Download February 8, 2012

Y376 International
Political Economy
February 8, 2012
North-South Aid Issues: What the
Developing Countries Want
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Increasing the total amount
Untying “tied” aid
Increasing the proportion of aid channeled
through multilateral agencies
Making aid more automatic
Giving LDCs more control over the spending of
aid
What is Aid (Official
Development Assistance)?
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Undertaken by governments
Main objective to promote economic
development and welfare
Made on concessional terms with a grant
element of at least 25 percent
Figure 6-1. Annual Bilateral ODA by the G-5 Countries,
1960-2007, in Billions of Constant 2006 Dollars
Source: OECD Statistics online.
Figure 6-3. ODA from DAC Countries, OPEC, CMEA, and
non-DAC Countries, 1956-2007, in Billions of Current Dollars
Source: OECD Statistics Online.
ODA, 2000-2006
ODA by Major Donors, 2006
Aid as Percentage of GDP
Example of US Aid to
Iraq
•Infrastructure
•Water
•Electricity
•Health system
•Schools
•Reconstruction
•Elections
Source: http://www.usaid.gov/iraq
US Aid to Iraq, 2004-2007
US Aid to Iraq in Comparison
with Aid to Germany and Japan
Why Hasn’t US Aid to Iraq
Worked?
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Preference for US over Iraqi contractors (higher
costs)
Huge proportion of spending went to private
companies like Bechtel
US concentration on rebuilding oil fields and
other infrastructure projects
Al Qaeda disruption of aid work, especially in
the rebuilding of infrastructure
Table 6-2. U.S. Foreign Aid Programs, 2004
Department
Name of Program
Department of State
Refugee
756
International Organizations and
Programs
320
ESF (policy)
Treasury Department
$Millions
3,263
NIS (distribution)
584
SEED (distribution)
442
HIV/AIDS (distribution)
488
Andean Counter-Drug
727
Contributions to Intl. Financial
Institutions
Debt Relief
1,383
94
Dept. of Agriculture
PL-480 II (budget)
1,185
USAID
DA, child survival, disaster
4,511
MCA
Iraq Reconstruction
Other
994
18,439
1,000-1,500
Source: Carol Lancaster and Ann Van Dusen, Organizing U.S. Foreign Aid (Washington, D.C.: Brookings Institution,
2005), p. 14.
Table 6-1. Bilateral Aid to Former Colonies, 1970-1994
Donor
Former Colony Share of
Total Aid (in percentages)
Portugal
99.6
United Kingdom
78.0
France
57.0
Belgium
53.7
Netherlands
17.1
Source: Alberto Alesina and David Dollar, “Who Gives Foreign Aid and Why?
Journal of Economic Growth, 5 (March 2000), p. 37.
Summary
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Aid flows are strongly influenced by former colonial
relationships and power politics
Net aid flows do not always remain positive because
some aid takes the form of loans that must be paid
back
The US share of total aid to LDCs declined markedly
over time
Aid is primarily needed to deal with poverty, disasters,
and wars and cannot be used in general to promote
long-term economic development