ECONOMIC DEVELOPMENT BSA 1-1 GROUP 14
FOREIGN FINANCE,
INVESTMENT, AID
AND CONFLICT
controversies and opportunities
Tiru, Andrea Marie T., Lucero, Sheena Angela, Punzalan, Jholina
01 THE INTERNATIONAL FLOW OF FINANCIAL
RESOURCESE
SUB 02 PRIVATE FOREIGN DIRECT INVESTMENT
AND THE MULTINATIONAL CORPORATION
TOPICS 03 THE ROLE AND GROWTH OF REMITTANCES
04 FOREIGN AID: THE DEVELOPMENT
ASSISTANCE DEBT
05 CONFLICT AND DEVELOPMENT
14.1 The International Flow of Financial Resources
In this chapter, we examine the international flow of financial resources,
which takes three main forms:
• Private foreign direct and portfolio investment, consisting of (a) foreign
"direct" investment by large multinational
a. Foreign direct investment (FDI) is an investment of capital into a business
entity in one country by an entity in another country. It is typically made with
the intention of establishing a long-term presence in the target country.
b. Foreign portfolio investment (FPI) is the purchase of financial assets, such
as stocks and bonds, in a foreign country. FPI is typically made for the
purpose of generating short-term returns.
• Remittances of earnings by international migrant - Remittances are
transfers of money from migrant workers to their home countries. This
can be made through formal channels, such as banks, or through
informal channels, such as family and friends. Remittances can be used
for a variety of purposes, including consumption, investment, and
education.
• Public and private development assistance (foreign aid) - Foreign
aid is the transfer of financial resources from developed countries to
developing countries. Foreign aid can be provided by governments,
non-governmental organizations (NGOs), and individuals. Foreign
aid can be used for a variety of purposes, including poverty
reduction, economic development, and humanitarian assistance.
The nature, significance, and controversy regarding private direct and portfolio
investment and foreign aid in the context of the changing world economy.
• Private direct and portfolio investment
Private direct investment (FDI) and foreign portfolio investment (FPI) can both contribute
to development in developing countries. FDI can help to create jobs, boost economic
growth, and transfer technology and skills. FPI can provide developing countries with
access to capital and help to improve their financial markets.
However, there is also some controversy surrounding the role of FDI and FPI in
development. Some critics argue that FDI can lead to environmental degradation and
the exploitation of workers. Others argue that FPI is too volatile and can lead to financial
crises.
•Foreign aid
Foreign aid can also contribute to development in developing countries. It can be used to
fund development projects, provide humanitarian assistance, and build capacity.
However, foreign aid can also be tied to political agendas and can create dependency
14.2 Private Foreign Direct Investment and The
Multinational Corporation
The rise of multinational corporations (MNCs) has been one of the most
important developments in the global economy in recent decades. MNCs
are companies that operate in multiple countries, and they have played a
major role in the growth of international trade and capital flows.
MNCs bring a number of benefits to developing countries. They can
create jobs, transfer technology, and boost economic growth. However,
MNCs can also pose some challenges to developing countries.
MNCs can provide developing countries with access to resources and
markets that would otherwise be unavailable.
Here are some examples of the opportunities and challenges that MNCs present for
developing countries:
Opportunities Challenges
Job creation Exploitation of workers
Technology Transfer Environmental damage
Increased Export Tax avoidance
Access to Capital Market dominance
An MNC is most simply defined as a corporation or enterprise that
conducts and controls productive activities in more than one country.
These huge firms are mostly based in North America, Europe, and
Japan; but a growing number are based in newly high-income
economies such as South Korea and Taiwan.
The growing importance of multinational corporations (MNCs) from
emerging markets, such as Brazil and China. These MNCs are
presenting new opportunities and challenges for developing
countries.
On the one hand, MNCs from emerging markets can provide
developing countries with access to new technologies, markets, and
capital. They can also create jobs and boost economic growth.
