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Introducing Five Principles for the Use of Aid in Subsidies to the Private Sector

Development finance institutions like the International Finance Corporation and the UK’s CDC Group use public finance to support private investments in developing countries. At their best they can help create new markets and invest in the delivery of vital goods and services, creating good jobs and entrepreneurial opportunity along the way. They have been rapidly expanding over the past few years.

Burundian soldiers deployed with AMISOM on patrol. Photo from AMISOM Public Information, via Flickr

Converging Military Spending and Its Fiscal Consequences

Worldwide military spending as a percentage of GDP in the years since the Global Crisis has been at nearly half its level during the Cold War. This column identifies three groups into which spending has been converging. It also shows that external threat levels are a factor in determining military spending, but only in developing economies. The results suggest a significant peace dividend from reducing internal conflicts, with a country that moves from the bottom 25% to the top 25% of developing countries on political stability and the absence of violence/terrorism likely to reduce military spending by about half a percentage point of GDP. 

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Building a Foundation for Better Development Cooperation: CGD Development Leaders Conference 2019

The big takeaway from the 2018 CGD Development Leaders conference was that all agencies, new and old, face similar opportunities and challenges—of relevance, responsiveness, communication, capability, and resilience—and there is much to learn from sharing experiences, especially at this time of profound change in the world of international development. CGD’s 2019 Development Leaders conference, co-hosted with the Asian Infrastructure Investment Bank (AIIB), in Beijing, China, will again bring together the community of Heads and Directors of development cooperation in aid agencies and ministries from around the world.

The exterior of UN plaza

Financing Development: A “Common but Differentiated” Path to 0.7%

Ministers are gathering at the UN this week to discuss the financing needs to meet the Global Goals—with the challenge that resources will clearly fall short, not least because most high-income countries are still failing to meet their financial commitments. We reviewed the pathways taken by the countries that agreed to the UN 0.7 percent target on overseas development assistance as a share of national income, and find that—perhaps unsurprisingly—aid as a share of the economy rises with per capita income.

Chart showing IFC project ratings

Is the New Model IFC a Good Deal for IDA Countries?

For much of the last decade, the World Bank’s private sector arm, the International Finance Corporation (IFC), has delivered a share of its profits as grants to the World Bank Group’s soft lending arm for governments, the International Development Association (IDA). In the last couple of years that pattern has reversed.

Achieving the SDGs Will Require More than Revenue Increases

How much progress is made in achieving the Sustainable Development Goals (SDGs) is likely to depend crucially on resources low and lower-middle income countries (LIC/LMICs) can mobilize domestically. This is because the financing needed to achieve the SDGs is large.

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