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Distributing Foreign Aid
No unitary world body is responsible for coordinating and distributing foreign aid. Foreign aid efforts generally consist of bilateral or multilateral aid. One country directly grants bilateral aid to another, while several countries pool resources together before joint-delivering multilateral aid. The U.S. Agency for International Development (USAID) is an example of a bilateral aid organization because only the United States is part of its decision-making process. A strong example of a multilateral aid donor would be the United Nations or the World Bank, where the organizations themselves exercise a strong degree of autonomy over distributing foreign aid.

International Cooperation in Foreign Aid

The World Bank, United Nations and the Organisation for Economic Co-operation and Development (OECD) are some of the biggest agenda-setters in foreign aid. While they all operate independently, each contributes to a shared effort and common understanding in achieving their goals.

In 2012, the United Nations convened a large conference to set targets and an agenda for goals in sustainable development by 2030. Of its 17 development goals and 169 targets, poverty topped the list and contained seven targets. The conference determined the most significant and salient issues relating to sustainable development until 2030. In support of this common objective, OECD also incorporated a platform regarding the 2030 Agenda for Sustainable Development. This exemplifies how one organization’s agenda can cross over and influence agendas that others set.

The Coordination Efforts of the OECD

The OECD advises the distribution and implementation of effective foreign aid flow among the aid members of its Development Assistant Committee (DAC). Within many different frameworks and groups, OECD utilizes a “gold standard” for foreign aid called Official Development Assistance (ODA). Since 1969, the largest countries convened within the DAC have adopted ODA as their primary source of distributing foreign aid. The definition of ODA is a complicated matter, because, for instance, the countries that are eligible for ODA change over time. Regardless, distributing foreign aid undergoes careful optimization to promote and target economic development and welfare in developing countries. These repercussions are wide-ranging. International bodies from the World Bank to the U.N. respect the standards that the OECD sets.

The OECD utilizes a top-down approach to achieving broader development and aid objectives. The organization regularly measures and assesses its progress in implementing its objectives. This includes providing advice to member countries. In its report on “Measuring Distance to the SDG Targets,” it provided member countries with an assistive overview of strengths and weaknesses when it comes to achieving the Sustainable Development Goals (SDGs) that the U.N. set. Such feedback helps countries stay on track to best reach the goals. Overall, the study revealed uneven progress on the Sustainable Development Goals. Some targets, such as infrastructure experienced near achievement, but other targets rated medium to low progress.

The World Bank

The World Bank is something of a twin to the International Monetary Fund (IMF). However, instead of preventing and dealing with financial catastrophes like the IMF, “the [World] Bank is primarily a development institution.” One can see the international links when the World Bank discusses ODA while considering foreign aid flows.

In 2021, one of the World Bank’s primary objectives is to soften the economic blow of COVID-19. It plans to deploy up to $160 billion by June 2021 in support of countries’ responses to the virus. For example, the World Bank provided nearly 7,000 infection, prevention and control supplies and more than 31,000 personal protective equipment to Papua New Guinea. In Ghana, it supported the training of thousands of health professionals and technicians. Today, the World Bank is the largest external financier of education in developing countries. In its 2020 annual report, the World Bank estimated that the International Finance Corporation, a member of the World Bank Group, would contribute to the creation of at least 1.9 million jobs through the projects it financed in the fiscal year 2020.

Looking Forward

Thanks to organizations such as the World Bank, the U.N. and OECD, foreign aid benefits from higher levels of cooperation than ever. While no unitary body exists to overlook aid distribution, these organizations are filling the gap. Their efforts foster hope for even greater effectiveness in distributing foreign aid.

– Marshall Wu
Photo: Wikipedia Commons

China’s Foreign Aid
The pathway of China’s development in foreign aid has strongly correlated with its own trajectory of economic and diplomatic development. China’s foreign aid programs have matched with its modernization over the past seven decades, going from limited in scope to becoming both global and influential.

China’s Development Regarding Foreign Aid

For instance, four noticeable and distinct time periods showcase China’s approach toward foreign aid. In its first phase, from 1949 to China’s adoption of Reform and Opening-up Policy in 1978, its foreign aid was primarily ideological and centered around competing with Taiwan for diplomatic recognition as the rightful claimant to China following World War II. For instance, China utilized aid in order to encourage countries to vote favorably for or side diplomatically with China in international institutions. By the end of 1975 during the cultural revolution, foreign aid had amounted to 5.9% of total government spending. For comparison, in recent years, the United Kingdom’s spending on foreign aid peaked at 0.7% of its GDP. Following the Reform and Opening-up Policy, aid took a complementary role to diplomatic cooperation and trade and shrank in ideological orientation.

