Learning Curves

OED
June 2007

PRC:SuccessDrivesDemandfor MoreInnovativeandResponsive Services

ADBandothershaveprovidedthePRCwithasuccessfuldevelopmentexperienceby bringinginstateofthearttechnical,financial,andmanagementexpertise. ThePRCisnowamiddleincomedevelopingmembercountryanditdoesnotfollowthatthe servicesthathelpedinthepastwilladdvalueinthefuture.Diversificationfocusedon limitedgeographicareasorsectorswillallowADBtoinnovateandcontinuetoaddvalue.
Background EconomicgrowthinthePeoplesRepublicofChina (PRC)overthepasttwentyyearshasbeenexceptional. IntheAsianDevelopmentBank(ADB),thePRCisnow categorizedasamiddleincomedevelopingmember country.ADBscountryassistanceprograminthePRC issolid.BecauseADBsportfoliothereisoneofthebest, thesecondcountryassistanceprogramevaluation 1 focusedonstrategicandinstitutionalaspectsofADB interventionsinthePRCandonthethrustof operationsfrom19982005.Thestudyteamdrewon recentevaluationstudies,examinedongoingprojects, andcarriedoutsurveysontheeffectivenessoftechnical assistanceandclientperceptionsofADB. SummaryofFindings InkeepingwiththeGuidelinesforthePreparation ofCountryAssistanceProgramEvaluationReports, ADBssuccesswasassessedintermsofstrategic positioning,institutionalpositioning,valueaddedto developmentresults,andsectoralperformance.The firstthreeperspectivesledtoatopdownassessmentof whetherADBhaddonetherightthing.Thefourth embodiedabottomupapproachqueryingwhether ADBhaddonethingsright. Thestudyratedstrategicpositioningsuccessful borderingonhighlysuccessful.Itratedinstitutional positioningpartlysuccessful.Valueaddedto
Operations Evaluation Department Asian Development Bank

developmentresultsandsectoralperformancewere ratedsuccessful.TheoverallratingofADBsprogram wassuccessful.Themainweaknessesidentified pertainedtoinstitutionalpositioning,andaresystemic concernsformiddleincomecountries.ADBs shortcomingshaverelatedto(i)thewaytechnical assistancehasbeenused;(ii)weakcapacityand incentivestosupportknowledgetransferand innovation;and(iii)institutionalstructuresand bureaucraticproceduresthatweakenresponsiveness, notwithstandingimprovementsduetothe establishmentofthePRCResidentMissionin2000. ThePRCwouldhavesucceededwithorwithout ADB.But,progresshasbeenmorerapid,consistent, andsustainablewithintheframeworkofitspartnership withADB.ADBhasaddedvalueasaconsistent, trusted,andlongtermpartner,appreciatedequallyasa reliablefinancierasfortransferringknowledgeand developingoptionsthrough140loanand500technical assistanceprojects.Atthesametime,thePRCs developmentexperiencehasbeenmarkedbystrong governmentownershipamajorreasonforthequality oftheprogramandrapiddevelopmentofcapacity. ForADB,continuationofbusinessasusualin traditionalsectorsis,insomeprovinces,notadvisable. AlignmentofCountryandADBStrategies.Ifthe Governmentsstrategyandpoliciesaredeemedto beworking,ADBshoulddrawonitscomparative

6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444; evaluation@adb.org; www.adb.org/evaluation/

