Millennium Development Goals

From Wikipedia, the free encyclopedia

This article is about the 2015 goals. For the 2030 goals, see Sustainable Development Goals.

The Millennium Development Goals were a UN initiative with a time span from 2000 to 2015.

In the United Nations, the Millennium Development Goals (MDGs) were eight international development goals for the year 2015 created following the Millennium Summit, following the adoption of the United Nations Millennium Declaration. These were based on the OECD DAC International Development Goals agreed by Development Ministers in the "Shaping the 21st Century Strategy". The Sustainable Development Goals (SDGs) succeeded the MDGs in 2016.

All 191 United Nations member states, and at least 22 international organizations, committed to help achieve the following Millennium Development Goals by 2015:

1. To eradicate extreme poverty and hunger
2. To achieve universal primary education
3. To promote gender equality and empower women
4. To reduce child mortality
5. To improve maternal health
6. To combat HIV/AIDS, malaria, and other diseases
7. To ensure environmental sustainability
8. To develop a global partnership for development

Each goal had specific targets, and dates for achieving those targets. The eight goals were measured by 21 targets. To accelerate progress, the G8 finance ministers agreed in June 2005 to provide enough funds to the World Bank, the International Monetary Fund (IMF) and the African Development Bank (AfDB) to cancel $40 to $55 billion in debt owed by members of the heavily indebted poor countries (HIPC) to allow them to redirect resources to programs for improving health and education and for alleviating poverty.

Critics of the MDGs complained of a lack of analysis and justification behind the chosen objectives, and the difficulty or lack of measurements for some goals and uneven progress, among others. Although developed countries' aid for achieving the MDGs rose during the challenge period, more than half went for debt relief and much of the remainder going towards natural disaster relief and military aid, rather than further development.

As of 2013, progress towards the goals was uneven. Some countries achieved many goals, while others were not on track to realize any. A UN conference in September 2010 reviewed progress to date and adopted a global plan to achieve the eight goals by their target date. New commitments targeted women's and children's health, and new initiatives in the worldwide battle against poverty, hunger and disease.

Background

Origins

Following the end of the Cold War, a series of UN‑led conferences in the 1990s had focused on issues such as children, nutrition, human rights and women, producing commitments for combined international action on those matters. The 1995 World Summit on Social Development produced a Copenhagen Declaration on Social Development with a long and complex list of commitments by global leaders, including many adapted from the outcomes of previous conferences. But international aid levels were falling and, in that same year, the Development Assistance Committee of the OECD set up a reflection process to review the future of development aid. The resulting 1996 report, "Shaping the 21st Century", turned some of the Copenhagen commitments into six monitorable "International Development Goals", which had similar content and form to the eventual MDGs: halving poverty by 2015; universal primary education by 2015; eliminating gender disparity in schools by 2005; reductions in infant, child and maternal mortality by 2015, universal access to reproductive health services by 2015 and adequate national strategies for sustainable development in place everywhere by 2015.

In late 1997, the UN General Assembly envisaged a special Millennium Assembly and forum as a focus for efforts to reform the UN system. A year later, it specifically resolved to hold not only the Millennium Assembly but also a Millennium Summit, and mandated the Secretary-General, Kofi Annan, to come up with proposals for "a number of forward-looking and widely relevant topics", thus opening the possibility of going beyond the institutional questions of UN reform. Annan's report, when published in April 2000 under the title "We the Peoples: The Role of the United Nations in the 21st Century", framed the questions of UN reform within the larger challenges facing the world, the chief of which was identified as "to ensure that globalization becomes a positive force for all the world's people, instead of leaving billions of them behind in squalor". In the report Annan urged the forthcoming Millennium Summit to adopt certain key goals and objectives on many of the issues raised in the Copenhagen summit, other conferences of the 1990s, and the recently published Brahimi Report on international peace and security.

The Millennium Summit and the General Assembly in September 2000 issued a Millennium Declaration echoing the agenda that Annan had set out. This declaration did not specifically mention "Millennium Development Goals", but it does contain the substance – and much of the same wording – as the eventual goals. A process of selecting and refining the Goals from the content of the Declaration continued for some time. A crucial moment here was unification between discussions under the auspices of the United Nations and approaches being followed by the OECD based on "Shaping the 21st Century"; this unification was agreed at a meeting convened by the World Bank in March 2001. In September 2001, Annan presented to the General Assembly a "Road map towards the implementation of the United Nations Millennium Declaration" which did contain a section specifically about "the Millennium Development Goals", enunciating some of them in their eventual wording, and indicating the remaining issues in formulating a definitive set.

Human capital, infrastructure and human rights

The MDGs emphasized three areas: human capital, infrastructure and human rights (social, economic and political), with the intent of increasing living standards. Human capital objectives include nutrition, healthcare (including child mortality, HIV/AIDS, tuberculosis and malaria, and reproductive health) and education. Infrastructure objectives include access to safe drinking water, energy and modern information/communication technology; increased farm outputs using sustainable practices; transportation; and environment. Human rights objectives include empowering women, reducing violence, increasing political voice, ensuring equal access to public services and increasing security of property rights. The goals were intended to increase an individual's human capabilities and "advance the means to a productive life". The MDGs emphasize that each nation's policies should be tailored to that country's needs; therefore most policy suggestions are general.

Goals

A poster at the United Nations Headquarters in New York City, New York, United States, showing the Millennium Development Goals

The MDGs were developed out of several commitments set forth in the Millennium Declaration, signed in September 2000. There are eight goals with 21 targets, and a series of measurable health indicators and economic indicators for each target.

Goal 1: Eradicate extreme poverty and hunger

• Target 1A: Halve, between 1990 and 2015, the proportion of people living on less than $1.25 a day
• Target 1B: Achieve Decent Employment for Women, Men, and Young People
• Target 1C: Halve, between 1990 and 2015, the proportion of people who suffer from hunger

Goal 2: Achieve universal primary education

• Target 2A: By 2015, all children can complete a full course of Primary education/primary schooling, girls and boys

MDG 2 focused on primary education and emphasizes enrollment and completion. In some countries, primary enrollment increased at the expense of achievement levels. In some cases, the emphasis on primary education has negatively affected secondary and post-secondary education.

Goal 3: Promote gender equality and empower women

• Target 3A: Eliminate gender disparity in primary and secondary education preferably by 2005, and at all levels by 2015

Goal 4: Reduce child mortality rates

• Target 4A: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate
  

Achieving the MDGs does not depend on economic growth alone. In the case of MDG 4, developing countries such as Bangladesh have shown that it is possible to reduce child mortality with only modest growth with inexpensive yet effective interventions, such as measles immunization. Still, government expenditure in many countries is not enough to meet the agreed spending targets.

Goal 5: Improve maternal health

• Target 5A: Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio
• Target 5B: Achieve, by 2015, universal access to reproductive health

Goal 6: Combat HIV/AIDS, malaria, and other diseases

• Target 6A: Have halted by 2015 and begun to reverse the spread of HIV/AIDS
• Target 6B: Achieve, by 2010, universal access to treatment for HIV/AIDS for all those who need it
• Target 6C: Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases

Research on health systems suggests that a "one size fits all" model will not sufficiently respond to the individual healthcare profiles of developing countries; however, a study found a common set of constraints in scaling up international health, including the lack of absorptive capacity, weak health systems, human resource limitations, and high costs. The study argued that the emphasis on coverage obscures the measures required for expanding health care. These measures include political, organizational, and functional dimensions of scaling up, and the need to nurture local organizations.

