I am honored that my blog received a guest post from The Organisation for Economic Co-operation and Development (OECD).
By Jon Lomøy, Director of the OECD Development Co-operation Directorate (DCD)
Innovation isn’t something that springs to mind when speaking of statistical systems. But right now, the OECD is looking to do just that: innovate the way it measures and monitors external development finance in order to boost both its volume and effectiveness.
The official development assistance (ODA) measure developed by the OECD, which has been used for over 50 years to monitor development finance, defines how funds must be delivered in order to be recorded as ODA. These volumes, in turn, are used to measure the effort providers of development assistance make and to score them against their commitments.
Reporting rules can, therefore, make a big difference to how development programmes are designed and to the amounts of money they mobilise. There is a real temptation for providers to design programmes to maximise recorded development flows, letting this take precedence over the focus on what will produce best results. For example, we know that some development finance institutions may not lend support to private investors backing development-related projects simply because the cost of doing so would not be counted as ODA.
Updating the way development finance is reported can, therefore, spur innovation. As with any accounting system, it is essential that clear and robust rules are in place. Yet problems arise if the rules are restrictive to point of reducing flows – and the effectiveness of our development efforts.
This is important particularly for the economies that, without ODA, would be starved of external sources of finance. These are typically the least developed countries, which are often conflict affected and face the biggest development challenges. Encouraging flows to these countries can not only help to fill this gap, but can also be done in such a way as to maximise other resources available to them.