First phase – the institutionalist models

Section 2.1.3 outlined the crisis of and subsequent neoliberal turn in development.

The growing criticism of development aid was diverted into criticism of technical co-operation. The early champions of capacity development among donor organisations were the World Bank (World Bank 1991), CIDA (Morgan and Baser 1993; Baser 1994; CIDA 1996), JICA (2003, 2004b, 2006) DFID (2006, 2008) and UNDP (Lopes 2002). The theory-building in these institutions particularly emphasised the importance of instigating institutional reform through capacity development.

However, the strenuous effort to extend the mandate of this notion beyond single institutions is well exemplified by the following quote from a concept note written for CIDA:

Capacity development as the next 'big wave' in development co-operation (like basic needs in the 1970s or structural adjustment in the 1980s) [...] is centered around institutions, assumes a multi-disciplinary approach and has substantial implications for restructuring relationships. [...] While capacity development is centred substantially on institutions, the concept itself is broader than institutional development. The latter is concerned with the performance of individual organizations and their ability to make effective use of the human and financial resources available. Capacity development goes beyond individual organizations to broader systems, groups of organizations or inter-organizational networks. Institutional development can thus be an important component of capacity development, but is not the same as capacity development itself. (Baser and Bolger 1996, p. 3-4)

The above account demonstrates the delicate mechanisms of co-optation that started to reshape the initially participatory notion of capacity development (during the 1980s) into an institution building exercise. As shown in Section 2.1.2, the notion of capacity development was formed around ideas of bottom-up action in order to empower individuals or communities (Honadle 1979; Chambers 1980, 1986;

Richards 1981; Eade and Ireland 1997; Botes and Van Rensburg 2000; Cannon et al. 2003; Girgis 2007). It portrayed institutions as instruments that rather inhibit than enable the agency of individuals and/or communities. From the early 1990s, when capacity development entered the mainstream development discourse, two key theories influenced its conceptual evolution: New Public Management and New Institutional Economics (Teskey 2005; Craig and Porter 2006).

New Public Management (NPM) gained popularity particularly in OECD countries during the 1990s, especially as a measure to strengthen the economic compatibility and competitiveness of states (OECD 1996; Horton 2001). The core idea of New Public Management was the incorporation of private sector practices into public management (Gruening 2001; Lane 2002). Public administration should

be modelled after the management of companies in order to eliminate inefficiencies.

This involved the definition of business processes, value addition and functionalist approaches such as the focus on skilled personnel. The recurring use of keywords such as process, function, performance, efficiency, institutions, key actors, value addition and skilled personnel make the influence of NPM easy to identify.

Furthermore, these often connote a logic of planning, customer satisfaction as well as problem solving.

Figure 6.1 – Capacity development definition reflecting the influence of New Public Management

The presence of NPM elements in capacity development definitions of the 1990s implies the subtle shift that moulded capacity development into an institutionalist development practice. Furthermore, the economisation of the public sector (Dunleavy and Hood 1994; Denhardt and Denhardt 2000) undermined participation and community empowerment. Capacity development was transmuted into a mechanism that enforced and supervised the imperatives of efficiency and productivity (Hood and Peters 2004).

The main influence of New Institutional Economics (NIE) was the adoption of two notions: institution building and social capital (Teskey 2005; Hameiri 2007;

Keefer and Knack 2008). The early adopters of capacity development – the World Bank, the UNDP, OECD and CIDA (cf. Table 6.1) – further refined the institutionalist frameworks by differentiating between organisations and institutions (North 1990, 2007). Teskey (2005) even argued that “because of the lack of conceptual clarity, the term capacity development (or capacity building – some writers even like to argue over this distinction) is often used synonymously with institutional development and state building.” This demonstrates the strong tendency among donors to frame capacity development as an approach to state building (Teskey 2005; Hameiri 2007;

Hameiri 2009).

From the conceptual body of New Institutional Economics, the notion of social capital influenced the theory-building of capacity development the most (Moore 1995; Hameiri 2009). A discourse analysis of notions of social capital with regard to

UNDP defines capacity as the ability to perform functions, solve problems, and set and achieve objectives (Lopes 2002, p. 8).

capacity development is beyond the scope of this thesis. Nonetheless, it is important to emphasise that social capital is represented as an institutional practice to strengthen governance (Morgan 1998; Lopes 2002) in the capacity development literature.

Figure 6.2 – Capacity development definition reflecting the influence of New Institutional Economics

The framing of social capital “as morally and ethically neutral, facilitating all manner of individual and collective endeavors” (Hunt et al. 2009, p. 17) illustrates the adoption of a Colemanian framework (Coleman 1987, 1988). This further underlines the neoliberal economic and functionalist interpretation of social capital. In Coleman’s model, it is the role of the individual to derive the benefits of social capital;

the state is only a provider of a set of norms that create social capital. This interpretation furthermore also emphasises and presupposes the existence of basic political institutions and the rule of law in the recipient countries (Fukuyama 2002).

The following excerpt from a UNDP policy document reflects this neoliberal economic and political agenda in a concise manner:

Capacity development thus takes place not just in individuals, but also between them, in the institutions and the networks they create – through what has been termed the “social capital” that holds societies together and sets the terms of these relationships. [...] Communities with high levels of trust and strong networks are said to be better off than those without. This is because social capital is reflected in better jobs, less disputes and in a more prompt response to citizen concerns. (UNDP 2002b, p. 9 and 26 respectively)

The integration of New Public Management and New Institutional Economics into the notion of capacity development led to its gradual transformation. Its earlier emphasis on participation (1980s) as well as its human-centeredness receded and gave place to a neoliberal institutionalist instrumentarium. This transformation

Capacity building is a complex notion – it involves individual and organisational learning which builds social capital and trust, develops knowledge, skills and attitudes and when successful creates an organisational culture which enables organisations to set objectives, achieve results, solve problems and create adaptive procedures which enable it to survive in the long term (DFID 2008, p. 3).

reiterated the importance of effectiveness, efficiency and sustainable institution building. Furthermore, it infused the notion of capacity development with a distinct rhetoric of ownership. The sidelining of national institutions constituted a considerable part of the critique of development aid (Lethem et al. 1983; Brinkerhoff 1990; Buyck and Mundial 1991; Berg 1993; Baser 1994).

Donors employed capacity development to address this criticism by adding the emphasis on country-led approaches (Bossuyt and Laporte 1994; Jerve 2002;

Goldberg and Bryant 2012; Booth 2012). The reinforcement of country leadership became part of capacity development definitions as well. The above exploration confirms Phillips' and Ilcan's (2004) claim that during the 1990s and early 2000s, capacity development became “a technology of neoliberal governance” (p. 393). It extended the borders of neoliberal governance into recipient countries by endorsing neoliberal institutional practices (OECD 1996).