Some governments also include military assistance in the notion "foreign aid", although many NGOs tend to disapprove of this. Official development assistance is a measure of government-contributed aid, compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development OECD since The DAC consists of 34 of the largest aid-donating countries.
The concept of development aid goes back to the colonial era at the turn of the twentieth century, in particular to the British policy of colonial development that emerged during that period. The traditional government policy had tended to favor laissez-faire style economics, with the free market for capital and goods dictating the economic role that colonies played in the British Empire.
Changes in attitudes towards the moral purpose of the Empire, and the role that government could play in the promotion of welfare slowly led to a more proactive policy of economic and developmental assistance towards poor colonies. The first challenge to Britain was the economic crisis that occurred after World War I. Prior to the passage of the Colonial Development Act, the doctrine that governed Britain and other European colonizers with their territories was that of financial self-sufficiency.
What this simply meant was that the colonies were responsible for themselves. Britain was not going to use the money that belongs to the metropole to pay for things in the colonies. The colonies did not only have to pay for infrastructural development but they also were responsible for the salaries of British officials that worked in the colonies. The colonies generated the revenues to pay for these through different forms of taxations. The standard taxation was the import and export taxes. Goods going out of the colonies were taxed and those coming in were also taxed.
These generate significant revenues. Apart from these taxes, the colonizers introduced two other forms of taxes: hut tax and labor tax. The hut tax is akin to a property tax today. Every grown up adult male had their own hut. Each of these had to pay a tax. Labor tax was the work that the people had to do without any remunerations or with meager stipends. While this was going on, Britain experienced major unemployment rates.
Parliament began to discuss ways in which they could deal with Britain's unemployment rates and at the same time respond to some of the urgent needs of the colonies. It was a major shift in colonial development. The doctrine of financial self-sufficiency was abandoned and Britain could now use metropolitan funds to develop the colonies. By the late s, especially after the British West Indian labour unrest of — , it was clear that this initial scheme was far too limited in scope.
A Royal Commission under Lord Moyne was sent to investigate the living conditions in the British West Indies and it published its Report in which exposed the horrendous living conditions there. Amidst increasing criticism of Britain's colonial policies from abroad and at home,   the commission was a performance to showcase Britain's "benevolent" attitude towards its colonial subjects.
Further Acts followed in , and , dramatically increasing the scope of monetary assistance, favourable interest-free loans and development assistance programs. Development aid was aimed at offering technical solutions to social problems without altering basic social structures.
The United States was often fiercely opposed to even moderate changes in social structures, for example the land reform in Guatemala in the early s. In at the end of the Korean War , the incoming Eisenhower Administration established the Foreign Operations Administration FOA as an independent government agency outside the Department of State to consolidate economic and technical assistance. In , the Senate conducted a study of foreign aid with the help of a number of independent experts. The result, stated in a amendment to the Mutual Security Act, declared that development in low-income regions was a U.
Kennedy 's support, which retained the policy of international development as an independent U. The volume of international aid to developing countries called " Third World " at the time grew dramatically from the s. This aid came mainly from the US and Western European countries, but there were also significant contributions from the Soviet Union in exchange for overseas political influence in the context of the heightened global tensions of the Cold War.
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The practice of extending aid to politically aligned parties in recipient nations continues today; Faye and Niehaus are able to establish a causal relationship between politics and aid in recipient nations. Faye and Niehaus discovered that the greater the degree of alignment the recipient party has with the donor entity, the more aid it receives on average during an election year. The Development Assistance Committee was established in by the Organisation for European Economic Co-operation to coordinate development aid amongst the rich nations.
A resolution decreed that:. The Committee will continue to consult on the methods for making national resources available for assisting countries and areas in the process of economic development and for expanding and improving the flow of long-term funds and other development assistance to them. Development aid is often provided by means of supporting local development aid projects.
In these projects, it sometimes occurs that no strict code of conduct is in force. In some projects, the development aid workers do not respect the local code of conduct. For example, the local dress code as well as social interaction. In developing countries, these matters are regarded highly important and not respecting it may cause severe offense, and thus significant problems and delay of the projects.
There is also much debate about evaluating the quality of development aid, rather than simply the quantity. For instance, tied aid is often criticized as the aid given must be spent in the donor country or in a group of selected countries. Tied aid can increase development aid project costs by up to 20 or 30 percent. There is also criticism because donors may give with one hand, through large amounts of development aid, yet take away with the other, through strict trade or migration policies, or by getting a foothold for foreign corporations.
