Thursday, 7 August
As global crises mount and budgets tighten, governments are rethinking how—and even whether—they deliver foreign aid. Once a cornerstone of international cooperation, foreign aid is now under growing scrutiny. On this episode of Macro Matters, Baroness Minouche Shafik joins BWC Executive Director Emily Slater to answer “Foreign Aid’s Future: Crisis, Course Correction, or Comeback?” With decades of experience at the IMF, World Bank, Bank of England, and the UK’s Department for International Development, she is more than well-equipped to help us explore the future of international development.
Stream Macro Matters on all major podcast streaming platforms
Apple Podcasts | Spotify | Amazon Music / Audible | iHeartRadio | YouTube
Transcript
Slater: Welcome to Macro Matters, a podcast where global experts offer clear-eyed analysis on global economic policy. I’m your host, Emily Slater, Executive Director of the Bretton Woods Committee. Each episode, I sit down with BWC’s diverse network of members, from global policymakers to private sector leaders, to discuss timely topics in economics, geopolitics, and finance. In a media landscape full of noise, these conversations offer clarity. We go beyond the headlines to explore not just what’s happening in the global economy, but why it’s happening, what it means, and what might come next.
Welcome to the Macro Matters podcast. Today we’re going to dive into foreign aid’s future, and we’re asking whether foreign aid is in a moment of crisis, course correction, or comeback. So, I mean thinking about kind of the landscape and state of play of where foreign aid is at, right. I mean kind of around the world, governments are really reconsidering how, why, even whether to deliver international aid at all as they once did. And, you know, there’s several factors that are coming into play here. Budgetary pressures, shifting political priorities, questions around the effectiveness and efficacy of foreign aid. These are really raising questions about what is the long-term viability of international aid architecture as we’ve known it. And, I think, from my perspective, we’re really kind of facing a reckoning moment here, and we need to really think about what the future of foreign aid looks like, and how to make this architecture fit for purpose.
And I’m very fortunate to be joined today by really a woman at the forefront of the thought leadership in this space. Baroness Minouche Shafik, just one of the most well-respected voices on international development and global economic policy. She has held relevant positions across many, many institutions and government. She was Deputy Governor of the Bank of England, Permanent Secretary of the UK’s Department of International Development, Deputy Managing Director at the IMF, Vice President of the World Bank. So just really no one better to, kind of tackle some of these issues head on. So Minouche, thank you so much for joining me today and discussing some of these really important and timely questions around foreign aid.
Shafik: Thank you, Emily, and thank you for that very kind introduction.
Slater: And of course, I’d be remiss not to mention that Minouche is also on our Advisory Council. We just appreciate you being involved in the Bretton Woods Committee, Minouche, over the years and being on our leadership team.
Shafik: I’m very proud to be so!
Slater: Wonderful. Well, let’s dive in a little bit here. So, as we said official development assistance, also known as ODA, has really come under attack in the last couple of years and especially here in the U.S. There’s a pretty visible illustration right now, obviously with the sort of dismantling of USAID, but this is not unique to the U.S. Actually, the UK was a really leading donor for many years and kind of went through its own aid review, which I’m sure you can speak to. Even top donor countries like France have signaled that they will need to sort of reduce some of their commitments. So, just want to kind of get your thoughts on what’s the state of play with foreign aid right now? How did we get here? And what are some of the different drivers between these different countries stepping back a little bit?
Shafik: Sure. Well, I mean, you’re quite right, Emily, that this is a moment of reckoning. We are at a key transition point. If you look at what has happened, there’s one common theme that I think has affected all of the traditional western donors, which is the backlash against globalization and the sense that one should focus on taking care of one’s own citizens. The decline of international solidarity and a slightly more selfish politics that has emerged in many countries. And I think that’s a common theme. I think what’s different in Europe is that fiscal pressures to spend money on other things has also been a driver, initially to spend more on climate change issues, which was a very important issue for many citizens in Europe, and also more recently to spend more money on defense. And so, the UK, for example, the recent aid cut was really driven by the need to free up resources for the defense budget. I think the other thing I would say is that until recently, the kind of flattening and the diminished enthusiasm for foreign aid from traditional western donors was being offset by the rise of new donors, particularly China which has now become the biggest creditor and trading partner for most developing countries, and also other donors like the Gulf and Turkey and India and others. And so until recently, the actual total level of foreign aid in the world was going up still until last year. Last year, according to the OECD, official development assistance fell by 7% and the projections for this year have it falling between 9 and 17%.
