Open Letter on “Sustainability in Development”

By: João Marinotti

To the members, advisors, partners, and alumni of the
Law and International Development Society:

Over the years, LIDS has evolved from a student group at Harvard Law School into an interdisciplinary collaborative organization combining the strengths, resources, and passions of various graduate programs in the Greater Boston metropolitan area. This collaboration has led to the formation of a thriving community of individuals who are excited about the intersection of law, policy, and development. The dedication and generosity of our community has made it possible for LIDS to: (1) further the global conversation around sustainable development by hosting a yearly Symposium, in which renowned speakers reflect on critical topics in development; (2) aid development efforts through our research projects and pro bono work with leading law firms; and (3) train the next generation of development practitioners, academics, and global leaders through our alumni network, our access to internship and career opportunities, and our career development trips to New York and Washington, DC.

Building upon this legacy is a tremendous task, but one that LIDS is eager to undertake. We hope to empower our members to embrace their passions and seek out ways to make a difference in the world. We also aim to empower our organization to grow into an even more dynamic and effective institution in the world of development law and policy. To accomplish these goals, LIDS, as the Law and International Development Society, requires a robust, unified, and explicit definition of international development. This definition should and will continue to change overtime as LIDS’ conceptualization of international development evolves. The use of such a definition will allow us to allocate our financial and intellectual resources effectively in light of our growth in recent years.

For the 2019–2020 school year, LIDS has adopted the following proposal: International development is the process through which we will end poverty, protect our planet, and ensure that everyone can live in peace and prosperity. The tripartite goals within this definition resemble the goals listed by the UNDP in its analysis of the UN’s Sustainable Development Goals (SDGs). This similarity is not accidental. International development must account for the sustainability of social, environmental, and economic systems if development solutions seek lasting results.

What, then, is the exact relationship between sustainability, including the SDGs, and international development? According to Pedro Conceição, Director of UNDP’s HDR Office, the SDGs provide a destination in the form of 17 attainable global goals while development, on the other hand, provides the tools to get there. LIDS should adopt this approach to development and use the UN’s SDGs to define our ultimate law and policy “destinations” while focusing on the development means through which we will reach them.

We look forward to working with our members, partners, and mentors to continue building upon the traditions and legacy of LIDS. We hope that the adoption this definition of international development, will empower LIDS to promote further intellectual, practical, and interdisciplinary discussions across Harvard and beyond.

About the blogger: João Marinotti is Co-President of the Law and International Development Society.

Follow Harvard Law and International Development Society on Facebook and Twitter (@HarvardLIDS).


Lex Rex vs. Rex Lex: A Hungarian Parable

By: Peter Vincze

For many of us who live far from our native lands, no day passes by without us thinking of the place we left behind. I tend not to palaver about Hungary or the challenges the country has been facing for nearly a decade. However, my approach changed forever on September 12, when the EU Parliament invoked Article 7 of the Treaty on European Union against Hungary for its contemptuous disregard of democratic norms and the rule of law. Such solemn measure could potentially lead to stripping Hungary of certain rights within the bloc including voting. Following this poignant event, I strongly attest it is the onus of every patriot to wave a warning flag and do whatever one can to halt further harm to our frangible democracy. Citing a revered poet: “On your feet, Magyar, the homeland calls! The time is here, now or never!”[1]

Following my undergraduate studies, I was eager to broaden my perspective and learn the practicalities of international relations, the focus of my academic endeavors, by enrolling in a Master’s program abroad. However, I left Hungary with the conviction that one day I would return with wisdom and prowess to serve the country that has given me so much. During those few years I studied outside Hungary, tectonic shifts occurred not only in the Middle East, the region I chose to specialize in, but also back in my homeland that altered my career aspirations once and for all.

As the Arab Spring swept through the Middle East, Hungary encountered another type of maelstrom. The country was severely hit during the 2008 financial crisis resulting in an abysmal economic contraction of 6.4 percent. Subsequently, the Hungarian Socialist Party, the largest center-left force in Hungary’s political gamut, experienced its worst defeat in the history of the country’s Third Republic during the 2010 parliamentary elections, whilst nationalism and the extreme right-wing Jobbik party gained momentum. Hungarians breathed a sigh of relief when, in lieu of Jobbik, the then moderately conservative Fidesz led by Viktor Orbán seized power. Little did we know at that point that the country was headed down a darker path.

