Following sessions of the Working Group “Finance for Development” are scheduled to be presented at the 14th EADI General Conference:
|WGS111||Mobilisation and Managing of Financial Resources and International Financial Flows in Developing Countries||24/06, 2.30pm||S14|
|WGS112||Remittances and Access to FfD at Local Level||24/06, 5pm||S14|
The Changing Landscape of Financing for Development
With the rise of new regional and global powers like the BASIC countries (Brazil, South Africa, India, and China) a new middle class emerges which tends to play a more important role in financing responsible development of these countries. Public and private enterprises from these countries invest in other countries, e.g. on the African continent. At the same time, several authors witness a proliferation of actors in various sectors of global governance. The development arena and financing for development is among those sectors.
The mobilisation of domestic resources has been on the financing for development agenda ever since. Yet despite of the emphasis put on it in policy documents, it is still an underresearched area. Moreover, global changes may lead to the rise of groups of new actors and those all too often overlooked. New middle classes in developing countries contribute to finance responsible development, e.g. as entrepreneurs by provision of equity for their own enterprises. For the full potential to unfold developing countries have to provide a sound policy environment. While the single elements are generally known, more analyses are needed to explore the minimum requirements and exact mode of action. Where resources mobilised by single persons do not suffice, several people may join forces. Cooperatives or community organisations manage to pool domestic financial contributions, e.g. for the provision of basic utilities like water or electricity.
In the North, the growing disappointment with current aid practices has led private investors to start their own development assistance. Since these initiatives often use techniques developed in conventional financial business, they are called “venture philanthropy” where sponsors expect a certain social return on investment. Carol Adelman goes as far as stating that “private philanthropy is remaking the landscape of international development assistance.” On the other hand, some authors fear negative impacts of these initiatives on democracy and the overall political development world-wide. Similarly, there is a rise of other private initiatives by middle-class people from the North who have travelled to the South and start their own initiatives after having come back home. Together with remittances these financial flows by far outpace official development aid in the US, for instance, but not in other countries. Compared with research on official development aid, there still is a severe knowledge gap with regard to the forms, efficiency, and overall effect on responsible development of venture philanthropy and social investment.
This move towards private investment practices to finance responsible development in middle-and low-income countries is reproduced and reinforced by aid agencies when trying to leverage private investments and to pool public and private funds. Public donors join private initiatives or attract private money to form public-private partnerships. In some cases, official aid is channeled through private entities in the hope of a more efficient allocation of resources. Leveraging private investment often arises as an issue on the agenda where investment needs are particularly high and exceed public aid budgets, where expected returns do not meet conventional private investors’ expectations, and/or where risks are too high for private investors to take them. Climate and clean energy finance is a recently debated example.
Overall, financing for development has become more diverse or polycentric in nature with these changes in the number and constellation of actors. We welcome papers from all disciplines on these and related issues focusing on specific sectors and country cases or comparative studies across sectors and/or countries.
Conveners: Alberto Mazzali (CeSPI, Rome) & Lars Holstenkamp (Leuphana University of Lüneburg)