Who spends what on foreign aid and where?

The ‘traditional’ foreign aid donors (aka the OECD DAC) released it’s latest report (here) and stats on aid (here) this week. This is of course amid different debates each side of the Atlantic (the UK’s 40% increase in aid amid major public spending cuts and the US aid cuts that the NY times reported on here with infographic here).

So, what does this week’s report and new data say on who spends what on aid?

A very quick ‘3 take-ways’ run down:

First, who get’s most OECD DAC aid?

A rather strange top 10 rather unevenly linked to poverty or income levels:

Turkey, Pal, Afghanistan, Ethiopia, Serbia, Morocco, Sudan, DRC, Ukraine, Egypt…

What kind of countries get aid most?

55% goes to low income countries; 45% to middle-income countries.

Finally, which countries are aid dependent?

Surprisingly, not as many as you’d think if one takes 5% or 10% of GNI (gross national income) in ODA (overseas dev assistance) for medium and high aid dependency.

What to make of all this? How closely are poverty and aid linked?

The world’s poor live in 3 places:

1. Half of world’s poor are in China and India – these countries (arguably) have sufficient resources and in fact are both foreign aid donors themeselves – aid to China and India is probably in the shared endeavour of global public goods, possibly concessional loans.

2. A quarter of poor live in other lower middle income countries (MICs) – again plenty of domestic resources here so no real need for lots of aid but many of these are also fragile states or have governance issues – Pakistan and Nigeria – that no one knows quite how to intervene (see some thoughts here).

3. And a quarter of worlds poor are low income countries (LICs) who unequivocally need aid but most LICs will be lower MICs in next decade so what happens to aid after that?

This all leaves aid in need of an overhaul I think (see aid 2.0 post here).

Maybe aid needs a rethink with objectives related to insuring against new global risks – climate adaptation, financial instability for example or tried and tested poverty interventions such as conditional cash transfers direct to the poor?

Happy to hear views below…