PDF Download DOI: https://doi.org/10.64503/978-93-49061-58-3 
Over the last two decades, the international development landscape has undergone massive transformations. Multiple conflicts across the globe, accompanied by economic fragmentation, have positioned development at a crucial juncture. Moreover, the world is now on track to miss the Sustainable Development Goals (SDGs) before the 2030 deadline[1]. Several challenges hinder the journey toward resilience and prosperity—a common goal shared by the Global North and South. Traditional aid offered by the Development Assistance Committee (DAC) members of the Organisation for Economic Cooperation and Development (OECD) was pegged at US$210 billion in 2024, marking a drop of 6 percent after nearly five years of growth, yet remaining well above the 2019 level (see Figure 1)[2].
Figure 1: ODA Flows, 1960-2024
Source: OECD, 2026[3].
Financing for sustainable development is an evident obstacle, particularly for developing economies. Current investment flows to meet sustainability targets are abysmally low[4]. For instance, between 2015 and 2022, the development financing needs of developing countries surged by about 36 percent[5]. Further, the annual average SDG financing gap is projected to increase from US$5.24 trillion in 2022 to US$6.4 trillion by 2030 (see Figure 2)[6].
Figure 2: Gaps in SDG Financing
Source: Global Outlook on Financing for Sustainable Development, 2025, OECD[7].
Multilateral institutions, particularly legacy multilateral development banks (MDBs) such as the International Monetary Fund and the International Bank for Reconstruction and Development, later known as the World Bank, are in urgent need of reform, as they fail to realistically reflect the needs of the Global South, among other issues[8].
Additionally, while official development assistance (ODA) is a vital source of development finance (see Figure 3), there is an urgent need to refocus remittance flows, align global investments with targeted development projects, and reduce administrative barriers. The dismantling of the US Agency for International Development (USAID) marks a precarious moment for the international development landscape, reversing years of progress in critical sectors such as health, education, and food and nutrition. These aid cuts will likely have long-lasting impacts, particularly fragmenting the multilateral development architecture.
Figure 3: ODA Contributions by DAC members in 2024
Source: OECD, 2026[9].
Further, the retreat of European donors such as Germany, France, and the UK casts a shadow on who will be the ‘prime mover’ to fill the void left by USAID[10]. This reflects a need to diversify development finance beyond ODA. This can only happen if new actors and new forms of alliances—such as collaborations with philanthropic organisations, civil society, private sector, non-governmental organisations, and private individual or family trusts—are established. This can also provide impetus for South-South Cooperation, fostering the breaking of hierarchies, the reduction of asymmetric power relations, and equal access to resources through engagement with a wide spectrum of actors.
Given that development finance is an urgent priority, devising innovative yet purposeful financing mechanisms, responsive institutions, and cooperative frameworks must be the focus to unlock high-quality SDG finance for underfunded sectors, such as climate, energy, and health. To be sure, examining the quantum of finance is as critical as upholding the quality of finance to ensure ‘just finance’[11]. Indeed, developing countries in need of finance should be able to obtain not only adequate amounts of finance but also the right quality—in essence, financing that supports sustainability[12].
Additionally, there is a clear recognition that climate stressors constitute a primary hazard threatening the fundamental existence of the Global South. For instance, several least developed countries, small island developing states (SIDS), and low-income countries experience severe and disproportionate climate shocks, resulting in the loss of lives and property. One study assessing climate change impacts and adaptation initiatives in six SIDS (the Comoros, Maldives, Mauritius, Fiji, the Marshall Islands, and Barbados) found that, in a scenario of no climate action, loss and damage (L&D) totalled over US$25 billion, and GDP lost US$117 billion cumulatively by 2050. As a result, “climate impact would result in a loss of 1.7 to 6.5 years’ worth of GDP across the six SIDS, depending on their vulnerability to extreme weather events” (see Figure 4)[13]. Still, while the interlinkages between the economy and the environment have been extensively discussed, there remains ambiguity regarding issues such as temperature pattern variability, technological advancements, and country contexts, further magnifying the problem[14].
Figure 4: Percentage of GDP Foregone in 2025 in SIDS Due to Climate Shocks in a Business-as-Usual vs Adaptation Scenario
Source: Global Centre on Adaptation[15].
