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1. What Does It Mean for Agencies to Be Effective in a Changing Development Landscape?

Author:
Rachael Calleja, Sara Casadevall Bellés, and Beata Cichocka
Publication Date:
01-2025
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
For official bilateral development agencies, the realities of providing effective development cooperation are increasingly complex, as competing demands and changing international and domestic contexts are raising fundamental questions around what it means to be an effective agency. This paper explores the concept of agency effectiveness to demonstrate why agencies – and their leadership – should consider how their structures and processes interact with the changing landscape as part of their efforts to remain relevant and resilient. To do so, we consider how the current challenges facing agencies – including the need to respond to climate change, global instability, and changing domestic political environments – affect why agencies act, what they do, and how they do it. We then explore dominant understandings of agency effectiveness, which provide a lens for thinking about what it may mean for agencies to be effective in the years ahead. Overall, we suggest that the challenges facing development agencies in the changing landscape raise key issues for agencies to consider, particularly around what they prioritise, how they are structured, and the capabilities or ways of working needed to respond to complex demands. While there is unlikely to be a single approach for agencies looking to adapt to changing contexts, considering the implications of new – and future – pressures for the work of development agencies will be a necessary first step towards supporting their resilience and relevance in the years ahead.
Topic:
Development, Humanitarian Aid, and Economic Development
Political Geography:
Global Focus

2. The Future of Official Development Assistance: Incremental Improvements or Radical Reform?

Author:
Masood Ahmed, Rachael Calleja, and Pierre Jacquet
Publication Date:
01-2025
Content Type:
Special Report
Institution:
Center for Global Development (CGD)
Abstract:
Over the last decade, donor country governments have faced new and additional demands for financing international challenges, including providing global public goods (GPGs) and addressing historically high numbers of refugees and humanitarian crises. They have partly done so by re-allocating their official development assistance (ODA) away from its original aim: to support poverty reduction and growth in developing countries. This has led to questions about the integrity and credibility of ODA. These questions are only likely to grow more pertinent in the coming decade because the pressures on ODA—and on public finances more broadly—are here to stay. ODA budgets are being cut in a number of traditional donor countries and what remains is increasingly being deployed to meet emerging needs beyond traditional development and to reflect a more national security perspective on development cooperation. The time is right, therefore, to ask whether the concept and accounting for ODA need to be modified to ensure that the needy and vulnerable it was designed to serve continue to be protected in the face of fiscal constraints and changing geopolitical circumstances. This report, a compendium on the future of ODA, aims to provide fresh thinking and inspire the action needed for ODA to remain relevant and effective. It brings together reflections and proposals from leading experts and practitioners, including the under-secretary-general and executive director of UNOPS to a former DAC chair, to inform policymakers. In this executive summary, we will introduce the key arguments from the compendium contributors. The contributions are organised into four key areas of discussion that reflect the main themes raised in this compendium: the rationale for ODA reform, the political and institutional realities shaping reform, using ODA for climate and leveraging private finance, and forward-looking proposals for reimagining ODA’s role and purpose.
Topic:
Development, Finance, Humanitarian Crisis, Donors, and Foreign Assistance
Political Geography:
Global Focus

3. Planned Relocation of Climate-Vulnerable Communities: Preparing Multilateral Development Banks

Author:
Steven Goldfinch and Samuel Huckstep
Publication Date:
02-2025
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
Planned relocation of highly climate-vulnerable communities is becoming increasingly necessary as climate shocks become more frequent and intense. It is also becoming more feasible as modelling of future scenarios improves and adaptation limits become clearer. Despite this, many governments are underprepared for planning and implementing planned relocation projects. In the absence of an intergovernmentally agreed framework or set of principles on planned relocation, development finance, and specifically climate finance, is not well positioned to respond to this emerging demand from countries. This is heightened by a widespread absence of coherent domestic policies, and by institutional gaps in international assistance. Multilateral development banks, in particular, could be well-placed to fill this gap. They have extensive experience in undertaking relocation projects, including in contexts of climate adaptation. Multilateral development banks will increasingly field borrower country demand for both technical and financial assistance. They are, however, not yet prepared to meet this demand, nor are countries adequately equipped to make applications for support. This paper outlines emerging public policy regarding planned relocation, draws from existing standards on development-forced displacement and resettlement, and explores entry points for development financiers in providing technical assistance and finance. The paper proposes recommendations to multilateral development banks and the global climate funds on engaging in this emerging area.
Topic:
Climate Change, Development, Refugees, Displacement, Resettlement, and Banking
Political Geography:
Global Focus