The growth of private foreign direct investment (FDI) in the developing world has
been extremely rapid and volatile in recent decades.
FIGURE 14.1 FDI inflows, Global and By Group of Economies, 1980-2008
As Figure 14.1 shows, FDI inflows to developing countries have increased
from just $2.4 billion in 1962 to over $35 billion in 2005. before surging to
$565 billion in 2007 (when total world FDI hit its record of just over $2
trillion). And even though global FDI in 2008 fell back, FDI flows to
developing countries actually hit a new record of $630 billion before falling
to $478 billion in 2009, after which the beginnings of a new recovery were
seen. Globally the financial crisis led to an estimated 16% decline in FDI
inflows in 2008 and an additional 37% in 2009, to $1,114 billion, with a 24%
fall in inflows to developing countries in 2009.
This growth has been driven by a number of factors, including:
The rise of multinational corporations (MNCs)
The liberalization of trade and investment policies
The growth of the global economy
FIGURE 14.1.1 Global FDI flows, 1999-2022
Source: OECD International Direct Investment Statistics database.
Figure 14.1.1 shows global FDI flows from 1999 to
2022, with a 24% increase in the first half of
2022, the highest level since 2018, before a 58%
drop in the second half. The majority of the
drop occurred in the last quarter, which was
95% lower than the previous quarter.
FIGURE 14.1.2 FDI inflows to selected areas, 2005-22 (USD billion)
Source: OECD International Direct Investment Statistics database.
FDI inflows in the OECD area dropped by 26% to USD 496
billion, mainly due to Luxembourg's large disinvestments.
However, surges in Switzerland and the UK offset the
drop. FDI flows in the remaining OECD economies
decreased by 2%.
FDI flows into the US decreased by 21% in 2022, while
inflows in Australia, Italy, and Sweden increased. FDI
flows in EU27 countries, excluding Luxembourg,
increased by 22%.
FIGURE 14.1.3 FDI inflows to selected countries, 2021-22 (USD billion)
Source: OECD International Direct Investment Statistics database.
FDI inflows to G20 economies decreased by 15%. While they were
up by 7% in OECD G20 economies, they dropped by 38% in non-
OECD G20 economies, largely driven by decreases in China and, to
a lesser extent, in South Africa, from peak levels recorded in 2021.
Brazil experienced a 68% increase in FDI flows, reaching a record
high of USD 85 billion, largely due to earnings reinvestment and
intra-company debt movements. Despite a drop in FDI inflows,
the United States (USD 318 billion) remained the top destination,
followed by China (USD 180 billion) and Brazil (USD 85 billion).
FIGURE 14.1.4 FDI outflows to selected areas, 2005-22 (USD billion)
Source: OECD International Direct Investment Statistics database.
FDI outflows from the OECD area dropped 14%
to USD 1,067 billion, but increased by 9% when
excluding Luxembourg trends. Australia,
Sweden, the UK, and Spain contributed to the
increase. EU27 outflows decreased by 7%,
mainly due to equity disinvestments.
FIGURE 14.1.5 FDI outflows to selected countries, 2021-22 (USD billion)
Source: OECD International Direct Investment Statistics database.
In 2022, FDI outflows from G20 economies
increased by 5%, while OECD G20 outflows
increased by 16%. Non-OECD G20
economies saw a 28% decrease. The US
(USD 403 billion) was the largest global
source of FDI, followed by Japan (USD 162
billion) and China (USD 150 billion).
In 2009, China received a significant share of FDI inflows to developing countries,
while Africa received a much smaller share. This is due to a number of factors,
including:
• China's large and growing economy.
• China's favorable investment environment.
• Africa's underdeveloped infrastructure and relatively small economies.
Despite the relatively low share of global FDI going to Africa, the continent has seen
a steady increase in FDI inflows in recent years. This is due in part to the growing
demand for African commodities, such as oil, gas, and minerals.
