3Patterns of aid

Learning objectives

This chapter will help readers to:

Although aid is difficult to define and measure as we discovered in Chapter 2, it is possible to ascertain and describe some of the major flows of aid resources from country to country and from agency to agency. In this chapter we attempt to map some of those major flows, looking at both absolute (total volume) and relative (share of Gross National Income (GNI) and per capita) measurements. We also unpick some elements of the types of aid that move between donors and recipients. We focus particularly, though not exclusively, on official (Official Development Assistance (ODA)) data and the mainstream aid landscape.

A geography of aid

The patterns of aid flows are not straightforward. In the above chapter, we saw that agencies change over time and not all forms of aid can be easily quantified and compared. Figure 3.1 depicts a framework for seeing where aid comes from and where it flows to. Firstly, there are the primary sources on the top line. These come mainly from governments, whether members of Development Assistance Committee (DAC) (USA, Japan, UK, France etc.), present or aspiring members of the OECD, but not yet DAC members (Chile, Estonia, Russia, Costa Rica), or non-OECD countries (China (People’s Republic of China – PRC), Chinese Taipei/Taiwan (Republic of China – RoC), Saudi Arabia). Donors can also include a category of countries that are simultaneously donors and recipients (India). Other primary donors include private funders (the Bill and Melinda Gates Foundation is notable in this regard) and a plethora of non-government organisations (NGOs) who raise money themselves from the public and governments. Below these primary donors are the very significant multilateral organisations (the UN, a range of development banks, and official organisations with specific missions, such as the Global Environmental Facility – GEF). These organisations derive their income from donor states as well as, in the case of development banks, from their own trading operations and sometimes from NGOs and private sources. The share of total ODA flows over the five year period 2013–17 is depicted in Figure 3.2. We see that DAC donors account for over half of all ODA but what is perhaps surprising is the large share – about one-third – from non-DAC countries. This is probably the result of the very high ODA returns from Saudi Arabia, Turkey and UAE in this period (see Figure 3.7), much related to the flow of refugees from Syria after 2015 and humanitarian crises in Myanmar and Yemen.

Flows of aid from donor organisations follow a variety of paths (Figure 3.1). There are bilateral flows – perhaps the most common and largest of the flows – and these link a donor with a recipient country in a series of one-to-one relationships (hence ‘bilateral’). There are the multilateral flows: these see several sources of funding flow into an organisation, which then disperses it to many recipients. Both bilateral and multilateral flows, especially when involving OECD members, tend to be captured fairly fully as ODA statistics, though many of the funds channelled between non-OECD members and recipients are not. Some private and NGO flows (largely from large organisations) are counted by DAC and these mainly involve flows from the organisations to non-state projects and programmes, though some funders (the Bill and Melinda Gates Foundation and some of the larger NGOs) will support certain projects by multilateral and state agencies from time to time. Mostly, however, the NGO sector works outside of the ODA environment and their aid flows are not analysed, except for when donor states contribute to the work of NGOs and fund them directly. Donor governments also fund projects directly in recipient countries, outside of state agencies, especially when recipient states lack the capacity or legitimacy to perform certain development functions.

Figure 3.1 Schematic diagram of ODA flows

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Figure 3.2 Share of global ODA by donor category 2013–17

Image

Source: www.stats.oecd.org

In order to analyse these flows, we mainly make use of DAC ODA statistics. These, of course, do not measure all aid flows, but the ODA volumes they do record give a good indication of relative size and direction. Here we use data on ‘aid disbursements’, those funds actually spent by donors (rather than just budgeted), though they might not be a completely accurate record of what funds finally make it through recipient agency systems to the desired end-point. In order to account for fluctuations from one year to another, for example the occurrence of a major disaster or a short-term economic variation, we use a five year average over the years 2013–17 and we allow for inflation by using the adjusted ‘constant’ values (at 2017 values for the $US) rather than the actual ‘current value’ in each year. There are problems with any such measures, such as using the US dollar as the standard, but again these results give a reasonable view of overall ODA patterns.

Traditional and established donors

Established donors are those who work within the DAC framework and who account for the largest share of ODA flows (see Figure 3.2). It is the aid budgets of these countries that fund the majority of the bilateral programmes worldwide and also support the work of key multilateral agencies. To a large extent these established donors are the original large founders of the DAC: USA, UK, France, Germany, Japan, and the northern European countries of Sweden, Norway and the Netherlands. It is striking just how much of global ODA comes from a small number of countries. The USA, for example, alone accounts for 30 per cent of the total given by DAC country members in 2013–17 and the largest five donors (USA, UK, Germany, France and Japan) account for 69 per cent (see Figure 3.3). Even if we account for all ODA donors including multilateral institutions, non-OECD donors and private sources, the figures are still impressive: USA contributes 20 per cent of global ODA and the five largest donors 43 per cent.

Figure 3.3 DAC donors ODA annual average 2013–17 ($US mill constant 2017)

Image

Source: www.stats.oecd.org

Whilst the ‘big five’ dominate total volumes, the contribution from other states is significant. Another ten countries average over $US 1 billion per year in ODA and the DAC list is continually expanding, bringing many of the former transition economies of Eastern European (Poland, Slovenia, Hungary etc.) and still includes countries which experienced severe economic problems themselves in the past decade (Greece, Portugal and Spain).