The Commitment to Development Index measures the overall policies of donors and evaluates the quality of their development aid, instead of just comparing the quantity of official development assistance given. Although development aid rose in to the highest level ever recorded, a trend of a falling share of aid going to the neediest sub-Saharan African countries continued.
The top 10 DAC countries are as follows. European Union countries that are members of the Development Assistance Committee gave 0. Albert Hirschman's Exit-Voice-Loyalty model can be used to understand how certain policy changes affect the growth of a nation and the change of bargaining power inside it. Clark et al. Albert O. If the individual in a chooses the former, they simply stop buying the product and inflict a revenue drop that forces the firm to either correct their mistake or cease to exist. This will force the firm to fix their lapse, but it will not suffer a decline in revenue. When a government changes a policy that now has a negative effect on the welfare of some citizens, or is already being unresponsive to a deleterious situation, the citizens have the same 3 choices of response as before.
If the state receives international aid, it is less dependent on the tax revenue that it collects from its constituents. A higher level of fiscal independence on the part of the state decreases the bargaining power of the citizens. Although international has done far-reaching things with respect to increasing access to improved medical care, improving education, and decreasing poverty and hunger, only in did the World Bank began to rethink its aid policy structure and begin using parts of it specifically for building up the state capability of the aid-receiving nations .
Even more recently, the Millennium Challenge Corporation , a US-based aid agency, started working with developing nation to provide them with strictly development aid as they set and implement goals for national development. While most economists like Jeffery Sachs hold the view of aid as the driver for economic growth and development, others argue that aid has rather led to increasing poverty and decreasing economic growth of poor countries. Foreign aid kills local industries in developing countries. Foreign aid creates a system of dependency where developing or poor countries become heavily dependent on western or developed countries for economic growth and development.
Aid dependence is defined as the "situation in which a country cannot perform many of the core functions of government, such as operations and maintenance, or the delivery of basic public services, without foreign aid funding and expertise". Most African economies have become dependent on aid and this is because foreign aid has become a significant norm of systems of international relations between high and low income countries across the globe.
Foreign aid makes African countries dependent on aid because it is regarded by policy makers as regular income, thus they do not have any incentive to make policies and decisions that will enable their countries to independently finance their economic growth and development. While development aid is an important source of investment for poor and often insecure societies, aid's complexity and the ever-expanding budgets leave it vulnerable to corruption, yet discussing it remains difficult as for many it is a taboo subject.
Foreign aid encourages rent-seeking, which is when government officials and leaders, use their position and authority to increase their personal wealth without creating additional wealth, at the expense of the citizens. However, there is little clear consensus on the trade-offs between speed and control, especially in emergency situations when the humanitarian imperative of saving lives and alleviating suffering may conflict with the time and resources required to minimise corruption risks.
Although aid has had some negative effects on the growth and development of most African countries, research shows that development aid, in particular, actually does have a strong and favorable effect on economic growth and development. According to a study conducted among 36 sub-saharan African countries in , 27 out of these 36 countries have experienced strong and favorable effects of aid on GDP and investments,  which is contrary to the believe that aid ineffective and does not lead to economic development in most African countries.
Research also shows that aid per capita supports economic growth for low income African countries such as Tanzania, Mozambique and Ethiopia, while aid per capita does not have a significant effect on the economic growth of middle income African countries such as Botswana and Morocco. Aid effectiveness is the degree to which development aid works, and is a subject of significant disagreement. Dissident economists such as Peter Bauer and Milton Friedman argued in the s that aid is ineffective: . In economics, there are two competing positions on aid.
A view pro aid, supported by Jeffrey Sachs and the United Nations, which argues that foreign aid will give the big push to break the low-income poverty trap poorer countries are trapped in. American political scientist and professor Nicolas van de Walle has also argued that despite more than two decades of donor-supported reform in Africa, the continent continues to be plagued by economic crises due to the combination of state generated factors and to the counter productivity of international development aid to Africa.
Van de Walle first attributes the failure to implement economic policy reform to factors within the African state:. Van de Walle later argues that these state generated factors that have obstructed the effective implementation of economic policy reform are further exacerbated by foreign aid. Aid, therefore, makes policy reform less likely, rather than more likely. Van de Walle posits that international aid has sustained economic stagnation in Africa by:.
In order for aid to be productive and for economic policy reform to be successfully implemented in Africa, the relationship between donors and governments must change. Van de Walle argues that aid must be made more conditional and selective to incentivize states to take on reform and to generate the much needed accountability and capacity in African governments. Additionally, information asymmetries often hinder the appropriate allocation of aid; Blum et al. Many econometric studies in recent years have supported the view that development aid has no effect on the speed with which countries develop.
