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‘Social Capital’ approach of development, where social cohesion and
mutual interac� ons occurs for mutual benefi t and the associa� ons, networks,
clubs etc facilitate the growth by increasing trust among the member of
communi� es. Co-opera� on among members of a group creates habits
and a� tudes towards interac� ons among members and non-members
(Collier, 1998; Putnam et al., 1993; 1995a; 1995b; 2000). Ideas of social
capital, ins� tu� ons and culture are interrelated because cultural values are
elements of social capital as well as founda� on for ins� tu� onal structure
(North, 1990). It is not easy to promote social capital merely by development
aid. It requires changes in laws, bureaucra� c structure etc., which may be
poli� cally unpopular. Therefore, Hayami (2001) views capacity development
of rural community with support of aid could be the most appropriate path
to development. At the same � me, there must be adequate incen� ves for
rural community to induce them to join development ac� vi� es with full
capacity. Recently, Uzawa (2005) coined new term “social common capital”
as a form of ‘social capital’ comprising of common property, public goods
and ins� tu� ons.
Thus, the dynamics of development has now arrived at ins� tu� onal
and contextual concerns with more complexity at hand in terms of aid
management. Involvement of mul� -level actors in aid rela� onship is one of
the major causes of complexity. What incen� ves do the actors perceive from
aid business is a crucial issue for aid management, which requires separate
inquiry.
4. Managing Aid for Development Eff ec� veness
Management of development aid in consonance with contemporary
development paradigm is a daun� ng challenge for it is perceived as per
convenient of the major actors- diff erent donors, diff erent recipients,
business community and the civil society organiza� ons both in the North and
the South. The Marshall Plan itself was condi� onal while off ering up to $20
billion to the Europe for reconstruc� on. The European na� ons were asked
to plan, lead and take ownership of their own program under Marshal Plan.
These condi� ons were important elements of eff ec� ve aid management and
were part of incen� ves for Europe. At the same � me, the plan required the
Europe to import goods from the United States using US ships so that US
economy would benefi t (Dhakal & Ueta, 2007). Thus, the incen� ves of the
Marshall Plan for Europe were it helped them in hard � me; and for donor, it
pumped the donor’s economy and helped meet strategic interest. However,
the Marshall plan proved that par� cipa� on, ownership and leadership of
benefi ciary had contributed to quick reconstruc� on and development.
The recent orienta� on in regard to aid management can be found in
the Paris Declara� on, 2005, implementa� on of which has already been
monitored thrice and evaluated twice, globally. The Paris Declara� on is
a collec� on of ambi� ous but visionary poli� cal commitments made at
higher level ar� cula� ng 56 commitments around ownership, alignment,
harmoniza� on, result-based management and mutual accountability for
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Changing paradigms of aid eff ec� veness in Nepal