Lectures 1-2: Basic Concepts Flashcards
Development definition
In general: Positive change in a society
(as understood in Development Assistance) = a process of accomplishing planned short and medium term goals
technocratic approach, easier to operationalize in practice
Why should we study development “industry”?
- big “business”
- it has an impact on many spheres (political,economical…)
- it brings forth hugely differing opinions (e.g. Sachs x Easterly)
assistance/cooperation/aid: definition
concrete external interventions in the developing countries with the overall aim to bring about a positive social change, most often poverty reduction
Development Assistance
Different Understandings (limited/broad):
a) all the financial resources from private and public donors provided for development aims
b) only funds provided by the official donors => ODA
Forms of Development Assistance
humanitarian emergency assistance, budget support, country programmable aid, food aid, military assistance…
de-politicization of development
Dealing with immediate, urgent individual needs,
ignoring the broader context (political economy, power structures, global income inequalities etc.)
ODF
= used for measuring the inflow of public resources to recipient countries
OOF = transactions by the official sector with countries on the DAC List which do not meet the conditions for eligibility
as ODA
OOF
transactions by the official sector with countries on the DAC List which do not meet the conditions for eligibility
as ODA
Development Assistance: Public Sector
Development Assistance: Private Sector
OECD DAC
- Organisation for Economic Co-operation and Development’s
- Development Assistance Committee
- international forum for the major donor countries
- seeking new ways of doing business to increase both the quantity and the quality of aid
- 30 members + observers
- Candidate country assessment based on criteria:The existence of appropriate strategies, policies and institutional frameworks that ensure capacity to deliver a development co-operation programme; an accepted measure of effort; and the existence of a system of performance monitoring and evaluation
- established in 1960 as Development Assistance Group (1961 => DAC)
- original aim: accurate and comparable data reporting
- aid statistics, especially on ODA
ODA: Official Development Assistance
- specific category of official financial flows from donor to recipient countries
- created in 1969 to:
→separate some of the problematic forms of aid in 50s and 60
→unify the reporting of aid data
OECD DAC put limitations on what can be classified as official development assistance in terms of:
- aim of the funding
- which country receives the funding → e.g. military assistance (& DAC imposed geographical limitations on classified ODA)
- 1970: target of providing 0.7% of GNI as ODA annually
ODA Flows (starting 2018)
- flows to countries and territories ONLY on the DAC List of ODA recipients: LDCs, other low income countries, lower middle and upper middle income countries:
- and to multilateral development institutions that promote and specifically target economic development and welfare
the resource flows which are:
a) provided by official agencies, including state and local governments, or by their executive agencies;
b) concessional in character (grants and soft loans)
ODA as grant equivalent (starting 2018)
before, grants and concessional loans valued in the same way &“concessional” was open to interpretation
only “grant equivalent” of loans is now recorded as ODA = the more generous the loan, the higher the ODA value
encouraging donors to prefer grants and highly concessional loans
grants
resources provided free of interest without repayment
concessional/soft loans
= have to be repaid with interest, but with significantly lower interest rates than if borrowed from commercial banks
limitations on classification of ODA imposed in several thematic sectors:
- military aid: military equipment and services, anti-terrorism activities not eligible; using donors’ armed forces to deliver humanitarian aid eligible
- peacekeeping: only developmentally relevant activities of peacekeeping operations eligible
- nuclear energy: only for civilian purposes
- cultural programmes: eligible if they build cultural capacities of recipient countries
- in-donor refugee costs: assistance to asylum seekers and refugees eligible during the first 12 months
Why track ODA?
to compare how generous individual donors are
- keeping the internationally agreed-on target for ODA (0.7%of GNI)
- soft-pressure on donors
to track where the money goes and what are the most targeted thematic areas
- to harmonize activities of individual donors
- “donor darlings” and “donor orphans”
Why to have strict rules for aid reporting?
- comparability of data on aid
- to exclude the flows that do not contribute to development in recipient countries (e.g. military assistance)
ODA trends x other flows
1960-2018
More stable, less tied to market shifts
e.g. private flows affected by: oil price shocks, Mexican debt crisis, 1990 recession, 9/11, 2008 financial crisis, refugee crisis
ODA trends
Although absolute volume of ODA has increased
ODA as a per cent of GNI has decreased until 2000s and since slowly increased but not to the level it was in 1960s
Biggest ODA flows:
- Bilateral ODA
- multilateral ODA
- Humanitarian Assistance
- …
ODA: Critique
numerous items eligible for ODA are controversial, e.g.:
- scholarships provided in the donor countries
- spending on the assistance to refugees
- debt relief
- programs to raise development awareness in donor countries
- administrative costs of ODA programs
→ not spent directly in the recipient countries
some financial flows do not genuinely contribute to development
ODA does not reflect the quality of the development assistance, only the quantity
Complementary aid indicators (TOSSD, CPA)
Total Official Support for Sustainable Development & Country Programmable Aid
New ODA: Total Official Support for Sustainable Development (TOSSD)
tracks broad range of resources supporting developing countries in achieving the Sustainable Development Goals
new measure of broader international financing for sustainable development that will complement ODA
TOSSD covers the totality of international public finance extended to developing countries and multilateral institutions, and private resources mobilized through official means, regardless of the type of instrument used
to increase transparency and rigour in reporting on development finance beyond ODA
TOSSD: Total Official Support for Sustainable Development
- documents previously unreported activities (e.g. biodiversity, migration, peace & security, labor statistics)
- TOSSD is the only international measure of funding for global public goods benefiting developing countries
Country Programmable Aid (CPA)
category of aid developed by OECD DAC in 2007
= portion of aid that donors programme for individual countries or regions
defined through exclusion of activities which:
- are unpredictable by nature (humanitarian aid, debt relief)
- entail no cross-border flows (administrative costs, student costs, promotion of development awareness, costs related to research and refugees in donor countries)
- are not a part of co-operation agreements between donor and recipient governments (food aid, core funding to NGOs, aid from local governments or aid not allocable by country or region)
proportion of ODA over which recipient countries have, or could have, a significant say
Gross bilateral ODA: to recipients by Income group
- Largest share to Lower Middle Income countries
- Then LDCs
- Then Upper middle income countries
- then other low income countries
Gross bilateral ODA: by region
- Sub-saharan africa
- South and Central Asia
- ME & NA
- Other Asia & Oceania
- Latin America & Caribbean
Gross bilateral ODA: by sector (4 biggest)
- Education, health…
- Other social infrastructure
- Economic infrastructure
- Humanitarian aid
Alternative ways of measuring aid
several alternative indicators to ODA
Inflated aid vs. Genuine aid:
Developed by CONCORD as part of their AidWatch initiative
Alternative ways of measuring aid: Inflated aid vs. Genuine aid:
- inflated aid =* items from net ODA flows that do not contribute to development or do not represent a genuine transfer of resources to developing countries
- Spending on students and refugees in the donor country, repayments of interest rates on concessional loans, debt relief, tied aid
Most ODA is genuine BUT inflated aid increases aid gap (further from 0,7% target)
Commitment to Development Index
Assessment of the affect the rich countries have on developing countries
by Centre for Global Development
8 policy areas:
- Quantity and quality of foreign aid
- Openness to trade
- Policies that encourage investment & financial transparency
- Openness to migration
- Environmental policies
- Promoting international security
- Support for technology creation & transfer
- Global health issues
