By María del Pilar Garrido Gonzalo, Director, Development Co-operation directorate, OECD
The recent Paris Summit for a New Global Financing Pact turned a page of the development co-operation history that was written in Bretton Woods in 1944. Back then, the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) were founded with a limited scope, catering to a world of fewer than a hundred independent countries. The focus was on Europe’s reconstruction and balance of payments, illustrated by France’s pioneering IBRD loan. However, the landscape has drastically changed, with over 150 countries striving for high-income status, more than 650 million people in extreme poverty, and urgent challenges stemming from climate change and biodiversity loss.
The Organisation for Economic Co-operation and Development (OECD) and its Development Assistance Committee (DAC) have been integral to the historical development co-operation framework for over sixty years. The DAC, a leading forum for bilateral development co-operation, has monitored finance flows, guided policies, shared best practices, and contributed to the global financial architecture. Most notably, the DAC has given birth to the ‘gold standard’ of development co-operation that is Official Development Assistance (ODA). Despite its accomplishments, the DAC, like other institutions, requires reform to align with modern needs.
To make development co-operation fit for 21st-century sustainable development challenges, the OECD and the DAC have a key role to play in three areas:
A fresh narrative and framework: The 2015 Addis Ababa Action Agenda (AAAA) emphasized the private sector’s role in funding Sustainable Development Goals (SDGs). This has blurred the lines between public and commercial interests, raising questions about ODA and investment distinctions. Varied perspectives on ODA’s nature – solidarity vs. investment – have emerged. The concept of global public goods, underpinning some of the SDGs, further challenges development co-operation boundaries. A new narrative is necessary, one tailored to the SDG era, accommodating diverse visions of development co-operation while channelling resources to the needy and encouraging investment via enhanced ODA.
Holistic measurement of contributions: The traditional lens of ODA no longer captures all SDG support efforts. The OECD has worked to broaden development co-operation statistics’ inclusivity and quality, including non-DAC countries and philanthropic organisations. Total Official Support for Sustainable Development (TOSSD) was introduced, encompassing ODA, Other Official Flows (OOF), private finance mobilised, South-South co-operation, triangular co-operation, and contributions to global public goods. TOSSD now collects more than one million activities from 105 providers in support of sustainable development, amounting to USD 394 billion of disbursements in 2021. TOSSD’s evolution involves transitioning to an independent International Forum with global reach by 2024.
Revamping the global financing architecture governance: The DAC’s establishment in the 1960s aimed to enhance co-ordination and effectiveness among bilateral ODA providers. However, the landscape has evolved, with new actors like Global South providers, philanthropic organisations, and private investors entering the scene. Over 40% of DAC members’ ODA flows through multilateral systems via 200+ multilateral organisations or funds. Fragmentation hampers effectiveness. While remaining a cornerstone, the DAC should become more inclusive and globally oriented. Initiatives like regional dialogues (LAC-DAC, Arab-DAC) and better co-ordination tools for multilateral development finance should be accelerated.
As we approach the 2024 Summit of the Future and the 2025 Fourth Financing for Development Conference, the OECD and the DAC are poised to drive this three-fold reform agenda. They aim to secure their positions as key actors in the emerging global financing architecture. The OECD will actively engage in reform discussions across various forums – UN, G7, G20, COP, WB/IMF Annual Meetings – to mobilise resources needed to achieve SDGs for a more equitable shared future.