Overcoming the Challenges of the Transition and Exit from Aid

By Annalisa Prizzon, Senior Research Fellow, Overseas Development Institute 

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Flat stairs, Sao Paulo by Jared Yeh / Flickr CC-BY-NC-ND

Since 2000, the number of low-income countries (LICs) has more than halved — from 63 to 31 — and have now joined the ranks of middle-income countries (MICs). Typically, these economies have strengthened their macroeconomic management, played a stronger and more visible role in global policy, diversified their sources of finance and received less external development assistance (or ceased to benefit materially from it).

As developing countries become richer and address their own development challenges, donors usually reconsider their programming and interventions. And so, transition and exit from bilateral development co-operation programmes should rightfully be celebrated as an indicator of success in economic and social development.

Challenges facing financing for development

However, as countries graduate from soft windows of multilateral development banks or as bilateral donors cut their country programmes — or they shift to loans if that is an option — the financing mix changes. Reliance on tax revenues and commercial finance when aid starts falling inevitably expands, and so does the costs to service debt obligations. Tax revenues do not necessarily increase to fill the gap. Continue reading

The Green Eureka Moment: Investing and Inventing to Stop Climate Change

By Raluca Anisie, Carbon Impact Analyst and Paul Hailey, Head of Impact, responsAbility Investments AG

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A family bakery in Ecuador that used a green loan from a GCPF investee to buy a more energy-efficient oven. Photo: José Jacomo

In the 3rd century B.C., Archimedes declared: “Give me a place to stand and with a lever I will move the world.” This phrase speaks to the potential of the right tools at the right time, but as anyone who has tried to build flatpack furniture will confirm, not having the right tools can derail any project, however grand.

In 2019, our quest to find and use the right tools to move the world is more urgent than ever. As UNEP stated at COP24, we are the last generation that can stop climate change. This challenge requires a mobilisation of investment on an unprecedented scale, yet enormous gaps remain, especially in the developing world. Filling these gaps will require ground-breaking investment approaches like blended finance, a method that uses public money to improve the risk profile of investments to catalyse private funding. However, tools such as blended products will also need to credibly demonstrate impact to attract and retain public and private investors. Continue reading

Three trade challenges for LDCs to converge and eradicate poverty

By Anabel González, Nonresident Senior fellow at the Peterson Institute for International Economics; Former Costa Rica Minister of Trade, World Bank Senior Director for Trade & Competitiveness, and World Trade Organization Director for Agriculture


This blog is part of a special series marking the 3 July 2019 launch in Geneva of the joint OECD/WTO publication Aid for Trade at a Glance 


AFT coverBangladesh is preparing to graduate from the category of least developed countries (LDCs). Robust multi-year economic growth of more than 6-7% has helped this South Asian nation make remarkable progress in reducing extreme poverty from 44.2% in 1991 to 13.9% in 2017. In parallel, life expectancy, literacy rates and per capita food production have increased significantly. Rapid growth enabled Bangladesh to reach the lower middle-income country status in 2015; it now aspires to become an upper middle-income country by its 50th anniversary in 2021. Trade has been at the heart of this success story (see Figure 1). Exports of textiles and garments are driving integration into the global economy, with new products becoming part of the country’s export basket. Will Bangladesh be able to continue to rely on trade for increased growth? Will conditions remain for other LDCs to follow?

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A perspective from the financial sector on sustainable business

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By Professor Angela Sansonetti, Golden for Impact Foundation


This blog is part of a special series exploring subjects at the core of the Human-Centred Business Model (HCBM). The HCMB seeks to develop an innovative – human-centred – business model
based on a common, holistic and integrated set of economic, social, environmental and ethical rights-based principles. Read more about the HCBM here, and check out an event about it here
The HCBM project originated in 2015 within the World Bank’s Global Forum on Law, Justice and Development and is now based at the OECD’s Development Centre.

For too long, the financial system worked on its own set of principles focused on attracting clients and maximising short-term profits. These principles, growth within a capitalist and closed economy, are no longer suitable in a circular and sharing economy focused on customer needs as well as on environmental, social and governance rules. Today, several forces are pushing towards a new framework oriented to sustainable development, social innovation and human-centred approaches based on these rules.

