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sustainable and self-reliant development while exogenous models are
economics-centric that ignore indigenous people. Development happens
from within; it is not done or made from outside.
As discussed above, broad approaches to development can be grouped
into ‘exogenous’ and ‘endogenous.’ In developing countries, two types
of fund - external resources, i.e. ‘foreign aid’ and internal resources, i.e.,
‘domes� c revenue’ prevail, which follow clearly two sets of values, structures
and opera� onal frameworks, resul� ng in confl ict of interests and high
transac� on costs. Management of aid amid proliferated discrete projects
always becomes an issue. The situa� on then requires harmoniza� on. To
make the actors ready to harmonize, incen� ves must be aligned at one
point from both ‘exogenous’ and ‘endogenous’ approaches. A tabular
framework developed by Dhakal and Ueta (2007) shows the combina� on of
aid and domes� c resources in 'endogenous', 'exogenous' and 'customized'
development approaches and analyzes incen� ves compa� bility (See,
Table-3.1).
Table 3.1: Poten� al Framework for Incen� ve Alignment
60
Local
Resources
(L)
Foreign Aid
(F)
Endogenous (En) Exogenous (Ex) Customized (C)
‘EnL’
Ethnocentric
‘EnF’
Una� ainable
Source: Dhakal and Ueta (2007)
‘ExL’
Redundant
‘ExF’
Egocentric
Changing paradigms of aid eff ec� veness in Nepal
‘CL’
Utopian
‘CF’
Pragma� c
Combina� on of ‘endogenous’ and ‘local resources’ (EnL) is ‘ethnocentric’,
i.e., guided by cultural supremacy. It is ideal for the recipients because local
community can have greater choices. Benefi ciaries within the context are
master of their des� ny because they do not need to follow alien concept
of development. Technology and knowledge can either be innovated
endogenously or can they be purchased from other countries. Unfortunately,
it is not prac� cal in this 'globalizing' world of interdependence. Therefore, it
is an ambi� ous combina� on (Dhakal and Ueta, 2007).
Combina� on of ‘endogenous’ and ‘foreign aid’ (EnF) is desirable because
endogenous approach is aboriginal for recipients. However, it is diffi cult to
a� ain because aid always brings as Galtung (1979) argues, the structure,
social cosmology, and values of the donor countries with technology and
ins� tu� ons. The recipient lacks capacity to deal with mul� -layered interest
groups in aid delivery chain and lack bargaining power in nego� a� on table
mainly due to asymmetric informa� on and knowledge. Therefore, this
combina� on is diffi cult. Paris Principles of "Aid eff ec� veness" for eff ec� ve