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Begin New Search Topic Development Content Type Policy Brief Publishing Institution German Institute of Development and Sustainability (IDOS) Publication Year within 10 Years Publication Year within 5 Years Publication Year within 25 Years

1. Germany and the UK: Perspectives for Deepening the Bilateral Dialogue on Development Policy

Author:
Niels Keijzer and Ina Friesen
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Germany and the United Kingdom of Great Britain and Northern Ireland (UK) are the second- and fourth-largest providers of official development assistance (ODA) worldwide and are key actors in driving international policy discussions on global development in the Organisation for Economic Co-operation and Development (OECD), the G7, the G20 and other key groupings and platforms. The development policies of both countries witnessed important convergence and detailed cooperation during the first decade of this millennium – a period when Western countries understood development cooperation as a source of considerable soft power, which was demonstrated in rising budgets and like-minded policy directions. The austerity policies that followed the global economic and financial crisis, and the UK’s decision to leave the European Union (EU) in 2016, have challenged the bilateral relationship in the development policy area between Germany and the UK. The UK’s departure from the EU has reduced the number of joint interactions and corresponding opportunities for identifying cooperation initiatives. Halfway through the period envisaged for the completion of the 2030 Agenda, both countries are adjusting their development policies, seeking to determine their future European roles and global development ambitions, but they remain key partners in global development. Both the UK and Germany have recently revised or are in the process of preparing development policy strategies as part of their integrated foreign policies – a reflection process which in recent months has been challenged to adjust to the implications of the war in Ukraine. The case remains strong for regular exchanges and cooperation on development policy between both countries, including by intensifying dialogues and resuming formal secondments between the FCDO and the German Federal Ministry for Economic Cooperation and Development (BMZ). Two areas in particular offer good prospects. First of all, the UK and Germany should closely work together to deliver on the current G7 Presidency agenda – including the key focus on infrastructure investment, as initiated during last year’s UK Presidency. Other key opportunities for cooperation include gender and climate action, as well as the provision of global public goods. Secondly, Germany and the UK should seek to engage in and harness the role of the OECD as a provider of key standards for international development policy and as an important forum for peer learning. As key providers of global development finance, the legitimacy of its reporting system is essential to both countries’ influence and contribution to global development.
Topic:
Development, Bilateral Relations, European Union, Development Assistance, and Dialogue
Political Geography:
United Kingdom, Europe, and Germany

2. Is Foreign Direct Investment Losing Clout in Development?

Author:
Axel Berger and Alexandros Ragoussis
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Over the last decade, only a single projection of foreign direct investment (FDI) flows by the United Nations influential “World Investment Report” has proposed a negative outlook in the medium term. Based partly on surveys of business executives, these forecasts reflect ex¬pecta¬tions of investment growth which, however, have repeated¬ly failed to materialise. In fact, FDI flows to develop¬ing countries have remained stagnant over the past decade. Such wishful thinking is nurtured by a long series of positive narratives and facts about foreign investment. FDI has been one of the pillars of international development efforts for over 70 years. Its promise has not been limited to critical finance, but extends to longer term competitiveness through access to better technology, managerial know-how and, above all, prosperity through more and better paid jobs in the formal sector. From the old prescriptions of the so-called Washington Consensus to the hopeful Addis Ababa Action Agenda, the dominant development narrative has therefore favoured a rather indiscriminate pursuit of investment volume. This brief calls for rethinking of narratives and policies that help to improve the impact of FDI, based on secular trends that challenge our expectations. Four such trends stand out: First, while other sources of finance for development have grown considerably over the last decades, foreign invest¬ment has not followed the trend. Second, the kind of investment that is associated with stronger gains and longer term commitment in host economies – greenfield FDI – has also been in consistent decline as a share of total invest¬ment, while mergers and acquisitions and project finance have gained in importance. Third, the top 100 multinational enterprises (MNEs), accounting for nearly a quarter of global FDI stock, rely less on employment today than they used to in order to grow their foreign presence. Job creation, knowledge transfer and spillovers are therefore less likely to materialise through the presence of mega-firms and their corresponding investment at scale. Fourth, the growth of Chinese outward FDI within a strategic expan¬sionary political agenda stands to change rules and attitudes towards foreign investment moving forwards. We argue that, collectively, these trends invite a renewed conversation around the kind of foreign investment we want and expectations of this source of finance for develop¬ment. These facts obscure neither the broad benefits of FDI to developing countries, nor the value proposition of FDI attraction. Rather, they raise questions about expectations, priorities and the alignment of investment policy with the realities experienced across develop¬ing countries. To that end, we propose four priorities that stand to make a difference in the current context. We call for policy-makers to: 1) Place additional emphasis on retention of investment and linkages with the domestic economy. 2) Try new approaches for FDI attraction that focus on improving domestic investment facilitation frameworks. 3) Be selective as to investment sources and activities in order to mitigate political risks and align inward investment better with sustainable development. 4) Add evidence to improve our understanding of invest¬ment and inform decision-making. Overall, it is critical to engage in a serious multi-stakeholder conversation around expectations, actors and solutions that respond to the investment reality of today.
Topic:
Development, United Nations, Foreign Direct Investment, and Economy
Political Geography:
Global Focus

