un by Werner Schneider

Discussion Paper Responding to Trends in Democratic Governance Towards a New Strategic Vision for DGG Sept 2011

Introduction This paper is part of a strategic visioning process which will ensure that UNDP and its Democratic Governance Group (DGG) are positioned to deal with emerging democratic governance (DG) challenges in a timely fashion. The mid-term review of UNDP’s Strategic Plan 2008-2013 has highlighted what we have done well in DG and also where we need to improve our analysis, our 1 programming, and our reporting. As we consider how best to respond to these findings, we also need to develop a renewed vision of our work to ensure that we respond to emerging corporate priotities and to take us into the period of the next Strategic Plan, and beyond. We are undertaking this strategic visioning exercise to ensure that DGG and UNDP are positioned to meet our internal planning needs, to provide a basis for consultation with Regional Bureaux and Cos in the context of the Agenda for Organisational Change, and to prepare our input to the next UNDP Strategic Plan. We also want to influence the broader UNDP, UN and wider discourses over the next decade, including ensuring that democratic governance is appropriately integrated into the post-2015 development framework. We want to contribute as global thought leaders in this area, in accordance with our mandate. The strategic visioning process is addressing the following questions: What will be the key governance issues in the coming decade and beyond? Which of these challenges is UNDP best placed to address? How should we address them? How should UNDP better position itself to meet these challenges? This paper is a draft for consultation. It draws on the background paper “Emerging Trends in Democratic Governance” developed for discussion at the DGG Policy Advisors and Practice Team Leaders Meeting (New York, 31 May-1 June). Section 1 looks at emerging trends in the external environment (i.e. the world at large). Rather than listing every global issue worthy of attention, it focuses on issues that are either new or receiving insufficient attention and is intended to contextualize the new world in which UNDP and DGG operate. While UNDP will not and should not move into all of these areas, they must inform our work. Section 2 discusses key trends and challenges within the DG agenda. Sections 1 and 2, together with a review of where we currently are, provide the background and rationale for the need to adopt a new strategic vision of our DG work, laid out in section 3. This new vision is motivated by principles of inclusion, non-discrimination, equity and sustainability, and places an understanding of locally-specific political settlements and social contracts at the centre of all programming. This approach re-affirms our commitment to democratic governance as a key approach to development but enhances it by complementing a focus on formal institutions with attention to the informal institutions and networks of power that may stand outside formal governance institutions but nonetheless have a powerful influence over the success of development programming and development itself. While the final section looks at the implications of this proposed new approach for DGG’s contributions to emerging corporate priorities, this paper does not provide the detailed programming, operational and organisational implications of adopting that framework, which will need to be considered in much more depth.

MTR document available here: http://www.undp.org/execbrd/adv2011-annual.shtml .

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

Table of Contents SECTION 1: Key Trends in the External Environment

1.1 Growing power of the ‘South’ and new constellations of power-holders

1.2 Financial volatility in the context of continued economic globalization

1.3 Global impact of the ‘Arab Spring’

1.4 Growing importance of regional bodies and configurations

1.5 Rapid growth in media and technology

1.6 Climate change and natural resource management

1.7 Urbanisation

1.8 Changing patterns of inequality

1.9 The challenges of a growing youth population

1.10 Challenges from migration

1.11 Transnational crime and the criminalisation of governance

SECTION 2: The DG Agenda: Trends and Challenges

2.1 Key trends and debates

2.2 Challenges to the broad DG agenda

SECTION 3: UNDP and DG

3.1 Mandate and definition

3.2 Where are we now?

3.3 Towards a new strategic vision for DGG

3.4 Programming implications

3.5 Conclusion

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

Section 1 – Key Trends in the External Environment2 3

By 2015 the global population will be 7.2 billion, an 18% increase from as recently as 2000. More than 95% of the increase will take place in developing countries and in urban areas. As the world becomes more inter-connected, states will continue to be dominant players, but their influence will wane due to decreased control over flows of media, technology, and financial transactions. Non-state actors such as multinational companies and non-profit organizations will play an increasingly important role as the boundaries between countries become more porous. Regional bodies and coalitions will likely increase their influence. The quality and the effectiveness of governance will, in large part, depend on how quickly governments and development practitioners are able to adapt to rapid changes in the global environment. In this section, broad global phenomena are discussed. These provide the essential global backdrop for a discussion of the future of UNDP’s DG work.

1.1

Growing power of the ‘South’ and new constellations of power-holders 4

In recent years, the economic weight of developing countries has been increasing, with this trend accelerating since the mid-1990s. The OECD predicts that the GDP of the non-OECD economies will exceed that of OECD countries by 2015. Importantly, the economic weight of new powers is also being reflected in discourses about global power and global futures. China and India recognise themselves, and are acknowledged by others to be, emerging or actual global powers. Together with Brazil and Russia (and now South Africa) they 5 are part of the so-called BRIC(S) countries which according to some forecasts will account for one third of global GDP growth by 2015. Their designation as the BRIC(S) countries is recognition of their growing global influence, with other constellations such as IBSA (India, Brazil, South Africa) and other groupings of emerging powers becoming influential within the G20. The full development impacts of these shifts are not yet clear. However, it is becoming apparent that there are calls from these new powers for greater participation in global governance. While low-income countries are benefiting from diverse sources of support, it is also possible that they will become the battleground for the fight for resources and political influence between the old powers and the new. In light of the ascendancy of these new powers, ODA from DAC countries will become increasingly less important in financial terms, with implications for their ability to pursue economic and political conditionality, promote human rights and democracy issues. In the area of development assistance, China and India have attracted a lot of attention owing to the volume of their aid and to the relative 6 7 absence of conditionality. Emerging powers like Brazil (as well as Turkey, Mexico, Saudi Arabia, and more) are also increasingly 8 involved in development assistance, though their ODA is much smaller than China or India. These countries’ engagement with international development is not new, however. Indeed, many reject the title of ‘emerging donors,’ preferring instead to speak in terms of ‘non-DAC’ donors. A key trend is therefore the decline in reliance of some states on Western aid: although research on the effect of BRICS on developing states is largely anecdotal and researchers have not yet demonstrated significant changes in state behavior. Nonetheless, there is 2

This section is an abridged version of the ‘Emerging Trends in Democratic Governance’ paper, which provides more detailed analysis as well as regional trends. http://www.un.org/waterforlifedecade/factsheet.html 4 This section draws heavily on Humphrey, J., 2011, European Development Cooperation to 2020: Rising Powers and New Global Challenges. Policy Brief, EDC2020. See also World Bank (2011) “ Global Development Horizons 2011: Multipolarity: The New Global Economy” advance edition available at http://www.iberglobal.com/Archivos/multipolarity_wb.pdf 5 Business Standard report from May 25, 2011 http://www.business-standard.com/india/news/total-bric-countries-gdp-to-exceed-thatus-in-2015-report/131567 6 Jobelius, M., 2007. New Powers for Global Change? Challenges for the International Development Cooperation. FES Briefing Paper 5; Financial Times, “China’s Lending Hits New Heights,” January 17 2011. 7 Manning, R., 2006. Will “Emerging Donors Change the Face of International Cooperation? http://www.oecd.org/dataoecd/35/38/36417541.pdf 8 Schlager, C, 2007. New Powers for Global Change? Challenges for International Development Cooperation: The case of Brazil. FES Briefing Paper 3, March 2007. 3

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

considerable concern amongst some DG observers that the growth of China and India in particular, paired with rising commodity prices, will enable many governments to deflect pressure for reform from the international community and from their own citizens. Of course, this concern among some is tempered by a rejection by others of the assumption that conditionality by DAC donors has necessarily been supportive of DG in the long term, and the counter-assertion that there is a need for mutual accountability between DAC donors and recipients.

1.2

Financial volatility in the context of continued economic globalization

While ‘emerging donors’ are growing in influence, many traditional donors are recoiling from the global financial crisis. The knock-on effects and overall impact of the global financial crisis are not yet clear – but there have been some surprising outcomes. China grew at an extraordinary rate through the crisis, while Asian economies such as India, Indonesia and Bangladesh were also able to move back to high levels of growth after slowdowns in 2008-09. Latin America, which had previously suffered severely in global recessions was 9 surprisingly resilient. Nonetheless, research now makes clear that the initial prediction that many developing countries would not be greatly affected appears to have been premature. While many countries with large informal or cash economies had little exposure to 10 international credit markets, a second wave has hit in the form of reduced ODA, remittances, demand, and FDI. FDI into Cambodia and Ethiopia, for example, fell by 50% and 31%, respectively in 2009, while job losses were deep in low-skill manufacturing countries like 11 Bangladesh. The crisis showed how major financial centres (and not just volatile emerging markets) are vulnerable and illustrated how the loss of confidence in a major financial centre can have serious repercussions on credit and economic activity worldwide. Despite the fact that governments reacted quickly to the crisis with stimulus and rescue packages, global leaders have not enacted the structural 12 and regulatory reforms needed to protect the world against future crises.