Slater: So, diving into that a little bit, I mean, as you said, China had stepped up even as maybe some of the traditional G7 donors were stepping back. Given some of China’s domestic economic issues, where do you see foreign aid in China going? Up, down, neutral? Especially given some of the further step back of the G7 countries?
Shafik: Yeah. Well, it’s interesting you saw a slight pause in the so-called Belt and Road Initiative, which was a very important vehicle for Chinese foreign aid, when their economy started to slow down. But actually, in the last year or so, we have seen a reinvigoration of Belt and Road and a reinvigoration of Chinese foreign aid. And I think a large part of that is because they’re filling the vacuum. And another kind of, new emergence of new donors that stepping in to fill some of that vacuum has been philanthropy. And there’s really been sort of a rise in foundation level support and direct contributions from philanthropic foundations.
Slater: What role do you think philanthropy plays in this kind of aid landscape and filling the gap going forward?
Shafik: So, I think philanthropy is very, very important and it is growing, but it cannot substitute for government aid. The scale is just different. Even, you know, I declare an interest. I’m on the board of the Gates Foundation, which is the largest philanthropy in the world. And there is no way that even a foundation of that scale can fill the gap that is resulting from the withdrawal of nation states.
Slater: So, how does that gap get filled? And what is the real impact for countries with a little bit of the step back, maybe China is stepping up a little bit, philanthropy can do a little bit. But countries that rely on this foreign assistance, and especially in a high-interest rate environment are, you know, what do they do? What do they? Where do they go from here?
Shafik: Yeah, it’s a good question. I mean, it’s important to remember that the development era that we’ve just been through actually has resulted in huge amounts of progress. And the proportion of the world that’s in extreme poverty has fallen from roughly half to about 10% at the moment. So developing countries are objectively in a better position. And even among the very poorest developing countries, aid was never more than 10, maximum 30% of government spending. For middle income countries, it’s always less than 5% of government spending. So it’s significant. But it isn’t by any means the very high levels of dependency that are often perceived to be the case. And I think developing countries now have very different expectations because aid has been very volatile because the dramatic way in which USAID was cut or more as well as the fact that UK aid was cut a few years ago in a very abrupt fashion. Countries feel that they don’t have reliable partners and that they have to be more self sufficient. And so you start to hear many officials in developing countries talking much more about raising tax revenues and domestic resource mobilization. They are interested in attracting philanthropists, and they’re also just more and more interested in using the market. The big obstacle to that which you hinted at is the fact that interest rates are high. Many of them borrowed quite a lot when interest rates were low. And so their debt levels are quite high.
Slater: And were encouraged to do that, right?
Shafik: And were encouraged to do that. And so the question for them is without some form of debt relief or debt restructuring, their ability to self-finance, which is where they want to go is really in jeopardy. And of course, the big issue on the debt restructuring is in many countries, particularly in Africa, is China.
Slater: Yeah, maybe just diving in a little bit on the debt piece. This is something that also has been discussed for many, many years. Since Covid, there’s been this effort to try to rethink the restructuring architecture given the emergence of new lenders like China who aren’t members of the Paris Club of donors. Progress has been slow in my view, to kind of bring in both China and the private sector which is now a very large source of lending, as you said, to these developing countries. How do we make this go faster? I mean, what do we do? It’s just these, you know, developing countries, they’re just really stuck. And I just don’t think that the progress to support them is going fast enough.
