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Development cooperation at a glance

DEFINITIONS AND BASIC CONCEPTS

Development cooperation refers to activities that aim to support national or international development priorities. It represents an additional source of funding for developing countries, complementing other domestic and international resource flows. Development cooperation is not driven by profit. It discriminates in favor of developing countries and is based on cooperative relationships respecting the ownership of the developing country. Development cooperation is also referred to as “aid” or “external assistance” or “development assistance”. To underline the principle of cooperation between development partners, the term “development cooperation” is widely preferred today.
Transfers of resources – either in cash or in the form of commodities or services – are counted as ODA if they fulfill the following criteria: (i) they are of official nature (i.e. the funds must be provided by the government, (ii) they are aimed at promoting economic development and welfare in countries and territories on the DAC List of ODA Recipients (see Useful links) and (iii) they are concessional in character. In 2014, the OECD Development Assistance Committee (OECD DAC) (see Useful links) decided on some major adjustments to its ODA measurement. For example, for a loan to be eligible for ODA reporting, the loan will need to include a grant element of a minimum of 45% for least developed countries and 15% for lower middle-income countries.
Not all public, concessional flows to developing countries are ODA. The members of the DAC have agreed that contributions in the following fields are mostly not ODA: military aid, anti-terrorism activities, peacekeeping, civil police work, social and cultural programmes, assistance to refugees, nuclear energy and research. Training components in these fields tend to be considered ODA (e.g. expenditure on police training unless it relates to paramilitary functions). Also, a distinction is drawn between building developing countries’ capacity (ODA-eligible) and one-off interventions (not ODA-eligible). 
For most countries, development cooperation is an integral part of their foreign policy. By providing assistance, countries respond to internationally-agreed commitments (e.g. the commitment to provide 0.7% of one’s GNI for international development). At the same time, they foster relationships with partner countries and support regional development and security. As countries graduate from low-income status to middle-income or high-income status, many countries start to provide development assistance to less developed countries. These new donor countries are commonly referred to as emerging donors.
  • Countries are urged to meet their ODA commitments (Monterrey Consensus 2002, Doha Declaration 2008, Addis Ababa Action Agenda 2015) and provide additional resources to address the food,energy and climate change crises that the world is facing. There are five main flows of finance for development:

    • Mobilization of domestic and international (foreign investment, private flows) resources for development;
    • Trade as an engine of development;
    • Increasing international financial and technical cooperationfor development (0.7% ODA/GNI commitment);
    • External debt;
    • Systemic issues: enhancing coherence and consistency of the international monetary, financial and trading systems.


GLOBAL COMMITMENTS 

Broadly speaking, there are three global processes in the field of development cooperation: (i) the various UN processs, (ii) the OECD-DAC led process, and (ii) meetings in other frameworks (e.g. G8, regional meetings).

The UN leads discussions on the financing for development, framed by the 0.7% commitment from 1970. The UN Financing for Development process reviews and discusses the complete range of financing options available for development. UN member states also discuss which development challenges need to be addressed. These deliberations have led to the adoption of the Millennium Development Goals (MDGs, 2000) and the Sustainable Development Goals (SDGs, 2015). Moreover, the bi-annual Development Cooperation Forum (DCF)has emerged as an important venue to discuss key policy issues in development cooperation, in particular with regards to mutual accountability, South-South Cooperation and policy coherence.
At the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD), major donors have been coming together since the 1960s to reflect on their development cooperation efforts. The DAC has also taken forward the thinking on donor engagement in fragile states. Starting in the early 2000s, DAC members started to discuss more intensively how they can improve the effectiveness of their aid to developing countries. As a result, the DAC convened high-level fora in Rome (2003), Paris (2005), Accra (2008) and Busan (2011). The so-called “Paris process” phased out in 2011. The Global Partnership for Development Cooperation is now continuing efforts to make aid more effective.

There are also other fora where issues related to development cooperation are discussed. These include meetings of the G8, the EU, and other regional meetings. In addition, donor conferences take place for countries with major needs and challenges, for example the Tokyo process for Afghanistan.

In 2014, for the second consecutive year, ODA totaled a historic high of US$ 135 billion according to OECD data. Most ODA comes from the member states of the OECD Development Assistance Committee (DAC)The European Commission contributed US$ 15.9 billion and a further US$ 9.4 billion came from some non-DAC countries. In 2013, the world’s total ODA was estimated at US$ 160 billion.