Goal 7: Ensure environmental sustainability

• Target 7A: Integrate the principles of sustainable development into country policies and programs; reverse loss of environmental resources
• Target 7B: Reduce biodiversity loss, achieving, by 2010, a significant reduction in the rate of loss
• Target 7C: Halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation
• Target 7D: By 2020, to have achieved a significant improvement in the lives of at least 100 million slum-dwellers

Goal 8: Develop a global partnership for development

• Target 8A: Develop further an open, rule-based, predictable, non-discriminatory trading and financial system
• Target 8B: Address the Special Needs of the Least Developed Countries (LDCs)
• Target 8C: Address the special needs of landlocked developing countries and small island developing States
• Target 8D: Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term
• Target 8E: In co-operation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries
• Target 8F: In co-operation with the private sector, make available the benefits of new technologies, especially information and communications

MDG 8 uniquely focused on donor achievements, rather than development successes. The Commitment to Development Index, published annually by the Center for Global Development in Washington, D.C., is considered the best numerical indicator for MDG 8. It is a more comprehensive measure of donor progress than official development assistance, as it takes into account policies on a number of indicators that affect developing countries such as trade, migration and investment.

Progress

Graph of global population living on under 1, 1.25 and 2 equivalent of 2005 US dollars a day (red) and as a proportion of world population (blue) from 1981 to 2008 based on data from The World Bank

A major conference was held at UN headquarters in New York on 20–22 September 2010 to review progress. The conference concluded with the adoption of a global action plan to accelerate progress towards the eight anti-poverty goals. Major new commitments on women's and children's health, poverty, hunger and disease ensued.

Between 1990 and 2010 the population living on less than $1.25 a day in developing countries halved to 21%, or 1.2 billion people, achieving MDG 1A before the target date, although the biggest decline was in China, which took no notice of the goal. However, the child mortality and maternal mortality are down by less than half. Sanitation (MDG 7) and education (MDG 2) targets will also be missed.

Fundamental issues such as gender, the divide between the humanitarian and development agendas and economic growth will determine whether or not the MDGs are achieved, according to researchers at the Overseas Development Institute (ODI).

Progress towards reaching the goals has been uneven across countries. Brazil achieved many of the goals, while others, such as Benin, are not on track to realize any. The major successful countries include China (whose poverty population declined from 452 million to 278 million) and India. The World Bank estimated that MDG 1A (halving the proportion of people living on less than $1 a day) was achieved in 2008 mainly due to the results from these two countries and East Asia.

In the early 1990s Nepal was one of the world's poorest countries and remains South Asia's poorest country. Doubling health spending and concentrating on its poorest areas halved maternal mortality between 1998 and 2006. Its Multidimensional Poverty Index has seen the largest decreases of any tracked country. Bangladesh has made some of the greatest improvements in infant and maternal mortality ever seen, despite modest income growth.

Success factors

Scholars identified six factors that have "enabled or hindered MDG implementation" for particular countries: These include path dependencies ("whether the MDGs are in line with the historical political orientation and tradition of a country"), government ownership of the MDGs, pressure from NGOs, availability of financial resources, "administrative capacity and level of economic development", and "support from international or bilateral donors". The researchers found China successful in achieving the MDGs due to its strong administration, economic growth, and effective national strategies, which were well aligned with the MDGs.

Multilateral debt reduction

G‑8 Finance Ministers met in London in June 2005 in preparation for the Gleneagles Summit in July and agreed to provide enough funds to the World Bank, IMF and the African Development Bank (AfDB) to cancel the remaining HIPC multilateral debt ($40 to $55 billion). Recipients would theoretically re-channel debt payments to health and education.

The Gleaneagles plan became the Multilateral Debt Relief Initiative (MDRI). Countries became eligible once their lending agency confirmed that the countries had continued to maintain the reforms they had implemented.

While the World Bank and AfDB limited MDRI to countries that complete the HIPC program, the IMF's eligibility criteria were slightly less restrictive so as to comply with the IMF's unique "uniform treatment" requirement. Instead of limiting eligibility to HIPC countries, any country with per capita income of $380 or less qualified for debt cancellation. The IMF adopted the $380 threshold because it closely approximated the HIPC threshold.

Millennium Development Goal 3 (gender equality)

The Hollywood actress Geena Davis in a speech at the MDG Countdown event at the Ford Foundation in New York, addressing gender roles and issues in film such as her organization's work in combating inequality in Hollywood (24 September 2013)

Increased focus on gender issues could accelerate MDG progress, e.g. empowering women through access to paid work could help reduce child mortality. In South Asian countries babies often suffered from low birth weight and high mortality due to limited access to healthcare and maternal malnutrition. Paid work could increase women's access to health care and better nutrition, reducing child mortality. Increasing female education and workforce participation increased these effects. Improved economic opportunities for women also decreased participation in the sex market, which decreased the spread of AIDS, MDG 6A.

Although the resources, technology and knowledge exist to decrease poverty through improving gender equality, the political will is often missing. If donor and developing countries focused on seven "priority areas", great progress could be made towards the MDG. These seven priority areas include: increasing girls' completion of secondary school, guaranteeing sexual and reproductive health rights, improving infrastructure to ease women's and girl's time burdens, guaranteeing women's property rights, reducing gender inequalities in employment, increasing seats held by women in government, and combating violence against women.

It is thought by some women's rights' advocatess that the current MDGs targets do not place enough emphasis on tracking gender inequalities in poverty reduction and employment as there are only gender goals relating to health, education, and political representation. Feminist writers such as Naila Kabeer have argued that in order to encourage women's empowerment and progress towards the MDGs, increased emphasis should be placed on gender mainstreaming development policies and collecting data based on gender.

According to MDG Monitor, the target under MDG 3 "To eliminate gender disparity in primary and secondary education by 2005, and in all levels of education by 2015" was met.

However MDG monitor points out that while parity has been achieved across the developing world, there are regional and national differences favouring girls in some cases and boys in others. In secondary education in "Western Asia, Oceania, and sub-Saharan Africa, girls are still at a disadvantage, while the opposite is true in Latin America and the Caribbean – boys are at a disadvantage." Similarly in tertiary education there are disparities "at the expense of men in Northern Africa, Eastern Asia, and Latin America and the Caribbean" while conversely they are "at the expense of women in Southern Asia and sub-Saharan Africa."

Funding commitment

Over the past 35 years, UN members have repeatedly "commit[ted] 0.7% of rich-countries' gross national income (GNI) to Official Development Assistance". The commitment was first made in 1970 by the UN General Assembly.

The text of the commitment was: "Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum net amount of 0.7 percent of its gross national product at market prices by the middle of the decade."

The attention to well-being other than income helps bring funding to achieving MDGs. Further MDGs prioritize interventions, establish obtainable objectives with useful measurements of progress despite measurement issues and increased the developed world's involvement in worldwide poverty reduction. MDGs include gender and reproductive rights, environmental sustainability, and spread of technology. Prioritizing interventions helps developing countries with limited resources make decisions about allocating their resources. MDGs also strengthen the commitment of developed countries and encourage aid and information sharing. The global commitment to the goals likely increases the likelihood of their success. They note that MDGs are the most broadly supported poverty reduction targets in world history.

The International Health Partnership (IHP+) aimed to accelerate MDG progress by applying international principles for effective aid and development in the health sector. In developing countries, significant funding for health came from external sources requiring governments to coordinate with international development partners. As partner numbers increased variations in funding streams and bureaucratic demands followed. By encouraging support for a single national health strategy, a single monitoring and evaluation framework, and mutual accountability, IHP+ attempted to build confidence between government, civil society, development partners and other health stakeholders.