Mr. Orbán, buttressed by an unprecedented two-third majority in parliament, took no respite to reshape Hungary on his and his party’s whim, which led to the meteoric decimation of democratic checks and balances and defilement of the rule of law. According to the Worldwide Governance Indicators, a joint World Bank Group and Natural Resource Governance Institute endeavor, Hungary’s rule of law index plummeted by approximately 10 percent between 2012 and 2017.[2] Findings of the World Justice Project’s (WJP) Rule of Law Index showcase a similar trend between 2017-2018 and 2012-2013. Consequently, according to WJP, Hungary now ranks lowest among high-income countries vis-à-vis the status of the rule of law. [3] Among the eight dimensions measured in WJP’s Index, Hungary shows alarming tendencies with regards to constraints on government powers, open government, regulatory enforcement, and civil justice.[4] Such findings alas come as no surprise.

Since Fidesz’s ascendancy to power, Hungary has experienced disquieting developments regarding the expansion of executive puissance, crippling of democratic checks and balances, political intrusion into disparate branches of the government, and suppression of the press and civil society as well as their subordination to the executive branch. Moreover, fast-tracked legislative solutions have circumvented democratic processes, and curtailed stakeholder participation and parliamentary and public deliberations, thereby debilitating governmental transparency and citizen empowerment.

Furthermore, regulations have been ineffectively or unfairly enacted or enforced. Hungary’s new constitution, for instance, was ratified with major lacunae on issues crucial to safeguarding the rule of law following a nine-day parliamentary debate. These legal gaps were purposefully filled with the so-called cardinal laws that require two-third parliamentarian majority to be adopted or amended. With such enactments, the Fidesz Government made it unattainable for any simple parliamentary majority to transmute any of the provisions encapsulated in these statutes. As the government passed these cardinal laws to regulate the key dimensions of a democratic society, such as freedom of the press, electoral legislations, and minority rights, Fidesz ascertained that the party’s values are cemented into the society for years if not for decades to come.

Finally, Hungary’s civil justice system has become crippled by protracted delays in the resolution of court cases, stymies in enforcing court adjudications, political interference with judicial appointments and decision-making, discriminatory practices targeting marginalized groups, and the paucity of accessibility, probity, and efficacy vis-à-vis alternative dispute resolution mechanisms. The mandate of Hungary’s highest court, the Constitutional Court, has been significantly encumbered by the newly-adopted constitution as well as ensuing amendments. An expansion of Constitutional Court membership from 11 to 15 judges has rendered an idiosyncratic opportunity for Fidesz to appoint four new justices to the high court, thereby tilting its neutrality for years to come.

I like to believe, the rule of law is the sine qua non of progress and development. The prevalence of the rule of law forfends, mitigates, and disincentivizes conflict, malfeasance, and violence. At the same time, it creates societal inclusion, fortifies public accountability, ascertains a just allocation of resources, safeguards public goods, and reduces corruption, inter alia. Conversely, once the rudimentary tenet of “lex rex” is assailed or infringed, social cohesion suffers, leading to grave abuses by certain interest groups that are not representative of the will of the majority.

Hungary has historically been prone to such political hijacking, and recent experiences point to a similar tendency: Approximately fifteen years in the twentieth century were ruled by democratically elected leaders. Who however thought recidivism would occur following strenuous efforts by the political leadership in the 1990s to lay the bricks of a democracy that successfully functioned for over a score of years? The Global Financial Crisis is unequivocally one of the culprits that paved the way in a frail democracy for one strongman at the helm of a coterie to “come, see, and conquer.” To avert such hijacking, we need a mature democracy grounded in a robust rule of law. What Hungary needs is the herculean effort to foster a rule of law, and this effort ought to come directly from its political elite.