Another way of analysing aid donations is to look at the relative ‘generosity’ of donor countries. USA and the other major donors dominate total volumes because they are amongst the world’s largest economies (only China would be able to match them in terms of economic power). When we measure ODA against the size of the national economy (GNI) we get a rather different picture (Figure 3.4). In this case it is the countries of northern Europe (Sweden, Norway, Luxembourg, Denmark, Netherlands and UK) that stand out as well as the UAE. Indeed, only these seven countries have managed to match or exceed the 0.7 per cent of national income target set in 1970.1 Further down the list, European countries continue to dominate.2 Furthermore, it is apparent that the large USA and Japanese total volumes recorded are not matched by their proportionate commitments to ODA: both hover at or below the 0.2 per cent of GNI mark.

Figure 3.4 Donors: ODA as a % of GNI 2017

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Source: https://data.oecd.org/oda/net-oda.htm

Finally, with regard to the established DAC donors, it is possible to see some interesting changes over time. Although we will look at the way aid policies and motivations have evolved over time in detail in Chapter 4 and we have briefly reviewed these at the start of Chapter 2, Figure 3.5 shows that the established donors have always dominated ODA volumes but their relative positions have altered since 1970. Again we use dollar values adjusted for inflation (constant $) to see changes in ‘real’ ODA values over time. Only selected major donors are shown to indicate some broad features.

Firstly, it is apparent that USA has always been the largest ODA donor, though the value of ODA has changed markedly over the years. Some fluctuation was apparent between 1970 and 1990 but the 1990s saw a sharp decline in real values before a sharp and steady rise through the first decade of the new millennium. Since 2010 there are perhaps signs of a decline. These trends were matched by some but by no means all of the other donors. Until the mid-1990s Japan and France were the next largest donors (along with Germany) but their aid volumes have plateaued or dipped slightly and their relative ranking as major donors has fallen. Two of the countries to have risen in this regard are Germany and the UK, the latter’s increases in ODA since 2000 being substantial.3 Although not included in this graph, we can point to examples of two other donors to illustrate some interesting changes over time. South Korea has emerged from being considered a poor or developing country for much of the past 60 years to being a significant donor with rising ODA budgets since 2000. By contrast, Spain had followed an upward trend since starting ODA donations in about 1980 but the global financial crisis of 2007–08 hit it hard and its ODA contributions have fallen drastically since. In addition to the countries depicted in Figure 3.4, we should note that the list of DAC donors has expanded (see Table 2.2) with ten new members since 1990 but, as yet none of these has emerged to match the five largest established donors.

Figure 3.5 ODA from main DAC donors 1970–2017 (constant $US mill 2017)

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Source: www.stats.oecd.org

Non-traditional donors

Alongside these established and emerging donors within the OECD system, we can begin to gain an impression of how other countries are playing a role as aid donors and how rapidly this has been changing (Woods 2008; Six 2009; Greenhill et al. 2013; Eyben and Savage 2013). Because we are just analysing ODA at this stage, it is important to note that this gives us only a partial impression of these new players. Some are not included at all (most notably China) and we know that their development aid and co-operation activities are very substantial globally. Secondly, others appear only to have partial reporting of their aid budgets. Taiwan/Chinese Taipei does appear (see Figure 3.7), but the amounts seem very small compared to what we suspect anecdotally to be significant forms of assistance to countries with which it has diplomatic relations.

Nonetheless, the DAC system does reveal some interesting points about these non-traditional donors. Several oil-producing countries (Saudi Arabia, UAE and Kuwait) (see Figure 3.9) are revealed as important donors, Saudi Arabia ranking alongside Japan and France in terms of total volumes of ODA in recent years. There are also emerging donors, perhaps those who are eyeing membership of the OECD in future (Russia, Romania and Bulgaria) and who are beginning to comply with DAC’s definition and data reporting procedures. Figure 3.6 shows the major non-DAC donors in terms of their recorded ODA in the past five years. Three countries dominate (Saudi Arabia, United Arab Emirates and Turkey), each with over $US1 billion of ODA each year, followed by Russia and Kuwait. It is probable that much of this aid is related to aid and refugee costs associated with the conflict in Syria. Yet beyond these five largest non-DAC donors, ODA volumes are very small: the other 15 donor countries recorded totalled an annual average of only $US 622 million in 2013–17.

Figure 3.6 Main non-DAC donors: average annual ODA 2013–17 ($US mill constant 2017)

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Source: www.stats.oecd.org

Figure 3.7 Main non-DAC donors: ODA 1970–2017 ($US mill constant 2017)

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Source: www.stats.oecd.org

Interestingly, these aid flows from non-DAC donors have some historical antecedents. Looking at flows since 1970 (Figure 3.7), we can see that the oil-producing countries of Saudi Arabia, Kuwait and United Arab Emirates were significant donors in the 1970s (probably a consequence of the very high oil prices in that decade). Indeed, in the second half of the 1970s, ODA from the non-DAC oil-producing countries amounted to as much as two-thirds of the total aid volumes of all DAC donors. Aid fell away in the 1980s and 1990s but Saudi Arabia and UAE re-emerged as large donors after 2000, joined by Turkey after 2010.