European Union

In 2005 the European Union reaffirmed its commitment to the 0.7% aid targets, noting that "four out of the five countries, which exceed the UN target for ODA of 0.7%, of GNI are member states of the European Union". Further, the UN "believe[s] that donors should commit to reaching the long-standing target of 0.7 percent of GNI by 2015".

United States

However, the United States as well as other nations disputed the Monterrey Consensus that urged "developed countries that have not done so to make concrete efforts towards the target of 0.7% of gross national product (GNP) as ODA to developing countries".

The US consistently opposed setting specific foreign-aid targets since the UN General Assembly first endorsed the 0.7% goal in 1970.

OECD

Many Organisation for Economic Co-operation and Development (OECD) nations, did not donate 0.7% of their GNI. Some nations' contributions fell far short of 0.7%.

The Australian government committed to providing 0.5% of GNI in International Development Assistance by 2015–2016.

Criticism

General

General criticisms included a perceived lack of analytical power and justification behind the chosen objectives. Some of the indicator definitions, baselines and targets were changed after their first adoption, to suggest that progress had been better than was really the case.

Further criticism included their "money-metric and donor-centric view", their "unidirectional dimension and narrow focus on developing countries, with industrialized countries being deployed almost as their tutors", the "lack of stakeholder engagement in formulating the MDGs" and the "weak review mechanisms to measure performance".

David Hulme and James Scott noted that the process of creating the MDGs was diffuse, having no single architect and "no clear start or end". They also commented that the process was driven by rich states rather than the countries that would be more the subject of MDG interventions. The entire MDG process has been accused of lacking legitimacy as a result of failure to include, often, the voices of the very participants that the MDGs seek to assist.

The MDGs lacked strong objectives and indicators for within-country equality, despite significant disparities in many developing nations.

The MDGs were attacked for insufficient emphasis on environmental sustainability. Thus, they did not capture all elements needed to achieve the ideals set out in the Millennium Declaration.

Human rights

The MDGs may under-emphasize local participation and empowerment (other than women's empowerment). FIAN International, a human rights organization focusing on the right to adequate food, contributed to the Post 2015 process by pointing out a lack of: "primacy of human rights; qualifying policy coherence; and of human rights based monitoring and accountability. Without such accountability, no substantial change in national and international policies can be expected."

Measurement difficulties

A publication from 2005 argued that goals related to maternal mortality, malaria and tuberculosis are impossible to measure and that current UN estimates lack scientific validity or are missing. Household surveys are the primary measure for the health MDGs but may be poor and duplicative measurements that consume limited resources. Furthermore, countries with the highest levels of these conditions typically have the least reliable data collection. The study also argued that without accurate measures, it is impossible to determine the amount of progress, leaving MDGs as little more than a rhetorical call to arms.

MDG proponents such as McArthur and Sachs countered that setting goals is still valid despite measurement difficulties, as they provide a political and operational framework to efforts. With an increase in the quantity and quality of healthcare systems in developing countries, more data could be collected. They asserted that non-health related MDGs were often well measured, and that not all MDGs were made moot by lack of data.

Equity

Further developments in rethinking strategies and approaches to achieving the MDGs include research by the Overseas Development Institute into the role of equity. Researchers at the ODI argued that progress could be accelerated due to recent breakthroughs in the role equity plays in creating a virtuous circle where rising equity ensures the poor participate in their country's development and creates reductions in poverty and financial stability. Yet equity should not be understood purely as economic, but also as political. Examples abound, including Brazil's cash transfers, Uganda's eliminations of user fees and the subsequent huge increase in visits from the very poorest or else Mauritius's dual-track approach to liberalization (inclusive growth and inclusive development) aiding it on its road into the World Trade Organization. Researchers at the ODI thus propose equity be measured in league tables in order to provide a clearer insight into how MDGs can be achieved more quickly; the ODI is working with partners to put forward league tables at the 2010 MDG review meeting.

Examples

Sub-Saharan Africa

One success was to strengthen rice production in Sub-Saharan Africa. By the mid‑1990s, rice imports reached nearly $1 billion annually. Farmers had not found suitable rice varieties that produce high yields. New Rice for Africa (NERICA), a high-yielding and well adapted strain, was developed and introduced in areas including Congo Brazzaville, Côte d'Ivoire, the Democratic Republic of the Congo, Guinea, Kenya, Mali, Nigeria, Togo and Uganda. Some 18 varieties of this strain became available, enabling African farmers to produce enough rice to feed their families and have extra to sell.

The region also showed progress towards MDG 2. School fees that included Parent-Teacher Association and community contributions, textbook fees, compulsory uniforms and other charges took up nearly a quarter of a poor family's income and led countries including Burundi, the Democratic Republic of the Congo, Ethiopia, Ghana, Kenya, Malawi, Mozambique, Tanzania, and Uganda to eliminate such fees, increasing enrollment. For instance, in Ghana, public school enrollment in the most deprived districts rose from 4.2 million to 5.4 million between 2004 and 2005. In Kenya, primary school enrollment added 1.2 million in 2003 and by 2004, the number had climbed to 7.2 million.

Millennium Villages Project

Main article: Millennium Villages Project

Following the adoption of the Millennium Development Goals (MDGs), in 2000, Jeffrey Sachs of The Earth Institute at Columbia University was among the leading academic scholars and practitioners on the MDGs. He chaired the WHO Commission on Macroeconomics and Health (2000–01), which played a pivotal role in scaling up the financing of health care and disease control in the low-income countries to support MDGs 4, 5, and 6. He worked with UN Secretary-General Kofi Annan in 2000–2001 to design and launch The Global Fund to Fight AIDS, Tuberculosis and Malaria. He also worked with senior officials of the George W. Bush administration to develop the PEPFAR program to fight HIV/AIDS, and the PMI to fight malaria. On behalf of Annan, from 2002 to 2006 he chaired the UN Millennium Project, which was tasked with developing a concrete action plan to achieve the MDGs. The UN General Assembly adopted the key recommendations of the UN Millennium Project at a special session in September 2005.

The Millennium Villages Project, which Sachs directed, operated in more than a dozen African countries and covered more than 500,000 people. The MVP has engendered considerable controversy associated as critics have questioned both the design of the project and claims made for its success. In 2012 The Economist reviewed the project and concluded "the evidence does not yet support the claim that the millennium villages project is making a decisive impact." Critics have pointed to the failure to include suitable controls that would allow an accurate determination of whether the Projects methods were responsible for any observed gains in economic development. A 2012 Lancet paper claiming a 3-fold increase in the rate of decline in childhood mortality was criticized for flawed methodology, and the authors later admitted that the claim was "unwarranted and misleading".

Activities and organizations

• The United Nations Millennium Campaign was launched to increase support for the Millennium Development Goals. The Millennium Campaign targets intergovernmental, government, civil society organizations and media at global and regional levels.
• The Millennium Promise Alliance, Inc. (or simply the "Millennium Promise") is a U.S.-based non-profit organization founded in 2005 by Jeffrey Sachs and Ray Chambers. Millennium Promise coordinated the Millennium Villages Project in partnership with Columbia's Earth Institute and UNDP; it aimed to demonstrate MDG feasibility through an integrated, community-led approach. The project ran from 2005 to 2015, operating in 15 sites across 11 countries in sub-Saharan Africa.
• The Youth in Action EU Programme "Cartoons in Action" project created animated videos about MDGs, and videos about MDG targets using Arcade C64 videogames.

