Whether it is the government, aid agencies or NGOs attempting to develop a country, the final aim is the same: to give an impulse to the development of independent sectors. Energy specialists try to create entire energy sectors, health specialists attempt to create a national health sector, economic development specialists try to create a whole range of vital economic sectors. The development of a new sector generally follows the following 4-stage profile (adapted from a product life cycle):
- demand has to be created
- cost high
- volume low
- no/little competition
II. Growth stage
III. Mature stage
- market is better established
- volume peaks
- increase in competitive offerings
- prices tend to drop
- differentiation, diversification of product or service.
- volume stabilises leading to a focus on efficiency rather than growth
- volume declines e.g. if a replacement product/service is introduced
- new growth stage can be triggered if changes in the market or the product create new demand
Development aid simply doesn’t have the resources or the mandate to guide the entire product cycle. For example, how can development aid hope to supply electricity to hundreds of millions of people in
The aim of development aid is to guide a sector through stage I so that the market and the government can take over an exponentially growing sector.
This is a key point in understanding the role of development aid. Understanding this principle, also allows us to better assess the sustainability of a development aid intervention. If indeed we are successfully guiding a sector through stage I of its development, we would expect to see:
- Exponential growth
- The creation of new independent market actors and institutions
Our new definition of sustainable development aid would then be:
This is an ambitious aim. And I would guess that less then 10% of development aid projects succeed in fulfilling this aim. Leaving behind a sector independent enough to continue the work after the end of your project is not easy.