Revising ODA in the era of SDGs

By Andrea Vignolo, Executive Director of the Uruguayan Agency for International Cooperation, and Karen Van Rompaey, Knowledge Manager of the Uruguayan Agency for International Cooperation

SDGs
Discussions on the post-2015 development agenda have paved the way to new thinking about development as a multidimensional and global process. They also have built momentum for revising and modernising the concept and concessionality of Official Development Assistance (ODA).

ODA’s eligibility and graduation criteria are still based fundamentally on countries’ economic growth performance. A growing consensus among academic, practitioner and political communities 1 reveal that classifying countries according to their per capita income is inadequate to measure well-being or sustainability. Furthermore, it is not fit for the purpose of “leaving no one behind” in the era of universal sustainable development goals. 

Achieving sustainable development is a far more complex enterprise than achieving economic growth. It requires not only the latter, but also specific knowledge, technologies, the right incentives and institutional capacities to change the way we currently live, work, produce, consume, share the fruits of growth and treat the planet. Otherwise, the quest towards economic growth can lead to negative consequences for the environment and future generations.

Middle- and upper-income developing countries have had access to an enhanced domestic resource base in the past decade to set forth their development priorities. They increasingly have assisted other developing countries through South-South and triangular co-operation. As a result of this growth in their aggregate income, some of them, like Antigua and Barbuda, Chile and Uruguay, have been classified recently as “high-income countries.”

Is this just good news?

Despite past growth and progress in their human development indicators, most of these upper-income developing countries still face acute structural gaps and vulnerabilities that constitute persistent development bottlenecks. They need to close gaps in policies, institutions and capacities to ensure policy coherence towards sustainable development. They lag behind when it comes to accessing, for example, technologies and knowledge, both of which are the “game changers” 2 required to transform their current model of growth into sustainable development.

Moreover, the “rise of the South”3 has halted in Latin America and the Caribbean (LAC), threatening to jeopardize all progress made to date. Currently, the LAC region is experiencing a slowdown in trade, a decrease in investment in physical infrastructure as well as human capital and innovation, and a reduction in fiscal space. External vulnerability remains very high since most of the economies in the region lack diversification and are vulnerable to climate change 4.

Hence, ODA can play a strategic role to support these countries in the transition needed to build capacities in key areas/policy issues such as institutions, economic structures, risk management, social cohesion, research and innovation/technology to effectively achieve sustainable development.

Furthermore, by participating in triangular co-operation schemes, these developing countries can expand their contribution to global sustainable development by sharing their experiences, lessons learned and policy innovations.

Humankind stands at a critical juncture, when it is important to count on the contributions and support of all stakeholders to achieve the global sustainable development goals. It is therefore necessary to work towards an integral and non-exclusionary system of development co-operation that will fulfill the commitments made to date.

For an international co-operation system to be truly integral and non-exclusionary, it needs to provide the right incentives and overcome any zero-sum glance at the issues. While focusing on countries with greater challenges and less capacity to mobilise their own resources, ODA should support all developing countries according to their diverse conditions and needs. In this way, they can build their capacities and contribute towards global sustainable development.

Finally, it is thus necessary to review the OECD Development Assistance Committee’s current ODA graduation criteria to include other multidimensional measures of well-being and sustainability beyond GNI and an alternative timeframe, according to the scale of both the challenges and commitments of Agenda 2030 for Sustainable Development.

 


[1]  See the growing consensus on par. 129 of the Addis Ababa Action Agenda on Financing for Development and on the Sustainable Development Goal 17.19; Dasgupta, P. (2016): “What´s missing from the SDGs?”, Global Views,  Devex, available at https://goo.gl/1vqcBi;  Alonso, J.A., Glennie, J. and Sumner, A. (2014): Receptores y contribuyentes: Los países de renta media y el futuro de la cooperación para el desarrollo, DESA Working Paper No. 135, Julio 2014; Tezanos, S. and Sumner, A. (2012): Beyond Low and Middle Income Countries: What if there were five clusters of developing countries?, IDS Working paper, Volume 2012 No. 404, IDS; Stiglitz, J., Sen, A. and Fitoussi, J.P (2010): “Mis-measuring our lives: Why GDP doesn´t add up”, The New York Press: London and Fleurbaey, M. (2009): “Beyond GDP: The quest for a measure of social welfare”, Journal of Economic Literature, Vol. 47, Nr. 4, December 2009.

[2] Bokova, I., 2012 “An Integrated Policy Approach in STI for Sustainable Development”, in INSEAD-WIPO, The Global Innovation Index.

[3] UNDP, 2013. “Human Development Report 2013. The rise of the South: Human progress in a diverse world”: New York.

[4] Bárcenas, A. (2016). “Horizontes 2030: La igualdad en el centro del desarrollo sostenible”. Trigésimo sexto período de sesiones de la CEPAL. 23 al 27 de mayo de 2016. Ciudad de México.


This article should not be reported as representing the official views of the OECD, the OECD Development Centre or of their member countries. The opinions expressed and arguments employed are those of the author.


 

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