Next set of goals (SDGs)

Main article: Sustainable development goals

Although there have been major advancements and improvements achieving some of the MDGs even before the deadline of 2015, the progress has been uneven between the countries. In 2012 the UN Secretary-General established the "UN System Task Team on the Post-2015 UN Development Agenda", bringing together more than 60 UN agencies and international organizations to focus and work on sustainable development.

At the MDG Summit, UN Member States discussed the Post-2015 Development Agenda and initiated a process of consultations. Civil society organizations also engaged in the post-2015 process, along with academia and other research institutions, including think tanks.

The Sustainable Development Goals (SDGs) are the goals and targets relating to future sustainable development for 2030 once the MDGs expired at the end of 2015.

On 31 July 2012, Secretary-General Ban Ki-moon appointed 26 public and private leaders to advise him on the post-MDG agenda.

In 2014, the UN's Commission on the Status of Women agreed on a document that called for the acceleration of progress towards achieving the millennium development goals, and confirmed the need for a stand-alone goal on gender equality and women's empowerment in post-2015 goals, and for gender equality to underpin all of the post-2015 goals.

Aid

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Aid 

Aid per capita (2016, OWID)

In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. The type of aid given may be classified according to various factors, including its intended purpose, the terms or conditions (if any) under which it is given, its source, and its level of urgency. For example, aid may be classified based on urgency into emergency aid and development aid.

Emergency aid is rapid assistance given to a people in immediate distress by individuals, organizations, or governments to relieve suffering, during and after man-made emergencies (like wars) and natural disasters. Development aid is aid given to support development in general which can be economic development or social 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.

Aid may serve one or more functions: it may be given as a signal of diplomatic approval, or to strengthen a military ally, to reward a government for behavior desired by the donor, to extend the donor's cultural influence, to provide infrastructure needed by the donor for resource extraction from the recipient country, or to gain other kinds of commercial access. Countries may provide aid for further diplomatic reasons. Humanitarian and altruistic purposes are often reasons for foreign assistance.

Aid may be given by individuals, private organizations, or governments. Standards delimiting exactly the types of transfers considered "aid" vary from country to country. For example, the United States government discontinued the reporting of military aid as part of its foreign aid figures in 1958. The most widely used measure of aid is "Official Development Assistance" (ODA).

Definitions and purpose

The Development Assistance Committee of the Organisation for Economic Co-operation and Development defines its aid measure, Official Development Assistance (ODA), as follows: "ODA consists of flows to developing countries and multilateral institutions provided by official agencies, including state and local governments, or by their executive agencies, each transaction of which meets the following test: a) it is administered with the promotion of the economic development and welfare of developing countries as its main objective, and b) it is concessional in character and contains a grant element of at least 25% (calculated at a rate of discount of 10%)." Foreign aid has increased since the 1950s and 1960s (Isse 129). The notion that foreign aid increases economic performance and generates economic growth is based on Chenery and Strout's Dual Gap Model (Isse 129). Chenerya and Strout (1966) claimed that foreign aid promotes development by adding to domestic savings as well as to foreign exchange availability, this helping to close either the savings-investment gap or the export-import gap. (Isse 129).

Carol Lancaster defines foreign aid as "a voluntary transfer of public resources, from a government to another independent government, to an NGO, or to an international organization (such as the World Bank or the UN Development Program) with at least a 25 percent grant element, one goal of which is to better the human condition in the country receiving the aid."

Types

The type of aid given may be classified according to various factors, including its level of urgency and intended purpose, or the terms or conditions (if any) under which it is given.

Aid from various sources can reach recipients through bilateral or multilateral delivery systems. Bilateral refers to government to government transfers. Multilateral institutions, such as the World Bank or UNICEF, pool aid from one or more sources and disperse it among many recipients.

By urgency and intended purpose

Aid may be also classified based on urgency into emergency aid and development aid. Emergency aid is rapid assistance given to a people in immediate distress by individuals, organizations, or governments to relieve suffering, during and after man-made emergencies (like wars) and natural disasters. The term often carries an international connotation, but this is not always the case. It is often distinguished from development aid by being focused on relieving suffering caused by natural disaster or conflict, rather than removing the root causes of poverty or vulnerability. Development aid is aid given to support development in general which can be economic development or social 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.

Official aid may be classified by types according to its intended purpose. Military aid is material or logistical assistance given to strengthen the military capabilities of an ally country.

Humanitarian aid and emergency aid

Main articles: Emergency aid and Humanitarian aid

U.S. soldiers unload humanitarian aid for distribution to the town of Rajan Kala, Afghanistan, 5 December 2009

Humanitarian aid is material or logistical assistance provided for humanitarian purposes, typically in response to humanitarian crises such as a natural disaster or a man-made disaster.

The provision of emergency humanitarian aid consists of the provision of vital services (such as food aid to prevent starvation) by aid agencies, and the provision of funding or in-kind services (like logistics or transport), usually through aid agencies or the government of the affected country. Humanitarian aid is distinguished from humanitarian intervention, which involves armed forces protecting civilians from violent oppression or genocide by state-supported actors.

The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) is mandated to coordinate the international humanitarian response to a natural disaster or complex emergency acting on the basis of the United Nations General Assembly Resolution 46/182. The Geneva Conventions give a mandate to the International Committee of the Red Cross and other impartial humanitarian organizations to provide assistance and protection of civilians during times of war. The ICRC, has been given a special role by the Geneva Conventions with respect to the visiting and monitoring of prisoners of war.

Development aid

Main article: Development aid

Development aid as share of government budget. (2015, OWID)

Development aid 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. For donor nations, development aid also has strategic value; improved living conditions can positively effects global security and economic growth. Official Development Assistance (ODA) is a commonly used measure of developmental aid.

Technical assistance is a sub-type of development aid. It is aid involving highly educated or trained personnel, such as doctors, who are moved into a developing country to assist with a program of development. It can be both programme and project aid.

By terms or conditions of receipt

Aid can also be classified according to the terms agreed upon by the donor and receiving countries. In this classification, aid can be a gift, a grant, a low or no interest loan, or a combination of these. The terms of foreign aid are oftentimes influenced by the motives of the giver: a sign of diplomatic approval, to reward a government for behaviour desired by the donor, to extend the donor's cultural influence, to enhance infrastructure needed by the donor for the extraction of resources from the recipient country, or to gain other kinds of commercial access.

Other types

Aid given is generally intended for use by a specific end. From this perspective it may be called:

• Project aid: Aid given for a specific purpose; e.g. building materials for a new school.
• Programme aid: Aid given for a specific sector; e.g. funding of the education sector of a country.
  • Budget support: A form of Programme Aid that is directly channelled into the financial system of the recipient country.
• Sector-wide Approaches (SWAPs): A combination of Project aid and Programme aid/Budget Support; e.g. support for the education sector in a country will include both funding of education projects (like school buildings) and provide funds to maintain them (like school books).
• Food aid: Food is given to countries in urgent need of food supplies, especially if they have just experienced a natural disaster. Food aid can be provided by importing food from the donor, buying food locally, or providing cash.
• Faith-based foreign aid: aid that originates in institutions of a religious nature (some examples are, Salvation Army, Catholic Relief Services)
• Private giving: International aid in the form of gifts by individuals or businesses are generally administered by charities or philanthropic organizations who batch them and then channel these to the recipient country.

Scale

Chart showing foreign aid given per capita (2023), from countries with highest donation rates among countries with large populations.

Most official development assistance (ODA) comes from the 30 members of the Development Assistance Committee (DAC), or about $150 billion in 2018. For the same year, the OECD estimated that six to seven billion dollars of ODA-like aid was given by ten other states, including China and India.

