ASIA
26 March 2014
New trends in foreign aid
As the wealthy OECD countries cut back on their foreign aid, emerging donors like China, India, Brazil and South Africa are expanding their aid programs -- and expanding their influence too.
As the wealthy OECD countries cut back on their foreign aid, emerging donors like China, India, Brazil and South Africa are expanding their aid programs -- and expanding their influence too.
Aid from rich OECD countries to developing countries fell by 4% in real terms in 2012, following a 2% fall in 2011, the Organisation for Economic Cooperation and Development (OECD) reported recently. Overall, OECD donors gave $125.6 billion in 2012, representing 0.29 per cent of their combined gross national income. The OECD is the self-dubbed "global economic policy forum" which has 34 member governments, mainly advanced democracies, but does not include in its membership leading emerging economies like Brazil, China, India, Indonesia, Russia or South Africa.
The continuing financial crisis and euro zone turmoil has led several governments to tighten their foreign aid budgets, reports the OECD. Indeed, since 2010, the year it reached its peak, official development assistance has fallen by 6.0% in real terms. But according to an OECD survey, a moderate recovery in aid levels is expected in 2013
The United States continued to be the largest donor with $30.5 billion in 2012, a fall of 2.8% in real terms compared to 2011 (the next largest donors are Japan, Germany, the United Kingdom and France). American aid is equivalent to a puny 0.19% of its gross national income (GNI). The US is beaten for stinginess by only Japan, Spain, Korea, Italy and Greece.
Aid from the fifteen EU countries that are members of the OECD's Development Assistance Committee was $63.7 billion in 2012, a fall of 7.4% compared to 2011. As a share of their combined GNI, aid fell from 0.44% in 2011 to 0.42% in 2012.
Only Denmark, Luxembourg, the Netherlands, Norway and Sweden continued to exceed the United Nations’ aid target of 0.7% of GNI. Aid did rise in real terms in nine countries, with the largest increases recorded in Australia, Austria, Iceland, Korea and Luxembourg.
There was also a noticeable shift in aid allocations away from the poorest countries and towards middle-income countries. Aid to sub-Saharan Africa was $26.2 billion, a fall of 7.9 % in real terms compared to 2011. Aid to the group of Least Developed Countries also fell by 12.8% in real terms to about $26 billion.
At the same time, the OECD's analysis suggests a shift in aid towards middle-income countries in the Far East and South and Central Asia, primarily China, India, Indonesia, Pakistan, Sri Lanka, Uzbekistan and Vietnam.
This trend of switching a declining aid pie away from the very poorest countries towards rapidly emerging countries is very curious. It is all the more curious given that some of these emerging countries having growing aid programs themselves. China's aid is estimated at over $20 billion a year, making it the world's second biggest donor! And India’s new aid agency will receive $11.3 billion as an operating budget for the next three years.
The reality is that aid from OECD countries is increasingly targeting opportunities for OECD business, and buying influence, rather than seeking to achieve the lofty dream of poverty reduction inscribed in the UN's Millennium Development Goals. And as OECD countries cut back their aid to countries like Burundi, Chad, Madagascar, Malawi and Niger, they open the field to greater social discontent and instability from poverty, and to influence from countries like China with authoritarian governance. It is not a wise course of action.John West
Executive Director
Asian Century Institute
www.asiancenturyinstitute.com
Aid from rich OECD countries to developing countries fell by 4% in real terms in 2012, following a 2% fall in 2011, the Organisation for Economic Cooperation and Development (OECD) reported recently. Overall, OECD donors gave $125.6 billion in 2012, representing 0.29 per cent of their combined gross national income. The OECD is the self-dubbed "global economic policy forum" which has 34 member governments, mainly advanced democracies, but does not include in its membership leading emerging economies like Brazil, China, India, Indonesia, Russia or South Africa.
The continuing financial crisis and euro zone turmoil has led several governments to tighten their foreign aid budgets, reports the OECD. Indeed, since 2010, the year it reached its peak, official development assistance has fallen by 6.0% in real terms. But according to an OECD survey, a moderate recovery in aid levels is expected in 2013
The United States continued to be the largest donor with $30.5 billion in 2012, a fall of 2.8% in real terms compared to 2011 (the next largest donors are Japan, Germany, the United Kingdom and France). American aid is equivalent to a puny 0.19% of its gross national income (GNI). The US is beaten for stinginess by only Japan, Spain, Korea, Italy and Greece.
Aid from the fifteen EU countries that are members of the OECD's Development Assistance Committee was $63.7 billion in 2012, a fall of 7.4% compared to 2011. As a share of their combined GNI, aid fell from 0.44% in 2011 to 0.42% in 2012.
Only Denmark, Luxembourg, the Netherlands, Norway and Sweden continued to exceed the United Nations’ aid target of 0.7% of GNI. Aid did rise in real terms in nine countries, with the largest increases recorded in Australia, Austria, Iceland, Korea and Luxembourg.
There was also a noticeable shift in aid allocations away from the poorest countries and towards middle-income countries. Aid to sub-Saharan Africa was $26.2 billion, a fall of 7.9 % in real terms compared to 2011. Aid to the group of Least Developed Countries also fell by 12.8% in real terms to about $26 billion.
At the same time, the OECD's analysis suggests a shift in aid towards middle-income countries in the Far East and South and Central Asia, primarily China, India, Indonesia, Pakistan, Sri Lanka, Uzbekistan and Vietnam.
This trend of switching a declining aid pie away from the very poorest countries towards rapidly emerging countries is very curious. It is all the more curious given that some of these emerging countries having growing aid programs themselves. China's aid is estimated at over $20 billion a year, making it the world's second biggest donor! And India’s new aid agency will receive $11.3 billion as an operating budget for the next three years.
The reality is that aid from OECD countries is increasingly targeting opportunities for OECD business, and buying influence, rather than seeking to achieve the lofty dream of poverty reduction inscribed in the UN's Millennium Development Goals. And as OECD countries cut back their aid to countries like Burundi, Chad, Madagascar, Malawi and Niger, they open the field to greater social discontent and instability from poverty, and to influence from countries like China with authoritarian governance. It is not a wise course of action.John West
Executive Director
Asian Century Institute
www.asiancenturyinstitute.com