3. Europe’s Global Gateway: A New Geostrategic Framework for Development Policy?

Author:
Mark Furness and Niels Keijzer
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The proposal by the European Union (EU) to build a “Global Gateway” to the world is potentially an important juncture in EU foreign relations. Since its official launch in December 2021, most attention has been put on the initiative’s geo­strategic implications and whether the EU can compete with China. Less attention has been paid to the Global Gateway’s implications for EU development policy in terms of strategic objectives, decision-making, thematic focus and financing. Two aspects are important in this regard. The first is whether the Global Gateway is a serious proposal that can deliver on its headline promises to massively increase European infrastructure financing in developing countries, provide partners with an alternative economic and political model to that being offered by China, and make a meaningful contribution to their efforts to realise the 2030 Agenda. The EU’s announcement that the Global Gateway will generate up to EUR 300 billion in investment by 2027 grabbed headlines, many of them sceptical. There is, however, no reason to doubt that the initiative will be adequately financed. Although the planning for the EU’s international aid budget for 2021-2027 has mostly been completed, a significant proportion remains flexible and could be spent on Global Gateway projects. As for the EU’s implementing capacity, the Gateway’s financial toolbox draws on the EU’s recent experiences with the Juncker Investment Plan and the External Investment Plan, which have both been utilised by development banks and private investors. The second aspect is whether the Global Gateway heralds a change in the EU’s motivations, objectives and modalities for cooperation with developing countries and regions. On the surface, the Global Gateway does not seem to change much. There are many thematic overlaps with existing strategic frameworks for engaging with Africa and the EU’s Neighbourhood. There is even a sense that the Global Gateway turns back the clock to the days when the EU focussed aid spending on infrastructure and emphasised its “political neutrality”. The geopolitical context in which the EU finds itself is, however, being transformed by pandemic, wars and multipolarity. The impacts of epochal events such as the Covid-19 pandemic and Russia’s invasion of Ukraine are still playing out. The Global Gateway signals a major adjustment in the EU’s response to these transformations, particularly regarding its engagement with the “Global South”. This will create a new paradigm for EU development policy, defined by strategic interests. It is likely that the new geostrategic framework will weaken the EU’s commitment to, and observance of, core develop­ment policy principles, especially the focus on poverty, partner country ownership, open governance and the “do no harm” principle. The Global Gateway’s use of aid to cata­lyse commercial investment risks further instrumentalising EU development policy. Specific measures are therefore needed to safeguard and promote the principles that the EU and its member states have committed themselves to.
Topic:
Foreign Policy, Development, European Union, Development Aid, and Competition
Political Geography:
Europe