4. IMF, Structural Adjustment, and Poverty: A Cross-National Difference-in-Differences Analysis, 1980-2018

Author:
Shih-Yen Pan, Lawrence P. King, and Elias Nosrati
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The International Monetary Fund (IMF) has been one of the world’s most powerful international organizations in setting the parameters for economic reforms in the developing world. In this study, using data from 1980-2018 from 57 countries, we test competing hypotheses surrounding the impact of the IMF’s lending programs on poverty incidence in participant countries. Departing from the prevailing practice of relying on instrumental variables, we employ a novel difference-in-differences approach that ensures clean comparisons between “treatment” and “control” units based on their program participation histories. Besides providing a quantitative estimate of the average program effect, we evaluate whether the IMF’s alleged anti-poverty focus in recent decades has made any difference. We find that IMF program participation leads to large increases (3.6-5.7 percentage points) in the proportion of a country’s population living under the $3.65/day and $6.85/day international poverty lines (2017 PPP) and the countryspecific Societal Poverty Line. We also find that the poverty reduction measures incorporated by the IMF into its programs have not been effective in mitigating the poverty-increasing program effects. Overall, our findings show that IMF programs have been detrimental to the welfare of vulnerable populations in participant countries.
Topic:
Development, Economics, International Organization, and IMF
Political Geography:
Global Focus

5. The Distribution of Climate Finance among Annex-II Countries: A CBDR-RC Approach for Partial Funding of the Developing Countries

Author:
Shouvik Chakraborty
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Developing nations face the significant challenge of reconciling their efforts in climate change mitigation with the urgent need for financial resources to adapt to climate-related disasters, achieve sustainable development, and stabilize their economies. The financial requirements for addressing climate impacts span various sectors, including energy transition, energy efficiency, transportation, agriculture, forestry, other land use (AFOLU), and adaptation strategies. Estimates provided by reputable international organizations, such as the International Energy Agency (IEA), the International Renewable Energy Agency (IRENA), and the Intergovernmental Panel on Climate Change (IPCC), suggest that the annual global climate finance needs may range from $4.2 trillion to $5.7 trillion. Within this framework, the share allocated to developing countries is estimated to constitute approximately $1.9 trillion to $2.0 trillion annually, mainly to support mitigation efforts. It is widely acknowledged that developing countries are unlikely to meet these financial demands independently. Consequently, it is projected that around $1 trillion must be sourced from advanced economies, particularly the AnnexII countries. This paper introduces a methodology grounded in the principles of common but differentiated responsibility and respective capability (CBDR-RC). It facilitates a structured distribution of financing responsibilities among Annex II nations. The methodology incorporates the notion of historical responsibility, quantified as carbon debt, while also measuring capability through a balanced consideration of the wealth and gross domestic product (GDP) of the AnnexII countries. The analysis conducted reveals that the United States of America (USA) is required to contribute nearly half of the total financial obligations among the AnnexII countries, with the remaining funds to be apportioned among other nations within this group.
Topic:
Development, Finance, Climate Finance, and Burden Sharing
Political Geography:
Global Focus