The absence of the essential wherewithal—namely, access to critical resources and climate resilience—heightens the risks for these countries. Here, climate finance is a key obstacle crippling their fiscal capacities to address policy reforms and economic stability[16]. However, piloting innovative solutions for risk apportionment and for the management and analysis of climate action is critical, especially from the perspective of developing economies.
In this sense, the Global South’s collective bargaining power is pertinent, although it remains to be seen whether it is a success or a failure[17]. The Global North has adopted a united stance in terms of shaping markets, setting regulations and standards, and dominating global value chains. On the other hand, developing economies end up competing rather than collaborating in the larger race to procure goods, build supply chains, and access markets. Building collaborative ecosystems thus becomes essential to ensuring healthy, successful competition in a fragmented economic milieu[18].
This volume explores the experiences of different stakeholders, including philanthropy, the private sector, academia, and think tanks, to present potential avenues and mechanisms to garner appropriate development finance for developing countries. With a focus on North–South and South-South partnerships across the broader Indo-Pacific, this compendium offers policy recommendations for integrating quality finance into the thematic areas of climate, energy, and health.
In their essay, Madhav Joshi, Saurabh Mamtani, Aditi Deshpande, and Samrudhi Khanna focus on philanthropic capital as a transformative tool for sustainable development finance. With case studies centred around SDG-3 (good health and well-being) and SDG-13 (climate change mitigation and adaptation), the essay spotlights Indian philanthropies playing a catalytic role in building a robust climate ecosystem.
Next, Swati Prabhu assesses how development cooperation or partnerships have now expanded beyond the parameters of ODA to include a host of other actors, such as philanthropic collaboratives, the private sector, non-DAC donors, civil society, and local agencies. She proposes an ODA-plus model grounded in the pillars of ‘just financing’ and ‘equal partnerships’ in a post-aid world.
Nitya Mohan Khemka examines the lacunae in the current financial architecture that are proving detrimental to the larger goal of SDG financing. She offers policy recommendations for reforming MDBs, such as leveraging climate finance for adaptation and structural overhauls to impact cooperation and collaboration between the Global North and Global South.
Next, Aparna Roy delves into the importance of ensuring climate justice for all countries by exploring the contours of adaptation finance through a global lens, with India as an anchor point. The essay evaluates the state of adaptation finance, its inherent links to the SDGs, the evolving dynamics of North–South and South-South Cooperation, and the role India can play in shaping a more equitable and effective financial architecture.
In their essay, Nilanjan Ghosh and Swati Prabhu explore the evolution and increasing significance of the L&D Fund as an operating instrument for advancing the principles of better governance, climate equity, and sustainable financing. Further, their essay analyses how the Fund could facilitate equal partnerships between the Global North and the South.
In the subsequent essay, Oommen Kurien examines the health financing landscape in the Indo-Pacific, highlighting the region's fiscal realities, which straddle fragile protection and uneven coverage. The essay recommends creating a financing pathway for health through co-financed, multi-year health system platforms that start locally and expand outward.
Malshini Senaratne explores the intersection between blue economy financing and the implementation of SDGs in the Seychelles and other SIDS. Her essay also identifies challenges in the Seychelles’ blue economy and presents recommendations to improve the global financial architecture in delivering blue finance for sustainable development in SIDS.
In the next essay, Ana Garcia, Pedro Silva, and Daniel Lannes argue that expanding the volume of climate finance is possible since there is no scarcity of capital in the global economy. Instead, they highlight the failure of the international financial and economic architecture to meet the needs of climate finance and propose reforms across multiple fronts.
Shruti Jain reiterates the urgent need to reform the MDBs to accelerate the achievement of the SDGs and climate goals while delivering an inclusive governance system. She presents options for capital adequacy reforms, such as the deployment of new capital, specifically hybrid instruments, and rechannelling special drawing rights to provide developing nations a more inclusive voice.
Next, Labanya Prakash Jena and Prasad Ashok Thakur address the concerns of just transition and transition finance for the Global South. They recommend structural and fundamental changes in financial policy, regulatory approaches, and capital allocation strategies, as well as global cooperation to ensure a just transition.
In the final essay, Shraman Jha spotlights the role of the private sector to unlock quality development finance for the SDGs. He also highlights the importance of private players leveraging capital for global good by aligning with the public sector and improving regulatory clarity and consistency for long-term benefits.
[1] United Nations Department of Economic and Social Affairs, “With Less than One Fifth of Targets on Track, World Is Failing to Deliver on Promise of the Sustainable Development Goals, Warns New UN Report,” June 28, 2024, https://www.un.org/en/with-less-than-one-fifth-of-targets-on-track.
