Lectures 1-2: Basic Concepts

Question 1

Development definition

Answer 1

In general: Positive change in a society

(as understood in Development Assistance) = a process of accomplishing planned short and medium term goals

technocratic approach, easier to operationalize in practice

Question 2

Why should we study development “industry”?

Answer 2

• big “business”
• it has an impact on many spheres (political,economical…)
• it brings forth hugely differing opinions (e.g. Sachs x Easterly)

Question 3

assistance/cooperation/aid: definition

Answer 3

concrete external interventions in the developing countries with the overall aim to bring about a positive social change, most often poverty reduction

Question 4

Development Assistance

Different Understandings (limited/broad):

Answer 4

a) all the financial resources from private and public donors provided for development aims
b) only funds provided by the official donors => ODA

Question 5

Forms of Development Assistance

Answer 5

humanitarian emergency assistance, budget support, country programmable aid, food aid, military assistance…

Question 6

de-politicization of development

Answer 6

Dealing with immediate, urgent individual needs,

ignoring the broader context (political economy, power structures, global income inequalities etc.)

Question 7

ODF

Answer 7

= used for measuring the inflow of public resources to recipient countries

OOF = transactions by the official sector with countries on the DAC List which do not meet the conditions for eligibility
as ODA

Question 8

OOF

Answer 8

transactions by the official sector with countries on the DAC List which do not meet the conditions for eligibility
as ODA

Answer 9

Question 10

Development Assistance: Public Sector

Answer 10

Question 11

Development Assistance: Private Sector

Answer 11

Question 12

OECD DAC

Answer 12

• Organisation for Economic Co-operation and Development’s
• Development Assistance Committee
• international forum for the major donor countries
• seeking new ways of doing business to increase both the quantity and the quality of aid
• 30 members + observers
• Candidate country assessment based on criteria:The existence of appropriate strategies, policies and institutional frameworks that ensure capacity to deliver a development co-operation programme; an accepted measure of effort; and the existence of a system of performance monitoring and evaluation
• established in 1960 as Development Assistance Group (1961 => DAC)
• original aim: accurate and comparable data reporting
• aid statistics, especially on ODA

Question 13

ODA: Official Development Assistance

Answer 13

• specific category of official financial flows from donor to recipient countries
• created in 1969 to:

→separate some of the problematic forms of aid in 50s and 60

→unify the reporting of aid data

OECD DAC put limitations on what can be classified as official development assistance in terms of:

• aim of the funding
• which country receives the funding → e.g. military assistance (& DAC imposed geographical limitations on classified ODA)
• 1970: target of providing 0.7% of GNI as ODA annually

Question 14

ODA Flows (starting 2018)

Answer 14

• flows to countries and territories ONLY on the DAC List of ODA recipients: LDCs, other low income countries, lower middle and upper middle income countries:
• and to multilateral development institutions that promote and specifically target economic development and welfare

the resource flows which are:

a) provided by official agencies, including state and local governments, or by their executive agencies;
b) concessional in character (grants and soft loans)

Question 15

ODA as grant equivalent (starting 2018)

Answer 15

before, grants and concessional loans valued in the same way &“concessional” was open to interpretation

only “grant equivalent” of loans is now recorded as ODA = the more generous the loan, the higher the ODA value

encouraging donors to prefer grants and highly concessional loans

Question 16

grants

Answer 16

resources provided free of interest without repayment

Question 17

concessional/soft loans

Answer 17

= have to be repaid with interest, but with significantly lower interest rates than if borrowed from commercial banks

Question 18

limitations on classification of ODA imposed in several thematic sectors:

Answer 18

• military aid: military equipment and services, anti-terrorism activities not eligible; using donors’ armed forces to deliver humanitarian aid eligible
• peacekeeping: only developmentally relevant activities of peacekeeping operations eligible
• nuclear energy: only for civilian purposes
• cultural programmes: eligible if they build cultural capacities of recipient countries
• in-donor refugee costs: assistance to asylum seekers and refugees eligible during the first 12 months

Question 19

Why track ODA?

