Innovative Sources for Development Finance: Over-Arching Issues

This paper deals with general concerns that arise when proposals for new sources of development funding are analyzed. It presents accumulated knowledge on national public finance and public economies in order to build a global perspective.

Proposals for new sources of development funding must be seen in a political as well as an economic context. Conclusions that will help build a framework for assessing proposals include:

• Deciding whether the new funding source is a complement or an alternative to expanding ODA will help build a clear case for it;
• Double dividends may occur when new taxes have a beneficial impact on resource allocation but their calculation is complex;
• Considering equivalent ways of achieving the same objectives is good discipline and a source of new ideas;
• Learning from the experience of supra-national groupings such as the European Union will help in designing the fiscal architecture;
• Substantial transfers could affect trade, demand patterns and cause domestic inflation, but may lead to global double dividend through stimulus to the world economy.