Under the leadership of Prime Minister Orbán, the opposite however seems to be materializing. Unassailable by political opponents, Mr. Orbán seemingly believes “rex lex.” The unfortunate part is that Mr. Orbán used to be a vanguard of democracy and his, and his comrades’ efforts, through the establishment of Fidesz, significantly contributed to the fall of communism and Hungary’s transition to market economy. As one of the champions of nascent democratizing movements in Eastern Europe, he was even awarded a scholarship to pursue education in the UK, thanks to one of the loudest democratizing voices back then: Mr. George Soros. Mr. Orbán has apparently chosen to diverge from some of the lessons he learned about democracy earlier in his lifetime, something that became clear even during his first premiership in the late 1990s. Since the inception of his second premiership, this trend has just regressed. The liberal opposition has entirely been asphyxiated, critics have been silenced, freedom of speech has been curbed, and Mr. Soros has been declared one of the foremost personae non gratae of Hungary. Now, after Fidesz’ third consecutive election victory and the disintegration of the mere remaining considerable opposition force, Jobbik, the sole question remains: Hungary, quo vadis? While “lex rex” is in absentia, the answer cannot rest in the hands of one person. Those of us who care for Hungary must stand up to defend its democracy and future.

[1] Excerpt from the National Song [Nemzeti Dal] composed by Sándor Petőfi in 1848 prior to the outbreak of the Hungarian Revolution against the Habsburg Empire. Translated by László Kőrössy in 2004. Available at: [Accessed 16 October 2018].

[2] Kaufmann, D., Kraay, A., and Mastruzzi, M. (2010) The Worldwide Governance Indicators: Methodology and Analytical Issues. [online] Available at: [Accessed 14 October 2018].

[3] The World Justice Project (2012–2013). Rule of Law Index 2012–2013. [online] Available at: [Accessed 14 October 2018].

The World Justice Project (2018). Rule of Law Index 2017–2018. [online] Available at: [Accessed 14 October 2018].

[4] The World Justice Project (2018). Rule of Law Index 2017–2018. [online] Available at: [Accessed 14 October 2018].

About the blogger: Peter Vincze is a consultant on legal topics at the World Bank.  He aims to pursue further academic training in international development law.

Follow Harvard Law and International Development Society on Facebook and Twitter (@HarvardLIDS).

A Journey to the Hotbed of the European Migrant Crisis

By: Peter Vincze

To open the gates, or not to open the gates of their countries, that is the question. The pseudo-Hamletian query seems to resonate very well with the dilemma European policymakers face in light of the European migrant crisis.[1] Recently I have had the chance to observe the situation on the ground and how the crisis has taken a toll on the migrant population, nation states, NGOs, and other stakeholders. As co-organizer of the Harvard Humanitarian and Policy Advocacy Trip, I have travelled to Athens and the Greek island of Lesvos – the infamous locale seven kilometers away from the Anatolian shores where tens of thousands of migrants have been crossing over to the European Union since the inception of the crisis in 2015. It should not come as a surprise that the trip was arresting, yet the situation on the ground is grievous, to say the least.

As carnage exacerbated in Syria and ISIS seized new territories in the Middle East and North Africa, hundreds of thousands of migrants boarded rubber boats and other rudimentary forms of naval transportation to reach the Mediterranean shores. Greece, in the midst of its sovereign debt crisis, was inevitably caught off guard by the massive influx of migrants. Its understandable unpreparedness coupled with economic and social hardship, political instability, rise of the extreme right, and mounting security concerns created a crucible for migrants, Greeks, and all other entangled parties.

Notwithstanding the quandary, Greek authorities initially responded positively to the aforementioned Hamletian question: Both government and opposition assented that humanitarian considerations abrogate all other facets in the crisis. Reception centers and refugee camps were set up nation-wide. Multifarious bureaus at the helm of migrant matters were integrated into a single, newly-established Ministry of Migration Policy. Various legislative alterations were implemented to ameliorate migrant protection and align Greek statutes with European standards.  Clemency towards squatters was exercised. Despite all propitious measures and widespread Greek benevolence, it became apparent early on that the Greek Government could not unilaterally cope with the magnitude of the humanitarian crisis.

