Building on data analyses and an extensive review of the literature and policy documents of the seven largest MDBs (the World Bank and six regional development banks: AfDB, AIIB, AsDB, EIB, EBRD and IADB), this review offers a comprehensive overview and analysis of MDBs abilities to provide and finance GPGs.
It aims to:
- Define what GPGs are and explain why they are underprovided.
- Examine whether and how MDBs can provide GPGs, to what extent the strategies and operations of MDBs reflect GPGs, and how GPGs are allocated across client countries.
- Identify the challenges and limitations of MDBs in financing and providing GPGs, and the constrains that limit demand from client countries.
- Offer reflections on improving the instruments and models used by MDBs in the provision and financing of GPGs, as well as facilitating their access by client countries.
The report identifies three areas within the operations of MDBs that meet the criteria of GPGs, which means that they are non-rival, non-excludable and have an impact across borders, whether positive or negative. These three main areas come under the core activities of MDBs, and have a strong and direct impact on development. The areas are: climate change mitigation, global public health and peace and security.
MDBs are seen as key players in addressing these challenges through providing or financing GPGs. They can help address the constraints and challenges countries face in accessing and implementing projects that have cross-border impacts, but they are not the only development actor able to increase the uptake and delivery of GPGs.
The impacts of these three areas are escalating and are becoming more frequent and long-term. Financing needed to address immediate consequences and invest in transforming societies and economies are soaring and becoming even more urgent. However, concessional public finance is not increasing enough to match the scale and urgency of action as bilateral donors try to balance their books following the Covid-19 crisis and countercyclical policies and deal with increasing domestic pressure.
Report by the Overseas Development Institute