CHAPTER 3: The Aims of Aid |
14. When in the 1940s "this concept of helping
people in faraway lands took off",
the aims of aid were not codified. The underlying motive seems
to have been charitable. Professor Adrian Wood of Oxford University,
formerly DFID's Chief Economist, sees the "fundamental justification"
for aid as "a moral duty to help our fellow citizens on the
planet who are very much poorer than we are."
Ms Michela Wrong, a journalist and author with wide knowledge
of Africa, calls it "utopianism and post-imperial guilt complex."
15. The present consensus in the global aid community
is that the first purpose of aid is poverty reduction. The first
of the UN Millennium Development Goals (MDGs) adopted in 2000
by the United Nations and the OECD is to "eradicate extreme
poverty and hunger."
Aid, growth and the private sector
16. Economic growth is generally seen as the
indispensable means to achieve poverty reduction. Professor Wood
said "The only way you will eliminate mass poverty in the
long run is for those countries to grow faster ... for Bangladesh,
India and most of Africa, the long-run poverty reduction agenda
is a growth agenda."
Economic growth in itself is not sufficient for poverty reduction
but it is necessary. As Professor Collier notes: "growth
is not a cure-all; but the absence of growth is a kill-all."
Sustained economic growth depends ultimately on high levels of
private investment and employment; appropriately delivered, aid
can arguably play a catalytic role in supporting private sector-led
growth. From this perspective, as Professor Jeffrey Sachs, Director,
Earth Institute, Columbia University, noted, the role of aid is
to "help low income countries [out of poverty] and on to
their own self-sustaining growth path."
17. Aid (and aid-financed technical assistance)
is widely used to support private sector activity through a range
of channels: by strengthening tax, audit and legal systems; supporting
land reform and registration to facilitate greater collateralisation
of assets; supporting efforts to reduce the costs of doing business
in the domestic economy and to improve access to global markets;
and, through research and technical assistance, supporting the
development of macroeconomic, trade and fiscal policies capable
of managing economic volatility, and delivering coherent strategies
for sustained and inclusive growth.
These activities complement traditional donor support for health,
education and skills, and basic economic infrastructure.
18. Economic growth is essential to bring
about poverty reduction in developing countries. Aid is plainly
not the main driver of their growth, since capital and trade flows
are so much greater, but it can arguably play a catalytic role.
We consider in this report what impact aid makes on recipient
19. Although the global donor community subscribes
to poverty reduction as the overarching purpose of aid, in practice
aid has not always been for pure and immediate developmental
or humanitarian purposes. East-West rivalry used to weigh on aid
allocations that are today still heavily influenced by global
security considerations. For example, as Mr Riddell pointed out,
in 1999 Pakistan, Iraq and Afghanistan together accounted for
less than 1% of global official aid; five years later they accounted
for 25%. Here and
elsewhere aid is deployed, usually in conjunction with military
and security expenditures, for the immediate purpose of conflict
prevention and to secure the often fragile post-conflict peace,
but it is increasingly being used in longer-run attempts at state-building
(we look at the effectiveness of aid to fragile states in Chapter
20. Donors have also used aid funds to support
home industry, for example through projects tied to suppliers
in the donor country (the UK abandoned the tying of aid in this
manner in 1997).
21. More recently, DFID has reportedly spent
£900 million in the past four years on tackling climate change
in recipient countries, including £600 million in the past
financial year, and has committed a further £533 million
up to 2013. Over
the next four years £2.9 billion, or 7%, of ODA will be spent
on tackling climate change in developing countries.
Forms of Aid
22. Development aid takes four main formsthese
are listed below with the identified amounts spent from DFID's
bilateral programme in 2010-11:
- direct financing of projects (project
- budget support (payments to the recipient government's
general budget or sectoral budget such as health)£644m;
- technical assistance (funding of expertise of
various types)£468m; and
- governmental debt relief£66m.
At different times, different forms of aid have been
judged most conducive to development. In recent years budget support
has tended to replace projects. Mr Riddell said "we have
moved from a situation where aid was for many years provided predominantly
in project form to aid in programme form. The new aid modalities
are predominantly sector and budget support."
Dr Alison Evans, Director of Programmes, Poverty and Public Policy,
Overseas Development Institute (ODI), agreed that there had been
"a shift away from ... growth-enhancing or growth-inducing
sectors [such as] agriculture ... and to some extent hard infrastructure."
Mr Jonathan Glennie, Research Fellow, ODI, although acknowledging
that aid to infrastructure and business leads to growth in the
short term, argued that aid in support of health and education
is also "fundamental to growth"as did Mr Max
Lawson, acting Head of Advocacy, Oxfamand
that aid to institutions "supports growth and poverty reduction
in the longer term."
Mr Riddell agreed that "institutions are a critical factor"
in determining the impact of aid on growth.
18 Q 31, Picciotto Back
Q 13 Back
Q 429 Back
Q 14 Back
As quoted by Marian Tupy, Legatum Institute Back
Q 463 Back
Secretary of State for International Development (SoS 2), paras
Q 9 Back
The Sunday Telegraph, 'UK's £1.5bn for climate change
aid' by Richard Gray, 19 February 2012 Back
DFID 4 Back
DFID, Statistics on International Development 2011, Table 3, October
Project aid figure taken from the category Other Financial Aid
which DFID defines as: "Funding of projects and programmes
such as Sector Wide Programmes not classified as PRBS [Poverty
Reduction Budget Support]." Back
Q 7 Back
Q 82 Back
Q 213 Back
Q 88 Back
Q 2 Back