Do loose networks like the G20 strengthen or weaken developing country voice?

January 14, 2010

     By Duncan Green     

Networks are (yet) another development buzzword, contrasting with markets and hierarchies. They are proliferating in the international arena, as well as in academic literature – how many ‘Gs’ can you name apart from the G20 and the G8? What’s the difference? According to ‘Networks Networks of influenceof Influence? Developing countries in a Networked Global Order‘, edited by Leonardo Martinez-Diaz and Ngaire Woods, ‘Like networks, markets are non-hierarchical, but in a market with many buyers and sellers, a particular set of participants may transact once but never again. In a network the same group of actors interacts repeatedly in an iterative process. As in networks, actors that are part of hierarchical institutions may interact regularly, but in a hierarchy, there is by definition someone with the authority to arbitrate and resolve disputes when conflicts arise. In networks, there is no such delegation of authority.’

Networks of Influence builds on 8 case studies, all loosely involving financial networks such as the G20, several written by network insiders, to try and sort out whether networks are a blessing or a curse for developing countries. Are they exciting new avenues for poor country governments and civil society to influence the big decisions, or sneaky ways to get round accountability and exclude the great unwashed through a 21st century version of invitation-only gentleman’s clubs? Will they replace or strengthen formal international institutions like the UN or IMF? Are North-South networks different from South-South ones? (both are proliferating).

It’s time for some wonky lists. The book sets out five functions of networks: agenda setting; consensus building; policy coordination; knowledge exchange and production and norm-setting and diffusion. It identifies two categories of network. Advocacy networks aim to mobilize support for a cause and concentrate on the agenda-setting, norm-setting and consensus-building functions, while ‘self-help’ or ‘problem-sharing’ networks focus on improving members’ capacities through knowledge production and exchange and policy coordination.

It then uses the case studies to test four hypotheses (last list, promise):

Hypothesis: Networks emerge as a reaction to real and perceived failings of formal institutions, particularly international organizations
Conclusion: Yes

Hypothesis: The largest contributors of resources to a network use their influence to ‘capture’ the network and steer it in their own interests
Conclusion: Not completely. Big contributors are kept in check because weaker players simply vote with their feet and leave the network if they see the big guys abusing their positions.

Hypothesis: Even with unequal resource contributions, networks provide developing countries with greater voice and influence than international organizations
Conclusion: Mixed results, but overall, yes, where there are adequate resources for the network and the stronger players don’t try and take over.

Hypothesis: Networks will replace international organizations because they are much less resource-intensive, more flexible and more egalitarian
Conclusion: No. Networks are rarely effective on their own – they need to form a symbiotic relationship with international organizations. The emerging world order will be of these organizations interacting with clusters of networks, each playing to its strengths.

It’s that last conclusion on symbiosis that is the most interesting. International organizations burdened with procedures and bureaucracies can take tricky issues off-line for discussions and consensus-building in networks, but binding decisions require rules and formal institutions, so in turn, networks have to bat them back to the organizations to be turned into something concrete. The interaction between the G8/G20 and the IMF and World Bank is a classic example. Networks have to be properly ‘nested’ within a larger institutional landscape if they are to be more than mere talking shops. One lesson for international advocacy is that if we are proposing new networks on tax, arms control or whatever else, we need to think long and hard about the best institutional ‘nest’ for them.

Worth comparing this with Owen Barder’s recent attempt to rethink the aid system in terms of a hybrid of markets, networks and hierarchies.