Many new coalitions have emerged in recent decades, for example through the Shanghai Cooperation Organisation (SCO), BRICS bank, and between India and African countries. Unlike under the old aid paradigm, the power balance in these coalitions is often more equal. These are illustrative of plurilateral realities, as seen through diverse clustering of countries based on specific economic, geographic and political interests. If actors in international development are much more diverse, this should be a strength. Both ‘traditional’ and emerging donor development actors need to appraise their position and comparative advantage in this changing cooperation landscape.
Development draws from multiple tools, including aid, diplomacy, security, trade and investment policies. It requires collective action that draws lessons from recent years and makes the most of new sources of cooperation – from governments to private sector, philanthropic, tech and civil society partners, across regions and globally. The challenge is what form new international cooperation partnerships take and what the organising principles are for that cooperation.
An interconnected and geopolitically charged operating environment
The landscape of development cooperation is shifting, with growing South–South political (e.g. ASEAN) and economic (e.g. Africa Continental Free Trade Area) cooperation and China’s increasing influence challenging traditional models. State-led capitalism is gaining ground. Liberal market economies promoted by Global North development actors are no longer recognised as the universally preferred model. Yet that approach from previous international leadership and convening has led to significant global progress e.g. on women’s economic empowerment or nutrition. The best of that cooperative leadership needs to be reflected in new models of partnership.
Being outward-facing, transparent, and concerned with solidarity is more important than ever. It is important to recognise the contribution of international cooperation to upholding shared values and norms. Asking people what they want from a reformed global development system has been done at large scale before, such as with the SDGs. With the gains in technology, this could be done again now at even greater scale, more cheaply and more quickly.
To meet future challenges we should take an integrated approach to work on emerging megatrends, such as the confluence of new technologies, demographic change, labour mobility, and migration. Progress does not only happen sectorally, but interconnectedly.Demographics are leading to shortages of labour in ageing countries and shortages of economic opportunities in lower-income countries. The corrective for this trend has been migration, but the impact on receiving countries is putting more pressure on the international system and on development resources.
The value of labour is changing due to the disruption of AI. Cognitive tasks, especially in services, will be increasingly automated in the next 3-5 years. The route to growth via services (the so-called Indian model of development) will be disrupted, and most countries are not well prepared. Connectivity and technologies like AI could democratise and create growth opportunities via innovation if access, inclusion, and distributional issues are addressed. Investment in knowledge ecosystems now will enable wider access to knowledge and expertise that can in turn drive growth.
A smart combination of economic, development, and foreign policies is needed in any new approach. There is scope to learn from the work being done in sub-sectors which have had success. Questions for the whole of international development apply in specific ways to the different thematic and policy issues that make up the international development agenda.
Cooperating on finance and accountability
Growing economies at scale is a significant challenge in traditional donor countries as well as in emerging economies.[1] Recent challenges have included security spending (where since 2015 global military expenses have grown by 37%); deep impacts resulting from the pandemic and commodity price rises (particularly for emerging economies); and the various shocks wrought by recent disruptions in tariff regimes and (in traditional donor countries) public expenditure pressures due to ageing populations. The opportunity to focus development finance carefully to catalyse change in a much larger financing gap has become even more urgent.
Different types of capital should be deployed based on their comparative advantage in a specific context. Sources include bilateral governments as investors who expect a return for ODA investment; philanthropic capital, which can take risks and undertake advocacy but not replace ODA; Development Finance Institutions (DFIs), which can leverage and de-risk but not crowd out the private sector; private sector and capital markets, which power jobs, growth, and trade; and multilateral development investment, including IFIs, which delivers results at scale, catalysing and leveraging. Though more needs to be done to invest in the evidence base on the impact of leveraging private finance, integrating an investor or private sector mindset and valuing the private sector for what it does, rather than for its money, is crucial.
With many governments around the world carrying fiscal deficits, and many new potential sources of capital, there are strong arguments that development and humanitarian work should focus on low-income countries. In prioritising concessional finance and making the case for using it, it may also be worthwhile considering further distinguishing humanitarian aid from other forms of development cooperation. Reducing the cost of capital for low and middle-income countries is an example of a clear international system priority that would have huge benefits and build resilience into borrowing.
A global observatory for monitoring the quantum, deployment, and impact of development finance could monitor how effectively development finance is used. It could track how finance addresses development challenges through partners that need most support, and in a way that strengthens systems. It would enable actors in the international system to hold one another accountable, and national governments to have an overview of development interventions in their countries such that they can be integrated into national plans.
This is a rare moment to fix a number of existing challenges that have long been understood to undermine the efficiency and impact of development efforts. These include problems that undermine aid effectiveness, such as disparate reporting and assurance procedures that overburden government and local leaders and reduce their oversight and leadership in development planning and delivery. The need for more resilient systems for investing in and accessing data, innovation, and research has taken on new urgency following recent wide-ranging aid cuts that have left systems for critical global public goods such as health, humanitarian and climate monitoring fragile and at risk. These capabilities are crucial in providing an evidence base to maximise the impact of international cooperation, ensure that it is well prioritised and effective, and that lessons are learned.
Strengthening local foundations and systems
The new development context should re-set the balance more strongly towards cooperation that supports and strengthens systems in countries. External agendas and ways of working have historically often dominated how cooperation works, undermining and even supplanting national systems. Approaches that hold all parties involved in cooperation to account for delivery will be key to progress.
Domestic resource mobilisation and greater attention to governance are critical to achieving self-reliance. FDI, remittances and aid as income without these two additional factors will not be sufficient to bring about long-term benefits of development. Domestic revenue mobilisation requires parallel effort from governments to deliver service provision and that motivates people to pay tax. Successful tax partnerships with external partners are characterised as long term, expertise sharing, grounded in local context, and building sustainable foundations. It was suggested that this external partnership can be powerful in persuading citizens that their governments are being held to account for financial management and a motivator in paying taxes, particularly during a period of transition.
The foundations of the re-imagined international system will also need to build in resilience. Recent years have demonstrated the increasing importance of recognising the risks when the biggest powers opt out, and the challenges this can pose to multilateral systems and action. A system of cooperation that is based around local and national foundations, rather than international ones, should carry longer-term resilience.
Building local systems means understanding people’s aspirations for a better future. These aspirations are highly salient, even if what they focus on will continue to shift. There can be an issue of ‘denialism’ of development challenges by countries conscious of their image on the global stage. In this context it will be important to offer channels to understand peoples lived experiences better, and to respond with changes in how international development happens, including sensitive framing in the approaches to these. These could include the shifts from grants to debt and financing, developing better systems for innovation and knowledge exchange, and developing different systems of representation.
[1] African economies are collectively around $3 trillion (same as Brazil), with an average GDP per capita of $2,000. A reasonable medium-term ambition might be to achieve $10,000 per capita – approaching that of Brazil, India etc. But, with the current rate of population growth that would be a combined economy for African countries of $20-25 trillion.