De­vel­op­ment aid is still crit­i­cal for cut­ting rates of poverty world­wide

The China Post - - COMMENTARY - BY JOHN J. MET­ZLER

In­ter­na­tional de­vel­op­ment as­sis­tance still re­mains a vi­tal el­e­ment in re­duc­ing global poverty. What’s known as Of­fi­cial De­vel­op­ment As­sis­tance (ODA) has now reached record lev­els of more than US$135 bil­lion an­nu­ally and is chan­neled to a group of 148 coun­tries rang­ing from the poor­est of the poor such as Bangladesh and Haiti to bet­ter-off but needy lands such as Egypt and Kenya. When it comes to de­vel­op­ment as­sis­tance the largest donor coun­tries re­main the United States, the United King­dom, Ger­many, France and Ja­pan.

That’s the as­sess­ment from the Or­ga­ni­za­tion of Eco­nomic Co­op­er­a­tion and De­vel­op­ment ( OECD) the Paris-based agency whose De­vel­op­ment As­sis­tance Com­mit­tee tracks and co­or­di­nates aid flows glob­ally.

“In the past 15 years, net ODA has been ris­ing steadily and in­creased by 66 per­cent since 2000. It has long been a sta­ble source of fi­nanc­ing for de­vel­op­ment,” the OECD states. Aid for poverty re­duc­tion projects and tech­ni­cal as­sis­tance ac­counts for the ma­jor­ity, but in re­cent years hu­man­i­tar­ian aid has risen con­sid­er­ably while debt re­lief grants have fallen. The spike in hu­man­i­tar­ian aid re­flects the chaotic world sit­u­a­tion.

Though Of­fi­cial De­vel­op­ment As­sis­tance has grown con­sid­er­ably, “the growth was un­evenly dis­trib­uted across de­vel­op­ing coun­tries.” Aid re­mains sig­nif­i­cant for what’s termed as the “frag­ile” Least De­vel­oped Coun­tries but in fact ac­cord­ing to re­ports, “pri­or­i­ti­za­tion” is now be­ing fo­cused on “non frag­ile” but needy coun­tries such as Ghana, Honduras and Belize.

The OECD re­port states that “The United States con­tin­ued to be the largest donor by vol­ume with net ODA flows amount­ing to US$32.7 bil­lion in 2014.” The num­bers re­flect­ing an over 2 per­cent in­crease, were fo­cused on hu­man­i­tar­ian aid es­pe­cially to subSa­ha­ran Africa.

Euro­pean Union ( EU) states con­tin­ued to give the lion’s share of as­sis­tance of­fer­ing US$74 bil­lion in aid in 2014.

For ex­am­ple, the United King­dom gave US$19.4 bil­lion, Ger­many US$16.2 bil­lion, and France US$10.4 bil­lion. Smaller Euro­pean coun­tries such as Nor­way of­fered US$5 bil­lion and the Nether­lands US$5.5 bil­lion.

Only two East Asian states be­long to the elite De­vel­op­ment As­sis­tance Com­mit­tee; Ja­pan and South Korea. Ja­pan do­nated US$9 bil­lion while South Korea of­fered US$1.8 bil­lion.

In ad­di­tion, Aus­tralia sent US$4.2 bil­lion in aid while New Zealand of­fered US$502 mil­lion.

Ac­cord­ing to the OECD, the rel­a­tive im­por­tance of ODA is di­min­ish­ing. “The growth in for­eign di­rect in­vest­ment, port­fo­lio in­vest­ment and other forms of pri­vate fi­nance has sig­nif­i­cantly out­paced ODA growth over the past decade.”

This re­mains a pos­i­tive de­velop- ment where mar­ket-driven forces of in­vest­ment can re­place gov­ern­ment grants and loans to ad­mit­tedly poor coun­tries. Nonethe­less the least de­vel­oped coun­tries still have not at­tracted suf­fi­cient for­eign in­vest­ment to off­set the need for aid. And the mid­dle in­come coun­tries such as In­done­sia, Mexico and South Africa still face de­vel­op­ment chal­lenges de­spite at­tract­ing sig­nif­i­cant for­eign in­vest­ment.

For­eign di­rect in­vest­ment which fell by over 16 per­cent glob­ally in 2014 ac­cord­ing to U.N. re­ports, still re­mains vi­tal to most economies. Yet such aid still ac­counts for over forty per­cent of de­vel­op­ment fi­nance to de­vel­op­ing economies.

Though aid is cer­tainly nec­es­sary in many cases, ODA can clearly cre­ate a de­pen­dency which keeps many coun­tries from reach­ing their po­ten­tial.

In many ways such a de­pen­dence on for­eign eco­nomic as­sis­tance can be com­pared to train­ing wheels on a child’s bi­cy­cle. Though pru­dent and nec­es­sary in the be­gin­ning, wqho would se­ri­ously keep­ing the train­ing wheels on the bi­cy­cle year af­ter year? Many coun­tries like South Korea, for ex­am­ple, cer­tainly needed se­ri­ous Amer­i­can aid in re­build­ing in the 1950’s af­ter the war, but then grad­u­ated from this de­pen­dency and be­came suc­cess­ful in their own right. Other coun­tries still have that lin­ger­ing de­pen­dence on aid which serves both as a short term bless­ing but long term bane. John J. Met­zler is a United Na­tions cor­re­spon­dent cov­er­ing diplo­matic and de­fense is­sues. He is the au­thor of Di­vided Dy­namism The Diplo­macy of Sep­a­rated Na­tions; Ger­many, Korea, China (2014). con­tact jjm­col­umn@ earth­link.net

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