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5 Countries That Show Development Assistance is a Two-Way Street

Development AssistanceThe Development Assistance Committee (DAC) is a division of the Organisation for Economic Co-operation and Development (OECD). It facilitates economic development worldwide, partly by providing financial assistance to developing countries. The DAC currently has 30 members, including the U.S., Japan and the European Union. According to analysis organization DevelopmentAid, 155 countries received development assistance from these members and of other non-member donors in 2018.

Development Assistance Programs

Official Development Assistance (ODA) distributes financial assistance annually to low-income, lower-middle- and upper-middle-income status countries. Eligibility is based on national per capita income. Countries transcend eligibility once they exceed the high-income threshold set by the World Bank for three consecutive years.  The highest Gross National Income (GNI) was $12,376 as of 2018.

Many countries have graduated from being ODA recipients to become donors themselves. Researchers from the Overseas Development Institute found countries become donors when possible both out of morality and the recognition that aid can “lubricate commercial, trade and investment opportunities” for a donor country. But, it’s not just high-income countries that recognize this. Some nations have become development donors even while still being ODA recipients. Below are five such countries that are both aid donors and recipients simultaneously, proving foreign aid is often a two-way street.

Five Countries That Prove Foreign Aid is a Two-Way Street

  1. Brazil. With a 2019 GNI of $9,130 dollars, Brazil is an upper-middle-income country. It is an ODA recipient, receiving about $430 million in net ODA and official aid in 2018. According to the data organization Development Initiatives, Brazil’s biggest donors are Japan, Norway and Germany. Most of its ODA capital is directed to improving water and sanitation, agriculture and food security and infrastructure. However, Brazil has long been a donor nation, too. In 2010, the Brazilian government found that from 2005-2009 the country invested “more than $1.8 billion dollars into international development” efforts. In 2010 alone, Brazil disbursed $1 billion in aid abroad. One year later, it received that same amount itself in ODA financing. Brazil’s donations largely go to Latin America, the Caribbean and sub-Saharan Africa, particularly for peacekeeping and humanitarian purposes.
  2. South Africa. South Africa is an upper-middle-income ODA recipient with a 2018 GNI of $5,750. It received about $915 million in net ODA and official aid in 2018. In 2011, it received $1.5 billion, but it disbursed $209 million, according to Development Initiatives. Accurate assessments of total contributions and contribution breakdowns are hard to acquire because South Africa’s foreign aid programs are managed by various government organizations. Nevertheless, the country has several successful programs like the African Renaissance and International Cooperation Fund, which have steadily increased contributions since launching in 2001. South Africa’s foreign aid primarily fosters development across Africa. Conversely, as an ODA recipient, the country gets most of its ODA aid from the U.S., EU Institutions and Germany. It is directed primarily toward health issues.
  3. India. As of 2018 data, India is considered a lower-middle-income country. Its GNI for 2019 was $2,130, an all-time high for the country. However, as a nation far from the high-income threshold, it still receives substantial foreign aid. In 2018, it received $2.45 billion in ODA and official aid. The biggest ODA donors to India are the International Development Association, Japan and Germany. These funds are primarily spent on improvements in infrastructure, health and education. However, in 2011, while India took the third-largest share of ODA aid with $5.4 billion received, it also became the sixth-largest non-DAC member donor country. It disbursed $787 million toward international development cooperation. India’s contributions primarily support technical and economic development in Africa. 
  4. Chile. Chile was removed from the ODA eligibility list in 2018, having reached high-income status. It remained at $14,670. However, before achieving this status, Chile’s international development cooperation had been bilateral. The country was helping other nations throughout the world. Though its main beneficiaries are in Latin America and the Caribbean, Chile disburses money to a variety of areas for various purposes as needed. For example, it contributed $100,000 toward the crisis in Syria. The OECD estimated that in 2010, Chile’s overall contributions reached $42 million. However, it still received ODA at that time. In 2012, Chile was an upper-middle-income country and received $126 million in net ODA, largely from France and European Union institutions.
  5. Indonesia. With a 2018 GNI of $3,840, Indonesia is a lower-middle-income country that received just under $950 million in ODA and official aid in 2018. In 2011, Indonesia received $3.7 billion, making it the tenth-largest recipient of ODA. Japan is its largest donor. Almost 25% of all aid goes toward improving the country’s infrastructure. Despite still receiving such a large amount of foreign aid, Indonesia is seeing some growth. ODA’s share of national GNI has steadily decreased while government spending has increased. Moreover, in 2019, Indonesia created the Indonesian Agency for International Development to ramp up the country’s own participation in foreign aid. The agency will manage a $283 million endowment fund the government has set aside for development cooperation.

