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To recover from the COVID19 pandemic and make progress towards the Sustainable Development Goals, finance for development must increase from “billions to trillions” per year. Prospects increased for public and private financing from the developed to the developing world have been muted by the pandemic, so, the key to sustainable human and infrastructure investment over the long term will be increased domestic resource mobilization (DRM)—the process through which low-income and lower middle-income countries raise and spend their own funds to provide for their people. The 2015 Addis Agenda, and the ensuing Addis Tax Initiative, enshrine global DRM aspirations and have prompted an acceleration in DRM-related technical assistance to LIC/LMICs. There is increased recognition that DRM must be done in such a way to increased equitable and sustainable growth.
CGD's work in this area seeks to enhance understanding of the political and economic constraints to increasing DRM and the distributional consequences of DRM policies. To support this learning process, CGD will:
Establish a common understanding of what constitutes “good” DRM;
Understand what the structural and political constraints are to increasing DRM;
Explore what multidimensional measures are best suited to track the efficiency and distributional impact of DRM;
Assess the effectiveness of policy advice, financial support and technical assistance for DRM from multilateral and bilateral institutions, particularly from the LIC/LMIC policymakers’ perspective;
Understand the impact that international finance and tax regimes have on LIC/LMICs and propose reforms that will assist LIC/LMIC development;
Develop an agenda of new ideas and actions to enhance DRM support and effectiveness.
This will be done in close consultation with bilateral and multilateral partners and developing country officials.
With the third international Financing for Development conference taking place only a week from now in Addis Ababa, I sit down with Charles Kenny to take stock of this marquee event. We discuss its importance and what one might reasonably hope is achieved there.
There are 20 pages covering the Addis Ababa Action Agenda. And while they are inevitably bubble-wrapped in diplo-speak and hat-tipping, there is a solid package of proposals nestled within. They cover domestic public finance, private finance, international public finance, trade, debt, technology, data and systemic issues. Amongst many other things, the Agenda calls for more tax and better tax (less regressive, more focused on pollution and tobacco). And it is long and specific on base erosion, tax evasion and competition and tax cooperation. It calls for financial inclusion and cheaper remittances. The draft discusses blended finance and a larger role for market-based instruments to support infrastructure rollout, as well as a new measure of “Total Official Support for Sustainable Development.” It calls for Multilateral Development Bank reform including new graduation criteria and scaling up. And it suggests a global compact to guarantee a universal package of basic social services and a second compact covering infrastructure. Finally, the draft has a good section on technology including the need for public finance and flexibility on intellectual property rights.
In Washington, rumor has it that the United States will bring commitments on domestic resource mobilization (DRM) and data to the table at the Financing for Development Conference this month in Addis Ababa, Ethiopia. As we get down to the wire, our fingers are crossed that the US government will take this opportunity to be ambitious and offer robust packages in both these areas. Here’s what that could look like.
The Financing for Development conference in Addis Ababa in July represents one of President Obama’s last major opportunities to secure his development legacy. This memo offers 14 proposals from the Center's experts for commitments the United States Government should consider advancing for the Conference on Financing for Development. Each of the proposals has the opportunity to yield tremendous development impact, some as standalone USG commitments, and others as commitments ripe for broader cooperation.
The total scale of incremental investment requirements in infrastructure in developing countries has been estimated at around USD 1 trillion a year, with a range of related studies suggesting numbers between $815 billion to $1.3 trillion. While all such numbers are open to considerable debate, and were not designed to measure the cost of delivering the specific SDG infrastructure targets, they suggest the likely scale of the financing challenge for an SDG agenda which includes universal coverage to adequate housing, water, sanitation, modern energy and communications technologies.
Tax day looms large for many Americans – April 15 was the last date for paying your tax bill, and the day on which the top one percent of Americans, who get 21.0 percent of total income, pay 21.6 percent of total state and federal taxes. So much for a progressive tax system.