6. Global health at a crossroads: policy recommendations in light of the Lancet Global Health 2050 Report

Author:
Christoph Strupat, Marco Schäferhoff, Martin Siegel, and Anna-Katharina Hornidge
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
At a time of global crisis and competing priorities, investing in health is among the most impactful and cost-effective decisions governments and stakeholders can make. Beyond being a fundamental right, health is a catalyst for growth, stability and resilience – particularly in uncertain times. The new Global Health 2050: the path to halving premature death by mid-century (Global Health 2050) report (Jamison et al., 2024) of the Lancet Commission on Investing in Health (the Commission) builds on a legacy of evidence-driven reports to provide strategies for making health a cross-cutting enabler of the Sustainable Development Goals (SDGs). Global Health 2050 provides a roadmap for further health improvements in all countries by mid-century, arguing that by 2050 countries can reduce by 50% the probability of premature death (PPD) in their populations. The Commission calls this goal “50 by 50”. Germany has solidified its role in global health through significant investments in the health sector and by designating global health as a political priority, as demonstrated by its Global Health Strategy and the inclusion of global health as one of the core themes of the Federal Ministry for Economic Cooperation and Development (BMZ). Given this political priority, it is essential to assess the implications of the Global Health 2050 report for Germany’s global health agenda, especially as global health stands at a crossroads following the withdrawal of the United States (US) from the World Health Organization (WHO) and cuts to its global health programmes. Therefore, the aim of this policy brief is to build upon the Commission’s findings and draw from scientific evidence to provide key recommendations for Germany’s global health agenda. Five recommendations have been synthesised that align with Germany’s global health engagement and offer promising strategies to help achieve the 50 by 50 goal: 1. Sustain or ideally increase funding for the Gavi, The Vaccine Alliance, and the Global Fund to Fight AIDS, Tuberculosis and Malaria at the upcoming replenishment conferences and strengthen Germany’s global health leadership through strong bilateral support, investments in pandemic preparedness and response (PPR) and better interministerial coordination. 2. Reconsider non-communicable diseases (NCDs) in future strategic direction of German international cooperation by reducing financial and geo-graphical barriers to access to medicines and addressing key NCD risk factors. 3. Promote health taxes on tobacco, alcohol, and sugar-sweetened beverages that can serve as an effective strategy to improve public health and generate domestic revenue. 4. Increase funding for R&D in neglected diseases. Expand regional manufacturing, and enhance global health innovation coordination to strength-en global health security and reduce dependence on external supply chains. 5. Nepal serves as a good example of Germany’s bilateral health and social protection support: advancing the 50 by 50 goal could be achieved by strengthening national health insurance, addressing climate risks, expanding health taxes and enhancing pharmaceutical access through the Arrow mechanism.
Topic:
Development, Investment, Public Health, Global Health, and Disease
Political Geography:
Global Focus

7. Enhancing public works programmes: sustainable impact through participatory asset creation and digitalisation

Author:
Francesco Burchi and Tekalign Gutu Sakketa
Publication Date:
01-2025
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Public works programmes (PWPs) are widely used social protection instruments in low- and middle-income countries. Participants carry out temporary, labour-intensive works in exchange for cash or in-kind compensation. The available empirical evidence indicates that these programmes are usually effective in improving outcomes such as food security and earnings in the short term, but these positive effects rarely persist in the long term. Our knowledge of PWPs’ effectiveness is, however, incomplete as scholars have mostly examined programme impacts through the wage channel, largely neglecting the skill-development and, especially, the asset channels. PWP participants engage in the construction of assets, such as roads, check dams and sewage systems, that could provide important benefits for the whole community. Without assessing these effects, it is normal to arrive at the general (biased) conclusion that cash transfers (CTs) are always more cost-effective than PWPs. Moreover, the effectiveness of PWPs largely depends on programme design, implementation and context. Based on the existing empirical evidence and our recent fieldwork to analyse Malawi’s PWP, this policy brief provides the following policy recommendations for how to enhance the potential of these programmes. • Policy-makers should design PWPs to guarantee stable, reliable employment; set wages not higher than market levels but high enough to incentivise participation; ensure transparency in the targeting, possibly by involving communities and at the sametime avoiding elite capture; align the timing of work cycles with local agricultural calendars; and assign tasks in a way that reduces travel burdens,especially for women. • Policy-makers should promote active community participation in the identification and maintenance of the assets created through PWPs. Evidence points to the importance of community participation for the implementation of higher quality infrastructure and better long-term maintenance. Only in this way, can these assets provide sustainable benefits not just for programme participants, but for the entire community. Approaches like those used in Ethiopia and Malawi can serve as models to enhance active community participation in the programme cycle. • Digitalisation of PWPs (and social protection ingeneral) should be promoted as it offers great advantages, but specific measures should be adopted to avoid their negative consequences: 1. The construction of a digital registry of beneficiaries is a great tool to reach the intended beneficiaries and coordinate the various schemes. Development cooperation actors should provide technical support for the creation and updating of these databases, then leave them in the hands of national institutions. 2. The digitalisation of reporting systems for work activities is likely to improve the accuracy and efficiency of the information reported. To achieve this, it is essential to provide the “digitisers” withproper training. 3. It is important to move from physical cash payments to e-payments, but it is firstly necessary to ensure adequate digital literacy through training. Moreover, to compensate for the impossibility to interact with programme officials at the time of payment, PWPs should include complaint handling points, as is done in India.
Topic:
Development, Digitalization, Assets, and Social Protection
Political Geography:
Global Focus

