Economic Paper

2310-1385 (online)
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This series examines current economic issues from a Commonwealth perspective. The titles in the series are technical papers of topical interest to specialists concerned with trade, micro and macroeconomics, development economics and related subjects.
Financing for Development

Financing for Development

Perspectives and Issues You do not have access to this content

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Percy S. Mistry
01 Jan 2002
9781848597655 (PDF)

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This publication addresses the key issues surrounding financing for development (FfD), the subject of the International UN Conference on Financing for Development (UNCFD) in Mexico in 2002. These key areas are: Domestic Resource Mobilisation; Trade Earnings; Private Capital Flows; Official Flows and Official Development Assistance; External Debt; Systemic Issues Concerning the Architecture and Functioning of the Overall Global Institutional System that Influences FfD. The book also has two introductory chapters setting out the background and rationale for UNCFD, and a summary at the end of the volume highlighting the main recommendations made in the six core areas, focusing on those that go beyond those of the Zedillo Panel Report (ZPR) and the Secretary General's Report (SGR). It is a useful guide for policy makers in developed and developing countries, private sector institutions and international financial institutions.
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  • Executive Summary

    This report, commissioned by the Commonwealth Secretariat, covers the six major substantive areas that comprise the core of the International UN Conference on Financing for Development (UNCFD) to be held in Monterrey, Mexico in March 2002. Using as its lodestones the findings of the High Level Panel chaired by former President Zedillo of Mexico (the Zedillo Panel Report or ZPR) and of the UN Secretary General (the Secretary General's Report or SGR), the report raises conceptual and practical issues involved in each of these areas and emerges with its own views. Based on reasoning elaborated at length, and comparing the conclusions it reaches vis-à-vis those of ZPR and SGR, the report makes a variety of observations, suggestions and recommendations for consideration by the Secretariat and by Commonwealth governments to help them refine and determine the positions they take at the conference.

  • Introduction and Background

    In preparing for the UN Conference on Financing for Development to be held in Monterrey, Nuevo Leon, Mexico, March 18–22, 2002 it may be opportune for officials and ministers from Commonwealth countries to recall its history. Developing countries have pressed to have such a conference for over two decades. Members of the Development Assistance Committee (DAC) of the OECD – i.e. the major providers (or donors) of official development assistance – have been sceptical about what it would achieve other than: (a) highlighting failure to meet the ODA/GNP target of 0.7 per cent; and (b) creating pressure for new targets aimed at increasing ODA and other capital flows that finance development.

  • The Importance and Potential Value of UNCFD

    Its inauspicious genesis notwithstanding, UNCFD provides an overdue occasion for the international community, and for the Commonwealth as an influential part of it, to revisit the conceptual and practical foundations that have supported financing for development between 1950–2000. It provides an occasion to renew and reinforce these foundations to meet the different needs created by the pressures and promise of globalisation in the twenty-first century. It presents an opportunity that the global community cannot afford to miss.

  • Mobilising Domestic Financial Resources for Development

    From its agenda, it is apparent that as much attention will be focused at UNCFD on: (a) what governments of developing countries need to do to increase domestic resource mobilisation (for financing their own development) as on (b) what governments of developed (donor) countries might do to provide greater amounts of external and particularly official concessional financing (ODA) from their budgets. If more rapid development and growth is to occur, it is unarguable that the bulk of the additional resources required will need to be generated locally in developing countries themselves.

  • Maximising Earnings from Trade for Financing Development

    Next to relying on their internal resources, developing countries will have an unprecedented opportunity in the coming decades to switch from previously entrenched dependencies on aid and external (official or commercial) borrowing, to relying more on earnings from trade and remittances to finance their development. That shift in options reinforces the case for creating and reinforcing a different FfD framework.

  • Mobilising External Private Capital for Financing Development

    Observing that: ‘Private capital cannot be expected to finance poverty reduction or human development…[but it]…can be an important factor in promoting growth – or in precipitating crises…’ and ‘The extent to which FDI bypasses smaller and poorer countries is often exaggerated…’, ZPR makes the following points in considering the role of FDI and FPI in financing development.

  • Mobilising Official Development Assistance for Financing Development

    As far as developing countries and the agencies, bilateral and multilateral, that intermediate official aid flows are concerned, increasing official (tax-funded) resource transfers, and particularly concessional ODA resource transfers, from developed to developing countries is the raison d'être for holding UNCFD. Such agencies include the UN, the IMF and the World Bank, the three principal scriptwriters (as well as aspiring stars, directors and producers), of the UNCFD play. Their role as intermediaries inevitably creates a bias toward arguing for increased official flows as the most critical issue in FfD.

  • Reducing External Debt Burdens to Revive Growth and Development

    An as yet unresolved issue that obfuscates determination of additional ODA requirements is the hardy perennial of external debt. In discussing this question it is instructive to recall that, in the 1980s, the Latin American (or middle-income country) debt crisis was serially mishandled for eight years with one misguided plan following another. That happened because the nature of the crisis was only partially diagnosed.

  • Systemic Issues and Changes in the Global Institutional Architecture

    In mid-2001, supranational (and national) processes, institutions and mechanisms for effective global governance – in a world that has been globalising very rapidly over the last 15 years – are obviously inadequate. They have been inordinately slow in responding to the demands of rapidly changing circumstances. They lag too far behind the reality of globalisation for it to proceed as smoothly as it should, or for ironing out the asymmetric concentration of its gains and losses across countries in real or conscionable time.

  • Conclusions and Synopsis of Findings and Recommendations

    In its first two sections, this report emphasises that UNCFD presents the first opportunity in decades for the global community to address issues concerning FfD in a holistic manner. The requirements and modalities for FfD in present circumstances are entirely different from those of the 1950s when the post-independence development financing enterprise began. The FfD options available at the beginning of the twenty-first century are more varied and fertile than those in the mid-twentieth century when the world was recovering from a devastating war and the Bretton Wood regime had barely established itself.

  • Annex and Bibliography
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