Development aid

In some countries there is more development aid than government spending. (Image from World in Data)

Development aid (or development cooperation) is a type of aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries.[1] It is distinguished from humanitarian aid by aiming at a sustained improvement in the conditions in a developing country, rather than short-term relief. The overarching term is foreign aid (or just aid). The amount of foreign aid is measured though official development assistance (ODA). This is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid.

Aid may be bilateral: given from one country directly to another; or it may be multilateral: given by the donor country to an international organisation such as the World Bank or the United Nations Agencies (UNDP, UNICEF, UNAIDS, etc.) which then distributes it among the developing countries. The proportion is currently about 70% bilateral 30% multilateral.[2]

About 80% of the aid measured by the OECD comes from government sources as official development assistance (ODA). The remaining 20% or so comes from individuals, businesses, charitable foundations or NGOs (e.g., Oxfam).[3] Most development aid comes from the Western industrialised countries but some poorer countries also contribute aid. Development aid is not usually understood as including remittances received from migrants working or living in diaspora—even though these form a significant amount of international transfer—as the recipients of remittances are usually individuals and families rather than formal projects and programmes.

Negative side effects of development aid can include an unbalanced appreciation of the recipient's currency, increasing corruption, and adverse political effects such as postponements of necessary economic and democratic reforms.[4][5]

  1. ^ "Development Aid and Economic Growth: A Positive Long-Run Relation" (PDF). Retrieved 2 January 2020.
  2. ^ "Total flows by donor (ODA+OOF+Private) [DAC1]". OECD. Archived from the original on 11 June 2009.
  3. ^ OECD, DAC1 Official and Private Flows (op. cit.). The calculation is Net Private Grants / ODA.
  4. ^ Aid Effectiveness and Governance: The Good, the Bad and the Ugly Archived 9 October 2009 at the Wayback Machine
  5. ^ Rahnama, M. & Fawaz, F. & Gittings, K. (2017). The effects of foreign aid on economic growth in developing countries. The Journal of Developing Areas 51(3), 153-171. Tennessee State University College of Business.