China’s third phase of aid focused on international institutions as China became increasingly involved in international organizations, treaties and the global economy. Since 2013, in its most recent orientation, foreign aid has matched step with China’s greater economic role in the world as it has played a greater role contributing to global aid infrastructure, such as the World Bank Group, and finds its own ways of improving on the effectivity of its own aid.

The Evolution of Chinese Aid

The expansion and evolution of Chinese aid have come from two main factors, one domestic and one international. Most recently, China’s 13th five-year plan, covering the phase of 2016-2020, laid out an increasingly global agenda for China’s development, bringing up core principles such as sustainability, openness and inclusivity. It follows that China’s current agenda for foreign aid will adopt these development principles. Internationally, adoptions of U.N. resolutions such as the Paris Climate Agreements and the G20 Hangzhou summit have carried sustainable and global development goals into its aid agenda, helping China grow as an international leader in global sustainable development.

A Picture of China’s Foreign Aid

The very nature of estimating China’s foreign aid is challenging because the data itself is a state secret. An AidData report, published in late 2017 and meticulously computed and collected by hand over a period of five years, analyzed Chinese aid commitments from 2000-2014 and provides the most recent data. Furthermore, the nature of China’s foreign aid is unlike that of other major global aid donors because it follows its own unique logic. For instance, only as recently as 2018 had China’s foreign aid come under a single centralized body. Furthermore, Chinese aid tends to emphasize economic and infrastructure aid, coming in the form of export credits or near-market rate loans.

As a result of many of these factors, one can truly call little of China’s aid official development assistance (ODA), the most common type of foreign aid in the world today. In fact, one can consider just 22% of China’s aid ODA, while roughly 93% of U.S. aid is ODA. To illustrate the distinction, estimates using looser definitions of ODA have found that China’s quantity of foreign aid has approached that of the United States in some years. Other estimations of ODA in the strict sense find that China’s quantity of aid is comparable with that of countries such as Luxembourg.

Chinese Foreign Aid Around the World

Of China’s complicated foreign aid breakdown, the top three destinations of Chinese foreign aid around the world are Africa in first with 34% of all aid flow, Central and Eastern Europe with 16% and Latin America with 15%. When accounting for only ODA-like aid, however, aid takes on a more nuanced perspective. While Latin America keeps most of its share, now with 12% of ODA-like flows, Central and Eastern Europe receives only 3% of ODA-like flow, and Africa nearly doubles its portions, receiving 58% of China’s ODA-like aid flows.

The Benefits of China’s Foreign Aid

AidData ultimately concluded in its research that Chinese aid, contrary to some people’s fears, certainly did more good than harm. One point AidData made was that Chinese ODA would, on average, contribute to a 0.7% increase in economic growth two years after project commitments, although it did not find positive correlations between non-ODA aid and growth.

China’s evolution from net aid recipient to major global donor has been a transition that has kept pace with its financial development. Despite the shortlisting of available data and information, China is poised to overtake the U.S. as the largest aid donor in Africa if one considers all of the aid it gives. Mystery ultimately shrouds China’s aid, even today, and to know where the next stage of Chinese aid will go, it would be beneficial to follow China’s broader national development agendas which set the broader tone and direction of all economic efforts in the country. Given its expanded role in today’s world, China will likely continue on its overall trend of improving both the quantity and impact of its own foreign aid as it incorporates international development agendas, learning from and teaching others about its own economic lessons.

– Marshall Wu
Photo: Flickr

Sweden’s Long-standing CommitmentOn September 22, 2020, Peter Eriksson, Sweden’s Minister for International Development Cooperation, took to Twitter to announce that Sweden will continue to commit 1% of the country’s GNI to official developmental assistance during the COVID-19 pandemic, urging the international community to follow in the country’s footsteps. This act is indicative of Sweden’s long-standing commitment to eliminate poverty, which is a promise the country is dedicated to keeping.

