Development Assistance Committee
Encyclopedia
The Organisation for Economic Co-operation and Development
's Development Assistance Committee (DAC) is a forum for selected OECD member states to discuss issues surrounding aid
, development and poverty reduction in developing countries. It describes itself as being the "venue and voice" of the world's major donor countries.
The Development Cooperation Directorate (DCD), sometimes called the "Secretariat of the DAC", is the OECD Directorate under which the DAC operates.
, which acts as a full member of the committee, although it is not a member state in the judicial meaning of the term. The World Bank, the IMF and UNDP also participate as observers.
On 23 July 1961
a Ministerial Resolution decreed that upon the supercession of the OEEC by the OECD, the DAG would become the DAC, and these changes came about in September 1961. The resolution also spelled out the DAC's mandate in five points, the first of which read:
Along with the institution of the DAG/DAC, several developments in the early 1960s completed the institutional framework for aid that is still largely in place. In 1960, the World Bank
opened a subsidiary, the International Development Association
(IDA) to provide loans to developing countries on easier terms than the Bank's normal lending. The aid agencies of the large donor states were also set up at this time.
Canada created an "External Aid Office" in 1960, which in 1968 became the Canadian International Development Agency
(CIDA). France was the first country to establish a Ministry for Co-operation to be responsible for assistance to independent, mainly African, developing countries in 1961, the predecessor to French Development Agency
Agence Française de Développement (AFD). Enactment in the United States in 1961 of the Foreign Assistance Act
as the basic economic assistance legislation, established the United States Agency for International Development
(USAID).
Later the rest of the member states followed, either establishing an aid agency under the command of its Foreign ministry or as a separate entity.
To this end, the committee holds an annual High Level Meeting where the ministers or heads of the national aid agencies meet to discuss issues related to development
and adopt recommendations and resolutions. It is also attended by senior officials of the World Bank
, the International Monetary Fund
and UN Development Programme.
The member states are expected to have certain common objectives concerning the conduct of their aid programmes. The committee therefore issues guidelines on the management of development aid. It also publishes a wide range of reports, among them the annual OECD Journal on Development and the Development Co-operation Report. In addition, as OECD countries recognise the need for greater coherence in policies across sectors that affect developing countries, an initiative on Policy Coherence for Development explores ways to ensure that government policies are mutually supportive of the countries' development goals.
The Committee has been preparing for the 4th High Level Forum in Seoul which would be a major landmark in the process of building global, regional and national partnerships for the effective achievement of development results.
The subsidiary bodies of DAC are:
Since 2008 its chair has been Mr. Eckhard Deutscher.
. In the early 1960s, some member states contributed a significantly larger share of their GNP
than others. To encourage that the aid effort was equally divided, DAC quickly recognized the United Nations Conference on Trade and Development
recommendation on having an International Aid Target, proposed in 1964. The issue of the aid burden-sharing eventually lead to the first report on “Total Official Contributions as Per Cent of National Income” in 1967, something that was accompanied by closely negotiated explanations.
Another early question was what a donor could include when it reported its aid efforts to the committee. It was necessary to make the distinction between official transactions that were made with the main objective of promoting the economic and social development of developing countries, as opposed to other official flows (OOF) like military assistance. To that end, the committee adopted the concept of Official Development Assistance
(ODA) in 1969. The DAC revised the definition in 1972, which has remained unchanged since then, except for changes in the list of recipients for which it can be counted.
At the DAC High Level Meeting in May 2000, members agreed to untie their aid (with the exception of technical cooperation and food aid)from January 2001 onwards to the Least Developed Countries and to promote buying goods and services locally in these countries, rather than in donor countries. This agreement was extended in 2008 to 39 highly indebted poor countries (HIPCs). As a consequence, in 2008 80% of total ODA (minus administrative costs) was provided untied, 4% tied and of 16% the tying status was not reported. "Untying aid: is it working?" an independent evaluation of DAC members policies and practices towards untying finds that the overall picture is positive, with important qualifications. Country partners affirm that untying is about transferring responsibility from donors to recipients. Practically, it is a matter of contracts, modalities, use of country systems and offering local business an opportunity to compete for contracts. The report concludes that there is much scope for further actions towards untying aid in genuine partnerships between donors and aid recipients.