advantagesandskillsmixtodevelopprogramsand provideserviceswhereitcanaddthemostvalue withintheGovernmentsframework.However,a delicatebalancemustbestruckbetweenrelying excessivelyonclientpreferencesandproviding alternativeviewsthatmightchallengecurrentviews. BuildingonthePositiveAspectsofStrongClient OwnershipandtheBeneficiaryMustPay Principle.Theenhancedaccountabilityresulting frombeneficiariesbeingresponsibleforrepayinga portionormostoftheloanhasbeenapowerful instrumenttoensurethataprojectiswelldesigned andimplemented.However,thecountrysfinancial andmonitoringsystemsarenowmoredeveloped andsomeflexibilitywouldbeappropriatefor projectsthatofferpotentialforinnovativesolutions toaddresssocialandpovertyproblems. RegionalCooperation.TheADBPRCpartnership haspotentialtodeterminethefuturepathof regionalcooperationandeconomicprosperityin Asia.Asanhonestbrokerwitharegionalfocusand expertise,ADBcansupportthePRCincontinuing withamultilateralapproachwhileintensifying effortsinotherareasofregionalcooperation. OvercomingtheInertiaandBureaucraticObstacles toProvidingBetterServices.InthePRC,thereare concernsabouttheefficiencyofADBsoperations. Theserelatetocumbersomeprocedures,excessive delays,andinadequatecoreprojectrelatedservices. MoresystemicissuesrevolvearoundADBs operationalrelianceonconsultants. RationalizingtheUseofAdvisoryTechnical Assistance.ThePRChasthecapacityand commitmenttotakeonresponsibilityfor implementationofadvisorytechnicalassistance projects.ThiscouldfreeADBstaffresources,which mightybedeployedinprojectsupervisionorin innovationinitiativesandtechnologytransfer. CreatingtheAtmosphereforaMoreInnovative andKnowledgeOrientedBank.ADBssystems havenotevolvedquicklyenoughtofitthePRC. Recommendations Thestudygavedirectionalinputstothepreparation ofanewcountrypartnershipstrategy.Inshort: StrengthentheQualityofNonlendingOperations forBetterInnovationandKnowledgeProducts. ADBshouldleverageadvisorytechnicalassistance
Learning Curves available @ www.adb.org/evaluation/

projects,raisetheefficiencyofprojectpreparatory technicalassistanceprojects,andusetheideasof counterpartagenciesandlocalthinktanks. DiversifytheLendingProgram.ADBshouldselect areastofocuson,retainacriticalmassoflending there,anddevelopthesupportingskillsbase. IncreasePrivateSectorOperations.ADBshould drawaroadmapandequipthePRCResident Missionforproactivebusinessdevelopmentin privatesectoroperations. IncreaseADBResponsivenesstoClientConcerns. ADBshouldstrengthenthePRCResidentMissions capacitytoimproveclientservices,strikeabalance betweeninhouseexpertiseandconsultingskills, movetoclientexecutionofadvisorytechnical assistanceprojects,andpilottesttheuseofcountry systemsforenvironmentalsafeguardsagainstADBs updatedenvironmentpolicy. DeepenRegionalCooperationInitiatives.ADB shouldprovideastrategicframeworkandintensify itsinvolvementasanhonestbrokerinafewkey areassuchastransportandtradefacilitation, cooperationoncrossborderissues,trade agreementsonenergyandcommodities,and disseminationofdevelopmentknowledgeand lessonslearned. Feedback ADBManagementsResponseagreedwithallthe recommendations,notingthatthesevalidatethe importanceofADBwidereforminitiatives.The ChairsSummaryoftheDevelopmentEffectiveness CommitteeDiscussionsconfirmedtheoverall assessmentrating.Itacknowledgedtheverystrong relationshipthatexistsbetweenthePRCandADB. However,itnotedthattherelationshipneedstobe renegotiatedalittletogiveADBmoreroomto maneuverintermsofprogramdesign,projectlocation, andfinancingissues.KnowledgetransferfromADBto thePRCshouldincludelearninghowtousealready availableknowledgeanddrawinglessonsfromother countries. 1 ADB.2007.CountryAssistanceProgramEvaluationfor thePeoplesRepublicofChina:SuccessDrivesDemandfor MoreInnovativeandResponsiveServices.Manila. Available: http://www.adb.org/Documents/CAPES/PRC/CAPE PRC.asp
Team Leader: Hemamala Hettige; Tel +63 2 632 5568; hhettige@adb.org