Capacity Development and Institutional Change in International Development Cooperation

Summary: The capacity development approach was proposed by UNDP and European donors as a new approach based upon the African aid failure in the1980s and the end of the Cold War instead of conventional aid approach. In this paper, capacity development approach comes into collision with institutional studies in social sciences on purpose to accelerate knowledge evolution. This paper presents a new perspective on the development process and on aid policy. It is named an approach of “capacity development and institutional change”. By using this new approach of “capacity develop-ment and institutional change”, capacity development is able to cover not only technical cooperation but also lending matters. Moreover, the program approach is realized into development strategy and aid policy. The program approach indicates criteria of selectivity and priority of allocation of development resources including aid resources. Program approach concentrates more on the policy making process or on the top down (upstream) approach. Furthermore, this paper shows the importance of field experiences, meaning the advantages of Japanese aid compared to European aid, especially with regards to making the program approach more e#ective. The micro (field experience) and macro (top down) loop is a critical factor for aid e#ectiveness. 1