Financial Transparency Coalition

For fifteen years, eight goals have represented the yardstick by which development is measured. These are the Millennium Development Goals (MDGs) adopted in the United Nations Millennium Declaration at the beginning of the century, and represent a commitment to a noble new partnership to drastically reduce poverty worldwide. It is through this Declaration that all 193 member states of the United Nations and 23 organizations have agreed to achieve a set of eight goals by 2015.[1]

Now that we are rounding into the last year of the Declaration, the UN and other aid organizations are developing the post-2015 Development Agenda and asking the important question: “So now what?”

And the answer is self-sufficiency.

In particular, I mean that the world needs to develop a system of global financial transparency that allows developing countries to depend on themselves, rather than the rest of the world, to achieve their development goals.

This will require an evolution away from the status quo. These MDGs, in large part, are donor-centric. By and large, developed countries and international organizations provide the policy advice, technical assistance, and financial support to achieve these goals. In 2005, members of the G8 also provided enough funds to forgive an additional $55 billion debt owed by Highly Indebted Poor Countries.

In many ways, the evolution away from a donor-centric model of development is already happening. In 2011, for the first time in many years, the level of official development assistance to developing countries dropped. Out of the world’s 23 Development Assistance Countries, 16 cut their aid. Many of these countries—the list includes Greece and Spain—are confronting their own grave economic and budgetary problems. Already the world is considering new models for development, such as global taxes, to solve the problem. These efforts, while admirable, don’t achieve the policy and development independence that developing countries need.

No, to alleviate this problem, we must allow developing countries to achieve self-sufficiency through domestic resource mobilization—the most sustainable source of funding in the long-term. To achieve this objective we should pursue several goals, including curtailing illicit financial flows, abusive transfer pricing, and tax evasion. While these solutions are not panacea, in countries with good political institutions and low levels of corruption, they would go a long way toward achieving sustainable, long-term development.

Developing countries cannot achieve self-sufficiency without help from their counterparts in wealthier nations, particularly those with opaque financial systems who facilitate these practices. Those developed countries could also support improving governance and the efficiency of government expenditures on poverty reduction by helping developing countries improve anti-corruption efforts and transparency in payments to governments.

Most people would likely agree that the optimal, most sustainable way to lift developing countries out of poverty and move beyond the MDGs is to help them help themselves. When it comes to the transparency initiatives I outlined above, while developing countries are the ones most hurt by harmful financial practices, they are not the ones with control over their implementation. Participation from developed countries will make or break the effort.