Heterogeneity in Financing for Development strategies as a hindering factor to achieve a global agreement on the 2030 Agenda

Abstract

The adoption of the 2030 Agenda has favoured a profound shift in the development aid system with the consolidation of new actors, goals and instruments. While the Sustainable Development Goals are a sound proposal to address the development problems in this new scenario, there is no agreement on many other topics, such as the most accurate instruments to finance the Agenda. Despite consensus on concerns about the effectiveness of official development assistance (ODA), no alternative proposals have yet been consolidated, and debate persists on how to finance the Agenda. However, the literature does not sufficiently address the fact that countries are pursuing divergent financing strategies that complicate the necessary consensus, especially after the negative impact of COVID-19 on international cooperation. To contribute to filling this gap in the literature, we focus on donor countries, scrutinising the variety of financing for development (FfD) strategies they support through their public policies, either promoting ODA flows, remittances, philanthropic donations or a policy coherence for development approach. Although there is still no international agreement on the role that these four instruments should play in financing the 2030 Agenda, data evidence shows how donor countries rely more on one or another of such instruments. Our hypotheses are that it is possible to find similar strategic patterns throughout different groups of countries and that there are significant differences in the FfD strategy implemented by each group. To test them, we propose a hierarchical cluster analysis to classify main donor countries according to the different FfD strategies they are actually carrying out. The analysis confirms our hypotheses, identifying four groups of countries according to their FfD strategy. Countries in each group share similar strategic approaches to financing the fight against poverty, while groups deeply diverge from one another. These results could explain the delay in addressing the unavoidable FfD debate in the 2030 Agenda, and they even question whether a common and shared FfD approach would be feasible if not appropriately addressed.