mitigates donor power to a certain extent. Fact is that policy formulation is not necessarily determinant of policies actually being adopted and drafting nice documents does not guarantee their implementation.
Donors have to keep these aspects in mind when they engage in this first step of the policy process. It is important that it is not dominated as this will have far reaching impacts on donor influence on the other two steps.
4.6.2 Policy Implementation During the step of policy implementation the relationship characteristics shift and priorities and commitment become most influential. This is because policy implementation is a long-term process strongly dependent on the engagement of local actors and Poli cs Priori es their willingness to cooperate. From the case study analysis it Implementation becomes apparent that donors are aware that their influence is Commit- Power lower in the implementation phase, however the failures of ment implementing policies with direct donor involvement also show that they might not be dealing with this correctly. Especially their emphasis on visibility in policy formulation seems to be a major stumbling bloc for their work in implementation. Without an increased alignment of priorities there will be issues in the implementation of policy documents.
For policy implementation recipient commitment is crucial as local actors will be those putting policies into practice. However, it is difficult for donors to elicit commitment from recipients through a short-term relationship as there might not be enough time to build a level of trust. Very often the success then depends on the commitment of donor staff on the ground – especially on how far they engage with recipients. For effective implementation it might be beneficial if the donor-recipient relationship was based on a partnership where both have similar levels of power. The implementation phase is dependent on the way of policy formulation and hence the two steps have to be seen together even if donor involvement only happens in the first phase. Donors have to acknowledge that the strong influence they can have during formulation is mitigated by the nature of implementation and this will strongly determine the overall effectiveness of the policy.
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4.6.3 Policy Evaluation During policy evaluation the nature of the donor-recipient relationship shifts again, albeit not as much as politics come back into play. It lies in the nature of donors to require evaluation to show the effectiveness of their initiatives as well as justifying Poli cs Priori es future ones. Evaluation is generally a process that is not Evaluation prompted by recipients but encouraged by donors. Through their Commit- Power engagement over time donors may be able to introduce this part ment of the policy process to recipients. A major obstacle can be that indicators set by donors do not coincide with what recipients see as a crucial outcome of the policy.
Commitment is possibly even more essential for evaluation. It is mostly needed from the recipient side and is affected especially by conflicts in priorities. If no evaluation takes place the recipient has not truly taken on the policy, as there will be no adjusted versions to guide future development, which keeps the policy from being effective. Although evaluation is a small step it is crucial for the development of effective policies and all three steps need to be considered together. To make sure that this step even takes place it is important that the relationship is relatively equal between donors and recipients from the start and that both parties engage in negotiations and find consensus.
Overall it seems that the changing importance of the relationship characteristics have a large impact on the involvement of donors in the policy process. With the change of the defining relationship characteristics over time the degree of influence by the donor also changes. Table 10 summarises dominant and secondary factors for each step of the policy process.
Table 10 – Change in Importance of Relationship Characteristics
Politics Priorities Power Commitment Project-tied aid Donor-dominated Funding and Less influence as & conditionality due to political expertise as short-term Formulation = imposing of aspects leverage content & processes Influence Clashes between Less leverage as Need through projects official and local commitment by Implementation and assistance unofficial priorities stakeholders recipient yet hampered by mean lack of involved long-term implementation Donor-induced & Changing priorities Less as not seen Recipient only Evaluation indicators often = lack of as important or evaluates policies only set by them evaluation too far in future with commitment
Dominant Factor
Secondary Factor
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4.7 Conclusion From the analysis of the case study findings in this chapter it becomes clear that foreign aid can play a Formulation crucial role in the policy process as Poli cs Priori es the four characteristics of the donor- Implementation recipient relationship have an effect Commit- ment Power throughout the whole process. Depending on the nature of the Evaluation different aspects they can have a larger and more wide-spread impact.
Politics is crucial as it determines the way of involvement in the policy process. Depending on direct or indirect involvement the effects can be more or less directed by the aid agency. The political aspect also gives donors the possibility to get recipients to comply with policy reforms through conditionality. This can greatly shape the direction in which policies evolve. The actual impacts of this may be questionable as their implementation is not ensured. The added layers of bureaucracy also impact on the policy process making it more difficult to reach consensus. Currently the aspect of politics seems to lean towards ‘forcing change’ rather than ‘accepting individuality’.
Priorities in this situation appear more like ‘muddled intentions’ rather than ‘mutual agreement’. They determine the degree of consensus and hence the occurrence of conflicts between donors and national government but also between different layers of government. The fact that donors may impose an alien way of working on recipients can affect mechanisms of the policy process such as the degree of participation. Donor fragmentation and project proliferation lead to clashes in priorities for example between donor initiatives in tourism and other economic activities. Similar effects are seen with a general clash of priorities between donor and recipient priorities. The importance of visibility for donors affects their preferred way of working which can lead to crowding out recipients from their own policy process.
