SOURCES FOR FUNDING

DEVELOPMENTValentina Lagos

Financing for Development MOOC World Bank Group

Sustainable Development Goals“17 Goals to end poverty, fight inequality and injustice, and tackle climate change by 2030.” (UN)

How do we finance this?• Public Funding• Private Funding• Technical Assessment

Public Funding• Domestic or international funds provided by governments• Money raised from taxes and savings from domestic resources• Used to leverage investments and provide guarantees

Public Sources• Domestic Resource Mobilization (DRM) $7.7 trillions/yr /50-80% of

the money needed to finance the SDGs

• Official Development Assistance (ODA) $135 billions/yr

Private Funding• Domestic or international funds provided by the private sector• Investment is based on returns and risk• Main drivers to invest in emerging markets:

• High returns (6-10% range) • Diversification

Private Sources• Remittances $400 billion/yr• Foreign Direct Investment $600 billion/yr• Capital markets $300 billion/yr• Philantropy $60-70 billion/yr

Technical Assessment

Multilateral Development Banks and the International Monetary Fund

Role: Support countries in achieving their goals by providing financial support, technical assistance and policy advice.

Case Study: CHILE• Chile is 4,000 km long country on the south Pacific coast of

South America• It has a GDP of US$258.1 billion and a population of 17.76

million• Joined OECD in 2007

Next: Study performed by Bertelsmann Stiftung analyzing the feasibility and challenges to accomplish the SDGs.

Source: Kroll, 2015

Biggest challenges• GDP allocation in research and development• Improve inequality (last place in income gap)• Inclusive, equitable and quality of education• High domestic material consumption

Source US$ 2011 2012 2013 2014ODA 163,950,000 124,840,000 78,520,000ODA per capita 9 7 4Remittances 170,264,685 136,789,078 136,351,353FDI 23,443,915,10

428,625,587,109

347,848,740,397

Source: World Bank Group

How do we tackle these challeges?By Blended Finance: Combining the public sector’s social return objectives and private sector’s financial return objectives through risk mitigation by the public sector in a

manner that induces the private sector to participate. (Fin4dev MOOC)

In the case of Chile, FDI could be used for research and development to improve the use of domestic materials, while remittances focus on reducing poverty and inequality and Domestic funds invested on improving education.

ConclusionsCountries need to identify:

• Challenges to accomplish development and how to confront them• Sources for financing development and what is their best use• Strategy towards public private partnerships

BibliographyWorld Bank Group. Data.worldbank.org/country/chile

Kroll, Dr. Christian. "Sustainable Development Goals: Are the Rich Countries Ready?" 2015.