Trends And Evolutions Of Innovative Financing Mechanisms As A Complement Of The Official Development Assistance

Globalization has contributed positively to an endless process of searching, exploring, assessing the ways of new sources of financing by encouraging and attracting additional international financing. The mankind faces an incredible task to tackle, which is to eradicate poverty and to respond to climate changes. The essential prerequisite of it are available capital resources. New opportunities for funding must be identified and collaboration between various actors—especially investors, entrepreneurs, and policy-makers is required. Innovative financing provides capital resources characteristic with the attributes such as stability, predictability and are supplemental to official development assistance (ODA) from donor countries. Innovative financing, from the perspective of a deployment of capital, highlights a new set of tools for capital donors that are decided to create more development impact through their investments, or for financial institutions seeking new opportunities, as well as, it highlights the procedures how innovative financing mechanisms can make development initiatives more effective and efficient by reallocating risk, improving liquidity, and matching the duration of investments with project needs. The definition of innovative financing mechanisms for development (innovative financing) comprises both visions: approaches to mobilize resources and to increase the effectiveness and efficiency of financial flows that address global social and environmental challenges. The objective of the paper is to explore the current status of innovative financing for development, new trends and evolutions and to analyze its main characteristics taking both mentioned visions into consideration. In the end the comparison of the various financial aid provided to developing countries is presented and the analysis of a financial aid impact on selected macroeconomic indicators is conducted and evaluated.