This paper sets out all the financial resources potentially available for development, examines their key characteristics, and discusses their poverty and sustainable development impacts, and the implications for aid.

 

This discussion could not come at a more important time. Aid is under severe pressure as donors seek to cut budgets and to reorient aid to more clearly attribute direct ‘results’ to it. Recent initiatives at European and donor level have sought to change the focus of the aid debate towards stimulating the private sector, including emphasizing the role of private flows, particularly foreign investment. At the same time, the development community is gearing up to decide what targets should replace the Millennium Development Goals. Incorporating financing into this framework will be vitally important.

These changes in the aid debate take place against the backdrop of a greatly increased focus on other financial flows, including illicit capital flight, as governments seek to plug leaks in their revenues. They are also increasingly aware that the ongoing economic and financial crisis has demonstrated how fragile yet important finance flows, financial institutions and financial regulation are.