The Future of Financing for Development

UN High-Level Intergovernmental Event in 2001

Background Paper by Jens Martens World Economy, Ecology & Development Association (WEED)

Original document in German Translated into English by CIDSE May 2000

In 2001, for the first time in its history, the United Nations will be staging an International Conference on Financing for Development. Its objective is to find ways out of the permanent financial crisis of the countries in the South. The range of topics on the agenda runs from the future role of official and private capital flows to institutional reforms in the world financial system. The United Nations is thus moving into an area which until now has primarily been dominated by the Bretton Woods Institutions and the World Trade Organisation (WTO).

Three trends have obviously encouraged the willingness of the governments to discuss the future of financing for development in a dedicated conference: the traditional official development assistance (ODA) is mired in crisis and drifting ever further from the goal of '0.7 per cent'; the international flows of private capital (including direct and portfolio investments) have mushroomed, without the majority of developing countries having so far profited from them; and the financial crises of the past years have shown up the increased need for regulation and harmonization within the global monetary and financial system.

It is not clear whether the UN process will offer a way out of the impasse to which North/South negotiations in past years have almost automatically led when it came to questions of financing. If the governments settle for 'Business as usual', then the conference is doomed to failure from the start. However, if the (new) social-democratic dominated governments in many western industrialised countries use this process in order to demonstrate at least a gradual shift in international development policy, then the conference could bring progress. However, a repeat of the historic Bretton Woods conference is not very likely.

As they did in the world conferences of the 1990s, non-governmental organisations (NGOs) will contribute to the dynamic of the negotiating process. The outcome of the conference will also depend upon their impulses and the pressure which they exercise on their governments. The moment for this, given the current debate about a reform of the IMF and after the (provisional) failure of a new round of liberalisation at the WTO ministerial meeting in Seattle is more propitious than ever.

You can download the whole document here as PDF-file: ffd042000.pdf (278 KB)

Bonn, April 2000