Development aid can take the form of direct aid from one country to another. However, aid in this form will gradually decrease in importance in the years to come. As development questions become increasingly interwoven with broader global and regional issues, the focal point of development activities will also have to shift in the same direction. That shift does not have to be made too hastily. For a number of developing countries, bilateral aid is still of vital importance and can be useful under certain conditions. However, that applies to a decreasing number of countries. If the pace of development between 2004 and 2008 continues, by 2020 classical developing countries like Bangladesh, Ethiopia, Ghana, Kenya and even Chad will be middle-income countries, at least according to current methods of measurement. The fate of these countries will then depend less on what financial support individual donors still wish to give them and more on how they respond to the opportunities they find and take for themselves in a globalizing world.

The question is how development issues can gradually be placed more and more in such a global perspective. Donors are still making heavy weather of this shift in focus, and most of them have not yet even reached the conclusion that it is necessary. This chapter describes how to achieve this change in three stages. The first is how more aid can be provided through multilateral channels, which offers greater opportunities to address development issues from a broad perspective. The second stage relates to how national and European policies in areas that do not belong to the classical development domain can devote serious attention to their impact on development-related issues. After addressing coherence for development, the third step is to examine how development issues fit within an approach based on international public goods. This also means examining the implications for global governance of the increasing need for coordination and strategic integration of policies with cross-border consequences.

MULTILATERAL AID

Addressing development issues in a way that goes beyond classical bilateral aid can first be achieved by placing aid in a multilateral context. That has a number of advantages, including less need for coordination, greater effectiveness, lower transaction costs for recipients and donors, but especially more opportunities to tackle issues from a broader perspective. We first examine the extent to which attention is devoted to the latter possibility.