Seventy-five years after its inception, the multilateral development system offers the image of a system under stress and is challenged as never before.

At the threshold of the “decade of action” (2020-2030), the multilateral development system has hardly ever been so solicited, with a highly ambitious global development agenda, and a simultaneous need to cope with the impact of global challenges – such as climate change and the COVID-19 pandemic – that could undo years of hard-won development progress.

At the same time, the multilateral development system has rarely been so criticised. In recent years mounting tensions in the global political landscape have led to a resurgence of nationalism and a new wave of criticism against the international rules-based order that constitutes the backbone of the multilateral development system.

Since its foundation in the aftermath of the Second World War, the mandate of the multilateral development system has continuously expanded to respond to new and emerging development challenges. While this attests to the continued relevance of multilateral organisations in the global development landscape, it has also led to a progressive fragmentation of the system, with the creation of myriad new multilateral channels over time, raising growing concerns of systemic inefficiency and lack of accountability. Indeed, the creation of new institutions has outpaced the suppression of potentially obsolete ones.

The COVID-19 pandemic has once again put the multilateral development system in the spotlight. The multilateral response has been unprecedented in scale and speed, far outpacing the responses of bilateral development partners. Yet, it has also revealed some limitations in the system, such as the lack of co-ordination among multilateral stakeholders.

The magnitude of the challenges lying ahead requires a multilateral system performing at its full potential: this year’s edition of the Multilateral Development Finance Report makes the case that “building back better” also means improving the existing multilateral aid architecture. The renewed attention and expectations placed on the multilateral development system call for fresh insights into its collective coherence and value proposition, as well as into potential areas for improvement that could increase its development impact. For this reason, the report starts with an overview of the multilateral development system (Chapter 1), including its evolution to date, and presents some of the “building blocks” required to erect a multilateral system fit for the development challenges of the 21st century.

The OECD’s Development Assistance Committee (DAC), whose members remain the largest shareholders and funders of the multilateral development system, holds a responsibility to steer the multilateral development system towards greater effectiveness and efficiency and to ensure that it is equipped to support the global development agenda. Chapter 2 of the report explores DAC members’ funding to the multilateral development system and outlines the systemic implications of their individual funding decisions. It breaks down DAC members’ portfolio strategies and discusses how these can affect the exposure of multilateral organisations to specific donors, and their vulnerability to political influence and the threat of funding cuts.

The challenging times ahead call for leveraging the comparative advantages of the multilateral development system and ensuring it maximises the resources made available by donors. Chapter 3 sheds light on the development activities financed by multilateral organisations and identifies areas where multilateral entities are expected to increase their contribution. It also analyses whether, and how, multilateral organisations build on their respective areas of strengths to add value to, and complement, other types of development co-operation.

The Multilateral Development Finance 2020 report features a new format: it is leaner than previous reports, and is supplemented by (i) a new series of policy briefs on multilateral development finance; and (ii) online statistics on the multilateral contributions of official providers, available on the Development Co-operation Profiles 2020. The first policy brief, which deals with DAC members’ earmarked contributions through the multilateral development system, is published as a companion paper to this report.

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