Negative side effects of aid can include an unbalanced appreciation of the recipient's currency known as Dutch Disease , increasing corruption, and adverse political effects such as postponements of necessary economic and democratic reforms. It has been argued [ by whom? A good example of this is the former dictator of Zaire , Mobuto Sese Seko , who lost support from the West after the Cold War had ended. Mobuto, at the time of his death, had a sufficient personal fortune particularly in Swiss banks to pay off the entire external debt of Zaire. The earnings of this project 6.
The government defended this purchase by stating that "development was not possible without safety". However, the Military of Chad is notorious for severe misconduct against the population abuse, rape, claiming of supplies and cars and did not even defend the population in distress e. In , the World Bank retreated from the project that thus increased environmental pollution and human suffering. Another criticism has been that Western countries often project their own needs and solutions onto other societies and cultures.
Discussion Paper 55
In response, western help in some cases has become more 'endogenous', which means that needs as well as solutions are being devised in accordance with local cultures. While this is a noble goal, most of these projects fail because of this intent. The intent of cooperation is not necessarily a reason for failure, but the very nature of different aspirations towards defining virtues which exist in direct context with respective societies.
In this way a disconnect may be perceived among those imposing their virtues onto ethnic groups interpreting them. The Center for Global Development have published a review  essay of the existing literature studying the relationship between Aid and public institutions.
In this review, they concluded that a large and sustained Aid can have a negative effect in the development of good public institutions in low income countries. They also mention some of the arguments exhibited in this article as possible mechanism for this negative effect, for instance, they considered the Dutch Disease , the discourage of revenue collections and the effect on the state capacity among others.
Furthermore, the effect of Aid on conflict intensity and onset have been proved to have different impacts in different countries and situations.
For instance, for the case of Colombia Dube and Naidu  showed that Aid from the US seems to have been diverted to paramilitary groups, increasing political violence. Moreover, Nunn and Qian  have found that an increase in U. In fact, they note that aid can have the unintentional consequence of actually improving rebel groups' ability to continue conflict, as vehicles and communications equipment usually accompany the aid that is stolen.
Finally, Crost, Felter and Johnston  have showed that a development program in the Philippines have had the unintended effect of increasing conflict because of an strategic retaliation from the rebel group, on where they tried to prevent that the development program increases support to the government. It has also been argued that help based on direct donation creates dependency and corruption, and has an adverse effect on local production.
As a result, a shift has taken place towards aid based on activation of local assets and stimulation measures such as microcredit. Aid has also been ineffective in young recipient countries in which ethnic tensions are strong: sometimes ethnic conflicts have prevented efficient delivery of aid.
In some cases, western surpluses that resulted from faulty agriculture- or other policies have been dumped in poor countries, thus wiping out local production and increasing dependency. In several instances, loans that were considered irretrievable for instance because funds had been embezzled by a dictator who has already died or disappeared , have been written off by donor countries, who subsequently booked this as development aid.
In many cases, Western governments placed orders with Western companies as a form of subsidizing them, and later shipped these goods to poor countries who often had no use for them. These projects are sometimes called ' white elephants '. According to James Ferguson , these issues might be caused by deficient diagnostics of the development agencies. In his book The Anti-Politics Machine , Ferguson uses the example of the Thaba-Tseka project in Lesotho to illustrate how a bad diagnostic on the economic activity of the population and the desire to stay away from local politics, caused a livestock project to fail.
According to Martijn Nitzsche, another problem is the way on how development projects are sometimes constructed and how they are maintained by the local population. Often, projects are made with technology that is hard to understand and too difficult to repair, resulting in unavoidable failure over time. Also, in some cases the local population is not very interested in seeing the project to succeed and may revert to disassembling it to retain valuable source materials.
Finally, villagers do not always maintain a project as they believe the original development workers or others in the surroundings will repair it when it fails which is not always so. A common criticism in recent years is that rich countries have put so many conditions on aid that it has reduced aid effectiveness. In the example of tied aid , donor countries often require the recipient to purchase goods and services from the donor, even if these are cheaper elsewhere.
Other conditions include opening up the country to foreign investment, even if it might not be ready to do so. All of these problems have made that a very large part of the spend money on development aid is simply wasted uselessly. This means that for example for the Netherlands, 1. An excerpt from Thomas Dichter 's recently published book Despite Good Intentions : Why Development Assistance to the Third World Has Failed reads: "This industry has become one in which the benefits of what is spent are increasingly in inverse proportion to the amount spent - a case of more gets you less.
