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To meet the Sustainable Development Goals (SDGs), the world must ramp up development financing by an order of magnitude—“from billions to trillions.” We must think beyond aid, to private finance and unlocking developing countries’ own resources. CGD’s work in this area examines how to catalyze more development finance, more effectively.
The United Nations Statistical Commission’s Interagency and Expert Group on SDG Indicators (IAEG-SDGs) agreed on 230 individual indicators to monitor the 17 goals and 169 targets of the SDGs. We now have a complete picture of the SDG agenda for the next 15 years, right? Not quite.
There are arguments for and against “spending through the tax system.” On one hand tax incentives are relatively easy to implement; they don’t require an outlay of cash and they make use of information that revenue agencies already collect. But on the other, loading the tax system with too many policy objectives conflicts with the drive for a coherent, simple, transparent tax system. Despite decades of advice from international organisations to curtail tax incentives, they remain a popular tool for governments.
This report explains how Development Impact Bonds (DIBs) can increase the efficiency and effectiveness of development funding. Based on Social Impact Bonds in industrialized countries, a DIB creates a contract between private investors and donors or governments who have agreed upon a shared development goal. The investors pay in advance for interventions to reach the goals and are remunerated if the interventions succeed. Returns on the investment are linked to verified progress.
The future of development policy is in development finance. Developing countries need aid less and less as their incomes rise and economies grow. What they need now is private investment and finance. US development policy, however, has failed to bring its development finance tools in line with this reality. Related US efforts have not been deployed in an efficient or strategic manner because authorities are outdated, staff resources are insufficient, and tools are dispersed across multiple agencies.
Other players are doing more. Well-established European development finance institutions (DFIs) are providing integrated services for businesses, and these services cover debt and equity financing, risk mitigation, and technical assistance. Moreover, emerging-market actors — including China, India, Brazil, and Malaysia — have dramatically increased financing activities in developing regions such as Latin America and Sub-Saharan Africa.
In September this year, world leaders will meet in New York at the United Nations General Assembly. Top of the agenda will be the passage of a resolution laying out global development goals for the fifteen years to 2030, covering progress in areas from poverty reduction to forestry preservation. They will follow on from the Millennium Development Goals (MDGs), which have become a common yardstick of global progress over the past decade and a half.
Imagine you are a Guatemalan living and working in the United States without the proper documents. Almost certainly (because it is legally required) there is a poster in the place where you work—most likely in English and Spanish—that “Equal Opportunity is the Law” and that you are protected from discrimination “on the basis of race, color, religion, sex (including pregnancy), or national origin.”