22 January 2018
SDG Knowledge Weekly: Davos, Inequality and Development Finance
Photo by IISD/ENB
story highlights

The World Economic Forum released a report on global risks ahead of its annual meeting.

The World Inequality Lab and Oxfam each published reports examining global inequality.

The Center for Global Development, Eurodad and Development Initiatives released papers on aid transparency and effectiveness, and ODA.

This week’s brief reviews issues being discussed at the World Economic Forum (WEF), which is holding its annual meeting in Davos-Klosters, Switzerland from 23-26 January 2018. The meeting’s theme, ‘Creating a Shared Future in a Fractured World,’ acknowledges political, economic, social and environmental challenges facing the global community.

WEF published the 13th edition of its Global Risks Report, which reviews risks by both the scale of impact and likelihood of occurrence. A matrix of the full risk landscape for 2018 ranks extreme weather events and natural disasters among the highest in both categories. Weapons of mass destruction are shown to have the highest impact, but are listed as being of low likelihood. Other above-average risks in both categories include cyber attacks, water crises, involuntary migration and biodiversity loss, each of which relate to Goals and targets under the 2030 Agenda. The report also maps interlinkages between the risks identified. Similar studies have been conducted for the SDGs and their associated targets (see here and here). A next step would be to compare the various findings to determine whether WEF’s risk interlinkages align with relationships identified between SDGs, as doing so may reveal synergistic opportunities to mitigate risks or accelerate implementation across sectors and thematic areas.

The Global Risks Report also notes that, despite the reduced prominence of economic risks relative to last year’s report (which have been replaced largely by environmental risks), persistent inequality remains a concern. Inequality is showing to be a continued concern in the international community, as reflected by the issuing of the first ‘World Inequality Report’ (WIR) by the World Inequality Lab with experts from the Paris School of Economics and the University of California at Berkeley. Using an open-source database, the report finds that global inequality has increased since 1980 despite significant growth in emerging economies, and that “the top 1% has captured twice as much global income as the bottom 50%.” The data reveal that there has been a transfer of wealth from the public to private sphere—which may limit governments’ abilities to tackle inequality—but the study indicates that strong public policies and public investments in education, health and environmental protection are key to stemming further social and economic division. An analysis of one aspect of the report, “the elephant curve of global inequality,” is available on the Center for Global Development’s blog.

Also related to WEF, a preview aimed at civil society members titled, ‘Davos: An NGO Leader’s Survival Guide,’ is available on Devex, while a recommended reading list of articles is available on the WEF website. Additional WEF reports released in late 2017 are available here. Those seeking to follow the conversations in Davos as they relate to the 2030 Agenda can do so by following the hashtag #SDGlive.

The stark contrast between the top 1% and the bottom 50% is also the subject of an Oxfam report titled, ‘Reward Work, not Wealth.’ The research finds that 82% of the wealth created in 2017 went to the top 1% of society, and that “nothing went to the bottom 50%.” The report calls for governments to use the Palma Ratio, whereby “the collective income of the top 10% [is] no more than the income of the bottom 40%”, as a revised indicator to measure SDG 10 (reduced inequalities). A press release for the report is available here, and an article by Oxfam Executive Director Winnie Byanyima is available on WEF’s website. SDG 10 is referenced across numerous recommendations aimed primarily at governments and corporations.

Prior to the WEF discussions on finance taking place this week, the Center for Global Development (CGD) released two papers on the International Finance Corporation (IFC) and other development finance institutions (DFIs). The first, titled, ‘Comparing Five Bilateral Development Finance Institutions and the IFC,’ reviews DFI commitments by instrument, sector, country and country income status. The authors’ analyses suggest that, due to the relatively small size of bilateral DFIs compared to multilateral institutions, bilaterals should focus on sectors where they have a comparative advantage, or where multilaterals are less successful.

Transparency is crucial in ensuring fair use of government money and reassuring the public.

The second paper, titled, ‘Inside the Portfolio of the International Finance Corporation: Does IFC Do Enough in Low-Income Countries?,’ finds that the IFC’s portfolio can be better focused to increase its impacts. It notes a shift in funding from lower-middle countries (LMICs) to upper-middle income countries (UMICs), in part due to their recipient countries graduating from LMIC status. Charles Kenny offers his take in a summary blog, with a key takeaway being that transparency is not only a crucial aspect in aid and development finance, ensuring fair use of government money and reassuring the public to build trust.

Eurodad, the Civil Society for Financing for Development (FfD), and Save the Children submitted inputs to the Inter-agency Task Force (IATF) on FfD’s 2018 Report, expected to be released in late February. The International Disability Alliance and International Disability and Development Consortium also put forward a short brief, as did the Basel Institute of Commons and Economics.

Additionally on finance, Development Initiatives (DevInt) analyzed final ODA data points from 2016. DevInt highlights increases in official development assistance (ODA) totals, many of which are actually related to the costs of hosting refugees in donor countries: net ODA hit a new high of US$145 billion, an increase of 10% since the prior year; ODA with no recipient specified rose sharply; and the total costs of in-donor refugees that were counted as ODA account for roughly 11% of net ODA reported from Development Assistance Committee (DAC) members.

On delivery, DAC members channeled US$4.7 billion through private sector institutions. On the multilateral side however, Nancy Lee writes on Devex that multilateral development banks (MDB) and private sector actors must work together to harmonize products and deliver on the SDGs.

Additional issues of the SDG Knowledge Weekly can be found here.

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