As a forum for and by the bilateral donors, each donor’s aid efforts are evaluated in peer reviews where major findings and recommendations are presented. Each DAC member country is reviewed once every four years.
More recently DAC, in collaboration with the World Bank, has been involved in questions related to aid effectiveness
. This collaboration lead to the adoption of the Paris Declaration on Aid Effectiveness at the DAC High Level Meeting in 2005. Progress in implementing the Paris Declaration commitments was reviewed at the third High Level Forum on Aid Effectiveness in September 2008 in Accra Ghana, an event co-ordinated by the DAC's Working Party on Aid Effectiveness, the government of Ghana and the World Bank. The UNCTAD has noted that since the turn of the century, DAC has become one of the dominant institutions with regards to development aid.
The Center for Global Development
, a non-profit think-tank in Washington DC, created the Commitment to Development Index
which ranks and evaluates the achievements of the DAC countries to the developing world. It measures the "development-friendliness" of the donor nations, moving beyond standard comparisons of Official Development Assistance
. The Index quantifies a wide range of policies on seven indicators: aid, trade, investment, migration, environment, security, and technology. In 2009, Sweden and Denmark received the highest rankings, while Japan and South Korea fell toward the bottom.
(ODA). It has become widely used by other organisations, and scholars, as a general measure of aid; for example, the United Nations and the World Bank both commonly use ODA as calculated by the DAC as their measure of aid. This is in spite of the fact that it is not an entirely comprehensive measure. It includes only aid from government sources; aid from private sources, including NGO's, is not counted. About ten to fifteen percent of aid comes from private sources.
ODA includes developmental and humanitarian aid, the latter being much the smaller of the two.
It does not include aid for military use. It includes both outright grants and loans, as long as the loans are on significantly easier terms than the commercial norm: the DAC calls these "concessional" loans. The change to the definition of ODA in 1972 involved tightening the definition of "concessionality". The DAC defines concessionality according to a mathematically computed "grant element"; loans with a grant element of at least 25 percent are considered concessional and count as ODA. This criterion has not been changed since 1972.
Loans made in a given year that are counted towards ODA are counted net of repayments made that year on the principal of old loans, but not net of interest payments. Therefore, after a loan has been paid back its overall effect on ODA figures is zero. (Its overall direct fiscal effect on the recipient is of course that the recipient has had to pay back some amount of interest.)
Debt forgiveness is counted explicitly as a category of ODA.
The DAC computes ODA from data submitted by its member states. It also has collected some data on the OPEC countries' aid donations, which are significant: in fact OPEC donations are currently about twice that of the DAC countries' as a fraction of donor gross national income
.
Only aid to countries on the DAC List of ODA Recipients counts as ODA. Initially it included most developing countries. After the fall of Communism in Europe in the early 1990s the Eastern European countries and the Soviet Union, which had formerly been donors of aid,
became aid recipients, albeit wealthier ones than most developing countries. Because of this and because some formerly poor East Asian countries were now middle-income, the DAC in 1993 divided the list of recipients into two parts, on the basis of national income. Only aid to countries in the lower income part (Part I) counted as ODA. Aid to countries in the upper income part was put into a new category called Official Assistance (OA), separate from ODA. This bifurcated list was abolished in 2005, however, because of the confusion and accounting difficulties that were occasioned when countries moved from one part to the other of the list. The current list (2007) includes all countries with per capita GNI less than $11 455, except that it excludes countries that are members of the G8, or the EU, or that have a firm accession date for EU membership. Movement of countries on or off the list has caused the DAC to retroactively change past ODA figures for some group categories.
Besides ODA, the DAC keeps statistics on three other major categories:
quite volatile from year to year because they represent a balance between positive and negative flows.
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade...
