Official Development Assistance (ODA) has been the traditional method for poverty reduction, but its effectiveness has been questioned for decades, leading to the exploration of alternative instruments like remittances and philanthropic donations. The 2030 Agenda and the subsequent Financing for Development (FfD) debate highlight the need for a more holistic approach to development financing. Despite the global commitment to the SDGs, there is no agreement on the relative importance of these different financial instruments. This lack of consensus is further complicated by the varying strategies employed by donor countries. This paper investigates the heterogeneity in FfD strategies by analyzing the policies of donor countries that utilize ODA, remittances, philanthropic donations, and policy coherence for development (PCD). The research questions are: Do different groups of countries share similar strategic approaches to promoting development? Could these approaches conflict when aiming for a new international consensus on financing development? The study uses a hierarchical cluster analysis to group donor countries based on their FfD strategies, aiming to demonstrate the diversity of strategies and explain the delays in reaching a consensus on FfD.

The literature extensively critiques the effectiveness of ODA, with studies like Dollar & Pritchett (1998), Burnside & Dollar (2004), and Dreher et al. (2018) highlighting its limitations. This has led to concepts like "Global Policy Finance", "Beyond Aid", and "Beyond ODA", advocating for a broader framework. The decline in ODA flows after the 2007-2008 financial crisis reinforced this trend. The 2030 Agenda introduced a shift towards a more holistic FfD approach, integrating public and private resources. However, there is ongoing debate about the relative importance of various instruments in achieving the SDGs, including the Total Official Support for Sustainable Development (TOSSD) framework proposed by the OECD. The paper cites various works that acknowledge the transformations in the aid system, the impact of the 2007-2008 financial crisis and the COVID-19 pandemic, and the need for a shared FfD agreement.

The study's theoretical framework is grounded in game theory, suggesting that cooperation becomes harder with increased heterogeneity among players. The authors posit that diverse FfD strategies represent different and potentially irreconcilable ways of understanding development cooperation, hindering the attainment of a global consensus. Twenty-six DAC donor countries are analyzed using hierarchical cluster analysis. Four FfD instruments are chosen as proxies: ODA (measured as % of GNI), PCD (using the CDI), philanthropic flows (PHI, as % of GNI), and remittances (REM, US$/person). The NbClust package in R is used to determine the optimal number of clusters. Ward's method with squared Euclidean distance is employed for hierarchical clustering, and the results are visualized using a dendrogram. ANOVA and Bonferroni tests assess the significance of differences between clusters. The Silhouette Coefficient and Dunn's Index evaluate clustering quality, and k-means clustering is used to validate robustness.

The analysis identifies four distinct clusters of donor countries based on their FfD strategies. The optimal number of clusters was determined to be four using the NbClust package in R. The dendrogram visually represents the clustering process, and the resulting four clusters were each labeled and given a representative diamond graphic, showing the differing emphasis given to each type of funding. The four clusters are: 1. **The Underachievers:** (Austria, Belgium, Finland, France, Italy, Portugal, Spain). This group prioritizes PCD, but shows relatively low levels in ODA, PHI, and REM. 2. **The Outsiders:** (Czech Republic, Greece, Hungary, Japan, Korea, Slovak Republic). This group exhibits low levels across all four FfD instruments. 3. **The Traditional Winners:** (Denmark, Germany, Luxembourg, Netherlands, Norway, Sweden, United Kingdom). This cluster is characterized by high ODA levels. 4. **The Champions of Philanthropic Flows:** (Australia, Canada, Ireland, New Zealand, Switzerland, United States). This group shows high levels of both PHI and REM, while ODA and PCD are relatively low. ANOVA and Bonferroni tests confirm significant differences between clusters and the importance of all four instruments in shaping these differences. The Silhouette Coefficient and Dunn's Index indicate acceptable clustering quality, validated further by k-means clustering, showing the consistency of results.

The findings demonstrate significant heterogeneity in FfD strategies among donor countries. These differences in approaches could stem from varying national priorities, institutional structures, and historical experiences. The existence of distinct clusters with differing preferences makes achieving a global consensus on FfD more challenging. The four identified clusters showcase different strengths and vulnerabilities; some rely on established mechanisms like ODA while others champion newer methods such as private philanthropic flows. The findings provide insights into potential alliances and obstacles in international negotiations on development finance.

This research highlights the diversity of FfD strategies among donor countries, hindering the achievement of a global consensus on financing the 2030 Agenda. Four distinct clusters were identified, each prioritizing different FfD instruments. This diversity poses a significant challenge to international cooperation. Future research could incorporate more detailed data, longitudinal analysis, and a comparison with non-DAC countries to further enhance understanding.

Data availability limitations restrict the analysis to a cross-sectional study and limit the depth of donor-recipient analysis and sectoral segmentation. Furthermore, the study doesn't assess the effectiveness of different FfD strategies. Future research should address these limitations by including longitudinal data, more detailed information on financial instruments, and a focus on the effectiveness of diverse strategies.