Power plays a large role when determining in how far donors can influence recipients and hence to what extent recipients have to follow donor demands. The structure of the recipient government can determine how far the reach of donors goes. In a more centralized government structure it is easier for donors to disseminate policy changes, while autonomous regions make it more important to induce change at all levels. Power also affects the hierarchical structure of the donor-recipient relationship as relationships become more hierarchical with increasing donor power. Power is contingent on the degree of dependency on funding and expertise by the recipient, imposed loan conditionalities, donor fragmentation, the structure of the recipient government and the type of aid. With increased dependency recipients are more prone to following donor demands throughout the policy process. On the other hand, the level of donor fragmentation can hamper a single donor’s leverage as it is more likely for the recipient not to not accept demands for change if there are other donors willing to support them. Overall, project-tied aid results in more donor power while with technical assistance recipient governments can decide whether or not to accept advice. The power element tends towards ‘exploited supremacy’ rather than a ‘balanced alliance’.
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Commitment seems characterised by ‘selfish interests’ instead of ‘shared ambitions’ although this is very much dependent on each donor because they seems to have recognised the importance of this aspect. It is the factor that determines how well the relationship works and how deep the change induced by donors can go. Donor fragmentation conditions the extent to which recipients can concentrate on one initiative and build capacity. The short-term focus of donors can impact as recipients may be less committed and drop introduced reforms after a donor project finishes. Aspects of the other three characteristics also have an impact on recipient commitment. Recipients are less likely to commit to a donor-dominated relationship or if there is a clash of priorities. The effectiveness of a policy hence depends on the extent to which there is ownership by the recipient and continuous support by aid agencies.
The importance of these characteristics appears to changer over time (shown in Figure 10). During policy formulation politics and power are the most influential as they define the degree of involvement of foreign aid in the policy process. The manner of involvement in formulation and the nature of power relationships and politics have a great impact on the other steps. For policy implementation priorities and commitment are essential. Only if policies are aligned with local priorities will local implementers be willing to engage in implementation. Evaluation is most affected by politics and commitment. It is reliant on political aspects for donors to introduce evaluation and raise awareness of its importance. Commitment from the recipient and donor side to policies is crucial such that evaluation takes place and policies are adjusted if necessary.
Figure 10 - Change in Importance of Relationship Characteristics
Poli cs Priori es Poli cs Priori es Poli cs Priori es
Formulation Implementation Evaluation Commit- Commit- Power Power Commit- ment ment ment Power
Policy Process
The analysis shows that the donor-recipient relationship is a crucial factor determining the nature of the policy process while the importance of each of the characteristic and the different aspects within seems to change over time depending on the step of the policy process. It appears important that the donor-recipient relationship is managed correctly at all steps and the links between characteristics and steps are considered. Only then can aid initiatives be efficient and recipients accepting of the change induced by donors in terms of contents and tools of the policy process.
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CHAPTER 5: TANGLED AFFAIR OR FRUITFUL RELATIONSHIP? – CONCLUSIONS 5.1 Importance of Aid involvement in Tourism Policy Foreign aid plays a crucial role for tourism in developing countries as the analysis of the literature and case study show. Through their assistance in monetary terms or expertise donors can greatly influence the direction of tourism development. They provide means for increasing the capacity of recipients and foster the establishment of effective institutional and regulatory frameworks hereby getting involved in the local policy process. Donors work with all levels of government and can therefore spread the positive impacts of their work such that both national as well as provincial levels benefit. In this way they try to ensure that tourism is managed appropriately and benefits are distributed equally. The areas of work that donors engage in when they foster good governance and policies indicate that they have to work closely with the recipient government to really induce change.
The literature on aid involvement in tourism mainly assesses the way that aid is given, the areas that donors engage in and the overall effectiveness of aid depending on characteristics such as recipient governance. While these aspects are important the focus on relationships, their effect on the policy process and how to manage them appropriately is missing. This aspect should be given more attention in the future and the links and interactions between donors and recipients examined as these determine the effectiveness of donor-infiltrated tourism policy processes. The politically sensitive nature of the topic and the engrained ways of working on the recipient and donor side can make it difficult or almost impossible to suggest new practices for the donor-recipient relationship. However the fast changing environment with emerging donors among developing countries and financial crises within traditional donors which might alter the prevalent form of the donor-recipient relationship make this issue more pressing than ever.
5.2 Four Characteristics Defining the Donor-Recipient Relationship The literature review and case study of Laos show that the donor-recipient relationship is characterised by aspects, which can be categorised as politics, priorities, power and commitment. Each of these characteristics has an effect on the nature of the relationship making it more or less effective.