The increase in FDI inflows to Africa is a positive development, as it can help to
create jobs, boost economic growth, and improve the standard of living for
Africans.
Most of the 34 least developed countries in Africa received very little
foreign investment
Some of the reasons why least developed countries in Africa may receive
less foreign investment include:
Political and macroeconomic
instability.
Weak infrastructure.
Poor governance.
Incomplete economic reforms.
Multinational corporations (MNCs) are not primarily in the development business.
Their primary objective is to maximize their return on capital. This means that they
will seek out the best profit opportunities, regardless of the impact on development
MNCs can have both positive and negative impacts on development. On the
positive side, they can create jobs, transfer technology, and boost exports. However,
they can also have negative impacts, such as exacerbating inequality, polluting the
environment, and undermining local businesses.
FDI inflows to developing countries are still a small fraction of their total
investment, but they have become the largest source of foreign funds flowing to
developing countries in recent years.
• FDI Positive Impact - can create jobs, transfer technology, and boost exports.
• FDI Negative Impact - can lead to increased inequality, pollution, and the
undermining of local businesses.
Figure 14.2 Net Capital Flows to Developing Countries, 2000–
2009
Add a little bit of body text
Source: From United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2009, ch. 1, p. 5. Reprinted with permission from the United Nations.
After a strong rebound in 2021, global FDI fell by
12% in 2022 to $1.3 trillion, due mainly to
overlapping global crises – the war in Ukraine, high
food and energy prices, and soaring public debt.
The decline was felt mostly in developed
economies, where FDI fell by 37% to $378 billion.
But flows to developing countries grew by 4% –
albeit unevenly, with a few large emerging
countries attracting most of the investment while
flows to the least developed countries declined.
PRIVATE FOREIGN INVESTMENT: SOME
PROS AND CONS FOR DEVELOPMENT
1. Contribution to national development in terms of
fostering economic growth through closing the
resource gap between locally mobilized savings and
targeted investment.
2. Contribution toward bridging the difference
between the required net export revenue and net
foreign aid and the planned foreign exchange
requirements.
PRIVATE FOREIGN INVESTMENT: SOME
PROS AND CONS FOR DEVELOPMENT
3. Extra tax money collected in addition to local
taxes. Developing nations are better able to raise
public funds for development programs when MNC
earnings are taxed.
4. Contribution to the acquisition of managerial
expertise, entrepreneurial spirit, and technological
know-how that may be taught to local counterparts
through experiential learning.
TRADITIONAL ECONOMIC ARGUMENTS IN
SUPPORT OF PRIVATE INVESTMENT
By replacing foreign savings, FI could reduce
investment and savings domestically.
Using exclusive production agreements with host
governments to stifle competition.
Not reinvesting the majority of their earnings.
TRADITIONAL ECONOMIC ARGUMENTS IN
SUPPORT OF PRIVATE INVESTMENT
While MNC investments initially help the recipient
country's foreign exchange position, over time they
may have the unintended effect of decreasing foreign
exchange earnings or at the very least distorting the
apparent net increase due to the significant
importation of capital goods and intermediate goods
as well as the overseas repatriation of profits, interest,
royalties, management fees, and other funds.
TRADITIONAL ECONOMIC ARGUMENTS IN
SUPPORT OF PRIVATE INVESTMENT
Multinational corporations (MNCs) do pay corporate
taxes to the government, but this contribution is
significantly less than it might seem due to a number
of factors, including generous tax exemptions, the
practice of transfer pricing, lavish investment
allowances, covert public subsidies, and tariff
protection offered by the host government.
TRADITIONAL ECONOMIC ARGUMENTS IN
SUPPORT OF PRIVATE INVESTMENT
➤ The expansion of local sources of these rare skills and
resources may be hampered by the MNCs' control over
local markets, which in turn stifles the rise of indigenous
entrepreneurship. In fact, the management,
entrepreneurial skills, ideas, technology, and
international contacts that MNCs provide may have little
effect on this process.