If we move outside the DAC ODA framework however, the picture becomes much more complex. China has become a significant aid donor, though perhaps we should note that it sees itself more as a ‘development co-operation partner’ than and ‘aid donor’. It does offer grants for development purposes (see Box 3.1 for examples in the Pacific Islands) and it has offered a great many scholarships for students to study in China and develop essential skills as well as learn the Chinese language and customs. However, the bulk of its development assistance is in the form of concessionary loans. The precise amounts of these loans and terms remain largely hidden from the public eye and result from negotiations with separate recipient governments but we know that they are very substantial. They are mostly concerned with providing funds for construction and infrastructure (government buildings, sports arenas, roads, harbours, telecommunications etc.) and there is evidence of major Chinese-funded road projects throughout Africa, Latin America, Asia and Oceania. Another feature of these loans is that they are apparently forms of ‘tied aid’ in that they are linked to agreements for Chinese firms to be directly involved in the provision of facilities. Thus, Chinese loans are provided (at seemingly favourable rates) so that recipient governments can have roads and buildings constructed for them by Chinese companies (using Chinese equipment and employing mostly Chinese labour). Although this falls outside the purview of DAC and would seem to be an overt form of tied aid with clear benefits back to the donor, they are now a very important feature of aid, globally. They are clearly a form of ‘co-operation’ which makes explicit that there will be benefits for both sides (Sears 2019). And because the Chinese government is ready to fund such projects on a large scale, it is proving to be a popular option for many recipient/partner governments who find the Chinese donors more straightforward to deal with than their less generous Western counterparts. What is not yet apparent is how the loan repayment process will proceed. The loans are provided through Chinese (state-owned) banks and it is clearly expected that they will be repaid at the agreed rates – they are commercial agreements, albeit at below market rates. However, it is also likely that there will be some instances when problems with repayment will be met with a favourable response by the Government of China, either forgiving some debt or allowing some rescheduling. In other instances, though, repayments of mounting debt burdens by some countries may become problematic and may lead to difficulties in the future.

Other non-traditional donors are likely to emerge in the future. Of interest here are those countries in transition, formerly or still aid recipients but with rapidly growing economies and ambitions and plans to extend their diplomatic and economic interests worldwide. Thus India, Brazil and South Africa have signalled that they will expand their aid operations in future. India is clearly reinforcing its own commercial and diplomatic interests through a strategic use of aid (Fuchs and Vadlamannati 2013) and Brazil has strengthened its relationships in Africa through the use of technical assistance (Abdenur 2015). We can expect these new donors to operate along similar lines to China, seeing aid as an element of South–South co-operation and a way to seed and support their trading and investment interests internationally.

We will see later in this book that these sort of trends in the donor world are likely to operate more and more outside of the OECD ‘club’ and conform to more recent concepts ‘shared prosperity’ as new donors seek their own ways of operating, more explicitly pursuing their self-interest and less willing to conform to global agreements and harmonised ways of working.

Multilateral agencies

Multilateral aid agencies consist of a wide variety of international agencies. Firstly, we note the European Union. Although European countries have substantial bilateral programmes, they also pool ODA resources to operate collectively. This pool is larger in size than any single member’s contributions. Then there is the United Nations group of agencies, itself funded by UN members to varying degrees. These agencies include bodies directly concerned with aid and development (such as United Nations Development Program (UNDP)) or relief efforts (United Nations High Commission for Refugees (UNHCR)) and many whose specific roles touch on particular development issues (United Nations Children’s Fund (UNICEF), Food and Agriculture Organisation (FAO), World Food Program (WFP), United Nations Environment Program (UNEP), United Nations Programme on HIV/AIDS (UNAIDS) etc.).

There is then the group of development banks, headed by the World Bank group and including a variety of regional development banks (ADB, African Development Bank, Inter-American Development Bank etc.). These banks, together with the International Monetary Fund (IMF), grew out of the Bretton Woods Agreement of 1944 and had the mission of supporting reconstruction and development in the global economy after the Second World War. Other development banks have emerged separate from the Bretton Woods framework. These include the Arab Bank for Economic Development in Africa, BancoSur (South America), the Council of Europe Development Bank and the Islamic Development Bank. The resources provided by these agencies are counted as ODA when they meet the criteria for aid, though this is less than their total operating budgets. Once again, we need to note that, like much of the assistance provided by the PRC, these development banks offer some direct grants but most of their activities involve concessionary loans, in this case where the credit-worthiness of ‘donors’ is used to secure favourable interest rates for borrowing countries that would otherwise face higher market rates because of their higher risk profiles.

To these multilateral institutions have been added a range of agencies which have a particular development role, such as the Global Alliance for Vaccines and Immunization (Radelet and Levine 2008) and the International Atomic Energy Agency. In recent years there has been a growth of multilateral funding agencies focused on different aspects of environmental change. These include the Adaptation Fund, the GEF, and the Climate Investment Fund. Together these have become significant features of the aid landscape in the past decade.

