On November 13, CGD senior fellow Charles Kenny testified before the House Committe on Financial Services Subcommittee on National Security, International Development, and Monetary Policy Hearing, on How America Leads Abroad: An Examination of Multilateral Development Institutions.
The new US International Development Finance Corporation (USDFC) will be considerably larger than its predecessor, and it will also be more focused on low and lower middle income countries. It will have new tools to deliver but face expanded competition.
There is a significant and ongoing ramp-up in support for explicitly subsidized official development finance to the private sector around the world, but its role remains poorly defined. Lessons from the aid effectiveness literature as a whole and principles on effective use of aid suggest the need for approaches that do not merely finance the marginal private investment.
Marginal, Not Transformational: Development Finance Institutions and the Sustainable Development Goals
Development finance institutions have positioned themselves as key agencies to help the world meet the Sustainable Development Goals. It is doubtful that they can deliver. This paper outlines the challenges facing DFIs in achieving (anywhere near) such an expansion in their impact, particularly in infrastructure and particularly in the poorest countries.