Development in Transition

Overcoming the Challenges of the Transition and Exit from Aid

Development Matters Development finance, Development in Transition , , ,

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 →

Triangular, the shape of things to come?

Development Matters Development finance, Development in Transition , ,

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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.

Continue reading →

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

Development Matters Development finance, ODA, policy ,

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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 →

5 facts about global poverty that may surprise you

Development Matters policy , , ,

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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

poverty-DiT-facts

This blog is the first of two. Part one outlines five facts about global poverty and economic development in the developing world and discusses how the nature of development is changing. Part two, which will post tomorrow, will consider the implications of these changes for future development co-operation.

Fact 1. A new polarisation is emerging in the developing world. A new polarisation is emerging within the developing world between ‘moving’ and ‘stuck’ countries, as well as between ‘high-ODA’ and ‘post-ODA’ countries. Continue reading →

What’s the path to sustainable development?

Development Matters policy , , , ,

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By Mario Pezzini, Director, OECD Development Centre, and Special Advisor to the OECD Secretary-General on Development

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

Cover-PGD_2019What’s the path to sustainable development? In this era of the Sustainable Development Goals (SDGs) — when all countries face both new challenges and new opportunities for improving the lives of their citizens in inclusive, holistic and environmentally sustainable ways – the question remains as relevant as ever.

Some may think the question was answered in the 2000s when we witnessed the transformation of the global economic geography. Whereas only 12 developing countries in the 1990s managed to double the OECD per-capita growth rates, 83 developing countries managed to do so a decade later. By 2008, developing and emerging economies made up 50% of the global economy for the first time. And the 15-fold surge in South-South trade linkages from 1990 to 2016 and the jump in development finance from USD 3.2 billion in 2003 go USD 15.6 billion in 2012 provided by large emerging economies, notably China, are clear proof points of this new economic geography.

Yet, this upswing in global economic growth masks two underlying issues that we cannot ignore on the road to sustainable development.

Continue reading →

What does it take for a Development Bank to succeed?

Development Matters Development finance, policy , , ,

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By João Carlos Ferraz, Instituto de Economia, Universidade Federal do Rio de Janeiro, Brazil

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” will add to this discussion

bank-finance-growth-financePublic finance institutions, or development banks, have “development DNA”. But, can they effectively engage in financing “development in transition” or the call to rethink international co-operation to help countries at all levels of income sustain their development gains? What would it take for such institutions to succeed? How can they anticipate and effectively respond to societal and market needs and aspirations?

Political space for this does exist. A consensus exists that development banks must have at least four priorities: infrastructure, innovation, sustainable environment and firms of smaller size. That’s the easy part! No policy maker or analyst in their right mind would be against these priorities. But, consider the nature of these priorities: each one is time- and place-specific but evolving permanently; they are moving targets. More importantly, they are risk-intensive, given the duration and unpredictability of associated projects and/or the potentially low credit worthiness of economic agents pursuing these priorities.
Continue reading →

Africa: Time to Rediscover the Economics of Population Density and Development

Development Matters Africa , , , ,

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By Professor Erik S. Reinert, Tallinn University of Technology, and Dr. Richard Itaman, King’s College, London

Learn more about this timely topic at the upcoming
18th International Economic Forum on Africa

Africa-Industrialisation-Factory.jpgAt the OECD’s origin, we find the 1947 Marshall Plan that re-industrialised a war-torn Europe. At the very core of the Marshall Plan was a profound understanding of the relationship between a nation’s economic structure and its carrying capacity in terms of population density. We argue that it is necessary to rediscover this theoretical understanding now, in the mutual interest of Africa and Europe.

In early 1947, worries grew in Washington that an impoverished Germany – where manufacturing industry had been forbidden under the Morgenthau Plan – would fall an easy prey to the Soviet Union. US President Truman therefore sent former president Herbert Hoover on a fact-finding mission to Germany. One powerful sentence in Hoover’s Report of March 18 that year zeroed in on the basic problem:

‘’There is the illusion that the New Germany left after the annexations can be reduced to a ‘pastoral state’. It cannot be done unless we exterminate or move 25.000.000 out of it’.1 

Hoover understood that the population density of a country is determined by its economic structure: Industrialisation makes it possible to dramatically increase the population carrying capacity of a nation. ‘Exterminate’ was an extremely strong word to use after the horrors of World War II, and everyone understood that there was no place where 25 million Germans could be sent: Re-industrialisation was the only option. Continue reading →