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How Relevant is Financing for Development?

Financing for development (FFD) is thought to be the answer on how to acquire the tremendous resources needed to attain the Millennium Development Goals (MDGs). FFD has become an overarching framework that weaves together major themes or what the official document calls “leading actions.” To wit: the mobilization of domestic financial resources (e.g, taxation), international trade, international private resources (e.g., foreign direct investments or FDI), international financial cooperation (mainly official development assistance or ODA), external debt, and systemic issues that will provide the coherence of the multilateral monetary, financial, and trading systems. However, the problem with blueprints such as the MDGS and FFDs is that their models and details do not exactly correspond to the complexity of development in a particular country. This brings us to the relevance of country growth diagnostics, as amplified by Hausmann, Rodrik, and Velasco (2004), among others. The key in growth diagnostics is to identify a particular economy’s binding constraint(s). In the context of country diagnostics, international mechanisms such as the FFD become a secondary matter, unless it turns out that the main binding constraint on sustained growth in the Philippines pertains to global rules.


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Jul 03, 2013

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