Serie de informes de políticas de financiación por el AITF

This policy brief explores the challenges of trade fragmentation and inequality in the global economy, focusing on the impact on low- and middle-income countries. It outlines policy solutions to reduce trade costs, invest in infrastructure, promote economic diversification, and strengthen global trade governance. Specific recommendations for the Fourth Conference on Financing for Development (FFD4) include financing for trade infrastructure, bridging the digital divide, improving access to finance, and reducing trade barriers to foster inclusive and sustainable development.

The global financial system faces critical challenges, particularly for developing countries, including debt crises and financing gaps. Intensified South-South and Triangular Cooperation (SSTrC) can offer innovative policy solutions. Recommendations include scaling up debt management strategies, upscaling innovative solutions, strengthening regional development banks, and creating regional infrastructure bonds to pool risks and lower borrowing costs. Expanding contingency financing mechanisms and establishing data-sharing platforms are essential for financial stability. FFD4 presents a key opportunity to advance these SSTrC-driven initiatives for sustainable development.

Remittances and diaspora investments are a major source of external private finance crucial for achieving SDGs, but their full potential remains largely untapped. Member States should acknowledge their potential and renew and expand their commitments to maximize their impact to development, ensuring access to formal, affordable, and secure remittance services through supportive regulations, improved payment systems, digital solutions, and promoting financial inclusion for both migrants and their families back home. At the same time, Member States should facilitate and support diaspora investments to homeland SMEs by creating diaspora engagement strategies and supportive environments, capacity-building for diaspora members, involve them in policy development, remove investment barriers, and provide adequate mechanisms to crowd in their investment.

This policy brief addresses the $1.5 trillion global trade finance gap, which disproportionately impacts small and medium-sized enterprises (SMEs) in developing economies. It outlines key challenges, including high rejection rates and compliance costs, and proposes targeted solutions such as expanding risk-sharing frameworks, strengthening local financial institutions, and promoting climate-friendly trade finance. The brief emphasizes the need for multilateral cooperation to close the gap, promote inclusive growth, and support the transition to a low-carbon global economy.