Political aspects set the context or boundaries for the relationship and therefore have a large impact on its nature. Priorities are more important in terms of the outcome of the activities in the relationship. Clashes in priorities can put a strain on the Poli cs Priori es relationship and make work less effective. Power is a crucial element as it largely defines the nature of the relationship in Commit- terms of equality. Recipient dependency on donor funding and ment Power expertise as well as the political aspects of conditionality can result in donors dictating the relationship hampering the effectiveness of their own initiatives. Yet this is mitigated through a lack of donor coordination and the fact that the recipient government often ultimately has the last word on activities. Commitment is essential for a close working relationship and increases the possibilities for collaboration. It is largely dependent on the other three aspects as donor-dominated relationships and their often short-term involvement will decrease the recipient commitment. Yet, recipient
44 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux commitment is crucial for donor activities such that induced change is taken on and aid initiatives can have the widest impact. These four relationship characteristics are all linked. Aspects of politics can determine the priorities and power characteristics and hence the nature of the relationship. All three factors have an impact on the level of commitment from the donor as well as the recipient side. It is crucial that the links between characteristics are acknowledged and managed accordingly.
5.3 Important Effects on the Tourism Policy Process The tourism policy process is influenced by donor involvement at government level and their interest in governance and policy reforms shapes the relationship and its characteristics.
Politics: Politics determine whether there is a direct effect on policies and Formulation in how far policy changes are directed Poli cs Priori es by donors or based on consensus Implementation between donors and recipients. This Commit- Power hence affects whether the ment relationship is equal or dominated from Evaluation one side. Yet, if donors induce change based only on their conditions this can hamper implementation which is mainly reliant on recipient actors. Added layers of bureaucracy also make for a more distant relationship and lengthen the policy process.
Priorities: Priorities affect policies as there are likely to be clashes between donors and recipients disrupting both the relationship as well as finding consensus for policy formulation and in the end obstructing implementation. This gets aggravated through missing coordination of donors and recipients as donor demands will go into different directions making it difficult for the recipient to handle them. Another factor is the difference between official and unofficial policies which – if not considered during policy formulation – can be detrimental especially during the implementation phase.
Power: Power discrepancies in the relationship define whether there is donor or recipient domination over processes and outcomes of the policy process. Dictation from one side mitigates the effectiveness of the relationship and can lead to disruptions in the policy process if for example implementation is refused after formulation was donor dominated. Power determines the level of hierarchies and therefore the proximity of the working relationship resulting in more or less benefits derived for recipients. Conditionality of aid is a major aspect through which donor power can be channelled and policy reforms forced upon recipients. Donor fragmentation on the other hand increases recipient power and means that not all changes that donors request have to be accepted.
Commitment: The aspect of commitment is essential as it cannot only ensure a stable and effective donor-recipient relationship but also that the steps of the policy process are linked and efficient. It can turn the whole policy process into a cycle where evaluation in the end feeds back into formulation. This is necessary to determine the success of policies and adjust them if necessary which can make for more effective policies and hence improve development. The short-term involvement of donors – aggravated by aid volatility – which stands opposing the long-term nature of local processes and development goals has an impact on commitment and also hinders effective
45 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux involvement in the policy process. Donor fragmentation is an impacting factor as it leads to competition over resources and hence hinders recipient commitment. Commitment is not only needed for the donor-recipient relationship but also for policy reforms to be effective. Only if recipients are involved in the policy discussion and consensus is found will they have ownership over the introduced policies and implement them accordingly.
Although these characteristics were discussed independently the link between them should not be forgotten, as for example especially commitment is highly affected by the nature of the other three characteristics. It will therefore never only be one of these characteristics that defines the relationship throughout the policy process but rather the nature of each one and the interactions of all. In each step of the policy process two different characteristics are the main factors impacting on results and effectiveness. Politics and power have the largest effect on policy formulation as it is possible that one party, usually the donor, dominates this step. During implementation an alignment of priorities and commitment especially from the recipient side is crucial as otherwise local stakeholders resist implementation and undergo other activities. Politics and commitment are the defining characteristics for policy evaluation as they determine whether evaluation takes place at all and is fostered by both donors and recipients. The relationship characteristics as well as the steps of the policy process and hence the resulting effects are interdependent. In the case of donor- dominated policy formulation commitment during implementation is not likely to exist from the recipient side. This is especially crucial as donors tend to get involved only in one of the steps which is usually policy formulation. Hence they have to acknowledge these interdependencies when they get involved in the policy process to ensure long-term effectiveness.
How well donors are integrated into the recipient system and manage to induce the change they are seeking is dependent on the conscious management of the donor-recipient relationship and its characteristics. This poses a challenge for both parties as each aspect of the policy process has to be managed separately as well as in relation to the other characteristics. At the same time their effect on each step of the policy process and their interdependency in relation to outcomes has to be taken into account. The task of managing the donor-recipient relationship in the policy process is therefore highly complex, yet it has to be done efficiently to make the relationship and its outcomes beneficial to both parties. Only if links and interdependencies are recognised by both parties can the relationship be truly efficient and effective in inducing necessary change and fostering development.
