The multilateral development system serves as a platform for co-ordinating collective responses to the world’s most pressing challenges. By monitoring and analysing trends in financing flows to and from this system, the OECD helps development co-operation providers better pool resources for joint solutions.
Multilateral development finance
The multilateral development system, which encompasses more than 200 organisations and funds, including the World Bank and UN agencies, plays a pivotal role in global development co-operation. The OECD, whose members are major stakeholders of the system, offers expertise, policy analysis and guidance to ensure multilateral organisations are well-equipped to help address global development challenges.
Key messages
By capitalising on their comparative advantages – including their expertise, global reach and ability to leverage private finance – multilateral organisations maximise their impact. The OECD conducts analyses to inform its Members’ multilateral aid strategies, while improving co-ordination and complementarity among development stakeholders.
With proper support, multilateral organisations can contribute to both long and short-term development objectives. The OECD provides insights and policy guidance to strengthen development co-operation providers’ multilateral strategies and practices.
Context
The multilateral system is a major channel of development co-operation
Official providers’ contributions to the multilateral development system can be divided into two types: either core funding that multilateral organisations allocate as they see fit, or aid earmarked for specific purposes only.
Despite the share of earmarked aid rising steadily over the last two decades, preserving core contributions remains essential as they provide multilateral organisations with the flexibility needed to adapt to a quickly changing environment.
Development co-operation providers use a mix of funding types to support multilateral action
Development co-operation providers contribute to multilateral organisations – such as United Nations agencies, multilateral development banks and vertical funds – using various funding mechanisms.
The OECD provides insights on the trade-offs of each funding type, and promotes good practices to enhance the effectiveness and reach of development finance.
Multilateral organisations hold key roles in the development finance landscape
Multilateral organisations use their core resources to support developing countries in varying ways.
For example, multilateral development banks, led by the World Bank Group, mainly provide non-concessional development finance with terms that reflect market rates. Other institutions, such as United Nations agencies, typically offer concessional support with softer terms.