Shafik: Yeah, I agree. I think, as you implied, there have been many attempts to try and bring China into the Paris Club framework that has failed. The IMF has developed this common framework which is an attempt to have a different group of countries around the table to try and agree debt restructurings in a different format that has been very slow. You know, Zambia has taken a couple of years to get its debt restructuring done. It’s too little too late for most countries. So, you’re quite right, we need a better system and we basically need China to be willing to engage in more transparency around the levels of debt, but also be willing to take haircuts. Part of the problem with China, frankly, is a definitional one. They don’t, they don’t categorize some of this debt as sovereign debt, they see it as purely commercial. And I think there’s a bit of a dispute around some of these definitional issues. I actually think the most important voices here are going to be developing country voices who put pressure on China to say, if you want to be a real partner for us, you need to help us find a way to achieve financial sustainability, and debt restructuring has to be, and debt forgiveness has to be part of that package.
Slater: Hmm, that’s interesting because certainly here in the U.S., anyways, the rhetoric is just, we need to be tougher on China to get them to the table. The U.S. needs to apple more pressure, be more vocal, right? Name and shame. But I don’t know if that’s going to work, and it hasn’t. And I think the pressure from the U.S. and other western governments has increased over the course of the past couple of years. And we’re still not seeing a whole lot of action, as you said on China’s side. So yeah, it really has to be from the countries who are in need, who, as you said, can approach them and say, we need to be constructive here.
Shafik: Yes.
Slater: I want to pick up on something you mentioned a little bit about the UK aid experience because you have been at the center of this, and the UK really did something that I think the U.S. is kind of considering right now, right? With its dismantling of USAID and then folding some of those operations which were an independent agency into our State Department, right? The US State Department. And the UK really did something similar, right? With DFID and then folding it into the foreign ministry. And now I think there’s some questions around how effective that was and a review of whether or not that was the right policy pathway. So maybe could you just share a little bit about that experience and what the learnings were and if there’s any parallels that you see to the current US moment.
Shafik: Hmm. So the UK merged its Foreign Office and the Department of International Development in 2020. I think most analysts would tell you that it was a failure. The theory was that you would get synergies between the two, that you would get cost efficiencies from the merger and that you would get development aid that was more aligned with foreign policy priorities. I think the synergies have proven to be very modest. The number of examples you can give where having a merged organization deliver better outcomes are very, very few. The cost efficiencies actually never came. In fact, if you look at the total staffing of the then Foreign Ministry and the Department for International Development, the combined entity ended up with higher levels of staff then the two subcomponents.
I think that a big driver of why it didn’t work well was the context in which it happened. First, it occurred in the context of big budget cuts. So, you were merging two organizations but also trying to cut the budgets at the same time in a very large-scale way very quickly. And there was also a period of great political instability. And so, there were four different foreign secretaries over four years, and priorities kept shifting. And as a result of that, the restructuring occurred in the period of great instability.
For me, probably one the biggest losses was the loss of expertise. And the sort of deep technical expertise you had on global health, on trade, on debt restructuring, on education diminished rapidly. And because of the merger, people felt that the issues they worked on were no longer a priority. And so, they either left the organization or became generalists in the organization. And what’s interesting is if you compare the experience of Canada and Australia, both of whom also merged their foreign ministries with their development ministries, they tell the same story that the loss of expertise was a really significant consequence of the merger.
Slater: Yeah, that’s certainly something we’ve been hearing a lot of in the U.S. As you know, USAID has kind of been dismantled and some of it will come back into the State Department. Likely not all of it. But then, there’s, as you said, the loss of expertise and not just within government but a whole industry, especially in the U.S., most of the aid flows through US NGOs or international, nonprofit organizations and then is delivered. And so that whole industry is also being impacted and having to likely be reskilled or, as you said, become more generalist. And so, it’s a real kind of industry issue, I think beyond just government.
And a lot of foreign aid is meant to provide technical assistance to the recipient countries, right? So that, you know, they can, in fact develop some of the expertise necessary to develop on their own. And so that’s going to be lost as well, right?
Shafik: I mean, arguably too, if the, if the resource transfer part becomes less important, the technical expertise cooperation becomes more important.
