Development Cooperation Policy: a time inconsistency approach

Development Cooperation Policy: a time inconsistency approach

A time inconstistancy between the objectives and tools of development cooperation results in the failure of development initiatives

The paper considers why development cooperation policy has failed to meet the goals it has set itself. It analyzes cooperation policy based on theories of economic policy, which focus on the problem of time inconsistency and the impact of political decisions on economic choices. The fundamental idea is that development cooperation policy, like other areas of economic policy, takes for granted an intrinsic irreconcilability between the timetables of cooperating governments and those necessary to pursue the actual objectives of cooperation.

This paper is organized as follows

  • the first section discusses the objectives of past and present development cooperation policy and attempts to define development according to the current historical-institutional framework. It also deals with the tools that have been historically used to carry out development policies and their respective efficacy in achieving the pre-defined objectives
  • the second section discusses the problem of time inconsistency in economic policy
  • the third section deals with development cooperation policy as a new case of time inconsistency
  • finally the case of the Italian Development Cooperation Policy is discussed focusing on the problem of time inconsistency within private sector promotion.

    The paper concludes that the inherent discrepancy between objectives and tools of development cooperation, a product of time inconsistency, forces national governments to pursue cooperation policies that are inconsistent with the defined objectives. This leads to an eventual failure in development cooperation. It is evident, then, that an in-depth analysis of this topic remains of fundamental importance in the structural analysis of the “failures of cooperation” and of the policies necessary to avoid repeating past mistakes.

    [adapted from authors]

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