sustainable development 20 years on from the ... - José Eli da Veiga

<strong>20</strong>3
The region’s lower-middle income countries, which have received large amounts of ODA in
relative terms, include some that are also classified as heavily indebted poor countries (HIPC), such as the
Plurinational state of Bolivia, Guyana, Honduras, Nicaragua, and, more recently, Haiti. This means that,
in some cases, a significant share of the ODA received has been in the form of actions on their external
debt (forgiveness and other measures), rather than “new money” targeting other sectors.
The allocation of ODA has changed in line with the Millennium Development Goals (MDGs). In
terms of total assistance, there has been a slight upward trend in amounts targeting the social service sectors
and social infrastructure; and the preference for grants rather than loans in total official <strong>development</strong>
assistance has persisted. General assistance for environmental protection in the region remained virtually
unchanged throughout the last decade, accounting for about 4% of the total (United Nations, <strong>20</strong>10b).
Using the so-called “Rio markers”, which are indicators used to identify official <strong>development</strong>
assistance activities for meeting the goals of the three Rio conventions (the United Nations Convention on
Biological Diversity, the United Nations Framework Convention on Climate Change and the United
Nations Convention to Combat Desertification), shows that there is a rising trend in bilateral
disbursements of assistance, from about 2% in the middle of the decade to levels around 10%, with
positive implications from the standpoint of those environmental conventions.
Against this backdrop, the region is facing the challenge of preventing assistance that targets
internationally-agreed <strong>development</strong> goals, including the MDGs, which is still highly necessary, from
being replaced by assistance aimed at generating global goods and services, in which the region has major
potential as a supplier (for example, activities to mitigate climate change). The latter should be subject to
the additionality commitments of traditional ODA, since it directly benefits the developed countries, in
which, for example, certain mitigation measures could be prioritized as a target for assistance.
2. Private international financial flows
Private financial flows have been a fundamental component of total external financing received by Latin
American countries; and, although their volume has fluctuated, on average they have tended to easily
outweigh other capital flows.
For example, in the period 1990-<strong>20</strong>09, net private financial flows entering the region —including
both portfolio investment and foreign direct investment (FDI)— averaged US$ 48.2 billion per year, far
outweighing the ODA received by the region in the same period, which averaged US$ 6.3 billion per year. 4
Foreign direct investment is an increasingly important component of financial flows for the
region, as Latin American and Caribbean have increased their share as recipients of global FDI (from 5%
to 10% over the last four <strong>years</strong>) (see figure table V.2). The FDI received by the region increased fivefold
in the period 1992-<strong>20</strong>10, growing from US$ 12.8 billion to US$ 113 billion (see figure V.3), outpacing
both the global average and the average of developing countries, but with different subregional trends
(United Nations, <strong>20</strong>10b). Flows into South America grew on average by 12% per year between 1992 and
<strong>20</strong>10, double the rate in Mexico, Central America and Caribbean. The leading FDI recipients over the last
five <strong>years</strong> have been Brazil, Mexico and Chile; but, in terms of the relative weight of the recipient
economy, foreign investment is more important in the Caribbean countries.
4
Data on private capital flows are based on the World Economic Outlook (WEO) database of the International
Monetary Fund. ODA figures were obtained from the OECD statistics system.