Working Papers

Lack of fiscal space and the risk of sovereign debt distress remain key stumbling blocks to achieving Sustainable Development Goals (SDGs) in developing countries. Because the allocation of concessional funds and debt relief is essentially reserved to Low Income countries (LICs), official financing strategies and mechanisms to support developing countries provide insufficient support to non-LICs that may need and deserve special consideration concerning official financing. This paper discusses how official financial support allocation could consider countries’ vulnerabilities in critical dimensions, with special reference to Small Island Developing States (SIDS). It explores how a…

The pandemic has progressed differently across the world. Using monthly data on COVID-19 cases and fatalities, we evaluate whether income inequality is an important factor in explaining cross-country differences in the spread and mortality of the virus. The results show that income inequality is positively correlated with the number of COVID-19 cases. Higher income inequality is associated with a more rapid spread of the virus and an increase in the number of cases, indirectly increasing mortality rates as well. Also, higher levels of inequality are associated with reduced effectiveness of social distancing measures in containing new infections. Thus, elevated inequalities place…

As developing countries pursue infrastructure projects, they should aim to address a combination of the pandemic, climate, inequality, and other crises with the right mix of economic and social infrastructure. To do this, governments must invest in a national infrastructure planning process, align planning with the SDGs, and prioritize sustainable infrastructure over infrastructure that does not put people and the planet first. There is no silver bullet for all the challenges; however, incremental changes based on innovative precedents can potentially make a difference on the ground. This paper proposes an analytical framework to consider these challenges and concludes with possible…

Does digitalization reduce corruption? What are the benefits of data-driven digital government innovations to strengthen public integrity and advance the Sustainable Development Goals? While the correlation between digitalization and corruption is well established, there is less actionable evidence on the effects of specific digitalization reforms on different types of corruption and the policy channels through which they operate. This paper unbundles the integrity dividends of digital reforms that the pandemic has accelerated. It analyses the rise of integrity-tech and integrity analytics in the anticorruption space, deployed by data-savvy integrity institutions. It also assesses the…

Demographic dynamics have strong repercussions for development and need to be addressed in the definition of the global development strategy for post 2015. Despite divergent trends across countries, international migration offers no definitive solution. A comprehensive approach is needed. Countries with declining and ageing workforces need to sustain or raise productivity. Countries with growing labour forces need to embark in growth patterns that are labour intensive, offer possibilities for dynamic structural change and productivity increases. Both cases require investments in education, skill formation and upgrading. The impact of population ageing on economic variables is nuanced but…

Demographic dynamics have strong repercussions for development and need to be addressed in the definition of the global development strategy for post 2015. Despite divergent trends across countries, international migration offers no definitive solution. A comprehensive approach is needed. Countries with declining and ageing workforces need to sustain or raise productivity. Countries with growing labour forces need to embark in growth patterns that are labour intensive, offer possibilities for dynamic structural change and productivity increases. Both cases require investments in education, skill formation and upgrading. The impact of population ageing on economic variables is nuanced but…

The international community has advanced in reforming the international aid system. Such reform comes at a time when there is a renewed skepticism about aid effectiveness and when the crisis sheds new doubts about the sustainability of donors´ commitments. At the same time, the international reality has changed as a consequence of the growing heterogeneity of the developing world, the new geography of global poverty, the emergence of new powers from the developing world, the presence of new aid players and, finally, the enlargement of the sphere of international public goods. Such changes demand a deeper reform in the development cooperation system.

The International Finance Facility for Immunization (IFFIm), which securitized future aid commitments by donor countries, has been successful in providing funds to immunize children in poor countries. Since capital is likely to remain scarce, the paper evaluates the prospects of setting up IFFIm-like mechanisms to fund a variety of objectives. Two broad conclusions emerge. First, replicating IFFIm could prove challenging because donor pledges will lack the desired credibility. Second, credit enhancements like third party guarantees, excess coverage, and channeling of pledges through a preferred creditor, could overcome this deficiency. Finally, Advance Market Commitments and Cash on…

This paper argues that the technical and political difficulties of using SDRs for development can be overcome. This requires an SDR-based reserve system and a fully SDR-funded IMF. The IMF would allocate SDRs counter-cyclically and treat them as deposits of countries, which could be used in lending to them. A substitution account is needed for a smooth transition from major reserve currencies to SDRs. To avoid the deficiency payments, a counterpart account – which would be credited when the substitution account is in surplus and debited when in deficit – is required. Alternatively, politically-feasible cost-sharing mechanisms could be designed.

This paper assesses the scope and impact of innovative development finance (IDF) in the Latin America and the Caribbean (LAC) countries in the 2000s. It also reports the views from the region’s relevant actors regarding IDF. The paper finds that very little IDF flowed to LAC in the 2000s, though it was significant for a few, poorer, and smaller countries, such as Haiti and Nicaragua. The views from the region suggest that LAC should fight for greater share of existing and prospective IDF, but also make better use of other available resources, such as remittances and flows through South-South cooperation.

This paper argues that SDRs should become a more relevant instrument of international monetary cooperation. This requires transforming them into a pure reserve asset and the IMF into a fully SDR-funded institution. SDRs would then be issued counter-cyclically and treated as deposits of countries in the IMF, which can in turn lend to countries. This approach would correct basic deficiencies of the current global monetary system. Complementary reforms include a substitution account for an orderly and smooth transition from major reserve currencies to SDRs, and the issuance of SDR-denominated bonds as an alternative to other major short-term assets.

The Millennium Development Goals (MDGs) were introduced to monitor implementation of the United Nations Millennium Declaration which set out a vision for inclusive and sustainable globalization based on human rights principles. This paper critically assesses the MDG experience including their policy purpose, ethical commitments, political origins, and consequences. It proposes that post-2015 goals should be based on principles of equity, sustainability and human security and address key contemporary challenges such as climate change, unemployment, inequality and global market instability.