Building Scenarios for International Development Finance

As indicated in the preceding chapter, the current international development architecture and the development financing system associated with it have evolved over the past six decades in an incremental and haphazard manner. For example, one of the most important elements of the system — ODA — comprises more than 80 bilateral, multilateral and international agencies. In spite of a surge of multilateral flows in the 1970s and 1980s, official aid remains heavily dominated by bilateral flows, which accounted for about 70 per cent of ODA in 2003, and particularly for European countries, which were responsible for more than 50 per cent of these flows in the same year. At the same time, as mentioned in chapter 1, private capital inflows, comprising primarily direct foreign and portfolio investments, have increased greatly, although they tend to be concentrated in a few emerging and middle-income countries and focus on specific sectors (mining, energy, telecommunications, finance and some manufacturing activities). Finally, there have been impressive increases in other private flows, especially over the past decade, including remittances, grants from private foundations, and donations from NGOs and individuals.