Private and corporate donors

Finally, we see those aid donors which mainly draw on private and philanthropic funds. It is a diverse array that ranges from Coca-Cola® to Comic Relief. Some operate as multilateral agencies. For example, the Global Fund brings together a diverse range of funding sources, including governments, private philanthropists, private sector companies and NGOs (Radelet and Levine 2008). Raising nearly $US 4 billion a year the Fund focuses on the elimination of key diseases: AIDS, tuberculosis and malaria. There are the large private philanthropic donors, such as the Bill and Melinda Gates Foundation (Fejerskov 2015), which follow the philanthropic traditions and models of the Ford Foundation and the like. There are also many agencies which provide ‘corporate aid’. These are private sector businesses which donate finds for development, often under the principle of corporate social responsibility. Some, such as Nestlé, have distributed aid, often in ways which link the geography of their international commercial presence with patterns of their aid distribution (Metzger et al. 2010). And, of course, there are development NGOs: a huge array spanning faith-based organisations (World Vision, TearFund, Caritas etc.) and more secular ones (Oxfam, CARE, MSF, etc.).

However, whilst such organisations are often visible in donor public consciousness in terms of aid and relief, only a few (such as the Bill and Melinda Gates Foundation) are seen in the statistics for ODA. Private donors have been, and continue to be, an important element of the aid world. Many are associated with long-standing and well-grounded networks and development activities (Wallace et al. 2007). Yet, compared to the budgets of the larger bilateral and multilateral agencies, only a handful can be considered to be significant donors at the global scale.

Summary of ODA donors

The operations of many multilateral agencies (though not so much of the more private philanthropic agencies or development NGOs) are able to be analysed through the DAC system and putting together these data with the bilateral donors we looked at above, we can obtain an interesting picture of the overall sources of significant ODA (Figure 3.10). Here we show the major ODA donors, those contributing an average of over $US 200 million per year over a recent five-year period (2013–17).

Figure 3.10 Ranking of major ODA donors 2013–17 (annual ODA 2013–17 average $US mill constant 2017)

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Source: www.stats.oecd.org

Some key features emerge from these data. Firstly, we note that the large DAC donors – the big five (US, Germany, UK, Japan and France) – are still prominent, accounting for five of the seven top-ranked donors. Below them OECD donors (mostly members of DAC) are well represented. These donors are interspersed with the range of multilateral agencies, most notably the EU, World Bank and UN in the upper ranks, and the Global Fund, the Gates Foundation and the various development banks down through the order. However, perhaps the most interesting feature of this diagram is the prominence of a number of non-traditional donors. Their ODA efforts have been counted by the DAC even though their activities lie outside the DAC framework and agreements. The oil-rich countries of Saudi Arabia, especially, UAE and Kuwait are the most notable but we also see important contributions from Russia and Taiwan (Chinese Taipei) (bearing in mind that their total aid efforts are probably not well accounted for through this ODA analysis).

Types of aid

Whilst donors give varying amounts over time and there are marked differences in the volumes of ODA they disburse, there are also significant differences in the types of aid that different countries and institutions support. We can see a broad range of sectors that ODA goes to. There is a broad welfare category, which includes many of the basic sectors that many people associate with aid: education health, population and reproductive health and water and sanitation. There is a category that has to do with building public institutions and their capacity (government and civil society) and building peace and security. There is then economic infrastructure (transport, communications and energy) and the ‘productive sectors’ (increasing production and productivity in agriculture, fisheries, forestry, mining, tourism, construction and industry, and developing economic and trade policies). Multi-sector and ‘cross-cutting’ activities include the promotion of environmental protection and gender issues whilst general budget support and debt action usually involve direct support for governments either supporting the everyday costs of state activities or retiring debt. Humanitarian aid and food aid/security are usually related to particular emergencies or issues of shortage. Finally, there is often a large ‘unallocated’ category of ODA. This is for expenditures which cannot be readily allocated to a sector but also includes support for development NGOs and administrative costs.

Taking a broad overview of these sector allocations (Figure 3.11) it is apparent that ODA is spread quite evenly over these many sectors. Education, health and other welfare activities account for less than a quarter of ODA (a surprisingly low proportion perhaps given their prominence in the MDGs and SDGs). ‘Government and civil society’ support is another significant category (along with humanitarian assistance and the ‘other/unallocated’ category) whilst economic sectors (infrastructure and industries) together make up just over a quarter of total ODA. It is a diverse portfolio of sectors supported globally by ODA.

Figure 3.11 Sector allocations of ODA 2013–17

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Source: www.stats.oecd.org

Adding to this overall diversity we can see significant differences in the way different donors have different sectoral priorities for funding (Figure 3.12). If we look at some examples of donors, including the main bilateral and multilateral agencies and two additional donors (Sweden and the Global Fund to illustrate some peculiarities of donors), it is apparent that donors develop their own strategies and decide to fund particular sectors rather than others.

Figure 3.12 Sector allocations of ODA 2013–17 by selected donors

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Source: www.stats.oecd.org

Note: Saudi Arabia data for 2015–17 only.

