Sixth High Level Dialogue on Financing for Development
- Rule of Law
UNITED NATIONS GENERAL ASSEMBLY
Statement by Senator Chris Back, Parliament of Australia
Australia welcomes the opportunity provided by this Dialogue to take stock of development financing achievements and challenges.
But it is also a time to recall international realities, and identify the sources of, and approaches to financing that will truly drive development. Work is underway to develop the post-2015 development framework. Discussions on how we will implement and finance it are beginning.
But the world has changed since 2000 when we committed to the Millennium Development Goals, and later, to their financing.
Rapid and sustained economic growth in Asia has changed economic and financial
capacities in the region, with global implications (1). Developing countries
have led the recovery in world trade since the global financial crisis (2).
They are driving growth in the global economy, and this is expected to continue
These changes have driven shifts in the relative size and importance of different
types of finance available to developing countries. Domestic government spending
in developing countries grew from $2.2 trillion in 2000, to $5.9 trillion
in 2011 (4). Foreign direct investment in developing countries grew from $150
billion in 2000, to $650 billion in 2011. A four-fold increase (5). Compare
this with Official Development Assistance – which increased from $80
billion in 2000 to $130 billion ten years' later (6).
Of course, ODA is still an important source of finance for development, particularly in small economies. It continues to play a significant role in supporting economic reforms and good governance, promoting the rule of law and building the productive capacity of trade related sectors. It is still the largest international flow of finance in 43 countries.
But in 1990, ODA was the largest source of finance in 95 countries (7). Its importance in many countries therefore has decreased.
In many developing countries, particularly in Asia and the rapidly growing economies of Africa, other sources of finance are proving more effective at generating economic growth.
The Monterrey Consensus and the Doha Declaration provide a good basis for discussions on financing the post-2015 framework. Monterrey highlighted multiple sources of finance for development, including public and private sources – at domestic and international levels; trade as an engine for development; and the importance of sustainable debt management. Monterrey also underlined the importance of an international financial, monetary and trading system that enables development.
It is clear that trade continues to be an important driver of development. The economic growth of developing countries can be unlocked through trade. This is why Australia will continue to promote trade liberalisation at the global level through the World Trade Organisation, and at regional and bilateral levels. And this will be a key theme for us as we chair the G20 in 2014.
Other sources of finance are also growing in importance. Private development assistance from individuals through NGOs, foundations and corporate giving is growing much faster than ODA, although from a small base (8). And development cooperation from developing countries – south-south cooperation – will be an integral part of financing the post-2015 framework.
Since Monterrey, there has also been an increasing focus on the importance of a vibrant private sector in developing countries to drive long-term economic growth. The private sector will provide capital for investment and innovative solutions to development challenges.
Building domestic and international enabling environments for a robust private sector will therefore also be a crucial component of financing for development.
The focus of Monterrey was mobilising finance for development. Mobilisation is important, but won't be enough. This time around we will need to expand the focus of our discussions to look at how poor countries are able to attract and access international flows of finance.
Experience in the last 10 years highlights that many small countries, Least Developed Countries and Fragile States have largely missed out on the growth enjoyed by developing countries who have had access to international trade and investment opportunities.
Helping these countries access such opportunities is vital. And spending finance effectively – to maximise its contribution to economic growth – will be another integral part of the post-2015 development agenda.
We look forward to discussions on financing for development that are grounded in current global economic realities. We need to learn from public and private sector experience, and use this experience to inform future financing decisions. We need to develop strong partnerships with a range of development actors, particularly the private sector.
Australia is committed to playing our part in this effort.
Concrete steps need to be taken to assist developing countries build, access and effectively use multiple sources of finance to drive sustainable economic growth.
(1) World Bank (2013) 'World Development Indicators'
(2) Qureshi (2011) 'Rebalancing, growth and development in a multipolar global economy' Economic Premise, World Bank
(3) Qureshi (2011) 'Rebalancing, growth and development in a multipolar global economy' Economic Premise, World Bank; World Bank (2013) 'World Development Indicators'
(4) Development Initiatives (2013) 'Resources to end poverty; real money, real choices, real lives'
(5) World Development Indicators, World Bank.
(6) OECD Aid statistics (2012) 'Long-term trends in DAC ODA'
(7) Development Initiatives (2013) 'Resources to end poverty; real money, real choices, real lives'
(8) Total of $45.3 billion in 2011. Development Initiatives (2013) 'Resources to end poverty; real money, real choices, real lives'