Second in the series on the UK's Integrated Review, Charles Kenny looks at the UK's international relations policy
CGD Policy Blogs
How should member countries of the OECD's Development Assistance Committee classify their support to private sector investments in developing countries though development finance institutions? Either way, donors have decided that DFIs are in the aid business. And that means that DFIs should follow the principles of effective aid that DAC donors have signed up to.
Non-medical masks are a comparatively affordable intervention that could be rolled out at scale in developing countries, were WHO guidance to change. At the moment, apparel firms in developing countries have considerable spare capacity because of cancelled orders. Taking all of this into account, we propose donor support for local cloth mask manufacture and—if WHO guidance were to change—free distribution.
The World Bank Group has some very clear (and very good) guidelines about what makes for a successful public-private partnership where governments contract service provision like energy supply or education from private firms. Sadly, the bank has been ignoring that rule recently. And that is a sign of a broader problem in donor-backed financing of public-private partnership deals.
When development finance institutions (DFIs) use subsidies to support private firms in developing countries, they fundamentally change the nature of their business. To ensure the maximum development impact of scarce aid resources, subsidies should be competitive wherever possible, capped if not competitive, and transparent in every case.
The Private Sector Window (PSW) takes resources from the World Bank’s soft lending arm, the International Development Association (IDA), and uses it to support private sector investments in poorer developing countries.This is a comparatively straightforward way for the IFC to move money, but it is hard to know if it is a good way, in part because of the Corporation’s opaque lending practices –which need to change.
I’m not convinced that the IFC will manage to deliver on all of the promises it is making in order to receive the funds. And I think that congressional concerns with the IFC’s use of aid in an attempt to meet lending targets are right. So, reform should come alongside resources.
A broad array of international actors agrees that many developing countries desperately need to collect more tax revenue. But one part of the World Bank is pushing in the other direction.
In global development, we spend a lot of time thinking about cost effectiveness. But what if we step back and look at the broader picture when it comes to the effectiveness of different tools of foreign policy and engagement including diplomacy and defense? What are our most effective approaches to deliver on US national security and future prosperity? My new book is an attempt to answer that question.