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Don't Let Pessimism About Foreign Aid Become a Self-Fulfilling Prophecy

November 15, 2011

It is common to say that, given the economic crisis, countries cannot be expected to budget for increases in official development assistance (ODA). But the facts show that it is possible–and happening.

At last week’s G20 Summit in Cannes, Bill Gates called on all G20 countries–traditional and new donors alike--to increase their aid to the world’s poorest countries. He advocated that Organisation for Economic Co-operation and Development (OECD) donors in particular need to deliver on their aid promises. At the same time, international aid agency Oxfam warned that aid from rich nations is likely to fall by at least $9.5 billion by the end of 2012--the biggest drop in aid for 15 years.

There is no doubt that we should be concerned about the risk of rich countries failing to meet their commitments to increase aid. But we also need to avoid being too pessimistic. That pessimism could easily become a self-fulfilling prophecy.

The fact is that aid is at its highest level ever. Combined with its clearer focus on health and education, aid is helping to make progress towards the Millennium Development Goals.

The OECD is the guardian of the facts on these things. When they announced the latest figures in April this year, their title was "Development aid reaches an historic high in 2010." Aid increased by 6.5 percent in 2010, over 2009, reaching $129 billion.

Play around yourself with this data on the OECD’s interactive graph.

As you can see, aid to developing countries, including sub-Saharan Africa, rose steadily from 1960 to 1990. After the recession of the early 1990s, aid fell.

Since 1997, aid has been growing once again. First steadily, then more quickly after the 2002 UN Conference on Financing for Development, held in Monterrey, Mexico. In 2005, aid peaked due to exceptional debt relief for Iraq and Nigeria. But also in 2005, donors made further commitments to increase their aid at the Gleneagles G8 Summit, leading to underlying increases eventually overtaking the 2005 peak.

Despite the financial crisis, ODA continued to rise in 2008 and 2009, and in 2010 reached its highest level ever in real terms. 

The G8 at their Summit in May this year, and the European Union Summit in June this year, both reaffirmed their commitments to continue to increase ODA. (Read the joint declaration from this year’s G8 Summit and findings from the European Union Summit in this PDF report.)

At the G20 Summit last week, leaders again reiterated that aid commitments made by developed countries should be met and that emerging countries like China, Brazil, and Saudi Arabia will extend their level of support to other developing countries.

But if people talk about aid as if it is already falling, there is a real danger that this will become a self-fulfilling prophecy. If no one expects governments to increase ODA, they won’t--which is why it’s so important to realize that aid is increasing, and is at its highest level to date.

The UK's leadership among the G8 in budgeting to increase aid to the UN target of 0.7 percent of national income by 2013 is impressive, but it is not the only nation to increase its aid budget. We should not fall into the trap of thinking it is exceptional. Instead, 10 out of the 12 largest donors have increased their aid even in these tough times.

Graph of Aid by Donor Countries

Look yourself with the comprehensive datasets behind this graph on the OECD website.

This graph shows aid from the 12 largest government donors over the last eight years (approximately two political cycles).  As you can see, only two of these donors countries (Japan and Italy) have cut aid over the period. All of the other donors have increased aid, some substantially.

If that's better news than you thought, it's time to become an aid optimist.

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