Top 10 aid recipient countries (2009–2018)

Main article: List of countries by Official Development Assistance received

 

Foreign aid received (2009–2018)

Country	US dollars (billions)
Afghanistan	51.8
Syrian Arab Republic	44.4
Ethiopia	37.9
Vietnam	32.0
Congo, Dem. Rep.	28.7
Pakistan	27.5
Tanzania	27.4
Turkey	25.2
Kenya	24.1

Top 10 aid donor countries (2020)

Main article: List of development aid country donors

Official development assistance (in absolute terms) contributed by the top 10 DAC countries is as follows. European Union countries together gave $75,838,040,000 and EU Institutions gave a further $19.4 billion. The European Union accumulated a higher portion of GDP as a form of foreign aid than any other economic union.

1.  European Union – $75.8 billion
2.  United States – $34.6 billion
3.  Germany – $23.8 billion
4.  United Kingdom – $19.4 billion
5.  Japan – $15.5 billion
6.  France – $12.2 billion
7.  Sweden – $5.4 billion
8.  Netherlands – $5.3 billion
9.  Italy – $4.9 billion
10.  Canada – $4.7 billion
11.  Norway – $4.3 billion

Official development assistance as a percentage of gross national income contributed by the top 10 DAC countries is as follows. Five countries met the longstanding UN target for an ODA/GNI ratio of 0.7% in 2013:

1.  Norway – 1.07%
2.  Sweden – 1.02%
3.  Luxembourg – 1.00%
4.  Denmark – 0.85%
5.  United Kingdom – 0.72%
6.  Netherlands – 0.67%
7.  Finland – 0.55%
8.   Switzerland – 0.47%
9.  Belgium – 0.45%
10.  Ireland – 0.45%

European Union countries that are members of the Development Assistance Committee gave 0.42% of GNI (excluding the $15.93 billion given by EU Institutions).

By nation

• Australian Agency for International Development
• China foreign aid
• Indian foreign aid
• Israeli foreign aid
• Foreign aid institutions of Japan
• Qatari foreign aid
• Saudi foreign assistance
• Swedish International Development Cooperation Agency
• Department for International Development (United Kingdom)
• United States foreign aid

Quantifying aid

Official development assistance

Main article: Official development assistance

Official development assistance (ODA) is a term coined by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure aid. ODA refers to aid from national governments for promoting economic development and welfare in low and middle income countries. ODA can be bilateral or multilateral. This aid is given as either grants, where no repayment is required, or as concessional loans, where interest rates are lower than market rates.

Loan repayments to multilateral institutions are pooled and redistributed as new loans. Additionally, debt relief, partial or total cancellation of loan repayments, is often added to total aid numbers even though it is not an actual transfer of funds. It is compiled by the Development Assistance Committee. The United Nations, the World Bank, and many scholars use the DAC's ODA figure as their main aid figure because it is easily available and reasonably consistently calculated over time and between countries. The DAC classifies aid in three categories:

• Official Development Assistance (ODA): Development aid provided to developing countries (on the "Part I" list) and international organizations with the clear aim of economic development.
• Official Aid (OD): Development aid provided to developed countries (on the "Part II" list).
• Other Official Flows (OOF): Aid which does not fall into the other two categories, either because it is not aimed at development, or it consists of more than 75% loan (rather than grant).

Aid is often pledged at one point in time, but disbursements (financial transfers) might not arrive until later.

In 2009, South Korea became the first major recipient of ODA from the OECD to turn into a major donor. The country now provides over $1 billion in aid annually.

Not included as international aid

Most monetary flows between nations are not counted as aid. These include market-based flows such as foreign direct investments and portfolio investments, remittances from migrant workers to their families in their home countries, and military aid. In 2009, aid in the form of remittances by migrant workers in the United States to their international families was twice as large as that country's humanitarian aid. The World Bank reported that, worldwide, foreign workers sent $328 billion from richer to poorer countries in 2008, over twice as much as official aid flows from OECD members. The United States does not count military aid in its foreign aid figures.

Improving aid effectiveness

Aid effectiveness is the degree of success or failure of international aid (development aid or humanitarian aid). Concern with aid effectiveness might be at a high level of generality (whether aid on average fulfils the main functions that aid is supposed to have), or it might be more detailed (considering relative degrees of success between different types of aid in differing circumstances).

Questions of aid effectiveness have been highly contested by academics, commentators and practitioners: there is a large literature on the subject. Econometric studies in the late 20th century often found the average effectiveness of aid to be minimal or even negative. Such studies have appeared on the whole to yield more affirmative results in the early 21st century, but the picture is complex and far from clear in many respects.

Many prescriptions have been made about how to improve aid effectiveness. In 2003–2011 there existed a global movement in the name of aid effectiveness, around four high level forums on aid effectiveness. These elaborated a set of good practices concerning aid administration co-ordination and relations between donors and recipient countries. The Paris Declaration and other results of these forums embodied a broad consensus on what needed to be done to produce better development results. From 2011 this movement was subsumed in one concerned more broadly with effective development co-operation, largely embodied by the Global Partnership for Effective Development Co-operation.

Criticism

See also: Humanitarian aid § Problematic aspects, and Development aid § Discussion on unfavourable impacts

Promoting poor governance

American political scientist and professor Nicolas van de Walle has also argued that despite more than two decades of donor-supported reform in Africa, the continent continues to be plagued by economic crises due to the combination of state generated factors and to the counter productivity of international development aid to Africa. Van de Walle posits that international aid has sustained economic stagnation in Africa by:

1. Pacifying Africa's neopatrimonial tendencies, thereby lessening the incentives for state elites to undertake reform and preserving the status quo.
2. Sustaining poorly managed bureaucratic structures and policies that would be otherwise rectified by market forces.
3. Allowing state capacities to deteriorate through externalizing many state functions and responsibilities.

In order for aid to be productive and for economic policy reform to be successfully implemented in Africa, the relationship between donors and governments must change. Van de Walle argues that aid must be made more conditional and selective to incentivize states to take on reform and to generate the much needed accountability and capacity in African governments.

Corruption

A 2020 article published in Studies in Comparative International Development analyzed contract-level data over the period 1998 through 2008 in more than a hundred recipient countries. As a risk indicator for corruption, the study used the prevalence of single bids submitted in "high-risk" competitive tenders for procurement contracts funded by World Bank development aid. ("High-risk" tenders are those with a higher degree of World Bank oversight and control; as a result, the study authors noted that "our findings are not representative of all aid spending financed by the World Bank, but only that part where risks are higher" and more stringent oversight thus deemed necessary.) The study authors found "that donor efforts to control corruption in aid spending through national procurement systems, by tightening oversight and increasing market openness, were effective in reducing corruption risks." The study also found that countries with high party system institutionalization (PSI) and countries with greater state capacity had lower prevalence of single bidding, lending support for "theories of corruption control based on reducing opportunities and increasing constraints on the power of public administrators."

A 2018 study published in the Journal of Public Economics investigated with Chinese aid projects in Africa increased local-level corruption. Matching Afrobarometer data (on perceptions of corruption) to georeferenced data on Chinese development finance project sites, the study found that active Chinese project sites had more widespread local corruption. The study found that the apparent increase in corruption did not appear to be driven by increased economic activity, but rather could be linked to a negative Chinese impact on norms (e.g., the legitimization of corruption). The study noted that: "Chinese aid stands out from World Bank aid in this respect. In particular, whereas the results indicate that Chinese aid projects fuel local corruption but have no observable impact on short term local economic activity, they suggest that World Bank aid projects stimulate local economic activity without any consistent evidence of it fuelling local corruption."