8. Can guarantees effectively leverage financing for SMEs in low- and middle-income countries?

Author:
Bao-We-Wal Bambe
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Achieving the Sustainable Development Goals (SDGs) will require significant financing and investment, particularly as growing challenges from climate events highlight the insufficiency of public funds to meet the 2030 Agenda (World Economic Forum 2024). Private capital for low- and middle-income countries (LMICs) surged in recent years, with significant commitments from multilateral development banks (MDBs). However, the financing gap to achieve the SDGs remains sizable, highlighting the need for greater effort to mobilise much larger private capital for sustainable development. In recent years, guarantees have emerged as a key leveraging mechanism. They are designed to mitigate high investment risks to support private capital mobilisation in LMICs. However, despite some progress, guarantees are used sparingly, suggesting considerable scope for increasing their scale, as highlighted by the G20 Independent Expert Group (IEG). This Policy Brief examines whether guarantees can serve as an effective leveraging mechanism for small and medium-sized enterprises (SMEs) in low- and middle-income countries (LMICs). This is especially so because SMEs remain largely hampered by poor access to finance, despite their key role in providing jobs for the local population and contributing to economic growth. Moreover, in the face of climate change, SME adaptation requires new investments in climate-resistant technologies and clean energies, highlighting the need for additional financing amid severe constraints on access to capital. Guarantees can complement other leveraging mechanisms, further easing financing constraints for SMEs in LMICs. Guarantees can absorb some of the risks associated with investment, offering financial institutions greater security. This added security can, in turn, help improve access to capital for SMEs. On the other hand, they can also help catalyse private sector investment in LMICs. Recognising both the potential benefits and short-comings of guarantees, this Policy Brief provides the following policy recommendations on how guarantees could be extended efficiently to the SME sector in LMICs. • Guarantees should be directed at financial institu-tions to mitigate portfolio risk and actively promote lending to small projects or SMEs in high-risk sectors, particularly those with the potential to generate substantial economic, environmental, or social benefits. • Complement guarantees with additional measures to improve SMEs’ financial management, enhance risk assessment, and strengthen technical capacity through professional training and advisory services. • Implement partial credit guarantees to require financial institutions to retain a share of the risk, thereby reducing moral hazard and promoting rigorous analyses of borrowers’ creditworthiness. Complement these guarantees with conditionalities and monitoring criteria, such as regular reporting, to ensure the incrementality and additionality of guaranteed financing. Enhance the harmonisation of guarantees with other leveraging mechanisms, improve coordination among MDBs and DFIs, and streamline guarantee frameworks to achieve greater efficiency. • Recognise that guarantees alone cannot address structural vulnerabilities and institutional weakness in LMICs; a long-term commitment from decision-makers is essential to improve institutional and economic performance.
Topic:
Development, Finance, Sustainable Development Goals, and Investment
Political Geography:
Global Focus

