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721. What is Social Finance? Definitions by Market Participants, the EU Taxonomy for Sustainable Activities, and Implications for Development Policy

Author:
Sören Hilbrich
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The market for social financial instruments is rapidly growing. The issuance of social bonds, for instance, reached $149.4 billion in 2020, showing an extraordinary growth of 720% compared to 2019 (ADB, 2021, p. 14). By providing capital for certain types of investments associated with positive social impacts, these instruments are intended to close funding gaps that hamper the realisation of social goals, as laid down, for instance, in the 2030 Agenda for Sustainable Development. In addition, social finance might set incentives for enterprises to engage in more sustainable business models that would give them access to social financial instruments potentially associated with a lower cost of capital. However, the magnitude of the potential contribution to society of social finance is a matter of debate. This paper focuses on an important challenge for social finance that concerns the plurality of existing definitions of social investments. The paper provides an overview of the definitions followed by market participants, describes the EU taxonomy for sustainable activities as a potential standard in this context, and discusses implications for development policy.
Topic:
Development, Markets, European Union, Sustainability, Bonds, and Social Finance
Political Geography:
Global Focus

722. Social Cohesion: A New Definition and a Proposal for its Measurement in Africa

Author:
Julia Leininger, Francesco Burchi, Charlotte Fiedler, Karina Mross, Daniel Nowack, Armin von Schiller, Christoph Sommer, Christoph Strupat, and Sebastian Ziaja
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Social cohesion is key for sustainable development. While social cohesion has suffered in many societies from the consequences of the Covid-19 pandemic, high levels of social cohesion have helped to overcome critical situations during the pandemic in other societies. As a consequence, protecting and strengthening social cohesion has become an increasingly central goal for most countries and the international community. Despite the strong interest in the topic, the questions of how to define social cohesion and make it an observable phenomenon through proper measurement are still contested, in both academia and policy circles. To date, no consistent, temporally and geographically spread-out data on the different elements of social cohesion exists that would allow for a global analysis of social cohesion. This rather fragmented picture of analytical approaches calls for a more universal definition and measurement of social cohesion. This paper aims to provide a narrow and measurable definition of social cohesion that travels across regions and countries. Conceptually, it proposes a definition of social cohesion that incorporates the core elements of existing and widely used definitions of social cohesion across disciplines (trust, identity, cooperation for the common good). Our contribution is to offer a definition of social cohesion that is broad enough to cover the essentials holding societies together while at the same time keeping it lean enough to analyse the causes and consequences of social cohesion, for instance the relationship between social cohesion and inequalities or political institutions. Methodologically, we propose an application of our concept to the African context. It is not only a first step towards a more global and inter-regional measurement of social cohesion, but also the basis for further knowledge-creation, the identification of patterns of social cohesion and the analysis of its causes and consequences. From a policy-oriented perspective, a more unified definition of the core elements of social cohesion and its measurement can inform policies that aim at protecting and fostering social cohesion. In development cooperation, it will help not only to build indicators for designing programme objectives and for evaluation and monitoring, but also to advance evidence-based theories of change.
Topic:
Development, Sustainability, Social Cohesion, and COVID-19
Political Geography:
Africa

