The Prospects for International Development Cooperation in Times of Geopolitical Conflict and Resource Scarcity

Abstract

Motivation

The re-election of Donald Trump in the US in a context of geopolitical disputes and armed conflicts has led major cooperation providers to divert resources from global development and humanitarian efforts. In addition, the growing complexity of current crises tends to blur the distinction between humanitarian cooperation and development cooperation.

Purpose

This article examines the impact of abrupt cuts in Official Development Assistance (ODA) on developing countries, with a special focus on USAID and South America, and identifies options for these countries to redress the loss of development funding.

Findings

While ODA has been losing relevance relative to other development flows and has long suffered from politicization and ineffectiveness, several least-developed countries still depend on ODA for significant shares of their income. Moreover, USAID funded many humanitarian initiatives which cannot be interrupted and resumed without significant costs in terms of their objectives. Finally, in addition to its quantity, the quality, channels and goals of development cooperation also matter: USAID financed largely grassroots organisations and thereby attempted to empower local stakeholders. These organisations have been hit the hardest by its dismantling.

Policy Implications

Developing countries should seek wherever possible to increase their self-reliance and shift the focus of international cooperation from the global to the regional level. Although China cannot be expected to replace historically dominant donor countries entirely, the diversification of funding sources and establishment of new South-South partnerships presents opportunities to reshape aid frameworks and reduce dependence on such countries. In addition, alternative funding models, such as triangular cooperation arrangements and Global Public Investment could help tap into new synergies and complementarities and ensure development efforts are driven by local priorities rather than external agendas.