Of the donors shown here, all support welfare provision in some way, though Sweden and Japan are relatively lower funders in this regard, whilst the Bill and Melinda Gates Foundation concentrates heavily on health-related activities. Support for building the capacity of government and public institutions seems to be of significant interest for most European donors, USA, the UN and the World Bank. On the other hand, economic infrastructure seems to be a speciality of Japan, although the World Bank also puts emphasis here, along with Saudi Arabia, France and Germany. Similarly, building productive sectors seems to be a particular concern for the large multilateral agencies. By contrast, the cross-cutting issues of the environment and gender are well supported by European donors and the UN but less so by USA. Of the remaining sectors, it seems that humanitarian assistance is supported by nearly all donors to varying degrees (the high relative and absolute expenditure by USA is notable here), whilst the relatively small amounts to programme support come from Europe. Unusually, Sweden has a very high unallocated amount, perhaps reflecting its strong support for development NGOs working across a range of activities.

We will return to the issue of contrasting donor priorities across different sectors in later chapters, and changes over time, when we examine changing theories, regimes, and practices of aid.

Recipients

Having mapped where ODA comes from and what it is spent on in terms of donors, we can now investigate where aid funding goes in terms of recipients. Here we see the dominance of country-based systems: countries, usually governments, receive and disperse aid funding. But there are also important flows to multinational (or regional) institutions as recipients.

Firstly, on a broad scale, it is apparent that the largest share of ODA goes to Africa, south of the Sahara – some 42 per cent globally – and this is the region where development indices show the most pressing need for assistance (Figure 3.13).4 Interestingly, South and Central Asia comprise the next largest flow (with just over 20 per cent). This region includes one of the largest developing countries (India) and the largest single recipient of ODA (Afghanistan). This latter example, involving the way ODA often follows military intervention into areas of conflict, also helps explain why the Middle East (including Iran and Syria) is the next largest region.

Figure 3.13 ODA recipients by region 2013–17

Image

Source: www.stats.oecd.org

These features can be seen more clearly when we look at the ranked order of recipients for the 2013–17 period (Table 3.1). This list includes all ODA recipients receiving an average of over $US 500 million per year. African countries dominate the list but there are notable inclusions of countries embroiled in conflict situations (Afghanistan receives twice as much ODA as any other recipient, also Iraq, Palestine (West Bank and Gaza), Syria and Ukraine are significant recipients) or deemed to have high strategic value (Pakistan and Jordan). Interestingly on this list there are also countries which have experienced fairly rapid economic growth and have quite reasonable development indices (Vietnam, Brazil and Mexico), but whose continued economic development seems to be well supported by donors.

Table 3.1 Ranking of major ODA recipients 2013–17 (ODA disbursements average per year at constant $US mill 2017)

Rank

Recipient

$US mill

1

Afghanistan

3519

2

Syria

2009

3

Vietnam

1961

4

India

1951

5

Ethiopia

1935

6

Pakistan

1588

7

Kenya

1576

8

Iraq

1556

9

Tanzania

1506

10

Jordan

1505

11

Myanmar

1460

12

Bangladesh

1446

13

South Sudan

1388

14

West Bank and Gaza

1261

15

Mozambique

1242

16

Nigeria

1233

17

Democratic Republic of the Congo

1154

18

Uganda

1044

19

Colombia

  969

20

Morocco

  906

21

South Africa

  892

22

Somalia

  804

23

Ukraine

  786

24

Yemen

  739

25

Turkey

  699

Source: www.stats.oecd.org

We can suggest then that there is no clear correlation between how needy a country is and how much aid it receives. This may be the case for the presence of so many countries from south of the Sahara but it certainly does not explain the volume of ODA going to many other countries. A basic analysis of ODA measured against a country’s development status (its HDI (Human Development Index) score – see Figure 3.14) shows this lack of a clear picture. Perhaps the only feature of these data is that small island states and territories generally seem to be amongst the highest recipients of ODA per capita (as we have seen) but they also rank quite highly in terms of HDI.

Figure 3.14 ODA and HDI 2017

Image

Source: www.stats.oecd.org

Another way to see where aid goes is to look at how much aid countries receive relative to their population – and here the picture is quite different (see Table 3.2). The most notable feature of this table is that the top 16 and most of the world’s top 25 aid recipients on a per capita basis are small island states and territories. We will examine this category of aid recipients in detail below.

Table 3.2 Ranking of major ODA per capita recipients 2013–17 (ODA disbursements average per year at constant $US mill 2017, using UN estimates of 2015 population)

Rank

Recipient

$US mill

1

St Helena

22612

2

Tokelau

14126

3

Wallis and Futuna

7649

4

Niue

7519

5

Montserrat

7496

6

Nauru

2029

7

Tuvalu

1907

8

Marshall Islands

1093

9

Cook Islands

1028

10

Palau

  911

11

Federated States of Micronesia

  900

12

Tonga

  479

13

Vanuatu

  402

14

Kiribati

  369

15

Samoa

  324

16

Solomon Islands

  295

17

West Bank and Gaza

  270

18

Cabo Verde

  240

19

Jordan

  164

20

Timor Leste

  134

21

South Sudan

  117

22

Mongolia

  110

23

Lebanon

  109

24

Syria

  107

25

Afghanistan

  104

Source: www.stats.oecd.org

Aside from the small island states, however, it is interesting to note that our high ODA per capita list includes a number of countries that also appear on the total ODA list (Table 3.1): Afghanistan, West Bank and Gaza, Jordan and South Sudan. These are countries that have attracted attention not just because of the poverty experienced there, but because they have particular strategic value or are associated with conflict or military intervention.