In 1970, a UN resolution was passed in which UN members states commit themselves to contribute 0.7% of their gross national income for development cooperation. This commitment has been reiterated at various major conferences and meetings. Still, in 2013, only six countries fulfilled this commitment: Denmark, Luxembourg, Norway, Sweden, the United Kingdom, and the United Arab Emirates (due to its exceptional support to Egypt that year). In order to tackle the remaining development challenges as well as the additional ones that have emerged (e.g. climate change), it is important that each country increases its ODA budget. This call has been reinforced most recently at the 2015 Addis Ababa Third High Level International Conference on Financing for Development, also with a view to ensuring sufficient financing for the SDGs.
In 2000, UN member states adopted the Millennium Declaration. The ambitious agenda was broken down into 8 development goals, the so-called Millennium Development Goals (MDGs). The goals were to: (1) eradicate extreme poverty and hunger, (2) achieve universal primary education, (3) promote gender equality and empower women, (4) reduce child mortality, (5) improve maternal health, (6) combat HIV/AIDS, Malaria and other diseases, (7) ensure environmental sustainability, and (8) establish a global partnership for development. The deadline for the MDGs was 2015. While substantive progress has been made, not all goals could be reached. Detailed country-level information on the MDG indicators is available in Useful links.
In 2012, UN member states agreed to launch a process to develop a set of Sustainable Development Goals (SDGs), which will build upon the MDGs (“post-2015 development agenda”). Extensive global and country-level consultations were organized under the leadership of the UN to identify the elements for the new goals. In contrast to the MDGs, the new development agenda is broader and includes systemic issues. The 17 sustainable goals and 169 targets aim at tackling key barriers to sustainable development such as inequality, unsustainable consumption and production patterns, and lack of decent jobs. The new development agenda was adopted at the Sustainable Development Summit in New York in September 2015.                                                                                                                                                                                                                                                                                                                                                                

The Sustainable Development Goals

 

 Goal 1

End poverty in all its forms everywhere

 Goal 2

End hunger, achieve food security and improved nutrition and promote sustainable agriculture

 Goal 3

Ensure healthy lives and promote well-being for all at all ages

 Goal 4

Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

 Goal 5

Achieve gender equality and empower all women and girls

 Goal 6

Ensure availability and sustainable management of water and sanitation for all

 Goal 7

Ensure access to affordable, reliable, sustainable and modern energy for all

 Goal 8

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

 Goal 9

Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

Goal 10

Reduce inequality within and among countries

Goal 11

Make cities and human settlements inclusive, safe, resilient and sustainable

Goal 12

Ensure sustainable consumption and production patterns

Goal 13

Take urgent action to combat climate change and its impacts

Goal 14

Conserve and sustainably use the oceans, seas and marine resources for sustainable development

Goal 15

Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

Goal 16

Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

Goal 17

Strengthen the means of implementation and revitalize the global partnership for sustainable development


ODA MANAGEMENT 

Broadly speaking, we can distinguish between bilateral ODA, i.e. contributions going to other countries, and multilateral ODA, i.e. contributions going to multilateral organizations. Aid modalities refer to the manner in which external assistance is being delivered. Broadly speaking, we can distinguish between three types of development cooperation: (i) finance, (b) capacity support, and (iii) policy change. Concrete aid modalities include grants, concessional loans, blended finance, innovative finance, direct budget support, pooled funds, public-private partnerships, technical cooperation, support to trilateral cooperation and humanitarian assistance.

Each aid modality has its particularities. It is therefore not possible to generalize the effectiveness of certain aid modalities across different country contexts. When development partners decide on an aid modality, they need to primarily assess whether the aid modality fits the given context. Specific criteria to keep in mind are the respect of country ownership, whether local capacities are strengthened, the functionality in the given context (cost, flexibility, speed of delivery, coordination) and the fit of the aid modality with the level the intervention is aimed at (local/national/regional/global).

          In order to be flexible in its ODA management and responsive to the needs and preferences of partner countries, Romania provides a range of aid modalities to its partners:

    • Projects and programmes;
    • Scholarship scheme;
    • Voluntary contributions to international organizations;
    • Joint funds;
    • Budget support;
    • Technical assistance.