Slater: Right. I want to turn a little bit to the multilateral aid architecture. And so, you mention something in your opening really about this kind of backlash against globalization and internationalism. And of course, multilateralism and multilateral institutions are a kind of pillar of global cooperation really. So, I want to ask what is your assessment of this state of multilateralism? I think kind of broadly, there’s a lot of different ways that that’s done. Obviously, we’re seeing on the trade front a real breakdown. On the global governance front, we see things like G7 and G20, maybe G7 has been a little more effective than G20 this past year, but then we have sort of the institutions, the World Bank, the IMF, the MDB’s, that are kind of the stewards of this system. So, you know, in this kind of anti-globalism environment, how do you view the state of multilateralism?
Shafik: Well, there is no doubt that public opinion has shifted away from multilateralism in the United States and to some extent in other countries. And I think we haven’t done a good enough job of telling the interdependence story and how countries’ well beings are completely intertwined with each other, whether it’s on climate or trade or global health, for example. And I think that we really need to do a much better job of demonstrating the benefits of an international system. I think it’s also fair to say that some aspects of the system have become too big, too overlapping, too inefficient. And this is a moment when we can try and address those issues. If you look at the humanitarian architecture, there’s huge amounts of overlap. If you look at the emerging climate finance architecture, again, proliferation of subscale funds, none of which can really solve the climate problem. And so, I think some of the criticism is valid, but I think some of the criticism also really ignores the huge gains that we have made in terms of development outcomes over the last 50 years with this system. But you know it is a moment of change.
Slater: Yeah. Maybe just diving specifically into the World Bank and the MDB architecture, and then we’ll talk about the architecture more broadly, but just looking at those institutions and the investment vehicles that they are for aid, right? I mean certainly in the last couple of years, in the last couple of G20s, it’s been a focus to look at the MDB system and think about how to reform it and how to ensure greater coordination and collaboration. It’s how to bring in the private sector, right? How to mobilize private sector investment. We’ve been talking about this for decades and decades. I like to tell a story. I was looking in some of our Bretton Woods Committee archives, and I literally saw a proposal from 1989 that was saying the same exact things we’re talking about today. So I think, what do we do with this architecture? It’s necessary, it is effective at delivering assistance, the sort of leverage effect is incredibly important. But how do we actually make movement on some of these issues that we’ve been talking about since 1989? And is this a moment where maybe real action can happen?
Shafik: So, there are many aspects of the multilateral development bank model that are really worth preserving. The sort of financial engineering miracle of having relatively small amounts of capital, some callable capital and being able to borrow against that to generate huge amounts of financing for developing countries is a brilliant model and we need to hold on to that. There are some aspects of the system which have grown in ways that don’t make a huge amount of sense. There is a huge amount of overlap in functions. I have a real question about whether multilateral development banks should be providing grants which duplicate what bilateral donors do. And I think, concessional financing, yes, but if you are funding projects which over 40 years, which can’t repay close to a zero at a 0% interest rate, it’s probably not a great project. And so I think we should maybe look at that question again.
Slater: Nor great business for a bank, right?
Shafik: Right. And so I think that’s an area where we could look at possible reform. And then I think the other area where there’s been quite a lot of work done is on they getting as much leverage from their balance sheets as they could. And there was a very good report done for the G20, which many people will know about, which looked at this issue and showed really large opportunities to get more bang for the buck. I think going forward, given the cuts in bilateral aid, the MDBs will have to do the heavy lifting of providing finance. And if they’re going to do the heavy lifting, they’re going to have to be a lot more assertive with using their balance sheets in creative ways. And the so-called CAF report does a very good job of laying out all the different ways of which that could happen.
Slater: Yeah, a lot more aggressive in their risk, right? I mean of course, the kind of issue outside of the CAF report and the kind of argument of the World Bank in terms of being conservative is the coveted AAA credit rating, and not wanting to do anything that would put that in jeopardy. But I think sometimes that’s been used as a crutch.
