Development and Globalization: Facts and Figures2016 United Nations Conference on Trade and Development

Target 17.3: Additional financial resources

Mobilize additional financial resources for developing countries from multiple sources.

What is currently known as Official Development Assistance (ODA)The flows to countries and territories on the DAC list of ODA recipients and to multilateral institutions.
(See Target 17.2 on ODA commitments) is only a subset of the multilateral development aid and cooperation afforded to developing countries. Finance may also be made available through South-South cooperationThe term signifies a broad framework for collaboration among countries of the South in the political, economic, social, cultural, environmental and technical domains.
, foreign direct investment (FDI) and philanthropic and private charities. These sources of funds are increasingly important, as beyond the emergence of the BRICS17.20 countries, past decades have shown a broader trend whereby other international financial flows, such as FDI and remittances, have grown in size relative to ODA. This has led to a decline in the relative importance of aid flows to developing countries. It also implies that the role of aid and traditional aid donors in influencing the global environment for development will diminish over time (European Centre for Development Policy Management, 2012).

A potentially important new trend in global development assistance is the growing significance of developing country donors.The United Nations (United Nations, 2014), estimates that in 2011 the total value of South-South cooperation17.21 was between US$16.1 billion and US$19 billion, and its share in total development cooperation was 10 per cent in 2011, up from 6.7 per cent in 2006. However, this may well be an underestimate, especially as definitions of development assistance vary and there are no systematic and comparable data across countries. For many developing countries, development cooperation is closely linked to trade and investment relationships, and it is often hard to distinguish between public and private components (Zhou, 2010).

One study has suggested that South-South financial cooperation represented around 15 per cent of DAC real aid in 2008, with the largest developing country donors that year being China, India, the Republic of Korea, Saudi Arabia, Turkey and the Bolivarian Republic of Venezuela, and in other years Brazil has also been a significant donor (Reality of Aid, 2010). Since then, the amount of financial assistance has grown substantially, led by China. It should be noted that not all of this financial assistance would qualify as ODA in the sense used by DAC members. Financial assistance from non-DAC countries has taken the form of grants, concessional loans, non-concessional loans and debt relief. The mix of financial assistance varies from country to country, but loans are the predominant form (UNCTAD, 2015a). The OECD estimates that 13 per cent of global concessional development finance in 2013 was provided by countries that are not members of DAC (OECD, 2015a).

A significant challenge regarding all of these forms of multilateral aid is to ensure coordination17.22, policy coherence, transparency and accountability. A good example of this is the need for the heterogeneous partners involved in South-South cooperation to reach a consensus as to what it means and how best to quantify that cooperation. Furthermore, without common reference metadata and a central database, it is very difficult to appreciate the value and outcomes associated with this important source of cooperation. As multilateral aid and cooperation grows and becomes more diverse it will be important that the concepts underlying South-South cooperation are coordinated and transparent and that data are properly curated in a public database to enhance transparency and information exchange to ensure the extent of this cooperation is understood.