The humanitarian disaster in Greece precipitated UNHCR to intervene and declare emergency inside the European Union, whilst the EU deployed its own humanitarian response division, the Civil Protection Mechanism, inside the continent for the first time. Government and IGO efforts were augmented by an unprecedented number of international volunteers as well as a plethora of international and local NGOs. Regrettably, goodwill and eagerness to assist has led to a situation, I would characterize, if I may, by the hoary statement: Too many cooks spoil the stew.  Obscurity around stakeholders on the ground, their responsibilities and prowess, as well as dearth of coordination among them have been debilitating operational efficacy. Disconnect between local and international NGOs has further aggravated the crisis. On the one hand, international NGOs, with well-grounded experience and established funding channels, frequently struggle with bureaucratic hurdles, distrust, and detachment from the situation on the ground.  Smaller NGOs, on the other hand, tend to successfully secure trust among migrants and possess a rather people-centric, hands-on modus operandi. They are nonetheless prone to funding constraints and, occasionally, that of expertise.

Gargantuan levels of humanitarian aid influx have not been vulnerary either.  Pundits have denominated the situation “the most expensive humanitarian response in history” with over $800 million allocated since 2015. Accordingly, circa $14,000 per migrant could have been allotted to cover associated expenses. Mismanagement of funds has however led to an estimate by ECHO, the Directorate-General for European Civil Protection and Humanitarian Aid Operations, that up to $70 had been wasted out of every $100 spent.[2].

Amidst these challenges, the objective of our trip was to ameliorate the sojourn of migrants in Lesvos and potentially in other similar settings by ideating on sustainable solutions. In order to do so, we kicked off our trip with consultations with the Greek Ministry of Migration Policy, Asylum Services, Coast Guard, and Police as well as foreign dignitaries representing major stakeholders in the crisis to fathom constraints policy-makers encounter and perspectives stakeholders maintain. Subsequently, we journeyed to Lesvos to attain first-hand experiences and insights from denizens of three migrant settlements (Moria, Olive Grove, and Kara Tepe) that would facilitate our ideation process. Listening to a handful of gruesome anecdotes, our prognosis was pellucid: the cardinal challenge migrants face as they penetrate the European Union’s borders is the paucity of access to legal resources. Lack of access to legal resources debilitates migrants’ ability to learn and understand the asylum process; hence, their eventual attainment of asylum status in the European Union.

Disheartened by the plight in their home countries and bilked by smugglers, migrants embark on a treacherous journey in hopes of a better and safer life without the rudimentary understanding of the perils along the journey or the consequences of illegal border crossing. They cross over the Aegean Sea to enter the European Union on rubber or other rickety boats, if not swim across, just to be apprehended by the Hellenic Coast Guard or the European Border and Coast Guard Agency (Frontex), at the helm of monitoring the EU’s external borders. Placing humanitarian considerations aside, migrants’ act is deemed illegal, as they enter a sovereign entity in violation of its immigration laws, at unofficial entry points, often times without appropriate travel documents.

Migrants entering the EU illegally are subsequently apprehended and taken into custody in immigrant detention centers like the notorious Moria camp in Lesvos, where they must await registration and an asylum interview. The asylum interview that may take weeks to be conducted endeavors to shed light on the rationale why the migrant seeks asylum status and why s/he cannot return to her/his home country. Vulnerability plays a pivotal role in the asylum process, as vulnerable cases may be expedited and such consideration may impact migrants’ living conditions as they go through the process. Vulnerable characterization is deemed to be as crucial as, in certain extreme instances, one would even engage in self-mutilation to attain such status.

Following the evaluation of the asylum request that may also take weeks if not months, upon repudiation, migrants may resort to an even more bureaucratic appeals process. Whilst success is a rarity in such instances, migrants can easily be mired in the islands for years without any determination whether they can proceed to the mainland or be deported to Turkey. The oft-praised EU-Turkey Deal of 20 March 2016 is the culprit here. The accord has not merely culminated in an abrupt stop in the massive influx of migrants to Greece but has also resulted in thousands of migrants indeterminately stranded on the Greek islands, as it stymies migrants’ further movement until their asylum applications are gauged.