723. Does COVID-19 Change the Long-Term Prospects of Latecomer Industrialisation?

Author:
Tilman Altenburg, Clara Brandi, Anna Pegels, Andreas Stamm, Christiaan Vrolijk, and Tina Zintl
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This study explores to what extent the COVID-19 crisis affects the long-term prospects for industrial development. The focus of the study is on latecomer economies – those facing an uphill battle because they joined global markets at a point in time when other economies had already established global production networks. In a first step, we analyse how the prospects for industrialisation are changing, mainly as a consequence of three global megatrends: digitalisation and automation of production; global economic power shifts; and the greening of economies. These trends create new opportunities for latecomer industrialisation, but they also raise entry barriers to markets, especially for country with weak innovation systems. We then explore COVID-19 effects through the analytical lens of the pre-COVID megatrends. While the pandemic has had a severe impact on the world economy, such impacts will not change the ongoing trends fundamentally. The ongoing recovery from COVID-19 is not showing much structural transformation – despite many voices demanding to “build back better”. Yet, the pandemic is accelerating or decelerating some of the previous trends. One is the trend towards online trading. The dominance of international trading platforms may lead to concentration in “upstream” activities such as manufacturing, crowding out weaker market actors. At the same time, platform economies are boosting delivery activities, such as courier services. Another trend that may be accelerated by the pandemic is towards the reshoring of previously offshored productive tasks, yet, evidence here is mixed, and we may see other risk-hedging strategies rather than large-scale reshoring. We may also see the gap between dynamic economies in East/Southeast Asia and other developing regions widening, because the former recovered faster due to vaccination programmes and fiscal stimulus packages. Regarding the greening of economies, some major economies initiated green fiscal stimulus packages, accelerating for example the development of global green hydrogen economy. Also, the trend towards tele-work is reducing emissions from the transport sector. Overall, however, the pandemic does not seem to alter the ongoing, but slow, progress towards greener economies. We conclude with police recommendations in five domains: i) Fostering economic resilience through economic diversification; ii) the need to develop pharmaceutical and medical supply industries in all countries; iii) increased investments in digital capabilities, including the ability to regulate platform economies; iv) strengthening domestic revenue generation to increase policy space and resilience, including pro-environmental fiscal reforms; and v) improving international governance e.g. in the domains of intellectual property rights and technology-sharing.
Topic:
Development, Economics, Governance, Industrialization, Resilience, and COVID-19
Political Geography:
Global Focus

724. The EU-UNDP Partnership and Added Value in EU Development Cooperation

Author:
Erik Lundsgaarde
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
European Union (EU) funding for United Nations (UN) organisations has expanded significantly over the last two decades. The EU’s partnership with the United Nations Development Programme (UNDP) is an important example of EU-UN cooperation, and UNDP was the fourth-largest UN recipient of European Commission funds in 2018. Against the backdrop of UN and EU reforms that aim to strengthen multilateralism and promote more integrated development cooperation approaches, this paper outlines priority areas in EU-UNDP cooperation and modes of cooperation. The term “added value” provides an entry point for identifying the rationales for EU funding to UNDP. In EU budgetary discussions, added value is a concept used to inform decisions such as whether to take action at the EU or member state levels or which means of implementation to select. These choices extend to the development cooperation arena, where the term relates to the division of labour agenda and features in assessments of effectiveness. The paper explores three perspectives to consider the added value of funding choices within the EU-UNDP partnership relating to the division of labour between EU institutions and member states, the characteristics of UNDP as an implementation channel and the qualities of the EU as a funder. On the first dimension, the large scale of EU funding for UNDP sets it apart from most member states, though EU funding priorities display elements of specialisation as well as similar emphases to member states. On the second dimension, UNDP’s large scope of work, its implementation capacities and accountability standards are attractive to the EU, but additional criteria – including organisational cost effectiveness – can alter the perception of added value. Finally, the scale of EU funding and the possibility to engage in difficult country contexts are key elements of the added value of the EU as a funder. However, the EU’s non-core funding emphasis presents a challenge for the UN resource mobilisation agenda calling for greater flexibility in organisational funding. Attention to these multiple dimensions of added value can inform future EU choices on how to orient engagement with UNDP to reinforce strengths of the organisation and enable adaptations envisaged in UN reform processes.
Topic:
Development, United Nations, Reform, European Union, Partnerships, and Funding
Political Geography:
Global Focus