As donors are attracted on the basis of appeals emphasizing "product", results, and accountability Because funding for development is increasingly finite, this situation is very much a zero-sum game. What gets lost in the shuffle is the far more challenging long-term process of development.
Instit utions as formal rules, laws, entitlements or property rights, on the other hand, are part of a vector of variables on an operational plane. Other variables of the latter are explicitly formulated goals, available resources including information , the st ate of the environment and options for action activities with corresponding expected outcomes. In performing institutional analyses information concerning operational variables is generally more easily accessible and these variables are often quantifiable in physical units, in terms of costs and benefits, respectively.
They are t hus found more within the domain of economists and quantitatively working social scientists. The variables on the mental plane, on the other hand, try to capture features which are hidden, often even to the actors themselves, and are less easily accessibl e and quantifyable with methods known to economists.
Their further specification and integration into applied research will therefore require contributions from psychologists or behavioural scientists for specifying research topics, hypotheses, methods fo r information generation and processing as well as statistical tests. A research project on institutions and behaviour can be understood and designed as positive or normative analysis. A positive analysis will describe and understand institutions, explaining how they work and influence behaviour in a part icular cultural context and within a given set of exogenous variables concerning the physical, economic, social and political environment.
This analysis might perhaps arrive at predicting how actors will behave under a different set of exogenous variables or institutional setup. Like normative analysis, research might e. Positive analyses will mostly be needed as part of normative inquieries. For both types of analysis transparency concerning the objectives, subjects and methods has to be maintained through communication and exchange of information between researchers from different disciplines as well as between researchers and the actors or stakeholders concerned.
From the research agenda indicated above some inferences about the political dimension and implications of such research become clear. Even though the subjects investigated understanding of institutions and human behaviour in the c ontext of natural resource use are of a general and, particularly, of theoretical interest, empirical research has to be done in an action research framework related to the solution of specific problems of non-sustainable resource use as perceived by sta keholders.
This means, an interest and a sincere commitment is needed on part of the more influential and perhaps: affluent stakeholder s involved. This commitment includes time and resources for participation in research as well as the political will and funds to initiate changes in current institutions and patterns of resource use once research results become available with respect to causes of non-sustainability and options for countervailing measures. As has been pointed out before, the perception of non-sustainability, its extent and possible causes by different actors stakeholders will not be unanimous and there might be little interest or even fear concerning outside interferenc e, the creation of transparency with respect to causes of resource degradation or to hidden agendas as well as apprehensions about changes in the institutional status quo , about self-organization and about the empowerment of hitherto disorganized l ocal people.
As interests, perceptions and hidden agendas are part of the research agenda interactive methods for getting to know each other, for overcoming fears, for gaining trust and for achieving commitment will have to be identified in a preparatory phase with the help of behavioural scientists. The corresponding concepts will have to be adapted to the particular circumstances or research subject and will be applied and tested throughout research in order to derive specific conclusions on the researc h process, rather than only research results.
The need for a repression free political environment and for an open discourse is quite obvious in action research. Even though there have been some indications to the contrary 11 there is a commitment to strive for decentral ized, participatory forms of government and the involvement of local people in decision-making on policies and projects affecting their livelihoods in most Latin American countries. Since the Rio Conference many countries have explicitly included lon g-run concerns about equity and sustainability - besides short-term goals of economic efficiency and growth - into their policy agenda, i.
The consideration of nature as a common world heritage as well as a resource of global dimensions requiring an openness of the country to the concerns and interests of the international community, however, propagated particularly by cou ntries from the North, is still being questioned by many countries in the South.
All too often stakeholders representing international concerns and interests 12 ignore the skewed distribution of benefits from natural resources and lack respect for the concerns of local people and of regional and national governments when claiming to defend goals of a global and long-run interest 13 and when offering to help protect nature as well as offering services or technological and institutiona l innovations. On the other hand, there seem to be indications that also on a global plane mutual understanding, exchange of information and communication is being improved by means of modern communication technology and institutional innovations.
In particular, networks of NRO or research institutes for the exchange of information and research results and funds for the enhancement of sustainability on an international scale the GEF 14 can be considered institutional innovations fostering understanding, cooperation and coordination of activities to enhance global sustainability. They will have to be taken into consideration when planning and implementing research projects in order to benefit from the experience of others, avoid previous m istakes and traps, economize on scarce research funds and improve the quality of research The deficiencies of neoclassical welfare theory for the valuation of natural resources with competing demand from local and global users becomes evident when considering the valuation of local knowledge, culture and genetic material etc..