A Leader in Foreign Aid

According to the OECD, Sweden dedicates around 1% of its national income to developmental aid, making it the highest developmental assistance donor. The country’s commitment to policy development issues is the strongest in three categories: peace and conflict prevention, gender equality and women’s rights as well as environmental sustainability. Since 2006, the country has committed to regularly donate a portion of its GNI as official developmental assistance (ODA) and has since kept its word, donating at least 1% or more every year.

The Swedish International Development Cooperation Agency (Sida)

Sida is a government agency of the Swedish Ministry for Foreign Affairs. Sida is responsible for Sweden’s official development assistance to developing countries.

Sida is a prominent international actor with an overall mission to make sure people living under poverty and oppression are able to enhance their living conditions. During the COVID-19 pandemic, Sida allocated $149 million to mitigate the pandemic’s effects on vulnerable communities and populations abroad. Sida has collaborated with many different multilateral organizations to uphold Sweden’s promise of helping the international community during the pandemic..

Sida has bilateral development cooperation with 35 different partner countries from four different continents and consistently supports multilateral organizations in their pursuit of increasing human rights and democracy globally.

A Leader for Women’s Empowerment

The country has shown relentless support for gender equality and women’s rights, highlighting Sweden’s long-standing commitment to ending gender discrepancies around the world. Sweden is a pioneer for many new policies regarding women’s rights. For instance, in 2014, Sweden created the world’s very first feminist foreign policy. Sweden has garnered the support of many foreign bodies and their allies by raising awareness through forums. The most notable being the 2018 Stockholm Forum of Gender Equality. The gathering brought 700 members from 100 different countries to discuss the implementation of new policies to protect women in vulnerable communities from oppressive regimes, further elevating their rights and enabling an inclusive society.

A Leader for Environmental Sustainability

Furthermore, Sweden’s clean carbon footprint is impressive, with a large quantity of the country’s waste recycled. The country has committed to net-zero emissions by the year of 2045 and it has dedicated many resources to encourage countries across the globe to implement sustainable environmental practices. The country has shown continued leadership. In 2017, Sweden had co-chaired the U.N. Ocean Conference with Fiji. In 2018, Sweden also hosted GEF-7 Replenishment, a meeting between contributing and potential participants from all around the world with efforts to eliminate non-renewable energy sources in the near future.

Sweden: A Developmental Assistance Model

Sweden’s long-standing commitment to developmental assistance highlights the country’s leadership skills as an exemplary model for other developed nations. Sweden’s relentless efforts in supporting foreign aid, even during a pandemic, is a model that needs to be mimicked by other developed nations that have the same capacity to help, now more than ever.

– Mina Kim
Photo: Flickr

pork and povertyAfrican Swine Fever (ASF) may seem unimportant during the COVID-19 pandemic, especially as the virus that causes ASF cannot infect people. Nevertheless, it can produce serious consequences. ASF can cause up to 100% mortality in pigs. The disease not only affects pork, the most consumed meat in the world, but also devastates the livelihoods of pig farmers around the world. ASF may also hurt a country’s trade with other countries. In addition, ASF can be the target of an eradication program that costs millions of dollars. For example, in Spain, it cost an estimated $92 million in just five years. Rural development and the alleviation of poverty are at stake as well. Hence, the connection between foreign aid, pork and poverty is more significant than you might think.

ASF in Nigeria

Pig farming is connected to the livelihoods of people around the world. In Nigeria, pig farming helps Nigerians get out of poverty. An outbreak of ASF during the summer of 2020, however, already affected Nigerian farmers. Farmer Ayo Omirin told the BBC that four farmers died as a result of shock. Two of these farmers, who slumped over and died on the farm, leave their dependents facing an uncertain future. Thankfully, the state government has offered help to the farmers impacted by ASF.

Foreign Aid, Pork and Poverty

To successfully combat ASF, foreign aid flows must not stop. The Nigerian state government may have been able to provide help in part to such flows. To help us better understand foreign aid, The Borgen Project interviewed Professor Waya Quiviger, an IE University professor. Quiviger told The Borgen Project that “[Foreign aid] … could be defined as the international transfer of capital, goods or services from a country or international aid agency to a recipient country or its population. That would be a simple definition. Foreign aid consists of all resources transferred from donors to recipients.” This would include military aid and private aid, such as NGOs and individual donations.