While awaiting the next steps, “urban” legends and canards have been metastasizing amongst the uninformed and occasionally illiterate masses. Access to accurate and up-to-date information is paramount to foster understanding and eliminate pertinent negative externalities. Obtaining and communicating such information is nonetheless exacting for a multitude of reasons. First, it is onerous, even for pundits, to construe relevant statues owing to intricacies stemming from the autonomy of Greek regulations and that of the acquis communautaire as well as the fluidity of information.  The velocity by which information changes is drastic:  while statues are relatively immutable, procedures and practices that often fill in legal lacunae and explicate particularities could, in extreme cases, even be altered overnight. Second, there is a scarcity of legal resources i.e. lawyers and legal aid organizations, especially the ones who are able and willing to practice law in such contexts in Greece. Third, dissemination of information faces challenges due to technological as well as linguistic and cultural barriers.

Stakeholders have not been lax in stepping up their efforts in light of the atrocious situation on the ground.  The Greek Asylum Services and Ministry of Migration Policy, in collaboration with UNHCR and other IGOs, have assembled disparate websites, brochures, and other written and electronic resources for asylum-seekers. Local and international NGOs, regardless of their limited resources and constraints in operating under a foreign jurisdiction, have been coordinating with volunteer lawyers to provide pro bono legal services and translators to break down language barriers. Existing resources however are inadequate. It is evident from our sojourn that innovative approaches are needed to ascertain access to legal aid, thereby facilitating migrants’ journeys while at the same time alleviating peripatetic pressures on host countries.

Going forward, all eyes will be on the Greek Government to take action and find a much-needed remedy, as international agencies as well as local NGOs are increasingly receding from the situation.  It merely begs the question whether a government still embroiled in one of the greatest economic malaises of our time will have the much-needed resolve and resources to meet expectations and fill lacunae. There is so much at stake. As one politician has sagaciously advised on the situation: “[e]very person who comes is a human being and has the right to be treated as such.” Now, whether Greece and other European countries will see migrants as human beings, especially those in dire need, will shape the future of Greece and the European Union in the years and decades to come.

[1] For the purposes of this article, the term “migrant crisis” and “migrant” will consistently be utilized. The used terminology does not intend to differentiate between individuals who are forced to vacate their homes and those who voluntarily leave their countries in hopes of better living conditions abroad. The term “migrant,” in this context, simply refers to people who have moved or are in the process of moving from one sovereign to another.

[2] The Guardian (2017).  Where did the money go? How Greece fumbled the refugee crisis.  [online]  Available at: [Accessed 29 April 2018].


About the blogger: Peter Vincze is a consultant on corporate governance-related topics at the World Bank.  He aims to pursue further academic training in international development law.

Follow Harvard Law and International Development Society on Facebook and Twitter (@HarvardLIDS).

Development Versus Anti-Development: Your Choice Matters

By: Sabrina Singh

Given the immediate relevance of development policies to everyday life, it is not surprising that the idea of development is also a site of political contestation. Your choice to engage or disengage—and in what manner—implicates you in this politics.

The city of Kathmandu in my home country Nepal had been reeling with protests by local ethnic communities against the government’s road expansion development project for several weeks. The debate is framed as follows: On the one hand, there are the ‘developers’—political and technocratic leaders who have inherited a country sick of political turmoil and hungry for economic growth. On the other hand, there are the ‘anti-developers’—a mixture of ethnic minorities and heritage conservation activists skeptical of easy claims to development. The former want to build roads; the latter do not want to concede their land and heritage to development projects. The stakes are high on both sides.

Although these protests are triggered by recent events, they are not new. Development is a living, breathing phrase in places like Nepal and has been since the post-World War II global order. The Nepali word “bikaas” simultaneously means progress, in a normal sense of the word, as well as “development,” in the sense of the institutions and policies that make up this global governance system. It is as much a word of everyday parlance for many Nepalis as it is a career choice for many in the West and elites of the Global South. But leaving aside a debate about the merits of this particular policy, what do these protests and rhetorics reveal, and what do they mean for young students and practitioners on this side of the Atlantic?


To The ‘Developers’: Development For Whom?

My seventy-something-year-old grandmother has lived in the heart of Kathmandu valley all her life, as did many of her ancestors. She is a Newar woman, of the ethnic group protesting against the government’s infrastructure projects. Like many other Newari women, she has watched the ancestral land beneath her get parceled out to her husband and his brothers. She has watched as these lands were sold; as fallow fields were used for new buildings, roads and settlements. For her, land is not just land. It is tied to her community, identity, her sense of pride and dignity.

