Financing for Sustainable Structural Transformation

Abstract

Official development assistance (ODA) and domestic expenditures of developing countries on food and agriculture are often too small, relative to needs or for stimulating private investment. ODA and expenditures are suboptimally allocated mostly to subsidies, with little to public goods, such as agricultural education, research, and extension. Learning and evaluation of impacts need to improve and expand to meet complex challenges facing farmers. The multisectoral nature of agriculture means that agricultural financing must consist of multiple components, with resources that are public, private (household), and private (external to household), coming from six categories: public—domestic and international; private—domestic and international; and household—savings and remittances. Information on “traditional” ODA for agriculture is more available than for “nontraditional” ODA: for example, from emerging countries, including China’s growing involvement in Southern countries, private investments in value chains, land purchases, and private philanthropy. Aside from the Bill and Melinda Gates Foundation (BMGF), few philanthropists report aid to the Organisation for Economic Co-operation and Development–Development Assistance Committee (OECD–DAC). BMGF’s Aid Transparency Index (ATI) rating improved only from “very poor” (18.1 percent) in 2013 to “fair” (47.3 percent) in 2018. The 2020 ATI reported significant improvement in aid donors’ overall transparency, but less in impact of aid projects. New themes, including nutrition and the environment, pose challenges to estimating sources of resource flows in support of adaptation of agriculture. We show that, even though available aid has increased since 2020, resources are very small relative to needs and the extent of advocacy.

Estimating the intrahousehold costs and benefits of innovations to enhance smallholder farmers’ resilience

“…Nearly three-fourths of the 2.1 billion people living in extreme poverty depend on agriculture as their main source of livelihood (Lele and Goswami, 2021). Increasing frequency of extreme weather events such as droughts, floods, heat waves, and tropical storms due to climate change however poses multiple threats to agriculture.…”