[2] OECD, “Final OECD Statistics on Official Development Assistance (ODA) and Other Resource Flows to Developing Countries in 2024,” Data Explainer, December 18, 2025, https://www.oecd.org/en/data/insights/data-explainers/2025/12/final-oecd-statistics-on-oda-and-other-development-finance-flows-in-2024-key-figures-and-trends.html.
[3] OECD, “Final OECD Statistics on Official Development Assistance (ODA) and Other Resource Flows to Developing Countries in 2024.”
[4] UNCTAD, “Global Foreign Direct Investment Falls for the Second Consecutive Year, Posing Acute Challenges to Developing Countries,” June 19, 2025, https://unctad.org/news/global-foreign-direct-investment-falls-second-consecutive-year-posing-acute-challenges.
[5] OECD, Global Outlook on Financing for Sustainable Development 2025: Towards a More Resilient and Inclusive Architecture (February 7, 2025), https://www.oecd.org/en/publications/2025/02/global-outlook-on-financing-for-sustainable-development-2025_6748f647.html.
[6] OECD, “Development Finance Needs Major Overhaul to Achieve Global Goals,” February 7, 2025, https://www.oecd.org/en/about/news/press-releases/2025/02/development-finance-needs-major-overhaul-to-achieve-global-goals.html.
[7] OECD, Global Outlook on Financing for Sustainable Development 2025.
[8] Mark Miller et al., “Bigger, but Also Better: Why MDB Reform Must Go Further,” ODI Global, Expert Comment, April 6, 2023, https://odi.org/en/insights/bigger-but-also-better-why-mdb-reform-must-go-further/.
[9] OECD, “Final OECD Statistics on Official Development Assistance (ODA) and Other Resource Flows to Developing Countries in 2024.”
[10] Simon Fraser, “Cut to USAID—the Fallout Continues (Part 1),” Global Policy, May 21, 2025, https://www.globalpolicyjournal.com/blog/21/05/2025/cuts-usaid-fallout-continues-part-1.
[11] World Economic Forum, “Amid Fragmentation, Leaders Advance Innovative Public-Private Partnerships to Accelerate SDGs,” September 21, 2023, https://www.weforum.org/press/2023/09/amid-fragmentation-leaders-advance-innovative-public-private-partnerships-to-accelerate-sdgs/.
[12] World Economic Forum, “Amid Fragmentation, Leaders Advance Innovative Public-Private Partnerships to Accelerate SDGs.”
[13] Chandrahas Choudhury et al., “From Vulnerability to Value: The Economic Payoff of Adaptation in Small Island States,” Global Centre on Adaptation, November 5, 2025, https://gca.org/from-vulnerability-to-value-the-economic-payoff-of-adaptation-in-small-island-states/.
[14] Philip Kofi Adom, “The Socioeconomic Impact of Climate Change in Developing Countries over the Next Decades: A Literature Survey,” Working Paper, Centre for Global Development, February 20, 2024, https://www.cgdev.org/publication/socioeconomic-impact-climate-change-developing-countries-next-decades.
[15] Choudhury et al., “From Vulnerability to Value: The Economic Payoff of Adaptation in Small Island States.”
[16] Liam Maguire, “Unlocking Climate Finance for Least Developed Countries: Innovations and Opportunities,” Climate Policy Initiative, June 24, 2025, https://www.climatepolicyinitiative.org/unlocking-climate-finance-for-least-developed-countries-innovations-and-opportunities/.
[17] Eric Hogan and Stewart Patrick, “A Closer Look at the Global South,” Carnegie Russia Eurasia Center, May 20, 2024, https://carnegieendowment.org/russia-eurasia/research/2024/05/global-south-colonialism-imperialism.
[18] Janet Truncale, “To Go Fast and Far, Go Together: Why Leaders Are Collaborating to Compete,” World Economic Forum, December 17, 2025, https://www.weforum.org/stories/2025/12/go-fast-and-far-go-together-why-leaders-collaborating-to-compete/.
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Dr Nilanjan Ghosh heads Development Studies at the Observer Research Foundation (ORF) and serves as the operational and executive head of ORF’s Kolkata Centre. He ...
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Dr Swati Prabhu is a Fellow with the Centre for New Economic Diplomacy at Observer Research Foundation. Her research explores the idea of aid, role of ...
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