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Chapter 5: Progress in the International Development and Trading Framework

Chapter Highlights

The past tumultuous decade has ushered in significant changes in the assistance policies of international institutions. They have developed a results-based, country-driven assistance framework grounded in regular reviews of country strategy and independent evaluations. A more diverse and flexible range of financing instruments helped them tailor assistance to the needs of particular countries (such as those affected by conflict) and in particular situations (such as disaster relief and crisis assistance).

Indications for aid levels in 2011 are mixed. Some major donor governments remain dedicated to maintaining aid levels and others have announced cuts. Developing countries are also benefiting from new donors, including disbursements of some $9–10 billion a year from donors that are not members of the Development Assistance Committee of the Organization for Economic Co-operation and Development, and a sharp rise in donations from the private sector in advanced countries.

The growing assistance from emerging donors, many in the developing world, is welcome but may not compensate fully for a significant fall in aid from traditional donors, to the extent that the emerging donors pursue different development priorities and practices.

Trade integration and facilitation remain essential for inclusive growth and poverty reduction. World trade, now recovering at about double the 2002–08 rate of growth, remains well below the precrisis peak and even lower than the level it would have achieved if it had continued the 1995–2008 trend. The rise in protectionist measures during the crisis, which particularly affected the exports of least developed countries, appears to be receding. Solidifying an open, rules-based international trade regime can be accomplished best by concluding the Doha Round.

The global community can support poverty reduction through improving trade integration in low income countries. Poor country market access could improve significantly if rich countries extended duty-free, quota-free access to exports, simplified rules of origin in preference agreements, and removed obstacles to trade finance. More financial resources and technical assistance are needed to strengthen trade facilitation and to reduce supply constraints on poor country exports. These efforts should include increased commitments for aid for trade (which in real terms stagnated in 2009) and greater use of public–private partnerships. Further efforts are required to connect landlocked countries and lagging regions to regional and international markets.

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