Official development assistance
Encyclopedia
Official development assistance (ODA) 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 international aid flow. It includes some loans.
In other words, ODA needs to contain the three elements:
(a) undertaken by the official sector;
(b) with promotion of economic development and welfare as the main objective; and
(c) at concessional financial terms (if a loan, having a grant element of at least 25 per cent).
This definition is used to exclude development aid from the two other categories of aid from DAC members:
Examples:
If a donor country accords a grant or a concessional loan to Afghanistan
it is classified as ODA, because it is on the Part I list.
If a donor country accords a grant or a concessional loan to Bahrain
it is classified as OA, because it is on the Part II list.
If a donor country gives military assistance to any other country or territory it is classified as OOF, because it is not aimed at development.
As a percentage Sweden
is the largest donor among developed countries, and together with Luxembourg
, Norway
, the Netherlands
and Denmark
it meets the International Aid Target of dedicating 0.7% of GNP.
World Bank
reports that Iraq was the top recipient of development aid in 2005 followed by Nigeria. However, this is due to the significant debt relief deals that were granted to these nations that year - when donor countries write off a portion of a recipient country's debt, it is counted as official development assistance from the donor country.
The OECD reports that in 2009 Africa received the largest amount of ODA, at $28 billion. Of that, $25 billion went to countries south of the Sahara. Asia received the second largest amount at $24 billion. The top ODA receiving countries in order were Afghanistan ($5.1 billion), Iraq ($2.6 billion), Vietnam ($2.1 billion), Sudan ($1.9 billion), Ethiopia ($1.8 billion).
has been one of the most vocal of them. Another notable economist arguing against ODA includes Dambisa Moyo
in her book Dead Aid.
Donor countries are most commonly compared by the amount of Official Development Assistance given and their quantity of aid as a percent of GDP. However, there is an increasing focus placed on the quality of aid, rather than simply the quantity. The Commitment to Development Index
is one such measure that ranks the largest donors on a broad range of their "development friendly" policies. It takes into account the quality of aid, in addition to the quantity, penalizing countries for tied aid
. Aid also does not operate in a vacuum; a country's policies on issues such as trade or migration also have a significant impact on developing countries.
Development Assistance Committee
The Organisation for Economic Co-operation and Development's Development Assistance Committee is a forum for selected OECD member states to discuss issues surrounding aid, development and poverty reduction in developing countries...
of the Organisation for Economic Co-operation and Development
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...
to measure 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....
. The DAC first compiled the term in 1969. It is widely used by academics and journalists as a convenient indicator of international aid flow. It includes some loans.
Definition
The full definition of ODA is:In other words, ODA needs to contain the three elements:
(a) undertaken by the official sector;
(b) with promotion of economic development and welfare as the main objective; and
(c) at concessional financial terms (if a loan, having a grant element of at least 25 per cent).
This definition is used to exclude development aid from the two other categories of aid from DAC members:
- Official Aid (OA): Flows which meet conditions of eligibility for inclusion in Official Development Assistance (ODA), other than the fact that the recipients are on Part II of the Development Assistance Committee (DAC) List of Aid Recipients.
- Other Official Flows (OOF): Transactions by the official sector with countries on the List of Aid Recipients which do not meet the conditions for eligibility as Official Development Assistance or Official Aid, either because they are not primarily aimed at development, or because they have a grant element of less than 25 per cent.
Examples:
If a donor country accords a grant or a concessional loan to Afghanistan
Afghanistan
Afghanistan , officially the Islamic Republic of Afghanistan, is a landlocked country located in the centre of Asia, forming South Asia, Central Asia and the Middle East. With a population of about 29 million, it has an area of , making it the 42nd most populous and 41st largest nation in the world...
it is classified as ODA, because it is on the Part I list.
If a donor country accords a grant or a concessional loan to Bahrain
Bahrain
' , officially the Kingdom of Bahrain , is a small island state near the western shores of the Persian Gulf. It is ruled by the Al Khalifa royal family. The population in 2010 stood at 1,214,705, including 235,108 non-nationals. Formerly an emirate, Bahrain was declared a kingdom in 2002.Bahrain is...
it is classified as OA, because it is on the Part II list.
If a donor country gives military assistance to any other country or territory it is classified as OOF, because it is not aimed at development.
Uses
There are normally two ways of looking at the volume of ODA:- In real terms - the amount transfer
- As al government's aid budget is ~0.2% of its GNI, whereas Sweden's is ~1%.
As a percentage Sweden
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
is the largest donor among developed countries, and together with Luxembourg
Luxembourg
Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...
, Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
, the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
and Denmark
Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...
it meets the International Aid Target of dedicating 0.7% of GNP.
Distribution
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...
reports that Iraq was the top recipient of development aid in 2005 followed by Nigeria. However, this is due to the significant debt relief deals that were granted to these nations that year - when donor countries write off a portion of a recipient country's debt, it is counted as official development assistance from the donor country.
The OECD reports that in 2009 Africa received the largest amount of ODA, at $28 billion. Of that, $25 billion went to countries south of the Sahara. Asia received the second largest amount at $24 billion. The top ODA receiving countries in order were Afghanistan ($5.1 billion), Iraq ($2.6 billion), Vietnam ($2.1 billion), Sudan ($1.9 billion), Ethiopia ($1.8 billion).
Criticism
Official development assistance has been criticized by several economists for being an inappropriate way of really helping poor countries. The Hungarian economist Peter Thomas BauerPeter Thomas Bauer
Peter Thomas Bauer, Baron Bauer was a developmental economist. Bauer is best remembered for his opposition to the widely-held notion that the most effective manner to help developing countries advance is through state-controlled foreign aid.- Life :Bauer was born as Péter Tamás Bauer in Budapest,...
has been one of the most vocal of them. Another notable economist arguing against ODA includes Dambisa Moyo
Dambisa Moyo
Dr. Dambisa Moyo is an international economist and New York Times best-selling author of both Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa, published in 2009, and How the West Was Lost: Fifty Years of Economic Folly - And the Stark Choices that Lie Ahead, published in...
in her book Dead Aid.
Donor countries are most commonly compared by the amount of Official Development Assistance given and their quantity of aid as a percent of GDP. However, there is an increasing focus placed on the quality of aid, rather than simply the quantity. 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...
is one such measure that ranks the largest donors on a broad range of their "development friendly" policies. It takes into account the quality of aid, in addition to the quantity, penalizing countries for tied aid
Tied aid
Tied aid is foreign aid that must be spent in the country providing the aid or in a group of selected countries. A developed country will provide a bilateral loan or grant to a developing country, but mandate that the money be spent on goods or services produced in the selected country...
. Aid also does not operate in a vacuum; a country's policies on issues such as trade or migration also have a significant impact on developing countries.
External links
- Development Assistance Database (DAD)
- Aid Management Platform
- AidData: Tracking Development Finance
- ODA Data from Global Policy Forum website.
- OECD's statistics portal. Fairly detailed extracts of the OECD's ODA statistics are available here free.
- The UN has some free ODA data under "Key Global Indicators."
- The Story of Official Development Assistance (pdf). A history of the DAC by Helmut Führer, former Director of the OECD's Development Co-operation Directorate.
- OECD: Final Official Development Assistance (ODA) data for 2007
- Arab Aid
- U.S. Official Development Assistance Database
- USAID Development Experience Clearinghouse (DEC)
- Aidflows