With the UN’s development goals up for renewal the question of financing is more important than ever
This article was originally published by SPERI
The UN’s much lauded and also much criticised Millennium Development Goals (MDGs) expire in 2015. I’m interested in what comes next, but I’m also concerned as to how its post-2015 development vision will be financed. Isn’t that the million (or billion) dollar question?
Last week, the UN’s High Level Panel of Eminent Persons on Post-2015 delivered its much anticipated report. The panel asked some simple questions: starting with the current MDGs, what to keep, what to amend, and what to add? The UN’s on-line ‘My World’ survey – which asks people to rank their key priorities for the future (note there’s still time to vote if you haven’t already) – helped to inform the panel’s post-2015 vision. This set out five transformative shifts:
- Leave no-one behind: we should move to end extreme poverty in all its forms by reaching out to excluded groups and ensuring we track progress at all levels of income;
- Put sustainable development at the core: this is a universal challenge that will require structural change but also offer new opportunities;
- Transform economies for jobs and inclusive growth: all countries need to ensure good job opportunities while moving to the sustainable patterns of work and life necessary in a world of limited natural resources;
- Build peace and effective, open and accountable institutions for all: peace and good governance are core elements of well-being, not optional extras; and
- Forge a new global partnership: each priority area identified in the post-2015 agenda should be supported by dynamic partnerships among all these actors.
These are important goals, but transforming any post-2015 agreement from a simple ‘wish list’ of desirable outcomes into achievable objectives will require agreement on how it will be financed.
Whatever vision finally emerges, it’s likely to be expensive. So where will the money come from?
The report emphasises the primacy of domestic resources, but also stresses that a more stable global financial system and greater efforts to curb illicit capital flows are needed. More Official Development Assistance (ODA) will be important (and donors must keep their promises), but this will not be the most important source of long-term finance. More cash will need to come from private corporations, development banks, pension funds, mutual funds, sovereign wealth funds and others.
The High Level Panel doesn’t enter into specifics but does recommend that the UN convenes a conference to address in practical terms how to finance post-2015. This conference should discuss how to merge the development, sustainable development and environmental financing streams.
This last point is crucial: we now have an expanded set of global objectives beyond ‘classic’ development. Sustainable development and global public goods are emerging as the major, new framing theories of the 21stcentury. Climate change and other environmental constraints are recognised as more urgent – but it is more expensive to develop sustainably. It’s also widely accepted that we need a coordinated international approach to issues such as communicable diseases and the international financial architecture. Volatility has become the new norm, which means the issue of development financing cannot be limited to a `normal’ time agenda.
What do these new challenges mean in terms of how we approach the financing question? And, in particular, how should the ‘burden’ of paying for sustainable development and global public goods be equitably shared within and between countries?
The structure of global finance is now skewed towards highly concentrated and mobile private capital flows and less towards long-term development needs. The share of aid in global transfers is shrinking and will continue to shrink. The expansion and diversification of actors involved in international development (especially private agents) has led to a proliferation of financing instruments and an uncoordinated spaghetti bowl of channels through which finance is delivered. This is hardly a coherent development financing system.
The post-2015 process provides a window of opportunity for a fundamental rethinking of the development finance architecture – and we need to think much more creatively than simply re-affirming the 0.7 per cent ODA/GNI target. For instance, what role can be played by innovative sources of finance, in particular global taxation mechanisms (such as financial transaction taxes and carbon taxes)? They could raise sizeable sums for post-2015 in a way that is sustainable over time.
Traditional distinctions between ‘developed’ and ‘developing’ countries, as well as between aid ‘providers’ and ‘recipients’, are increasingly obsolete. In this context, the Overseas Development Institute asks whether allcountries should contribute public monies to shared global concerns (such as research and development, preservation of the environmental commons etc.) on the basis of common, but differentiated, responsibilities? What would this look like for countries at different income levels?
Another hot topic is how to catalyse long-term finance – especially for low-carbon development – from the private sector. Opportunities for blending public and private finance are likely to be at the centre of any viable post-2015 development framework. Public policy will play a crucial role by establishing the incentive frameworks needed to catalyse high levels of private investment into sustainable development.
Domestic resource mobilisation is obviously paramount, but some countries have more capacity to mobilise resources for sustainable development than others (think of the Least Developed Countries or small islands). Should this help us determine which countries have priority access to concessional finance, or do other criteria also matter?
International tax policies and treaties also determine developing countries’ slice of the pie. MP Margaret Hodge’s brilliant grilling of Amazon, Google and Starbucks over alleged tax avoidance recently captured the headlines in the UK and beyond. This is also a major challenge for developing countries. Coordinated international action on this front could boost the post-2015 resource envelope for development.
The institutional arrangements for development finance post-2015 will also matter; inclusive governance will be crucial to ensure legitimacy as well as maximise coherence.
To prepare ourselves for the High Level Panel’s proposed conference on financing in 2015, perhaps we could conceive of a ‘My World 2’ survey. The first survey asked people to prioritise what matters to them; the second could ask how it should be paid for! Whilst the final agreement on financing will almost certainly emerge from late-night negotiation, such a global survey could contribute and be much more illuminating than we think.