Shafik: Yes, I mean you know many of the major shareholders of the World Bank are not AAA themselves, including the United States or the United Kingdom, most of its shareholders are not AAA. I think there’s still some room to maneuver without jeopardizing the credit rating. And similarly with the private sector financing side, there is more room to maneuver. You can see it at the moment, the Bank isn’t taking advantage of its, it isn’t maxing out on its leverage ratio, for example, while it could, and you can say that about many of the multilateral development banks that they have, many of them have had capital increases in recent years. They’ve got more room, and I think they have to carry a bigger load given what’s happening with official development assistance. I think the other issue though and we should talk about this as well is they may have more room to lend, but the developing countries don’t have room to borrow because of their debt levels. And so the problem is almost more on the demand side than on the supply side.
Slater: And on the private sector, I mean, you know something that we hear time and time again as, you know, the World Bank and the other MDB’s, but I think specifically the World Bank, it’s just so difficult for the private sector to work with the bank, right? It’s incredibly cumbersome, incredibly slow. And I think that the private sector’s just lost a bit of trust. And there’s all this talk about the private sector stepping in to fill some of these gaps and mobilizing that financing. But again, been talking about this for years. And do you think that there’s real action now? I know the World Bank has this private sector investment lab. They are producing some thought leadership and some actionable ideas. Do you think that the bank, the World Bank and the other MDB’s are really capable of making the changes that they need to make to work at the speed and scale that the private sector wants them to?
Shafik: Yeah. So I was vice president of private sector infrastructure when I was at the World Bank, so this is a topic that’s close to my heart. The basic problem is that investing in developing countries is risky and the private sector would like the multilateral development banks to take on more of that risk, whether it’s risk around foreign exchange or policy changes that the government might make, credit risk and so on. And the multilateral development banks think that’s what the private sector should be doing is managing those kinds of risks. And I think there’s been some interesting experience with experiments with wholesale approaches, providing big lending vehicles that make it easier for the private sector that are less kind of retail where you do project by project, which is incredibly time consuming. But again, the many projects in developing countries are not, they’re not like US mortgages, you know, you can’t securitize them and they’re not all the same. And doing a power plant in Kenya is different than doing a power plant in Bangladesh or a solar farm or so on. And so being able to standardize, simplify, aggregate, and securitize, which is what financial markets are really good at, is really hard in developing countries where the risks are so different across different environments.
Slater: Yeah. And of course there is work underway on that at the Bank, but I think to be seen, again, been work underway on that for many years and so to be seen whether or not, it can actually be done, because the needs are so varied across countries.
Shafik: Yeah, and of course, some of the most important ways in which developing countries can attract private investors is by having really good policies, and both macro policies, micro level policies in terms of pricing and so on, and finding a solution to the debt burden, uh, that would be incredibly powerful for making it attractive for private investors.
Slater: Yeah, and of course, that’s also what the MDBs and the World Bank, the IMF should be doing, right? Is counseling countries and providing that policy advice. So maybe let’s wrap up here talking about the architecture a little bit more and in a forward looking lens. We’ve hit on bilateral, multilateral, we’ve hit on debt, you talked a little bit about humanitarian. But, where do we go from here? What does the future aid architecture need to look like? You know, kind of taking into account all of the political, geopolitical, fiscal, budgetary factors that we’ve talked about, what does the entirety of the architecture need to look like moving forward to really be effective at delivering economic development for countries?
Shafik: Yeah, so I imagine there being four pillars to the system going forward. The first which we’ve talked about is multilateral development banks. And as I said, they should be doing the heavy lifting. They have $2 trillion in assets which they can use to generate resources to finance development. And in terms of the big volume of lending, I think they should be the ones who are doing that. And so, we can talk about how they can be reformed and get more mileage from their existing balance sheets and so on, but they would be the first big financing pillar.
Slater: They need to be in the lead.
Shafik: And here I’m talking about large scale financing for things like infrastructure, big kind of public investment programs.
