Deutsches Institut für Entwicklungspolitik / Latest News

This paper investigates the impact of aid for trade (AfT) targeted at trade policies on the participation of recipient countries in global value chains (GVCs), and how this impact varies with their prevailing political regimes. In democratic countries, the need for the authorities to account for the interests of various stakeholders (e.g., lobbies, trade unions) can compromise the allocation, use, and effectiveness of AfT. In contrast, less democratic regimes are typically more insulated from political pressures, which may lead to more effective outcomes of aid. At the same time, integration into some complex GVCs requires efficient and democratic institutions, to which these products are sensitive. Employing a sample of 110 countries and data covering 2002-2018, we control for standard determinants of GVC participation, while examining the effect of AfT and the moderating role of the political regime in place. Our estimation addresses the endogeneity of aid through an appropriate instrumentation strategy. Our results suggest that the effect of AfT is mostly positive in autocratic regimes, indicating more effective trade policy reforms. When we account for regional disparities, we find evidence that AfT for trade policy is also impactful in some democratic regimes. This might suggest that the efficacy of AfT is not strictly regime-dependent, but hinges on the government’s commitment to carry out significant reforms leading to greater participation in the global economy.

Many colonies in Africa attained independence through negotiated settlements. However, several others engaged in armed liberation struggles, for example, Kenya, Namibia, South Africa, Southern Rhodesia (Zimbabwe), and the Portuguese colonies of Angola, Cape Verde, Guinea Bissau, Mozambique, and São Tomé and Príncipe. Newly independent states provided liberation movements with bases on their territories and political, military, intellectual, ideological, material, and moral support. In West Africa, Ghana’s first president, Kwame Nkrumah, a notable pan-Africanist, declared in his Independence Day speech in 1957, “Our independence is meaningless unless it is linked up with the total liberation of the African continent.” In East Africa, Julius Nyerere and Jomo Kenyatta, the first presidents of independent Tanzania and Kenya respectively, showed similar commitment to Pan-Africanism and anticolonialism by hosting refugees fleeing armed struggles in Southern Africa. Tanzania hosted the Organization of African Unity Liberation Committee supported anticolonial resistance and liberation movements. President Nyerere supported them for “challenging injustices of empire and apartheid” and declared, “I train freedom fighters”. He encouraged Tanzanians living around liberation movement camps to welcome these movements and their freedom fighters and also protect them from agents of colonial governments. Support also came from many other countries on the continent including Nigeria, Ethiopia, and Algeria. The latter provided sanctuary to representatives of liberation movements such as Nelson Mandela of the African National Congress (ANC) in South Africa.

International donors commit substantial resources to GovTech projects (the application of information and communication technologies to government functions). World Bank GovTech investments alone have exceeded $118 billion over the last three decades. Donor strategy documents consistently frame digital transformation not only as a vehicle for improved effectiveness but also for strengthening democracy.
Autocrats are equally invested in these tools. Globally, at least 88 authoritarian regimes currently operate GovTech projects, and electoral autocracies receive the largest share of GovTech aid (48.6 per cent of commitments). Beyond well-known surveillance applications, autocracies deploy GovTech for service delivery, grievance redress and even citizen engagement. These platforms are deployed to project an image of responsiveness and legitimacy. Our experimental evidence from Turkey shows how efficiency-enhancing GovTech tools, when paired with sophisticated regime communication, can durably entrench autocratic rule. We designed a survey experiment focused on CIMER, Turkey’s widely used citizen petition platform, to examine how citizens respond to the government propaganda surrounding it. The results show that the government’s framing of CIMER as an effective tool that “gets things done” significantly increased trust in authoritarian institutions, even among regime opponents. The effect extended beyond attitudes to behaviour: Asked to allocate a hypothetical donation of money among state institutions, independent non-governmental organisations (NGOs) or themselves, anti-government respondents exposed to messages on the platform were significantly more likely to give the money to state institutions. Our recommendations are as follows:
• Donors must take the second-order effects of GovTech initiatives seriously and develop mechanisms to carefully evaluate the risks of unintended consequences. In many cases, support for GovTech projects is overly optimistic regarding their effects on political openness. Adopting a more context-sensitive and realistic approach demands detailed political economy assessments before supporting GovTech projects and developing monitoring metrics that capture potential regime-legitimation effects.
• Donors need to build stronger safety guardrails into these projects. Depending on the political economy assessments, such measures could include the institutional involvement of international organisations or, if feasible, local NGOs (as conditionality) in platform oversight, mandatory independent audits and open data standards by design, among others.
• Finally, donors need to consider actively participating in public communication on these platforms, with visible donor branding, to counter government-controlled propaganda, claim credit for service delivery and strengthen trust in donor countries and organisations.

