Washington, USA, 22 April 2017
The Current Context
1. In 2015, the global community agreed on a collective and comprehensive roadmap for inclusive and sustainable development. The 2030 Agenda for Sustainable Development ─ along with the Paris Agreement and the Addis Ababa Action Agenda – are explicit acknowledgements by the international community of the importance of collaborative partnerships and collective action to secure a prosperous future for all.
2. However, this ambitious global agenda is under threat. Global growth continues to stumble along at just 3% in 2017, trade growth is even slower, and productivity growth remains low. At the same time, inequalities continue to rise: in OECD countries, the richest 10% earn almost 10 times the income of the poorest 10%, compared to 7 times in the 1980s. The current backlash against globalisation, rising protectionism and populism, as well as an erosion of trust in governments and public institutions, threaten to undermine decades of openness that have lifted more than one billion people out of poverty and are critical to realising the 2030 Agenda.
3. International co-operation is the key to overcoming this threat. At this critical juncture, we must take account of all perspectives, expertise, and experience. We need all hands on deck. The OECD stands ready – armed with the insights and multidisciplinary expertise of our Development Centre, Development Assistance Committee (DAC), Regional Initiatives and Country Programmes – to work with all stakeholders to assist countries to navigate the challenging current context.
Strengthening ODA for the 2030 Agenda
Collective efforts to mobilise the financial resources required to implement the 2030 Agenda are an urgent priority. Donors are on the right path in providing record highs in aid.
5. Official Development Assistance (ODA) from members of the OECD's Development Assistance Committee (DAC) reached a new all-time high of USD 142.6 billion in 2016, marking an increase of 8.9% over 2015. A rise in in-donor refugee costs accounted for a portion of this increase; aid rose by 7.1% when these costs are excluded. Contributions to multilateral organisations rose by nearly 10% in real terms, reflecting growing recognition of the importance of multilateralism in tackling global challenges.
6. Net ODA also grew as a share of gross national income (GNI). DAC member countries allocated, on average, 0.32% of their GNI to ODA, up from 0.30% in 2015. Six DAC members (Denmark, Germany, Luxembourg, Norway, Sweden, and United Kingdom) met or exceeded the UN target of allocating 0.7% of GNI to ODA. Since the turn of the millennium, aid has more than doubled.
7. Given financing needs for the 2030 Agenda are expected to run into the trillions , ODA must be deployed more strategically to catalyse additional financing. In this spirit, the OECD is working with the international community to create an enabling environment that maximises the returns to developing countries from ODA inflows.
8. First, by helping developing countries to design and implement effective policies.
- The OECD has developed best practice international standards in tax, investment, anticorruption and integrity, corporate governance, responsible business conduct, SME financing, state owned enterprises, consumer policy, digital economy, and development finance. We are leveraging our work with the G20, G7 and other international and regional fora to globalise their implementation.
- We have also developed an Action Plan to help countries prioritise and implement the Sustainable Development Goals (SDGs), focusing on four key areas: (i) applying an SDG lens to the OECD’s strategies and policy tools; (ii) leveraging OECD data to track progress on SDG implementation, including by contributing to the UN-led Global Indicator Framework for the SDGs and producing our own study on Measuring Distance to SDG Targets; (iii) strengthening support for integrated planning and policymaking at the national level; and (iv) evaluating the linkages and impact of the SDG agenda with the OECD’s work with non-Members, other international organisations, and non-state actors, and taking steps to maximise synergies and reduce overlap. The OECD has a particularly strong contribution to make in assessing economic, social and environmental progress through its internationally-recognised measures that look beyond GDP. One particularly salient example is the OECD's flagship Programme for International Student Assessment (PISA) which, along with the PISA for Development Programme, strengthens the evidence base available to countries on education and learning outcomes.
- In line with SDG target 17.14, the OECD has developed a Policy Coherence for Sustainable Development (PCSD) Framework to complement the Action Plan. This framework provides guidance that assists countries to analyse, apply and track progress on PCSD and adapt their institutional mechanisms, processes and practices to enhance policy coherence.
- OECD Multidimensional Country Reviews (MDCRs) are helping policymakers in emerging and developing countries identify context specific barriers to growth and development, set national development objectives, and prioritise their implementation. The OECD is working closely with the Millennium Challenge Corporation (MCC) to leverage synergies between MDCR’s and MCC’s Constraints Analysis to deliver coherent, consistent and timely advice to recipient countries.
- MDCRs complement the OECD’s Regional Initiatives – covering Eurasia, Latin America and the Caribbean, Southeast Asia, Southeast Europe, and the Middle East and North Africa – which seek to support the exchange of good practices within and across regions. The OECD’s Country Programmes and activities with Key Partners – Brazil, China, India, Indonesia and South Africa – are reinforcing these efforts.
9. Second, by strengthening the tax systems of developing countries to support domestic resource mobilisation.
- Since 2012, the OECD-UNDP Tax Inspectors Without Borders (TIWB) Initiative has helped developing countries raise over USD 278 million in increased revenues. TIWB is fully aligned with the Addis Ababa Action Agenda and Target 17.1 of the SDGs which focuses on: ‘strengthening domestic resource mobilisation, including through international support to developing countries to improve domestic capacity for tax and other revenue collection.’ It is assisting developing countries across the world ─ from Costa Rica to Jamaica, Georgia to Egypt, Nigeria to Botswana ─ to build tax audit capacity and implement effectively the principles of the OECD-G20 Base Erosion and Profit Shifting (BEPS) Project. It is also an important complement to the BEPS Inclusive Framework ─ which includes 96 jurisdictions, including 12 from Africa ─ and the work of the Global Forum on Tax Transparency, of which more than half of its 139 member jurisdictions are developing countries. For every dollar spent on the TIWB initiative, developing countries receive a return in excess of USD 1,000 from taxes recovered.