1.3

Global impact of the ‘Arab Spring’

Against this backdrop, the ‘Arab Spring’ continues to unfold, and in some places unravel. Under pressure from popular uprisings, Arab and other leaders are re-evaluating their positions on a whole range of issues including the need for economic growth and increasing participation in political processes to go hand-in-hand, a redefinition of the relationship between the state and the people (especially in terms of security) and an adequate response to the needs of a young population. The ripple effect from upheaval in this region may well result in a shift in US foreign policy towards the Arab States, and could yet influence the current impasse over the Arab- Israeli conflict as Egypt, in particular, redefines its relationship to Israel. The role of religion in politics is also being contested and redefined in the region, with a particular focus on Islam, which may have global implications both in terms of identity politics and the ongoing fight against 13 terrorism fuelled by extremism. Additionally, international actors are being forced to confront publicly what was acknowledged privately about the repressive nature of some regimes that had previously been supported because they were considered indispensable, 14 either because of their strategic geo-political position, or their natural resources. It is also now being acknowledged that oppressive stability supported by outside forces for geo-political reasons has proven unstable in the long-term.

Carnegie Endowment, 2010. Five Surprises of the Great Recession. Policy Brief 89: November 2010. Report of the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System. United Nations Conference on the World Financial and Economic Crisis and its Impact on Development, 2009. 11 ODI, 2010. The Global Financial Crisis and Developing Countries: Phase 2 Synthesis. ODI Working Paper 316. 12 Report of the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System. United Nations Conference on the World Financial and Economic Crisis and its Impact on Development, 2009. 13 See “Briefing: Islam and the Arab Revolutions,” The Economist, April 2 2011. 14 Brown, N., 2011, “Hope and Change in the Middle East,” Foreign Policy 18 May 2011. See also a variety of blogs and discussions at http://www.carnegieendowment.org/. 10

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

1.4

Growing importance of regional bodies and configurations

Global governance institutions are often seen to be failing to address major global challenges, including climate change, trade regimes, and global finance. The extraordinary diversity of policy preferences across these issues has meant global inaction has been too common. While the architecture of global governance on many key issues is lacking, countries are finding solutions at the regional 15 level. Indeed, international integration through regional and sub-regional organizations is one of the most important current trends. Trade has been a key driver in this process. There are hundreds of regional trade agreements (RTAs) in the world today linking 16 neighbours through agreements on goods and services. Nearly every country in the world belongs to at least one RTA, and significantly almost all of these contain human rights provisions. While some are merely expressive, many increasingly contain binding provisions 17 with threats to withdraw from the agreement if periodic reviews find rights violations. In addition to the rapid numeric growth of RTAs, the world has also witnessed a move by regional intergovernmental organizations from involvement in ‘low politics’ (development cooperation, environmental regulation, etc.) to prominent roles in ‘high politics’ involving peacekeeping and dispute- and conflict-resolution. The UN Security Council explicitly recognised a role for regional organizations in working with the UN to prevent conflict and control the illicit trade in small arms, calling for greater cooperation between the UN and 18 regional and sub-regional organizations, as well as greater assistance to develop regional capacities. Regionalism in contexts of weak domestic institutions does not mean a diminution of sovereignty. On the contrary, when regional bodies excel at providing public goods that states alone cannot provide – such as clean rivers or protection from supra-state criminal networks – the national state is only strengthened by the resultant regional stability. st

This is not to absolve states of the need to construct global governance institutions that are fit for the challenges of the 21 century, nor is it to ignore the fact that many regional organizations suffer from low capacity or have member states with little incentive to cooperate. However, in certain contexts, and with appropriate facilitation, regionalism is increasingly offering significant opportunities to enhance growth, stability and the provision of cross-national public goods, including improvements in governance through the good neighbourhood effects of, for example, European Community accession policies and peer review processes such as the African Peer Review Mechanism.

1.5

Rapid growth in media and technology

The Arab Spring is only the latest event to have brought to the world’s attention how communication, technology and social media are 19 shaping the possibilities for civic participation and social action. While Egyptian bloggers become known outside even their own borders, communication technology is also quietly changing the way farmers access market information, how women entrepreneurs access micro-credit, and how citizens inform the outside world of unfolding humanitarian disasters. However, for all the changes brought by social media and ICT, the digital divide remains stark and the ambitious rhetoric surrounding social media and ICT needs to be tempered through sober analysis.

UNCTAD, 2007. Trade and Development Report 2007. World Trade Organization, http://www.wto.org/english/tratop_e/region_e/region_e.htm. 17 On a related issue see Hafner-Burton, E., “Trading Human Rights: How Preferential Trade Agreements Influence Government Repression,” International Organization, 2005, 59(3), 593-629. 18 UN Security Council Resolution 1631 (2005). 19 This section draws heavily on Zambrano, R et al., 2011. Mirage and Reality: Participation in the Era of Social Networks and Mobile Technologies. Available at https://undp.unteamworks.org/node/102886 16

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

The expansion of social media and mobile phones represent two of the most visible components of what is often referred to as Web 2.0, a term used to refer to the second wave of internet-based communication technologies following the initial stages of development in the 1990s. Statistics on users of mobile phones, internet, and social media vary by source, but many argue that while the â&#x20AC;&#x2DC;hypeâ&#x20AC;&#x2122; has been around the use of social media, the quiet revolution has been the increased access to mobile phones. There are an estimated five billion mobile 20 phones in use around the world, and in less developed countries it is estimated that 80-90% of people have access to a mobile phone.

Estimated mobile phone subscriptions per 100 people (2010) World

CIS

Americas

Arab States

Asia-Pacific

Africa

131

Source: International Telecommunications Union. http://www.itu.int/ict/statistic

The phenomenal expansion of mobile technology and social media has created new opportunities for participation across multiple spheres, including strengthening human rights; access to markets, financial services; market information; social accountability; and service provision. Nonetheless, it is important to maintain realism and to see ICT developments as a means to an end. There is a pronounced digital divide in the world caused by inequality of access to information, infrastructure, technology and technological competence. Users of social media tend to be in developed countries or the upper middle and wealthy class in developing countries. Additionally, while organization is often a stumbling block to citizen action, the sharing of information is usually less of a barrier than the diverse nature of interests that tend to prevent collective action. It is also important not to ignore the important role of traditional media in promoting development goals. Media is a key shaper of state-society relationships and an independent media plays a critical role in democratic and especially newly emerging societies. Its role as a watchdog and source of accountability on government is especially important, although capacity is often weak, regulation poorly 21 structured and there are risks of media fuelling instability, hate or extremism.

1.6

Climate change and natural resource management

Environmental challenges for the next decades include stabilizing the climate, managing access to energy, water and other natural resources, and stemming the loss of biodiversity. Unless these challenges are addressed with political commitment and financial resources, the economic and social implications of these environmental challenges will become insurmountable. While international attention has been focused on global solutions, the effects of climate change are being felt at the local level in poor countries, as climate change is predicted to disproportionately affect developing countries, through, among other issues, reduced food security, challenges to human health, water stress, rising sea levels, and changes in eco-systems and biodiversity.

Ibid., p. 7. See Deane., J, 2011. Media and the 21st Governance Agenda, https://undp.unteamworks.org/node/102886 for a compelling discussion of why support to media is necessary. 21

Responding to Trends in Democratic Governance â&#x20AC;&#x201C; Towards a New Strategic Vision for DGG

Climate change and issues of natural resource management present large and urgent challenges for democratic governance. These challenges do not fall neatly into one sector, but rather affect multiple dimensions of social, political and economic life, including issues 22 23 of corruption and transparency, challenges to local governance, gender differentiated impacts, resource (water and land) constraint 24 25 as a source of conflict, and differing patterns of migration. International coordination on governance approaches to the issue is essential, including emphasising the role of national authorities in providing context-specific policy. The 2012 European Report on Development (forthcoming) will examine appropriate roles for public and private sectors to best manage the new pressures on land, water and energy use and ensure that natural resource rents contribute to development. It aims to produce concrete recommendations on regulations/subsidies/taxes and punitive steps, and how to support cooperative initiatives including public-private partnerships 26 leading to better natural resource management. The consultations and preparations for the Rio +20 conference in June 2012 are examining precisely this nexus between environmental, social and economic issues, and the resulting outcomes and commitments must be informed by an understanding of the importance of democratic governance in ensuring effective and inclusive institutional frameworks to implement those commitments and meet the agreed targets.