Natural resources including wildlife, forests, biodiversity and natural scenery are part of the world heritage and a crucial basis for the livelihood of the rural poor at the same time. As is the case with public goods with local, national and internat ional importance, their valuation in terms of market prices or shadow prices 16 implies methodological problems which have not yet been solved convincingly For negotiating trade-offs and compensation in situations of alternative uses and competing interests ethical, institutional, political, and social dimensions need to be analyzed in addition to the physical natural eco- or agro-eco- and economic systems resource scarcities and willingness to pay.
Interactive processes of r esource valuation and for the identification of 'PARETO-' efficient policies, projects and institutions are therefore imperative The role of in stitu tions for the enhancement of cooperation, for increasing the availability of information and for reducing the costs of devising, monitoring and enforcing rules transaction costs are discussed and further elaborated in the different papers of the volume, although on a quite abstract level.
The treatment of common property resource CPR problems in a game theoretical framework though very adequate for structuring the problem of CPR use, in the case of solving practical problems of non-sustainable resourc e use and of multiple actors is not very helpful. The complexity is such that analytical solutions do not seem to allow any inferences as to practical strategies.
A transaction cost framework, on the other hand, appears to be more flexible and challenging for economists and other social scientists working in development concerned with degradation of renewable natural resources, the basic hypothesis being that the problems are caused by a lack of communication respectively high costs in the transactions to wards cooperative strategies in natural resource use The use of PRA methods in action research on natural resources management is widespread and it has become a standard component in projects striving for a demand driven approach in development aid.
This is not the place to enter into discussions on research methodology 21 , however, the very fact of talking about 'action research', is an indicator for the basic approach of institutional analysis in rural areas of developing countries: it has to be participatory and transpar ent to the people concerned with respect to objectives, content and results, has to be people centred and has to lead to 'action'.
Anthropologists and ethnologists have long practiced participatory observation research, while economists and other social s cientists have carried through huge baseline studies for development projects based on questionnaire methods. Both, however, have rarely been part of a single process linking up research with participatory planning and the execution of selfhelp activities.
PRA, on the other hand, gives people "approaches and methods The principal objective of applying these methods therefore is the involve ment of ru ral people in research concerned with the lasting improvement of their living conditions, in other words with a sustainability perspective. Finding out more about institutions and human behaviour is a secondary objective directly related to a people centr ed approach to development.
It is unthinkable to apply PRA methods without subsequently implementing development activities in case an agreement has been found. Consequently, there will have to be enough funds available from the beginning to allow for the eventual support of identified activities. A second alternative would be a close association between research and a development project with sufficient financial means and with an interest in a more profound knowledge. As PRA methods tend to have a limited capacity to generate quantitative information for testing hypotheses this means applying also traditional survey methods for the quantifica tion of the identified key indicators and variables mentioned above and for using statistical methods for estimating interrelationships between variables With respect to the interdisciplinarity of research on institutions for sustainable development and natural resources management, practically all other disciplines of the social sciences have a place and should be considered For action research, however, particularly social psychology and behavioural sciences have to be involved as social behaviour, cooperation, communication and interaction between actors from different cultures 25 are not only key subjects of the intended research on institutions, but will also help to focus the energies of the participants in action research.
For the time being there are only some general ideas of possible methods considered to be useful in the normative analyses of institut ions and projects and enquiries need to be done to get in contact with researchers in corresponding fields interested in empirical research on the subjects to be identified.
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Here only two examples for possibly useful research approaches will be given. Besides having been successfully used in psychotherapy as a method to enhance understanding between people it has also been applied as a conceptual framework for understanding interaction between social groups and nations Secondly, the Theme-Centered Interaction TCI framework, developed as a method of psychotherapy by Ruth COHEN for a similar purpose, has also been applied with a wider perspective of peacefully solving international conflicts.
When it comes to solving problems of sustainability in a context where poor people depend on renewable natural resources considered to be irreversibly damaged by th em and lost to future generations and humanity the central role of ethics has been generally acknowledged. How to use an ethics framework in order to reach a consensus on how to improve human forms of interacting and living together in harmony with each o ther as well as with nature is still not very clear On the other hand, an interdisciplinary approach must be open and tolerant to approaches by other disciplines and must show a particular awareness, sensitivity and flexibility in the use of language and terminology.