4. New Standard Indicators for German Development Cooperation: How Useful are “Numbers at the Touch of a Button”?

Author:
Heiner Janus and Daniel Esser
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
For years, German development cooperation (GDC) has been striving to become more results-oriented. In 2022, the Federal Ministry for Economic Cooperation and Development (BMZ) took an important step in this direction by introducing 43 standard indicators. The aim was to aggregate development results across themes and countries in order to present them to the public. The BMZ hopes for more effective communication with Parliament (Bundestag) and the general public, as well as more coherent reporting by Germany’s two main implementing organisations, the GIZ (Gesellschaft für Internationale Zusammenarbeit – the German agency for international cooperation) and the development bank of the Kreditanstalt für Wiederaufbau (KfW). From an international vantage point, Germany needs to catch up in respect to results orientation. Other major actors, especially the United Kingdom, the United States and multilateral development banks, introduced compre-hensive reporting systems back in the 2010s. These organisations report on 20 to 50 standard indicators to demonstrate how their activities contribute to measurable results. On this basis, they communicate more coherently with the public. BMZ aims to create a similar basis for improved communication. In a participatory process – and jointly with the GIZ and the KfW development bank – the BMZ has formulated indicators that are equally suited to implementing organisations’ political priorities and their needs. The administrative burden of collecting the standard indicators is limited by leveraging existing data. In addition, the BMZ has set methodological standards whose obligatory use is intended to increase the quality of the data collected. However, the introduction of standard indicators also entails risks: They can set perverse incentives that encourage reporting on short-term results. Such reporting can lead to a neglect of long-term effects, which are more difficult to measure. Research also shows that indicators no longer fulfil their original purpose of providing neutral representations of change if they are used to exert political control. In addition, there are methodological challenges, such as double counting across different benchmarks, as well as concerns about unrealisable expectations. Overall, we assess the development and introduction of standard indicators in GDC positively. Yet, some important decisions are still pending. The level of detail at which the data will be shared among stakeholders and the public has yet to be determined. The quality of the data collected and the transparency of reporting will in turn determine what larger effects towards an improved results orientation of GDC can be achieved. In view of the decentralised and fragmented structure of GDC, especially regarding monitoring and evaluation systems, we hope that the new indicators can foster the harmonising of the reporting systems of the GIZ and the KfW development bank. The standard indicators can also help make GDC more transparent. We therefore recommend that all data collected be made publicly available. Finally, the integrative potential of standard indicators should be harnessed to improve the division of labour between the ministry and the two main implementing organisations towards becoming learning-oriented – both in the data collection process and during evaluation.
Topic:
Development, Government, Development Aid, Cooperation, and Impact Evaluation
Political Geography:
Europe and Germany

5. The EU-CEAP Impacts on Developing Countries – Recommendations for Development Policy

Author:
Jenny To
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The European Union Circular Economy Action Plan (EU-CEAP) is key to transitioning to a circular economy and climate neutrality under the EU Green Deal, with developing and emerging countries (DECs) playing an important role. First, DECs are essential for the primary material chains, for example, supplying material for electric vehicle (EV) batteries to the European Union (EU). Second, DECs are involved in secondary material chains: To recycle its plastic packaging, Europe relies on DECs. But despite the essential role DECs play in Europe’s transition to a circular economy, the EU-CEAP’s impact on DECs has largely gone unexamined in literature and policy discourses – a shortcoming that could reinforce Eurocentrism and jeopardise the much-needed willingness to cooperate on multilateral solutions to global challenges (Messner, 2022). This policy brief and associated discussion paper (To, 2022) outline challenges and opportunities for DECs that are related to the EU-CEAP and present recommendations for German development cooperation. In the plastic packaging sector, DECs will likely be impacted by stricter waste shipment regulation (WSR), along with higher EU recycling targets, mandatory recycled content for plastics, and bans on certain single-use plastic items. Hence, the following recommended policy actions: • To lower the risks of illegal plastic waste trade and disposal, DECs must be helped to enforce the WSR and meet tightened import regulations. • The impact of plastic waste imports on DEC domestic markets in light of changing WSR must be monitored; discussion about stricter EU waste export regulations should be initiated accordingly. • In response to plastic waste imports, plastic recycling in DECs must be improved by raising standards and investments in advanced machinery as well as working conditions for informal labourers. • Changing EU plastic ban regulations must be monitored to anticipate increased demand for plastic alternatives. For EVs and batteries, EU-CEAP regulations that could impact DECs include stricter due diligence requirements for raw materials, higher targets for retrieving secondary battery materials, as well as reusing, repurposing and recycling EVs and their batteries. In response, the following policy actions are recommended: • Help DEC suppliers meet tighter supply-chain require-ments in light of the expected steady increase in demand for virgin raw materials from DECs. • Help expand road infrastructure to make it possible to reuse EVs, ensure EV batteries for repurposing, and provide recycling machinery and know-how.
Topic:
Climate Change, Development, European Union, Multilateralism, Supply Chains, Green Deal, and Circular Economy
Political Geography:
Europe

6. Addressing the Challenges of Digital Lending for Credit Markets and Financial Systems in Low- and Middle-Income Countries