Reconciling pros and cons
accept foreign investment with
responsible policy - reap the
maximal benefit from MNCS
seven
key
disputed
issues
Private Portfolio Investment: Benefits
and Risks
Benefit: raising capital for domestic firms to
diversify their assets
Risk: portfolio funds can flow out back
unexpectedly causing instability for both the
financial market and the overall economy.
14.3. THE ROLE AND GROWTH OF
REMITTANCES
High-income economies offer higher wages
than developing nations, attracting migrants.
By 2010, 200 million migrants were
worldwide, with half leaving developing
nations for other countries. However, this also
encourages risk-taking and personal risk.
Remittances from migrants
significantly reduce poverty in
countries like Guatemala, Uganda,
Ghana, and Bangladesh, as they help
build houses, send money, and
support children's education.
Figure 14.4 shows various resource flows to developing countries over
the period 1990–2008.
Source: International Bank for Reconstruction and
Development/The World Bank, World Development Indicators.
Copyright © 2010 The World Bank. Reprinted with permission.
Remittances have surged in recent
years, surpassing 5% of low-
income countries' GDP, outpacing
FDI and aid inflows, but their
distribution is uneven across
developing nations.
Table 14.1 lists the top 15 remittance recipient countries, ranked by
dollars and by share of GDP, in 2008.
Source: UNCTAD Trade and Development Report, p. 23 (New York: United Nations, 2009), tab. 1.6. Reprinted with permission from the United Nations.
This chart shows the
top 10 remittance-
receiving countries in
2022 and changes
from 2021 (in billion
U.S. dollars).
In terms of remittances as a share of
gross domestic product, by contrast,
the top five recipients in 2022 were
smaller economies: Tajikistan (51%),
Tonga (44%), Lebanon (36%), Samoa
(34%), and the Kyrgyz Republic (31%)
Remittances have grown significantly
in 15 countries, representing at least
11% of GDP.
The growth is attributed to improved
accounting, rising migrants, and
advances in financial intermediation.
Forecasts suggest remittances
could exceed $500 billion in 2016,
with further reductions in costs
and barriers to remittances
potentially leading to further
benefits.
To maximize social benefits,
improved regulations and
protections for irregular status
migrants and improved willingness
of developed countries to accept
reasonable increases in migration
are essential.
14.4. FOREIGN AID: THE DEVELOPMENT
ASSISTANCE DEBATE
Developing countries receive public
bilateral and multilateral
development assistance and private
NGOs' unofficial assistance, both
forms of foreign aid, although only
public aid is typically measured in
official statistics.
All official resource transfers
between countries—including
concealed ones like preferential
tariffs, which can benefit
developing countries while hurting
developed ones—should be covered
by foreign aid.
Foreign aid is defined as; (1)
non-commercial capital flow to
developing countries with
concessional terms, (2)
characterized by softer interest
rates and repayment periods.
AMOUNTS AND ALLOCATIONS:
PUBLIC AID
Between 1960 and 2008, official
development assistance (ODA) rose
from less than $5 billion to over $128
billion. But from 0.51% of developed-
country GDP in 1960 to 0.23% in 2002
—and then to 0.45% in 2008—the
share of GDP going toward ODA fell.
Table 14.2 shows the disbursement of ODA by some of the principal
donors, both in total amount and as a percentage of GNI in 1985, 2002,
and 2008.
Source of data: World Bank, World Debt Tables, 1991–1992 (Washington, D.C.: World Bank, 1992), vol. 1, tab. 2.1; World Bank, World Development Indicators,
2004 and 2010 (Washington, D.C.: World Bank, 2004, 2010), tabs. 6.9 and 6.10
The United States is the largest
donor of foreign direct investment
(FDI) but provides the lowest
percentage of Gross National
Income (GNI) compared to other
industrial donor countries.