Thus, e. Another example for the need for clarity in terminology concerns the term 'margin al', which is widely used by economists and ecologists alike. This term is at the very centre of neoclassical economic analysis 29 and generally refers to the impact small changes in some economic variable have on others, based on an assumed eq uilibrium situation of an economic system e. In a spacial analysis it refers to the spacial distribution of agricultural production systems where the main indicators are land rent, soil fertility, distance to markets and transport costs In common language and in the use of other disciplines of natural and social sciences the term might be used still differently, e.
The basic assumptions, features and hypotheses of the conceptual framework for institutional analysis in the context of the management of renewable natural resources in rural areas of developing countries are as follows:. We define sustainability as 'context specific collective rationality' and adopt the basic hypothesis of microeconomic economic theory that collective rationality can only be understood by analyzing individua l behaviour and its rationality assumption of methodological individualism.
Rational individual behaviour does not automatically lead to collectively rational outcomes as is often assumed in neoclassical theory. Collectively rational outcomes, defined as the 'intra- and intergene rationally optimal allocation of resources' , in terms of neoclassical theory concerns only economic efficiency. The basic assumption concerning the socially optimal initial distribution of entitlements property rights to resources and of incomes der ived from them has to be questioned in institutional analysis.
Assuming strategically acting stakeholders in situations of outside interference, coercion, natural calamities, and shocks makes evaluations based on standard cost-benefit methodology highly q uestionable 31 as markets are of little importance, are not perfect, are not in equilibirium, and there are costs in transacting - within markets as well outside. Quantitative models and corresponding cost-benefit indicators may thus only be us ed for a very short time horizon, for partial problems of markets or organisations, and for the purpose of consistency checks or as a point of reference.
Equity and sustainability objectives have therefore to be operationalized and integrated into the ana lysis of projects and institutions Individual rationality does neither imply maximizing nor selfish behaviour but is rather understood as goal oriented and consistent behaviour in the sense that actors can rank a given number of options according to preferences and corresponding operational goals consistency assumption. Outcomes e. Contrary to neoclassical economics the present framework distinguishes individual actors from organizations as actors and stakeholders.
Individuals may act as resource users themselves or in specific positions with in organizations or with particular roles e. Organizations are seen as social structures in which individuals cooperate according to given and agreed upon rules By cons idering the whole range of institutional configurations of civil society, from a simple verbal contractual arrangement e.
Institutions are understood as rules which determine the decisions and the interaction of actors by restricting as well as widening the decision space. They thus represent constraints and resources at the same time. As in formal rules and norms of behavior as well as formal institutions with legal status e. In the analysis of individual behaviour mental asessing will be distinguished from an operational one.
Capabilities, perceptions, norms of behaviour and preferences are elements forming a vector of mental variables ; goals , entitlements to resources and alternative incomes contractual arrangements or property rights , states of the environment, alternative activity sets with corresponding expected outcomes are elements of a vector of operational variables.
Consiste ncy in the sense of a unique ranking of goals and activity sets can be expected on the operational plane but not in the sense of a unique and stable order of preferences. The time horizon for which stable preferences can be assumed and the degree to which preferences can be ranked in a definite order is expected to vary between individuals within a social system. Empirical analyses of sustainable and non-sustainable use of renewable natural resources might be carried out for a given organization rural family, household-firm in a FSR context or for a larger social system or te rritorial unit traditional community, district, watershed.
The relationship between variables on the mental and operational plane, the individual perceptions, capabilities, norms, entitlements property rights to physical as well as informational r esources are assumed to explain individual behaviour as well as cooperative or non-cooperative behaviour in the sustainable or non-sustainable management of natural resources The estimation of market demand functions and quantitative indicators willingness to pay for the valuation of resources and outcomes of activity sets in the use of natural resources will only be pos sible in exceptional cases.
Instead, preferences and valuations will have to be determined directly by means of questionnaires e. The same methods will be used for the identification, specification and, ideally, quantification of transformation and transaction acitivities and costs as wel l as for sets of activities and the corresponding expected outcomes To inquire into behavioural patterns of actors the following hypotheses are proposed: i situation specific rationality: satisfactory instead of maximum results because of non-indifference to risk; ii bounded, subjective rationality dependent on information and transaction costs limitations; iii bounded, subjective rationality influenced by perceptions, norms and capabilities; iv strategic behaviour, i.
For the four hypotheses the particular interactive behaviour within the social system related to collective outcomes of natural resources management free riding, shirking will have t o be considered Depending on the problem situation and general subject of research various actors might be the subject of interest in institutional analysis.
A central focus will certainly be on the rural family, the agricultural household-fir m unit as actors within a larger organizational or geographical unit. The rural family or agricultural household-firm might also be analyzed as organizations with various actors e. Transformation and transaction ac tivities will be analyzed in production agriculture, forestry, animal husbandry, crafts etc. Reproductive activitie s will concern home-keeping, health and hygiene, knowledge enhancement, leisure, festivities, ritual and religious services.