9. A new development paradigm and strategy for the OECD (and beyond): what should the ‘D’ of OECD stand for?

Author:
Andy Sumner, Stephan Klingebiel, and Arief Anshory Yusuf
Publication Date:
01-2025
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This paper examines the evolving role of the Organisation for Economic Co-operation and Development (OECD) in addressing global development challenges in the mid-2020s. At a time when a new development strategy is being drafted for the OECD, we provide a fresh perspective by exploring the tensions inherent in the definition of “development” and asking whose development the OECD seeks to support. Historically, the OECD extended its remit beyond its membership through mechanisms such as Official Development Assistance (ODA). However, considering the increasing prominence of South–South cooperation, private sector investment and intensifying geopolitical competition, ODA alone is insufficient for sustainable development needs, and for many countries of the Global South ODA no longer matters as much as it used to due to the growth of domestic resources. One of the most significant shifts within the OECD itself in recent years is in its identity, largely as a result of its expanding membership. This now totals 38 countries, including some from the Global South, and this trend is set to continue, with a set of Southern countries currently in the accession process. While this enlargement may strengthen the OECD’s relevance in a multipolar world, it also challenges the organisation’s traditional identity as a “club of mostly rich countries”, as The Economist has often referred to it. Employing a novel 2x2 matrix framework, we delineate four strategic scenarios for OECD development strategy: (i) “traditional development” within OECD member states (D-within), (ii) traditional development beyond OECD membership (D-beyond), (iii) “frontier development” within OECD member states, and (iv) frontier development beyond the organisation’s membership. The use of the term “traditional development” refers to an aggregate growth orientation of development without reference to inclusivity or sustainability. “Frontier development” is then the converse. The authors argue for an OECD development strategy that bridges “D-within” and “D-beyond”, by acknowledging the transnational spillover effects of the domestic policies of OECD countries on the Global South. Further, across the matrix framework, we advocate for the OECD to strengthen its engagement with the analysis and promotion of policy coherence for sustainable development (PCSD) as a means of providing global leadership in sustainable development. In theory, promoting PCSD necessitates the integration of economic, social and environmental dimensions across all policy areas, alongside a commitment to addressing long-term and transboundary impacts. Further, we highlight the imperative of engaging non-member states to enhance the inclusivity and relevance of the OECD’s development strategy within an increasingly multipolar global order. In sum, we argue that the OECD is at a pivotal juncture. Its capacity to adapt and redefine its developmental mandate will determine its future relevance in the global governance architecture. By prioritising leadership on global sustainable development, PSCD and an inclusive approach to non-OECD members, the OECD has the potential to serve as a transformative force.
Topic:
Development, International Cooperation, and OECD
Political Geography:
Global Focus

10. Financing for development: from Monterrey to Seville

Author:
Stephan Klingebiel, Jorge A. Pérez-Pineda, and Kathrin Berensmann
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The United Nations financing for development process, including the Fourth International Conference on Financing for Development (FfD4) in Seville in 2025, is an important building block to foster global cooperation amid the current geopolitical tensions and multiple crises that have led to increased development financing needs on the one hand, and increased spending on the other, with the OECD estimating that the financing gap in funding required for developing countries to achieve the Sustainable Development Goals is $3.9 trillion per year. Against this backdrop, a coordinated international effort is essential to increase the scale and effectiveness of development financing and promote sustainable development globally, particularly in line with the 2030 Agenda. The overarching goal of the FfD process, including FfD4, is to mobilise adequate financial resources for the sustainable development of countries in the Global South, and to design appropriate architectures for development and sustainable finance. The FfD process is unique in that it takes a holistic approach, involving all sources of development finance and all public and private stakeholders. In this respect, the FfD process has an extraordinary convening power. The purpose of this Discussion Paper is to provide meaningful input to the preparatory process of FfD4 by offering insights into key challenges, opportunities and innovative approaches. The paper aims to contribute to the broader dialogue on financing for sustainable development and support informed decision-making for a robust and inclusive development agenda beyond 2030. Topics range from reforms of official development assistance, innovative approaches to private-sector and sustainable finance, and innovative reforms of multilateral development banks.
Topic:
Development, United Nations, Finance, Sustainable Development Goals, and OECD
Political Geography:
Global Focus and Global South