Navigating the Indo-Pacific: Development Cooperation as a Diplomatic Tool

Introduction In its normative form, development cooperation, also known as development partnership, involves the creation of a cooperative framework for the “promotion of social and economic development of developing countries”. [1] The traditional donor-recipient relationship has now been replaced by partnerships where the actors involved are considered equal. Indeed, development partnerships have become pivotal for catalysing resource mobilisation and leveraging global public goods. [2] The international system is currently suffering from multiple multidimensional crises. [a] These interconnected challenges have amalgamated into what is sometimes called a ‘polycrisis’. [3] Amid such a situation, progress on the Sustainable Development Goals (SDGs) has been steady but fragile, with significant and persistent challenges. [4] Financing for Agenda 2030 has emerged as a major bottleneck, with several developing economies—particularly the least developed countries (LDCs), low-income countries, and the small island developing states (SIDS)—suffering the most. The gap to finance the SDGs widened from US$2.5 trillion in 2020 to a staggering US$4.2 trillion in 2023. [5] A drop in external finance sources (mainly private agencies, remittances, and foreign direct investment) and the diversion of existing resources to tackle the pandemic has impacted the capital outflow in developing countries. However, these multiple economic and political shocks had a mixed impact on the international developmental cooperation architecture. Despite the drastic drop in global GDP, the volume of Official Development Assistance (ODA) provided by traditional donors—i.e., the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) [b] —increased to its highest level ever in 2020, touching almost US$161 billion. [c] , [6] In 2022, the DAC donors provided about US$204 billion, a 13.6 percent increase in real terms from 2021. [7] This reflects a crucial feature of ODA—acting as a shock absorber in crises. Indeed, despite an economic slowdown, ODA by DAC donors experienced its highest growth rates alongside ‘slowing-but-positive-GDP growth’ in the OECD countries (see Figure 1).