The second pillar would be the humanitarian system. And humanitarian system is absorbing a greater and greater share of official development assistance as the number of humanitarian crisis in the world goes up. It’s now about 10% of total aid, which from having been a few single digit percentages before. And humanitarian system is underfunded, it’s too reactive. And so, when there’s a crisis, they pass a begging bowl around, which makes no sense given that 70% of humanitarian crises have been going on for 10 years. So, it’s not like we’re surprised that there’s a humanitarian crisis in Sudan, for example. We know that, that this has been going on for years and years. We need a better organized humanitarian system that is streamlined, has fewer players, has money prepositioned in advance and is focused much more on prevention rather than reacting to humanitarian crises.
The third pillar is what I call global public goods. That’s things like climate, like global health, like dealing with pandemics. And there I think we’re going to have an architecture of coalitions of the willing, where you’re going to have groups of countries coming together to fund vaccines or support the biodiversity and the protection of oceans. And some of the climate adaptation stuff would fit under that rubric. I would expect climate mitigation would be mainly funded by multilateral development banks rather than through such a mechanism. But global public goods, I think will continue to be an important story. And I think one way you can get public support because people understand that if we don’t deal with pandemics when they break out, the spill overs could be very quick and adverse for me. And so, people are willing, I think, to understand that logic.
The fourth pillar is bilateral aid, which my expectation is will become a smaller part of the system. And I think different countries will take different approaches to their bilateral aid programs. Some will, I think, take a very utilitarian approach which is focused on our national interest in how we give money to other countries to get them to do what we need them to do. And I think some countries will retain the principle that bilateral aid should be about poverty reduction and for the benefit of the citizens of those countries.
I think those different approaches will coexist in the system going forward.
Slater: Picking up on the global public goods piece a little bit and diving into that, I think we’ve covered some of the others in the conversation this far, but that was really a focus of I think a couple of the G20 presidents, last G20 presidencies, certainly the last US administration really introduced this concept of global public goods at the multilateral institutions. And really being led by the multilateral institutions. The Bretton Woods committee has done some work on this and suggested that could be a function of the multilateral institutions in addition to that first and foremost leadership role that you have suggested in terms of the long-term financing of infrastructure and development, right? We’re not supplanting what the Bank and the MDBs should be doing, but the global public goods piece could be layered into the multilateral institutions. And in your view, how does the global public goods piece play out in terms of the coalitions of willing? I mean, is this just sort of real, bilateral conversations, maybe regional conversations, or is there space for this to happen at multilateral institutions?
Shafik: Yeah. So I think it will be thematic. So think about the global health funds, there are something others, the Global Fund for Aids, TB, and Malaria, there’s the Global Alliance for vaccines. There’s a set of coalitions that have formed to deal with global health and they are funded by governments, by philanthropies and people. There’s replenishments and people put money in and it pays for dealing with a very specific global public good. I think that’s the way those things will be financed. You know, conceptually you could imagine and I think some in the UN have made this argument, you need some kind of tax base to pay for global public goods and you have some kind of international tax on airlines or on shipping or so on. I don’t see that happening anytime soon. And so I think in the absence of some reliable revenue source, it would have to be coalitions of the willing. I think climate change is a little bit more complicated than what I’ve just described because many aspects of climate finance can be financed on a semi commercial, either fully commercial or at least multilateral development bank commercial basis. And so those will be financed there. The bit that is more of a global public good which will require more grant financing is adaptation, the negative spillovers of climate on poor countries who are faced with flooding or loss of agricultural capacity and so on as a result of climate change. And there you can imagine that there would have to be more of a grant and concessional element to compensate for those losses.
Slater: Yeah, so coalitions of the willing and that can be done in various formats, right? Maybe some of these funds would exist inside some of the existing multilaterals, maybe they’re outside, right, there’s different mechanisms.
Shafik: Exactly, and it would be issue based. So, you know, one for health, one for climate adaptation, one for biodiversity preservation and so on.
Slater: Yeah. So maybe just the final question here to wrap up, this has been an incredibly wide ranging and as always very thoughtful conversation and perspectives from on your part. But looking at the political will to do some of these reforms and to really change some of the architecture, which is always been a little bit of the issue on reform. But especially in this current moment where there’s a lot of conversation about a real changing global order and real questions about the US’s leadership on the global stage going forward. So, do you think the political will exists to make some of these reforms and if the U.S. isn’t on board, are other countries going to move forward without the U.S.? Can they?
