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Innovative Finance for Development? Vaccine Bonds and the Hidden Costs of Financialization

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  • Sarah Hughes-McLure
  • Emma Mawdsley

Abstract

Innovative finance is now considered essential to mobilize the trillions projected as required to meet the sustainable development goals. The International Finance Facility for Immunisation (IFFIm), which issues vaccine bonds, is an emblematic example of innovative finance in global health and development. Since its launch in 2006, IFFIm has played a leading role in developing social bonds and funding global health, securing over $8 billion in donor commitments, and disbursing over $3 billion to date to Gavi, the Vaccine Alliance. Adopting a follow the money approach, we set out a significant, evidence-based challenge to some of the dominant development claims around innovative development finance more widely and IFFIm in particular. We find evidence of nontrivial private profit making, hiding in plain sight, at the expense of beneficiaries and donors. Through advanced critical financial analysis, we reveal precisely who benefits and by how much. Furthermore, our analysis shows in detail how financialization reduces political control over aid, and the uneven spatial distribution of material rewards and political power. While IFFIm delivers on its claim to front-load aid commitments and makes a significant contribution to global health, the article asks whether the economic and political costs of innovative financing mechanisms are worth it. We finish by showing that alternative models for vaccine finance are possible. A postscript provides a brief account of how IFFIm has responded to the COVID-19 pandemic.

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  • Sarah Hughes-McLure & Emma Mawdsley, 2022. "Innovative Finance for Development? Vaccine Bonds and the Hidden Costs of Financialization," Economic Geography, Taylor & Francis Journals, vol. 98(2), pages 145-169, March.
    • Handle: RePEc:taf:recgxx:v:98:y:2022:i:2:p:145-169
    DOI: 10.1080/00130095.2021.2020090
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    Cited by:

    1. Zhenfa Li & Fulong Wu & Fangzhu Zhang, 2023. "Adaptable state-controlled market actors: Underwriters and investors in the market of local government bonds in China," Environment and Planning A, , vol. 55(8), pages 2088-2107, November.
    2. Brendan Whitty & Jessica Sklair & Paul Robert Gilbert & Emma Mawdsley & Jo‐Anna Russon & Olivia Taylor, 2023. "Outsourcing the Business of Development: The Rise of For‐profit Consultancies in the UK Aid Sector," Development and Change, International Institute of Social Studies, vol. 54(4), pages 892-917, July.

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