Government to Government trade – a new development issue, but is it threat or opportunity?

February 17, 2014

     By Duncan Green     

I have a love-hate relationship with The Economist – hate its lazy, evidence-free, anti-state, privatizing ‘priors’, but love the range of G2G graphicthought-provoking new angles, and its coverage of development. In general, the further it gets from economics, the more I like it.

Usually I just tweet links to the good stuff, but last week’s piece on ‘government to government trade’ deserves special attention. The article describes a boom in such G2G exchanges:

‘A Norwegian government agency managing Algeria’s sovereign-wealth fund; German police overseeing security in the streets of Mumbai; and Dubai playing the role of the courthouse of the Middle East.’

The trade is growing as ‘it is a natural extension of the trend for governments to pinch policies from each other. “Policymaking now routinely occurs in comparative terms,” says Jamie Peck of the University of British Columbia, who refers to G2G advice as “fast policy”. Since the late 1990s Mexico’s pioneering policy to make cash benefits for poor families conditional on things like getting children vaccinated and sending them to school has been copied by almost 50 other countries.

When China realised in the run-up to the 2008 Beijing Olympics that it needed to improve its air-safety regulations, it could just have looked around for the best examples and come up with its own version. Instead it asked America’s Federal Aviation Administration (FAA) to write a new rule book and to train Chinese pilots. The FAA now has full-time offices in Beijing and Shanghai. Trinidad and Tobago, which decided in 2010 to computerise its register of motor vehicles, bought a system from the government of the Canadian province of Nova Scotia.

Dispute resolution is a particularly lively part of the G2G market. Britain will soon play host to an arbitration court for Saudi Arabian disputes, helping to allay investors’ concerns about the Gulf state’s legal system. A growing number of countries, most with a history of British common law, want to become the preferred jurisdiction in their region or for a particular type of case. In 2011 Dubai’s International Financial Centre threw open its courts to disputes from any country, provided the parties agreed to be bound by its decisions. Courts in the British Virgin Islands hear a good share of all disputes involving international joint ventures.

The most radical form of G2G is the delegation agreement: the government of one country providing a public service in another, which in effect cedes part of its sovereignty. In 2003 the government of the Solomon Islands, concerned at rising violence and falling tax revenues caused by corruption, asked the Australian-led Regional Assistance Mission to the Solomon Islands (RAMSI) to take over law enforcement. RAMSI brought in more than 2,000 soldiers and other personnel and succeeded in establishing the rule of law.



Critics fret about accountability and democratic legitimacy. The 2005 Paris Declaration on Aid Effectiveness, endorsed by governments and aid agencies, made much of the need for developing countries to design their own development strategies. And providers open themselves to reputational risk. British police, for instance, have trained Bahraini ones. A heavy-handed crackdown by local forces during the Arab spring reflected badly on their foreign teachers.

Local governments, however, both have greater incentives to trade and face fewer barriers. Rapid urbanisation creates urgent practical problems for cities: in 2009 the urban population in developing countries stood at 2.5 billion, a number expected to double by 2050. And, unlike countries, cities are not hobbled by issues of sovereignty.’

If this trend is genuine, there are both threats and opportunities for those interested in rights-based development. The threats are pretty obvious – the spread of bad ideas, the dilution of local accountability, the encroachment on national sovereignty, the Bahrain police thing.

But there are plenty of opportunities too. Involvement of European and North American governments provides a new advocacy target, targeting them to promote social and environmental safeguards, transparency, accountability etc in their G2G work (could start with Bahrain…..).

INGOs and other aid organizations could also get more proactive and push the right kind of G2G, linking up developing country governments, whether national or municipal, with positive experiences in other countries on everything from social protection to reducing road traffic accidents. I have a feeling this kind of signposting and linking is going to become an increasingly important part of our work. Bring on the exchange visits to see the speed bumps of London…..

The underlying assumptions of the Economist piece envisage a technocrats’ dreamland of exchanges of ideas and blueprints between countries, leading to progress and stronger institutions. Trouble is, the people who actually study institutions ( the ‘thinking and working politically’ crowd, Matt Andrews etc) say this isn’t how it works at all – instead, local problems lead at best to ‘hybrid’ solutions in which lessons from elsewhere are adapted to ‘go with the grain’ of local tradition. That would suggest this supposed wave isn’t going anywhere fast. Wonder who will be proved right?



February 17, 2014
Duncan Green