Policy coherence is widely regarded as essential for achieving sustainable development, climate targets, and reducing inequality, as reflected in the 2030 Agenda for Sustainable Development. Recent scholarship has moved beyond technocratic approaches, drawing on comparative politics, particularly the “3 I's” of ideas, interests, and institutions, to highlight the inherently political nature of coherence. Yet even these studies often treat coherence as binary, easily observable, and intrinsically beneficial. Building on a coherence literature focused on discourses and frames, this paper challenges these assumptions by examining how policy (in)coherence is constructed and contested. Focusing on policy implementation in North Rhine-Westphalia, Germany's coal heartland, we analyse two cases before and during the 2022 energy crisis triggered by the war in Ukraine: the commissioning of the Datteln IV hard coal plant in 2020, and the clearance of the village of Lützerath for mining in 2023. Drawing on 28 semi-structured interviews with German energy, climate, and environmental experts, alongside policy and media analysis, we find that (in)coherence is greatly constructed and contested under shifting political and economic pressures, instrumentalised and legitimisatised by different actors to advance their interests, and profoundly shaped by temporal dynamics. Given recent findings that challenge the 2030 Agenda's assumption that policy coherence reduces inequalities, we also explore how (in)coherence is perceived to shape multidimensional inequality in the Energiewende more broadly. Here, we find that (in)coherence is most prominently perceived to cause delays in climate mitigation, disproportionately affecting youth, low-income households, migrants, and activists. In this context, (in)coherence is not merely technical, political nor constructed, but fundamentally a matter of justice, shifting the analytical focus from whether policies and their implementation are coherent to how, and for whom, coherence matters.

Tax expenditures (TEs) in Zimbabwe represent a significant portion of government spending, amounting to 2.8 percent of GDP, 24.7 percent of total revenue, and 21.2 percent of public spending in 2023. Companies benefitting from TEs enjoy tax savings that trigger a reduction in government revenue, which may in turn result in higher budget deficits and sovereign debt. TEs are often regressive, e.g., when TEs related to personal income tax (PIT) benefit those in higher income tax brackets more, and TEs related to value-added tax (VAT) provide a larger benefit to higher income households, given their larger consumption in absolute terms. Although TEs are meant to boost investment, exports, innovation and employment, their real impact is often unknown, as Zimbabwe lacks a culture of ex-ante and ex-post evaluation of TEs.

Transparency: Section 3 of the Public Finance Management Act [Chapter 22:19] aims to secure transparency, accountability and sound management of revenues and expenditure, but does not provide specific provisions on TEs assessments nor reporting to the Parliament of Zimbabwe. Section 30 of the Zimbabwe Investment Development Agency (ZIDA) Act also highlights that ZIDA, in consultation with the Minister responsible for Finance, should publish guidelines for investment, which include general and special incentives applicable to specific categories of licensed investors. Against this backdrop, it is fair to say that there is no explicit policy on TE transparency in Zimbabwe.

Complex landscape: The rationale for the introduction of business-related TEs is to stimulate investment and production, which should then create employment opportunities and other benefits, potentially leading to higher government revenues in the medium or long term. If well-designed, tax incentives for investment can be a cost-effective policy tool. However, TEs may be vulnerable to lobbying and abuse, providing preferential tax treatment to specific groups with vested interests to keep the incentives in place even without much benefit to the economy at large. Empirical evidence on TEs is still limited in Zimbabwe, which undermines evidence-based tax policymaking.