10. Third, by helping to combat corruption and illicit financial flows and tackle tax evasion and avoidance.
- The OECD is at the leading edge of anti-corruption efforts. Our Anti-Bribery Convention is the first and only international anti-corruption instrument focused on the ‘supply side’ of bribery. The OECD Guidelines for Multinational Enterprises and the revised G20/OECD Principles of Corporate Governance provide globally-recognised standards on transparency, accountability and business integrity. In 2017, the OECD Council approved the OECD Recommendation on Public Integrity, which provides policymakers with a blueprint for a public integrity strategy. It shifts the focus from ad hoc integrity policies to a comprehensive, risk-based approach with an emphasis on cultivating a culture of integrity across the whole of society. We are also providing targeted anti-corruption tools in key risk areas. For example, the OECD Recommendation of the Council on Public Procurement helps mitigate the risk of corruption in a sector that accounts for approximately 29% of government expenditure in OECD Member countries.
- OECD data suggests that USD 1 spent on investigations into illicit flows from developing countries to OECD countries can yield up to a twenty-fold return in recovered assets. In this respect, the OECD-G20 Base Erosion and Profit Shifting (BEPS) Project and the Automatic Exchange of Tax Information are critical. On 7 June in Paris, the OECD will convene a signing ceremony for the new Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS.
- We are also encouraging a whole-of-government approach to tackling secrecy. In 2011, the OECD launched the Oslo Dialogue, which brings together senior officials from tax administrations, finance ministries, law enforcement, and other parts of government to fight the scourge of financial crimes.
11. Fourth, by maximising the development impact of private investment.
- Private flows to developing countries, including FDI, stand at around USD 300 billion a year, dwarfing ODA. The OECD’s updated Policy Framework for Investment (PFI) addresses the issue of sustainable and inclusive development through the lens of private sector-led development. In addition to macroeconomic stability, political predictability, social cohesion and upholding the rule of law, which are pre-conditions for sustainable development, the updated PFI considers investment policy; investment promotion and facilitation; trade policy; competition policy; tax policy; public governance; corporate governance; policies for enabling responsible business conduct; human resource development; an investment framework for green growth; private investment in infrastructure; and financing for investment. The PFI helps governments consider these policy areas as a whole, supporting policy coherence in support of economic, social, and environmental goals.
12. Finally, by building better partnerships with philanthropic foundations.
- Global private philanthropy is reshaping the development landscape, amounting to USD 19.5 billion in 2013-15. In 2009, the Bill and Melinda Gates Foundation was the third largest donor to the health sector behind the United States and the Global Fund to Fight AIDS, Tuberculosis and Malaria. To understand better philanthropy’s contributions to development, the OECD’s Development Assistance Committee and the OECD Network of Foundations Working for Development (NetFWD) are working to update and expand the 2003 OECD report, Philanthropic Foundations and Development Co-operation. The cornerstone of this work is a large-scale data survey that compiles detailed (activity-level) information from the most active and influential philanthropic foundations, funds, trusts and corporations in development co-operation.1 The results of this survey will be included in the updated report, which is targeted for publication by end-2017.
Mobilising All Actors to Support the 2030 Agenda
13. Alongside these efforts, the OECD is continuing to leverage its convening power to engage existing and new development actors and build and consolidate multi-stakeholder partnerships.
14. The OECD’s Development Centre brings together 27 OECD members and 25 emerging and developing countries to support knowledge-sharing and evidence-based dialogue. Its work is enriched by the involvement of diverse partners, including policymakers, civil society stakeholders, inter-governmental organisations, international financial institutions, academia, and private sector representatives. The Centre also hosts the Emerging Markets Network (EMnet) and the Global Network on Foundations Working for Development (netFWD).
15. In collaboration with UNDP, the OECD supports the work of the Global Partnership for Effective Development Co-operation, which brings together governments, civil society, and the private sector to identify obstacles to development and define solutions. In December 2016, at the Global Partnership’s 2nd High-Level Meeting in Kenya, participants endorsed the Nairobi Outcome Document that sets out how existing and new development actors can partner to implement Agenda 2030 and realise the SDGs.
16. We are also contributing to the Sustainable Development Investment Partnership (SDIP). This initiative strives to mobilise USD 100 billion over five years to support sustainable and climate resilient infrastructure. SDIP combines risk mitigation, co investment and technical assistance to enable specific projects to gain access to private capital, both foreign and domestic. The OECD and the World Economic Forum, together with USAID and the Swedish International Development Agency are SDIP’s operational partners, together with 35 public and private entities.
17. The OECD’s Development Assistance Committee is developing the Total Official Support for Sustainable Development (TOSSD) measurement framework to track all officially supported finance allocated to development, a metric designed to complement ODA. The OECD is also preparing a Global Outlook on Financing for Development to capture and present data on the universe of finance destined for sustainable development and offer recommendations on how to best leverage more and better flows.
18. The international community has a collective responsibility to deliver the 2030 Agenda. No single actor can go it alone. International co-operation must be stepped up to maximise the impact of record-high ODA flows, and create new development partnership tools that allow for holistic and inclusive approaches to common global challenges. The OECD is ready to play its part.