1.7

Urbanisation

About half of the world’s population lives in cities and approximately 80% of urban dwellers in Least Developed Countries live in 27 slums. By 2030, all developing regions will have larger urban than rural populations. Rapid urbanisation and the emergence of 28 megacities have led to a growth in un-governed or poorly governed spaces, which has contributed to growing violence. In these contexts, informal and formal systems of governance are closely interconnected and formal responses alone are likely to prove 29 ineffective. Some argue that megacities demand new governance concepts, tools and strategies. Although development outcomes tend to be better in urban than in rural environments, for the residents of slums basic needs survival is frequently the immediate concern, with actual prosperity and rising incomes often a distant goal. Insecurity of land tenure and the absence of good land markets is frequently the source of persistent slum-dwelling, especially in Africa. Due to corruption and complex and overlapping legal systems, slum dwellers cannot get access to land or housing titles, and so there is often little incentive for people 30 to invest in their housing even if they could afford to do so. Women are often particularly vulnerable to eviction owing to weak legal 31 protection in either customary law or through access to the formal system. Basic services like water, sanitation, education and transport tend be poor in urban developing cities, and in slums may be entirely absent. These remarkable and historically unprecedented shifts in human settlement are made even more challenging by the shift towards decentralisation: responsibility for running cities increasingly falls to local authorities, but these authorities frequently suffer from low capacity, weak legal authority, and insufficient fiscal bases. Although the local election of authorities would seem to be a positive

UNDP, 2010. Staying on Track: Tackling Corruption Risks in Climate Change. Agrawal, A., M. Kononen and N. Perrin, 2009. The Role of Local Institutions in Adaptation to Climate Change. Social Development Working Papers, Paper No. 118, June 2009. UNDP, 2009. Resource Guide on Gender and Climate Change 24 USAID, 2011. Climate Change, Property Rights, and Resource Governance: Emerging Implications for USG Policies and Programming. USAID Issue Brief. Property Rights and Resource Governance Briefing Paper # 2. 25 Brown, O, 2007. Climate change and forced migration: Observations, projections, and implications. Human Development Report Occasional Paper. 26 For a more detailed discussion see GSDRC, 2011. Helpdesk Research Report: Overview of key governance issues related to natural resource management. Available at https://undp.unteamworks.org/node/102886 27 UN Millennium Project, 2005. A Home in the City. 28 A megacity is usually defined as a metropolitan area with a population of more than 10 million. Some definitions also set a minimum level for population density of at least 2,000 persons/square km. 29 See GSDRC, 2011. Helpdesk Research Report: Urbanisation and Governance. 30 Lall, Somik V. et al, “Tenure, diversity and commitment: Community Participation for Urban Service Provision,” Journal of Development Studies, Vol. 40, Issue 3, pp. 1-26. 31 UN Habitat, 2010. State of the World’s Cities 2010/2011. 23

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

development, in many cases the reality is clientelism and corruption, such that many commentators even doubt whether locally elected 32 bodies are good for development. The weak capacity of central and local governments in many developing countries coupled with low political incentives to address the issue has led to mixed success in upgrading slums. The proportion of urban-dwellers living in slums declined from 39% in 2000 to 32% in 2010, but the absolute number of slum-dwellers increased by about 58 million per annum. That is, slum populations are growing faster in absolute terms than society’s ability to lift people out of them. Many challenges faced by governments in urban areas are closely related to the climate change agenda, with climate change affected by 33 urbanization, and urbanization exacerbated by the effects of climate change. Research and policy work is focusing on how international, national, regional and urban actors should address this interchange, and the role of decentralisation in ensuring the transparent and accountable governance of vulnerable cities with the planning capacity to meet these challenges. Land policy is a key tool in addressing issues arising from these twin challenges and ensuring that urbanisation supports economic growth and equitable development.

1.8

Changing patterns of inequality

The broad pattern of income inequality over several decades is a decline in income inequality between countries with an increase in 34 inequality within countries, results that are heavily driven by India and China. Overall, poor countries are catching up with rich countries in the Human Development Index (HDI): the HDI gap between developing and developed countries narrowed by about a fifth 35 from 1990 to 2010. While Africa and Latin America have the world’s highest levels of income inequality, UNDP’s Inequality-Adjusted Human Development Index shows that people in Africa, South Asia, and Arab States lose most from inequality in human development in 36 their countries. Despite progress in the HDI for many countries, income inequality between and within countries is still huge. For developing countries the effects of inequality are particularly pronounced: the impact of growth on poverty reduction is 37 significantly greater when initial income inequality is lower. 38

Income inequality is just one measure of inequality and exclusion, a phenomenon affecting social groups as well as households. Whilst there are various dynamics to exclusion, in almost every society and region certain groups of people face systematic social exclusion as the results of multiple inequalities that constrict their life chances. Inequalities in access to voice and opportunity do cause further 39 discrimination: vulnerable groups, including women, children and the politically marginalized suffer disproportionately. The 2003 Pakistan Human Development Report, for example, finds that corruption raises the costs of getting things done much more for the poor than the non-poor: 17% of the extremely poor reported paying a bribe to run their business compared to 7% of the non-poor. In rural 40 areas this figure jumped to 20% and 4%. Inequality of access to entitlements such as education and nutrition has long-term effects on 41 human development.

Bardhan, P., “Decentralization of governance and development,” The Journal of Economic Perspectives, Vol. 16, No. 4, Nov. 2002, pp. 185-205. World Bank, 2010. Cities and Climate Change: An Urgent Agenda. This section draws heavily on UNDP, 2010. The Real Wealth of Nations: Pathways to Human Development; ILO, 2008. World of Work Report; and World Bank, 2006. World Development Report: Equity and Development. 35 UNDP, 2010. Human Development Report, p. 29. 36 UNDP, 2010. The Real Wealth of Nations: Pathways to Human Development. 37 World Bank, 2006. World Development Report: Equity and Development, p. 9. 38 UNDP DGP, 2008. 2009 Retreat and Planning Workshop. February 11-12, 2009. Internal document. 39 On new measures for gender inequality see UNDP, 2010. The Real Wealth of Nations: Pathways to Human Development. 40 UNDP, 2003. Pakistan National Human Development Report: Poverty, Growth and Governance, p. 69. 41 UNDP, 2010. Regional Human Development Report for Latin America and the Caribbean 2010: Acting on the Future: breaking the intergenerational transmission of inequality. 33

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

In terms of DG, growing income inequality within countries is often a sign, not only of a failure to participate in economic growth, but also of a lack of political and social inclusion. Widening income inequality in countries also raises significant potential for social conflict. While it may serve to shake open regimes that are not responsive to their citizens, it is just as likely to destabilize states that 42 have made gains in governance reform, since democratizing states in which institutions are not consolidated are prone to instability. Inequality has also been causally linked to crime, adding a security dimension to the challenges already discussed: a cross-national study of homicides and robberies that controlled for endogeneity found that crime rates and inequality are positively correlated within and 43 between countries. Additionally, inequality is often a broader hindrance to development. In settings of high inequality – both in terms of income and access to power – powerful interest groups entrench themselves within the state and block social, economic and political 44 reforms necessary for development.

1.9

The challenges of a growing youth population 45

About half the population in the developing world is under 25 years of age. Globally, one in five people are between the ages 15 and 46 24, the age bracket typically used to define youth, and 1.5 billion people are expected to be in this bracket by 2035. While this remarkable demographic change is due to plateau in coming decades in most regions in Africa it is predicted to last several more. In Nigeria, for example, there are 100 million people under the age of 30: equal to the combined populations of Egypt, Tunisia and Libya. In the 15 to 24 age bracket, 46% are unemployed. Every year about one million aspiring young Nigerians pass entrance exams for university 47 but only 200,000 or so actually gain entry. For many observers this ‘youth bulge’ presents alarming challenges for societies and governments, and in extreme cases observers talk of impending crises of crime and violence associated with huge numbers of unemployed urban youth. Influential thinkers such as Samuel Huntington, Fareed Zakaria and Robert Kaplan have all advanced the notion that having a large proportion of youth relative to the total population is a recipe for disaster. This ‘youth bulge’ thesis suggests that large concentrations of young urban men who are socially adrift and culturally disconnected are perpetually ready to riot or join 48 insurrections. However, recent research contests this notion and makes clear the ‘youth bulge’ thesis inaccurately paints urban male youth as a menace. Most places in Africa with ‘youth bulges’ have not in fact had recent civil conflicts, while most civil wars on the 49 continent have rural origins. In this regard, it is important not to deny the potential of youth: greater proportions of working-age populations are associated with economic growth, as the dependant population (children, elderly) declines as a share of the overall population. Between 25 and 40% of the rapid growth between 1965 and 1990 in Japan, Hong Kong, S. Korea, and Singapore has been attributed to the growth of the 50 working age population. Moreover, in terms of a political contribution, the world has witnessed the important role played by young activists across the Arab States in recent months. Like the issue of gender equality, issues around youth inclusion are cross-sectoral: there are youth dimensions to discussions of 51 52 53 urbanization, ICT, climate change, conflict, and so on, and programming to date has reflected this. There have been consistent calls 42

Rogoff, K., 2011. The Inequality Wildcard. 02/04/2011. http://www.project-syndicate.org/commentary/rogoff77/English. Lederman, D. et al., “Inequality and Violent Crime,” Journal of Law and Economics, Vo. 45, No. 1, Part. 1, 2002. 44 UNDP, 2010. Regional Human Development Report for Latin America and the Caribbean 2010, p. 101; Vandemoortele, M., 2009. Within-Country Inequality, Global Imbalances and Financial Instability. ODI, 2009. 45 Abebe, T. and Kjorholt, A., 2011. Young People, Participation and Sustainable Development in an Urbanizing World. UN Habitat Working Paper. 46 World Bank, 2006. World Development Report 2007: Development and the Next Generation. 47 Ruhl, O., 2011. Youth and Governance: Is Revolution the Only Outcome? World Bank Blogs. http://blogs.worldbank.org/governance/node/871 48 UNDP, 2006. Youth and Violent Conflict: Society and Development in Crisis? http://www.undp.org/cpr/whats_new/UNDP_Youth_PN.pdf 49 Abebe, T. and Kjorholt, A., 2011. Young People, Participation and Sustainable Development in an Urbanizing World. UN Habitat Working Paper and Sommers, M., 2006. Fearing Africa’s Young Men: The Case of Rwanda. GSDRC. 50 World Bank, 2006. World Development Report 2007: Development and the Next Generation, p. 34. 51 See UN Habitat’s Youth Fund. http://www.unhabitat.org/categories.asp?catid=637 52 UN, 2010. World Youth Report 2010: Youth and Climate Change. http://social.un.org/index/WorldYouthReport.aspx 43

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

for enhanced participation of youth in governance in recent years, and recently the discourse has begun to focus on how this enhanced 54 participation can be made actionable.