Evaluation challenges: The government of Zimbabwe committed to develop a tax incentive monitoring and evaluation framework, managed by the Zimbabwe Revenue Authority (ZIMRA), to facilitate the management of TEs and inform cost-benefit analyses by Treasury on an annual basis with effect from 1 January 2019. No ex-ante evaluation has been conducted so far, but some ex-post evaluations of TEs were undertaken in 2021 and 2023. In addition, ZIMRA has started to publish TE figures from 2019 onwards in its annual reports, although the statistics published are highly aggregated and do not cover all taxes upon which TEs are granted. The published TEs from the annual reports are revenue forgone from domestic and trade taxes. Although the Parliament of Zimbabwe has the competence to oversee the national budget cycle, it is currently not involved in the monitoring and control of TEs.

Fiscal sustainability: Fiscal sustainability enables governments to meet future public expenditure and financial obligations without resorting to excessive borrowing. Constitution of Zimbabwe Amendment (No. 20) Act, 2013 (Act No. 1 of 2013, Section 299) provides for Parliamentary oversight of state revenues and expenditure to ensure accountability, monitoring and fiscal sustainability (Government of Zimbabwe, 2023a). Section 298 (1) b i of the Constitution states that the burden of taxation must be shared equally which implies that TEs should not be allocated without evaluating if they are beneficial to Zimbabwe. TEs can be described as hidden government spending, which can negatively affect fiscal sustainability. Zimbabwe’s TEs amounted to US$1.34 billion in 2023, which is about 2.8 percent of GDP, compared to the global average of about 4 percent of GDP. However, VAT rate reductions and exemptions on domestic sales, which constituted 51 percent and 27.1 percent of total TEs reported by ZIMRA in 2020, were not reported through the new Tax and Revenue Management System (TaRMS) in 2023. Moreover, TEs for CIT, PIT and excise duty were not reported since they are not captured by ZIMRA. The bulk of the reported figures for 2023 were TEs related to custom duties. Thus, the extent of TE use in Zimbabwe is underreported and may in fact be considerably higher than the global average. Moreover, this is happening at a time when Zimbabwe is facing limited fiscal space, with public debt constituting 59.7 percent of GDP in 2024.

Policy recommendations: The Government of Zimbabwe should conduct or commission ex-ante and ex-post evaluations of TEs to enhance their effectiveness. Statistics on TE use and revenue forgone should be publicly available and easily accessible to enhance transparency and access of information to the users. All TEs should be time-bound (with sunset clauses) and, ideally, only be renewed after an assessment has been undertaken to justify their existence. All new TEs should be subject to an ex-ante evaluation to clarify expectations and ensure that only effective TEs are implemented in the country. The Parliament of Zimbabwe should be involved in the monitoring and control of TEs. The legislation should ensure that TE proposals are in line with national development plans and policies. The Parliament of Zimbabwe should also ensure that TE reports are published at pre-defined dates. TE reporting should be comprehensive, reported annually. This means there should be a designated authority responsible for preparing the TE report, preferably in the Ministry of Finance, Economic Development and Investment Promotion. The legal framework should also establish the structure and frequency of TE evaluations, including both ex-ante assessments and ex-post evaluations.

The OECD Conference on the Future of International Development Co-operation convened in Paris on 11-12 May 2026. Andy Sumner and Stephan Klingebiel consider one core idea arising.