In 2008, it provided 0.18% of GNI,
below the UN target of 0.70%. Only
five countries provide ODA in excess
of this target: Sweden, Norway,
Denmark, the Netherlands, and
Luxembourg.
Table 14.3 shows the regional distribution of ODA in 2008.
Source of data: World Bank, World Development Indicators, 2010 (Washington, D.C.: World Bank, 2010), tabs. 1.1 and 6.16.
Aid patterns reveal that Iraq was the largest
recipient of aid in 2008, with $9.9 billion, or
$321 per capital. Afghanistan followed closely
at $4.9 billion.
However, India, Jordan, and Niger received
less than $126 per person. Aid per capital to
the least developed countries in Africa has
increased since 2005.
WHY DONORS GIVE AID?
Donor-country governments provide aid
primarily for political, strategic, or
economic reasons, with some aid
motivated by humanitarian desires.
Over time, aid may be expected to yield
political, economic, or military benefits.
POLITICAL MOTIVATIONS
Since the late 1940s, the United States, the largest
donor nation, has used foreign aid to halt the
spread of Communism, placing a higher priority
on political reasons for aid-giving.
In the mid-1950s, U.S. aid programs shifted focus
from Europe to developing nations, focusing on
security and regime support rather than long-
term social and economic development.
ECONOMIC MOTIVATIONS: TWO-GAP
MODELS AND OTHER CRITERIA
Japan's foreign-aid programs,
primarily focused on Asian countries,
have a strong economic rationale,
despite political and strategic
priorities, with private investments
and expanding trade being the
primary motivations.
FOREIGN-EXCHANGE CONSTRAINTS
Japan's foreign-aid programs, primarily
focused on Asian countries, have a
strong economic rationale, despite
political and strategic priorities, with
private investments and expanding
trade being the primary motivations.
The two-gap analysis of foreign
assistance suggests that developing
countries often face a shortage of
domestic savings gap or foreign
exchange gap to finance capital and
intermediate goods imports.
SAVINGS GAP
Starting with the identity that capital
inflows (the difference between
imports and exports) add to
investible resources (domestic
savings), the savings-investment
restriction can be written as;
I < F + sY
FOREIGN-EXCHANGE GAP
The foreign exchange constraint
or gap can be calculated based on
the marginal import share (m1)
and marginal propensity to
import (m2) of investment in a
developing country.
(m1 - m2)I + m2Y - E < F
FOREIGN-EXCHANGE CONSTRAINTS
Fiscal Gap affects private sector
investment, as domestic savings and
foreign exchange availability may
not significantly impact growth
without public investments in
infrastructure and human capital.
Growth and Savings
Being attached to foreign aids that we did
not see that there are more possible ideas
for locals that bring more savings if we
used to enhance and rebuild our own
brand. Embracing other products from
foreign land will reduce the growth of
economy.
Technical Assistance
Technology transfer and capacity-
building would also be welcome to
assist the region’s post-pandemic
economic recovery, which must not
be hampered by discriminatory
assistance to the detriment of small
island developing states.
Absorptive Capacity
Defined as the ability of a country to use aid funds
wisely and productively. It depends on a number
of factors, including:
The level of economic development
The quality of institutions
The availability of skilled labor
The capacity of the government to manage
aid programs
Economic motivations and self-interest
Donor countries often have economic
motivations for providing foreign aid. These
motivations include:
To increase trade and investment
To create job
To gain access to resources
WHY RECIPIENT COUNTRIES ACCEPT AID
The major reason is probably economic. Developing countries
have often tended to accept the proposition-typically advanced
by developed-country economists and supported by reference
to success stories it helps transform the economy structurally,
and it contributes to economic growth. Unfortunately, a good
deal of aid that comes in this form has either been wasted in
showcase but unproductive projects (eg, an elaborate
parliamentary building, an oversize airport) or actually been
plundered by corrupt government officials and their local
cronies.