Development assistance benefits both national and global economies because it allows countries that don’t have sufficient funds internally to build domestically as well as participate in trade with other nations. This supports the logic in development aid flowing both ways in several countries. Brazil, South Africa, India, Chile and Indonesia are just five countries that exemplify such a circumstance.

– Amanda Ostuni
Photo: Wikimedia

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Building Safer Roads in Latin America

Roads in Latin America
In 2010, the United Nations declared the Decade of Action for Road Safety, calling upon governments to take the actions necessary to reduce the 1.3 million annual traffic deaths that plague modern society. For Latin America in particular, where 60 percent of roads remain unpaved and the rate of deaths from traffic fatalities stands at twice that of high-income regions, this was and is an incredibly pressing issue. That is why, as the Decade of Action for Road Safety comes to a close in 2020, it is important to reflect on what governments have done to build safer roads in Latin America, and how they can continue to carry the torch in securing the future of the region’s most vulnerable.

Taking Action on the Ground Level

Efforts to improve road safety have traditionally fallen into one of a few categories. Awareness campaigns, such as Salvador, Brazil’s Life Not Traffic program, invest heavily in training drivers on proper road etiquette, as well as lobbying for stricter drunk-driving laws. For Salvador and other Latin American cities, in particular, educating the youth through programs like “child drivers of the future” is also a major priority, as traffic deaths are the leading cause of death for Latin Americans ages 15-29.  So far, the results of these efforts are striking. In just eight years since its initial launch, Life Not Traffic has contributed to a 50 percent drop in traffic fatalities in Salvador.

Structural solutions, on the other hand, focus on pinpointing areas of improvement in regard to material conditions on the road, as well as looking at safer and more efficient ways to control the flow of traffic. The construction of roundabouts to replace traditional four-way intersections, for instance, has led to a 50-70 percent drop in traffic fatalities and a 30-50 percent drop in traffic injuries. Meanwhile, increased investment into speed and red-light cameras is also yielding promising results.

Structural solutions can also bring economic benefits, such as in the case of Tocantins, Brazil, where times of rain have historically inhibited the region’s road network, depriving Tocantins’ residents of access to Brazil’s urban population centers. To combat this issue, the World Bank has funded the construction of more than 700 concrete bridges in cooperation with local authorities, which has both increased employment and the average wage of the region’s agricultural workers. Safer, more reliable roads have also meant a rise in the percentage of children attending school in Tocantins, which has had the added effect of opening up more work opportunities for Tocantins’ female population.

Obstacles to Improvement

The World Bank’s work in Tocantins is a particularly salient example in this case, as it highlights the traditional obstacles to improving Latin America’s road infrastructure, as well as the steps necessary to overcome them. For one, there is the problem of geography. Where conditions in European and North American nations are, for the most part, agreeable to road building, tall mountains, thick jungles, expansive deserts and urban centers hamper Latin America. These, in combination with the region’s low population density, have made road-construction very costly.

However, while geographic conditions certainly make the task of building better roads more difficult, the real crux of the issue lies in the lack of funding that Latin American governments are able to devote to infrastructure. Estimates from the Inter-American Developmental Bank indicate that the region faces an annual infrastructure-spending shortfall of around $100-150 billion, due to regional governments’ issues with fiscal deficits and mounting public debts. As a consequence, programs aimed at both improving and expanding the region’s road networks frequently go underfunded, leading to the need for foreign aid and investment.

Foreign Aid Successes

Indeed, recent years in Latin American have seen an increasing number of successes in road improvements due to foreign aid, though economists estimate that still more aid is necessary before Latin America will be able to bring its infrastructure on par with the rest of the world. China’s Belt and Road Initiative, for instance, has provided $26.8 billion in infrastructure-related loans to Latin America since 2005, including financing a major highway in Bolivia that should bring significant economic benefits to the region after its completion in 2021. The United States, for its part, has also recently launched a new initiative to encourage more private U.S. financial investment into Latin America’s roads and other infrastructure.

In addition to building new roads, many new organizations have also taken root in the region with an eye on other means of improving road safety. The Latin NCAP is one such organization, launched under the umbrella of the U.N.’s Decade of Action for Road Safety, which has published over 100 safety assessments for new vehicles since 2010, helping to keep Latin America’s drivers safe before they even step in the car.

While much work remains when it comes to building safer roads in Latin America, it is undeniable that foreign aid has led to major improvements for the region’s inhabitants.

– James Roark
Photo: Pxfuel