Crisis or Catalyst? Asia and the Future of Development Cooperation  

Nicola Nixon, Anthea Mulakala, Mandakini Surie 

As the Fourth International Conference on Financing for Development (FfD4) in Seville kicks off this week, critical questions are being asked about the future of development cooperation. Not only do traditional aid models—funded predominantly through official development assistance (ODA)—face disruption from budget cuts, but the post-World War II aid architecture itself faces a trust and legitimacy crisis.  

But what does this moment signify for Asia? Is this merely a crisis to manage, or could it serve as a catalyst to reimagine a new development cooperation paradigm that is more inclusive, resilient, and effective? 

A recent webinar convened by The Asia Foundation brought together leading voices from Asia to debate this question. The discussion illuminated the contours of this changing landscape in which traditional aid is declining, but new actors, innovations, and agendas are rising, particularly from within Asia. As FfD4 unfolds, these insights offer an important message: development cooperation must be reimagined together with Asia. 

As Anthea Mulakala, senior director for International Development Cooperation at The Asia Foundation, noted in her opening remarks, the traditional ODA system is not just shrinking, it is being redefined. The overall size of the global economy—now standing at more than USD 1 trillion—renders ODA’s USD 200 billion per year a drop in the ocean. Echoing this, panelist Swarnim Wagle, Nepalese parliamentarian and economist, said that while ODA once played a pivotal role in developing economies and fragile states—particularly countries with low foreign reserves and weak institutions—its relative importance has diminished. Domestic public finance, foreign direct investment, and remittances now dwarf ODA.  

However, Wagle also said that in many instances, an overall reliance on aid had weakened the social contract between governments and their citizens, with political elites responding to donors’ priorities rather than domestic constituencies. He emphasised the need to reorient existing ODA toward catalytic investments in critical areas, including last-mile service delivery in areas such as nutrition or education, particularly for the most vulnerable. 

As traditional donors retreat, Asia’s economic rise positions it as a new engine for development cooperation. In the last decade, several Asian countries, including India, China, Indonesia, and Thailand, have joined South Korea and Japan as key players in international development cooperation. Panelist Poppy Winanti, professor of international relations at the Universitas Gadjah Mada, said that this new cohort of so-called “emerging donors” promotes distinct principles—often grounded in the ideas of South-South cooperation, decolonization, solidarity, pragmatism, and non-interference. These approaches offer an alternative to the traditional donor-recipient dynamic and policy conditionality that has tended to characterize aid from the Global North.   

Yet emerging donors must build legitimacy at home while managing limited resources and navigating complex domestic politics. Indonesia—like many Western nations at this moment—has faced public debate over the rationale for serving as a donor while still grappling with its own development needs. Still, this regional shift opens the door to more contextually grounded cooperation.  

As Winanti noted, Asia’s role in the future of development cooperation is absolutely central, not only because of its economic and strategic importance but because of its capacity to act as a bridge between the Global North and South. As Mulakala put it, Asia is not just reacting to global shifts, it is recalibrating—offering alternative visions shaped by regional experience, values, and capacities.  

From many Asian perspectives, development cooperation is not viewed as a trade-off but as a win-win—one that often aligns with national interests and enjoys broad public support. That’s why domestic criticism of South-South cooperation efforts by countries like India or China is rare. In contrast, Asia’s Development Assistance Committee donors—South Korea, Japan, and Indonesia, for example—often find themselves navigating tensions between Asian policy norms and Western aid paradigms.  

One of the most striking opportunities for learning from the region lies in efforts to mobilize Asia’s vast private wealth. Patsian Low, chief of markets and deputy CEO of AVPN, noted that if philanthropic giving in Asia were to match the U.S. standard of 2 percent of GDP, it could generate up to USD 700 billion annually—nearly half the region’s Sustainable Development Goals financing gap. Low’s view is well-informed by her experience with the AVPN network, whose members represent USD 500 billion in impact-oriented capital. 

Unlocking the potential of that capital is complicated, however. Mobilizing private capital for development means aligning impact with return and ensuring financial models are viable while addressing long-term social needs. Low called for new norms and relational models that reflect Asian values—emphasizing trust, community ties, and context-specific innovation rather than replicating Western philanthropic models. 

Despite the promise of new sources of finance, realism is essential. As Roland Rajah, lead economist and director of the Lowy Institute’s Indo-Pacific Development Centre, cautioned, blended finance and private capital mobilization have thus far under-delivered in hard-to-reach sectors like health, education, and climate adaptation. These areas still require grants, concessional finance, and public investment. 

Rajah also noted that even in non-aid-dependent countries like Indonesia or Vietnam, official development finance still accounts for 10 to 15 percent of spending in key sectors. “Not that big relative to GDP, but very important for development,” he stressed. And while the quality of aid could theoretically improve as quantity declines, he said that in practice, both tend to fall together, particularly when donors dismantle independent agencies and reduce expertise. 

What, then, should replace the old aid paradigm? Several speakers argued for a reconceptualization more clearly into distinct pillars: catalytic support for poverty and service delivery, provisioning of regional and global public goods, and crisis/humanitarian response. Wagle proposed an Asian-led framework for global public goods on issues like climate, pandemic preparedness, and digital governance. He pointed to historical precedents such as the Chiang Mai Initiative after the 1997 financial crisis, which created a regional economic safety net to reduce future reliance on the IMF and marked a turning point in Asia’s regional financial cooperation with a regionally owned mechanism.  

With the FfD4 conference this week, it is clear that the future of development cooperation will need to reflect an increasingly multipolar world and therefore must rethink existing models of aid and development cooperation. The region is crucial for tackling climate change, future pandemics, and global supply chain resilience. It is home to the world’s economic growth engines and has the geostrategic leverage to act as a bridge between the global North and South. Countries like China, Thailand, India, Indonesia, and others have the legitimacy to help shape global development norms and cooperation mechanisms. 

Asia should therefore be recognized not merely as a recipient but as a co-architect in this process of redefining the future of development cooperation, offering policy and thought leadership, financial resources, and institutional innovation. That will require:  

• Redefining development finance: moving beyond traditional ODA models to mobilize private, domestic, and philanthropic resources for impact. 

• Investing in regional and global public goods: especially in climate resilience and health. 

• Rebuilding governance and accountability: ensuring that new actors operate transparently and in alignment with local priorities. 

• Empowering Southern voices and frameworks: including through triangular and South-South cooperation models that reflect shared experiences rather than external prescriptions. 

The current disruption of the international aid and development architecture is more than just a crisis; it serves as a catalyst for rethinking outdated paradigms and traditional North-South donor models. It is an opportunity to engage with emerging approaches and frameworks from Asia and other regions and foster partnerships based on trust and sensitive to local contexts and priorities. The challenge now is to transform disruption into constructive design and turn crisis into cooperation.