This study examines the synergistic effects of digital and green economies on sustainable development in 35 Sub-Saharan African (SSA) countries over the period 2010–2021. Using a two-step System GMM estimator, we analyze the interaction among digital technology index (DT), green total factor productivity (GP), and adjusted net savings (ANS) as a percentage of GNI. The baseline results reveal a negative association between DT and ANS at low levels of green productivity. However, this penalty is mitigated as green productivity rises indicating a synergistic effect. Robustness checks across income levels, regions, and infrastructure types uncover heterogeneities. Specifically, the marginal penalty associated with fixed broadband subscription improves by 0.41% point as economies move from the 25th to the 50th percentile of green productivity, and by a larger 0.828% points when moving from the 25th to the 75th percentile. While basic mobile connectivity remains sustainability-neutral, high-capacity fixed broadband requires environmental efficiency to avoid eroding national savings. Furthermore, digitalization attenuates the negative relationship between natural resource rents and ANS. These findings underscore that achieving sustainable development in SSA requires synchronized policy strategies rather than isolated investments in technology or green initiatives.

• Financial markets still provide financing on a large scale for investments in environmentally harmful activities, while projects conducive to the green transformation are often not funded. 
• Sustainable finance policies, such as new reporting requirements and standards for sus¬tain¬able financial instruments, have so far mostly focused on creating transparency. However, transparency alone is insufficient to turn the financial sector from a driver of en¬viron¬mental crises into a lever for the green transformation.
• Many countries of the Global South face special challenges, including high interest rates, currency depreciation and limited oppor¬¬tu¬nities to shape global policies (e.g. banking regulations and standards for sus-tainable finan¬cial instruments) in their interests.
• Aligning financial markets with sustainability objectives requires a comprehensive policy mix comprising policies that change incen-tives. These policies can include credit guidance instruments such as credit targets, green refinancing schemes and differentiated capital requirements, and tax policies such as differentiated capital gains taxes for green and non-green assets.
• International forums, such as the Network for Greening the Financial System (NGFS) and 
the Sustainable Banking and Finance Network (SBFN), remain valuable for mutual learning and for addressing cross-border effects of finan¬cial regulations.
• Policies to mobilise private resources should not be considered as a substitute for public investments or public steering, which are both crucial for the green transformation.

Heiner Janus and Michael Roll argue that the largest aid contraction on record coincides with a reopened decades-old fault line: what “development” means, who it serves — and how the field can reinvent itself for what comes next.

Bonn, 18. Mai 2026. Die neuen Märkte gewinnen an Bedeutung. Doch Märkte können nicht schützen, was sie nicht vollständig erfassen.

Biodiversitätszertifikate sind Finanzinstrumente, die privates Kapital in messbare Erfolge bei Naturschutz und Renaturierung lenken sollen. Unternehmen können damit Nachhaltigkeitsversprechen untermauern und naturbezogene Risiken steuern. Die Zertifikate werden auf Grundlage messbarer Verbesserungen der Biodiversität ausgegeben und auf Märkten gehandelt; die Einnahmen fließen an die Projektträger. Die Bedeutung der Zertifikate für die Umsetzung des Globalen Biodiversitätsrahmens wird auf der 17. UN-Biodiversitätskonferenz ein wichtiges Thema sein. Die Idee ist verlockend: eine Maßeinheit für Biodiversität und ihren Wert definieren, und einen Markt schaffen, der Mittel für den Naturschutz mobilisiert. Doch Märkte können nicht schützen, was sie nicht vollständig messen, bewerten oder erfassen können.

Damit Biodiversität handelbar ist, muss sie auf einen zusammengesetzten Wert – eine „Biodiversitätseinheit“ – reduziert werden – doch diese Berechnung ist umstritten. Über 570 verschiedene Kennzahlen spiegeln konkurrierende Vorstellungen darüber wider, welche Aspekte der Natur besonders wichtig sind. Eine Biodiversitätseinheit kombiniert Indikatoren wie Artenreichtum, Einzigartigkeit des Lebensraums, Standortfläche, Ökosystemstruktur, Zustand und Lage. Diese Vereinfachung ist nicht wertneutral: Gewinne bei einem Indikator können Verluste bei einem anderen ausgleichen. So kann die Zunahme weniger, relativ verbreiteter Arten den Rückgang seltenerer und empfindlicherer Arten verdecken und dadurch ökologische Zielkonflikte verschleiern.

