In search of new development finance

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Economic &

In Search of New
Development Finance


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Printed at the United Nations, New York
12-32527—June 2012—620


Social Affairs


Department of Economic and Social Affairs

World Economic and Social Survey 2012

In Search of New
Development Finance


United Nations
New York, 2012




perceived need for additional and more assured funding to address
global development goals has led to a search for innovative sources of

financing to complementtraditional official development assistance. Recently, a
number of innovative initiatives have been launched, particularly in the field of
health, but these have not been major fundraisers. Other options with large fundraising potential have been proposed, including taxes on financial transactions
and greenhouse gas emissions, as well as the issuance of special drawing rights
of the InternationalMonetary Fund to be leveraged as development financing.
The feasibility of these proposals depends mainly on securing the

political agreement needed to implement them. Questions regarding the best
ways to allocate the funds need to be addressed at the same time. Existing
innovative development financing mechanisms earmark resources to specific
purposes, such as for vaccination programmesdesigned to prevent the spread
of contagious diseases. This has its advantages from a global public goods
perspective, but the international programmes are not always well aligned with
national priorities and well-functioning of national institutions in developing
The 2012 World Economic and Social Survey analyses these and other
challenges. It confirms the potential of innovativedevelopment financing, but
concludes that realizing this potential will require new types of international
agreements and changes in global governance.

World Economic and Social Survey 2012


In search of new development finance
Innovative financing sources to meet
global challenges
In 2001, a United Nations High-level Panel on Financing for Development,
chaired by the formerPresident of Mexico, Ernesto Zedillo, recommended
a number of strategies for the mobilization of resources to fulfil the commitments made in the United Nations Millennium Declaration1 to sustained development and poverty eradication2 . The Panel concluded that
substantial amounts of financial resources would be needed to achieve the
international development goals. In addition, it made a strong casefor
tapping international sources of financing for the provisioning of global
public goods, including for the prevention of contagious diseases, research
for the development of vaccines and agricultural crops, combating climate
change, and preservation of biodiversity. While there are no generally
accepted estimates of the financing needs for meeting international development goals and globalpublic goods, and while all such estimates are
a matter of judgement, by any measure, needs tend to exceed, by far, the
funds available for such purposes.
For many low-income countries, official development assistance
(ODA) remains an important vehicle for financing development, given
low levels of domestic savings and limited access to private capital flows.
ODA has increased since theadoption of the Millennium Declaration,
reaching $133 billion in 2011. Yet, flows would need to more than double
in order to meet the long-standing United Nations target of 0.7 per cent
of donor-country gross national income (GNI). Immediate prospects for
meeting that target any time soon are grim, given fiscal pressures in donor
countries. There are additional concerns that ODA has not been a...