's Development Assistance Committee (DAC) is a forum for selected OECD member states to discuss issues surrounding aid
Aid
In international relations, aid is a voluntary transfer of resources from one country to another, given at least partly with the objective of benefiting the recipient country....
, development and poverty reduction in developing countries. It describes itself as being the "venue and voice" of the world's major donor countries.
The Development Cooperation Directorate (DCD), sometimes called the "Secretariat of the DAC", is the OECD Directorate under which the DAC operates.
Members
There are 24 members of DAC, including the European CommissionEuropean Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
, which acts as a full member of the committee, although it is not a member state in the judicial meaning of the term. The World Bank, the IMF and UNDP also participate as observers.
•  Australia |
•  Finland |
•  Italy |
•  South Korea |
•  Austria |
•  Early Modern France |
•  Luxembourg |
•  Spain |
•  Belgium |
•  Germany |
•  Netherlands |
•  Sweden |
•  Canada |
•  Greece |
•  New Zealand |
•  Switzerland |
•  Denmark |
•  Republic of Ireland |
•  Norway |
•  United Kingdom |
| • European Commission European Commission The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union.... |
•  Japan |
•  Portugal |
•  United States |
History
Known at first as the Development Assistance Group (DAG), the committee was set up on 13 January 1960 under the auspices of the OECD's forerunner, the Organisation for European Economic Co-operation (OEEC). Its first meeting took place in Washington, D.C. (U.S.A.) on 9–11 March 1960, chaired by ambassador Ortona, Italy. A primary concern of the DAG, addressed at its second (July 1960) and third (October 1960) meetings, was to achieve accurate and comparable data reporting by its members on their aid flows to developing countries. In March 1961, the OEEC published the first comprehensive survey of The Flow of Financial Resources to Countries in Course of Economic Development, 1956-59. This was followed by annual reports until 1964.On 23 July 1961
a Ministerial Resolution decreed that upon the supercession of the OEEC by the OECD, the DAG would become the DAC, and these changes came about in September 1961. The resolution also spelled out the DAC's mandate in five points, the first of which read:
- The origins of the so-called "DAC Secretariat" or DCD are as follows. A Development Department (DD), under the direction of Assistant Secretary-General Luciano Giretti of Italy was established within the OECD Secretariat in 1961. It consisted of two branches, a Technical Co-operation Branch and a Development Financial Branch. The latter became the Development Assistance Directorate (DAD) in 1969 and then the Development Co-operation Directorate (DCD) in 1975.
Along with the institution of the DAG/DAC, several developments in the early 1960s completed the institutional framework for aid that is still largely in place. In 1960, the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
opened a subsidiary, the International Development Association
International Development Association
The International Development Association , is the part of the World Bank that helps the world’s poorest countries. It complements the World Bank's other lending arm — the International Bank for Reconstruction and Development — which serves middle-income countries with capital investment and...
(IDA) to provide loans to developing countries on easier terms than the Bank's normal lending. The aid agencies of the large donor states were also set up at this time.
Canada created an "External Aid Office" in 1960, which in 1968 became the Canadian International Development Agency
Canadian International Development Agency
The Canadian International Development Agency was formed in 1968 by the Canadian government. CIDA administers foreign aid programs in developing countries, and operates in partnership with other Canadian organizations in the public and private sectors as well as other international organizations...
(CIDA). France was the first country to establish a Ministry for Co-operation to be responsible for assistance to independent, mainly African, developing countries in 1961, the predecessor to French Development Agency
French Development Agency
French Development Agency is the French international development agency.The Agence Française de Développement is a public institution providing development financing...
Agence Française de Développement (AFD). Enactment in the United States in 1961 of the Foreign Assistance Act
Foreign Assistance Act
The Foreign Assistance Act is a United States Act of Congress. The Act reorganized the structure of existing U.S. foreign assistance programs, separated military from non-military aid, and created a new agency, the United States Agency for International Development to administer those...
as the basic economic assistance legislation, established the United States Agency for International Development
United States Agency for International Development
The United States Agency for International Development is the United States federal government agency primarily responsible for administering civilian foreign aid. President John F. Kennedy created USAID in 1961 by executive order to implement development assistance programs in the areas...
