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Development finance institutions come of age: policy engagement, impact, and new directions

Research reports

Written by Alberto Lemma, Paddy Carter

There have been significant shifts in the global development policy landscape, and these shifts have important implications for the role of Development Finance Institutions (DFIs). The development finance architecture is shifting as DFI investment and domestic resource mobilisation have grown while traditional aid has stagnated. At the same time, the policy landscape is changing to put more emphasis on private investment, jobs and growth. This report argues both that policymakers and DFI shareholders need to better understand the unique role of DFIs in the wider aid architecture and that DFIs themselves need to address development challenges more forcefully in order to remain effective players and improve their contribution to development goals in the future. The report explores these issues, as well as looks at where DFIs fit within the evolving development finance architecture, the potential roles they could play in shaping private-sector development policy, the significant development impact they have, and finally future directions.
The report is the result of a research project undertaken by ODI and the Center for Strategic and International Studies (CSIS) in Washington, D.C. The report builds on what was originally a series of four essays that were the result of consultations and research undertaken by CSIS and ODI. This work included a series of working group meetings that drew together DFIs representatives – past and present – private-sector actors, development policymakers and other stakeholders.

Conor M. Savoy, Paddy Carter and Alberto Lemma