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Technical Co-Operation ISBN 92-64-03651-2 2005 Development Co-operation Report Volume 7, No. 1 © OECD 2006 Chapter 5 Technical Co-operation Technical co-operation (TC) has always played a central role in aid programmes. It is, however, controversial. In fact, TC programmes have come under repeated criticism for being too costly, inappropriate to recipients’ needs, or fostering dependency. In the past, donors have broadly assumed that they will promote capacity development, but reality has proved much more complex. This chapter explores the extent to which statistics – particularly DAC statistics on aid flows – can throw light on these controversies. It also flags recent proposals for improving the impact of TC, and outlines current DAC work to improve the data. 2005 DEVELOPMENT CO-OPERATION REPORT – VOLUME 7, No. 1 – ISBN 92-64-03651-2 – © OECD 2006 111 5. TECHNICAL CO-OPERATION What is technical co-operation? Development can be considered to have two broad strands. The first comprises physical infrastructure, including the buildings, utilities, transport and machinery necessary for production. The second consists of the skills and productive aptitudes available in the economy. Technical co-operation (TC) addresses the second strand, and comprises activities designed to increase the capacity of developing countries. It can in turn be divided into two categories, since the increase can be achieved either through direct supply of skills from outside, or by efforts to enhance the capacities of the local population. DAC statistics on TC focus on these latter measures, and have thus been used as a proxy to measure capacity development. These concepts are compared in Box 5.1. Technical co-operation and skills development The main resources to develop skills in any society are domestic and include both formal systems of education and training and informal systems for passing on traditional knowledge. Formal education systems alone absorb nearly USD 300 billion annually from developing countries’ own budgets – about 15 times the reported cost of TC funded from aid programmes. There is wide variation between countries, however. In some of the world’s poorest countries, TC may even exceed governments’ education spending, when valued at market exchange rates, as illustrated in Figure 5.1. Employers are also key agents of skills development, partly through training courses but mainly through the broadening of knowledge and abilities which employment itself provides. This process is probably unquantifiable in any meaningful sense, and DAC statistics specifically abjure the task of estimating TC by private firms based in donor countries. Yet it is obvious that employment (primarily in the private sector, which accounts for the bulk of productive output) is the primary means by which skills are developed after formal education. Components of technical co-operation The main elements of donors’ TC programmes are: ● Study assistance through scholarships and traineeships. ● Supply of personnel, including experts, teachers and volunteers, from the donor country, or funding of such personnel from the recipient country or other developing countries (South-South co-operation). ● Research on the problems of developing countries, including tropical crops and diseases. These categories can overlap. For example, a developing country national could receive a scholarship to research a development problem under the supervision of a state-salaried professor at a research institute. 112 2005 DEVELOPMENT CO-OPERATION REPORT – VOLUME 7, No. 1 – ISBN 92-64-03651-2 – © OECD 2006 5. TECHNICAL CO-OPERATION Box 5.1. Capacity, capacity development and technical co-operation Capacity is the ability of people, organisations and society as a whole to manage their affairs successfully. This definition does not prescribe either development objectives or criteria for measuring their attainment, though aid donors focus mainly on the capacities necessary for achieving the MDGs and other development objectives. Capacity development is the process by which people, organisations and society as a whole initiate, strengthen, create, adapt and maintain capacity over time.1 This definition has largely replaced the term “capacity building”, with its implications of building something from nothing based on a preconceived design. Donor support for capacity development aims to unleash, channel and strengthen existing potentials. Thus capacity is an outcome, whereas TC is an input. Capacity may also be developed through non-TC support, such as certain financial assistance programmes. DAC data on TC spending provide the best available measure of donor inputs aimed at capacity development. Indeed, the 2005 Paris Declaration on Aid Effectiveness takes TC as a proxy for measuring progress towards more co-ordinated support for capacity development.2 This is logical as DAC statistics only specifically record TC aimed at capacity development, known as “free standing” TC. “Investment related” TC, the supply of skills to support a physical project, is subsumed under project aid. DAC members’ internal definitions of TC may vary from this coverage, although they make efforts to adhere to this definition in their DAC reporting.3 The growing international consensus on the importance of capacity development reflects two inter-related observations: ● Country capacity is the key to accelerating economic growth and reducing poverty. This applies to both generic capacities (e.g. planning and managing organisational changes and service improvements) and specific capacities in critical fields (e.g. public financial management or trade negotiation). Capacity in the public sector is often an important constraint on private enterprise and private sector capacity development. ● Country ownership is the cornerstone of contemporary thinking about aid and development effectiveness. Yet country ownership of policies and programmes assumes the capacity to exercise it. Ownership will not begin to emerge in the absence of sufficient local capacity.4 These observations are the foundation of recommendations to improve the impact of TC reflected in the Paris Declaration and a forthcoming DAC guide to good practice in capacity development. 1. OECD, The Challenge of Capacity Development: Working Towards Good Practice, forthcoming. 2. OECD (2005), Paris Declaration on Aid Effectiveness. See in particular Indicator 4. 3. Although the Creditor Reporting System provides the opportunity to report on other, “investment related” TC at the activity level, most members have had great difficulty in isolating these amounts. They must, nevertheless, be substantial, since the costs of skilled personnel remain a high share of most infrastructure projects even in donor countries. Thus “investment related” and “free standing” TC together account for about half of total official development assistance. For a review of the then-current definitions of TC in various agencies, see Eliot J. Berg (1993), Rethinking Technical Co-operation: Reforms for Capacity Building in Africa, UNDP, New York, pp. 42-47. 4. Francis Fukuyama argues that this tendency means that donors need to define capacity itself as the primary objective of all development assistance, rather than focusing on the services, infrastructure or other results that donors typically define as the targets of their support. See State Building: Governance and World Order in the 21st Century, Ithaca, NY, 2004, esp. pp. 82-91, 99-104. 2005 DEVELOPMENT CO-OPERATION REPORT – VOLUME 7, No. 1 – ISBN 92-64-03651-2 – © OECD 2006 113 5. TECHNICAL CO-OPERATION Figure 5.1. Technical co-operation exceeds education spending in some poor countries 2001 data Public spending on education TC receipts Per cent of gross domestic product 10 9 8 7 6 5 4 3 2 1 0 Developing country Cambodia Tonga Zambia average Statlink: http://dx.doi.org/10.1787/412801624437 The boundaries of TC are also rather vague. Technical help is often an important component of infrastructure projects, which are not classified as TC in DAC statistics. On the other hand, equipment and supplies can form part of TC activities such as scientific research or capacity development in health or education. Despite these definitional problems, DAC statistics can give a broad idea of the scale of TC funding. “Free standing” TC amounted to USD 19 billion in 2004 – accounting for about a quarter of total net ODA. The main types of TC were study assistance and the supply of experts, with development research playing a lesser role. About a third of TC is given in the form of capacity development projects. Scholarships account for the bulk of expenditure on study assistance. There are almost as many traineeships, but since their duration is shorter, the costs are lower. Experts account for the lion’s share of spending on personnel, since there are more of them and they receive higher pay and ancillary benefits than teachers and volunteers. Technical co-operation as a share of DAC donors’ programmes The share of TC in donors’ programmes varies and although some of the variation is accounted for by differences in internal definitions, most of it is real, and an interesting pattern emerges. As Figure 5.2 shows, there is a loose but clear correlation between high per capita aid spending and low shares of TC. In other words, the more aid donors give, the less of it is in the form of technical help. There are probably several factors behind this. First, the most generous donors in terms of ODA/GNI ratios are smaller, non-Anglophone countries. These countries tend to have
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