2. Framework for a Global Partnership for Development
Trade
Foreign private investment
Official flows
Debt relief
Developing country policies
Priorities for action

3. Total net flows to countries receiving development assistance have been volatile following September 11 (US$ billion)
Trade

4. Domestic subsidies to agriculture dwarf official flows and are a leading barrier to trade

5. Average protection in manufacturing is low, but tariff peaks and escalation discourage development
Trade

6. Potential income gains from reducing barriers to trade are large…
Potential income gains from reducing barriers to trade are large…. and can help reduce poverty
Trade

7. Developing countries have made modest gains on trade issues in 2004
WTO declares that EU’s sugar subsidy regime and much of American cotton subsidies are illegal
July WTO talks in Geneva among 5 principal ag. producers* agree to change the ways governments protect their farmers
Eliminate all farm export subsidies
Cut domestic farm support programs
But
Implementation timetables still to be worked out
Remaining issues on exempting “sensitive” products
Divided over cuts in industrial import tariffs
*US, Europe, India, Brazil and Australia
Trade

8. Potential gains from liberalization of services, especially migration, are larger still
Source: Walmsley and Winters (2002)
Trade

9. Private capital flows are recovering
Foreign Private Investment

10. But foreign direct investment has declined - and low-income countries and Africa receive little
Foreign Private Investment

11. Aid flows have risen – but not fast enough
The third part of the compact is increased aid. The dollar value of aid declined during the 1990s, while rich-country GDP has grown
The paper for the Development Committee shows that at least an additional $30 billion per annum in aid could productively be used over the next few years
Aid quality could be improved as well through
better allocation
alignment with country priorities (through PRSPs, for example)
harmonization of donor procedures
predictable and sustained commitments
support for current expenditures
more grants
Official Flows

12. The increase in ODA in 2002 was concentrated in special-purpose grants
The third part of the compact is increased aid. The dollar value of aid declined during the 1990s, while rich-country GDP has grown
The paper for the Development Committee shows that at least an additional $30 billion per annum in aid could productively be used over the next few years
Aid quality could be improved as well through
better allocation
alignment with country priorities (through PRSPs, for example)
harmonization of donor procedures
predictable and sustained commitments
support for current expenditures
more grants
Official Flows

13. The HIPC initiative is making a difference
27 heavily indebted poor countries (HIPCs) – 2/3 of all HIPCs – receiving debt relief
Total debt relief: US$52 billion over time
Savings in debt service payments: US$1.3 billion per year
Funds freed up directed to programs to improve lives of poor people
World Bank’s contribution: US$12.4 billion up to 2025
Official Flows - Debt Relief

14. The total debt burden of heavily indebted poor countries has declined
Official Flows-Debt Relief

15. The proportion of aid provided in cash and more flexible forms is falling
Official Flows

16. Institutions and policies matter growth, aid, and policy
Official Flows

17. There is substantial scope for improving the allocation of aid
Aid selectivity index, 2002
Policy
Poverty selectivity
Overall selectivity
selectivity
Total Aid
1.76* –
0.49*
1.12
Bil
ateral Aid
0.63 –
0.38*
0.50
Multilateral Aid
2.57* –
0.83*
1.70
Five largest donors (by amount)
United States
0.66 –
0.76*
0.71
Japan
1.90
0.01
0.94
France –
0.07 –
0.28
0.10
Germany
2.06* –
0.47*
1.27
The third part of the compact is increased aid. The dollar value of aid declined during the 1990s, while rich-country GDP has grown
The paper for the Development Committee shows that at least an additional $30 billion per annum in aid could productively be used over the next few years
Aid quality could be improved as well through
better allocation
alignment with country priorities (through PRSPs, for example)
harmonization of donor procedures
predictable and sustained commitments
support for current expenditures
more grants
United Kingdom
3.66*
1.06* –
2.36
Good practice examples
Denmark(bilaterals)
4.77* –
1.11*
2.94
IDA (multilaterals)
4.23* –
4.20*
4.22
Note: Emergency and disaster relief are excluded from these calculations.
An asterisk denotes the elasticity is different from zero a
t 10 percent
significance level. The last column is an average of the first two.
Source: Dollar and Levin (2004).
Official Flows

18. Developing countries’ policies are improving — core of reform agenda is institutional
Developing Country Policies

19. Percentage distribution of low-income countries
Macroeconomic policies have improved — fiscal management is the main area for attention
Percentage distribution of low-income countries
Source: IMF staff assessments.
Developing Country Policies

20. Spending on human development is rising — key issues relate to effectiveness of service delivery
Developing Country Policies

21. Richer people often benefit more from public spending on human development
Developing Country Policies

22. Public sector governance, though improving, remains the weakest area
Percentage distribution of low-income countries
Developing Country Policies

23. Private business climate — heavy regulation, weak institutions
Developing Country Policies

24. Priorities for Action Industrialized countries
Fostering a robust global economic recovery
Moving forcefully, and leading by example, on the Doha Development Agenda
Providing more and better aid — increasing aid commitments beyond current indications and ensuring timely delivery, improving aid allocation, providing aid in forms responsive to needs, and making rapid progress on the alignment and harmonization agenda
Stepping up action on key global public goods
Improving the overall coherence of policies in terms of their development impact

25. Priorities for Action Developing Countries
Improving private sector enabling environment — deepening progress on macro policies, strengthening market institutions (property rights, rule of law)
Strengthening capacity in the public sector and improving the quality of governance (transparency, accountability, control of corruption)
Scaling up efforts to strengthen basic infrastructure
Enhancing the effectiveness of service delivery in human development

26. Priorities for Action Multilateral Agencies
Refining and strengthening institutional roles in low-income countries, including deepening of the PRSP process and harmonization of operational programs around country-owned strategies, while also continuing to adapt approaches and instruments to evolving needs of middle-income countries
Furthering progress on the results agenda, including implementation of action plan agreed at Marrakech Roundtable on Managing for Development Results
Improving selectivity and coordination of agency programs in line with comparative advantage and mandate to achieve greater systemic coherence and effectiveness

27. “Developed countries must meet their commitments to help accelerate progress… it is essential for (them) to do more to liberalize their markets and eliminate trade distorting subsidies …. More aid is required. It should be predictable, timely, long-term and more effective. We urged developed countries that have not done so to make concrete efforts towards the target of 0.7% of GNP as ODA … The IFIs are accountable for their contribution to implementing the Monterrey consensus.”
Development Committee of the Boards of Governors of the World Bank and the International Monetary Fund, April 25, 2004

28. To conclude
Partnership effectiveness: a question of quantity and quality
Need for social welfare agencies to lobby their governments
Need to think creatively about “agency”