The Near East and North Africa Division Director,  Nadim Khouri discusses Territorial Development, Decentralization and Poverty reduction:

The purpose of this brief note is to review the potential of using, where appropriate, the Territorial Development approach (TD) to promote poverty reduction based on the following virtuous causal chain:

• Community-based operations can be scaled up through TD;
• TD could therefore offer increased opportunity for rural poverty reduction;
• At least some NEN countries are politically and administratively interested in promoting decentralization—and TD is one way of implementing decentralization;
• Where applicable, TD would therefore be both in line with IFAD’s mandate and our partners’ political/administrative objectives.

TD for Scaling up of Community-based activities?

There is a definite participatory element in the EU’s LEADER-type instruments and other approaches to promote regional (sub-national) economic development that is based on regional comparative advantages and particularities.  The types of investments observed go from the private-focused opportunities (agro-industry; agro-tourism etc.) to the social ones (education, etc.)  The actors are from the private and public sectors and the rules of preparation and selection of projects can be defined in order to ensure public participation and increasing the voice of the rural people—including  IFAD’s constituency:  the smallholder, the rural poor, and institutions who cater to them;

TD and Poverty Reduction

A review by W. Dillinger¹ finds that regional development schemes such as TD do allow policy makers to focus more attention on the “lagging regions” with higher density or prevalence of poverty.  One limitation of course is that there may be pockets of poverty in otherwise rich regions.  Also, in reviewing the situation of countries within what we at IFAD call the CEN cluster of countries, the review found that the most effective circumstances for TD to play a role in poverty reduction is where  there are people of working age who are unemployed and there are no policy-level impediments to just letting the market forces do their magic.  Even after these impediments are removed (improving factor mobility etc.) individual investors generally need incentives (even if partial) to move into poor regions, justifying therefore public sector-supported programs such as TD.  Ensuring that TD leads to poverty reduction therefore is not automatic and requires special attention at diagnosis, design and implementation.

TD and decentralization

Poverty reduction is not the only purpose of TD.  Evidence from LEADER and other programs show that the overall management of natural resources and other environmental issues, as well as the overall administration of budgetary/municipal resources are best done in a decentralized way, using for example a TD approach.  Decentralization is usually based on the “subsidiarity principle” that simply says that interventions are better decided and executed at the lowest level (“closest to the field”) possible.  This means for example that a local park with no important biodiversity component should be left to local government to administer, while national parks with a high global biodiversity importance should have at least some element of national/central control of that resource.  Many of “our” CEN or NENA countries in the region are seeking for their own administrative and political reasons to decentralize.  IFAD should probably consider “riding” this trend and seeing where possible how TD can serve as a “formative” approach to build local and regional capacity for allocating development funds to pro-poor for productive purposes.  Whilst, again, not automatic, such decentralization can be managed in ways that promote local empowerment and better representation on the voice of the rural smallholder and the poor² .

A New Partnership Agenda Item in NEN?

Building on success in Albania and budding opportunities in other areas, NEN may want to explore, at the country level, opportunities to promote the above linkages along three specific  lines of engagement:

• Application of LEADER-type programs in Eastern European countries/regions that demand it;
• Application of TD in “twinning” and other “neighborhood” arrangements that link Europe to non-European countries, such as NEN countries (for example, in the context of the Euro-Mediterranean alliance);
• Developing NEN expertise in order to assist new EU adherents in the use of their foreign aid resources toward TD.

---