Roundtable Topic 9: International Aid Architecture

This page comprises information on background resources for Roundtable 9, compiled by the United Nations Development Programme. It does not necesserily represent the views of the Third High Level Forum organizers.

To access detailed information on the background resources for Emerging donors listed below, please visit the UNDP Aid Effectiveness Portal.

Background Resources: Emerging Donors

de Ferranti, David, “The World Bank and Middle Income Countries” in Birdsall N. (ed.), Rescuing the World Bank: A CGD Working Group Report and Selected Essays, Washington DC: Center for Global Development, 2006
De Ferranti argues that the MICs are central to addressing global development issues. They account for two thirds of the world’s population, and three-quarters of all people living in poverty (under $2 a day). Their economies are a major source of export demand for development countries, and they are an increasingly important source of foreign investment. Furthermore, the MICs are now big enough to generate systemic risk in global financial markets.  A high proportion of recent global financial crises have originated in MICs such as Mexico, Russia, East Asia, Turkey and Brazil. The MICs are key players on regional security issues. On climate change, they account for an estimated 47% of global CO2 emissions, and over half of all areas protected for their environmental significance. 

Linn, Johannes & Colin Bradford Jr., “Pragmatic Reform of Global Governance: Creating an L20 Summit Forum”, Washington D.C.: The Brookings Institution, 2006
Linn argues for replacing the G8 as global steering group with an expanded group (G20), to include MICs. This group already meets at the level of Finance Ministers. This would be a way of bringing emerging markets into the tent, to address global challenges.

Harmer, A. & L. Cotterrell, “Diversity in Donorship: The changing landscape of official humanitarian aid”, ODI, 2005
New and emerging donors, especially China, may undermine the international consensus on poverty reduction and aid effectiveness. New donors are not part of the DAC consensus on aid effectiveness. They tend to mix political with development and humanitarian objectives, and are not explicitly committed to poverty reduction and the MDGs as the ultimate purpose of aid. They have strong visibility requirements and tying practices. They are underrepresented in international fora where development policy is discussed. 

Debt Relief International, “Aid effectiveness: better indicators needed: non-OECD aid often highly effective”, Strategies for Financing for Development, Newsletter of HIPC CPB, Issue 32, 2007
A recent study by Debt Relief International on behalf of HIPC countries found that certain non-DAC donors (e.g., Venezuela and India) perform better than many DAC donors on aid effectiveness. Non-DAC donors on average are better at providing aid on the budget and use less conditionality. 

Manning, R., “Will ‘Emerging Donors’ Change the Face of International Co-Operation?”, Development Policy Review, Vol. 24(4), 2006
Richard Manning argues that new donors do not represent a major challenge to the aid-effectiveness consensus. He identifies three possible risks for LICs in the rise of new donors: (i) offers of less concessional development finance could cause a return to unsustainably high levels of debt; (ii) non-DAC development finance could undermine efforts by DAC donors to create positive incentives for reform, and help entrench poor standards of governance; (iii) non-DAC donors may fund high-profile, white-elephant projects that distort national spending priorities and cannot be sustained. However, he also supports the idea of greater choice for developing countries, and believes that the DAC should not act as a cartel. He believes that the priority is to encourage new and emerging donors to commit to the MDGs, and to participate more in the multilateral system.