(USAID).
Later the rest of the member states followed, either establishing an aid agency under the command of its Foreign ministry or as a separate entity.
Functions
The work of the committee concentrates on- how international development cooperation contributes to the capacity of developing countries to participate in the global economy, and
- the capacity of people to overcome poverty and participate fully in their societies.
To this end, the committee holds an annual High Level Meeting where the ministers or heads of the national aid agencies meet to discuss issues related to development
International development
International development or global development is a concept that lacks a universally accepted definition, but it is most used in a holistic and multi-disciplinary context of human development — the development of greater quality of life for humans...
and adopt recommendations and resolutions. It is also attended by senior officials of the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
and UN Development Programme.
The member states are expected to have certain common objectives concerning the conduct of their aid programmes. The committee therefore issues guidelines on the management of development aid. It also publishes a wide range of reports, among them the annual OECD Journal on Development and the Development Co-operation Report. In addition, as OECD countries recognise the need for greater coherence in policies across sectors that affect developing countries, an initiative on Policy Coherence for Development explores ways to ensure that government policies are mutually supportive of the countries' development goals.
The Committee has been preparing for the 4th High Level Forum in Seoul which would be a major landmark in the process of building global, regional and national partnerships for the effective achievement of development results.
The subsidiary bodies of DAC are:
- Working Party on Statistics
- Working Party on Aid effectivenessAid effectivenessAid effectiveness is the effectiveness of development aid in achieving economic or human development . Aid agencies are always looking for new ways to improve aid effectiveness, including conditionality, capacity building and support for improved governance.-Historical background:The international...
- Network on Development Evaluation
- Network on Gender Equality
- Network on Environment and Development Co-operation
- Network on Poverty Reduction
- Network on Governance
- Network on Conflict, Peace and Development Co-operation
- Fragile States Group
Since 2008 its chair has been Mr. Eckhard Deutscher.
Achievements
As already noted, the DAC is a forum for the major Western industrialised countries where they coordinate their aid efforts. One of the principal questions that emerged was how to ensure that its member states contributed equal shares of development aidDevelopment aid
Development aid or development cooperation is aid given by governments and other agencies to support the economic, environmental, social and political development of developing countries.It is distinguished...
. In the early 1960s, some member states contributed a significantly larger share of their GNP
GNP
Gross National Product is the market value of all products and services produced in one year by labor and property supplied by the residents of a country...
than others. To encourage that the aid effort was equally divided, DAC quickly recognized the United Nations Conference on Trade and Development
United Nations Conference on Trade and Development
The United Nations Conference on Trade and Development was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues....
recommendation on having an International Aid Target, proposed in 1964. The issue of the aid burden-sharing eventually lead to the first report on “Total Official Contributions as Per Cent of National Income” in 1967, something that was accompanied by closely negotiated explanations.
Another early question was what a donor could include when it reported its aid efforts to the committee. It was necessary to make the distinction between official transactions that were made with the main objective of promoting the economic and social development of developing countries, as opposed to other official flows (OOF) like military assistance. To that end, the committee adopted the concept of Official Development Assistance
Official development assistance
Official development assistance is a term compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development to measure aid. The DAC first compiled the term in 1969. It is widely used by academics and journalists as a convenient indicator of...
(ODA) in 1969. The DAC revised the definition in 1972, which has remained unchanged since then, except for changes in the list of recipients for which it can be counted.
At the DAC High Level Meeting in May 2000, members agreed to untie their aid (with the exception of technical cooperation and food aid)from January 2001 onwards to the Least Developed Countries and to promote buying goods and services locally in these countries, rather than in donor countries. This agreement was extended in 2008 to 39 highly indebted poor countries (HIPCs). As a consequence, in 2008 80% of total ODA (minus administrative costs) was provided untied, 4% tied and of 16% the tying status was not reported. "Untying aid: is it working?" an independent evaluation of DAC members policies and practices towards untying finds that the overall picture is positive, with important qualifications. Country partners affirm that untying is about transferring responsibility from donors to recipients. Practically, it is a matter of contracts, modalities, use of country systems and offering local business an opportunity to compete for contracts. The report concludes that there is much scope for further actions towards untying aid in genuine partnerships between donors and aid recipients.
