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| The weak link between International Aid and International Development |
 PRINTABLE VERSION |
“Foreign aid in different times and different places has been highly effective, totally ineffective, and everything in between. Perhaps that is to be expected in a complex endeavour that has spanned half a century, with scores of countries as donors, a hundred countries as recipients, tens of thousands of specific activities, and nearly US$1 trillion in finance.” - The opening lines of the 1998 World Bank Assessing Aid report, 1998
Aid is the annual transfer of billions of dollars from donor governments to developing countries. Donors give aid bilaterally or through multilateral institutions like the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD). In 2005, total official development assistance (ODA), the DAC
term used for aid, reached its highest level yet at USD $106.8 billion (DAC 2006a, 1).
However, the link between international aid and international development is weak and problematic. In order to strengthen this link, aid should be focused on solving governance issues, including corruption, so it will be more effective and efficient. I'm going to focus on three controversial aspects of aid: the motives and interests behind it, its size and distribution, and its effectiveness and efficiency.
Aid – Motives and interests
The reasons behind giving aid are based on a variety of purposes and motives that include self-interest and guilt. A perceived Western responsibility for a lack of development in many of the poorest countries following decolonisation has been a theme of academic discussion. One particular argument, advanced by Daron Acemoglu, is that the institutions set up during colonisation reflect differences in mortality rates. European powers set up “extractive” states, like that in Belgian-colonised Congo where mortality rates were high, which transferred many resources quickly from the colony to the coloniser. The opposite applied in “Neo-Europes” like Australia, New Zealand, Canada and the United States. The extractive states had, and continue to have, poor institutions because the colonisers were unwilling or unable to set up better institutions from the beginning.
The most altruistic of motives for foreign aid is on moral and humanitarian grounds. The idea behind it is that a person, or government, has an obligation to help those who are poor or who have poor access to resources. Purely moral and humanitarian motives for the provision of aid are rare. More often, donors stress the moral obligation but are also very aware of providing aid in such a way that it will benefit the donor in the long run. Giving aid for political and economic reasons has seldom been the sole motive, but these interests have played a significant role in the distribution of development assistance from a number of large industrial countries, including the USA. During the Cold War, both th U.S. and Russia used aid as a political tool to keep developing countries on their side. In the post-Cold War era, Japan has used aid as a tool for gaining votes from small states, including the Pacific Islands of Tuvalu and Nauru, in the International Whaling Commission.
Motives for aid provision are rarely simple and it is usually given for more than one reason. There can be significant differences between the declared motives and real ones, particularly in bilateral aid, as moral and humanitarian grounds are more difficult for opponents to argue against.
Aid – Size and Distribution
The size of development assistance is calculated against various definitions provided by the members of the DAC. In order for aid to be considered ODA it must:
1. be undertaken by the official sector;
2. have as its main objective the promotion of economic development and welfare;
3. be provided on concessional financial terms.
Of particular note is the fact that ODA is defined by declared goals and not the actual effects, with no emphasis on whether the aid actually contributes to economic development and welfare. In 2005, total ODA rose by 32% representing 0.33% of members’ combined 2005 Gross National Income (GNI). Most of the increase to core development programmes was accounted for by reconstruction efforts in Iraq and Afghanistan.
Aid distribution among regions and countries varies from donor to donor. Former European colonial powers concentrate their aid on former colonies. In 2005, the top ten recipients of gross ODA for France were (in numerical order): Democratic Republic of Congo, French Polynesia, New Caledonia, Senegal, Cameroon, Madagascar, Morocco, Pakistan, Poland and Mayotte. American foreign aid appears to be mostly allocated on the basis of national security interests, with their top ten recipients for 2005 including Israel, Russia, Jordan, Afghanistan and Iraq. Smaller DAC countries generally have a wider distribution, although New Zealand’s ODA is almost entirely focused on the Pacific region. Sub-Saharan Africa received the most aid in 1997-98, but Africa’s share of total official aid at the end of the 1990s remained the same as it was in the mid-1980s.
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Fi McKenzie
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Comments
Article Isabella | Feb 3rd, 2011
Concise, to the point and well informed.
You raise some very good arguments backed by stats.
The article is great
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