ASF: Damaging Pork and Poverty

In 2009, scientists authored a report that said “[international] agencies and donors should promote local capacity development, research activities including risk assessment, and regional coordination of emerging swine disease surveillance including ASF.” Now in 2020, foreign aid is more essential than it was then. This may be because the majority of official foreign aid is allocated with respect to public goods.

Quiviger told The Borgen Project that “[Official Development Assistance (ODA)] … is basically public aid.” Foreign aid flows target the economic development and welfare of designated recipient developing countries. Many of the countries in which ASF is or could be present will need support in order to adequately control the disease. In particular, these countries have insufficient Veterinary Services and/or policies.

In 2019, the Organization for Economic Cooperation and Development (OECD) designated the World Organisation for Animal Health (OIE) as an ODA-eligible international organization. Consequently, ODA can contribute to to the Regular Budget of the OIE. Additionally, designated countries can receive assistance through the OIE.

Why Should Donor Countries Provide Foreign Aid?

ASF can generate or make more pronounced socio-economic problems, such as food insecurity. These problems could lead to suffering and instability, which other countries may wish to address. Additionally, others may feel sympathetic or worry about their country’s national security. Countries may then send funds to address the problem.

As an incentive, donor countries could see how the OIE is involved in other activities. For example, peste des petits ruminants (PPR), a disease of goats and sheep, threatens the livelihoods of 300 million rural families around the world. In 2019, the OIE Vaccine Bank delivered 10.1 million doses of a vaccine to deal with the disease. Funding for this program came from the World Bank, the E.U., Italy, France and the U.K. Together with international agencies, national actors, can use foreign aid to help control ASF. Thus, people around the world can enjoy pork, maybe even as they move past poverty.

What Can You Do?

Quiviger mentioned in the interview that “Another type of aid is private aid … Private aid is aid given from NGOs or donors, like you and me. Bill Gates for instance.” However, during the COVID-19 pandemic, donor countries may scrutinize and cut their foreign aid. Importantly, the U.S. is a donor of the OIE. As an individual, you can contact your senators and representatives in Congress to ask them to support the International Affairs Budget.

Kylar Cade
Photo: Flickr

Which Countries Give the Most Foreign Aid?
In 2005, 15 countries agreed to dedicate 0.7 percent of their Gross National Income (GNI) to Official Development Assistance (ODA). ODA, according to the Organisation for Economic Cooperation and Development (OCED) stands for “the promotion of the economic development and welfare of developing countries”. The hope was to reach this goal by 2015, however, only seven countries reached this goal. Of these seven, five reached higher than the target percentage.

Wondering which countries give the most foreign aid? Here are the top five countries by the above-mentioned criteria.

Countries That Give the Most Foreign Aid

  1. Sweden – Sweden currently stands at number one in ODA support among countries from the European Union. In 2015, 1.4 percent of Sweden’s GNI, or $7.1 billion was ODA assistance. This was a dramatic increase from 2014 and was the result of in-donor refugee costs that cost $1.1 billion. That same year, over 160,000 people applied for asylum in Sweden. Most of Sweden’s ODA assistance was bilateral, meaning money was given directly to other governments. The money was mainly directed towards gender equality. More than $2 million were allocated and the focus of this money was largely geared towards population and reproductive health. During this time Sweden also integrated a Feminist Foreign Policy approach that ensures that women have the ability to access their human rights.   
  2. Norway – In 2015, Norway dedicated $4.3 billion to ODA support. This represented just over 1 percent of Norway’s GNI. This was a slight decrease from 2013, but Norway still remained above the dedicated 0.7 percent of GNI and ranks higher than most countries within the European Union. Most of Norway’s ODA support was for environmental causes. Thirty-four percent of their bilateral aid was focused on the environment (this translates to $1.3 billion). One of the biggest environmental issues that Norway addressed was climate change, and Norway developed an Oil for Development program for this mean. This program helps developing countries oversee their oil resources in a more sustainable way.
  3. Luxembourg – Luxembourg spent 0.93 percent of GNI od ODA, which totaled to $361 million. Most of this money was focused on economic development, more specifically strengthening the local private sector. Luxembourg helped developing countries economies in several ways. One of the most important was helping to improve trade performance and integration into the world economy. In total, $44 million went towards economic aid. The region that received a majority of this money was sub-Saharan Africa that took 44 percent of Luxembourg’s total bilateral aid.     
  4. Denmark  Denmark achieved 0.1 percent more than the established goal, which equated to more than $2.5 billion in ODA assistance. This was a slight increase from 2014, however, aid is expected to decrease slightly in the future. Despite this decrease, Denmark plans to remain at 0.7 percent of GNI spending towards ODA. Like Sweden, most of this money was provided to gender equality initiatives. The amount of bilateral aid that went towards gender equality was around $1 billion. Roughly 59 percent of this money had the objective of women’s empowerment. Denmark was above average in this category, since the average aid of countries from the European Union was 34 percent.
  5. The Netherlands – The last of the top five countries on the list is the Netherlands. ODA from Norway reached 0.76 percent of GNI spending or $5.8 billion in total numbers. This was an increase of 24 percent from the previous year and like Sweden, this was largely due to in-donor refugee costs. Also like Sweden, most of the Netherland’s ODA went towards gender equality, in the total of $1.6 billion. This is the result of spending toward reproductive health, water, sanitation and economic infrastructure, which all have an emphasis on gender.