      Developing countries differ greatly in their development trajectories and the challenges they are facing. The most commonly used classification of countries is based on GNI per capita. While this approach with its narrow economic factors has rightly received criticism and is not fully fit for the post-2015 era, it can serve as a useful measure in connection with other criteria. Countries can be classified, among others, by their levels of:

                         Low income countries: GNI per capita < US$ 1,045

                         Middle income countries: US$ 1,045 < GNI per capita < US$ 12,736

                         Lower middle-income countries: US$ 1,045 < GNI per capita < US$ 4,125

                         Upper middle-income countries: US$ 4,125 < GNI per capita < US$ 12,736

      Right now, Romania’s focuses its development assistance on the following partner countries:

      • Republic of Moldova
      • Ukraine
      • Belarus
      • Georgia
      • Armenia
      • Azerbaijan
      • Egypt
      • Tunisia
      • Libya
      • Iraq
      • Palestine
      • Afghanistan


      SPECIFIC ACTORS IN DEVELOPMENT COOPERATION  

      Emerging donors are countries that have been providing development cooperation for a relatively short time or that are in the process of establishing themselves as providers of development cooperation to other countries. The majority of emerging donors were or are recipients of development cooperation themselves. Having moved from being recipients of development assistance to being providers provides them with a unique perspective and understanding of the challenges of developing countries. Emerging donors have become significant actors in global and regional development efforts. At the end of 2009, the global volume of development assistance was estimated to have reached 170 billion US$. The share of assistance from non-DAC donors increased from 8% in 2005 to 10.5% in 2009, including South-South cooperation.

      Romania provides assistance to its partner countries in sectors where its support can have maximum impact and be implemented as standalone projects or can be complimentary to the ongoing initiatives of other development cooperation partners, reflect Romania’s comparative advantages and are based on the needs and demands of the partner country. The sectors concerned include:

      • Transition to democracy
      • Supporting agriculture and sustainable economic development in the context of climate change – with priority to the phytosanitary and veterinarian areas.
      • Protecting the environment and supporting the promotion of sustainable energy in the context of climate change
      • Health and Education as secondary sectors

      Civil society organizations play a vital role in the delivery of development cooperation. Civil society is made up of community groups, volunteers, civil society organizations (CSOs) and trade unions. They act as service providers, implementers of ODA projects, conveners, or observers to raise questions and demand changes in international development at the global, national, and local levels. At the Accra High Level Forum on Aid Effectiveness (2008), the important contribution of civil society in development cooperation was recognized. At the same time, CSOs were encouraged to increase the transparency and mutual accountability related to their own contributions. The CSO Partnership for Development Effectiveness cooperates closely with the Global Partnership for Effective Development Cooperation.

      Together, the European Union and its Member States are the world's largest aid donor. In 2013 they provided more than half of the official development assistance. (€56.5 billion). EU development aid goes to around 150 countries in the world, ranging from Afghanistan to Zimbabwe. In the period 2014-2020, about 75% of EU support will go to the poorest countries in the world which, in addition, often are hard hit by natural disasters or conflict, something that makes their citizens particularly vulnerable. Moreover, the EU is the only donor worldwide which gives support in all countries that are fragile or suffer from conflict. Over the last decade, thanks to EU funding, almost 14 million pupils could go to primary school, more than 70 million people were linked to improved drinking water, and over 7.5 million births were attended by skilled health workers, saving the lives of mothers and babies. These are just some of the ways the EU is helping to reach the global development goals. (www.europa.eu).

      In addition to providing jobs and contributing to economic growth, the private sector plays an increasingly vital role in international development in terms of providing resources, providing services and promoting sustainable policies. For example, companies are supporting local communities through corporate social responsibility programmes. Some companies have established foundations that focus on particular development themes or regions. On the other hand, public-private partnerships can be a powerful way to increase service delivery whereby some of the service obligations of the public sector are provided by the private sector. Companies can also contribute to international development efforts through becoming a member of the UN Global Compact and aligning their strategies and operations with the ten principles on human rights, labour, environment and anti-corruption. Last but not least, commercial companies, including consulting companies, are one of the main implementers of ODA projects possessing relevant knowledge and expertise.

      The Organisation for Economic and Co-operation and Development (OECD) is an international economic organization based in Paris. It was established in 1961 when 18 European countries plus the United States and Canada decided to create an organization dedicated to economic development. The OECD has its origin in the Organisation for European Economic Co-operation, which was established in 1948 to help administer the Marshall Plan. The OECD currently has 34 member countries. It works on a broad range of topics to help governments foster prosperity and fight poverty through economic growth and financial stability. The organization provides analysis, develops standards and encourages peer reviews among member countries. The OECD works closely both with emerging and developing economies.

      The OECD Development Assistance Committee (OECD DAC) brings together some of the world’s main donors. Through its defining and monitoring of global standards in key areas of development, it has shaped discussions in the field of development cooperation. Among others, the DAC collects information on development cooperation flows. The OECD DAC has undergone a transformational shift over the last decade, moving from what was perceived by many as a donor club to a more inclusive forum. Kazakhstan will apply OECD DAC reporting standards and observe international best practice.

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