Aid: Encyclopedia II - Aid - Development aid

Aid - Development aid

Development aid (also development assistance, international aid, overseas aid or - especially in the US - foreign aid) is aid given by developed countries to support economic development in developing countries. It is distinguished from humanitarian aid as being aimed at alleviating poverty in the long term, rather than alleviating suffering in the short term.

The term "development aid" is often used to refer specifically to Official Development Assistance (ODA), which is aid given by governments on certain concessional terms, usually as simple donations. It is given by governments through individual countries' international aid agencies and through multilateral institutions such as the World Bank, and by individuals through development charities such as ActionAid, Care International or Oxfam.

The offer to give development aid has to be understood in the context of the Cold War. The speech in which Harry Truman announced the foundation of NATO is also a fundamental document of development policy. "In addition, we will provide military advice and equipment to free nations which will cooperate with us in the maintenance of peace and security. Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people.“

Development aid wanted to offer technical solutions to social problems without altering basic social structures. Wherever even moderate changes in these social structures were undertaken, e.g. the land reforms in Guatemala in the early 1950s, the United States usually forcefully opposed these changes.

Aid - Quantity

Over the last 20 years, annual ODA has been between $50bn and $60bn. The United States is the world's largest contributor of ODA in absolute terms ($15.7 billion, 2003), but the smallest among developed countries as a percentage of its GDP (0.14% in 2003). The UN target for development aid is 0.7% of GDP; currently only five countries (with Norway in the lead with 0.92%) achieve this.

However, private contributions also make a significant, albeit harder to track, contribution to development aid. Private donations in the United States, for example, are estimated to be at least $34 billion dollars a year, broken down as such:

• International giving by US foundations: $1.5 billion per year
• Charitable giving by US businesses: $2.8 billion annually
• American NGOs: $6.6 billion in grants, goods and volunteers.
• Religious overseas ministries: $3.4 billion, including health care, literacy training, relief and development.
• US colleges scholarships to foreign students: $1.3 billion
• Personal remittances from the US to developing countries: $18 billion in 2000

It is this last figure, remittances, that blurs many definitions of aid: for example, money sent home by foreign workers is counted in this sum. The exact result and effect of remittance money is of some debate: however, even if it is factored out private donations still match ODA in the US. In many cases privately donated money is spent much more effectively than ODA, which must go through various governmental layers before reaching the problem. However, in other cases private sums disappear completely without any trace of their existence. Unfortunately, private aid figures are not tracked so well as ODA in many countries, so it is difficult to make across-the-board comparisons between various nations.

In the United States, popular estimates of spending on aid are often highly inflated - 15-25% of the federal budget is a typical answer; the real number is closer to 1%. In absolute terms, the $15-20bn of aid compares with $50bn spent annually on the war on drugs and $500bn spent on the military. Some commentators, such as Jeffrey Sachs, have said that if the US spent more money on helping the poor, it wouldn't need to spend quite so much on defending itself against them.

Aid - Conditions

See tied aid, conditionality, structural adjustment, aid effectiveness

In many cases, aid comes with conditions attached. These conditions may range from demands that some or all of the donated money be spent on goods or services (such as consultancy) from the donor country ("tied aid"), to demands that the recipient privatise various services ("conditionality"). Output-based aid may also be used.

Adapted from the Wikipedia article "Development aid", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki