The OECD’s Development Assistance Committee (DAC) conducts peer reviews of individual members once every five to six years. Reviews seek to improve the quality and effectiveness of members’ development co-operation, highlighting good practices and recommending improvements. The peer review of the European Union (EU), led by Norway and Switzerland, explores how the EU’s evolving development paradigm—centred on mutual benefits and quality infrastructure—can reduce poverty and inequality. Through the Global Gateway strategy and a diversified financing toolbox, the European Union seeks to leverage official development assistance as a catalyst for structural reforms and infrastructure investments. Yet, critical questions remain: how to maintain engagement in least developed countries and in contexts facing high and extreme fragility, uphold leadership in supporting institutional strengthening and human development, effectively mobilise private sector expertise and resources, and balance strategic interests with development objectives? The EU’s Team Europe approach and strong country presence offer valuable co-ordination and policy dialogue tools. The EU can also build on its strong track record on supporting peace, resilience, crisis response.
OECD Development Co‑operation Peer Reviews: European Union 2025
Abstract
Executive summary
What are the opportunities and challenges for the European Union’s new development paradigm centred on mutual benefits and quality infrastructure investments in contributing to poverty and inequality reduction? How can the European Union further improve? These questions underpinned the OECD Development Assistance Committee (DAC) peer review of the European Union, conducted by Norway and Switzerland.
The European Union is a standard setter committed to poverty reduction, peace and sustainable development. As a unique regional organisation, it has played a leading role in promoting human rights, rule of law and environmental norms. Committed to multilateralism, it leverages its diplomatic and financial weight to advance a rules-based international order. The European Union has made important efforts to integrate sustainability and development considerations into global economic governance frameworks and has played a leading role in the promotion of responsible business conduct through global supply chains. In 2024, the EU institutions provided USD 27.7 billion (preliminary data) of official development assistance (ODA). This marks the third year of increases in ODA volume driven by unprecedented support to Ukraine.
The European Union is reshaping its development co-operation in response to a rapidly evolving geopolitical environment. The convergence of global crises and rising tensions around migration, energy and trade have prompted the European Union to recalibrate its external action towards a stronger emphasis on defence, economic security and mutual interest. Development co-operation is a valuable tool for conflict prevention and can support broader geopolitical and strategic objectives. The European Union aims to deploy ODA as a catalyst for public and private investments.
The Global Gateway is an ambitious strategy that has the potential to create jobs, reduce poverty and inequality. Launched in 2021, the strategy aims to support digital connectivity, sustainable energy and transport, health and education and research in partner countries based on mutual interests of the European Union and its partners. In 2024, the European Union formalised a 360-degree approach that has the potential to strengthen the inclusivity and sustainability of infrastructure investments in accordance with its six key principles. However, understanding of this concept by stakeholders varies widely.
By mobilising and expanding its toolbox, the European Union can maintain its comparative advantage in support of structural reforms and human development. The European Union can mobilise grants, policy-based loans, budget support, technical assistance, capacity building and guarantees. The tool mix allows it to tailor responses to varied country contexts and development challenges, while using ODA to catalyse other sources of funding. The complementarity between tools can enable engagement in policy areas where market-based solutions cannot deliver the desired outcomes. This will be particularly important in the areas of basic services, which are facing ODA cuts worldwide.
With EUR 40 billion in guarantees, the European Fund for Sustainable Development Plus (EFSD+), is the main financing tool of the Global Gateway. It can help incentivise investments in sectors and locations perceived as risky by the private sector but that can bring development benefits. Streamlining the process for eligible financial institutions to access guarantees and sharing further information on the additionality of investments would strengthen this approach.
With a strategy more focused on mutual benefits and infrastructure investments, and a search for greater geographic flexibility in the next Multiannual Financial Framework, staying engaged in least developed countries (LDCs) and contexts most affected by fragility requires sustained efforts and attention. Indeed, the volume of mobilised private sector finance in these contexts is limited, reflecting private sector priorities and concerns. In contexts facing high fragility, a mix of tools can help create conditions for future investments and can help tailor the investment approach so that it supports peace and resilience objectives.
As the Global Gateway strategy moves from start-up to scale-up, further strengthening information sharing will be key to increase buy-in. The Global Gateway governance structure is inclusive with platforms such as the Business Advisory Group and the Civil Society and Local Authorities Advisory Platform, which bring a variety of perspectives. EU partners would benefit from clearer information on why Global Gateway projects were selected as flagships and their expected results. The ambition of the European Union to mobilise up to EUR 300 billion between 2021 and 2027 has created high expectations. Greater clarity on volumes of new investments and sources of financing for the Global Gateway would increase understanding from partners.
The Global Gateway has a distinctive focus on EU companies that can bring benefits to partner countries but also creates risks. The European Union promotes tenders that consider environmental, social and governance (ESG) standards, life-cycle costing, local labour and content. This can help level the playing field, transfer know-how and skills, and create opportunities for local companies. The European Union has a strong track record on untying aid. However, procurement restrictions in Ukraine risk undermining value for money. A new focus on European companies should not undermine the EFSD+’s effective support to local private sector development.
The Team Europe approach is a pragmatic and flexible way of working to enhance co-ordination, coherence and complementarities by aligning EU institutions, Member States and their implementing agencies, including development finance institutions and export credit agencies and partners, around shared priorities for impact. At global and country levels, co-ordination and decision-making are agreed among Team Europe actors without imposing formal harmonisation. While the European Commission plays a central role in facilitating Team Europe Initiatives, challenges remain around inclusivity and visibility concerns of EU Member States. Maintaining EU-level co-ordination and sustained co-ordination with local actors is essential for the continued success of Team Europe and to avoid fragmentation.
The country presence of the European Union is a key strength that facilitates policy dialogue based on an in-depth understanding of local and national contexts. As investment-driven approaches gain prominence in EU external action, nurturing the EU’s strong country presence with development expertise is critical to ensure that programmes remain politically informed, evidence-based and results-oriented.
The strong track record of the European Union in support of peace and resilience through long-term partnerships is a central feature of its engagement in contexts exposed to fragility or conflict, with an approach anchored in the Humanitarian-Development-Peace nexus. As the European Union updates its Commission-wide approach to fragility, embedding the expertise and toolbox on fragility beyond specialised units will be important for conflict-sensitive investments, and can benefit partnerships even in contexts less exposed to fragility.
The European Union is recognised as a leading humanitarian actor. In a changing donor landscape with shrinking resources, the planned review of its humanitarian action comes at a critical time. Partners are looking to the European Union for sustained, principled and effective humanitarian leadership, distinct from broader approaches to fragility, especially as prioritisation and efficiency drive changes across the system.