As a forum for and by the bilateral donors, each donor’s aid efforts are evaluated in peer reviews where major findings and recommendations are presented. Each DAC member country is reviewed once every four years.
More recently DAC, in collaboration with the World Bank, has been involved in questions related to aid effectiveness
Aid effectiveness
Aid effectiveness is the effectiveness of development aid in achieving economic or human development . Aid agencies are always looking for new ways to improve aid effectiveness, including conditionality, capacity building and support for improved governance.-Historical background:The international...
. This collaboration lead to the adoption of the Paris Declaration on Aid Effectiveness at the DAC High Level Meeting in 2005. Progress in implementing the Paris Declaration commitments was reviewed at the third High Level Forum on Aid Effectiveness in September 2008 in Accra Ghana, an event co-ordinated by the DAC's Working Party on Aid Effectiveness, the government of Ghana and the World Bank. The UNCTAD has noted that since the turn of the century, DAC has become one of the dominant institutions with regards to development aid.
The Center for Global Development
Center for Global Development
The Center for Global Development is a non-profit think tank based in Washington, D.C. that focuses on international development. It was founded in November 2001 by former senior U.S. official Edward W. Scott, director of the Peterson Institute for International Economics, C. Fred Bergsten, and...
, a non-profit think-tank in Washington DC, created the Commitment to Development Index
Commitment to Development Index
The Commitment to Development Index , published annually by the Center for Global Development, ranks the world’s richest countries on their dedication to policies that benefit the five billion people living in poorer nations. Rich and poor countries are linked in many ways; thus the Index looks...
which ranks and evaluates the achievements of the DAC countries to the developing world. It measures the "development-friendliness" of the donor nations, moving beyond standard comparisons of Official Development Assistance
Official development assistance
Official development assistance is a term compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development to measure aid. The DAC first compiled the term in 1969. It is widely used by academics and journalists as a convenient indicator of...
. The Index quantifies a wide range of policies on seven indicators: aid, trade, investment, migration, environment, security, and technology. In 2009, Sweden and Denmark received the highest rankings, while Japan and South Korea fell toward the bottom.
Statistics
Since its inception, one of the DAC's main functions has been to collect and publish statistics on aid flow. As noted in the Achievements section of this article, in 1969 the DAC's members adopted a criterion for calculating their aid contributions. They called the resulting measure of aid contributions Official Development AssistanceOfficial development assistance
Official development assistance is a term compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development to measure aid. The DAC first compiled the term in 1969. It is widely used by academics and journalists as a convenient indicator of...
(ODA). It has become widely used by other organisations, and scholars, as a general measure of aid; for example, the United Nations and the World Bank both commonly use ODA as calculated by the DAC as their measure of aid. This is in spite of the fact that it is not an entirely comprehensive measure. It includes only aid from government sources; aid from private sources, including NGO's, is not counted. About ten to fifteen percent of aid comes from private sources.
ODA includes developmental and humanitarian aid, the latter being much the smaller of the two.
It does not include aid for military use. It includes both outright grants and loans, as long as the loans are on significantly easier terms than the commercial norm: the DAC calls these "concessional" loans. The change to the definition of ODA in 1972 involved tightening the definition of "concessionality". The DAC defines concessionality according to a mathematically computed "grant element"; loans with a grant element of at least 25 percent are considered concessional and count as ODA. This criterion has not been changed since 1972.
Loans made in a given year that are counted towards ODA are counted net of repayments made that year on the principal of old loans, but not net of interest payments. Therefore, after a loan has been paid back its overall effect on ODA figures is zero. (Its overall direct fiscal effect on the recipient is of course that the recipient has had to pay back some amount of interest.)