Shafik: Hmm, so I think it depends on the area. Whether you can have sort of mini lateralism or what I’ve called a G minus 1 world where you have multilateralism without the U.S. cooperating. In some areas that can work. If you look at the recent pandemic treaty that was signed in May, a hundred and twenty odd countries signed that treaty so that next time there’s a pandemic, there will be a collective effort to both identify, isolate, and provide vaccines and treatment to stop that pandemic from spreading around the world. And the U.S. chose not to sign that treaty. But actually, unless the next pandemic breaks out in the U.S. and then spreads around the world, having 120-some countries agree to that is pretty effective actually. So that’s a good example of where you can get effective global solutions even if a major superpower is not engaged. In areas like debt restructuring, or for example, some of the issues around the international financial institutions, I think there will not be progress unless you can build a truly multilateral solution in which the U.S. is a very important player. And so I think it will vary by issue.
And I think countries will try to have cooperative solutions in the spaces where they can. You know, if you look at the area of trade, the U.S. hasn’t approved judges to the arbitration panel for the WTO now for… they’ve rejected, I think, 88 nominations. And so the rest of the world put together the multilateral, it’s called the interim arbitration agreement in which I think 57 countries have signed up and they are arbitrating cases on a voluntary basis without the U.S. And so it is possible, it’s not ideal, obviously, all of these things would be better if we had truly collaborative, cooperative multilateral engagement. But in some areas, it is possible, but not at all.
I think the other thing I’d say just before we wrap up is that I think what strikes me at this moment, as someone who’s been working on international development for, I don’t know, almost well, 35 years now and when I think about the difference in from when I started to what it looks like now, developing countries were really different than their advanced economy peers 35 years ago. Today they actually have so much in common. They have capable civil servants and public officials who’ve gone to the very same universities that everyone in the advanced economies has gone to. Those who work in the multilateral development banks, thanks to the information revolution, they have access to all the same information that we have. And actually the issues they face are very similar to their advanced economy peers. The issues for them are growth and jobs, physical sustainability of public service provision, managing sustainable debt, and dealing with the consequences of climate change. That’s a pretty common universal agenda for advanced economies and developing countries. And I think what developing countries want is a system that helps them deal with those problems, which are the same as what everybody else has. They just have fewer resources and weaker institutions to deal with those issues. But I find a great deal of comfort from the fact that the policy agenda is in some ways converging and some aspects of the capability to deal with that policy agenda are also converging.
Slater: Very interesting insight Minouche, reflecting on your 35 years of experience, and I think you’re right in many ways there’s not that much difference between London and Johannesburg and certainly on the policy agenda, I mean the whole conversation in the U.S. right now is about fiscal sustainability and debt. Very insightful comments there. I love your phrase about mini multilateralism. Maybe we’ve entered, entered the era of mini multilateralism. And it’s still there. Multilateralism still exists, still has a really important function, just might look a little bit differently going forward.
Shafik: Yeah, I think so. And, you know, there will be some new order, but I think in this, in between period, it’s going to look a little bit different, and I can’t predict what the new order will look like. But in this interim period, we’re going to have something that looks quite different than what we’re used to. I do think this is a fundamental moment. I think that we will not go back to what we had before. I think we need to accept that that’s the case and think creatively about what a new order could look like.
Slater: Yeah, I couldn’t agree more. I do think the mini multilateralism era is a transition period to something new and different and hopefully bolder. Well, Minouche, thank you so much. As I said, I couldn’t have heard from a better expert and someone with a deeper experience than you. Always incredibly thoughtful in the way you approach these issues, given us a lot to think about today. So I really appreciate you joining us and thinking through the future of foreign aid and the future of the global economic order.
Shafik: Okay, well, thank you, Emily. It was really my pleasure and thank you for a great conversation.
Slater: All right, thank you. Thank you to all our listeners.