CHAPTER 2: The Global Aid Context: Who
Gives What?
5. Mr Roger Riddell, author of "Does
Aid Really Work?" told us that "aid began in the
1940s."[4] The British
Government's ground nuts scheme in Tanganyika was an early example.
6. When former colonies reached independence,
economic progress often lagged, and former colonial powers maintained
development programmes. Aid programmes became an important strand
in relations between Western developed and developing countries,
coupled until the fall of the Soviet Union with a Western desire
to limit Soviet political influence in the developing world.
DONORS
7. The main established donors are members of
the Development Assistance Committee (DAC) of the Organisation
for Economic Cooperation and Development (OECD).[5]
Set up in 1960, the DAC serves as a consultative forum. Its statistics
give the global picture of member-states' Official Development
Assistance (ODA). Other OECD member-states are now donors also.[6]
Non-OECD countries such as China, India and Brazil are becoming
significant donors, although still recipients of British aid.
Private foundations are also now active in development aid. The
arrival of all these new entrants means that sources of aid are
more diverse. Whereas in 1970 75% of recorded aid to poor countries
came from the US, the UK and France, by 2010 their collective
share had fallen to 44%.[7]
8. In 2010, the United States was by far the
biggest single DAC donor followed by the United Kingdom, France,
Germany and Japan in that order. Only Norway, Luxembourg, Sweden,
Denmark and the Netherlands met the UN target of spending 0.7%
of GNI on aid.
FIGURE 3
DAC Donors: Who gives what?[8]
Source: OECD Development Assistance Committee
Statistics on Resource Flows to Developing Countries http://webnet.oecd.org/oda2010
SPENDING
9. From 1960 to 2010 net development finance
from DAC members rose from about $40 billion to over $125 billion
a year in real terms. The proportion of donors' Gross National
Income (GNI) devoted to aid fell over the same period from about
0.5% to 0.3%. Although the US is the largest DAC donor, it nonetheless
allocates only 0.2% of its national income to aid. Excluding the
US, the average contribution of DAC donors is about 0.4%. If all
DAC donors gave 0.7% the annual total of development finance would
more than double to $270 billion.[9]
FIGURE 4
The Long View: Net ODA from DAC Members,
US$ billions and share of Gross National Income (GNI)
Source: OECD Development Assistance Committee
Statistics on Resource Flows to Developing Countries http://webnet.oecd.org/dcdgraphs/ODAhistory/
OECD Development Assistance Committee net ODA is
measured in constant 2009 prices and includes debt relief, which
was particularly high in 2005 and 2006 as a result of the relief
of £2.7 billion owed by Nigeria to the UK's Export Credit
Guarantee Department.
10. While global aid spending by member states
of the OECD's Development Assistance Committee (DAC) has risen
steadily over the past fifty years, its share of donors' Gross
National Income fell from 1960 to 1970 and again in the 1990s
(when aid declined in absolute terms). Today, aid accounts for
about the same share of donors' Gross National Income as it did
in the early 1970s.
11. ODA remains a significant strand of international
economic relations and is the means by which donor governments
contribute directly to development. Total aid grew fast—8%
a year—in the first decade of this century.[10]
In 2010 net DAC aid was $128.5 billion, the highest ever total
in real terms.[11] But
developing countries' income from other external sources was much
higher. In 2010 private capital flows from DAC members to developing
countries—which have surged in the last couple of decades—totalled
over US$1 trillion and remittances were $321 billion (Table 1).
Trade is even more important; the export earnings of all developing
countries in 2010 were more than 40 times the level of official
aid flows.[12] Professor
Paul Collier of Oxford University, author of "The Bottom
Billion"[13], said
"supporting development is very much more than aid. Aid is
almost a sideshow in the portfolio."[14]
TABLE 1
Aid and Private Capital Flows to Developing
Countries 2010
| Flows
| US$ billions
| % of total official and private flows
|
| Total Official Flows (net ODA) | 128
| 10.9%
|
| Total Private Flows (including remittances)
| 1042 |
89.1% |
| Foreign direct investment | 509
| 43.5%
|
| Portfolio Investment | 128
| 10.9%
|
| Net private long-term debt | 84
| 7.2% |
| Remittances | 321
| 27.4%
|
Source: Aid Data: OECD Development Assistance
Committee Statistics on Resource Flows to Developing Countries
Table 1 www.oecd.org/dac/stats/dcrannex; Private flows: World
Bank Global Development Finance http://databank.worldbank.org/ddp/home.do?Step=1&id=4
Definitions for Private Capital Flows: Net Inflows on Foreign
Direct Investment (US$ millions); Net Inflows of Portfolio / Equity
Investment (US$ millions); Net flows on private non-guaranteed
long-term debt (US$ millions); Workers remittances received from
overseas. Developing countries defined as all low and middle income
countries that are DAC eligible
Since private capital flows to developing countries
are now so much greater than official aid flows it seems clear
that private spending has become a much greater contributor to
development than official aid.
AID RECIPIENTS
12. Some countries, for example the "Asian
Tigers" such as South Korea, have graduated over time from
eligibility or need for aid, while other long-term aid recipients
such as Botswana have achieved impressive growth.[15]
In others, such as Bangladesh, aid as a proportion of national
income has fallen sharply over the years.[16]
But there are still many poor people in a range of recipient countries.
148 countries remain eligible for aid by DAC criteria.[17]
13. The main destinations of DAC aid in 2010
were Sub-Saharan Africa (44%), which also received more aid per
head than other regions, followed at some distance by South and
Central Asia (19.5%) and Middle East and North Africa (10%).
FIGURE 5
Aid by destination: DAC donors 2010
Source: OECD Development Assistance Committee
Statistics on Resource Flows to Developing Countries Table 27
www.oecd.org/dac/stats/dcrannex
FIGURE 6
Aid by destination: UK 2010
Source: OECD Development Assistance Committee
Statistics on Resource Flows to Developing Countries Table 27
www.oecd.org/dac/stats/dcrannex
Note: UK Aid to South and Central Asia is dominated
by aid to India, Bangladesh, Pakistan and Afghanistan. Major recipients
in Sub-Saharan Africa are Ethiopia, Tanzania, Nigeria, Uganda,
Mozambique and Rwanda.
Sub Saharan Africa remains by far the main destination
of global and British aid flows. It seems likely that an even
higher share of British than of overall DAC aid goes to the region
because of the UK's links to its former colonies.
4 Q 9 Back
5
Appendix 5 Back
6
Appendix 5-6 Back
7
DFID 1, para 71 Back
8
China and India are not included since they are not members of
the Development Assistance Committee. But their programmes are
substantial and growing. Back
9
Carter and Temple, para 11 Back
10
Riddell, Q 20 Back
11
OECD DAC Back
12
Calculated using data from World Bank, World Development Indicators,
Exports of Goods and Services Back
13
Paul Collier, The Bottom Billion (OUP, 2007) Back
14
Q 333 Back
15
DFID 1, para 22, table 1 Back
16
Q 287 Back
17
OECD, The DAC List of ODA Recipients, Factsheet-January 2012 Back
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