Answer 19

to compare how generous individual donors are

• keeping the internationally agreed-on target for ODA (0.7%of GNI)
• soft-pressure on donors

to track where the money goes and what are the most targeted thematic areas

• to harmonize activities of individual donors
• “donor darlings” and “donor orphans”

Why to have strict rules for aid reporting?

• comparability of data on aid
• to exclude the flows that do not contribute to development in recipient countries (e.g. military assistance)

Question 20

ODA trends x other flows

Answer 20

1960-2018

More stable, less tied to market shifts

e.g. private flows affected by: oil price shocks, Mexican debt crisis, 1990 recession, 9/11, 2008 financial crisis, refugee crisis

Question 21

ODA trends

Answer 21

Although absolute volume of ODA has increased

ODA as a per cent of GNI has decreased until 2000s and since slowly increased but not to the level it was in 1960s

Biggest ODA flows:

1. Bilateral ODA
2. multilateral ODA
3. Humanitarian Assistance
4. …

Question 22

ODA: Critique

Answer 22

numerous items eligible for ODA are controversial, e.g.:

• scholarships provided in the donor countries
• spending on the assistance to refugees
• debt relief
• programs to raise development awareness in donor countries
• administrative costs of ODA programs

→ not spent directly in the recipient countries

some financial flows do not genuinely contribute to development

ODA does not reflect the quality of the development assistance, only the quantity

Question 23

Complementary aid indicators (TOSSD, CPA)

Answer 23

Total Official Support for Sustainable Development & Country Programmable Aid

Question 24

New ODA: Total Official Support for Sustainable Development (TOSSD)

Answer 24

tracks broad range of resources supporting developing countries in achieving the Sustainable Development Goals

new measure of broader international financing for sustainable development that will complement ODA

TOSSD covers the totality of international public finance extended to developing countries and multilateral institutions, and private resources mobilized through official means, regardless of the type of instrument used

to increase transparency and rigour in reporting on development finance beyond ODA

Question 25

TOSSD: Total Official Support for Sustainable Development

Answer 25

* documents previously unreported activities (e.g. biodiversity, migration, peace & security, labor statistics) * TOSSD is the only international measure of funding for global public goods benefiting developing countries

Question 26

Country Programmable Aid (CPA)

Answer 26

category of aid developed by OECD DAC in 2007 = portion of aid that donors **programme for individual countries or regions** defined through **exclusion of activities** which: * are **unpredictable by nature** (humanitarian aid, debt relief) * entail **no cross-border flows** (administrative costs, student costs, promotion of development awareness, costs related to research and refugees in donor countries) * **are not a part of co-operation agreements between donor and recipient governments** (food aid, core funding to NGOs, aid from local governments or aid not allocable by country or region) proportion of ODA over which recipient countries have, or could have, a significant say

Question 27

Gross bilateral ODA: to recipients by Income group

Answer 27

1. Largest share to Lower Middle Income countries 2. Then LDCs 3. Then Upper middle income countries 4. then other low income countries

Question 28

Gross bilateral ODA: by region

Answer 28

1. Sub-saharan africa 2. South and Central Asia 3. ME & NA 4. Other Asia & Oceania 5. Latin America & Caribbean

Question 29

Gross bilateral ODA: by sector (4 biggest)

Answer 29

1. Education, health… 2. Other social infrastructure 3. Economic infrastructure 4. Humanitarian aid

Question 30

Alternative ways of measuring aid

Answer 30

several alternative indicators to ODA **Inflated aid vs. Genuine aid:** Developed by CONCORD as part of their AidWatch initiative

Question 31

Alternative ways of measuring aid: **Inflated aid vs. Genuine aid:**

Answer 31

* inflated aid =* items from net ODA flows that **do not contribute to development or do not represent a genuine transfer of resources** to developing countries * Spending on **students** and **refugees** **in the donor country**, **repayments of interest rates on concessional loans**, **debt relief,** **tied aid** **Most ODA is genuine BUT inflated aid increases aid gap (further from 0,7% target)**

Question 32

Commitment to Development Index

Answer 32

Assessment of the affect the rich countries have on developing countries by **Centre for Global Development** 8 policy areas: * Quantity and quality of foreign aid * Openness to trade * Policies that encourage investment & financial transparency * Openness to migration * Environmental policies * Promoting international security * Support for technology creation & transfer * Global health issues