The Economic Impact and Effectiveness of Development Aid - Economic Affairs Committee Contents


The Economic Impact and Effectiveness of Development Aid

The Economic Affairs Committee has decided to conduct an inquiry on The Economic Impact and Effectiveness of Development Aid. The Committee welcomes written evidence on any or all of the issues set out below by June 30.

The inquiry will seek to assess the impact of official development assistance (ODA) on the economic growth and development of recipient countries and in particular the impact of the UK's ODA.

Net aid flows from traditional donors—the members of the OECD Development Assistance Committee (DAC)—totalled US$129 billion in 2010, the highest ever recorded in real terms and equivalent to approximately 0.36% of donors' Gross National Income.[204] The UK's contribution of US$13.7bn, equivalent to 11% of the total, represented 0.56% of UK's Gross National Income. Non-DAC members contributed a further US$7bn.[205]

The Inquiry, which will not examine the role of humanitarian aid, will seek to answer questions such as:

  • (1)  How far and in what ways does official development assistance (ODA) affect the economic growth of recipient countries? Where possible to identify, what has been the impact of British ODA? How robust are results from studies in this area?
  • (2)  How does economic growth in countries which experience large surges in ODA compare to similar countries which do not?
  • (3)  What lessons, if any, can be learnt from the experience of former aid-receiving countries that have graduated from reliance on ODA?
  • (4)  What factors determine the effectiveness of ODA in recipient countries? Are they dependent on the scale and form of aid flows? How is aid effectiveness monitored?
  • (5)  Do conditions imposed by government donors on recipient countries improve the effectiveness of ODA? What has been the British government's experience?
  • (6)  How should ODA be allocated? How far do (and should) the Millennium Development Goals (MDGs) shape aid allocations?
  • (7)  How useful is the UN target of rich countries giving 0.7% of GNP in ODA? If the target was reached would it lead to more official development aid than developing countries could efficiently absorb?
  • (8)  Does ODA complement or inhibit private investment in developing countries?
  • (9)  How does ODA, and British aid in particular, interact with financial flows from other sources including new donors, such as China, India and Brazil, private capital flows, and philanthropic sources?
  • (10)How does and how should development assistance engage with security concerns, at a global level and at the level of individual (fragile) states?
  • (11)What are the prospects for using aid to support market-based initiatives, for example in providing insurance against earthquake damage?
  • (12)In what ways, if any, can the British government improve the effectiveness of its development aid?

17 May 2011

204   See OECD-DAC Back

205   Figures for 2009 only.They take no account of aid flows from China, India, Brazil and Russia. Back

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