The 2009 Development Co-operation Report calls upon the international community to stand by its commitment to fight poverty and promote economic development in poor countries. Donor countries should see development co-operation as a strategic part of successful - and stable - globalisation, benefiting all sides. And emerging economies must assume responsibility for their share of the partnership.
The economic and financial crisis that erupted in the developed countries is now affecting developing countries: reducing their growth and trade, lowering the price they get for natural resources, cutting remittances, and halting investment flows to them.
The report lays out policies that respond to this new reality, noting that global governance is key to responding to the financial crisis. International collective action can more effectively deliver global public goods such as peace, security and freedom from poverty than purely national efforts to counter the crisis.
The way aid is given and spent is critical, as is the amount. Donors promised to increase funding by some USD 50 billion a year by 2010 compared with 2004, but OECD studies of their budget allocations find a shortfall of some USD 30 billion, and the Development Co-operation Report calls on donors to boost their forward spending plans.
For their part, developing countries could increase their revenues by strengthening their tax systems: ensuring that those who are able to pay do so, plugging the drains of tax evasion and avoidance, and battling corruption.
The Accra Agenda for Action was agreed in September 2008 by 130 donor and developing countries. Donors undertook to make their aid more predictable and recipients to lead their own development by strengthening their financial and budgetary systems, including transparency about aid spending. This will be increasingly important in the coming years. At present, some USD 50 billion – approximately half of all Official Development Assistance – is channelled through developing countries’ budgets, but that percentage should rise as the amount going as debt forgiveness declines.
Less political motivation and waste through red tape and tied aid would deliver more money to the people who need it. This is possible if donors spend less on their own agendas and more on those of developing countries, especially the poorest. Globally, there are now about 225 bilateral and 242 multilateral agencies funding over 35,000 activities each year. For 24 countries there are 15 or more donors that combined provide less than 10% of that country’s total aid. The transaction costs, both for donors and recipients, are massive and could easily be reduced if donors’ efforts were more coherent, co-ordinated and focussed.
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The full report is available at www.sourceoecd.org/developmentreport