This dissertation focuses on the European Union’s development partnerships, and particularly on the differentiated approach to development which was introduced as an operational principle in the Multiannual Financial Framework 2014-2020. According to this approach, development funding should be targeted where it is needed most and where it can have the most impact. The differentiated approach to development, also known as the differentiation principle, initially affected nineteen Middle Income Countries (MICs) mainly in Latin America and Asia. In accordance with the principle, development cooperation was to be ended in the countries concerned when the MFF 2014-2020 came into force. 

Adopting the differentiation principle as a policy decision is a significant one. It connects to the global debates on poverty in the MICs in particular which 1) may not have solid enough economic development to maintain their MIC status, and 2) may still struggle with development challenges such as in-country poverty pockets, deep economic and social inequality between their citizens, and environmental and political fragility. By introducing the differentiation principle, the EU has argued that the countries that have crossed the MIC threshold should take responsibility for dealing with their internal challenges when they have the prosperity to do so. As such, the principle raises for example questions such as whose responsibility poverty eradication is (and by what means) in the light of the Sustainable Development Goals and in today’s global and inter-connected world. In addition, changing partnerships entail a shift from the old to something new, and considering “then what and on whose terms” is central to the analysis. 

By asking whether the EU’s differentiated approach is compatible and coherent with the EU’s development policy objective of poverty eradication, and what alternative approaches to development cooperation the EU proposes in order to achieve the Sustainable Development Goals, the study at hand analyses the legitimacy of the principle as it was applied to the MFF 2014-2020. To that end, the notion of Policy Coherence for Development is being scrutinized from the point of view of differentiation in development. Likewise global taxation, a major policy agenda for the EU, is looked at as an alternative for more equal revenue re-distribution. 

The analysis points to very ambiguous results, concluding that the EU, a stern promoter of values such as human rights, equality and equity, seemed not to have a clear strategy in applying differentiation when it became an operational principle in 2014. It did not have sound exit strategies that have been negotiated with the partners; neither did it seem to have clear visions of future partnerships when the differentiation principle came into force. Rather, the initial decisions seemed to be based on motives driven by the EU’s own interests, and only afterwards, most notably when the Sustainable Development Goals became the global sustainability agenda, did the EU start to pay more attention to inequality, particularly in MICs, as a development challenge. In any event, with its current financial architecture, the EU is ill-prepared to deal with complex development issues such as economic and social inequality which would require multi-layered responses across policy divides.