The role of development finance institutions (DFIs) in addressing global challenges

The world is increasingly facing global challenges such as climate change, financial crises, food and oil price swings, security threats, etc. They increasingly affect the prospects of developing countries, yet the current thinking on development assistance is often rooted in national development plans. Research is needed to understand how aid and non-aid measures can help to address global challenges which are increasingly affecting developing countries.

The research will cover the following conceptual and empirical areas:

• review the nature of global challenges and pathways through which they affect development;
• sketch out the roles for public and private sector DFIs in overcoming these global challenges (what market failures do they address, what blend of instruments can they use in which situations);
• map out pathways for how DFIs can address global challenges, resulting in a broad metrics for analysing the effectiveness of the DFIs in overcoming global challenges (e.g. effect on growth, investment for dealing with the crisis; effect on energy efficiency for climate change; promoting employment in conflict affected areas).
• review evaluation studies on DFIs; 
• examine empirically the macro effects of DFIs, e.g. on growth, productivity and energy efficiency (i.e. to overcome negative growth and investment effects of financial crises, and to overcome climate change by improving energy efficiency);