1.10

Challenges from migration

Human migration is extensive, affecting hundreds of millions of people, yet the global governance institutions it needs are lagging 55 behind. In 2010 there were over 200 million international migrants, a figure which only records legal or officially known migration. Remittances run into the hundreds of billions of dollars. Yet the real migration phenomenon does not take place at the international level at all: conservative estimates put the number of internal migrants at approximately 740 million – about four times the 56 international figure. While refugees and the victims of human trafficking are frequently the faces of migration they are actually a small part of a much larger trend of economic migration. ‘South to North’ migration is also only a small part of a larger picture: most migrants move within their own country, while many move within their region, attracted to emerging regional markets for employment, potentially out-pacing local institutional capacities to respond. In one sense, migration is value-neutral: for a country of origin it can help to release pressure on social services while also increasing remittances, but it can also mean brain-drain or a release from pressure on states to address deeply rooted and entrenched discriminatory laws and practices; for the host country it can mean lower labour costs but also community-level problems of assimilation. As the 2009 Human Development Report made clear, however, fears that migrants will take local jobs, lower wages, or pressure public 57 services are unfounded. The aggregate benefits of migration to families and societies are large, and the demand for migrants is considerable. Yet, despite the value of migration and the demand for it, policy responses are lacking: protection for migrants tends to be quite weak and in many places, including developed countries, migrant communities are actively under attack. There are two major governance challenges. 58

First, global migration governance is fragmented and weak. While, for example, UNHCR has a role in overseeing international refugee law and ICRC has a role in overseeing international humanitarian law, no organization has a role in overseeing states’ existing 59 obligations under International Migration Law. Second, from a human development perspective, migrants are at a heightened risk of exploitation. Many have been forced to migrate due to political, economic or ecological instability, and often lack basic entitlements for sustainable livelihoods. The UN Special Rapporteur on the human rights of migrants has noted the increasing criminalization of irregular 60 61 migration. Migration is also not gender-neutral, with women especially likely to face discrimination when migrating. This is pronounced where international migrants are denied rights connected to citizenship, but it is not restricted to international migration. Although an internal migrant brings citizenship rights with her, in many developing countries one’s ability to access legal protection, a political voice, and social services is often bound up in personal relationships rather than legal status. Internal migration is thus experienced in a very similar way to international migration for many poor people. Migration thus offers strong opportunities for development, but it is beset by the failure to build requisite international institutions to protect migrants’ rights, especially when not a single developed country has ratified the UN Convention on the Protection of the 53

UNDP, 2006. Youth and Violent Conflict: Society and Development in Crisis? http://www.undp.org/cpr/whats_new/UNDP_Youth_PN.pdf GSDRC, 2011. Helpdesk Research report: Youth and Governance. 55 Institute for Security Studies, 2010. Global Governance 2025: At a Critical Juncture. An international migrant is one has lived outside of their country of origin for more than one year. 56 UNDP, 2009. Human Development Report 2009: Overcoming Barriers: Human Mobility and Development. 57 Ibid. 58 See Global Migration Governance Project at University of Oxford, http://www.globaleconomicgovernance.org/project-migration 59 Betts, A., 2010. Global Migration Governance – The Emergence of a New Debate. Global Migration Governance Project, Oxford University, November 2010. 60 UN, 2008. Report of the Special Rapporteur on the Human Rights of Migrants. A/HRC/7/12. 61 Global Forum on Migration and Development, 2010. Migration, Gender and Family. Background paper for roundtable session 2.2. 54

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Rights of All Migrant Workers and Members of their Families. Migration also sits at the cross-roads of many other important issues, 62 particularly regionalism, climate change, youth unemployment, and urbanization. At a more general level, migration raises fundamental challenges of disparities, social cohesion and inclusion in the pursuit of development.

1.11

Transnational crime and the criminalisation of governance

Since the end of the Cold War, global governance has failed to keep pace with transnational crime and the criminalisation of 63 64 governance. The trafficking of arms, humans, and drugs is worth hundreds of billions of dollars per year. Transnational crime can manifest itself as drug cartels that spread violence in Central America, collusion between insurgents and criminals in the Sahel, piracy in the Horn of Africa, counterfeiting in Asia, human trafficking in the Balkans, or cybercrime that can be committed almost anywhere. The drug trade, for example, is truly global - cocaine that is produced in Latin America is trafficked through West Africa and consumed in 65 Western Europe – and solutions must be global. In other areas, such as human trafficking, the phenomenon tends to be more 66 regional. A related phenomena – one that is intimately connected with the transnational quality of crime – is the tight links between crime and governance in many contexts. The ‘criminalization of governance’ described here is more than corruption: it is the creeping relationship between governance and criminal activity in areas like drugs, arms, human trafficking, cyber-crime, or terrorism. It is distinct from ‘normal’ corruption in which the act of bribery may be illegal but the road construction or hardware procurement involved is not an illegal activity. In the ‘criminalization of governance’ state actors are intimately involved in illicit industries and the manner in which governance takes place is influenced by the desire to preserve or expand that illicit activity. Violence is often the face of this criminality, but the absence of violence actually suggests that criminal networks either lack competition or have secured enduring links with state actors, a less visible though much more insidious phenomenon. This may come in the form of 67 criminal ‘godfathers’ sponsoring politicians in Nigeria or the penetration of organized crime into the state apparatus, as in Mexico. Conditions of instability such as fragile or weak states tend to favour this phenomenon. UNODC refers to West Africa, for example, as 68 “paradise” for organized crime. Former warlords who command local monopolies of violence are often the ones best positioned to 69 assert their power during transition processes. They rise to power in contexts of weak states and their connection to illicit industries means they have an interest in maintaining the weakness of state institutions such as the judiciary. The context for the emergence of much of today’s transnational crime and criminalisation of governance is a post-Cold War environment of softened borders, liberalized economies and decentralisation. Technological change enables cross-border internet fraud or cybercrime. Economic liberalization saw the selling off of state-owned assets which often flowed into the hands of political supporters or 70 politicians themselves. Improved transit infrastructure has eased the flow of humans, arms, and drugs. Globalization means borders are 71 easier to cross. Liberalization puts more assets in private hands and presents opportunities for politicians to extract enormous rents 62

Global Forum on Migration and Development, 2010. Assessing the Relevance and Impact of Climate Change on Migration and Development. Background paper for roundtable session 3.2. 63 UNODC, 2010. The Globalization of Crime: A Transnational Organized Crime Threat Assessment. 64 Friman, H. R. (ed.), 2009. Crime and the Global Political Economy. 65 See the recent War on Drugs: Report of the Global Commission on Drug Policy, June 2011. 66 UNODC, 2010. Promoting Health, Security and Justice: 2010 Annual Report. See also UNODC, 2007. An Assessment of Transnational Organized Crime in Central Asia. 67 Human Rights Watch, 2007. Criminal Politics: Violence, “Godfathers” and Corruption in Nigeria. http://www.hrw.org/en/node/10660/section/6 68 See for example the links between the Guinean President’s son and narcotics in “Cables Portray Expanded Reach of Drug Agency,” New York Times, December 25 2010. 69 UNODC, 2010. Promoting Health, Security and Justice: 2010 Annual Report. See also UNODC, 2009. Transnational Trafficking and the Rule of Law in West Africa: A Threat Assessment. 70 On human trafficking, see US Department of State’s Trafficking in Persons Report; on arms, see Naim, M., 2005. Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy; on drugs, see UNODC World Drug Report and Addiction, Crime and Insurgency: The Transnational Threat of Afghan Opium. 71 UNODC, 2007. An Assessment of Transnational Organized Crime in Central Asia.

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

during privatization. Decentralization presents opportunities for local criminal networks that control local politics to gain footholds in state agencies. Appreciating how globalization, liberalization and decentralization can have such perverse effects in certain contexts is crucial to identifying remedies.

On how this played out in the Balkans after the Cold War, see UNODC, 2008. Crime and its Impact on the Balkans.