In this transition environment, the financial system, plays a key role in driving economic growth towards values of sustainability based on promoting, amongst other factors, greater environmental responsibility, climate resilience, low-carbon, human rights, gender equality, social inclusion and sustainable economic growth. The financial system results from a long-term evolution related to global economic growth and founded on macro-economic choices as well as defined legal, technological and government rules. However, nothing is irreversible. So, in this changing context, sustainable finance plays a key role to support the shift from traditional economies based on high-impact and high-carbon industries to clean-energy and low-carbon sustainable industries.

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Triangular, the shape of things to come?

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By Mario Pezzini, Alicia Barcena, Stefano Manservisi 


This blog is part of an ongoing series evaluating various facets
of 
Development in Transition


As the global community gathers in Argentina to mark the 40th anniversary of the United Nations Conference on Technical Cooperation among Developing Countries, we have an additional opportunity to discuss, debate, and design a reinvigorated international co-operation system.

And something as small as what is currently called “triangular co-operation” can take centre stage in that system. Just like few imagined that the European Coal and Steel Community created in 1950 would grow into what the European Union is today, we think triangular co-operation’s future potential could very well dwarf its current status.

Rather than rationalise business as usual, we believe triangular co-operation could give us, instead, wide space for unleashing new thinking about the promise and value of multi-partner engagements to advance inclusive and sustainable development.

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The Future of Development Co-operation: Not the end, just the beginning of a new era?

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By Andy Sumner, King’s College London


This blog is part of an ongoing series evaluating various facets
of 
Development in Transition
The 2019 Perspectives on Global Development
on 
Rethinking Development Strategies adds to this discussion


immigration-integrationYesterday’s blog listed five areas of change related to global poverty and economic development in developing countries. What do these changes mean for development co-operation?

First, development co-operation needs to adapt to the new polarisation within the developing world. More precisely, the old model of supporting ‘stuck’ and ‘ODA-dependent’ developing countries needs to be complemented with a new model of collaborating with ‘moving’ and ‘post-ODA’ developing countries.

Second, development co-operation to support expanding social welfare regimes and social protection systems focused particularly on children is important to disrupt the inter-generational transmission of poverty, especially given that under 18-year olds make up half of global poverty.

Over 100 developing countries have already established cash transfer schemes, which indicates that these systems are already being built, and systematic reviews concur on poverty reduction impacts. A global knowledge bank on building social welfare and social protection systems is thus one potential area for post-ODA development co-operation. Continue reading

Comprendre l’initiative P20 : Une nouvelle approche de la définition de la pauvreté et des moyens de la combattre

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Abdoulaye Bio Tchané, Ministre d’État du Plan et du développement, Bénin


Pour en savoir plus sur ce thème, se reporter à la (version française) du rapport Coopération pour le développement 2018 : Agir ensemble pour n’oublier personne


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En tant que décideurs et responsables de l’action publique en Afrique, l’une des questions qui nous posent toujours problème est de définir et d’identifier clairement ce qu’est l’extrême pauvreté, et qui en sont les victimes. Au vu de mon expérience d’ancien Ministre des Finances et d’actuel Ministre d’État du Plan et du développement du Bénin, nos budgets nationaux ont toujours été par essence sociaux. Qu’entend-on par là ? La pression que font peser sur nous la pauvreté, la fragilité et la vulnérabilité nous condamne à gérer l’urgence ; et l’urgence en Afrique revient à garantir la survie au quotidien de nos concitoyens.

Toutefois, en dépit de lourds investissements dans des programmes sociaux, les frontières de la pauvreté ne reculent pas aussi vite que nous l’aurions espéré. Il y a à cela de multiples explications possibles, mais notre mission est de trouver des moyens de résoudre la question – et ce, de façon à atteindre en priorité les plus défavorisés. C’est à cette fin que le Gouvernement du Bénin, en partenariat avec le Gouvernement de la Suisse et l’ONG Development Initiatives, a lancé l’initiative P20 dans le but de remédier à la pauvreté et à la vulnérabilité, et d’honorer notre engagement de ne laisser personne de côté.

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