It may be tough for some of us to understand, and I myself have struggled at times to recognize, but development can never be justified for development’s sake. Development decisions leave tangible marks on people’s identity. Resources are not merely assets to be ‘used,’ but they are markers of relations and historical identities. And because of this, there are always winners and losers to every development decision, policy, or law. Because of what is at stake, an analysis of equity and justice must figure in every economic development decision.

I want to go one step further and argue that an analysis of equity and justice must figure in the very career choices we make as emerging lawyers. For many of us reading (or writing) this article, we can afford to switch these conversations on and off. Those whom we ostensibly aim to serve (or at least affect) through our work are ‘out there.’ Over time, it may be easy to forget that our choices matter. By ‘choice,’ I refer not to that between a “public interest” job in an INGO or a “private practice” job at a law firm. Those categories might hide as much as they reveal the state of international development and law.

Rather, I want to ask questions about our own choices in the way we approach each of our engagements internationally— some of us, for example, think we have to work in a developing country for one summer, others think we will ‘transition’ into an international social justice career. Is it possible that many of our choices are more about escapism than the people we want to ‘develop’? Is it possible that we are looking at international development as a ‘career,’ or a path of least resistance, rather than as a practice that affects everyday lives? Can we relentlessly strive for ethical and political practice in our international engagements despite the lack of answers on what that practice may look like?


To The ‘Anti-Developers’: Can You Work Past Neoliberalism?

However, this is not the time for disengagement and apathy. This is not an article about the many flaws or the eventual futility of international development. Let me start again with a story. Rupa Hitangi is a mother of two in a rural district called Palpa in Nepal. After years of working as a laborer in someone else’s farm and living with her alcoholic husband, she sent him to work in the Middle East. With newfound freedom and remittance sent home by her husband, she has built a small goat farm and vegetable business to support herself and her children. A self-made woman, she does not understand the complex system of international development, but her issue is basic: the right to make a decent living. This is the story of many in Nepal, most pressingly outside of the capital city of Kathmandu.

The need for basic economic security, poverty reduction, and higher income is real. It is irresponsible to say that the international development system is deeply flawed (see part one of this article), a product of neoliberalism, and then resort to cynical inaction. We need to be nuanced in our critique of the development concept, and part of the critique is to recognize our own power in this global neoliberal world order. Many who are critical are most often educated, young elites of the Global South like myself, who then resort to complete disengagement, apathy, or armchair theorizing. Many might even have worked in the international development field for a long time, and have suffered from cynical burnout. Many young Nepalis today find no saving grace in our government, politics, or youth movements. It becomes better to stay in a state of inaction in a foreign country than to go home to engage with such messy, tainted institutions.

What unites the ‘developers’ described above and these ‘anti-developers’ is the same lack of ethical and political engagement with this (neoliberal) world order that we are already positioned in. To this group of ‘anti-developers’, I ask: what claims to an ‘authentic voice’ of developing countries are we making? How can we build strategic practice and communities that can change entrenched institutions? In a practical sense, can we take that risk to work in and against messy, tough places like the government of Nepal?


A Call for Critical Engagement

In identifying myself with both groups, I am highlighting the need for a dialogue with both sides of the debate. We need to build teams capable of approaching places like Nepal and other places of the Global South as neither destinations for career-building escapism nor doomed places to flee from, but as spaces that deserve a more genuine, critical, and justice-oriented engagement.

At the personal level, this means investment in critical self-reflection about one’s professional identity and purpose. At the institutional level, we need to invest more resources to support collaborative, two-way work between the Global North and the Global South. At the societal level, this means healthy shifts in who occupies positions of authority and power. Complete inaction or siloed innovation won’t do – a critical change in everyday practice is what we need.


About the blogger: Sabrina Singh is a rising 2L from Kathmandu, Nepal.

Follow Harvard Law and International Development Society on Facebook and Twitter (@HarvardLIDS).

LIDS Symposium Blog Series – Businesses that Alleviate Poverty

By: Peter Vincze

During Panel 1 of the LIDS 2017 Symposium, Kevin Saunders, Lizzie Merrill, and Eric Solomonson shared their insights on diverse initiatives and approaches of four companies with the common objective of alleviating poverty. Accion International is a non-profit organization that aids microfinance institutions rendering financial services to low-income clients all across the globe. Ignitia and SeKAF are two Ghana-based NGOs that produce hyper-local, high-precision tropical weather forecasts and shea-based products through environmentally friendly and socially inclusive methods, respectively. One Acre Fund offers asset-based loans and agricultural trainings to eradicate poverty through the support of small-scale farmers in East Africa.