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Section 2: The DG Agenda: Trends and Challenges 2.1 Key trends and debates The role of the state after the ‘Washington consensus’73 Some have argued that the global financial and other crises have thrown into question orthodoxies around the role of the state. However, although the global financial crisis was felt throughout the world, its effects were most dramatic in wealthy countries with open and inter-dependent banking systems. While the effects on developing countries should not be down-played, especially in terms of declines in remittances, soaring costs of food and likely decreases in aid, many developing countries have not suffered the economic contractions and crises of public confidence seen in many OECD states. For many observers, the global financial crisis did not so much serve to de-legitimise the Washington Consensus but to make clear the extent to which the Washington Consensus had in fact already 74 been de-legitimised over the past decade. Following the Asian Financial Crisis in 1997, many developing states had sought to regain 75 control of their banking systems while accumulating large foreign currency reserves in order to limit their exposure to global volatility. So while the global financial crisis has provoked considerable debate in developed countries about the appropriate role of the state in the economy, for much of the developing world the crisis was not so profound: movement away from the Washington Consensus restrictedstate had already quietly begun. What will replace it, however, is not clear. Rodrik argues that there is anything but a consensus in Washington these days, with one community arguing that to the extent that the Washington Consensus failed it was because institutional reforms were never deep enough, while others argue that poverty traps rather than poor institutions are what drag down 76 countries at low levels of development, and what is needed is more aid. Others argue that a ‘post-Washington Consensus’ is coming to be defined by greater attention to ensuring safety nets exist for those dislocated by globalization and to creating a role for the state that is active but not activist. Rather than ‘picking winners’ in industrial policy, for example, developing states should actively seek to address 77 market failures such as coordination problems.

A mixed picture on decentralisation A shift to decentralized modes of governance, with local institutions gaining ever more responsibility for local service provision, marks one of the most important political changes to have occurred in developing countries in recent decades. Today most developing 78 countries have decentralized to some extent, although with tremendous variety across and within regions. However, reviews of the contribution of decentralization to development are at best mixed and are not causes for optimism. Recent studies make clear that decentralization has a weak record in improving local services, enhancing local democracy, reducing poverty 79 and promoting economic development, and those who suffer most are the vulnerable and marginalized. Very often the political economy of decentralization has been over-looked. There has been a gap between donor and practitioner expectations’ of decentralization on the one hand and the interests of local politicians and bureaucrats on the other, since it is ultimately up to the latter 73

The Washington Consensus’ was a set of ideas that emerged in the 1980s around which many policymakers converged in their prescriptions for developing countries, which at the time were heavily indebted. The ‘Consensus’ became synonymous with neo-liberal views on the state, emphasizing reduced social spending, privatization of state-owned industries, liberalization of trade, and deregulation of markets. 74 The World Bank’s Economic Growth in the 1990s Learning from a Decade of Reform can in many ways be seen as a sort of post-mortem for the Washington Consensus. 75 Birdsall, N. and F. Fukuyama, “The Post-Washington Consensus,” Foreign Affairs, Mar/Apr 2011, Vol. 90, Issue 2. 76 Rodrik, D, “Goodbye Washington Consensus, Hello Washington Confusion? A review of the World Bank’s Economic Growth in the 1990s” Learning from a Decade of Reform,” Journal of Economic Literature, Vol. XLIV, Dec 2006, pp. 973-987. 77 See, for example, the World Bank’s description of the “new roles for the state” in agricultural policy, which include the development of markets, providing public goods, and coordinating economic actors. World Bank, 2007. World Development Report 2008: Agriculture for Development. 78 World Bank. Decentralization in Client Countries: An Evaluation of World Bank Support, 1990-2007. 79 World Bank. The Political Economy of Decentralization Reforms: Implications for Aid Effectiveness.

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to make local government administratively capable and locally accountable. For many politicians and bureaucrats, decentralization can work against their own interests. However, despite the concerns with decentralization processes to date, there is still an understanding that accountable and effective decentralized governance is critical for dealing with many of the issues discussed above, including climate change, urbanization and inequality.

The emergence of ‘accountability’ as an over-arching narrative Whatever the disagreements about the appropriate role for states, there has been an increasing agreement and focus in recent years on the importance of domestic accountability in shaping the legitimacy of state institutions and the quality of governance. Domestic accountability is grounded inon human rights and broadly understood as being about the relationship between individuals and the state 80 and the extent to which the state is answerable for its actions and inactions. Domestic accountability is considered to work (or not) through the operation of accountability systems that bring together a variety of institutions, putting into practice a number of principles and standards, including human rights. Although citizen-state relations are embedded in specific country contexts, with their own political realities, structures of incentives and configurations of formal and informal power, the scope and capacity for domestic accountability can be shaped by aid (an important point discussed further in section 3.3, “A new strategic vision for DGG”). Aid that is delivered on the basis of a sound understanding of the prevailing governance context is more likely to have a positive impact. However, there are additional non-aid “global drivers” of accountability and governance, the dynamics of which are generated beyond the borders of the country concerned. To date, a range of donors have been engaged in improving accountability relations in developing countries as part of their democratic governance work developing the capacities of the duty-bearers and empowering rights-holders, through supporting civil society, anticorruption institutions, the media, parliaments, national human rights institutions, political parties and a range of other institutions. Some donors have recently begun to think about the concept of accountability as an organizing principle for programming, with a growing recognition that support to transparency and accountability needs to encompass different institutions, supporting accountability systems rather than single institutions. Donors are increasingly looking into improving their understanding of the political context, avoiding technical solutions, and strengthening rather than undermining domestic accountability.

The critical role of taxation81 While it has long been recognized that taxation is fundamental to sustainable development, because it supports the basic functions of an effective state and sets the context for economic growth, there has recently been an emphasis on taxation as a catalyst for more responsive and accountable governance and for expanding state capacity. Recent thinking on the broader relationship between taxation and state-building highlights the following ways in which taxation can improve governance: Developing a shared interest for economic growth: Governments which depend on their societies for taxes have stronger incentives for promoting economic growth.

80 81

This section draws heavily on OECD-DAC GOVNET, 2010. Aid and Domestic Accountability Revised Background Paper, p. 3. This section draws heavily on OECD, 2010. Citizen-State Relations: Improving Governance through Tax Reform.

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Developing the state apparatus: Tax collection requires a functioning administration, and may involve administrative innovations and an expansion into hard-to-reach areas. Its development may spur improvements in state capacity elsewhere. Developing accountability and responsiveness: Taxation can improve responsiveness and accountability by providing incentives for citizens and government to enter into a “tax bargain” or “fiscal contract”. Through this process, citizens accept and comply with taxes in exchange for government providing effective services, the rule of law and accountability. Tax bargains are mutually beneficial, as citizens receive improved governance while the government receives larger, more predictable and more easily collected tax revenues. Additionally, few, if any, governments have been able to implement highly effective tax systems without first entering into a national dialogue about taxation, and the process can therefore seek to strengthen citizen-state relationships more generally.

Unfortunately, in many countries tax systems remain essentially coercive, offering benefits and exemptions for elites, and most taxpayers have little faith in them.

Understanding the interaction between formal and informal institutions In recent years there have been a range of discussions around how public authority is created through processes of bargaining between state and society actors, and the interaction of formal and informal institutions. The so-called ‘upside-down view of governance’ 82 highlights the need for a fundamental reassessment of existing assumptions about governance and development resulting from this. Informal institutions and personalised relationships are pervasive and powerful, proponents argue, but they can contribute to progressive as well as to regressive outcomes. Rather than focusing on rules-based reform, policymakers should consider using indirect strategies to influence local actors and engage with customary practices. This challenge is picked up in Section 3.3 (“A new strategic vision for DGG”). Proponents of this view argue that governance programmes often do not fail just for lack of 'ownership' or attention to politics. They fail because of a false assumption: that progressive change consists in, and can be achieved through, strengthening formal, rules-based institutions that reflect a clear division between public and private spheres of life. Although informal institutions and personalised relationships are usually seen as governance problems, they can also be part of the solution. In the short-to-medium term, informal arrangements and relationships can help create trust required to stimulate investment, improve services, connect individuals to the state and facilitate the transition to more inclusive, rules-based governance. This does not mean rejecting the longer-term goal of helping poor countries to build inclusive, rules-based public authority. The key to progress in the short-to-medium term, however, may not be direct external intervention focused on rules-based reform, but more indirect strategies to shift or influence the incentives and interests of local actors. The growth of political economy and power analyses across the DG practitioner community can be seen as a tentative start to understanding and dealing with some of these issues, including root and structural causes. The logic behind UNDP’s PEA tool which is currently being piloted is to enable the organization to better understand the nature of power and politics in a developing country context. The new approach chartered in Section 3 of this paper advances this agenda.

