Innovative Financing for Development: A New Model for Development Finance?

This Discussion Paper explores recent experiences with innovative sources of development finance in order to capture lessons learned for the more effective implementation of both current and future initiatives.The paper first looks at what is understood by the term ‘innovative financing for development’ since the term encompasses a heterogeneous mix of innovations both in fund-raising and in spending on the ground. It then summarizes some of the major schemes implemented so far and outline how they work. The paper also reviews a number of proposals currently on the table for future innovative development finance schemes and examines the political dynamics associated with each.The paper aims to provide some insights into the pros and cons of different approaches and, as such, make a useful contribution to international policy discussions over the design and implementation modalities of both current and future innovative sources of development finance.