Putting these different issues and pieces of evidence together, it is possible to suggest a categorisation of aid recipients. These are broad and sometimes overlapping groups but they do reveal some quite different motives and strategies for allocating aid – a theme we will take up later.

High poverty countries

Many people would reasonably assume that international development aid is given to tackle poverty and meet pressing development needs. This is certainly the assumption behind calls to increase aid volumes and be guided by, firstly the Millennium Development Goals (MDGs) of 2000–15 and now the Sustainable Development Goals (SDGs) of 2016–30.

Looking at the data on the largest aid recipients (Table 3.1) we certainly see a high frequency of African countries south of the Sahara and others with relatively poor development indices (such as Haiti and Nepal). This group in aggregate accounts for the largest number of aid recipients and also for the highest total volume of aid flows. All major donors are involved (along with China and other non-traditional donors such as India) and their projects and programmes cover the full range of sectors we noted above, from welfare to humanitarian relief and, in some cases, debt relief. Some of these countries have been able to put in place some reasonably efficient and accountable public institutions that can directly handle increasing aid volumes through mechanisms such as SWAps (Sector-Wide Approaches) and GBS (General Budget Support) (see Chapter 4); others still lack the capacity at state level to take the lead in development activities; whilst others unfortunately straddle the poverty and conflict categories (e.g. Mali and Sierra Leone) and suffer the joint afflictions of very high levels of poverty, and dysfunctional or contested states.

If we compare ODA levels with development indices (in this case a country’s HDI score5) we can map this category of countries in Figure 3.9. These are the countries that lie in the lower part of the diagram (with HDI scores less than 0.55 and categorised by the UN as having ‘low human development’). Only 6 of the 41 countries listed in this low HDI category lie outside Africa.

Countries in conflict with external intervention

Some of the countries with the highest levels of aid (in both absolute and per capita terms) historically and at present have been those who have suffered from major conflict and the involvement of external powers. This intervention has been in the form of direct military intervention to overthrow unwanted regimes (as in Iraq and Afghanistan following the 9/11 attacks in 2001) or to protect regimes under internal threat (Iraq’s battle against ISIS (Islamic State)). Military intervention in the form of peacekeeping operations have also been in evidence in places such as Mali, South Sudan or Timor Leste.

In these cases, aid has followed military intervention, sometimes in rather controversial ways. Military intervention has occurred not because development is seen to be needed but because ‘regime change’ is a priority. But then, once political change has occurred, it is often realised that forms of development are needed to secure the legitimacy of new regimes and win the ‘hearts and minds’ of the general population in conflict zones. Thus, schools, health centres, roads, bridges, community facilities, microfinance schemes and so on, supplied by aid projects, become tangible expressions of hoped-for order and progress. Development assistance then in these situations is seen as part of a long-term solution and an exit strategy for the military. ODA can help build an environment that supports the legitimacy of occupying forces and/or the new regimes they install. This has been one of the key features of intervention in Afghanistan since 2001 when ‘provincial reconstruction teams’ established by the occupying forces have attempted to combine the efforts of military, NGO and local government agencies to provide forms of development, stability and, optimistically, prosperity for local communities.

Aid workers, wittingly or unwittingly, become agents of new regimes backed or installed by military action and this can be uncomfortable and even dangerous. Another aspect of this form of aid is that it may well involve military personnel and equipment in development activities. Rebuilding a school or a bridge by military forces as part of peacekeeping and peace building operations takes development assistance into a new realm and may involve an accounting exercise that sees some military expenditure counted as ODA. On the other hand, the experience of Afghanistan and Iran has seen a number of military leaders recognise that development, poverty alleviation and, crucially, community participation are crucial if civil order is to be established.

Countries experiencing internal conflict and natural disasters

Similar dynamics exist in countries that have suffered from internal conflict, but where external military intervention has been absent or limited. The recent conflicts in Syria have been enormously destructive and violent and very complex from a political perspective. Russia and USA have been involved in some military action but have largely stayed away from putting large numbers of their own military or aid personnel on the ground. Instead it has been their proxies in the country – the various factions they have backed – that it is hoped will help prevail and restore order. Syria is perhaps an extreme example – and the number of refugees flowing out of the country has been huge – but we see other internal conflicts and also natural disasters creating situations where both humanitarian and development assistance is called for and given. The earthquake in Haiti in 2010 for example, led to a very large-scale international response.

Development assistance in these circumstances, whether resulting from civil conflict or natural disaster, has usually combined forms of emergency help for those both in situ and those seeking to leave as either international refugees or internally displaced persons. There are specialist agencies which respond in such situations, such as Red Cross/Red Crescent or UNHCR, but donor governments have also developed the capacity to mobilise resources quickly and send needed resources.