Debt forgiveness is counted explicitly as a category of ODA.
The DAC computes ODA from data submitted by its member states. It also has collected some data on the OPEC countries' aid donations, which are significant: in fact OPEC donations are currently about twice that of the DAC countries' as a fraction of donor gross national income
Gross National Income
The GNI consists of: the personal consumption expenditures, the gross private investment, the government consumption expenditures, the net income from assets abroad , and the gross exports of goods and services, after deducting two components: the gross imports of goods and services, and the...
.
Only aid to countries on the DAC List of ODA Recipients counts as ODA. Initially it included most developing countries. After the fall of Communism in Europe in the early 1990s the Eastern European countries and the Soviet Union, which had formerly been donors of aid,
became aid recipients, albeit wealthier ones than most developing countries. Because of this and because some formerly poor East Asian countries were now middle-income, the DAC in 1993 divided the list of recipients into two parts, on the basis of national income. Only aid to countries in the lower income part (Part I) counted as ODA. Aid to countries in the upper income part was put into a new category called Official Assistance (OA), separate from ODA. This bifurcated list was abolished in 2005, however, because of the confusion and accounting difficulties that were occasioned when countries moved from one part to the other of the list. The current list (2007) includes all countries with per capita GNI less than $11 455, except that it excludes countries that are members of the G8, or the EU, or that have a firm accession date for EU membership. Movement of countries on or off the list has caused the DAC to retroactively change past ODA figures for some group categories.
Besides ODA, the DAC keeps statistics on three other major categories:
- Other Official Flows (OOF) are transactions by the official sector (not private) that are not "development-motivated" or not concessional. The main items in OOF are export credits, official sector equity and portfolio investment, and debt reorganisation.
- Private Flows consists mostly of investment by transnational corporations and private banks, and export credits given by industries. The figures for Private Flows and OOF are
quite volatile from year to year because they represent a balance between positive and negative flows.
- Net Private Grants. This is mostly aid from private sources such as NGOs.
See also
- Developed countryDeveloped countryA developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
- DevelopmentLand developmentLand development refers to altering the landscape in any number of ways such as:* changing landforms from a natural or semi-natural state for a purpose such as agriculture or housing...
- Development aidDevelopment aidDevelopment aid or development cooperation is aid given by governments and other agencies to support the economic, environmental, social and political development of developing countries.It is distinguished...
- Official Development AssistanceOfficial development assistanceOfficial development assistance is a term compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development to measure aid. The DAC first compiled the term in 1969. It is widely used by academics and journalists as a convenient indicator of...
- List of development aid agencies
- Aid effectivenessAid effectivenessAid effectiveness is the effectiveness of development aid in achieving economic or human development . Aid agencies are always looking for new ways to improve aid effectiveness, including conditionality, capacity building and support for improved governance.-Historical background:The international...
- Paris Declaration on Aid Effectiveness
External links
- OECD web pages:
- About the DCD-DAC. OECD.
- Development Co-operation Directorate (DAC), OECD
- Statistics. The OECD publishes a large quantity of statistics on-line, including DAC statistics. Full access is only by subscription, but large extracts are available free.
- OECD Statistics Portal is the place to start for all statistics. For the free stuff click "OECD.Stat Extracts", or try going directly to extracts:
- OECD Statistics extracts. Select "Development" in the left-hand menu for aid statistics.
- The Story of Official Development Assistance (.pdf). A history of the DAC/DCD by Helmut Führer, former DCD Director.
- "The DAC in Dates" (.pdf). Incorporates a lot of Führer's material, with other material.
- "History of DAC lists of aid recipient countries.
- Peer Reviews of DAC Members.
- DAC news and link to statistics.
- Aid Effectiveness.
- Paris Declaration on Aid Effectiveness.
- Aid Effectiveness Review, World Bank
- Aid Harmonization and Alignment, Paris High-Level Forum,
- Milestones in Aid Effectiveness, Accra High-Level Forum (2008)
- SEA - OECD DAC inclusive