5.4 Three Main Disrupting Factors The case study of Laos shows that the donor-recipient relationship is by no means managed as effectively as it could be. As the title of this report suggests it is more a tangled affair rather than a fruitful relationship. Concluding from the impact of the different relationship characteristics and their links three main determining factors for the donor-relationship emerge which are affected by a combination of the characteristics. These are a lack of coordination, differing priorities and the degree of partnership.
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5.4.1 Disorganised Endeavours A first aspect is a lack of coordination of donors and recipients. Donor coordination is vital to make it easier for recipients to deal with the myriad of donors that are often involved in their affairs. The dependency of the recipient on donor assistance means that they can be at the mercy of donors and are hence greatly affected by a lack of coordination which can lead to continuously Donor changing activities and demands from the Donor Donor donor side. Improved donor coordination could have a positive effect on all three steps Donor Donor of the policy process but is especially important for successful implementation. Without coordination the relationship with Donor Recipient Donor individual donors will be more distant and instable as recipient attention is diverted.
Donor coordination is important for current and future projects of individual donors as well as previously started projects of other donors. The focus of donors is myopic and mainly on their own projects, seeking to maximise the visibility of their initiatives, disregarding duplications and competition over the same resources. Although they work towards the same goals overall they have different ways of achieving these and recipients face great difficulties when dealing with this myriad of donors and the different work processes. This makes aid initiatives less effective as recipients can draw fewer benefits from a lower amount of interaction. Disruptions in aid flows therefore have a major detrimental impact on effectiveness. Donor fragmentation also reduces leverage over recipients in terms of inducing policy change. Recipients have the possibility to ‘pick and choose’ those donors that pose the least conditions which can make it more difficult for all donors to foster good governance.
On the recipient side coordination between the government levels and ministries is an issue. Policies in different areas are not compatible which makes for some involved parties being less accepting of donor involvement. Clashes among recipient policies also mean fewer possibilities for donors to work with recipients effectively as the policy process may stall during implementation. A lack of coordination also reduces the reach of aid initiatives and their benefits such as capacity building as departments who do not work closely together hinder the dissemination of the positive effects of donor involvement.
5.4.2 Opposing Goals Differing priorities go hand in hand with the degree of coordination of donors and recipients. Foreign donor involvement brings with it the problematic aspect of Donor Recipient misconceptions between donors and recipients dependent Priori es Priori es on their differing mindsets. This aspect – where the outsider approach stands opposing to the insider approach – can lead to conflicts in priorities hampering the stability within their relationship and hence aid effectiveness.
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This can have a large effect on all three steps of the policy process and is hence essential. If no consensus is found on the goals of policies between donors and recipients conflicts during the formulation phase make themselves known by hampering implementation. Despite donors being forced to align their priorities with those of the recipient through aid effectiveness declarations this is not always done. Especially with aid conditionality priorities of donors can be imposed on recipients. If recipients feel that their priorities are not considered or donors dictate policies they will put less effort in making the relationship work.
A complex issue is the difference between official and unofficial priorities of recipients. Official recipient goals are often influenced by international policy frameworks, such as the MDGs, while especially provincial priorities may differ from these. These unofficial priorities are what will in the end determine the effectiveness of an aid initiative as well as the stability of the donor-recipient relationship. Although it might seem as going against donors’ intentions to align their priorities with unofficial priorities this is significant. Donors who do not consider local contexts and ignore unofficial priorities when formulating policies and inducing policy change will be faced with resistance from recipients, especially local implementers.
Unofficial priorities may also differ between different levels of the recipient government. Provincial goals might not adhere to official national goals while national goals do not take provincial needs into consideration. Aid effectiveness is greatly decreased if government priorities are not aligned internally. It is likely that following unofficial priorities leads to more (personal) economic gains for local government and they are hence reluctant to deviate from them without incentives. This is especially so if the donor-recipient relationship is not equal and priorities are dictated from the donor side. If formulation is not based on consensus conflicts in implementation are difficult to solve as policies cannot be adjusted in arrears.
Conflicts in priorities will ultimately also obstruct policy evaluation and therefore hamper the efficiency of the policy process overall. An important issue is that donors often may not recognise what the recipient government sees as a success. Donors might impose evaluation mechanisms to define and measure policy success based on their own experiences and goals rather than taking into account recipient needs. This can lead to different views on the effectiveness of policies.
5.4.3 Egocentric Rule Instead of Respectful Alliance An aspect that emerged repeatedly is that the degree of partnership between donors and recipients has a major impact on the effectiveness of the relationship. In the current situation the relationship is often donor dominated which is not the most powerful link for both to induce change. The fact that there is no partnership between donors and recipients means that Recipient Donor neither side can work to its full potential. Power Power discrepancies are especially harmful during the Power formulation process as this can greatly affect the other Power steps of the policy process. Power in policy formulation Power seems to be based on differing sources of power for donors Power and recipients. The aforementioned fragmentation of donors mitigates their leverage while recipients’ acceptance
48 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux of policies is important as they have the legitimate power to disseminate them. The government ultimately has to approve of the policies and adopt them. Recipient commitment and ownership are greatly reduced through a lack of participation of government in donor initiatives. Donor power is mitigated especially during implementation through the important role of local actors in this process yet commitment especially from local stakeholders is what makes policy implementation effective.
