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European Report on Development 2014

European Report on Development 2014. “Financing and other means of implementation in the post-2015 context” Athens, 3 June 2014. ERD 2014 – background. Annual report commissioned by European Commission and 4 Member States. This will be 5 th edition to be launched in December 2014. Process:

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European Report on Development 2014

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  1. European Report on Development 2014 “Financing and other means of implementation in the post-2015 context” Athens, 3 June 2014

  2. ERD 2014 – background • Annual report commissioned by European Commission and 4 Member States. This will be 5thedition to be launched in December 2014. • Process: • Consultations • Drafting reports • Main report (ERD team; around 25 researchers) • Background papers (academics) • Country illustrations (country teams in Bangladesh, Ecuador, Indonesia, Tanzania, Mauritius, Moldova) • Target group varies by report: EU development officials & beyond. Now: Financing for Development Processes, UN Open Working Group, etc

  3. ERD2014 research question • “How can financial resources be most effectively mobilisedand channeled and how can they be combined with selected non-financial means of implementation, to effectively support a transformative post-2015 agenda?”

  4. Since 2000: Millennium Development Goals • 8 MDGs, poverty, health, education, partnerships (UN, 2000) • Monterrey 2002 Financing for Development to finance MDGs • Implementation / financing of MDGs: • Finance needs studies (UN Sachs, World Bank, etc) • Aid was often seen as addressing needs • Aid (especially for social sectors) increased from $50 bn a year in 2002 to $130 bn a year now

  5. The incremental costs to reach development goals, $ bn annually

  6. Aid Millennium Development Goals Examples: MDG 1 = poverty MDG 2 = education MDG 4-6 = health

  7. Finance a transformative post-2015 agenda • Post-2015 agenda under discussion (“UN Open Working Group”). We describe sustainable development transformations: • Allocating labour towards high productivity activities whilst creating employment • Zero poverty, whilst reducing inequalities • Energy access, whilst reducing CO2 emissions and preserving biodiversity • The role of finance in now much more complex?

  8. Financial flows (public and private, domestic and international) Supporting policies (Non-financial MOI) for effective use of finance (national / local / global policies) Specific policies for effective mobilisation of finance (national / local / global policies) • Enablers • Quality of institutions • Capital (infrastructure), labour, technology • Connectivity / integration Sustainable development transformations (economic, social, environmental)

  9. Financial flows (public and private, domestic and international) Specific policies for effective mobilisation of finance (national / local / global policies) Supporting policies (Non-financial MOI) for effective use of finance (national / local / global policies) • Enablers • Quality of institutions • Capital (infrastructure), labour, technology • Connectivity / integration Sustainable development transformations (economic, social, environmental)

  10. Financial flows (public and private, domestic and international) Supporting policies (Non-financial MOI) for effective use of finance (national / local / global policies) Specific policies for effective mobilisation of finance (national / local / global policies) • Enablers • Quality of institutions • Capital (infrastructure), labour, technology • Connectivity / integration Sustainable development transformations (economic, social, environmental)

  11. Financial flows (public and private, domestic and international) Supporting policies (Non-financial MOI) for effective use of finance (national / local / global policies) Specific policies for effective mobilisation of finance (national / local / global policies) • Enablers • Quality of institutions • Capital (infrastructure), labour, technology • Connectivity / integration Sustainable development transformations (economic, social, environmental)

  12. Financial flows (public and private, domestic and international) Supporting policies (Non-financial MOI) for effective use of finance (national / local / global policies) Specific policies for effective mobilisation of finance (national / local / global policies) • Enablers • Quality of institutions • Capital (infrastructure), labour, technology • Connectivity / integration Sustainable development transformations (economic, social, environmental)

  13. Financial flows (public and private, domestic and international) Supporting policies (Non-financial MOI) for effective use of finance (national / local / global policies) Specific policies for effective mobilisation of finance (national / local / global policies) • Enablers • Quality of institutions • Capital (infrastructure), labour, technology • Connectivity / integration Sustainable development transformations (economic, social, environmental)

  14. Financial flows (public and private, domestic and international) Supporting policies (Non-financial MOI) for effective use of finance (national / local / global policies) Specific policies for effective mobilisation of finance (national / local / global policies) • Enablers • Quality of institutions • Capital (infrastructure), labour, technology • Connectivity / integration Sustainable development transformations (economic, social, environmental)

  15. Finance for development(some emerging issues) • Complex and messy! • Importance of public finance, but its role is evolving • An important role for ODA, but in a supportive/catalytic rather than delivery role • Beyond aid: Private sector flows / instruments as countries evolve • Beyond finance: Context of finance matters

  16. Finance flows (% of GDP) change by income levels (beyond aid) Source: all WDI countries, 1980-2012 : Mauritius at 9.5 ($13.000)

  17. Why beyond finance? Two examples

  18. Importance of supportive policies – policies to reduce interest rate spread = 2 % points Private investors in Africa face an additional costs of around US$ 15 billion (2 per cent of credit extended). Competition & innovation policies, (non-financial MOI) that would lower the African interest rate spread to the average of low and middle income countries increase availability of finance by 1.2% of GDP and investment by 6 per cent.

  19. Estimating sustainable energy finance needs Difference in low carbon energy needs owing to different demand scenarios

  20. Impact of better global mitigation scenarios on mobilisation of climate finance Increasing CO2 reductions = higher carbon price = more funds

  21. ERD examples that support narrative • Beyond aid (Tanzania hydropower requires different types of finance) • Beyond finance (Tanzania workshop discussed role of supporting regulatory framework for renewable energy investment) • Examine finance in a transformative context (role of aid the compensate losers in Mauritius)

  22. Concluding issues • Finance for Development framework to support a post-2015 agenda • More complex than implementation of Monterrey / MDG suggested • Difference finance sources • Finance alone is not enough: complementary policies • New role for different types of finance in different transformative contexts • How is this signalled in a new framework?

  23. Thank you! For further information please contact:ERD2014 Project Manager – Gillian Hart g.hart@odi.org.uk ERD2014 Project Officer – Leah Worrall l.worrall@odi.org.uk

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