Promoting conflict

See also: Humanitarian aid § Increasing existing conflicts

The effect of aid on conflict intensity and onset have been proved to have different impacts in different countries and situations. For instance, for the case of Colombia Dube and Naidu (2015) showed that Aid from the US seems to have been diverted to paramilitary groups, increasing political violence. Moreover, Nunn and Qian (2014) have found that an increase in U.S. food aid increases conflict intensity; they claim that the main mechanism driving this result is predation of the aid by the rebel groups. In fact, they note that aid can have the unintentional consequence of actually improving rebel groups' ability to continue conflict, as vehicles and communications equipment usually accompany the aid that is stolen. These tools improve the ability of rebel groups to organize and give them assets to trade for arms, possibly increasing the length of the fighting. Finally, Crost, Felter and Johnston (2014) have shown that a development program in the Philippines have had the unintended effect of increasing conflict because of a strategic retaliation from the rebel group, on where they tried to prevent that the development program increases support to the government.

Aid dependency

Aid dependency is defined as the "situation in which a country cannot perform many of the core functions of government, such as operations and maintenance, or the delivery of basic public services, without foreign aid funding and expertise". Aid has made many African countries and other poor regions incapable of achieving economic growth and development without foreign assistance. Most African economies have become dependent on aid and this is because foreign aid has become a significant norm of systems of international relations between high and low income countries across the globe.

Foreign aid makes African countries dependent on aid because it is regarded by policy makers as regular income, thus they do not have any incentive to make policies and decisions that will enable their countries to independently finance their economic growth and development. Additionally, aid does not incentivize the government to tax citizens, due to the constant inflow of foreign aid, and as a result, the citizens do not have any obligation to demand the provision of goods and services geared towards development.

Dambisa Moyo argues that aid does not lead to development, but rather creates problems including corruption, dependency, limitations on exports and Dutch disease, which negatively affect the economic growth and development of most African countries and other poor countries across the globe. Moyo devotes a section of her book, Dead Aid to rethinking the aid dependency model. She cautions that although "weaning governments off aid won't be easy", it is necessary. Primary among her prescriptions is a "capital solution" where African countries must enter the bond market to raise their capital for development, the interconnectedness that globalization has provided, will turn other "pools of money toward African markets in form of mutual funds, hedge funds, pension schemes" etc.

Deindustrialization

Foreign aid can contribute to deindustrialization. Foreign aid in the form of food aid that is given to poor countries or underdeveloped countries is responsible for the death of local farm industries in poor countries. Local farmers end up going out of business because they cannot compete with the abundance of cheap imported aid food, that is brought into poor countries as a response to humanitarian crisis and natural disasters. Large inflows of money that come into developing countries, from the developed world, in a foreign aid, increases the price of locally produced goods and products. Due to their high prices, export of local goods reduces. As a result, local industries and producers are forced to go out of business.

Ineffectiveness

Main article: Aid effectiveness

Statistical studies have produced widely differing assessments of the correlation between aid and economic growth: there is little consensus with some studies finding a positive correlation while others find either no correlation or a negative correlation. One consistent finding is that project aid tends to cluster in richer parts of countries, meaning most aid is not given to poor countries or poor recipients.

Peter Singer argues that over the last three decades, "aid has added around one percentage point to the annual growth rate of the bottom billion." He argues that this has made the difference between "stagnation and severe cumulative decline." Aid can make progress towards reducing poverty worldwide, or at least help prevent cumulative decline. Despite the intense criticism on aid, there are some promising numbers. In 1990, approximately 43 percent of the world's population was living on less than $1.25 a day and has dropped to about 16 percent in 2008. Maternal deaths have dropped from 543,000 in 1990 to 287,000 in 2010. Under-five mortality rates have also dropped, from 12 million in 1990 to 6.9 million in 2011. Although these numbers alone sound promising, there is a gray overcast: many of these numbers actually are falling short of the Millennium Development Goals. There are only a few goals that have already been met or projected to be met by the 2015 deadline.

Effects depend on geography

Jeffery Sachs and his collaborators argue that in order for foreign aid to be successful, policy makers should "pay more attention to the developmental barriers associated with geography specifically, poor health, low agricultural productivity, and high transportation costs". The World Bank and the International Monetary Fund are two organizations that Sachs argues are currently instrumental in advising and directing foreign aid; however, he argues that these two organizations focus too much on "institutional reforms". Foreign aid is especially multifaceted in countries within Sub-Saharan Africa due to geographic barriers. Most macro foreign aid efforts fail to recognize these issues and, as Sachs argues, cause insufficient international aid and policy improvement. Sachs argues that unless foreign aid provides mechanisms that overcome geographic barriers, pandemics such as HIV and AIDS that cause traumatic casualties within regions such as Sub-Saharan Africa will continue to cause millions of fatalities.

Distorting incentives

The economist William Easterly and others have argued that aid can often distort incentives in poor countries in various harmful ways. Aid can also involve inflows of money to poor countries that have some similarities to inflows of money from natural resources that provoke the resource curse. This is partially because aid given in the form of foreign currency causes exchange rate to become less competitive and this impedes the growth of manufacturing sector which is more conducive in the cheap labour conditions. Aid also can take the pressure off and delay the painful changes required in the economy to shift from agriculture to manufacturing.

Some believe that aid is offset by other economic programs such as agricultural subsidies. Mark Malloch Brown, former head of the United Nations Development Program, estimated that farm subsidies cost poor countries about US$50 billion a year in lost agricultural exports:

It is the extraordinary distortion of global trade, where the West spends $360 billion a year on protecting its agriculture with a network of subsidies and tariffs that costs developing countries about US$50 billion in potential lost agricultural exports. Fifty billion dollars is the equivalent of today's level of development assistance.

Anthropologist and researcher Jason Hickel concludes from a 2016 report by the US-based Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics that

the usual development narrative has it backwards. Aid is effectively flowing in reverse. Rich countries aren't developing poor countries; poor countries are developing rich ones... The aid narrative begins to seem a bit naïve when we take these reverse flows into account. It becomes clear that aid does little but mask the maldistribution of resources around the world. It makes the takers seem like givers, granting them a kind of moral high ground while preventing those of us who care about global poverty from understanding how the system really works.

Ulterior agendas

See also: Foreign funding of non-governmental organizations

Aid is seldom given from motives of pure altruism; for instance it is often given as a means of supporting an ally in international politics. It may also be given with the intention of influencing the political process in the receiving nation. Whether one considers such aid helpful may depend on whether one agrees with the agenda being pursued by the donor nation in a particular case. During the conflict between communism and capitalism in the twentieth century, the champions of those ideologies – the Soviet Union and the United States – each used aid to influence the internal politics of other nations, and to support their weaker allies. Perhaps the most notable example was the Marshall Plan by which the United States, largely successfully, sought to pull European nations toward capitalism and away from communism. Aid to underdeveloped countries has sometimes been criticized as being more in the interest of the donor than the recipient, or even a form of neocolonialism.

Marshall Plan aid to Germany, West Berlin, 1949

Some specific motives a donor may have for giving aid were listed in 1985 as follows: defence support, market expansion, foreign investment, missionary enterprise, cultural extension. In recent decades, aid by organizations such as the International Monetary Fund and the World Bank has been criticized as being primarily a tool used to open new areas up to global capitalists, and being only secondarily, if at all, concerned with the wellbeing of the people in the recipient countries.