One of the most memorable points of the hour-long discussion that Kevin Saunders raised and Lizzie Merrill and Eric Solomonson echoed elaborated on the triple challenge (capital, channels, and data) lending institutions face in the international development arena.

The capital challenge stems from the fact that the level of demand for capital influx at the community level hardly ever equals the niveau of capital supply provided by lending institutions. The shortage of supply chiefly attributes to the fact that aid agencies themselves often struggle with obtaining and maintaining a constant influx of capital to their reservoirs that can later be allocated to their clients. Steady investment and working capital are however indispensable, especially for microenterprises and SMEs, to establish and/or expand their business activities, leading to a gargantuan demand for capital. As the traditional way to satiate this need through the philanthropic community is no longer satisfactory on its own, alternative, concerted ways need to be sought to ascertain proper funding for lending institutions.

The challenge of channels refers to difficulties of aid agencies in reaching individuals and businesses in developing economies that strive for access to financial services. Financial services are unavailable in many rural and even urban areas and, even if they are present, associated costs hinder accessibility. Main obstacles for lending institutions in these contexts are enhanced transaction costs, paucity of traditional collateral and basic requirements for financing, as well as geographic vicinity. Dearth of access to financial resources is a key impediment for entrepreneurs who possess the ability and required skills, as they cannot translate their deftness into sustainable outcomes. They are prone to resort to non-formal financing like moneylenders (“loan sharks”), traders, or even relatives and friends, and other high-risk financing mechanisms that further inhibit the operation of aid agencies. Cell phones and other technological developments can eventually mitigate challenges; access to these technologies is however also scarce, leading to a vicious cycle.

Accurate and comprehensive data is the sine qua non to evidence-based, responsible decision-making. Access to veracious and actionable data is particularly challenging in the development arena where data collection and reporting face numerous obstacles and can easily be hijacked for economic and political gambits. Among the numerous factors that impede or constrain data collection In developing contexts are low propensity of respondents, low standards in bookkeeping, deficiencies in law and order, rapid institutional alterations, size of informal sectors, and cultural constraints. Even in the unlikely scenario that data is reported accurately and fully, access to statistics, especially for non-public entities, be it large or small in size, is laborious and costly if not impossible. Asymmetrical and/or incomplete information poses risks, as institutions are unable to make optimal decisions vis-à-vis credit, inventories, clients, etc.  Technology, through the collection of mobile and satellite data, again has the potential to yield a breakthrough; however, dearth of access to such, in this context as well, perpetuates the issue.

While smaller donor agencies are more prone to the above-mentioned challenges, no lending institution is exempt from them, regardless of size or prevalence. My personal experience draws me to the World Bank, which constantly seeks solutions for all three issues.[1] The Bank’s coquetry with blockchain technology is one emerging approach to find remedies to the channels challenge. The recently launched Development Data Hub with provision of easily accessible and accurate development statistics aims to mitigate data challenge. The Bank also endeavors to tackle the challenge of capital, which, I would aver, is the most alarming in the current development policy landscape, with alternative ways of financing. Let me elaborate.

Funding of the World Bank (IBRD and IDA) relies on direct contributions of member countries.  Every member state renders a certain amount of initial capital to the institution upon accession that can later be expanded. Voting power of member states depends on the amount of contribution the country has made. Share allocation as well as voting power differs in IBRD and IDA.

In addition to bond issuance on international capital markets, IBRD relies on contributions from its 189 member states. IBRD’s capital stock has to be intermittently expanded through capital increases to replenish accounts drained by accelerated disbursements and/or to expand operations. A roadmap for the most recent general capital increase was assented to during the 2015 Annual Meetings in Lima with a decision to be made during the 2017 Annual Meetings. Owing to the change of the U.S. political landscape, the kismet of the general capital increase is however currently uncertain. During the 2017 Annual Meetings, U.S. Treasury Secretary Steven Mnuchin, representing the largest shareholder of the World Bank, rejected the idea. Instead, he urged the institution to transform its operations to effectively reallocate its existing capital and gestate a framework that would allow a financially self-sustaining Bank.