The importance of the crisis states/fragility agenda The state fragility agenda born after the attacks of September 11 2001 has acquired a prominent position in development research and policy, not only because of security concerns, but also because there is a close correlation between state fragility and lack of progress 82

The term is coined from the publication summarizing 10 years of research at the Centre for the Future State, IDS, UK . Institute of Development Studies, 2010. An Upsidedown View of Governance. Available at www.ids.ac.uk The summary here is adapted from the GSDRC summary http://www.gsdrc.org/go/display&type=Document&id=3849

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

towards the MDGs. In fact, not a single state within common classifications of ‘fragile’ has met a single MDG. Despite definitional problems, the state fragility debate has helped frame the way international assistance is provided in complex and crisis-affected countries, reinvigorating a focus on state-building, informal institutions and the social contract. An important shift in the development community is coming from development actors like DFID, the OECD and the World Bank, advocating for differentiated ways of engagement in countries where conflict and fragility have been persistent, as well as a focus on 83 expenditure for those countries. The OECD is providing guidance for development agencies on how to support state-building in conflict-affected and fragile environments, emphasizing the endogenous and political nature of the state-building project, with statesociety relations at its core. Much of the focus of major donors has been on contexts suffering persistent cycles of civil conflict. The 2011 World Development Report (WDR) looked at the persistent under-development of crisis and violence-prone states, and also widened the definition of fragility beyond those contexts affected by warfare to include situations experiencing the destabilizing effects of serious criminal violence. Citizen security, justice and job creation are identified as critical areas for conflict prevention, with recognition of the need to strengthen the institutions responsible for providing these services and opportunities. The WDR posits that stronger institutions that are able to provide security, justice and jobs will mitigate and resolve societal tensions that can lead to politically or criminally-motivated violence. There is also a focus on building states in the aftermath of violent conflict, a period in which restoring public confidence in the state through quick and tangible gains is of paramount importance. Observers have also pointed out that despite the prominence of the state fragility discourse, state capacity is too often seen as only a 84 crisis states issue. The effectiveness of the state is an issue for middle income and least developed states just as it is for post-conflict states.

Implications of the ‘Arab Spring’ for DG As the Arab Spring continues to unfold, it is obviously too early to assess its broad implications for DG. However, three broad sentiments are beginning to emerge that connect the specificities of particular events to the broader, global implications for how DG practitioners think about governance and civic participation. First, the very fact that mass protests have taken place in the Arab States region –known 85 for persistent autocratic rule - is a telling reminder that human dignity can only be oppressed for so long. The humiliation that caused Mohamed Bouazizi’s self-immolation echoed across a region in which decades-old regimes suppressed dissent but offered little in the way of social mobility. Standing back from these events, it is clear that although mass protests that bring revolutionary potential are impossible to accurately predict, the multiple long-term societal pressures of unemployment (Egypt had about 3,000 labor strikes In 86 2005 alone), exclusion, discrimination and suppression of voice – essentially the non-realization of human rights -provide a constant source of tinder for fires that are currently blazing in Benghazi, Damascus and elsewhere. Second, observers are cautioning against over-stretched historical comparisons of the Arab Spring with important historical events like 87 the fall of the Berlin Wall, and more generally are issuing cautious reminders that any reform that may follow from protests will be 88 highly contested, prone to failure, and will play out according to local context. Attention to the varied origins and natures of the protests makes clear that future challenges will be equally context-specific, with Libya having to rebuild after a civil war, Egypt dealing with a still-powerful military, and Tunisia with its legacy of tight links between economic elites and the Ben Ali family. 83

DFID, 2011. UK Aid: Changing Lives, Delivering Results. http://www.dfid.gov.uk/Documents/publications1/mar/BAR-MAR-summary-document-web.pdf; OECD, 2011, Supporting Statebuilding in Situations of Conflict and Fragility. http://www.oecd.org/document/12/0,3746,en_2649_33721_46623180_1_1_1_1,00.html World Bank, 2011. World Development Report 2011: Conflict, Security and Development. http://wdr2011.worldbank.org/fulltext 84 Munck, G., 2010. A Global Perspective: Building an Inclusive, Responsive and Capable State. Prepared for UNDP Democratic Governance Community of Practice Meeting, 15-19 February 2010 in Dakar, Senegal. 85 Freidman, T. “I am a Man,” New York Times, May 14 2011. Also El-Mikawy, N., “Governance chapter for poverty report,” unpublished draft, p. 8. See also the series of UNDP Arab Human Development Reports from 2005. 86 El-Mikawy, N., “Governance chapter for poverty report,” unpublished draft. 87 Carothers, T. “Think again: Arab democracy,” Foreign Policy, March 20 2011. 88 Nouira, A., 2011. Obstacles on the Path of Tunisia’s Democratic Transformation. Carnegie Endowment for International Peace.

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Protests are unlikely to do anything in the short-term to improve basic services. Rather than improved standards of living, the short- to medium-term reality in many places will likely be political and economic instability, induced in the first place by jockeying for power in 89 any constitution-writing process or election and then by diminished foreign investment. An ‘awakened’ citizenry does not quickly change the fundamentals of socio-political order, whether it is insecurity of land tenure, weak state capacity and rule of law, high concentrations of wealth, or natural resource dependence. Third, the Arab Spring has been a wake-up call to DG actors in multiple ways – sparking renewed debates about the meaning of ‘national ownership’ and state legitimacy, and providing a humbling reminder of the limitations (and often irrelevance) of our analysis and action.

2.2 Challenges to the broad DG agenda Democratic form without function90 It is now commonplace to acknowledge the widespread ‘democratic deficits’ in many countries, despite the spread of democratic 91 institutions. A review of the literature in this area identifies four types of democratic deficits:

hollow citizenship – in which citizens do not enjoy equal rights and entitlements; lack of vertical accountability – ‘the inability of citizens to hold governments and political elites accountable for their use of power;’ weak horizontal accountability – in which ‘potentially tyrannical’ executives manipulate checks and balances through patronage, corruption, and the stifling of dissent; and international accountability dilemmas – involving the shrinking policy space of national governments, and their citizens, due to the decision-making power of global markets, multinational firms, and international bodies. How to engage with regimes with the form but not the substance of democracy is one of the main challenges for donors providing DG support. A very useful review of donor assistance found that non-consolidation of democratic transitions and the emergence of so-called 92 ‘hybrid regimes’ (neither autocracies nor consolidated democracies) is the biggest challenge being faced by donors in the DG area. 93 Indeed this is also the most consistent theme across the various regional inputs provided for this strategic visioning process. Additionally, democratic form without function has led in many places to a cynicism among populations about democracy and its benefits. In some places this is related to concerns about corruption and lack of compliance with human rights commitments, in others about representation and legitimacy.

Differing notions of democracy94 In response to a perceived crisis of democracy, there are a number of competing trends in thought about the nature of democracy itself, and whether there are different trajectories to achieving inclusive state-society relationships. 89

“Reversals challenge hope of Arab Spring,” Washington Post, May 12 2011; Bremmer, I., “Measuring the revolutionary wave,” Project Syndicate, April 6 2011. For this section, see the series of global and regional reports prepared for UNDP Democratic Governance Community of Practice Meeting, 15-19 February 2010 in Dakar, Senegal. Also the various a useful review in the context of East and Southern Africa. 91 Luckham, R., Goetz, A. and Kaldor, M., 2000. Democratic Institutions and Politics in Contexts of Inequality, Poverty, and Conflict: A Conceptual Framework. IDS Working Paper 104, Brighton: IDS. 92 Rakner, L, Rocha Menoccal, A. and Fritz, V., 2007. Democratisation’s Third Wave and the Challenges of Democratic Deepening: Assessing International Democracy Assistance and Lessons Learned. ODI: London. Available at http://www.odi.org.uk/resources/download/201.pdf, 93 See, for example, GSDRC, 2011. Helpdesk Research Report: Governance in Eastern and Southern Africa. 94 This section draws heavily on Gaventa, J., 2006. Triumph, Deficit or Contestation: deepening the ‘deepening democracy debate. IDS Working Paper 264, Brighton: IDS. 90

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The neoliberal market approach to the state tends to reduce individuals to consumers, who express preferences through market choices, and perhaps through co-provisioning of services at the local level, but who exercise little real democratic power. A second dominant view grows out of the liberal representative model, which puts a great deal of emphasis on getting the institutions and procedures of democracy right, especially as measured through competitive, multiparty electoral processes. In this view, the role of individuals is somewhat passive. Individuals participate through elections, and enjoy certain rights, but primarily the individual rights to freedom and liberty from interference by the states in matters of private property or political association. The liberal representative view is extended by a third view, which grows out of long traditions of participatory democracy and is sometimes referred to as the ‘deepening democracy’ approach. In this view, democracy is not only a set of rules, procedures and institutional design, and cannot be reduced to only a way of competition amongst parties, though these are of course important. Rather it is a process of inclusive and equal participation through which individuals exercise ever deepening control over decisions which affect their lives, and as such it is also constantly under construction. In some formulations, especially those emerging from Latin America, this view also is about the extension of rights. Full democratic citizenship is attained not only through the exercise of political and civic rights, but also through economic, social and cultural rights, which in turn may be gained through participatory processes and 95 struggles. Overall, the trend is now to approach democracy as a set of principles and values, rather than a defined system of government, which has resulted in a greater acceptance by the international community of democratic divergence across societies and cultures. Nonetheless, there remains a tendency among many politicians in donor countries to see democracy (and democratic governance) in starkly defined terms, which affects the approaches and options available to development agencies.

