[afro-nets] Does aid go to the poorest?

[Dr Rana Jawad Asghar <jawad@alumni.washington.edu>]

Does aid go to the poorest?
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http://www.id21.org/society/s9cbb1g1.html

The two largest bilateral donors, the United States and Japan,
and the largest multilateral donor, the European Commission,
spend much of their aid budgets in small, relatively well-off
countries. Whilst a disproportionate amount of aid is given to
these few small countries many larger and poorer nations receive
a lot less. Can anything be done to re-target assistance to the
chronically poor?

A paper from the Chronic Poverty Research Centre analyses data
on the value of aid given in 2001 by the 27 bilateral and 19
multilateral donors belonging to the Development Assistance Com-
mittee (DAC).

Japan stands out from other bilateral donors as almost two
thirds of its aid is in the form of soft loans rather than
grants. Also bucking trends are the Scandinavian donors who have
exceeded the 1969 Pearson Committee recommendation that indus-
trialised countries should give at least 0.7 per cent of their
national incomes in aid. Indeed, generous Denmark gave over one
per cent in 2001.

The Netherlands and UK's bilateral aid programmes are commended
for giving significant assistance to a number of poor African
countries and to the populous countries of South Asia (Bangla-
desh, Pakistan and India) which are home to 45 per cent of those
below the global poverty benchmark of income of less than a dol-
lar a day.

Egypt and Russia lead the middle income countries which appear
to receive a disproportionate amount of DAC aid. The three most
populous poor countries - India, China and Nigeria - receive far
less aid than their contributions to the global poverty head-
count suggest should be given.

The author describes a scale of measurement (a modification of
the 'Suits index' used by economists to determine whether tax
systems are progressive) to assess whether donors are helping
the neediest large and small nations. Loans provided by the
World Bank receive high marks as they target both the major
large developing countries and the smaller least developed coun-
tries. The European Union scores badly as large amounts of grant
aid go to Brazil, South Africa, Turkey and relatively well-off
states in Eastern Europe.

The author challenges the aid community to ask:

why four of the six most important bilateral donors and two of
the three most important multilaterals give significant propor-
tions of their aid budgets to middle income countries whether
ex-colonial attachments, geo-political objectives and desires to
promote trade take precedence over professed poverty reduction
objectives whether aid sent to the poorest countries actually
reaches the poorest groups whether their aid concentration pat-
terns are exacerbating the risk that in many large poor coun-
tries sub-regions will miss out from significant growth or aid
at the national level. To increase prospects of aid being re-
targetted to those in greatest need, donors should:

* complement analysis of monetary poverty (using the $1/day
measure) to look at such non-monetary indicators of poverty and
ill-being as child malnutrition, primary school enrolments, un-
der-five mortality, adult illiteracy, access to safe water and
incidence of HIV/AIDS;
* compare aid disbursements before and after adoption of the
Millennium Development Goals to see if donors are taking seri-
ously their commitments to achieving the MDGs;
* extend analysis to include other foreign direct investment and
other types of financial flows to developing countries
* refine techniques for assessing the numbers of people in very
poor countries who live in chronic poverty.

Research on non-monetary indicators of poverty and ill-being in
relation to aid is currently being conducted at the Chronic Pov-
erty Research Centre on behalf of the UK Department for Interna-
tional Development.


Contributor(s): Bob Baulch

Source(s): 'Aid for the poorest? The distribution and maldis-
tribution of international development assistance' by Bob
Baulch, Working Paper 35, Chronic Poverty Research Centre, Sep-
tember 2003 More information.

Funded by: Department for International Development
id21 Research Highlight: 27 February 2004

Further Information:
Bob Baulch
Institute of Development Studies
University of Sussex Brighton BN1 9RE UK
Tel: +44 (0)1273 678774
Fax: +44 (0)1273 621202
mailto:R.J.Baulch@ids.ac.uk

Institute of Development Studies (IDS), UK

Chronic Poverty Research Centre
IDPM University of Manchester
Harold Hankins Building Precinct Centre
Oxford Road
Manchester M13 9QH UK
Tel: +44 (0)161 275 2810
Fax: +44 (0)161 273 8829
mailto:elaine.m.rossi@man.ac.uk

Chronic Poverty Research Centre, IDPM, UK

Other related links: 'More donors, less help: the cost of re-
ceiving aid'

'Politics vs aid?' Insights #39
'Rethinking the debt-aid conundrum: lessons from Côte d'Ivoire'
'Aid Effectiveness' from the Development Gateway