Befürworter*innen argumentieren, diese Vielzahl an Bewertungsmethoden sei eine mit den frühen Kohlenstoffmärkten vergleichbare Entwicklungsphase. Doch Kohlenstoff basiert auf einer universellen Kennzahl – einer Tonne CO2-Äquivalent. Bei der Biodiversität spiegelt eine solche Kennzahl nicht den sozioökologischen Wert der Natur wider, denn dieser kann sich je nach Kontext und Ort stark unterscheiden.

Die Vielzahl der Methoden zeigt, dass es keine neutrale Einheit gibt, sondern nur konkurrierende Entscheidungen, was gezählt und was ausgeblendet wird. Das in England angewandte Prinzip „Biodiversity Net Gain“ veranschaulicht dieses Dilemma: Für eine Baugenehmigung müssen Bauträger einen Nettozuwachs der Biodiversität von 10 % über 30 Jahre nachweisen; dafür können Lebensräume an einem Ort geschaffen werden, während irreversible Verluste von Ökosystemen anderswo in Kauf genommen und verschleiert werden.

Märkte erfordern handelbare, ortsungebundene Einheiten, doch biologische Vielfalt hängt vom Standort ab. Ökologische Funktionen wirken in größeren, miteinander verbundenen Systemen, die sich nicht auf abgegrenzte Landflächen reduzieren lassen. Der Amazonas erzeugt fliegende Flüsse aus Wasserdampf, die Niederschläge in entlegene Regionen Südamerikas bringen – Zusammenhänge, die Bewertungsmethoden nicht erfassen.

Indigene Völker und lokale Gemeinschaften verfügen über ortsspezifisches Wissen, das standardisierte Messgrößen nicht vollständig abbilden können: Wechselbeziehungen zwischen Arten, saisonale Dynamiken und die kulturelle Bedeutung bestimmter Lebensräume. Selbst dort, wo die Beteiligung von Interessengruppen an der Messung vorgesehen ist, dominiert die Logik der Zertifikate. In Kolumbien besteht selbst bei gemeinschaftsorientierten Programmen die Gefahr, problematische Dynamiken der Kohlenstoffmärkte zu reproduzieren – etwa durch ungerechte Verträge oder wenn Mittel die betroffenen Gemeinschaften gar nicht erreichen. Und: Indigene Gemeinschaften sind zwar in Governance-Strukturen vertreten, haben aber kaum Einfluss darauf, wie der ‚Wert‘ der Biodiversität definiert wird. Wie ein indigener Vertreter bemerkte, stand das Ziel einer Skalierung dieser Märkte von Anfang an fest, wodurch Beteiligung weitgehend symbolisch bleibt. Gemeinschaften werden zwar befragt, haben aber kein Mitspracherecht darüber, was gemessen oder wertgeschätzt wird – dies macht diese Märkte sozial ungerecht.

Obwohl Biodiversitätszertifikate als naturpositiv gelten, verschwimmt in der Praxis die Grenze zwischen Zertifikaten und Ausgleichsmechanismen. Drei der 15 bestehenden Zertifikatssysteme, darunter die des Vereinigten Königreichs und Indiens, erlauben ausdrücklich, dass Zertifikate auch als Ausgleichsleistung genutzt werden. In Kolumbien zeigen sich die Folgen: sogenannte ‚Habitat Banks‘ werden dort an ökologisch umstrittene extraktive Industrien vermarktet und sind damit faktisch zu einer Erweiterung der seit 2012 bestehenden Pflichtkompensationen geworden, anstatt Biodiversität nachhaltig zu schützen.

Globale Marktdaten zeigen weiterhin eine geringe Nachfrage nach biodiversitätsfördernden Zertifikaten: Von rund 11,6 Millionen ausgegebenen oder geplanten Zertifikaten wurden 124.183 verkauft und 1.285 aus dem Handel genommen. Wie der Kohlenstoffmarkt gezeigt hat, können der fehlende Zusatznutzen, Leakage-Effekte und MenschenrechtsverletzungenHandelssysteme fundamental untergraben; die größere Komplexität der Biodiversität macht diese Probleme noch schwerer zu beherrschen.