Although many countries out of 15 that have promised to spend their GNI od ODA haven’t done that, the countries that did reach a goal showed that several developed countries view foreign assistance as an important piece of their economy. The top five countries presented in this text are the good examples of how can developed countries provide help to other, less developed countries.

– Drew Garbe

Photo: Flickr

Importance of Foreign Aid
Here at The Borgen Project, we are often asked why foreign aid is important. Foreign aid can save the lives of millions of people living in poverty around the world. It addresses issues such as health, education, infrastructure and humanitarian emergencies.

Foreign aid is a broad term. In a wide sense, it can be defined as “financial or technical help given by one country’s government to another country to assist social and economic development or to respond to a disaster in a receiving country.”

 

2 Ways Foreign Aid Helps the U.S.

 

donate_poverty
Creates Jobs

 

world_hunger
Improves National Security

 

There are numerous reasons why foreign aid is important to help impoverished countries; discussed below are the six key targets.

 

Top 6 Benefits of Foreign Aid

 

  1. Infrastructure: roads, bridges, institutions and sewer systems get built, giving people the ability to be mobile and have access to basic necessities such as electricity and running water.
  2. Agricultural technology improvements: improvements enter the infrastructure within the agricultural businesses within recipient countries.
  3. Education: classrooms get built, teachers receive training and children gain basic educational needs.
  4. Health: vaccinations, mosquito nets, safe drinking water, access to hygiene education and basic sanitation are all brought in.
  5. Humanitarian issues and natural disaster emergencies: life-saving support comes to those affected and possibly displaced due to natural disasters, emergency shelters are built for people affected by violence, and counseling services are made available.
  6. National security: recipient countries can combat terrorism with the help of foreign aid as it decreases poverty, weak institutions and corruption and can help strengthen good governance, transparency and the economy.

Another reason why foreign aid is important is how it fosters a conducive diplomatic relationship between the donor and the recipient.

Impoverished nations receiving aid can eventually become independent and move towards democratic fundamentals with the help of donor countries.

There are hundreds of different donors of foreign aid. One of the most well-known donors of foreign aid comes in the form of Official Development Assistance (ODA).

It is provided by the Development Assistance Committee of the Organization for Economic Development Cooperation. The ODA provides foreign aid to poor countries in the form of grants and loans.

The ODA is important to impoverished countries as it provides specifically the materials needed to build effective infrastructure and expand educational programs and the access to schools. Additionally, it provides efficient responses to humanitarian emergencies.

One of the most well-known and largest providers of foreign aid is the International Development Association (IDA), which is part of the World Bank. It has 173 shareholders that provide grants and loans to 77 countries around the world, 39 of which are located in Africa.

The main goal of the IDA is to reduce inequalities, increase economic growth and improve the living conditions of those in poverty. These goals are addressed as IDA funds are given directly to the sectors of education, water, sanitation, agriculture and infrastructure.

The IDA provides little to no interest on its grants and loans and allows for a grace period of up to 10 years. It also allows the recipient country to make debt payments of up to 40 years.

Since 1960, the IDA has provided $312 billion in investments in 112 impoverished nations. In the last three years alone, there has been an average of $19 billion in grants and loans.

Foreign aid truly makes a difference to people living in poverty. It provides access to basic necessities and provides people essential conditions for living a peaceful and secure life.

