Department of Economic & Social Affairs CDP Background Paper No. 39 ST/ESA/2018/CDP/39 March 2018 Development cooperation to ensure that none be left behind José Antonio Alonso* ABSTRACT Te development cooperation system is undergoing a dramatic process of change. New actors are on stage, new instruments (beyond ODA) are being used, and the felds of work have been clearly widened. Te enlargement of the development cooperation system is in line with the ambitious and comprehensive 2030 Agenda. However, those changes also imply massive ten- sions and challenges to the current development cooperation system in terms of its objectives, procedures and narrative. Tis paper presents some of these challenges in light of the “leaving no-one behind” mandate. Te paper discusses, frstly, how the development cooperation system can be brought up to date, taking into account massive changes in the international landscape; secondly, it argues why development cooperation may be still useful and efective in supporting an Agenda that goes beyond ODA; and fnally, it discusses some dilemmas around the way in which resources should be allocated in order to preserve the distributive purpose of develop- ment cooperation. Keywords: foreign aid, development cooperation, South-South cooperation, fnancing for development, 2030 Agenda JEL Classifcation: F02, F35, O10, O15, O19, O20 * Professor of Applied Economics (Universidad Complutense de Madrid), member of the Committee for Devel- opment Policy (CDP) ([email protected]). I would like to thank comments from Marc Fleurbaey, Margarita Flores, Sakiko Fukuda-Parr, Jesse Grifths and Rashid Hassan. All errors remain those of the author, CONTENTS 1. Introduction........................ ............................................... 1 2. Reshaping the development cooperation system ......................................... 2 A new international landscape ..........................................................3 New actors in the field ................................................................3 New fields of action ..................................................................6 Rebuilding development cooperation policy ..............................................8 3. Is still ODA required? ................ ............................................... 9 The role of ODA .....................................................................9 The evolution of official financing resources ..............................................11 Allocation of resources ...............................................................14 4. Some dilemmas on resources allocation . .............................................. 17 Quantity vs. quality ..................................................................17 Poor people vs. poor countries ........................................................18 Efficiency vs. equity .................................................................20 Social sectors vs. productive sectors ....................................................21 5. Final considerations ................. .............................................. 21 References ............................ .............................................. 23 CDP Background Papers are available at https://www.un.org/development/desa/dpad/ cdp-background-papers/. Te views and opinions expressed herein are those of the author and do not necessarily refect those of the United Nations UNITED NATIONS Secretariat. Te designations and terminology Committee for Development Policy employed may not conform to United Nations prac- UN Secretariat, 405 East 42nd Street tice and do not imply the expression of any opinion New York, N.Y. 10017, USA whatsoever on the part of the Organization. e-mail: [email protected] Typesetter: Nancy Settecasi http://cdp.un.org 1 Introduction rather vertical decision-making structures (all char- 3 Te 2030 Agenda for Sustainable Development acteristics of ODA) seems to have come to an end . obliges the international community to move Te emergence of new ofcial providers from the towards a radically new Financing for Development South, the more active involvement of private actors framework. Tentative estimates put the amount in development activities, the advent of new instru- of resources required for meeting the Sustainable ments in felds heretofore insufciently considered Development Goals (SDGs) at between one and four (such as environmental fnance), and the shrinking trillion dollars annually1, a magnitude unattainable relative weight of ofcial funds in total development from current ofcial fows (SDSN, 2015; UNCTAD fnancing are all factors in the tectonic process of 2014). In accordance with its ambition and com- change that the system for development coopera- plexity, the 2030 Agenda will require a mobilizing tion is currently undergoing (a process analysed by of resources and capabilities from highly distinct Severino and Ray, 2009, Alonso, 2014, Kharas and sources, public and private, domestic and interna- Rogerson, 2012 and Lin and Wang, 2017, among tional. Te Addis Ababa Action Agenda, approved others). In the presence of emerging actors, new pri- at the Tird International Conference on Financing orities, procedures, and narratives have won traction for Development, follows in this line when stating in development cooperation policy, challenging the that achievement of the Agenda “will require an traditional discourse and practices of ODA. equally ambitious, comprehensive, holistic and Te aforementioned changes ofer a valuable oppor- transformative approach with respect to the means tunity for building a more open, inclusive, and of implementation, combining diferent means complex system of development cooperation that of implementation and integrating the economic, embraces all providers across more horizontal and social and environmental dimensions of sustainable cooperative relations, aligning resources and eforts 2 development”. around a set of shared goals. Tat is what the 17th In this holistic approach, development cooperation Goal of the 2030 Agenda proclaims when it seeks policy (a concept wider than, and distinct from, of- to “revitalize the global partnership for sustainable cial development assistance, or ODA) is expected to development”. However, making this change a real- play a modest but relevant role (see Box 1 for a clari- ity will further imply massive tensions and challenges fcation of these concepts). Its contribution could be for the current development cooperation system. signifcant, particularly if resources and policies are As the number of involved agents and instruments to address the demand of those social sectors and increases, the process of international coordination countries most in need, to guarantee that “no one will become more difcult, and the defnition of is left behind”. But in order to do that, the devel- common standards and rules for shaping individual opment cooperation system will have to undergo actions more arduous. Moreover, the enlargement of radical changes, given the new levels of complexity the development cooperation ecosystem is making it and interdependency in the world. Te realm of more difcult for recipient countries to govern the “donors and recipients”, unilateral transfers of con- fows of international support received. Additionally, cessional funds frequently under conditionality, and severe trade-ofs can emerge between the objectives of engaging new actors in the development cooper- 1 Te estimates are still too rough, although they coincide ation system and preserving its focus on people and in placing the resources required for meeting the SDGs in countries most in need. Finally, in the new interna- an order the magnitude of “trillion” dollars annually. For tional context, certain dilemmas arise around how example, the Sustainable Development Solutions Network resources and means of support should be allocated (2015) estimated this amount in 1.4 trillion dollars; and the UNCTAD (2014) climbed this amount up towards a fgure among countries and sectors. between 3.3 and 4.5 trillion dollars. 2 http://www.un.org/esa/fd/wp-content/uploads/2015/08/ 3 Te Paris Agenda has tried to transform these kinds of rela- AAAA_Outcome.pdf (par. 11) tionships with very partial success. 2 CDP BACKGROUND PAPER NO. 39 Tis paper attempts to present some of these dilem- (a big push) to break out the “low-level equilibrium mas and challenges in light of the “leaving no-one trap” and achieve self-sustained growth. International behind” mandate that the 2030 Agenda advances. fnancing (mainly through ofcial channels) was Te text is organized into three main sections fol- thought an essential ingredient in funding the lowing this introduction. In the second section, we investment required for enabling the world’s poorer discuss how the development cooperation system countries to escape poverty. In accordance, aid was can be brought up to date, taking into account considered temporary: once a country overcame massive changes in the international landscape; the the poverty trap, aid would become unnecessary; third section is oriented toward answering whether additionally, aid transfers were left to discretionary ODA is still useful and necessary; and the fourth decisions by donors, conditioned only by voluntary section considers certain dilemmas related to the standards agreed to within a committee of the way in which resources and means of support should OECD (the Development Assistance Committee, be allocated. A brief concluding section ofers some DAC).