Political bias

The practice of extending aid to politically aligned parties in recipient nations continues today; Faye and Niehaus (2012) are able to establish a causal relationship between politics and aid in recipient nations. In their analysis of the competitive 2006 Palestinian elections, they note that USAID provided funding for development programs in Palestine to support the Palestinian Authority, the US backed entity running for reelection. Faye and Niehaus discovered that the greater the degree of alignment the recipient party has with the donor entity, the more aid it receives on average during an election year. In an analysis of the three biggest donor nations (Japan, France, and the US), Alesina and Dollar (2000) discovered that each has its own distortions to the aid it gives out. Japan appears to prioritize giving aid nations that exercise similar voting preferences in the United Nations, France mostly sends aid to its former colonies, and the U.S. disproportionately provides aid to Israel and Egypt. These allocations are often powerful tools for maintaining the strategic interests of the donor country in the recipient country.

Vaccine diplomacy

Arrival of Salk Polio Vaccine from the United States at Amsterdam Airport Schiphol in 1957.

Vaccine diplomacy, a form of medical diplomacy, is the use of vaccines to improve a country's diplomatic relationship and influence of other countries. Meanwhile, vaccine diplomacy also "means a set of diplomatic measures taken to ensure access to the best practices in the development of potential vaccines, to enhance bilateral and/or multilateral cooperation between countries in conducting joint R&D, and, in the case of the announcement of production, to ensure the signing of a contract for the purchase of the vaccine at the shortest term." Although primary discussed in the context of the supply of COVID-19 vaccines, it also played a part in the distribution of the smallpox vaccine.

Policy incoherence

Some analysts, such as researchers at the Overseas Development Institute, argue that current support for developing countries suffers from a policy incoherence. While some policies are designed to support developing countries, other domestic policies undermine its impact, examples include:

• encouraging developing economies to develop their agriculture with a focus on exports is not effective on a global market where key players, such as the US and EU, heavily subsidise their products
• providing aid to developing economies' health sectors and the training of personnel is undermined by migration policies in developed countries that encourage the migration of skilled health professionals

One measure of this policy incoherence is the Commitment to Development Index (CDI) published by the Center for Global Development. The index measures and evaluates 22 of the world's richest countries on policies that affect developing countries, in addition to simply aid. It shows that development policy is more than just aid; it also takes into account trade, investment, migration, environment, security, and technology.

Thus, some states are seeking to ensure there is a policy coherence, for example see Common Agricultural Policy reform or Doha Development Round. This approach might see the nature of aid change from loans, debt cancellation, budget support etc., to supporting developing countries. This requires a strong political will, however, the results could potentially make aid far more effective and efficient.

History

An early example of the military type of aid is the First Crusade, which began when Byzantine Greek emperor Alexios I Komnenos asked for help in defending Byzantium, the Holy Land, and the Christians living there from the Seljuk takeover of the region. The call for aid was answered by Pope Urban II, when, at the Council of Piacenza of 1095, he called for Christendom to rally in military support of the Byzantines with references to the "Greek Empire and the need of aid for it."

After World War II the Marshall Plan (and similar programs for Asia, and the Point Four program for Latin America) became the major American aid program, and became a model for its foreign aid policies for decades. The U.S. gave away about $20 billion in Marshall Plan grants and other grants and low-interest long-term loans to Western Europe, 1945 to 1951. Economic historians Bradford De Long and Barry Eichengreen conclude it was, "History's Most Successful Structural Adjustment Program." They state:

It was not large enough to have significantly accelerated recovery by financing investment, aiding the reconstruction of damaged infrastructure, or easing commodity bottlenecks. We argue, however, that the Marshall Plan did play a major role in setting the stage for post-World War II Western Europe's rapid growth. The conditions attached to Marshall Plan aid pushed European political economy in a direction that left its post World War II "mixed economies" with more "market" and less "controls" in the mix.

For much of the period since World War II to the present "foreign aid was used for four main purposes: diplomatic [including military/security and political interests abroad], developmental, humanitarian relief and commercial."

Arab countries as "New Donors"

The mid-1970s saw some new emerging donors in the face of the world crises, discovery of oil, the impending Cold War. While in many literature they are popularly called the 'new donors', they are by no means new. In the sense, that the former USSR had been contributing to the popular Aswan Dam in Egypt as early as 1950s or India and other Asian countries were known for their assistance under the Colombo Plan  Of these the Arab countries in particularly have been quite influential. Kuwait, Saudi Arabi and United Arab Emirates are the top donors in this sense. The aid from Arab countries are often less documented for the fact that they do not follow the standard aid definitions of the OECD and DAC countries. Many times, the aid from Arab countries are made by private funds owned by the families of the monarch. Many Arab recipient countries have also avoided of speaking on aid openly in order to digress from the idea of hierarchy of Eurocentrism and Wester-centrism, which are in some ways reminders of the colonial pasts. Hence, the classification of such transfers are tricky.

Over and on top of this, there has been extensive research that Arab aid is often allocated initially to Arab countries, and perhaps recently to some sub-Saharan African countries which have shown Afro-Arab unity. This is especially true considering the fact that aid by Arab donors is more geographically concentrated, given without conditionality and often to poorest nations in the Middle East and North Africa. This is perhaps potentially due to the existence of Arab Fund for Technical Assistance to African and Arab Countries (AFTAAAC) or the Arab Bank for Economic Development in Africa (BADEA). OECD data for example also shows Arab countries donate more to lower middle income countries, contrast to the DAC donors. It is not completely clear why such a bias must exists, but some studies have studied the sectoral donations.

Another big difference between the traditional DAC (Western) donors and the Arab donors is that Arab donors give aid unconditionally. Typically they have followed a rule of non-interference in the policy of the recipient. The Arab approach is limited to giving advice on policy matters when they discover clear failures. This kind of view is often repeated in many studies. These kind of approach has always been problematic for the relationship Arab countries have with institutions like IMF, World Bank etc., since Arab countries are members of these institutions and in some ways they oppose the conditionality guidelines for granting aid and conditions on repayment agreed internationally. More recently, UAE has been declaring its aid flows with the IMF and OECD. Data from this reveals that potential opacity in declaring aid may also result from the fact some Arab countries do not want to be seen openly as supporters of a cause or a proxy group in a neighboring country or region. The exact impact of such bilateral aid is difficult to discern.

Arab aid has often been used a tool for steering foreign policy. The 1990 Iraq invasion of Kuwait triggered an increase of Arab aid and large amounts went to countries which supported Kuwait. Many countries around this time still kept supporting Iraq, despite rallying against the war. This lead the Kuwait national assembly to decide to deny aid to supporters of Iraq. Saudi Arabia for example did a similar thing, In 1991, after the war, countries against Iraq –Egypt, Turkey and Morocco became the three major aid recipients of Saudi aid. Several similar stances have arisen in the recent years after the Arab Spring of 2011 particularly.

Public attitudes

Academic research has suggested that members of the public overestimate how much their governments spend on aid. There is significant opposition to spending on aid but experiments have demonstrated that providing people with more information about correct levels of spending reduces this opposition.

Fiscal policy of the United States

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Fiscal_policy_of_the_United_States 

 

Federal Government revenue by type

  Other

  Excise tax

  Payroll tax

  Corporate tax

  Personal Income Tax

Fiscal policy is any changes the government makes to the national budget to influence a nation's economy. "An essential purpose of this Financial Report is to help American citizens understand the current fiscal policy and the importance and magnitude of policy reforms essential to make it sustainable. A sustainable fiscal policy is explained as the debt held by the public to Gross Domestic Product which is either stable or declining over the long term" (Bureau of the fiscal service). The approach to economic policy in the United States was rather laissez-faire until the Great Depression. The government tried to stay away from economic matters as much as possible and hoped that a balanced budget would be maintained. Prior to the Great Depression, the economy did have economic downturns and some were quite severe. However, the economy tended to self-correct so the laissez faire approach to the economy tended to work.