However, ODA is important here for it is not just an emergency situation that demands attention but also crucially the more long-term needs of peoples and communities to rebuild their lives, businesses and communities. Here more conventional development strategies and agencies are employed. Typically, countries in this category may experience large influxes of aid in response to crisis (the Boxing Day Asian tsunami led to a marked spike in global ODA in 2005) but then a gradual tailing off of aid donations back to normal levels. For some countries where internal conflict and displacement is seemingly endemic and political solutions absent, however, ODA may keep flowing at high levels for many years. This is likely to be the situation in South Sudan, Palestine or Syria for example.

Again, we need to note that aid in these circumstances may have a key role to play but it is situated within a very difficult environment where public safety is uncertain, government agencies may not function effectively and civil society may be in a fragile state. Development and aid can help rebuild people’s lives and livelihoods but where new conflicts and disasters are possible, aid work and development results can be problematic.

Countries of high strategic importance

ODA is used as a way to build diplomatic relationships as well as promote development and we can see this being reflected in the large flows of aid to countries whose development needs may be lower than others but who have importance because of their strategic location or diplomatic alignment. Jordan, for example, is a relatively prosperous developing country (its HDI puts it in the ‘high human development’ category of the UN), but it ranks very highly as an aid recipient (in the top 25 in both total and per capita terms – Tables 3.1 and 3.2). This is probably because its location, bordering Israel, Saudi Arabia and Iraq, means that it is seen as a critical country whose political stability and relatively liberal global outlook acts as buffer and a peaceful example in a region perceived as prone to extremism and conflict. Pakistan also is seen as critical for those donors anxious about the instability and extremism they see in neighbouring Iran and Afghanistan. Pakistan ranks (just) within the ‘medium human development’ category and could justify high volumes of aid on the basis of its development needs but its position as the world’s fourth ranked aid recipient country is much more the result of its strategic importance to Western powers.

In many cases, aid in these situations directly helps support governments in providing important services for their citizens. These can include education and health services, infrastructure and energy as well as promoting economic growth in particular sectors. Typically, aid programmes to such countries tend to involve long-term commitments to development programmes and the use of recipient state systems. Aid which helps maintain a stable government that delivers effective services and an economy that provides jobs thus can act as a bulwark against political conflict. Furthermore governments that receive generous amounts of aid may well be more inclined to support the diplomatic and political strategies of particular donors. This facet of aid, seeing it as an important instrument of donor foreign policy, is a theme we will explore more in Chapter 4.

Emerging economies

Another important category of aid recipients is that which includes countries whose economies are growing relatively rapidly. Again, these are countries whose HDI rankings would seem to suggest that they are not amongst those most in need of aid. They have relatively prosperous and growing economies, they are usually tied to the global economies with large export-oriented industries and they usually have reasonably stable governments. They are large economies. In this category we see countries, such as Brazil, South Africa, India and, in the past, China. In addition, we would include the economies of Vietnam, Kenya, Bangladesh, Chile, Mexico and Colombia. Looking at the list of the top aid recipients (Table 3.1) we can readily see that a large proportion of global ODA flows to these emerging economies. Aid, then, seems to be a way of lubricating the machinery of the global economy, ensuring those economies that have good prospects for development are encouraged and supported to continue to grow.

Aid is given to these countries partly for geopolitical strategic purposes – it is good to keep emerging economies on-side and align their growing prosperity and global roles with those of donors. But also there are sound economic reasons. Growing economies and involvement in the global economy develops trading partners for the future and aid can play a role here, helping to forge business partnerships, providing technology and knowledge from donor sources that can be built on and used more in future, and influencing the direction of economic development so that it fits with donor strategies. Furthermore, providing development assistance in an environment where there is stability, growth and effective local institutions and agents promoting development is much more likely to succeed compared to situations of conflict, minimal economic activity and dysfunctional local institutions. Emerging economies are a good investment both politically and economically for donors.

Small island states

Small island states face particular development issues: their remoteness and relative small population bases mean that maintaining a full and viable system of government is very difficult (Tuvalu, for example, has a resident population of fewer than 10,000 people yet it is a fully independent country spanning a vast area of ocean and with a nearly full complement of government departments). Furthermore, many face particular environmental and economic problems, ranging from a lack of arable land to the serious threat of climate change and sea-level rise. Many have willingly maintained close diplomatic and constitutional ties with the former colonial powers and have been able to secure both high and continuing aid incomes and also access to metropolitan labour markets (Bertram 2004, 2006; Hintjens and Hodge 2012).

What is especially notable from the data in Table 3.2 is the high level of per capita aid in various Pacific states and territories. Eight of the top 10 per capita recipients and 14 (of the top 20 are in the Pacific Islands. This is partly a legacy of colonialism in that region involving principally Britain (and later its ‘settled’ colonies of New Zealand and Australia) and France. A number of the territories listed, such as Wallis and Futuna, Niue and Tokelau have some form of constitutional connection to former colonial powers (France and New Zealand in the case of the latter two). In the case of the Marshall Islands and Micronesia, the important strategic geopolitical location for the US in the Cold War and in the current political moment in the Pacific plays an central role (indeed were flows to American Samoa counted as aid this territory too would be highly ranked in these terms). Some of these territories such as the Cook Islands and Niue for example have relatively high levels of human development. Others such as the Solomon Islands and Kiribati do not however, and face serious developmental challenges associated with conflict and the environment respectively. Overall however, the high relative receipt in that region is probably more due to the combination of current and historical geopolitical patterns rather than the real challenges these societies face.

