Development Aid Flashcards
what is aid?
gov transfers to poor countries for dev purposes
what is Official Development Assistance (ODA)?
gov aid to promote econ dev and welfare
- foreign aid ‘gold standard’
- recipients: countries and multilateral dev institutions
- donors: state or executive agencies
- give: concessional grants and soft loans
if an economic actor finances for profits/investment and indirectly finances dev, is that aid or trade?
trade
if a state directly invests or trades, but not concesionally, is that aid or trade? (e.g. China in Africa)
trade
what are the motives to provide aid?
- humanitarian motives: moral duty
- enlightened self-interest
- political and strategic moves
- economic motives
what are humanitarian motives to provide aid?
moral duty
- needs based
- for poorest
- in practice: most aid is actually to middle income countries, so not to poorest (so not a needs perspective)
what are enlightened self-interest motives to provide aid?
- to prevent spill over of poverty to adv countries
- so steer aid to countries presenting challenges
- usually regional
- not a ‘needs perspective’
what are the political and strategic motives to provide aid?
- towards allies
- towards those in conflict or important in preventing conflict
- towards former colonies
- not a needs perspective
what are the economic motives to provide aid?
- towards those with econ. potential, attractive markets, strategic commodities needed by donors
- mutual interest
- conditions tied (tied aid)
what are the different channels for aid?
- bilateral channel: gov -> gov
(biggest ODA share; 65% - 70%) - multilateral channel: UN, IFIs, regional dev banks…
(middle ODA share; 25% - 205%) - civil lateral or non-gov channel: NGOs, co-financed by govs
(smaller share; 5% - 10%)
what are the features of bilateral aid?
gov to gov
- visibility and profile for indiv. donors
- alignment with pol/strategic/security interests
what are the features of multilateral aid?
UN, IFIs..
- neutral, apolitical
- universality of allocation criteria
- large-scale possible
- specialized agencies build up know-how (WTO, UNDP)
what are features of civil lateral or non-gov aid?
NGOs, co-financed by govs
- smaller scale
- closer to poor
- commitment and non-profit orientation
how much aid is given, relative to other financial flows (investment)
very little
who is the main recipient of aid?
middle income countries
what is project aid?
limited in time, area and goals
what is program aid?
several activities integrated into 1 broader goal
what is sector aid?
assistance to entire sector
what is budget support aid?
contributes to overall development budget
- must agree on overall policies
- implementation left to receiving gov
what are the trends of aid since 2000?
- increasing aid
- > although mostly for refugees
- decrease in aid to lower developing countries
- MDGs/SDGs steer aid
- less projects and more budget support to countries on track
- increase in debt relief
What is the Heavily Indebted Poor Countries (HIPC)?
1996
for debt relief of poorest countries
37 countries eligible (Africa focused - 31)
what is a large challenge for the Heavily Indebted Poor Countries (HIPC)?
ensuring that the debt doesn’t return to unsustainable levels
why can aid be an obstacle for development?
- fragmentation
- dependence
- parallel institutions
what is the fragmentation risk of aid?
too many donors and projects
- high transaction costs
- burden on already fragile capacity of state institutions
- coordination problems
what is the dependence risk of aid?
- too much aid
- absence of exit strategies
- accountability trap: less incentive to collect taxes, more accountable to donors than population
what is the parallel institutions risk of aid?
donors create own institutions to implement
- hampers local capacity to build
- drains qualified staff from gov (higher salaries)
what is the goal of the 2015 Paris Agenda?
increase aid effectiveness through:
- ownership for receiving country
- alignment with policies of receiving gov
- coordination and harmonization among donors
