Aid to Laos in the twenty-first century : engagement and change

Abstract

This thesis aims to understand the Lao experience of development assistance in relation to three contemporary aid issues: the influence of aid on governance; the impact of the 'Poverty Reduction Strategy' (PRS) approach, a major aid reform; and the influence of growing Chinese aid. The thesis argues that aid from traditional donors has made an important contribution to improving some (though only some) areas of governance in Laos, and helped the country graduate from 'fragile state' status. This finding challenges the more negative views on the impact of aid on governance in general of aid to Laos. It supports the views in the literature that aid can best promote reform when government reformers embrace it, and when donors are patient and well-coordinated. The requirement that aid recipients prepare a poverty-reduction strategy as a condition for receiving debt-relief and/or aid represents a move from policy to process conditionality, and was one of the most important aid reform of the last decade. This thesis argues that many earlier assessments of the PRS approach have been made too soon to be reliable. Our assessment covers a decade, and finds that, contrary to the negative cross-country assessment of the literature, the PRS approach was a moderate success in Laos. Again, the underlying reason is political: reformers in government embraced the opportunity provided by the initially external imposition of the PRS to open up and improve the planning process. Laos may be an exception, but longer-term studies of other countries are needed. Chinese aid to Laos is on the increase. Government officials welcome Chinese aid for reasons that are familiar from the literature, but also because Chinese aid leads to tangible outputs which enhance political legitimacy. So far, the few country case studies of Chinese aid undertaken have tended to undermine more general claims that Chinese aid might have negative side-effects. This study finds that Lao government officials have their 'eyes wide open.' The more frank among them, while still supportive of Chinese aid overall, are willing to admit that rising Chinese influence does undermine Western donor reform efforts, and threaten governance reforms and environmental standards. This study supports a balanced view of Chinese aid, intermediate to the extreme attacks and defences of it which currently dominate. Overall, the thesis points to some useful achievements from OECD aid in the last decade in Laos, but also declining influence from traditional donors. The future of aid to Laos, and, indeed, the future of reform in Laos is uncertain, not only because of the rise of China, but also for domestic political reasons. On the methodological front, the thesis shows the benefits of representative sampling and reliance on surveys, both rarely used in country aid case studies. It also illustrates the value of research into aid undertaken by nationals of the countries being studied, and in the language of national interlocutors, especially for revealing views on sensitive subjects. Show more