Kimber Kraus

Photo: U.S. Navy

overseas_aid
ONE reports that international aid and foreign aid is confusing, and one of the key things to improving it is to make it clear and understandable. A suggested way to do this is that all donor countries need to work in unison to make sure that the definition and the measurement of official development assistance is communicated more effectively. ONE recently published a data report that showed this suggestion is actually not the best way to explain and improve aid, so the organization suggested 11 ways in which overseas aid can be improved.

  1. Redefine what aid is. According to ONE, 17 percent of total aid never left the donor countries between 2000 and 2012. There are a lot of things that can count as aid, including student costs and debt relief. These are important but shouldn’t necessarily count as official development assistance (ODA).
  2. Bring rules around loans up to date. An update to the criteria of what can count as loans is needed, because, currently, it is possible for donor countries to make money from ODA loans.
  3. Make sure countries only receive aid loans if they can afford repayments. Countries can become overwhelmed with repayment if they are at risk for further debt, and this can lead to increased poverty, which defeats the purpose of aid.
  4. All donor governments should step up and meet their aid commitments. Last year, aid increased by a small amount, but according to ONE, only 0.29 percent of gross national income is spent on aid.
  5. Donor countries should give 50 percent of their aid to the poorest countries. If this would have been done, in 2012 alone this aid would have given an additional $22 billion to the poorest countries.
  6. African governments need to improve their tax collection. People need to be responsible for their dues and prevent money from being lost to corruption. Governments need to crack down on how much tax is owed and how much is being paid.
  7. Donor countries should support public financial management. Government funding is often lost across Africa because of limited tax collection. ONE suggests that investing in public financial management systems will help build a better tax collection.
  8. Tax havens need to be opened. The role that donor countries play in keeping up tax havens is important and it entices illegal financial flows.
  9. African governments need to spend more on tackling poverty. The allocation of money for poverty reduction isn’t being met by a lot of African governments. Over the last few years, only six countries have given their promise of 15 percent being spent on health.
  10. Donors need to step up on aid transparency as they promised. Not all of the donors have signed up to publish the details of aid spending online, which was a requirement with The International Aid Transparency Initiative.
  11. African governments need to publish better budget data. The data that is currently posted is lacking a lot of information, which makes it hard to know what these governments are spending money on, how much they have to spend, and the results of what they are doing.

With these easy and attainable tweaks in the system, aid will be understandable and better utilized. If it is organized, we can see where the money is going and why, and if it can be better used somewhere else, it will be easy to see that and reallocate that aid. These steps will be essential moving into 2015 as our fight to end poverty continues.

Brooke Smith

Sources: ONE, OECD
Photo: Huffington Post

Private_Sector_For_Common_Good
In the wake of the destruction following Typhoon Haiyan, reconstruction strategies in the Philippines are starting to gain headwind. Budgets, however, remain limited. In fact, proposals for funds from the Philippines’s Congress are still inconclusive and critically slow to respond to relief efforts.

But there is some good news: the cooperation between private sector and international aid funding has provided a combined supplementary budget to the Philippines government at an estimated $5.8 billion. The Philippine Disaster Recovery Foundation, headed by private sector donors, raised $310 million for the recovery effort.

The World Bank Group has recently adopted a new strategy in ending the problem of world poverty by its goal of 2030: reaching out to the private sector. According to Bank Group estimates, expunging social inequality and closing large infrastructure gaps in developing countries will cost $1 trillion per year through 2020. Currently, official development assistance (ODA) from NGOs and agencies such as the Bank Group reach $125 billion per year.

At a meeting at the United States Chamber of Commerce, President Kim of the World Bank stressed the private sector’s necessary role in global development: “There is no way ODA is going to be anywhere near adequate. If you have high aspirations for poor people in the world, you have no choice but to embrace the private sector.”

The anxieties associated with private sectors invested in low to middle-income countries are astounding thanks to the high risks involved — so high as to turn most investors away from seeing the potentialities of opening up new markets. Private sector investments are responsible for 90% of the world’s economic growth. Focusing money into a developing country’s infrastructure would create new classes of middle-range consumers in the poorest of countries.

The World Bank, IFC (the Bank Group’s private sector arm), and the Multilateral Investment Guarantee Agency will work together to mitigate the risks involved in private sector ventures into global development. The organizations aim to act as financial advisors between public and private sectors of business in developing countries.