An unclear empirical relationship between DG and other development goals No clear consensus emerges in the enormous research literature on the relationship between democracy/governance and other development outcomes, such as poverty reduction. While some studies have shown a clear association between ‘good governance’ and better service delivery, there are problems in assigning causation, which is likely to be both ways. In addition, the linkages to actual development outcomes are often difficult to disentangle. However, a recent review of evidence found that when one looks at the experience of developing countries as a whole, those with more representative and pluralistic political systems have typically developed more rapidly, broadly and consistently than those with closed systems. The authors of the study argue that the differences are striking and persistent, even for the least developed countries – two-thirds of developing country democracies exceed the growth medians for 96 their regions over the past 20 years. Nonetheless, the definitional and measurement elements of these discussions are complex and contested, and there is not considered to be a global consensus on the relationship. The broad DG agenda is therefore vulnerable to shifting priorities and development ‘fashions’, as well as the foreign policy objectives of key donors. In the current environment this often manifests as a tendency to focus only on economic growth, without an appropriate recognition of the strong relationships between governance, poverty reduction and other desired development outcomes. Even the current discourse around ‘inclusive growth’ tends to ignore the governance elements that underpin this.

Contradictions between DG processes and external support Progress in democratic governance needs to be driven from within in order to be successful and sustainable over time. It is part of national political processes, which may be lengthy, and are certainly not linear. There may therefore be contradictions between these long-term processes and the need for international aid agencies to demonstrate results. Tensions often arise in the kinds of assistance 95

RBLAC has made notable contributions to these debates; see, for example, UNDP, 2004. Ideas and Contributions: Democracy in Latin America – Towards a Citizens’ Democracy. 96 Halperin, M., Siegle, J., Weinstein, M., 2010. The Democracy Advantage: How Democracies Promote Prosperity and Peace.

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that they provide due to these very different time horizons, especially in relation to the ‘ownership’ of processes. Additionally, donors have historically struggled to understand and acknowledge more explicitly that democracy assistance is inherently political. While there has been a significant shift in understanding on this issue in recent years, this has not yet clearly trickled down into changed approaches to programming.

The need to demonstrate and measure results In the context of the Paris Declaration on Aid Effectiveness and Accra Agenda for Action, and the emergence of the ‘randomistas’ in development economics, bilateral and multilateral donors are trying to strengthen their metrics, results measurement and impact evaluation systems, and researchers are experimenting with applying new methods to development interventions. There is also a stronger call for the ‘mid-range theories of change’ which would suggest what types of interventions might be successful in what types of environment. Ambitious research projects and external reviews have been conducted, new policies in this regard have been issued and 97 internal capacities are being built up and different practices mainstreamed. 98

Although there remain significant challenges in measuring and demonstrating results, and some ‘push-back’ against the trend, in the immediate future there will inevitably be an even greater emphasis on measuring and demonstrating results, especially as donors tighten their belts and seek to fund proven interventions under pressure from their own taxpayers in difficult economic circumstances.

Challenges with operationalizing insights from recent research While there has been significant research into and discussion of the relationship between formal and informal institutions (the so-called ‘upside-down view’ of governance, discussed above) there has been relatively little progress in operationalising the insights. Development agencies are finding it very difficult to define appropriate organizational responses and struggling to grapple with their implications in terms of interventions. The tendency to date has been to explain past failures using political economy analysis, rather than to use it effectively to plan future interventions.

See, for example, National Academy of Sciences NAS, 2008. Improving Democracy Assistance: Building Knowledge Through Evaluations and Research. Committee on Evaluation of USAID Democracy Assistance; DFID 2009, Building the Evidence to Reduce Poverty. The UK’s Policy on Evaluation for International Development; World Bank. Evaluation of Governance and Institutional Reforms. http://go.worldbank.org/169GZ6W820. 98 See, for example, the discussions at http://www.bigpushforward.net .

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Section 3: UNDP and DG 3.1 Mandate and definition UNDP’s work on democratic governance (DG) is inspired by its mandate to tackle human poverty and to work for the advancement of the voiceless, disempowered and most marginalized, based on the three pillars of the United Nations as laid out in the UN Charter: peace and security, development and human rights. This mandate is further legitimized by national governments’ commitments to internationally agreed norms, frameworks and agendas enshrined in international human rights instruments, and General Assembly resolutions such as the Universal Declaration of Human Rights and core international human rights treaties, the 1986 Declaration on the Right to Development and the Millennium Declaration. UNDP’s approach to human development and thus also to democratic 99 governance is a normative one. UNDP fully respects and works with individual countries’ capacities and needs; at the same time, as the United Nations’ primary development agency, UNDP is called upon to apply and promote internationally agreed norms and standards including all human rights in its development cooperation work. Democratic governance for UNDP is thus both means and end. For UNDP, democratic governance is not synonymous with the concept of democracy. Countries can be “differently democratic” and 100 there is no “one size fits all” approach or single model of democracy. Democratic governance means that people’s human rights and fundamental freedoms are respected, promoted and fulfilled, allowing them to live with dignity. People have a say in decisions that affect their lives and can hold decision-makers to account, based on inclusive and fair rules, institutions and practices that govern social interactions. Women are equal partners with men in private and public spheres of life and decision-making, and all people are free from discrimination based on race, ethnicity, class, gender or any other attribute. Democratic governance feeds into economic and social policies that are responsive to people’s needs and aspirations, that aim at eradicating poverty and expanding the choices that people 101 have in their lives, and that respect the needs of future generations. In essence, therefore, democratic governance is the process of creating and sustaining an environment for inclusive and responsive political processes and settlements.

3.2 Where are we now? The most recent assessment of our position has been the work carried out for the mid-term review (MTR) of the Strategic Plan. The 102 discussion here draws both on the final MTR document, as well as other contributing documents and analysis. Country level assessments and thematic evaluations, as well as other sources, showed that there were positive results across all geographic areas in many themes. Support to ‘traditional’ DG service areas tended to be evaluated as the most successful. In particular, support to national level institutions and processes - parliaments, elections, electoral commissions, constitutional reform processes, national human rights institutions, and institutions related to access to justice and the rule of law - were frequently mentioned as successful. The independent evaluation of UNDP’s contribution to local governance, for example, also considered UNDP’s work in this area as highly relevant. The report stresses the numerous instances where UNDP has helped build capacities of state and non-state actors, empower local communities, given ‘voice’ and representation to the socially disadvantaged, built trust between government and people, promote dialogue, and improve service delivery, including under conditions of conflict recovery and prevention. However, the evaluations and analysis also identified multiple challenges and areas of weakness, including:

United Nations (2007), Decision No. 2007/41 of the Secretary-General, Policy Committee on Democracy, New York: United Nations. UNDP, 2002. Human Development Report 2002: Deepening Democracy in a Fragmented World. 101 Ibid. 102 MTR document available here at http://www.undp.org/execbrd/adv2011-annual.shtml. 100

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

limited influence on national level political processes – a missing link between programme areas and the broader policy environment; limited upstream policy work; in some contexts, limited overall programme coherence and missed opportunities to promote greater synergies across programme areas and projects, as well as across practices and regions; a widespread tendency to spread activities too thinly and have too many projects with a lack of an overarching vision; a tendency to be demand-driven and short-term in approach; the frequent failure to partner strategically with civil society organisations, instead tending to see them as service deliverers; a generalised failure to scale-up pilot initiatives; a failure to systematise approaches to gender; a failure to capture knowledge and effectively share it across the organisation, including missed opportunities for South-South cooperation; weak analytical capacity (including political, gender, conflict and vulnerability analysis); a failure to support emerging middle-income countries in an appropriate way. Overall, the picture presented is of an organisation that often delivers well on DG programme and project objectives within its thematic areas but is failing to scale-up its impact, work effectively across themes and practices, be strategic in its approach and have an impact beyond the ‘sum of its parts.’ The new strategic vision outlined below takes up these challenges.

3.3 Towards a new strategic vision for DGG The overarching normative framework for DG and its broad definition, laid out in GA resolutions and international agreements and various interpretive documents, remain unchanged. However, the review of our work has highlighted a number of challenges, and combined with both the emerging trends and the global challenges to the democratic governance agenda globally discussed in sections 1 and 2, it is clear that we need to develop a better understanding of how our activities feed into the broad change that we want to promote. We need to articulate more clearly our overall theory of change– that is, our understanding of the relationships and structures which operate together to bring about democratic governance, and how these can be supported and strengthened in a fast-changing environment. This articulation will help us to focus and prioritise our efforts on activities likely to contribute to improved development results at the country level, and provide strengthened support to our national partners. It will help us determine the appropriate responses to the governance challenges posed by, among other issues, urbanisation, climate change and growing inequalities, harnessing the opportunities provided by global shifts in power and advancements in ICT. It will also enable us as DGG to articulate our unique contribution as a practice to emerging corporate priorities, to discussions around the Rio +20 conference and consultations about the post-2015 development framework. In other words, it will help us to understand, articulate and operationalise the contribution of democratic governance to sustainable human development.