Der Verlust biologischer Vielfalt ist kein durch Bepreisung lösbares Marktversagen, sondern Folge des Wachstumszwangs unseres Wirtschaftssystems, welches die ökologischen Grenzen der Erde überschreitet. Antworten darauf liegen in Ansätzen der Postwachstumsökonomie, Maßnahmen wie Schuldenerlassen und Subventionsabbau, sowie rechtsbasierten Ansätzen wie der Anerkennung der Natur als Rechtssubjekt sowie indigener und traditioneller Territorien.

United Nations (UN) Secretary-General António Guterres launched the UN80 Initiative in March 2025. Faced with the US government’s increasingly hostile approach to the UN, UN80 was presented as a reform geared towards making the UN system “fit for purpose”. However, this policy brief argues that both the UN bureaucracy and member states have missed key opportunities to turn UN80 into a tool for reconfiguring UN multilateralism and providing space for multilateral cooperation that – despite rising geopolitical tensions – effectively addresses transnational challenges. The UN Secretariat, on the one hand, has pushed for a rushed reform agenda through an avalanche of bureaucratic reshuffling and technocratic ideas that are driven primarily by the logic of efficiency gains. Despite investing considerable efforts, it has failed to develop a coherent organisational and governance vision for the future of the UN that would help the organisation adapt to shifts in global power and policy preferences. Although welcoming reform efforts in principle, member states – on the other hand – have neither provided proactive guidance on desired reform outcomes, nor offered strategic input on the reform proposals put forward by the UN bureaucracy. They have failed to take up their role as political reform governors of a UN system in need of adapting to new geopolitical realities. Although the trajectory of UN80 to date has been far from ideal, the Initiative could still serve as a first step towards more fundamental reform efforts that address member states’ diverging preferences and attempt to tackle multilateral governance deficits. Inorder to highlight what is at stake, the policy brief outlines three scenarios of how post-UN80 dynamics might unfold, helping stakeholders identify what kind of UN system they would like to see and which steps might be necessary to get there.

Scenario 1. Faltering momentum: the phase-out of UN80 contributes to UN fragmentation and decline. Member states and the UN bureaucracy continue working through the UN80 Initiative’s to-do list until everything is either proclaimed done, watered down or silently abandoned. This leaves major challenges unaddressed, contributing to increasing levels of fragmentation and dysfunction across the UN system.

Scenario 2. Bold moves: strategic UN reform ambitions supersede technocratic logics. Member states leave decisions about efficiency gains to UN chief executives while prioritising and spearheading more ambitious reforms. They task the new Secretary-General with designing a high-level debate on the purpose(s) and the future governance of the UN system that reaffirms the UN as the multilateral centre of world politics.

Scenario 3. Muddling through: a combination of technocratic and governance reforms keeps the UN afloat. Cost-cutting reforms continue while a coalition of reform-oriented small and medium-sized member states pushes for a selective reform of multilateral governance. The result is a somewhat smaller UN system that, while not fundamentally transformed, is better equipped to navigate geopolitical tensions.

A little more than a year into the Trump 2.0 era, the “post–Cold War” international order as we know it is coming to an end. Amid increasing volatility and conflict, the shape and character of the order that will replace it are dangerously unclear. There are ambitions by so-called middle powers – including some member states of the EU – to provide an effective response, but questions remain as to their potential impact. Three scenarios can be envisaged: (1) an Orwellian dystopia dominated by three global powers – the United States, China and Russia – each with its own sphere of influence; (2) a “new Cold War” between two rival capitalist models: “Western” liberal democracy versus “Eastern” oligarchy and (3) the survival of the rules-based international order, possibly as a counterweight to oligarchic spheres of influence. For this scenario to materialise, middle powers must address the liberal order’s inherent weaknesses so that it delivers for all of its members. This discussion paper brings together 14 contributions drawing on the German Institute of Development and Sustainability’s (IDOS) broad regional and thematic expertise to examine these questions. The contributions analyse key actors, cooperation themes and regions. Each contribution analyses the implications of the changing global order for its specific area of focus and explores how international cooperation in general – and development cooperation in particular – can contribute to a more just and sustainable international system. The paper aims to provide readers with a range of perspectives on the state of international development cooperation and its possible evolution. Taken together, the contributions provide insights into the roles that international development cooperation may play in an emerging global order and identify priorities for reforms.

