Linking policy and practice in international cooperation



European Report on Development 2015

Combining finance and policies to implement a transformative post-2015 development agenda


Overseas Development Institute (ODI), German Development Institute/Deutsches Institut für Entwicklungspolitik (DIE), European Centre for Development Policy Management (ECDPM), University of Athens (Department of Economics, Division of International Economics and Development), Southern Voice Network. May 2015. European Report on Development 2015. Combining finance and policies to implement a transformative post-2015 development agenda. Brussels: 2015.

We need a completely new approach towards finance for development – this is what follows from the lessons learned from the implementation of the Millennium Development Goals (MDGs), the changes in the Financing for Development (FFD) landscape and practical analyses of key enablers of transformative development which combines economic, social and environmental dimensions.

This report analyses the considerable changes in the FFD landscape since the 2002 Monterrey Consensus. It notes that the implementation of the Consensus came to focus largely on the role of Official Development Assistance (ODA) and paid insufficient attention to the importance of increasing domestic tax revenue and encouraging private finance. Yet in some of the countries that were achieving the greatest progress in reducing poverty, domestic tax revenue carried the main burden. This calls for adopting a more comprehensive view of FFD that takes fully into account the crucial role of public finance and private finance, both domestic and international. This will set the scene for international public finance to be a valuable complement to other flows of FFD.

The report’s main message is that finance alone will not be sufficient to promote and achieve the post-2015 development agenda. Policies also matter. Indeed, they are fundamental. Appropriate and coherent policies will ensure that finance is used effectively to achieve results and that it is not wasted or underused. Good policies will also help to ensure that more finance is mobilised as success breeds further success. The report identifies many examples of governments that are making effective policy choices in mobilising and using finance for major enablers of transformative development, including local governance, infrastructure, green energy technology, biodiversity, human capital and trade.

Given the challenges encountered in the follow-up of the Monterrey Conference, it is crucial to develop an appropriate system of monitoring and accountability that covers as many flows of finance as possible and that stimulates the right actions in the finance and policy framework, nationally and internationally. This accountability system must cover both the Sustainable Development Goals (SDGs) and their targets and the finance and policies required to achieve them. It can then guide implementation of the post-2015 agenda in a way that covers finance, policies and partnerships.

Overall our analysis suggests that it is not an overall shortage of funds that will be the constraining factor in achieving a transformative post-2015 development agenda. Rather, it is the way finance is mobilised and used that will determine success in achieving the goals the agenda enshrines. This in turn will require efforts to improve the effectiveness of each category of financing by drawing on its unique characteristics in support of particular enablers of development, to expand the range of possible sources of finance through appropriate policies and also to combine different flows as effectively as possible. This will call for reform of national finance and policy frameworks, as well as concerted efforts at the international level.

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Economic Transformation and TradeStrengthening European External ActionDevelopment Finance and TaxationEU Development Policy and PracticePost-2015 Global Development AgendaReportsDomestic resource mobilisationGovernanceInfrastructureOfficial Development Assistance (ODA)Post 2015BangladeshEcuadorIndonesiaMauritiusMoldovaTanzania

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External authors

Overseas Development Institute (ODI)

German Development Institute - Deutsches Institut für Entwicklungspolitik (GDI/DIE)

University of Athens (Department of Economics, Division of International Economics and Development)

Southern Voice Network