725. The Rise of the Team Europe Approach in EU Development Cooperation: Assessing a Moving Target

Author:
Niels Keijzer, Aline Burni, Benedikt Erforth, and Ina Friesen
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This paper analyses the European Union’s (EU) evolving motivations, priorities and current approaches to development cooperation under the label of “Team Europe”, following its introduction in April 2020 as the European Union’s global response to the COVID-19 pandemic. It assesses what Team Europe is, to what extent and how the Team Europe approach has changed the EU’s development cooperation, which effects it has on EU initiatives to support partner countries, and discusses the implications of Team Europe on the EU’s development policy in the medium and long term. The paper analyses the Team Europe approach along four dimensions, which are traditionally emphasised in the EU’s development policy: (i) visibility, (ii) effectiveness, (iii) ownership and (iv) integration. It concludes that Team Europe primarily seeks to increase the visibility of EU’s actions in support of partner countries and prioritises European ownership of cooperation priorities over developing country ownership. Although ‘effectiveness’ efforts focus on improving efficacy of the intra-EU-MS coordinated processes, it remains unclear whether Team Europe promotes more programmatic collective action among member states.
Topic:
Development, European Union, COVID-19, and Cooperation
Political Geography:
Europe

726. Quantifying Investment Facilitation at Country Level: Introducing a New Index

Author:
Axel Berger, Ali Dadkhah, and Zoryana Olekseyuk
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Council on Foreign Relations (DGAP)
Abstract:
This article introduces a new and unique dataset for measuring the adoption of investment facilitation measures at country level. The Investment Facilitation Index (IFI) covers 117 individual investment facilitation measures, clustered in six policy areas, and maps their adoption for 86 countries. This article presents the conceptual and methodological background of the IFI and provides a first analysis of the level of adoption of investment facilitation measures across countries participating in the investment facilitation for development negotiations in the World Trade Organization (WTO). Our dataset reveals novel insights. Countries which have lower levels of adoption belong to the low-income and lower-middle-income country group and are often located in Africa, the Middle East and to some extent Latin America and the Caribbean. The strong correlation between FDI and the IFI score shows that countries with the lowest levels of FDI, and thus in need of policy tools to attract FDI, have the lowest levels of adoption when it comes to investment facilitation measures. Our dataset has direct relevance for current policy discussions on investment facilitation for development in the WTO but also for domestic-level policy-making. Furthermore, the IFI provides the basis for a future research agenda to assess the design and impact of a future WTO agreement.
Topic:
Development, Investment, and WTO
Political Geography:
Africa, Middle East, Latin America, and Caribbean

727. The Transformative Capacity of Transnational and Transdisciplinary Networks and the Potential of Alumni Work

Author:
Johanna Vogel
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The Corona pandemic has shown us more than any other recent event that when it comes to a global crisis, we are all in the same boat. In a complex world, we need cooperation to meet global challenges. Networks can provide a structure that enables cooperation and offers promises of being flexible and adaptable. This paper will focus on transnational and transdisciplinary knowledge networks formed by alumni – people who have experienced collective training at the start of their network journeys. Through this shared experience, I see a special potential for these types of networks to engage in collaborative work and create a wider impact in society. The overall question of this paper is: How can knowledge networks fully develop their transformative potential through strategic alumni management? This question is of interest to network facilitators, especially of alumni networks. In order to address the challenge, the paper first presents findings from the alumni management literature focusing on the definition of alumni management, its relevance and the life stages of ideal alumni. This is complemented by insights from the social movement area that highlight the development paths of networks as well as the success factors for social impact networks. Empirical examples from existing alumni networks elaborate the success factors within their work. From these three areas, five recommendations are deduced. In order to foster transformation and create social impact beyond their networks, alumni networks should: (1) align their activities to the life stages of their alumni, (2) establish and nurture trustful relations among their network members – encompassing all elements of trust (benevolence and confidence, reliability and predictability, competence, honesty, openness as well as familiarity and intimacy), (3) initiate and continually work on a collaborative we-identity process, (4) provide supporting structures that allow for making easy connections as well as (5) enable self-organisation. When these five recommendations are taken into consideration, knowledge networks have a great potential to support societal change.
Topic:
Development, transnationalism, and COVID-19
Political Geography:
Global Focus

