Water, sugar and oil: how to mix development finance flows to best effect?

Written by Andrew Rogerson, Senior Research Associate at ODI on the Development Progress blog:

“Visualise global development finance in a post-2015 world as, well, as a bucket of water that holds 10 litres. The bucket is more than half full to start with, and contains mostly ‘domestic resources’, public and private.

Into this bucket now pour a 1 litre jug of fluid called ‘international flows’. This jug contains 800 millilitres of private capital, such as foreign direct and portfolio investment, worker remittances, and loans at market terms. The remaining 200 millilitres in the jug – or just one-fiftieth of the entire bucket – contains a mixture of public and/or philanthropic transfers, as well as some more market-related, but still not quite private flows.

Look closer now at this 200 ml of fluid: it looks cloudy, and might have been shaken, stirred or whisked into the rest.

Around half of it appears to be a rare substance that chemists in Paris discovered decades ago and call ‘oh-dee-ey’.  It seems an apparently trivial element in the overall bucket of development finance – accounting for just one-hundredth of the full bucket – yet it seems to generate a lot of fuss and debate.”

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