The nature of the relationship can affect the content and also the processes of formulation as well as implementation. Not only donors tend to tolerate little recipient participation but also recipients and donors together crowd out the participation of other stakeholders. This is often done as less participation makes for it easier to find consensus. However, it is not only those that are directly involved in negotiating the policies that are responsible for implementation and a lack of participation is hence detrimental. Donors and recipients have to acknowledge that other stakeholders play a crucial role and are therefore also important for the donor-recipient relationship.
In terms of processes of implementation donors are prone to introduce new tools for implementation unsuitable for the country context. This happens especially when the process design is left entirely to donors which can be the case in a dominated relationship. Donors tend to introduce highly participatory processes which local government might encounter to be too costly. Despite the possible efficiency of these processes the recipient will therefore not be willing and able to keep them running in the future. If introduced processes cannot be continued without donor assistance this indicates that donors are likely to be failing at their task to reduce dependency and work towards their redundancy. What is more, implementation will be interrupted when the recipient is supposed to take over the activities which is detrimental to development.
Working based on a partnership approach seems difficult to accept especially for donors as at first glance it will need more effort as they have to take into account foreign cultures and politics. However, in the current situation aid initiatives are not as effective as they could be if they operated based on principles of cooperation as the hierarchical structure and lack of communication between donors and recipients obstructs this. Policy reforms that are not formulated with mutual agreement and through negotiations such that all perspectives and interest are taken into account cannot be successful.
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CHAPTER 6: PILOTING THE AFFAIR TOWARDS A RELATIONSHIP – RECOMMENDATIONS
Recommendations can be made based on the main determining factors of the donor-recipient relationship. They entail actions to be undertaken by each party for greater coordination, alignment of priorities and building partnerships to improve the donor-recipient relationship and increase the effectiveness of foreign aid involvement in the tourism policy process. It is acknowledged that it would be an ideal scenario if all recommendations were implemented, however even if only some measures are adopted this will have a beneficial impact. The research made it clear that there is not one perfect way of managing the donor-recipient relationship. The recommendations give indications for solutions but the complex nature of the relationship and its changing environment mean that rigid guidelines would not be suitable. This makes for the importance of continuous research in this area such that necessary changes can be detected in advance and adopted by both parties. Future research, for which recommendations are provided at the end of the chapter, should aim at increasing the knowledge base for this topic and take into account changing environments to suggest adjusted solutions on how to turn a currently tangled affair into a fruitful donor-recipient relationship.
6.1 Concerted Success – Coordination for Effectiveness 6.1.1 Donor Actions for Coordination Greater donor coordination could be approached through various means. First steps towards donor coordination should be to engage more consistently in round table Donor meetings for donors and recipients. These should also be Donor divided into subsectors for more precise coordination. Aid involvement in tourism can have far reaching impacts and Donor due to the complexity as well as cross-sectoral nature of the industry it would be beneficial to have a specific tourism round table meeting. Including the different industry sectors that are affected by and have effects on Recipient tourism could mean greater efficiency in formulating and implementing policies as clashes can be avoided. This will not be an easy task as it is difficult to find consensus between different sectors, however it is crucial that especially this cross-sectoral donor coordination is improved and donors involved in tourism take into account other planned or ongoing donor activities that might be of similar nature or contrarian to their own.
Donor coordination within tourism can furthermore be improved through a more widespread use of multi-donor funds for initiatives. Donors already do this in certain areas, however it should be given more emphasis as it can truly improve coordination. A reason for donors not to engage in this is that their own effort gets diluted and therefore the visibility of their initiatives might be reduced and impacts less tangible for each individual donor. However it is a good way to coordinate donor actions if all channel their funding and assistance through the same mechanism. It makes it easier to see which areas are already covered such that initiatives are not duplicated as well as reducing transaction costs and time for both donors and recipient. Furthermore, it would allow donors to continue each others’ activities more easily. This would lessen the likelihood for aid initiatives to be disrupted by political aspects or volatility therefore making aid involvement more long-term. It might not be feasible to only have one fund for all initiatives in tourism as there are too many facets to it.
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Establishing 4 or 5 broad groups for different areas of action might be the best solution. Looking at the importance of foreign aid involvement in tourism policy this could be one group. Other groups could focus on areas such as infrastructure or product development. Each of these groups would need one organising body responsible for managing it, which could be made up of a collaboration of an accountable donor together with recipient staff responsible for donor coordination.