728. Institutional Change through Development Assistance The Comparative Advantages of Political and Adaptive Approaches

Author:
Michael Roll
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Development assistance often fails to achieve institutional change because of a limited consideration of the political nature of these reforms and the local context. In response, political and adaptive development assistance (PADA) approaches, such as “Thinking and Working Politically” (TWP) and “Problem-Driven Iterative Adaptation” (PDIA), have been developed in recent years. Politicians, practitioners and researchers increasingly want to know if these approaches are more effective than mainstream approaches to development assistance. To answer this question, this paper develops a framework by asking three more specific questions about the “which”, the “where” and the “what”. First, for which types of development problems is political and adaptive development assistance likely to work better than mainstream approaches? Second, where or in which contexts might this be the case? And third, what contributions can be expected from these approaches including, but going beyond, effectiveness? Available evidence is used to answer these questions. This paper finds that political and adaptive approaches have comparative advantages over mainstream approaches when either the problem is complex, the context is hard to predict, or the solution is contentious. The overall conclusion is that development policy needs a broader variety of approaches from which to choose based on which fits the problem and the context best.
Topic:
Development, Politics, Institutions, and Development Assistance
Political Geography:
Global Focus

729. Employing Capital: Patient Capital and Labour Relations in Kenya’s Manufacturing Sector

Author:
Florence Dafe, Radha Upadhyaya, and Christoph Sommer
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Generating decent employment is key to the creation of a new social contract and social cohesion in Sub-Saharan Africa. The crucial question is, thus, how can more decent jobs be created? Much of the extant research has focused on the role of states and businesses in shaping employment relations. In this paper, we draw attention to a third type of actor that has been largely absent in the literature on the determinants of employment relations in developing countries: financial institutions. Based on data from 38 interviews of Kenyan manufacturing firms, financiers and labour representatives before and during the COVID-19 pandemic, we examine the relationship between the patience of capital and labour relations. In particular, the evidence presented in this paper suggests that access to more patient sources of capital may help to enhance the quantity and quality of jobs in African countries. We discuss three mechanisms through which this occurs. Our paper contributes to the growing body of research on patient capital (which largely focuses on developed countries) by extending it to the context of lower income African countries; it also speaks to the broader debates about how to enhance the contribution of finance capital to social cohesion.
Topic:
Development, Labor Issues, Manufacturing, Social Cohesion, COVID-19, and Capital
Political Geography:
Kenya and Africa

730. Identity and Discourse Within Diverse International Networks: The Managing Global Governance Network Seen Through the Lens of Thematic Oral History

Author:
J. Carlos Domínguez
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The MGG Programme is an innovative and ambitious initiative implemented by the German Development Institute (DIE) with the support of the German Federal Ministry for Economic Cooperation and Development (BMZ). Although the scope and objectives have changed since it was launched in 2007, there is a clear vision that summarises its overarching goals: to construct a network that functions as an effective, high-quality, knowledge-based cooperation system for promoting global governance and sustainable development in the long run. In this respect, managing and crafting symbols, perceptions and collective identities within the MGG will remain crucial as a glue that enables collective efforts and maximises the network’s overall impact. Under what conditions does cooperation among diverse groups become sustainable? How does the MGG look when analysed as part of the longer-term life trajectory of its participants? How do individual identities intersect with a collective sense of belonging to the programme and to the network? What is the role of the collective identity and the collective narrative that underpins MGG efforts? The main goal of this discussion paper is to apply oral history methodologies to answer some of these questions. The assumption is that the long-term impact of the MGG Programme depends on how well individual motivations, which are shaped by complex life trajectories, intersect with national interests and broader global cooperation narratives. By confronting theory with empirical evidence, this paper also draws some lessons and raises some interesting questions that may be useful for MGG staff to consider when planning future activities.
Topic:
Development, History, Governance, Networks, and Identity
Political Geography:
Global Focus