ABSTRACT

Since the 1950s, NGOs have come to play an increasingly important part in the formulation and implementation of development policy, becoming key actors in the political economy of development. There has been increased collaboration with both governments and aid agencies, based on a growing belief over the period that the promotion of NGOs could offer an alternative model of development and play a key role in processes of democratization (see Mercer 2002). NGOs were seen as more administratively flexible, closer to the poor, innovative in problem solving and more cost-effective than corresponding state partners. Donor pressure towards structural reform and privatization underlies the increased interest in NGOs as ‘service deliverers’ – part of a wider and explicit objective to facilitate productive NGO-state partnerships. There is a realization among

donor countries that aid is becoming ever more complex, with new instruments and players, and increasing criticism of its effectiveness. Private financial flows increased rapidly in the wake of increased liberalization of trade. The increase in private capital flows was unprecedented in the 1990s, driven by market reforms, the rise in global trade, lowering investment barriers in developing countries, and the fall in communications and transport costs.