6.1.2 Recipient Actions for Coordination Recipients have to take action to improve donor as well as internal coordination. It is acknowledged that recipients need to take initiative to foster donor coordination. They could do so through demanding greater efforts for coordinating activities from donors as well as establishing internal mechanisms such as databases facilitating the overview over donor initiatives. They will need to cooperate with donors for this due to a lack of resources, however they have to show initiative and approach donors to assist them. Together with donors they can design institutional mechanisms and ensure that these are suitable for the local context. An example would be the aforementioned multi- donor funds where recipients could take action to integrate them into their current system.
Besides taking action in donor coordination recipients have to focus especially on improving internal coordination between ministries and departments. They should foster a culture of communication and information sharing to improve collaboration as the donor-recipient relationship in tourism is also affected Agriculture and by activities in other ministries. The recipient Forestry government needs to recognise this interdependence and put more emphasis on bringing together policies and activities from different areas. By working closely Tourism together they can multiply the positive effects of donor Transport involvement in one area. Admittedly this kind of coordination can be difficult in developing countries, especially if the prevalent culture constrains intergovernmental cooperation. However, if the importance of this is made clear at all levels and in all ministries it is likely that they will start going into this direction after having seen some successes of greater coordination.
6.2 Cooperative Goals – Aligning Priorities 6.2.1 Donor Actions to Align Priorities Besides donor coordination other measures should be taken to align priorities. Especially aid conditionality puts a strain on the alignment of priorities from the donor side as these Donor Recipient reforms might not coincide with the priorities of the Priori es Priori es recipient. Donors should therefore use conditionality more sparingly or more in terms of a negotiated conditionality allowing for more considerations of local circumstances and recipient priorities. If donors feel that conditionality is needed these reforms should not be required before granting the loan but introduced over the long-term. They could also be integrated into the aid project such that donors can assist recipients to disseminate these changes.
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Another aspect is the issue of local official versus unofficial priorities. Donors perform well in aligning their priorities with official national development plans. However, the large number of policy failures indicates that unofficial priorities are disregarded and donors need to be more open in this respect. This does not mean that they should disregard their principles of environmental conservation or poverty alleviation to adhere to local government. However it is crucial for donors to be aware of local priorities since they can greatly hamper aid effectiveness by making the policy changes induced by donors difficult to implement. Negotiations about priorities need to take into account both national as well as provincial levels. Donors therefore need to make an effort to provide incentives for local government to be willing to go along with donor initiatives or at least find consensus. Incentives in this case could be of financial nature for adhering to donor priorities. However, it might also be an incentive to simply involve local staff more in aid initiatives to give them more control and ownership over activities. Donors could also subdivide the requested reforms more commonly into smaller steps and reward locals each time they introduce and implement policies that work towards this. This would make it easier for recipients as local practices do not have to be abandoned at once but step by step after seeing the benefits that come from taking on donor advice.
6.2.2 Recipient Actions to Align Priorities Improving internal coordination of recipients already increases the alignment of priorities as a higher degree of coordination automatically introduces a level of consensus about the direction of development. The most pressing issue that the government has to address is making efforts to unite official and unofficial priorities internally. National as well as local governments have to realise that policies need to be aligned to secure future aid flows and to make the involvement of aid effective. Efforts have to be made by government to bring unofficial priorities closer to the official ones stated in development plans. To do this and mitigate effects of possible prevailing unofficial priorities negotiations need to take place to determine which priority is more important for long-term development. This is important as mostly those with widespread benefits and sustainability should be followed.
An issue arises if tourism policies conflict with other economic activities that have opposing directions for growth like environmental conservation and commercial logging. A solution could be to devise zoning plans to set clear boundaries for both activities. Some sacrifices will have to be made by both sides, however this is necessary as ultimately what should be seen as important is the long- term benefits. This can mitigate clashes at a later stage and improve effectiveness of donor- involvement as their initiatives are not hampered by other economic activities. For this it is hence important that recipient planning approaches are more flexible and the focus is on long-term goals. Unofficial priorities need to be considered already during policy formulation as it is difficult to change policies when conflicts appear during implementation.
6.3 Shared Ambition and Mutual Trust – Building Partnerships 6.3.1 Donor Actions to Build Partnerships Aligning priorities goes hand in hand with an equal donor-recipient relationship and donors can take initiative to lead this into the right direction. Partnerships between donors and recipients are the most powerful link to induce change. Donors try to spread good governance within the recipient, however it is also important that they practice this themselves. They need to have a participatory approach involving recipients very closely in the design of their initiatives as well as in the evaluations and decisions of which policy reforms would be beneficial. This includes negotiations
52 Foreign Aid Involvement in the Tourism Policy Process Nadine Fiaux between donors and recipients to arrive at consensus about the type and degree of aid involvement. Deep involvement of Recipient Donor recipient staff will ensure that there is a close working relationship which enhances the partnership and the effectiveness of the aid initiative overall. Despite recipient staff lacking capacity to be fully involved in aid initiatives donors have Power Power to be aware that not involving them will have worse effects over the long-term. If recipients are more involved in policy formulation implementation is facilitated as conflicts are solved in advance. Furthermore, donors need to work together with recipients to determine the suitability of new tools for implementation based on the country context before these are introduced. Development agencies often already attempt to do this and adapt their ways of working to the local context. Suitability of processes especially to the level of resources available for implementation at the local level over the long-term is crucial to make aid involvement more effective. Although this only works if recipients’ awareness is raised with regards to increased benefits through efficiency such that they are willing to adopt new processes despite these consuming more resources.