IDA capital replenishment occurs triennially. Within the framework of the past IDA replenishment, IDA 18, member states have made the most ambitious set of commitments to date with a historic $75 billion replenishment package that transforms IDA’s financial model.  Despite the unprecedented pledge, IDA’s future is currently irresolute, as the Trump Administration is rolling back several Obama-era commitments. In an effort to secure IDA finances, the institution has commenced penetrating capital markets through bond issuance for the first time in its history despite lingering criticism.

The future seems to be brighter though than one would think. Even if traditional financing sources are reconsidered, new emerging international development actors seem to be willing and able to step in to finance lending institutions as well as development projects directly. China, India, Russia, South Africa, Turkey, the Arab donors inter alia have for years been enhancing their efforts to fill potentials vacuums through unilateral, bilateral, and multilateral initiatives.  China, for instance, has recently increased its contribution to the Bank from 2.77 percent to 4.42 percent to become its third largest shareholder. In addition to state actors, the burgeoning of a heterogeneous smorgasbord of non-state actors can also be witnessed in international development circles ranging from philanthropic foundations (e.g. Bill & Melinda Gates Foundation), to global funds (e.g. The Global Fund to Fight AIDS, Tuberculosis, and Malaria) and enterprises engaging in corporate social responsibility.  These private actors not only bring a new set of perspectives to the table, but may also be financial heavyweights in particular sectors or regions. In this context, the work of organizations such as Accion International, Ignitia, SeKAF, and One Acre Fund is more salient than ever. Not only do they work to persuade the commercial world to penetrate the development arena, but also they seek to foster social inclusion, impact investing, the provision of management services and technical assistance, inter alia that will all assuage the triple challenge of capital, channels, and data.

[1] The term ‘World Bank’ refers to the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).  The World Bank Group comprises of five institutions:  International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).  This analysis merely focuses on the World Bank.

About the blogger: Peter Vincze is a consultant on corporate governance-related topics at the World Bank. He aims to pursue further academic training in international development law.

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LIDS Symposium Blog Series – Faizal Karmali on Networked Approaches to Complex Global Problems

By: Seth Norris

Mr. Faizal Karmali (Associate Director, Network Engagement & Bellagio Programs, Rockefeller Center) gave the closing address at the LIDS 2017 Symposium. His speech highlighted the increasing importance of working across discrete global networks to effectively implement international development projects. Specifically, Mr. Karmali looked at the relative influence of individuals, government, civil society, and the private sector across the networks of capital, expertise and influence.

Mr. Karmali began his talk by noting that government and civil society are by far the largest sources of capital investment for international development projects. However, the contributions of these two groups is by no means equal, with the total giving of the top 50 NGOs still falling 6 billion dollars short of the budget cuts to USAID proposed by the Trump White House.

Next came a discussion of international networks dedicated to providing expertise for development projects, with government and civil society being cast as the predominate providers, given that funds directed to private sector consulting firms through USAID are still merely extensions of government backed development finance.

Finally, Mr. Karmali touched on influence networks, arguing that the government and private sectors have traditionally held the most sway. This influence can have both positive and negative elements, as Mr. Karmali highlighted by recounting the effect that US subsidies of ethanol production have had in increasing global food prices, partially contributing to the outbreak of events like the Arab Spring uprising in 2010.

Mr. Karmali concluded by highlighting several NGOs who have succeeded in working across networks to effectively implement international development projects, including  BRAC, the world’s largest NGO, and the Aga Khan Development Network, which currently has operations in over 30 countries.  By pursuing both non-profit and for-profit endeavors, these NGOs have been able to dramatically increase the effectiveness of their development projects by pooling resources across the networks of capital, expertise and influence. Mr. Karmali ended his remarks by encouraging those in attendance, whether they aspired to work in international development or not, to consider what they might do to further international development goals around the globe.

About the blogger: Seth Norris is a member of the JD Class of 2019 at Harvard Law School. Before coming to Harvard, Seth earned his B.A. in East Languages and Literature from Yale University.

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