Other remunerative or non-remunerative activities might concern the provision of services, wage labour, reprocitive labour and ser vices provision, honorary activities, communication, information generation, representation of interests, etc. Scope for positive and normative institutional analysis in conflictive situations? A typical conflict situation where positive and normative institutional analyses might be needed are buffer zones of natural parks or nature reserves where conservation interests clash with settlers or loggers.
Logging, harvesting o f high valued non-wood forest products, adventure tourism, and the production of drugs or other commercial crops are activities with high commercial returns, usually realized within an extremely short time span. Conservation objectives of national governm ents or international organizations, on the other hand, are motivated by political goals, by ethical norms and with a concern for the longer time span. The actors might be indigenous peoples only marginally in touch with the rest of society, traditional p easants, settlers and migrants from other parts of the same country or abroad, profit oriented private enterprises, representatives from the local, regional or national administrative and political system, from local or national NGOs as well as from inter national NGOs and official donor agencies.
The valuation of resources and the search for a solution in such a complex situation of competing resource use will be extremely difficult. Because of the high stakes involved, both for resource users as well as protecters physical or cultural survival vs. In each case, the mixed group of actors involved, the distorted distribution of information and power, the types of institutions to be considered and the corresponding variables to be analyzed will be specific to the particular natural, social, cultural, economic, political and institutional environment.
An interdisciplinary research approach will require a combination of corresponding skills specific to each particular situation. Besides natural scientists and economists concentrating on the more structured part of situation analysis based on quantitative data, social scientists and particularly behavioural scientists will be needed to analyze the less structured part and also bridge the gap between actors with often very limited abili ty to communicate.
In some contexts the severity of conflicts and the complexity of different interests, hidden agendas and stakes involved might neither allow for bridging the gap between actors nor for carrying out institutional analysis with a particip atory policy analysis framework. Any other approach, however, will only be a second or third best solution and to the detriment of nature since the politically powerful and the powerless poor are often those who - although for different reasons - use rene wable natural resources in an non-sustainable way The following topics might be considered in research on institutions in natural resources management as part of a development aid or thesis project.
They are only briefly sketched, partly overlapping and will need to be further elab orated after observations on the present paper will have been received and after specific problem situations will have been identified Comparative analysis of organizational configurations for the collective management and coordination of individual strategies in the use of renewable natural ressources. The focus will be on different organizations in a rural natural resources management environment.
They might be rural families, agricultural household-firm configurations, traditional or recently established water user or pastoral group s, agricultural or other production associations or cooperatives, non-governmental organizations etc. Shirking of individuals within an organization, principal-agent situations and contractual relationships will be of interest.
The actors will be either t he individual members of the indicated units, or the different stakeholders within the larger territorial context. Particular attention will be given to transaction activities other than the production activities of neoclassical production theory. Identif ication, description and valuation in terms of time, material and monetary costs of these transaction activities will be an important step to a more structured comparative positive analysis of different organizational configurations and will serve as a ba sis for normative considerations in organizational choice.
The role of risk, individual and social valuation of time, valuation of future costs and benefits, individual vs. Procedures for an interactive discourse between stakeholders for attaining PARETO improvements in the management of renewable natural resources management in a local and regional development context positive and normative analy sis. Solving problems of non-sustainability in the use of natural resources will always mean analyzing situations of competing uses and, therefore, conflicting interests.
Assumptions of optimal initial distribution of property rights on reso urces, hypothetical compensation as well as zero transaction costs underlying the concept of 'potential PARETO improvement' PPI in a neoclassical benefit-cost framework ignores via assumptions the problems which in a real situation, however, cannot be b ypassed. Even without considering re- distributional policies, in any democratic society an agreement on trade-offs between different strategies alternative institutions, investments or projects of natural resources management has to be found.
Percept ions on resource degradation and its reasons, measures to be introduced, valuation of resources and trade-offs between measures, interests concerning resource degradation etc. Research will therefore have to inquire into how the difficulties of finding a consensus are influenced e. Situations of non-cooperati on and non-stainability might be particularly strongly related to one or various of these factors. Knowledge on them will be necessary for identifying the appropriate actions to be taken, procedures for a participatory situation analysis and a bargaining process to be established, perhaps with the help of an independent mediator who will have to be identified in the process.
Information on non-sustainability or non-sustainable resource use patterns of specific actors and on their specific situation with respect to the variables indicated might sometimes be evenly spread, readily available and agreed upon.