Furthermore, donors have to recognise the impact of stakeholders outside the donor-recipient relationship on the relationship itself as well as the policy process. An important aspect should therefore be to work with local stakeholders in the role of a mediator especially during policy implementation to improve coordination and build partnerships. Donors could provide guidance and due to their role ‘outside’ the local system serve as an independent advisor on how to improve collaboration at the local level. It is important to take these forces outside the donor-recipient relationship into account. This indicates that if assistance is approached in the right way and introduced processes are feasible for the local context donors should be able to leave before the implementation is finished without affecting the results.
6.3.2 Recipient Actions to Build Partnerships Building partnerships with donors is a major aspect, also to improve the other two aspects and recipients have an important role to play. Just like donors, recipients also need to set an example and be more accepting of participatory approaches with regards to their policies. If they are not willing to accept more stakeholder involvement in their policy processes then donors are also not likely get government more involved. Stakeholder meetings and workshops are crucial at all levels of government and all steps in the policy process to avoid conflicts. Furthermore, government has to show that they truly take on issues raised by groups outside the donor-recipient relationship.
Another crucial aspect to ensure a more equal relationship and increase the trust of donors is to show true commitment to donor activities. Governments should show more initiative with regards to donor activities rather than sitting back and taking them for granted. The level of effectiveness and the degree to which local staff can benefit greatly depends on their attitude towards aid. Despite recipients being dependent on aid for funding and expertise to build partnerships on an equal level with donors a prevalent culture of reliance on aid is harmful. They have to recognise that their commitment is needed for every aid initiative they accept and awareness has to be raised about this especially at the provincial levels. This will be facilitated with greater donor coordination. In the end if partnerships are built and both sides are committed this will lead to the satisfaction of both parties in terms of the result of the policy process and ultimately development.
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6.4 Recommendations for Future Research The exploratory nature of the study as well as the limited time and scope made it impossible to investigate all aspects of the research topic. To fill the gap in tourism literature about the donor- recipient relationship in the policy process it would be beneficial to undergo more research in this area. Certain suggestions for future research can therefore be made which will provide a more detailed picture of the donor-recipient relationship within the tourism policy process.
The study should be repeated at other destinations such that the donor-recipient relationship can be investigated in other contexts. This would also help in testing the developed recommendations. It would help determine the effect that the context of a destination with regards to its political, environmental, social, economic, technical and legal environment can have on the nature of the donor-recipient relationship. This study would hence assist in analysing whether the context is negligible and the characteristics of donor-recipient relationships are always the same.
Another interesting aspect would be to do a longitudinal study of the policy process and donor involvement where it is possible for the researcher to experience all three steps of formulation, implementation and evaluation first hand. It would then also be possible to refine the research methods and look directly at one-on-one relationships of donors and recipients working on the same project.
Furthermore, a research suggestion in relation to the nature of donors can be made. It would be valuable to determine whether there is a difference between multilateral and bilateral involvement in the policy process and the resulting donor-recipient relationships. The nature of multilateral and bilateral donors suggests that they have different motivations and ways of working and they might therefore approach the donor-recipient relationship in a different way. Findings from this research could be used to refine the recommendations depending on what type of development agency a recipient is dealing with.
A fourth point for future research is to investigate the role and impact that tourism stakeholders outside the donor-recipient relationship have. Due to the complex nature of tourism involving many different stakeholders this might be an important aspect to consider. This could include private sector businesses but also communities and independent organisations and associations. All of these have an interest in tourism and therefore in the direction in which tourism policy is developed and might therefore try to infiltrate the donor-recipient relationship and affect its outcomes.
Finally, the same study should be repeated at a later point in time as the findings of this research suggests that the donor-recipient relationship might change with increasing levels of development of the recipient. It would therefore be interesting to investigate in what way the nature of the involvement in the tourism policy process changes depending on the stage of development of the recipient.
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CHAPTER 7: DISCUSSION AND REFLECTION
The present study examined the effect of foreign aid involvement on the policy process and attempted to find areas for improvement for the donor-recipient relationship. This has been done through the case study of Lao PDR but findings can be generalised for other developing countries facing similar issues. The methods for gathering data have been chosen carefully, however they still have to be evaluated on hindsight to determine the validity of the study.