Author:
Christoph Sommer
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The demand for digital financial services has risen significantly over recent years. The COVID-19 pandemic has accelerated this trend and since the focus has shifted towards economic recovery, digital lending has become central. Digital credit products exploit traditional and alternative financial and non-financial data to provide access to finance for households and micro, small and medium enterprises (MSMEs). While it makes lending more inclusive for underserved or unserved households and firms, its increasing influence also brings forth challenges that need to be addressed by policy-makers and regulators in order to guarantee well-functioning credit markets and broader financial systems that foster sustainable economic development. A central concern is the adverse effect of digital lending on the stability and integrity of credit markets (and potentially the wider financial systems). The rise in non-performing loans, even before the COVID-19 crisis, has been associated with an increase in digital credits. New players with little experience enter the market and exploit regulatory arbitrage, but often these players have no (or only a partial) obligation to report to respective systems for sharing credit information or to supervisory bodies, which introduces severe vulnerabilities. In addition, the low entry threshold of digital financial products, due to their convenience and simplicity for customers, provides fertile ground for exploitative financialisation. Underserved households and MSMEs with limited financial literacy may be lured into taking up unsuitable and unaffordable digital credits, leading to over-indebtedness and bankruptcy. The last challenge arises from significantly shorter loan maturities in MSME lending if current forms of digital lending are scaled up. This is problematic, as firms need loans with longer maturities to realise productivity-enhancing medium- and long-term investments, many of which include complementary investments in labour, thereby contributing to an improvement in job quality.
Topic:
Development, Finance, COVID-19, Lending, Digital Finance, and Loans
Political Geography:
Global Focus

7. Towards Sustainable Ocean Governance: A Call for Blue Climate Action in International Development

Author:
Ina Lehmann, Michael Siebert, Nicola Hanke, Maximilian Högl, and Anna-Katharina Hornidge
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The ocean is vital for life on earth and yet it is under serious threat from climate change and resource overexploitation. Environmental change in the ocean significantly undermines human livelihoods, especially in the developing and least developed countries where people are particularly vulnerable to climate change-related losses and damages. This Briefing Paper outlines challenges that people, development cooperation and policy face and suggests ways forward for sustainable ocean governance through sustainable resource use, comprehensive risk management and enhanced climate action. Life in the ocean is threatened in various ways by human activities. Climate change, as one severe consequence, leads to ocean warming and ocean acidification putting complex ecosystems and their sensitive species in danger. Such climatic impacts are exacerbated by pollution, especially plastic, and the overharvesting of many marine species. As a result of the confluence of these developments, many local coastal communities lose their livelihoods. At the same time, climate change increasingly threatens coasts through sea level rise, salinisation and growing frequencies of extreme weather events, such as floods and storms. This puts the 2.6 billion people living at or near the coasts at high risk; low-altitude small islands are expected to become uninhabitable within the next decades if current global warming trajectories continue. Furthermore, the ocean contributes to climate change mitigation because marine ecosystems absorb CO2. In response to these challenges, there is a need for sustained awareness raising on the importance of the ocean for development as well as for the need of enhanced international cooperation for joint action. Conscious politics, substantial action and financial resources are needed at multiple levels of governance, from empowering local stakeholders to developing locally sound solutions to political guidance through national and international policy-making processes. From a development policy angle, this Briefing Paper specifically suggests that current climate and biodiversity policy processes pay enhanced attention to the ocean under climate change, pollution and overexploitation stress.
Topic:
Climate Change, Development, Governance, and Oceans and Seas
Political Geography:
Global Focus

8. Protecting Democracy: The Relevance of International Democracy Promotion for Term Limits

Author:
Julia Leininger and Daniel Nowack
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The question of whether and how democracy can be promoted and protected through international support has recently gained relevance. On the one hand, the withdrawal of NATO troops from Afghanistan has reignited a public debate on the limits of democracy promotion. On the other hand, the need for international democracy protection is growing due to an increase in autocratisation trends worldwide. DIE research shows that it is possible to effectively support and protect democracy. In this context, both the protection of central democratic institutions, such as term limits for rulers, and the promotion of democratic forces that pro-actively resist attempts at auto¬cratisation are central. Since 2010, autocratisation trends have been characterised by the fact that they often slowly erode achieved democratisation successes and consolidate autocracies. The circumvention and abolition of presidential term limits by incumbent presidents are part of the typical “autocratisation toolbox”. Term extensions limit democratic control and expand presidential powers. Democracy promotion and protection play a relevant role in preserving presidential term limits, and thus in protecting democracy. They contribute towards improving the “duration” and “survival chances” of presidential term limits. The more international democracy promotion is provided, the lower the risk that term limits will be circumvented. For example, a DIE analysis found that a moderately high democracy promotion mean of $2.50 per capita over four years on average halves the risk of presidential term limits being circumvented.
Topic:
NATO, Development, Diplomacy, Democracy, and Autocracy
Political Geography:
Global Focus