The Role of Nongovernmental Organizations in
Aid
NGOs are often more flexible and responsive to the needs of local
communities than government agencies or large multilateral
organizations. They can also be more innovative and willing to take risks.
Here are some of the ways that NGOs contribute to development
assistance:
Delivering essential services.
Empowering local communities.
Advocating for change
NGOs are an essential part of the global development community. They
play a vital role in delivering services, empowering communities, and
advocating for change.
The Effects of Aid
There is no consensus among economists about
whether aid is beneficial or harmful to developing
countries.
Arguments in favor of aid - Aid can help to supplement
scarce domestic resources and finance investments in
critical areas such as education, healthcare, and
infrastructure. Argument against aid - Aid can
discourage domestic savings and investment, leading to
a "dependency trap."
Critics of foreign aid argue that it can widen economic gaps in
developing countries by focusing on and stimulating the
growth of the modern sector. This can lead to a number of
negative consequences, including:
Increased inequality
Urbanization
Environmental degradation
Critics on the right argue that foreign aid has been a failure
because it has been largely appropriated by corrupt
bureaucrats, stifled initiative, and engendered a welfare
mentality on the part of recipient nations.
One major trend is to encourage evaluation through randomized
controlled trials.
Randomized controlled trials (RCTs) are a powerful tool for evaluating the
impact of development programs. This allows researchers to compare the
outcomes of the two groups and to isolate the impact of the program.
RCTs have been used to study a wide range of development programs,
including education, health, microfinance, and social welfare programs.
Poll numbers also suggest that the upturn in public support for aid was at
least temporarily weakened in the aftermath of the recent global financial
crisis. However, public support for aid has since rebounded, and there is
growing recognition that aid can play an important role in reducing
poverty and promoting development.
14.5 Conflict and Development
The Scope of Violent Conflict and Conflict Risks
Security assurance can be the most
essential institution for progress.
Conflict breeds uncertainty about the
economic situation and the likelihood
of future conflicts.
Figure 14.5 Global Trends in Armed Conflict, 1976-2021
THE CONSEQUENCES OF ARMED CONFLICT
Violent conflict negatively impacts
health, causing immediate and long-
term effects on non-involved
individuals, children, and society,
affecting their education and well-
being.
1. Health
At first, more men die than women, primarily as a
result of the fighting itself.
Scholars have found that the longterm effects of
conflict fall most heavily on women, diminishing
their access to health, social welfare services, and
education.
Many victims die in rape attacks, and many more
suffer long-term health consequences, including
AIDS and chronic depression.
Refugee children and women are at particular risk for
rape and sexual exploitation.
Just when public health programs are most needed,
funds are shifted to the military, and according to an
IMF estimate, government spending on health falls at
an annual rate of 8.6% during violent conflicts. Family
incomes are generally lower, so people are also
challenged to pay for needed care.
Long-term health consequences depend on the
nature of the conflict.
2. Destruction of wealth
One study found that on average, a tenth of a
country's wealth is transferred abroad between the
beginning and the end of a conflict, largely as capital
flight, as better-off residents seek to protect their
wealth.
This represented "an annual decline in per capital
income of about 6.5 percent compared to the average
growth rate of 2.5 percent after the civil war, the
relative loss in wealth was almost 10 percent per year.
In some countries, fighting is very localized.
But one study found an average annual growth of
3.3% in countries in conflict as a whole (for countries
with enough data to estimate it).
3. Worsening Hunger and Poverty
It is not surprising that in many conflict countries,
food production drops; one survey found this had
happened in 13 out of 18 conflict countries studied.
Hunger is also a weapon of war.
These are some of the factors extending the
consequences of conflict well after the end of
fighting.
4. Loss of Education
In eight countries in conflict for which data were
available, the IMF found that during the conflict,
education spending fell at a rate of 4.3% per person
per year.
Instead of getting an education, many children work
long hours to survive.
A study of children abducted into child soldiering in
Uganda found that they lose nearly a year of
schooling, on average.