Standfirst para:

Egypt’s manufacturing sector faces a dual challenge of weak job creation and persistent informality. Drawing on survey evidence on business behaviour and labour market dynamics, this column explains why job creation is limited and informal work remains such an integral part of how firms organise production. The generation of more formal jobs requires a comprehensive policy approach, one that goes beyond enforcement of labour regulations to reshape the economic environment in which firms and workers make decisions.

In a nutshell

Informality in the labour market reflects incentives on both sides: firms benefit from lower costs and flexibility, while workers may prefer higher take-home pay or they may perceive limited benefits from formal employment.

Policies to create formal jobs that are focused solely on enforcement may backfire by raising hiring costs; effective reform requires reducing the cost of formality -including through simpler tax procedures and more proportionate labour costs - while increasing its benefits.

Addressing informality requires targeting informal employment within formal firms, aligning labour market and industrial policies, and adapting social protection and contribution systems to non-standard work arrangements.

Escalatory attacks on multilateral rules and institutions in this era of raw power politics have plunged international politics into uncharted territory. Traditional alliances have been fractured and new partnerships between unlikely bedfellows are emerging. No longer in transition, the post-World War II world order is in rupture. This paper examines international cooperation under these conditions and argues that a new ‘flexi-lateralism’ is taking shape as a pragmatic response to changing times. We define the new flexi-lateralism as international cooperation expressed through adaptable modular tools and selective coalitions, anchored in UN norms, that proceeds even when universal commitments are openly contested and attacked. Our paper considers a set of initiatives launched around the Financing for Development (FfD) conference in Sevilla (July 2025) on the issue of debt servicing. We illustrate how cooperation often depends on selective participation, informal venues and issue-specific coalitions, rather than comprehensive universal bargains. The paper uses ‘flexi-lateralism’ as a term for these flexible multilateral forms that sit between classic UN-style universality and narrow great-power deals. We conclude that international cooperation in this era is neither automatically collapsing nor simply fragmenting. It is adapting and reconfigured through overlapping clubs and coalitions with uneven implications for the Global South and the North.

The OECD conference “will focus on action, connecting geopolitical realities with development priorities and translating vision into practical strategic directions.” So how does the flexi-lateralism framework help? We argue that cooperation is reconfiguring into selective coalitions using discrete modular instruments, orchestrated through intermediaries, connected to universal norms but no longer dependent on universal participation. Whether this configuration can maintain legitimacy while delivering speed and adaptation is an open question. Delegates in Paris could look at the design principles we set out that distinguish workable flexi-lateral arrangements from fragmentation, namely, transparency, open accession pathways, and normative alignment with agreed development goals. These are the features that differentiate new forms of cooperation.

Looking back, the return of Donald Trump to the White House, and, in the early phase, the role played by Elon Musk in reshaping the U.S. foreign aid approach has, to a large extent, foreshadowed what the second Trump administration would become. This profile consists of: (i) crude transactionalism, (ii) a strong ideological foundation (with significant elements of authoritarian libertarianism), (iii) a high degree of chaos with decisions not necessarily based on strategic or even tactical considerations, and (iv) an obsession with disruption. The wide range of current initiatives, coalitions, commissions, and conferences that are discussing development cooperation, as well as efforts to reflect on narratives, international aid governance, and resource mobilisation, are thus operating in a highly hostile environment shaped by the U.S. administration assault on long standing policy norms. European leaders could speak out more clearly about what can be seen as an open challenge those norms. They could also advance a more proactive narrative and, importantly, refuse to de facto repurpose development institutions and decide not to follow the fundamental ODA reductions by the United States.

