The complexities of global governance make policy coherence not just a desirable ideal, but an essential prerequisite for sustainable development.

To explore this further, it’s important to briefly touch on development itself. Development has been the subject of countless studies, articles, and frameworks, and while this post won’t delve into the full spectrum of what development entails, it’s necessary to revisit one key aspect: development aid.

Development aid, particularly Official Development Assistance (ODA), operates on the premise of providing support to states with significant limitations in achieving effective development outcomes. However, ODA has long been the subject of scrutiny, especially in times of global economic uncertainty. Critics argue that development aid often falls short of its goals, raising questions about its efficacy and the allocation of resources during economic crises.

Despite these criticisms, there is growing evidence that ODA contributes meaningfully to global development, particularly when the world faces large-scale challenges such as pandemics or climate change. In fact, in times of crisis, development aid can provide crucial support that helps stabilize vulnerable economies and ensures that progress toward the Sustainable Development Goals (SDGs) is not derailed.

While critiques of ODA’s efficiency are valid—especially regarding issues of dependency, misallocation, or lack of long-term impact—its value in global development should not be dismissed. What remains imperative is the need for coherence between international aid policies and broader development strategies to maximize the impact of ODA. Without alignment across policies, the potential benefits of aid can be undermined, leaving recipient countries no closer to achieving sustainable growth.

The criticisms surrounding development aid stem from the lack of tangible outcomes showing how capital investments in recipient countries genuinely impact their development. Donors and recipients have faced increasing pressure from both societies and stakeholders, particularly following the 2001 economic downturn and the 2008 global financial crisis, which heightened scrutiny on the effectiveness of aid.

The roots of these critiques are varied: development aid has often been marked by discretion, with political interests intertwined with humanitarian objectives. This fusion has led to unilateral actions that undermined the principles of international cooperation, prioritizing the donor countries’ national agendas rather than the needs of recipient nations. As a result, development policies lacked coordination between key actors, and aid investments were often volatile and inconsistent, when they should have been characterized by stability and long-term commitment.

In response to these challenges, a series of high-level forums were convened to enhance the effectiveness of development aid. Initiatives like the Paris Declaration on Aid Effectiveness (2005), the Monterrey Consensus (2002), and the Rome High-Level Forum on Harmonization (2003) sought to improve aid efficiency and coordination, shifting the focus from donor interests to more collaborative international efforts. These forums emphasized inclusive language, with terms like “partner countries” introduced to replace the hierarchical “donor-recipient” dynamic, fostering a more equitable dialogue.

The conclusion was clear: there was a need for a more logical framework for aid distribution, ensuring that resources were truly directed toward helping partner countries achieve sustainable development. This led to the concept of Policy Coherence for Development (PCD), which critiqued the traditional cooperation system and called for more aligned, coherent policies that genuinely addressed the root causes of underdevelopment. PCD aims to streamline policy measures and ensure that development aid supports long-term, systemic solutions rather than short-term or politically motivated fixes .

These criticisms would be:

• The limitation of the impact that we can find in development aid policies compared to economic, trade, or employment policies.
• The lack of a strategic framework: the aid was unilateral so that incentives were strongly linked to national agendas, agendas that would not necessarily coincide with the needs of partner countries. A link to development aid is therefore needed to ensure the established commitments.
• The fact that cooperation has taken place independently has led to problems of fragmentation and overlap of official development assistance.

Within the framework of these issues on traditional aid, policy coherence is carried out, which stipulates that government actions must be focused on promoting global and sustainable development in a logical way to increase as much as possible the efficiency of the measures taken under coherence. Accomplishing the pursuit of goals is also considered, such as those set by the Sustainable Development Goals.

Therefore, what can be differentiated from traditional development aid, with Proposals for Policy Coherence in Development Economics:

Ensure Aid Consistency and Stability:
Development cooperation must operate under a framework of logical and consistent aid distribution, avoiding fluctuations and uncertainties that can undermine long-term progress. Aid programs should be grounded in data-driven reports, such as those from the OECD, to ensure alignment with global development goals. This will help mitigate the volatility often associated with international aid, ensuring sustainable impacts over time (OECD, 2023).

Promote Synergies Among Stakeholders:
Enhancing coordination and complementarity between development actors, including multilateral agencies, governments, and NGOs, is essential. By fostering synergies, we can strengthen cooperation and reduce inefficiencies, which will, in turn, enhance the delivery and effectiveness of aid programs. Multilateral channels, such as the UN or World Bank, should be prioritized for their ability to bring various stakeholders together for collective impact (OECD, 2023; UNCTAD, 2024).

Public Policy Decisions Should Prioritize Development:
Government policies, both in donor and recipient countries, must always consider their impact on development outcomes. This means that domestic decisions—whether related to trade, migration, or environmental protection—should be assessed for their potential consequences on developing economies, giving priority to inclusive and sustainable growth (OECD, 2023).

Integrate Policy Coherence with Official Development Assistance (ODA):
There must be a symbiotic relationship between policy coherence and ODA, as both aim to improve living standards in developing countries. Ensuring that development aid is delivered efficiently, under the premise of logic and accountability, will maximize its impact. This requires continuous monitoring and regulation to align aid with broader development goals, thus ensuring that the same principles guide policy coherence and ODA (World Bank, 2024).

