Bulletin Points from Day 3 of the GReCEST 2022 Ann

On Day 3, the last session of the GReCEST 2022 Annual conference was held. Chaired by Rob Floyd (African Center for Economic Transformation, ACET), Session 3 provided scholars and experts with opportunities to present their research results and exchange their ideas on Development Financing. Let's have a look at a summary of key points.

Jiajun Xu (Executive Deputy Dean, Institute of New Structural Economics):

The INSE is building the first global database on DFIs worldwide in collaboration with French Development Agency. To be qualified as a DFI, it needs to meet five qualification criteria: (1) being a stand-alone entity, (2) deploying fund-reflow-seeking financial instruments as main products and services, (3) funding sources going beyond periodical budgetary transfers from governments, (4) having a proactive public policy orientation; and (5) a steering role by governments in setting its corporate strategies. New structural economics is well-positioned to provide a useful analytical framework for conducting original theories on why we need DFIs and what some DFIs succeed while others fail. This original research can help to unleash the potential of DFIs.

Xiaochen Hou (Fudan University):

Development banks in Brazil, India and South Africa have failed to contribute strongly to the structural transformation of their industries and to achieve their industrialization goals, due to their limited sources of financing and autonomy. The capacity and autonomy of development banks as industrial policy instruments, and the existence of a coherent and consistent set of industrial policies are key to country’s ability to achieve industrial structural transformation.

Ibrahim Elbadawi (Economic Research Forum):

The Finance for Development Lab (FDL) was established for closing the financing gap, which is related to the proposal of the African Liquidity and Sustainability Mechanism (ALSM). The ALSM aims to provide liquidity lines to enhance the quality of African debt by reducing financing costs and to tone down the negative effects of commodity price volatility on countries’ liquidity. Digitally enabled cash transfer programs have been influential and are also likely to enhance accountability, transparency and trust in government.

Eugenio Diaz-Bonilla (International Food Policy Research Institute):

Fostering structural transformation of food systems through development financing is very important nowadays. Applying international development funds strategically can mobilize and leverage other funds. Public expenditure and tax reviews with a focus on food system can shape national public budgets. Enabling macroeconomic and trade policies are vital. In the future, countries need integrated programs and must establish coordination mechanisms for programming, execution, monitoring, and evaluation.

Régis Marodon (French Development Agency):

INSE initiated the International Research Initiative of DFI Working Groups together with AFD and other stakeholders in 2019. To form a coalition of DFI researchers and practitioners, the Finance in Common Summit has been held successively in the past three years. This helps the international community to recognize the importance of DFIs. For instance, G20 sustainable finance strategy mentioned for the first time that development banks are key players in the transformation of the economy. It is relevant to really put public development banks at the forefront of the transition. We need a coalition driven by the government to align the research with the concepts such as SDGs and climate change to drive them into financial solutions. More accountability and transparency at both government and bank level are also needed.

Zaw Oo (Center for Economic and Social Development):

A new global financial architecture is needed not only to help countries go over the debt crisis, but also prevent other vulnerable economies from falling into the crisis. We should make efforts to combine physical infrastructure development and the relevant procedure and policy reform to tackle the priorities in the developing countries.

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