Mitigating the Risks of Increased ODA Flows MICHAEL HOFMANN/JÜRGEN ZATTLER A t the United Nations Major Event, the Millennium Development Goals( mdg s), adopted back in 2000, were reaffirmed. In New York, the eu countries presented their timetable for increasing oda 1 to 0.7 per­cent of gni by 2015 and made concrete pledges to increase it to 0.56 per­cent by 2010. Other industrialized countries also undertook to increase their oda . Implementation of these pledges would increase global oda by usd 50 billion to some usd 130 billion by 2010. This gives us the chance to lend massive support to the development efforts of our partner countries in the South. Yet it would be naïve to think that increased financial transfers through more oda will automatically lead to more development. It is an acknowl­edged fact that development occurs when domestic conditions provide a conducive environment. This can, and should, however, be flanked by a positive environment for development at international level. The set of eight goals contained in the Millennium Declaration( mdg s) which was agreed at the 2000 Millennium Summit is therefore right to emphasize open markets, debt relief and more oda . Because development can only be successful when endogenous and exogenous factors positively re­inforce each other, attention was also drawn during the run-up to the G8 summit in Gleneagles and the Major Event to the risks of massively in­creased oda . This paper examines these arguments and outlines ways of designing oda so as to minimize the negative side-effects and achieve the mdg s. In part 1 it outlines three key motivations for development cooperation and oda and in part 2 investigates the various risks of increased oda . In part 3, seven conclusions are drawn on the right way to design development cooperation. 1. In this paper, the terms oda (Official Development Assistance) and development cooperation are used interchangeably. ipg 2/2006 Hofmann/Zattler, Risks of Increased ODA Flows 27