The enabling (or disabling) environment for inclusive and responsive political processes UNDP is not alone in the challenges we face in our DG work, particularly the challenges in relation to ‘democratic form without function’ and the need to take into account the political context within which we work. A vast body of thinking and research has looked at these issues in the last decade, and some concepts and approaches have emerged which can be applied to our work, and are particularly appropriate to UNDP’s mandate and approach. To unpack our understanding of how DG can better be supported it is particularly helpful to isolate two key elements - political settlements and social contracts - that create the environment for inclusive and responsive political processes.

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A political settlement can be thought of as the power arrangements that govern the behavior of actors. The key elements in a 104 political settlement are the actors, actors’ interests, and institutions in a given society. Although the national level political settlement is important, different political settlements can exist at different levels. A focus on political settlements views development outcomes as the product of competition between elite groups, only some of whom may derive their power from governance institutions. The approach helps us see why formal institutions do not perform as intended in many developing countries, as discussed in section 2. Important features of this approach are: Key actors are all those in the dominant elite coalition that controls political and economic activity through formal (politicians, senior bureaucrats) or informal power (business leaders, traditional elites, religious leaders and so on). The political settlement is more than just who is in government: governments may change, or party leadership may evolve, but the coalition of elites that rules a country may remain the same. Political settlements are not ‘settled’ in the true sense of the word: rather, they are agreements that are on-going but constantly contested. When there is a broad consensus that governance is legitimate, the status quo political settlement will endure and political stability will result. A political settlement is not something that emerges from an event, such as the signing of a peace accord. This means that development interventions should not be short-term or focus heavily on ‘big bang’ governance moments like elections or constitutional conventions. The process of re-aligning elite incentives to pursue inclusive, equitable, and sustainable societies is long and cross-sectoral. Exclusionary political settlements are a major source of instability, conflict and disorder. They occur when groups that exist autonomously of the ruling elite coalition are excluded from that coalition, whether on grounds of race, ethnicity, religion, region, or simply because they are a threat to the ruling coalition. Excluded elites threaten the authority of the state. To be peaceful, stable and prosperous, the political settlement must be inclusive: politically it must not exclude other groups in society; economically it must redistribute from emerging productive sectors to the poorest to ensure their basic needs are met, and also thereby increasing their ability to contribute to the productive sector. Related to, but not synonymous with the concept of political settlements, is the concept of the social contract. Although there have been centuries of philosophical debate about the concept, in its commonplace usage in development circles today, the concept of a ‘social contract’ usually refers to the explicit and implicit relationship and agreements between a government and individuals, with roles and responsibilities on both sides. Using this term therefore provides a useful counterbalance in our thinking for the emphasis within the political settlements approach on power relationships between elites. A focus on the social contract in a given context: reminds us of the importance and agency of rights-holders and the responsibilities of duty-bearers. asserts the importance of individuals’ consent to be governed (the democratic in democratic governance) without invoking some of the ideological baggage associated with differing notions of ‘democracy’. places the relationships between the state, communities and individuals at the heart of our thinking about DG.

103 The following section draws extensively from Cole, W. and Parks, T., 2010. Political Settlements: Implications for International Development Policy and Practice. Asia Foundation, Occasional Paper No. 2 July 2010, also Goodhand, J. and Mansfield, D., 2010. Drugs and (Dis)Order: A Study of the Opium Trade, Political Settlements and StateMaking in Afghanistan. Working Paper No. 83, Crisis States Working Papers Series No. 2; DiJohn, J., 2010. The Political Economy of Taxation and State Resilience in Zambia Since 1990. Working Paper No. 78, Crisis States Working Papers Series No. 2; Booth, D, 2010. ‘Country Ownership’ When There is no Social Contract: Towards a Realistic Perspective. Third lecture in the SID-Netherlands series ‘Global Vales in a Changing World: Synergy of State and Society in a Globalised World,’ Amsterdam 13 Dec 2010; Barnes, C., 2009. Renegotiating the Political Settlement in War-to-Peace Transitions. Paper commissioned by DFID. DiJohn, J. and Putzel, J., 2009. Political Settlements. GSDRC Issues Paper, June 2009; Khan, M., 2010. Political Settlements and the Governance of Growth-Enhancing Institutions; DiJohn, 2010. Taxation, Resource Mobilisation and State Performance. Working Paper No. 84, Crisis States Working Papers Series No. 2. 104 Institutions – whether formal or informal – are sets of arrangements that govern access to resources, control violence and set the parameters for political competition.

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

Broad implications of a focus on inclusive political settlements and strong social contracts A heavy focus by development practitioners on formal institutions has often blinded us to the context in which formal institutions are operating. Formal institutions are only one part of the overall governance picture, and understanding the importance of political settlements and social contracts helps redress the balance. Conflict and peace, prosperity and poverty are partially the outcomes of elite behavior in a given political settlement. Thus, rather than focus development interventions solely on the outcome of a political settlement, donors and practitioners should expend much more effort on the underlying political settlement (the cause), and less on the outcomes of that settlement (the symptoms). A political settlements approach can be used in all countries, and it is especially useful in crisis or fragile states where institutions may be more malleable and careful intervention can lead to future political settlements that are inclusive, growthenhancing, and peaceful. We should expend less effort on exporting best practices or technical capacity, which may not be relevant in contexts of differing political settlements and alternative social contracts. We should move away from our tendency to focus only on thematic approaches to DG, and instead ensure we are also focusing energies on the broad political process in a country, of which certain themes (media, environment, parliament, etc) are but small parts in a larger picture. We should increasingly see our work on democratic governance as being part of a broader UNDP and one UN process of addressing development challenges from a cross-practice perspective. We should continue to pay attention to the interface between people and the state located in public sector institutions at national and sub-national levels. Regardless of the governance model and political settlements, the public administration as an institution at national and sub-national levels remains the key interface between supply and demand for governance, and between state and citizens. It is a core governing institution where politics, the state and people meet on a daily basis, and which can support or obstruct institutional change in other governing institutions.

3.4 Programming implications Adopting a more holistic political settlements and social contract approach, within which we apply our strong thematic expertise framed on the human rights normative framework, is consistent with UNDP’s experience to date, as well as our mandate. A political settlements approach is not a call for interference in domestic politics. Rather, it calls for a recognition that all development interventions are innately political, benefitting some but not others, and development actors themselves play a role (not always beneficial) in shaping the political settlement. Evaluations of our work and our own self-reflection have long ago convinced us that democratic governance work is fundamentally political, as well as technical. While technical expertise in management of election cycles, legislative committee structures, or media training is important expertise that should not be lost – indeed, expertise in which UNDP has a comparative advantage in providing to clients –we have recognized that these technical aspects of democratic governance programming must be seen as simply tools to be used as part of broader country-specific programs to affect the type of change that we wish to see. Yet we have been unable to move forward on how to apply this knowledge. Accepting the importance of inclusive political settlements and strong social contracts gives us an overall framework within which we can begin to apply our thematic expertise more strategically. It also gives us the conceptual underpinning which will allow us to respond appropriately to the constant refrain that we need to focus and prioritize. Within this overall framework we will need to work with others to develop ‘mid-range’ theories of change – that is, why and how certain interventions work in some contexts but not in others.

Responding to Trends in Democratic Governance – Towards a New Strategic Vision for DGG

We will also need to consider in much greater depth both the conceptual and practical implications of how operate. We need to consider more closely how the political settlements and social contract approach can support the normative framework within which we work. We will also need to define the principles and criteria that will guide the work – including the specific indicators, targets and sources of verification. In practical programming terms, there will inevitably be a stronger emphasis on improved analysis at different levels of the programming cycle, as well as likely changed programming modalities. We will need to think carefully about how we are structured to deliver according to this approach, as well as how we can support COs to adjust their focus. A focus on an inclusive political settlement 105 and strong social contract also resonates with emerging corporate priorities for UNDP as laid out in recent documents.

3.5 Conclusion Section 1 of this paper presented multiple broad emerging trends in the world today. The trends and challenges it set out – as diverse as migration, transnational crime, climate change, rise of the G20, and regionalism – set the context for a discussion of a new DGG. Section 2 described changes in the way democratic governance is being conceptualized and noted several limitations with current approaches. Section 3 charts a new way forward for UNDP in light of a changing world, seeking to grapple with the challenges that our work presents us with. This new vision for DGG is mindful of the challenges of a changing world, of UNDP’s position within it, and of the limitations of DG programming. But it is also a renewed vision that takes stock of what UNDP does well and pushes us forward to partner with countries to build inclusive and responsive political processes and settlements which will nurture and support sustainable human development.

Acknowledgements: This paper was written by Sarah Lister, Democratic Governance Adviser, and Barry Driscoll, Consultant, and its preparation was coordinated by the Oslo Governance Centre, under the guidance of the DGG Director, Geraldine Fraser-Moleketi. It draws on intensive discussions among DGG Advisors and Regional Practice Team Leaders, some commissioned pieces, available at https://undp.unteamworks.org/node/102886, and multiple other sources. Contact Information: Sarah Lister, Democratic Governance Adviser, sarah.lister@undp.org

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UNDP, 2011. An Agenda for Organizational Change: Lifting UNDP Performance from Good to Great; UNDP, 2011. Making Growth Inclusive – What Will it Take? UNDP SCIG, 2011. Refinement of Sub-Priorities: Final List 25 May 2011.

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