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Innovation in Development Finance

ROME – More than four decades ago, the world’s wealthiest countries pledged that at least 0.7% of their GDP would be devoted to official development assistance (ODA). But fewer than a half-dozen countries have actually met this goal. In fact, ODA disbursements have not been stable, reliable, or reflective of need, and doubts about their effectiveness linger.

ODA declined significantly after the Cold War, dropping to 0.22% of developed countries’ combined GDP in 1997-2001, before rising again after the September 11, 2001, terrorist attacks in the United States and the International Conference on Financing for Development in Monterrey, Mexico, the following year. Then, as developed-country governments imposed strict fiscal austerity in the wake of the global economic crisis, ODA fell again, to 0.31% of GDP in 2010-2011.