– Malika Gumpangkum

Sources: The World Bank Group: Private Sectors, Voice of America, The World Bank Group: Support the Philippines, International Finance Corporation
Photo: WordPress

National_Security_Foreign_Aid
Over the past 20 years the global poverty rate has been cut in half, a reduction that appears substantial at first glance. The harsh reality is that more than 1 billion people (over 14% of the world’s population) continue to live in destitution, a moral abomination of the highest order considering the money and resources of the wealthiest nations.

The U.S. has been particularly negligent in its committed foreign aid donation of 0.7% of Gross National Product (GNP), the amount the richest UN member states agreed to donate as Official Development Assistance (ODA) to developing countries. The U.S. is often the largest contributor of ODA in terms of dollars, but in 2011 the U.S. ranked among the lowest contributors of ODA as a percentage of GNP, only giving 0.2% while Sweden gave an impressive 1.02%. Why is one of the wealthiest nations falling behind in its humanitarian efforts?

The war on terror, particularly in Afghanistan, indicates a pattern: Situations must become a matter of national security before the U.S. will consider serious intervention and global poverty has yet to meet this criteria. Traditionally, poor states posed less of a military threat than wealthier states, but the 2002 National Security Strategy of the United States of America stated, “America is now threatened less by conquering states than by failing ones.”

What the U.S. must acknowledge is the likely symptom of poverty: violent conflict. Violent conflict can quickly drag down a developing country’s weak government, making room for the harboring of illegal groups and activities. As a result, potential new threats to U.S. national security in the form of terrorism, organized crime, and the trafficking of drugs, arms, or people will arise.

In the 1990s, 35 of the 46 states deemed “fragile” by the UK Department for International Development (DFID) were in conflict. According to the DFID’s estimate, these states account for over 30% of the people living on less than $1 a day. On average, ODA is the largest financial flow in fragile states, however the assistance has a decreasing impact due to growing populations.

It is in the best interest of the U.S. to contribute the committed amount of ODA. The U.S. is fertilizing the growth of potential threats through negligence in its ODA contributions. An increase in poverty in a fragile country will likely contribute to an increase in violent conflict that could become so severe it threatens at least U.S. interests, if not the very safety of its own citizens. It would not be the first time.

– Scarlet Shelton

Sources: Economist, World Bank, OECD, Global Issues, UN Millennium Project
Photo: Talk Android

US-foreign-aid-percent-GDP.opt
Global aid, formally known as Official Development Assistance (ODA), continued to decline in 2012 as wealthy countries struggled with the global financial crisis. Global aid decreased by four percent in 2012, following a two percent decline in 2011.

Global aid totaled about $125 billion USD in 2012. Most of that came from members of the Organization for Economic Cooperation and Development’s (OECD) Development Assistance Committee (DAC), which includes most of the world’s wealthiest countries: the United States, Japan, and much of Europe. However, contributions of the BRICS countries (Brazil, Russia, India, China, and South Africa) are becoming increasingly important to poverty reduction and assistance efforts.

In 2012, Australia, Austria, Iceland, Korea, and Luxembourg increased their donations to global aid. Countries hit the hardest by the financial crisis, including Italy, Spain, Greece, and Portugal, decreased their contributions.

Donations can be measured both by total quantity of donation and percentage of gross national income (GNI). The US was among the largest donors in total monetary value, but did not reach the minimum threshold of 0.7% of GNI. Smaller countries such as the Netherlands and Denmark surpassed 0.7%. In some cases, donations from non-traditional donor countries such as Saudi Arabia and Turkey surpassed individual donations from DAC-member countries.

The percentage of OECD global aid dedicated to humanitarian causes has increased from 3.3 percent to 8.6 percent over the last two decades. Global aid is distributed to many different sectors, including economic development, social and administrative infrastructure, food aid, transportation, and agriculture.

Global aid distribution has also shifted in recent years. The share of aid going to sub-Saharan Africa, traditionally the largest beneficiary, decreased from 47.8% to 41.8%. Meanwhile, aid to South and Central Asia increased from 11.5% to 19.8%.

The OECD’s official report on global aid trends can be found here. Call your senator or representative and let them know that you’d like to see the US contribute more, not less, to global aid.

– Kat Henrichs

Source: IRIN
Photo: The Fact File