9. Priorities for a Development-Friendly EU Carbon Border Adjustment Mechanism (CBAM)

Author:
Clara Brandi
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The European Commission unveiled the Carbon Border Adjustment Mechanism (CBAM) in July 2021 as part of its “Fit for 55” climate-policy package. The European Commission had announced this trade-policy instrument under the Green Deal in 2019 as a means of implementing more ambitious climate-policy goals without energy-intensive sectors transferring their emissions abroad (carbon leakage). The CBAM proposal envisages imposing a levy on imports in certain energy-intensive European sectors that is proportional to the carbon content of the goods concerned. The proposal complements the EU’s existing Emissions Trading System by requiring importers of goods purchased from especially energy-intensive sectors (steel, cement, electricity, fertiliser and aluminium) abroad to purchase carbon certificates based on emissions data from abroad. CBAM is primarily designed to promote an ambitious climate policy for the EU. However, the EU’s current proposal creates the impression that it is mainly about improving domestic competitiveness at the expense of climate-policy effectiveness and development prospects. The draft legislation must now be fleshed out in detail by the EU member states and the European Parliament. In addition to addressing climate-policy effectiveness and compatibility with WTO legislation, account must also be taken of the impact on European trading partners, and, in particular, poor developing countries. Many developing countries are expected to face additional export costs as a result of the CBAM. The EU should carefully evaluate the associated disadvantages for developing countries and work towards achieving a development-friendly design of the mechanism. Corresponding improvements should be made to the CBAM in the EU’s legislative process going forward: • The EU must ensure that the border adjustments do not have a detrimental impact on poor countries. Least developed countries (LDCs) should be exempted from the CBAM. • The EU should provide targeted support to the developing countries affected by the mechanism, for instance, by building their capacity for implementing the CBAM and for reducing carbon emissions in the sectors concerned. • The EU should assist low- and middle-income partner countries with the decarbonisation of their manu¬facturing industries. • The EU should also recycle revenue from the CBAM by deploying it primarily for climate-policy purposes abroad. • The affected countries should be involved to a greater extent in future through consultations and diplomatic dialogue in the process for further develop¬ing the mechanism.
Topic:
Climate Change, Development, Treaties and Agreements, European Union, and Carbon Emissions
Political Geography:
Europe

10. Export Curbs on Essential Goods in the Wake of COVID-19 and the Least Developed Countries: Permanent Scarring from a Temporary Outburst

Author:
Simon Evenett
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Anything that jeopardises progress towards the Sustainable Development Goals – such as a global pandemic and how governments react to it – is thus a major source of concern, in particular for least developed countries (LDCs). The first half of 2020 witnessed governments imposing dozens of export curbs on essential medical goods and foods that the LDCs, among other nations, depend upon. Although some of those curbs have subsequently been removed, there is a substantial risk of a permanent reduction in essential goods supplied to LDC markets, as current multilateral trade disciplines on export controls do not specifically require a return to the pre-pandemic status quo. Let us not forget that the G20 trade and investment ministers declared on 3 November 2020 that “any emergency trade measures designed to tackle COVID-19, including export restrictions on vital medical supplies and equipment and other essential goods and services, if deemed necessary, are targeted, proportionate, transparent, temporary, reflect our interest in protecting the most vulnerable, do not create unnecessary barriers to trade or disruption to global supply chains, and are consistent with WTO rules” (G20, 2020). Evidence on resort to export restrictions suggests, however, that G20 fealty to this pledge was uneven. The purpose of this Briefing Paper is to outline the key policy developments implicating the trade in essential goods during the first nine months of the COVID-19 pandemic before drawing out the implications for development policy and trade policy cooperation. These lessons need to be taken on board quickly if the mistakes made in 2020 are not to be repeated in 2021, when policymakers and the private sector around the world face the imperative of the equitable and efficient global distribution of COVID-19 vaccines. Recent export controls on such vaccines suggest important lessons from last year have not been taken on board universally. The key findings and policy recommendations are: • Permanent disruption to trade routes in medical goods and medicines cannot be ruled out as a result of temporary export curbs. • Revisit the World Trade Organization (WTO) rules that allow export curbs during emergencies. • LDCs should increase their buying power by joining together to buy medical goods and medicines from a diversified set of production locations. • Such buying power would be multiplied if LDCs joined forces with leading development agencies and the multilateral development banks. Stockpiling in advance of any future pandemic offers no cast-iron guarantee, as no-one can know for sure what medical goods will be in high demand.
Topic:
Development, International Cooperation, Sustainable Development Goals, Trade, and COVID-19
Political Geography:
Global Focus