NN41, December 2008
The New Politics of Partnership: Peril or Promise?
Information Asymmetries in North-South Development and Research Partnerships
By Yasin Janjua, Consultant, Islamabad
Email: yasin.janjua@gmail.comThe quest for bridging the development gap between North and South stirred up the need for continuous dialogue through development collaborations which cover almost all spheres of life. The premise behind this new essential relationship is summed up by Jean-Philippe Thérien (2004) in these words: ?the countries of the North, with only 15% of the world?s population, control 80% of global wealth, while nearly three billion people live on less than two dollars a day.? Given the North-South resource gap, collaborations in the form of assistance in development work, research partnerships, advocacy for reform, and policy formulation have been implemented since the 1960s [1]. Under rules of engagement set forth by the funding agencies, the North tries to create symmetry in the collaborative arrangements; however, the relationships are wedged between asymmetries which have not been adequately documented in the literature that emerged recently on this topic. These relationships are governed by the following visible or invisible asymmetries: asymmetry in resources; asymmetry in socio-political acceptance; asymmetry in research tools; asymmetry in knowledge generating systems, and asymmetry in information. Most collaborative arrangements pay attention to these disparities by allocating resources for capacity building through training, sharing of research tools and codified knowledge, necessary software and hardware, opportunities for Southern partners to publish in collaboration with Northern partners, and deployment of effective communication strategies. While there is a general consensus among Northern partners, along with socio-political backing from their communities, that these partnerships are beneficial for bridging development gaps between development poles, yet in some Southern countries these partnerships are viewed with suspicion by the governments and society at large. Whether these qualms are resolved overtime largely depends on two factors: a) if the outcomes of the partnership help bridge or worsen the development gap; and b) if the communication strategies are fully deployed to communicate outcomes in the South or not.
In its worst form, asymmetry of information undermines the collaborative relationship in many ways which has not been documented. The theory of information asymmetries is fully applicable to North-South collaborative research relationships. Before, understanding the nature of information asymmetries one must understand the nature of relationships and the environments in which these are worked out. Research partnerships have recently emerged as a form of requirement rather than a necessity. In order to fulfil this requirement the North has to find suitable partners in the South and vice versa. While utmost care is taken in selecting partners, the distribution of information between Northern and Southern partners is asymmetric which subsequently gives rise to adverse selection and a possible moral hazard ensues. In case of research partnerships, in an ideal setting, the North enters the relationship with an altruistic motive to help the South in filling research gaps for policy making with an ultimate objective of bridging the North-South divide. There is also a desire to gain insight into social, economic, political, moral, as well as ethnocentric and anthropological relationships that weave and govern the South?s behaviour and its outcomes. The analysis of these outcomes is not only limited to the decision making processes but also covers their wider influence on ways in which South acquires knowledge, lives, acts, produces, and spends. It also helps them to get access to geographic areas for conducting research where North cannot so easily reach. The latter on the other hand enters the relationship with the intent to; bridge its resource gap; learn from the North?s experiences; benefit from large scale communication and publication opportunities; gain access to capacity building opportunities; and of course to build its own profile. Sometimes, these altruistic motives are overcome by human passions and the outcomes of the partnership are found to be less than ideal.
The Northern partners receive their funding from their government?s bilateral donor agency or a multilateral organization. Recently, the funding agencies pledged to increase coordination among them for aid effectiveness under the Paris declaration; however, similar to information asymmetries between North?South, an information asymmetry exists among the funding agencies in the North as well. At times, one agency may try to acquire a prominent place among its peers. If it decides to bid for a top funding slot in a developing country and increase its aid commitment. This triggers adverse selection and a possible moral hazard in the form of an undue competition among Northern funding agencies who vie for more leverage in policy influence in a developing country. This may not only undermine the spirit of the Paris declaration but also the quality of input. As funding agencies compete with each other they may select the wrong partner in the South under the influence of information asymmetries. It must be noted that due to lack of capacity there are very few agents in South who are capable of delivering in a partnership while crooks are popping up all the time (the reverse may also be true; however, here the discussion is limited to Southern partner). Once adverse selection of an agent occurs, the moral hazard can start. If the Southern partner does not fully institutionalize the terms and conditions of the partnerships, the arrangement and its purpose fail which is not in the interest of either party. This deficiency in the arrangement emerges from information asymmetries which are not realized at the time of initiating a partnership. Some funding agencies therefore consider the quality of partnership rather than its size or the amount of funding involved.
The NGOs in South were created due to the fact that government did not deliver; hence, civil society stepped in to fill the gap. However, realizing the size of foreign funding involved and lucrative terms and conditions of foreign travel and training, many NGOs have been created by the government or by ex-bureaucrats. Hence, the culture of red tape, suppression of voice and accountability, and lack of transparency prevail even in those NGOs which were supposed to support these ideals. In some instances, labour laws and individual rights have been violated. For example, the donor agency evaluations have revealed that several major NGOs in Pakistan repeatedly failed on gender mainstreaming. Therefore, some funding agencies have made it binding on the Southern partner to provide health insurance, maternity and paternity leaves, gender mainstreaming, and opportunities for capacity building to their employees. It is also possible that the institution in South selected for the partnership did have the ability to deliver and was already in a North-South collaborative arrangement. It did not have the capacity to undertake a new partnership and subsequently deliver the results. In case other Northern agencies, under the influence of information asymmetries, also open up their wallets for the same Southern institution without realizing its capacity, the new partnership may fail. It is worthwhile to point out the inability of Southern NGOs rapidly to expand in contrast to the public sector which on the other hand operates on a very large scale. The inability of NGOs to expand emanates from the fact that most of them are personality driven while the government is not. In the past when trainings and capacity building were done in public institutions the government was able to retain its staff up to a certain period of time. However, in case of collaborative partnerships in the private sector the personnel either do not return after training in foreign universities or head off for better opportunities in multilateral organizations. Lack of staff retaining mechanism and policies in NGOs is also a primary factor in this respect. Therefore, capacity building is not achieved in the real sense and a contradiction remains. It is worthwhile to note that the high level corruption which was hallmark of most public sector organizations has crept into not-for-profit NGOs as well. Most Southern NGOs thrive on foreign funding. Neither do they have their own resources nor do they receive funding from their own governments or private philanthropy at home. In order to build a sound financial backbone they might resort to over-invoicing, false expenditure reports, and wrong exchange rates for budgeting. Unfortunately, the funds are channelled away from the project which is of course not in the interest of the principal partner. This is another form of moral hazard against which there are no checks if the Northern partner does not conduct a regular audit. Usually, this happens if Northern partners have a limitation to conduct an audit in another country. As donors coordinate among themselves while funding the public sector, they should also adopt a similar strategy for the NGOs. The funding agencies must require full financial audit of all NGO projects in their partner institutions.
Footnote
[1] See Royal Netherlands Academy of Arts and Sciences (2002)
Bibliography
Allsop, Terry. 2004. ?Learning from North-South Research Partnerships in Open and Distance Learning.? Paper presented at Third Pan-Commonwealth Forum Conference on Open Learning, Dunedin, New Zealand, July 2004.
RNAAS. 2002. ?North-South Research Cooperation.? Proceedings of International Conference held on December 3, 2001. Amsterdam: Royal Netherlands Academy of Arts and Sciences
Thérien, Jean-Philippe. 2004. ?The Politics of International Development: Towards a New Grand Compromise?? Economic Policy and Law, Journal of Trade and Environment Studies, Special Issue No. 5.
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