IDST 1001H Chapter Notes - Chapter 8: Development Assistance Committee, Official Development Assistance, Tied Aid
15 Jun 2018
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From Textbook Chapter 8: National Development Agencies and Bilateral Aid
Clarifying the Terminology
• Donors: providers of development assistance
• Most give majority of their aid directly to developing countries (known as bilateral
aid) and channel some through multilateral organizations (known as multilateral
aid)
• Official development assistance (ODA): flows of financing administered with the
promotion of the economic development and welfare of developing countries as the main
objective, and which are concessional in character with a grant element of at least 25%
• Must be from the government, and with main purpose of improving social or
economic well-being in developing countries
• Can be a grant or a loan, but if a loan must be on significantly better terms than
what is available on commercial market
Overview of Aid Donors
• Development Assistance Committee (DAC): club that contains most industrialized
countries that provide foreign aid, part of the Organization for Economic Co-operation
and Development (OECD)
• Makes public foreign aid from member countries (around 95% of ODA is in DAC)
• Since 1960s ODA has drastically increased and is expected to continue
increasing
• Most generous donor in dollar terms is US but they are the least
generous in relative terms
• Relative generosity = ODA/GNI
Donor Motivations
• One reason donors provide development assistance is to help the less fortunate
• Can be motivated by charity, religious beliefs, solidarity
• Other reason could be aid as a means to pursue other foreign policy objectives
• Looked down upon because it focuses on self-interest
• Some view ODA as a form of compensation for past or present injustices
• To ensure human rights are met in countries that cannot provide them
Characteristics of Donors
• Donors tend to focus on a particular region on the basis of geography, security interests,
or former colonial ties
• Countries tend to have agencies that they use to deliver aid
Aid Recipients
• OECD has a list of countries eligible to receive ODA
• Due to variations in size of aid, the top recipients of aid are not necessarily most
dependent on aid
Current Trends and Controversies
• Trends:
• Almost all donors are taking measures to reduce or eliminate tied aid
• Bilateral donors tend to use grants and less loans
• Debate on if aid should be to fight poverty or also to promote economic growth
• Most countries focus on poverty
• Debate on which countries aid should be focused on
• No consensus on what specific recipient-country entity should be given ODA funds
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