Rethinking Development: Back to the Future?

“We depend on others for our security forces, depend on donors for our health and education systems, and supply the world’s critical minerals but capture almost none of their value.” This was the stark diagnosis made by Ghana’s President John Mahama at the 2026 World Economic Forum, just months after calling for “a re-engineering of the very logic of development itself”.

President Mahama’s remarks perpetuate a long-standing debate. Since development succeeded colonialism as the dominant paradigm for North-South relations, the very concepts of development and the aid system have been contested. Critics from the neoliberal, populist, and neo-Marxist traditions have each challenged its legitimacy, effectiveness, and underlying assumptions.

Development refers to a profound social transformation process. It has been conceived in multiple ways, from early modernisation theories to more recent rights-based and human security approaches. Since 2000, UN Member States have agreed on shared objectives under the Millennium — and subsequently Sustainable — Development Goals (SDGs). Despite recurring critique and repeated initiatives to “rethink” and “reset” development, the Western-led aid system has proven remarkably resilient. Will this be different today in the face of an abrupt contraction of the global aid market?

A sector at the crossroads

Amid rising geopolitical tensions, donors are drastically reducing foreign aid while prioritising defence. In 2025, the United States dismantled its aid agency and distributed less than half the funds it had provided in 2024. Japan and several major European donors are also scaling back official development assistance (ODA).

Favouring defence over development is nothing new. Favouring defence over development is nothing new. In recent years, the US has spent around 3% of its GDP on defence compared with roughly 0.2% on ODA. In the European Union, these figures have been around 2% and 0.5% respectively, with only a handful of Northern European countries meeting the longstanding UN target of allocating 0.7% of gross national income to ODA. Private philanthropy remains relatively marginal but is on the rise. The Gates Foundation — the largest donor in this category — plans to spend down around USD 9 billion annually before winding down by 2045. Other billionaires are encouraged to follow suit.

In budgetary terms, further reducing ODA won’t pay for greater defence spending but puts the aid system under huge strain: how can it address contemporary development and humanitarian challenges with less? Think of the 1.2 billion jobs that need to be created over the next decade to absorb new labour-market entrants in low-income countries. Think of the existential threats resulting from climate change and nature loss. Think of the plight of the millions of people affected by multiplying armed conflicts.

Amid this funding crunch, some push for radical change while others seize this opportunity to reassert their own vision and priorities. There is widespread Schadenfreude among critics for whom putting the aid sector on a diet is long overdue. Yet the immediate impact of drastic cuts means vulnerable people losing access to vital assistance overnight.

Old wine in new bottles?

As aid allocation is once again driven by donors’ narrow foreign policy interests, we are witnessing the return of tied aid and the use of ODA to buy political allegiance and stricter migration controlsAs aid allocation is once again driven by donors’ narrow foreign policy interests, we are witnessing the return of tied aid and the use of ODA to buy political allegiance and stricter migration controls.  . Such priorities tend to undermine rather than support development objectives, which in turn reduces aid effectiveness in achieving the SDGs. Another concern is the growing risk of developing countries slipping back into unsustainable debt dynamics — an all-too-familiar pattern.

Development dynamics are ever more shaped by intensifying geoeconomic competition over critical minerals to sustain the digital and energy transitions. The EU has launched the Global Gateway strategy, partly intended to counter China’s Belt and Road Initiative. Meanwhile, the US has supported major infrastructure investments such as the Lobito Corridor, linking mining areas in Zambia and the Democratic Republic of Congo to the Atlantic. Will such initiatives ultimately benefit producer countries and local communities, or result in yet another “resource curse”? This greatly depends on whether solid policy safeguards are put in place early on.

It took decades of hard-won lessons to devise aid effectiveness principles, such as banning tied aid, and favouring partner country ownership, donor alignment, and coordination. Even if these principles were never faithfully implemented, they provided a widely accepted framework toward more effective aid, which now risks being sidelined entirely.

The promise of technology, private capital, and philanthropy

Foreign direct investment and remittances have dwarfed ODA in terms of resource flows into developing countries since the 1990s. Nowadays, ODA covers just a few percent of the resources required to pay for the SDGs. Global leaders gathered at the 4th International Conference on Financing for Development in 2025 reaffirmed the critical role of domestic taxes, private investment, and technological transfers for development. Notwithstanding calls to channel more private capital into fragile and conflict-affected contexts, success remains limited to a few ventures associated with microfinance, public-private partnerships, and blended finance.

Technological innovation is seen as an opportunity to “leapfrog development”. The home-grown mobile payment system M-Pesa in East Africa, for example, dramatically expanded financial inclusion in Kenya and Tanzania. All eyes now turn to artificial intelligence, with developing countries wary of being left behind. Rwanda recently partnered with Anthropic to deploy Claude AI across its public sector, aiming to build skills and strengthen the country’s knowledge economy. AI also holds the promise of enhancing health outcomes, improving agricultural productivity, and allowing countries to move up the value-added ladder. Yet the overall impact of AI on employment remains uncertain, a huge concern in particular in poorer countries with a large “youth bulge”.

To conclude

Rising geopolitical tensions are diverting resources and political attention away from pressing development and ecological priorities. Sidelining them to focus on short-term security concerns will only undermine peace and stability in the long run.

To address such dilemmas, policy coherence for sustainable development (PCSD) offers a powerful analytical framework for aligning relevant policy domains to reduce poverty and inequality while protecting global public goods. A case in point is reforming global taxation so that lower-income countries can mobilise domestic resources for development as ODA declines. Participatory processes at local, regional, and global levels remain crucial to ensure the ownership and legitimacy needed for sustainable outcomes.