M ore often, however, it will be asymmetrically distributed and strategically used by different actors or stakeholders. Getting to know the role of information types, sources, generation costs, use etc. A thorough understanding of the underlying theoreti cal concepts of neoclassical welfare and resource economics as well as New Institutional Economics e.
Sustainability as context specific collective rationality vs. Here the perception of sustainability and non-sustainability of a resources management situation by stakeholders and its influence on collective action will be the focus of research. In the case of individuals the assessment vector men tal plane will be related to the operational vector, in the case of organizations the perceptions of key individuals mental plane to the operational vector of the organization.
Thus individual perceptions are compared to collective average perception s, declared operational variables to actual behaviour, variables on the mental plane to variables on an operational plane. Behaviour of individuals and organizations is expected to be at least consistent i. Insights into the relationship between individual rationality and intra- and intergenerati onal collective rationality in the use of renewable natural resources for a particular situation and group of actors are expected.
Understanding the role of markets and of other institutions as a source of incentives and disincentives should help finding collective arrangements for using natural resources in a more sustainable way. The distinction between natural r esources as assets as well as sources of income streams, between discount rates and time preference rates, and between free access, common property and privately owned resources will have to be understood.
A distincion between a vector of variables on a m ental and on an operational plane will have to be accepted as a basic working hypothesis to allow for inquiries into the relationship between perceptions of sustainability, capabilities, preferences and social norms on the one hand and operational variabl es as well as actual behaviour concerning coordination, cooperation, collective decisionmaking and collective resource use on the other. The correlation between variables on a mental and on an operational plane will have to be calculated and hypotheses te sted in order to gain insights into the role of perceptions, social norms, capabilities and information as well as goals, property rights on resources, entitlements to alternative incomes in explaining differences in behaviour or inconsistencies.
Behaviour of individual actors in institutionally significant positions leaders and as key resource users or decision-makers within organizations. Traditional and modern leaders chiefs, clergymen, politicians etc. For processes of collective action in natural resources management, in the preparation and participation of project activities, as innovators, in creating new or reforming old institutions or organizations and acting as lead ers within organizations etc. As mediators they might be useful in negotiating compensation between international, national and local stakeholders.
On the other hand, they might be a principal cause for non-sustainable resources use in case of abuse of position and of political, economic or other power. Different hypotheses with respect to human behaviour need to be tested for individual actors or decisionmakers within organizations, including strategic, income and weal th maximizing or satisfying behaviour, orientation on traditional norms and beliefs as well as hypotheses with respect to constant vs.
Institutions as informal rules and norms of behaviour as well as humanly devised formal and legally binding rules in a dynamic context - inquiries into institutional change in natural resource use in rural areas of developing co untries. Understanding institutions as constraints as well as resources is also a useful assumption from a dynamic perspective to the problem of resource degradation in an institutional economic framework. Besides probing theoretical explanation s of institutional change in the face of non-sustainable resource use in rural areas of developing countries 42 , this research is considered to be useful in understanding institutions of natural resources management in a local context.
In parti cular, it will have to be seen how the distinction between variables of a mental vector as well as an operational vector can be integrated into a dynamic analysis. A change over time in the importance of institutions as informal rules and norms or as form al rights and entitlements can be expected, enhanced by a gradual decrease in the dependence of local people on incomes from direct use of local natural resources.
Also, an increase in activities in other sectors as well as in other geographical regions w ill have an impact on how people value nature and natural resources and how they manage them. Opportunity costs and transaction costs will be central variables to be considered, even if a retrospective quantification will be quite difficult.
Inquiries int o institutions as perceived and real restrictions, on a mental as well as an operational plane and between people of different social units, of different economic sectors and different geographical regions are expected to give useful insights into underst anding institutional reasons for the degradation of natural resources. Current theories 44 will have to be considered, even though formal tests might not be possible.
Quantitative analyses and the testing of corresponding hypotheses will not only be difficult for reasons of lack of information but also because of the multiple interdependencies of variables. As institutions influence human behaviour a nd - at the same time - have been created and modified by people in the course of time, a clear distinctions of demand and supply aspects as well as of cause and effect in institutional change is difficult.
Compared to the reductionist approach in growth models of modern analytical economics, inquiries into institutional change are much more difficult, particularly with respect to the identification of and the distinction between endogenous and exogenous variables. Together with the difficulty of finding adequate quantitative data modesty in expectations with respect to a better understanding of sustainability and institutions in a dynamic context is required Diskussionsschriften No.
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