Finance for Development, tax and Inequality

- Private flows

Private flows have increased significantly:

Flow In Returns Result

Remittances 343 0 343

ODA 165 -25 140

FDI 490 -420 70

Portfolio equity 18

Loans 710 -513 197

Illicit financial flows

Source: EURODAD (2011)

-947

Foreign direct investments:

• Rather limited geographical scope;• In LDCs, mainly within certain sectors;• Limited employment impact;• Governance issues;

Public-private Partnerships:

• Expensive mode of finance;• High failure rates;• For-profit nature vs. Public concerns;• Governance issues

Other Flows:

• Loans;• Remittances• Philanthropic aid

Summing up:

• Aid nowadays only makes up a small percentage of global flows.

• Private flows are rarely invested in public goods;

• Flows going from South to North remain much more important

Questions we need to ask ourselves:

• Do we need a modernisation of the DAC-rules?

• Should certain types of private flows be considered as being ODA?

• What are the implications on global governance of increased private flows globally?

Thanks!

- Henrik Nielsen