The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Section 1 introduces the concepts of transition and transition finance, the main thrust of this paper, with a focus on external finance in particular from the perspective of the DAC.Section 2 raises the question of what happens with financing for sustainable development when countries transition.Building on the holistic approach to FSD that has been promoted, among others, by the Addis Ababa Action Agenda and the recent Global Outlook on Financing for Sustainable Development (OECD, 2018[1]), this section develops a methodology to assess the relative weight and role of different sources of external finance as countries transition. It observes major trends (what happens with each source as the country becomes richer) and dynamics (how do different sources interact and substitute with each other) that allows for the identification of expected finance mixes at different stages of transition.
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