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New Paths for Development Finance

WASHINGTON, DC – When the Millennium Development Goals (MDGs) expire next year, the world will be able to count many achievements. The number of people lacking access to safe drinking water has been halved, improving the lives of over 100 million slum dwellers; gender equality in education has been strengthened; and health care has become more accessible for millions of people. But there is still much to be done; many countries are lagging behind, and there is a great deal of discrepancy within countries.

The post-2015 development agenda promises to take on the MDGs’ unfinished business, while adding objectives related to inclusion, sustainability, employment, growth, governance, and cooperation. Success will depend on world leaders’ ability to apply past experience not only to developing effective policies and programs, but also to finding innovative ways to finance them.

A recent World Bank Group (WBG) report – Financing for Development Post-2015 – identifies three major considerations that should inform the next development agenda. First, most of the world’s poor now live in middle-income countries, and many live in high-income countries. Second, the focus of debate about development financing has broadened from the quantity of aid to its quality – including its power to leverage other sources of finance. Finally, emerging economies have become important engines of global economic growth, with increasingly close ties to developing countries.

In this changing economic landscape, financing a transformative development agenda will require an unprecedented level of cooperation among governments, donors, and the private sector, as well as policies and institutions that facilitate more efficient use of existing resources and attract new and diverse sources of funding. The WBG report points to four foundational pillars of development financing: domestic resource mobilization; better and smarter aid; domestic private finance; and external private finance.