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WASHINGTON – A new study examining the impact of 13 rising economies including China, Brazil and India on global development has found that their contributions to multilateral institutions like the World Bank and the UN have increased five-fold over a decade, totalling around $6 billion in 2019, compared to just $1 billion in 2009.
Researchers from the Center for Global Development find that by 2050, these emerging economies could provide funding that rivals the World Bank’s fund for low-income countries. They projected that if the group of emerging economies continues on its current trajectory, by 2050, they could collectively provide a staggering $65 billion in funding for global development annually. Comparatively, the World Bank’s fund for low-income countries, IDA received funding in its last replenishment which, in 2050, would be equivalent to $50bn per year.
The study comes as G20 Finance Ministers and Central Bank Governors prepare to meet in Bengaluru to discuss several issues, including reforming the World Bank and other multilateral development banks to better address global challenges like climate change. The reform push has thus far been driven by the US and other high-income countries, which are the largest contributors to and hold the most voting power at these institutions.
Ian Mitchell, Senior Fellow at the Center for Global Development and one of the study’s authors, commented: “We're in the midst of a major push to remake the World Bank and other multilateral development banks, which will be one of the major topics at the G20 finance ministers meeting this week. This report is a good reminder that emerging economies outside the West are already important providers of development finance who play a major role in the international system, and that they will only become more important in the years to come. No reform, of the World Bank or the international system as a whole, will be successful unless they have a significant say.”
The study looked at contributions made by thirteen major economies outside the group of more established donor countries, such as Germany, the UK and the US, who make up the OECD Development Assistance Committee. The thirteen includes the BRICS—China, Brazil, Russia, India, China and South Africa—as well as the other G20 countries, Argentina, Indonesia, Mexico, Saudi Arabia, Turkey, and other important economies like Chile, Israel and the United Arab Emirates.
Finance from these countries increased almost fivefold, from $1.3bn in 2010 to $6.3bn in 2019 (up 377 percent). And their unrestricted contributions, which aren’t earmarked for particular purposes or projects, have risen even more: increasing from $1.0bn to $5.2bn (up a huge 410 percent). Funding for UN agencies more than quadrupled over the decade, steadily rising from $0.3bn to $1.2bn (up 330 percent).
China, which was the biggest of the 13 countries in terms of funding, saw its annual contributions to the UN and multilateral development banks rise a huge twenty-fold from $0.1bn to $2.2bn. The analysis also highlights the importance of Russia, Brazil and India, which each contributed more than $3bn over a decade. While India is currently chairing the G20, Russia’s invasion of Ukraine casts doubt on its commitment to multilateralism.
The biggest change in funding for development from emerging economies, however, has come from the creation and capitalisation of two new multilateral organisations: the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB). The creation of these institutions illustrates the choices emerging economies will make between funding development through existing institutions, like the World Bank and UN, and creating new ones in which they may have more say in governance, say the researchers.
Mitchell added: “Despite the rhetoric around a return to a bipolar world, this study is more evidence that emerging economies are becoming major actors in their own right, including on the provision of development finance. The critical question is how the countries we studied choose to engage in the international system and whether they fund existing institutions like the World Bank or set up new ones where they can have more influence. Established providers like Germany, the UK and US can help make that choice easier by ensuring these important actors have more of a voice in the existing system.”
Read the research, Emerging Actors in the Multilateral System, authored by Sam Hughes and Ian Mitchell at: www.cgdev.org/publication/emerging-actors-multilateral-system.
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