Overall, though, many small island states receive high levels of aid per capita. These states and territories, mostly lying in the Pacific, Caribbean and Indian Oceans, dominate the list of high per capita aid recipients (Table 3.2). Yet, perhaps even more than other recipients (for example, those in the ‘emerging economies’ or ‘strategic importance’ categories) these small island states do not rank poorly in the human development score. With the exception of Solomon Islands (one of the larger island states of the Pacific and with a recent history of internal conflict), and bearing in mind that many small states do not have a reliable enough statistical base to be able to calculate a meaningful HDI score, the small island states in Table 3.2 all rank in the medium or high human development categories. Although their export economies may be of questionable viability, the combination of aid and remittances has often provided jobs and incomes and led to the foundation of relatively good health and education facilities, improving literacy rates and life expectancy. Several now face the prospect of graduating to middle income status and are thus no longer eligible to receive assistance classified as ODA. For countries, such as Cook Islands, this may present a threat to a major source of funding for development and core government activities (Bertram 2018).

On the other hand, the case of St Helena and its inclusion in this list also rather stretches the credibility of the ‘developing country’ criteria and the definition of ODA (Box 3.2).

Conclusion

Aid flows between donors and recipients in a great variety of ways. There exist relatively simple bilateral relationships between a donor and recipient governments but these, in aggregate, criss-cross the globe in highly complex ways. As such, many recipients will receive diverse forms of aid from a multitude of donors, each with their own economic, political and strategic priorities. Adding to this complexity is the large number of multilateral institutions and flows, many with specific mission goals and ways of operating.

Overall, there are certainly some dominant ODA flows: the major donors are prominent and far outweigh the large number of smaller and newer donors. Thus USA, Japan, and the larger European countries (together with China outside of the ODA framework) alongside the World Bank and the UN, are the major players in the donor world. Yet their activities are not evenly spread. The geography of aid is such that some donors, large or not, dominate in particular parts of the world and this is often related to a mixture of historical geopolitics and current strategic economic and geopolitical interests. Japan, not surprisingly, has a particular interest in Asia; Australia focuses on both Asia and Oceania; Canada has a strong interest in the Caribbean etc.

These strategic priorities of donors also mean that there is no simple correlation between recipient ‘need’ (as measured by HDI or GNI per capita) and ODA receipts. Many aid recipient countries receive large amounts of ODA because of their strategic or economic interest to donors, whilst some of the poorest countries languish with low per capita ODA receipts. The reasons why these inequalities exist has to do with the varying motives of donors and recipients, something we turn to in Chapter 4. However, firstly it is important to see how aid strategies have evolved over time, for not only is the geography of aid uneven and complex, its history has been marked by sharp changes of direction in terms of the rationale for aid, who receives it and how it is delivered.

Summary

Discussion questions

Websites

Notes

  1. 1 Originally in the 1960s a target of 1 per cent of GNI in each member country was subscribed to but this included both government and private donations to developing countries. Given the difficulty of predicting or managing private flows, a focus just on ODA and a target of 0.7 per cent of ODA to GNP was adopted by the United Nations in 1970. It has been much referred to but rarely achieved by individual countries, and overall, since.

  2. 2 This high European ranking for ODA does not take into account the substantial amounts of ODA given by European Union institutions. Thus the ‘generosity’ of Europe is even greater than Figure 3.4 indicates.

  3. 3 Germany’s dramatic rise in 2015 is due to the inclusion of refugee-related expenses. Note also that the spikes for many donors in 2005 was probably related to humanitarian relief for the Asian tsunami.

  4. 4 In this analysis we have not included a large amount of ODA, which is classified in regional terms as ‘unspecified’. This goes to international institutions and activities where it is difficult to track exactly where in the world the funds end up. It also includes refugee and other costs which are spent within donor countries.

  5. 5 The Human Development Index (HDI) is a statistical measure that combines life expectancy, education (years of schooling) and per capita income (GNI at purchasing power parity) to gain a composite indication of a country’s development. The Index varies between 0 (no development) and 1 (very high development) and is used to rank and track countries over time.

Further reading

  1. Alesina, A. and Dollar, D. (2002) ‘Who gives foreign aid to whom and why?’, Journal of Economic Growth 5, 33–63.

  2. de Haan, A. (2009) How the Aid Industry Works: An Introduction to International Development. Kumarian Press, Sterling.

  3. Gulrajani, N. and Swiss, L. (2019) ‘Donor proliferation to what ends? New donor countries and the search for legitimacy’, Canadian Journal of Development Studies / Revue Canadienne d’études du développement 40(3), 348–368.

  4. Mawdsley, E. (2014) ‘Human rights and South–South development cooperation: Reflections on the “rising powers” as international development actors’, Human Rights Quarterly 36(3), 630–652.

  5. Overton, J. Murray W. E. and McGregor A. (2013) ‘Geographies of aid: a critical research agenda’, Geography Compass 7(2), 116–127.