Development Finance Architecture:What are the Institutional Challenges?

Inge KaulOffice of Development Studies (ODS)

United Nations Development Programme (UNDP)

OECDOECD

Paris – 4 July 2006Paris – 4 July 2006

* The views expressed are those of the author and do not necessarily reflect those of the organization * The views expressed are those of the author and do not necessarily reflect those of the organization with which she is affiliated. Please, send comments to with which she is affiliated. Please, send comments to inge.kaul@undp.orginge.kaul@undp.org. .

Multiplication and diversification of international financing mechanisms

Rise in the number of global public private partnerships

1 1 1 2 3 3 5 8 16

121

231

0

50

100

150

200

250

up to1865

1865-1885

1885-1906

1906-1921

1921-1947

1947-1958

1958-1968

1968-1978

1978-1988

1988-1998

1998-2005

GPP

Ps p

er p

erio

d

0

50

100

150

200

250

300

350

400

450

GP

PPs c

umul

ativ

e

GPPPs per period GPPPs cumulative

The phasing of aid instruments

The many roads to global equity for development

Intergovernmental cooperation in support of GPGs follows a subsidiarity principle

National-levelintervention

Market-based intervention

Regulatory intervention

Incentive provision

• on specific projects

Non-financial interventions

Financialinterventions

Global public good provision is subject to intense screening, minimizing international-level interventions, especially interventions with financial implications for national governments

Internationallevel

Morepreferred

Leastpreferred Direct

spending on:

• open-endedprojects

Selected financing mechanisms supporting international cooperation, 1930-present

Differences between aid and financing for global public goods