A little more than a year into the Trump 2.0 era, it has become apparent that the “post–Cold War” international order is in its death throes. For three decades, global affairs have been shaped by a system dominated by the United States as the world’s only genuinely global power. American power was embedded in a “rules-based” international order founded on respect for national sovereignty and territorial integrity, alongside liberal-democratic norms such as “free” global economic exchange and institutionalised governance. Led by the United States and its Western allies, this order was considered by some in the early 1990s to be the “end of history”, a supposedly final stage in human ideological, political and economic evolution (Fukuyama, 1989). While the order was never without its practical and moral failings, and although many countries did not benefit from its protection, it was widely considered an improvement over past systems for organising international interdependence. Today, however, the liberal inter­nationalist project faces a profound crisis and is being challenged by geopolitical competition and a hollowing out from within (Ikenberry, 2024).

Caught between weak employment opportunities and widespread informal employment, Egypt’s manufacturing sector faces a dual challenge. Existing incentives in the labour market encourage both firms and workers to engage in informal employment arrangements. Firms benefit from lower labour costs and greater flexibility, while workers often seek higher take-home pay, driven by limited confidence in the benefits associated with formal employment. Many workers perceive tax and social insurance deductions as offering few tangible benefits or effective safety nets that would compensate for the reduction in current income. At the same time, policies aimed at promoting formal job creation that rely exclusively on stricter enforcement may backfire by increasing hiring costs, thereby creating an additional obstacle for job creation as well as for policymakers. 

Caught between weak employment opportunities and widespread informal employment, Egypt’s manufacturing sector faces a dual challenge. Existing incentives in the labour market encourage both firms and workers to engage in informal employment arrangements. Firms benefit from lower labour costs and greater flexibility, while workers often seek higher take-home pay, driven by limited confidence in the benefits associated with formal employment. Many workers perceive tax and social insurance deductions as offering few tangible benefits or effective safety nets that would compensate for the reduction in current income. At the same time, policies aimed at promoting formal job creation that rely exclusively on stricter enforcement may backfire by increasing hiring costs, thereby creating an additional obstacle for job creation as well as for policymakers. 

The changing global order is reshaping the domestic politics of foreign aid. As many OECD governments shift their focus towards defence spending and narrower national interests, contributions to global public goods and development are declining. Development budgets, in particular, are traditionally among the first casualties of public spending cuts. Germany is no exception. Its core development budget has fallen from €12.4 billion in 2021 to €9.9 billion in 2026 – a decline of around 20 per cent. This decrease is driven by overall pressure on public spending and a decisive shift towards defence. A recent study projects a contested but illustrative estimate, suggesting that aid cuts could lead to an additional 9.4 million deaths by 2030 (da Silva et al., 2026). In January 2026, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) presented a reform strategy that directly addresses these pressures. The strategy advocates a shift towards a more targeted approach, shaped in part by these budget cuts. However, it also addresses long-standing reform needs that predate them. Three aspects are particularly noteworthy: a clear focus on least developed countries (LDCs), where aid can have relatively high impact; explicit thematic prioritisation that recognises over-fragmentation as a key problem; and a stronger commitment to evidence and results, anchored in the statement that “effectiveness and evidence are central principles for steering German development cooperation” (BMZ, 2026). Possible concrete steps towards achieving these goals can be found in a joint CGD–IDOS policy paper on prioritisation (Hughes, Janus, Mitchell, & Röthel, 2025). However, questions remain about the strategy, most notably the apparent tensions between the focus on LDCs and ambitions to promote German business interests, the vague implementation plans and the fundamental question of political viability: Can these reforms generate meaningful change within the German development cooperation system and its wider political authorising environment?