The researcher is aware that the sampling methods are non-probability methods, however these were judged most feasible in the context of the underlying study. Moreover, the cultural barrier could pose difficulties during interview with locals. The researcher aimed to minimize this through a preliminary exposure to the culture to be able to adapt to local practices.
Another limitation is that it was not possible for the researcher to actively participate or observe the policy process in action but rather information was gathered based on personal accounts of involved actors. This could be detrimental as it does not allow the researcher to get a personal picture of the process. However, due to the fact that many different views of donors as well as recipients and independent observers were considered, the researcher judges it feasible that this portrays a representative picture of what takes place during the policy process.
The generalizability and validity of the study results is also a limitation. However, while the results specifically for Lao PDR might not be transferable to other destinations, the theoretical research framework can be used in other aid dependent countries to assess the policy process. Furthermore, the primary data collection was based solely on qualitative data derived from in-depth interviews and observations where researcher bias might occur. Through triangulation and the awareness of the researcher regarding possible researcher bias this was mitigated giving the purely qualitative research methods validity and reliability.
Another issue is related to the political nature of the foreign aid and policy processes and the tendency of involved actors to avoid sensitive topics or emphasize the positive aspects which would introduce a bias the research findings. The researcher aimed to eliminate this through getting opinions from both foreign and local involved actors as recipients of foreign aid and shapers of the policy process as well as independent organizations to get a balanced view on the topic.
The final limitation is that it would have been beneficial for the investigation of the donor-recipient relationship to get responses from donors and recipients working at the same level for the same donor projects. This was not possible due to a lower response rate than desired. However, the three categories of donors, recipients and independent are still represented and provide a good picture of the relationship.
Despite these limitations the results of the study are deemed valid and representative due to the described countermeasures taken by the researcher to mitigate the limitations as much as possible. It is possible to replicate the study with the current methods while recognising their limitations in other destinations to examine the effect of the donor-recipient relationship on the policy process.
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Overall, the main goal of the study has been achieved and the study has realised its attempt at filling a gap in the academic literature by investigating the involvement of foreign aid in the tourism policy process. Based on the case study findings it was possible to provide recommendations for an improvement of the donor-recipient relationship which can assist both donors and recipients in managing their relationship in practice.
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APPENDIX Appendix 1 – List of Interviews Stakeholder Name Position/Company Type 1 Donor Carine Pin GIZ Advisor PTD Phongsaly Province 2 Donor Ines Seiler GIZ Advisor PTD Sainyabuli Province Donor Julie Graham SNV Laos Pro-Poor Sustainable Tourism 3 Sector Leader 4 Donor Kirsten Focken LNTA Marketing Advisor funded by GIZ Donor Paul Eshoo WCS Advisor 5 Formerly government advisor (funded by ADB) Donor Steven Schipani ADB Advisor 6 Formerly in Lao PDR (now Philippines) 7 Recipient Khamtan Bhouaphaivanh Deputy Director PTD Luang Prabang Recipient Thaviphet Oula Deputy Director LNTA 8 Responsible for STDP Laos Recipient/ Vayakone Bodhisane Former President LATA Independent Former Member of Board of Directors of 9 Chamber of Commerce Former CEO Diethelm Travel Owner Vayakorne Inn & Hotel Vientiane Independent/ Bill Tuffin Independent Tourism Consultant 10 Donor Formerly advisor for Green Discovery (Tour Operator) and GIZ 11 Independent Duangmala Phommavong Exotissimo (Tour Operator)
12 Independent Georgie Walsh Product Manager Exotissimo Independent/ Inthy Deuansavanh Owner Green Discovery and Inthira Hotels 13 Recipient Independent/ Jean-Yves Paille Lao Mood Travel (Tour Operator) 14 Donor Formerly involved in various donor projects Independent/ Klaus Schwettman Ecotourism Advisor Green Discovery (Tour Donor Operator) 15 Formerly LNTA Advisor & Department of Forestry Independent Nataly Wanhoff Managing Director Diethelm Travel Laos (Tour 16 Operator) Independent/ Paul Rogers Independent Ecotourism Advisor 17 Donor Formerly SNV Advisor for ESAP Independent Philipe Conod Managing Director Asian Trails Laos (Tour 18 Operator) Independent/ Tara Gudjhadur Independent tourism advisor (i.e. for ADB) 19 Donor Director Traditional Arts and Ethnology Centre, Luang Prabang
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Appendix 2 – Interview Guide
General Topic Specific Aspects Role of International Organisations Generally For tourism Motivation of Donors To come to Laos Donor or recipient led? Relationships Generally Between LNTA & PTDs & donors General challenges faced by both sides Relationship Characteristics Politics Power Priorities Commitment Impact on Policies Generally & relationship aspects On policy formulation On policy implementation On policy evaluation Beneficial Changes In relationship In policy process involvement
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