Policy Coherence with Judicial Support:
A more ambitious step would be to embed judicial backing for policy coherence in development cooperation. Similar to the Paris Agreement on climate change, this could involve voluntary participation but mandate the implementation of key measures, ensuring donor and recipient countries adhere to best practices. This would give policy coherence legal weight, ensuring accountability and enforcement (Paris Agreement, 2015; OECD, 2023).

Addressing Illegitimate Debt through Coherence:
One major area requiring greater coherence and cooperation is the issue of illegitimate third-world debt. As discussed in our blog post “Third World Debt? Begone!”, partial debt forgiveness has allowed countries like Somalia to re-enter the global economy. Flexible interest rates or partial forgiveness can be instrumental in helping these economies recover and thrive on the international stage (Somalia, IMF, 2023). This proves that well-coordinated policy coherence, coupled with adaptive financial measures, can lead to tangible changes for developing nations.

Reviving the New International Economic Order (NIEO):
The successes of debt forgiveness and soft loans reignite the discussion around the New International Economic Order (NIEO). Instead of a disconnect between financial institutions and social organizations, a convergence should be sought to amplify the effectiveness of both. The NIEO aims to empower all actors to meet modern development challenges, emphasizing the crucial role of policy coherence in ensuring aid efforts are not only generous but strategically effective (UNCTAD, 2024).

Smart and Targeted Aid:
Aid should not just be about quantity but also quality. Similar to the idea of “spare smart” giving, it is more beneficial to provide what is truly needed—be it clean water, food, or education—rather than just financial aid. The same principle applies to countries: while debt relief may offer temporary respite, without a coherent and long-term strategy, the cycle of debt will repeat, as highlighted by The Guardian’s “Poverty Matters Blog” (The Guardian, 2022).

Financial Institutions and Coherent Practices:
Development-focused credit institutions have begun adopting more flexible lending practices, such as “soft loans,” which feature lower interest rates and terms tailored to the repayment capacities of developing countries. These measures, driven largely by social pressure, demonstrate that greater coherence in financial policies can catalyze both economic and social progress in developing nations. By aligning these practices with the Sustainable Development Goals (SDGs), countries can pursue long-term prosperity (World Bank, 2024).

Traditional financial assistance has often fallen short of its intended purpose—stimulating sustainable growth in developing economies. The primary reason is that these measures frequently lack coherence and alignment with broader development goals, rendering them ineffective. To address this gap, I propose a more integrated approach that leverages international cooperation and policy coherence to maximize the effectiveness of these financial incentives.

International financial institutions play a critical role in shaping global development policies. If consensus is reached among these institutions, practical frameworks for policy coherence can be implemented, anchored in the following principles:

Do no harm: Traditional financing mechanisms often divert indebted nations from investing in critical development sectors, instead channeling resources toward debt repayment. This undermines the original goal of fostering economic growth.

Promote synergies: Collaboration among social institutions, governments, and organizations is essential to achieving shared goals, particularly the Sustainable Development Goals (SDGs). A unified effort will be key in driving tangible progress.

Transversal government actions: States, alongside creditors, must prioritize economic development over rigid financial obligations. Flexible interest rates and payment terms should be implemented to support long-term development objectives.

To make these goals a reality, I propose that an international body like the OECD take the lead in drafting agreements that adapt debt repayment structures to align with both national and international development needs. Such agreements would include provisions for an oversight mechanism to regulate financial aid and ensure compliance. In cases of non-compliance, legal consequences under International Law and the International Court of Justice would be necessary to enforce accountability.

By combining traditional financial aid with a coherent, flexible framework, we can move closer to fulfilling our development commitments. While this might seem like a drastic shift, it is a necessary one—millions of lives depend on our ability to implement meaningful, sustainable change.

This approach is in line with contemporary views on policy coherence and sustainable development, as highlighted by the OECD and other global development bodies .

Sources:

Barrenechea Fernandez. L. (2020). Modalitats, instruments i principis sobre eficàcia i qualitat de l’ajuda al desenvolupament. Barcelona: EdiUOC. Cap, 1, pg 9-17

African Economic Outlook 2017 by the African Development Bank Group: https://www.africaneconomicoutlook.org/statistics/

Donnelly, E. (2007). Making the Case for Jubilee: The Catholic Church and the Poor-Country Debt Movement. Ethics & International Affairs, 21(1), 107-133. doi:10.1111/j.1747-7093.2007.00063.x

IMF, 100 Percent Debt Cancellation? A Response from the IMF and the World Banks, by IMF and World Bank Staffs, July 2001: https://www.imf.org/external/np/exr/ib/2001/071001.htm#IV

The Guardian, Global Development, Debt relief allows Somalia to rejoin global economy after 30-year exile, Kaamil Ahmed, Thu 26 Mar 2020: https://www.theguardian.com/global-development/2020/mar/26/debt-relief-allows-somalia-to-rejoin-global-economy-after-30-year-exile

CADTM, Perspectives, About the Campaign for the Cancellation of the Third World debt, 13 March 2002 by Arnaud Zacharie, Eric Toussaint: http://www.cadtm.org/About-the-Campaign-for-the

“Capítulo 9. El triunfo del tercermundismo”. En: Rist, G., & Fernández, M. A. (2002). El desarrollo: Historia de una creencia occidental . p. 165-198. Madrid : Instituto Universitario de Desarrollo y Cooperación [IUDC/UCM] : Los Libros de la Catarata, cop. 2002. ISBN 8483191369