The Trump Shockwave and the New Landscape of Global Development Policy
The development cooperation system is in open flux, as donor retrenchment, US policy shifts, and rising Southern alternatives drive a fundamental contest over its purpose and future shape
by Professor Andy Sumner
Debate on the development cooperation system or the institutions, policy norms, and actors through which resources for financing development move has sharpened across 2025 and into 2026. There is now open contestation over what the system is, what it is for, and who shapes it.
What will happen next?
What happened and what’s the trigger?
A proximate trigger for the current sense of crisis in the development cooperation system is the second Trump administration’s pivot on United States foreign assistance. The administration has pursued the dismantling or absorption of USAID into the State Department, with overseas posts and programmes closed. The shift is not only about money. National interests and a rate of return on spends are central.
But current flux is also not only about the US. A deeper shift sits beneath.
The post-2000 consensus on purpose and practice that the development cooperation system has thinned sharply. There is a longer arc of donor retrenchment amid rising populist sentiment. Official development assistance from OECD donors has fallen in volume and ambition. Many donor rationales increasingly stress some kind of national interest claim too, not just the US.
The result of these longer run forces and the Trump shockwave have been mushrooming of initiatives to discuss what needs to change. Think tanks, commissions, and conferences propose new templates for finance, partnerships, and governance. The underlying sense is the inherited system is no longer self-sustaining and something drastic needs to change.
So, what’s the problem to fix?
The problem is there is no single agreed diagnosis of what problem is to be “fixed”.
Many OECD donors stress shrinking resources and less money for development cooperation. Public debate in Northern donors often stresses trust and narrative deficits and doubts about effectiveness and legitimacy. In parts of the Global South, there are long running calls for more equitable relationships and control over priorities.
Indeed, what looks like a crisis looks like an opportunity to many in the Global South. Not surprisingly, parallel Southern-institutions continue to grow. The New Development Bank (NDB) has expanded membership and lending, and BRICS states have agreed to create new guarantee and risk-sharing facilities hosted by the NDB.
The Asian Infrastructure Investment Bank has broadened membership to over a hundred states and sustains a sizable annual lending programme. These shifts suggest coexistence and competition among sources of finance and policy norms.
In this context, many governments in the Global South see room for active multi-alignment and hedging between providers.
Which future for the development cooperation system?
In this context, sketching different visions for the near future captures the sheer extent of contestation. One future is a stronger multilateral core with more focus on global public goods.
Another is more pluralist, club-led cooperation focused on small coalitions delivering bounded tasks.
Yet another is that pushed by the Trump administration and others of a nationalist conditionality of thinner, transactional cooperation tied to security, migration, or commercial goals.
And yet another is a strategic multilateralism linking development finance to industrial policy and geoeconomic competition and gain.
As contestation over the new development landscape builds a key question is what policy norms will survive across these divergent visions? The system now sits between retrenchment and reinvention. The issue is less whether change is coming, and more what kind of change will set the baseline.
Can the norms of multilateral cooperation, country ownership, the SDG focus, and policy coherence hold when donors shift to interest-based logics? Will climate finance and debt restructuring efforts be treated as global public goods, or as bargaining chips? How will global south countries protect their policy autonomy while pursuing multi-alignment? And what happens to accountability when more finance flows through new banks, guarantees, and blended instruments rather than public-based instruments?
All of these questions are up in the air. The only thing that is clear is that the development cooperation system is likely to look different and the contestation between competing visions only likely to heighten.
Andy Sumner is Professor of International Development at King’s College, London, and President of European Association of Development Research and Training Institutes. He is also a Senior Fellow at the United Nations University World Institute for Development Economics Research and the Center for Global Development; and a Fellow of the Academy of Social Sciences.