5. A Torn Social Fabric
According to the United Nations, by the end of
2008, there were about 26 million internally
displaced persons (IDPs) due to "conflict,
generalized violence or human rights
violations."
More than half were from five countries Sudan,
Colombia, Iraq, the DRC, and Somalia.
But the number of IDPs has fallen dramatically in
some countries that were once nearly synonymous
with violent conflict, such as Timor-Leste and
Uganda, where refugees are returning home.
Less than half of the world's IDPs are now from
Africa, and the region is making progress.
THE CAUSES OF ARMED CONFLICT AND
RISK FACTORS FOR CONFLICT
Conflict is more prevalent in countries with lower
incomes, slow growth, large populations,
significant oil production, poor institutions,
excluded ethnic minorities, ethnic divisions, stress
on resources, and opportunities for exporting
high-value commodities. However, diverse and
high inequalities across individuals usually do not
lead to violent conflict.
1. Horizontal Inequalities
Frances Stewart suggests that major
"horizontal inequalities" among culturally
defined groups increase conflict risk, as
cultural, economic, and political
differences can cause deep resentment
and violent struggles.
2. Natural Resources for Basic Needs
The United Nations has identified water
and other natural resource scarcity as the
root cause of the Darfur crisis,
highlighting the potential link between
basic-needs resource scarcity and
conflict risks.
3. Struggle to Control Exportable Natural
Resources
The conflict trap, as proposed by Paul Collier, is a
result of certain economic conditions that make a
country prone to civil war.
These conditions include low income, slow growth,
and dependence on primary commodity exports.
The lack of enforceable rules for the distribution of
these resources contributes to violent conflict,
making it difficult to escape once the cycle of
violence begins.
THE RESOLUTION AND
PREVENTION OF
ARMED CONFLICT
1. Importance of Institutions
Good institutions offer a solid foundation of
security and rights, enabling them to
effectively prevent or mitigate armed conflict
risks that could hinder progress.
Facilitates conflict resolution, avoiding
violence and promoting the growth of
capabilities.
2. Global Actors
Post-conflict development requires global,
regional, national, and community-level
engagement.
National security is crucial when violence
crosses borders and criminal forces remain
active.
The UN may play a more active coordinating
role, while other international organizations and
agencies provide funds and capacity building.
3. Regional Actors: An Africa-wide Approach
Post-conflict reconstruction is a challenge for
multination regional cooperation, with the
African Union increasingly addressing violent
conflict through peacekeeping operations.
Once a peace agreement and functioning
transition or permanent government are
established, support for post-conflict economic
development becomes crucial.
4. National Actors
The state must be strong enough to protect
citizens from violence and fulfill other crucial
government roles.
State fragility is a significant issue, but effective
checks and balances are necessary.
Multilateral assistance may be needed to
establish peace and security, but it is crucial to
ensure broad opportunities and make the gains
from cooperation more apparent.
5. Focus on Education
UNESCO's Education for All (EFA) highlights
the link between low education and violent
conflict, highlighting the harm caused by
conflict, such as infrastructure destruction and
student and teacher injuries, and the influence
of education on conflict, which may originate
from widely disseminated ideologies.
6. Local, “Community-Driven” Economic
Development
Community-driven development (CDD) is crucial for
local economic participation, as it can quickly distribute
resources to remote, rural areas, ensure fair and popular
resource distribution, and provide incentives for
collective action across conflict divides.
CDD also aims to prevent the erosion of social and
institutional bases necessary for non-violent
development management, thereby promoting
economic participation and fostering collective action.
The focus on fragile and conflict states in
development assistance is intensified, with
addressing state fragility expected to be a
key focus of the new Sustainable
Development Goals.
ECONOMIC DEVELOPMENT BSA 1-1 GROUP 14
THANK
THANKYOU
YOU FOR
LISTENING
Tiru, Andrea Marie T., Lucero, Sheena Angela, Punzalan, Jholina