President Franklin D. Roosevelt first instituted fiscal policies in the United States in The New Deal. The first experiments did not prove to be very effective, but that was in part because the Great Depression had already lowered the expectations of business so drastically.

History

The Great Depression

Crowd gathering outside of a New York City stock exchange during the Great Depression

The Great Depression struck countries in the late 1920s and continued throughout the entire 1930's. It affected some countries more than others, and the effects in the US were detrimental. In 1933, 25 percent of all workers were unemployed in America. Many families starved or lost their homes. Some tried traveling to the West to find work, also to no avail.

The Great Depression showed the American population that there was a growing need for the government to manage economic affairs. The size of the federal government began rapidly expanding in the 1930s, growing from 553,000 paid civilian employees in the late 1920s to 953,891 employees in 1939. The budget grew substantially as well. In 1939, federal receipts of the administrative budget were 5.50 percent of Gross National Product, GNP, while federal expenditures were 9.77 percent of GNP. These numbers were up significantly from 1930, when federal receipts averaged 3.80 percent of GNP while expenditures averaged 3.04 percent of GNP.

Another contributor to changing the role of government in the 1930s was President Franklin Delano Roosevelt. FDR was important because of his creation of the New Deal, which was a program that would offer relief, recovery, and reform to the American nation. In terms of relief, new organizations, such as the Works Progress Administration, saved many U.S. lives. The reform aspect was indeed the most influential in the New Deal, for it forever changed the role of government in the U.S. economy. In essence, it was the beginning of fiscal policy. It was the first time that the government took an active role in attempting to secure American individuals from unseen drastic changes in the market.

Although the relief and reform aspects of the New Deal proved to be effective for Americans, recovery was an issue that did not. Unemployment rates remained very high throughout the 1930s. It was still difficult for Americans to find jobs. This problem diminished when the government called for many industries to convert to military production in the early 1940s in order to prepare for World War II.

World War II and effects

World War II forced the government to run huge deficits, or spend more than they were economically generating, in order to keep up with all of the production the US military needed. By running deficits, the economy recovered, and America rebounded from its drought of unemployment. The military strategy of full employment had a huge benefit: the government's massive deficits were used to pay for the war, and ended the Great Depression. This phenomenon set the standard and showed just how necessary it was for the government to play an active role in fiscal policy.

The Employment Act of 1946 was enacted by the government to keep the economy from plunging back into a post-war depression. The act declared the continuing policy and responsibility of the federal government to use all reasonable means to promote maximum (not full) employment, production, and purchasing power. In addition to focusing on keeping unemployment rates low, the act called for the creation of the Council of Economic Advisors. This council had the task of assisting the president in appointing members to the Joint Economic Committee in the United States Congress and continuing to develop the role of fiscal policy in the United States.

Modern fiscal policy

The United States government has tended to spend more money than it takes in, indicated by a national debt that was close to $1 billion at the beginning of the 20th century. The budget for most of the 20th century followed a pattern of deficits during wartime and economic crises, and surpluses during periods of peacetime economic expansion.

In 1971, at Bretton Woods, the US went off the gold standard allowing the dollar to float. Shortly after that, the price of oil was pegged to gold rather than the dollar by OPEC. The 70s were marked by oil shocks, recessions and inflation in the US. From fiscal years 1970 to 1997; although the country was nominally at peace during most of this time, the federal budget deficit accelerated, topping out (in absolute terms) at $290 billion for 1992.

U.S. deficits and surpluses 1966-2026 by percentage of GDP, from CBO Updated Budget Projections March 2016

In contrast, from FY 1997–2001, gross revenues exceeded expenditures and a surplus resulted. However, it has been argued that this 'balanced budget' only constituted a surplus in the public debt (or on-budget), in which the Treasury Department borrowed increased tax revenue from intragovernmental debt holdings (namely the Social Security Trust Fund), thus adding more interest on Treasury bonds. In effect, the four year 'surplus' was only in public debt holdings, while the National Debt Outstanding increased every fiscal year (the lowest deficit in FY 2000 was $17.9 Billion). However, after a combination of the dot-com bubble burst, the September 11 attacks, a dramatic increase in government spending (primarily in defense for military operations in Afghanistan and Iraq) and a $1.35 trillion tax cut, the budget returned to a deficit basis. The budget went from a $236 billion surplus in fiscal year 2000 to a $413 billion deficit in fiscal year 2004. In fiscal year 2005, the deficit began to shrink due to a sharp increase in tax revenue. By 2007, the deficit was reduced to $161 billion; less than half of what it was in 2004 and the budget appeared well on its way to balance once again.

Fiscal policy is the application of taxation and government spending to influence economic performance. The main aim of adopting fiscal policy instruments is to promote sustainable growth in the economy and reduce the poverty levels within the community. In the past, fiscal policy instruments were used solve the economic crisis such as the great recession and during the financial crisis. They are effective in jump-starting growth, supporting the financial systems, and mitigating the economic crisis on the vulnerable groups especially the low-income earners and the poor. The most commonly applied fiscal policy instruments are government spending and taxes. The government increases or reduces its budget allocation on public expenditure to ensure vital goods and services are provided to the citizens. For instance, expenditure on infrastructural projects not only increases access to more roads but also creates jobs to the public and also increases the amount money in circulation thereby spurring economic growth. On the other hand, reduction of income and value added taxes increase the amount of disposable income that individuals direct to consumption and investment expenditures. Increasing income taxes reduce disposable income while it increases the tax base for public spending. Fiscal policy instruments are effective in poverty reduction and promotion of the community living standards. Increasing public expenditure ensures that vital public goods and services are availed to the public. Moreover, it helps in creation of employment opportunities, triggering economic growth, and ensuring sustainable growth and development. Tax reduction and cash transfers’ helps in increasing disposable income and transferring resources from the rich to the poor in the community. Fiscal policy instruments can be used to achieve balanced growth in an economy. Federal policies are system of laws, course of actions, regulatory measures, and priorities set by the Federal government in guiding decisions on issues relating to public interest. In most cases, public policy decisions are carried out by the group of people who represent the public, different interests, and beliefs. The policies define all the actions that the Federal government take in order to address issues like security, education, unemployment, poverty reduction among others. Federal policies assist the Federal government in conducting national affairs responsibly. For instance, they inform the government on where to prioritize their funding and support in order to achieve the macroeconomic objectives. For instance, the government is charged with the responsibility of providing education, security, and healthcare. Increased funding on these key priority areas helps in improving public access to the services thereby improving the standards of living of the citizens. Assuring access to the services and sustaining their provision helps in poverty reduction. Policies like unemployment insurance ensures that citizens are insured and unemployment benefits given to eligible workers who have lost their jobs out of their control. Policies helps in cushioning the public against the eventualities in the labor market that may be due to competition or economic performance hence adversely affecting the average citizens. Federal policies cuts across all sectors in the economy and seeks to link the operations of the Federal government and State governments in achieving sustained growth and development, poverty reduction, provision of basic goods and services to the citizens.

In late 2007 to early 2008, the economy would enter a particularly bad recession as a result of high oil and food prices, and a substantial credit crisis leading to the bankruptcy and eventual federal take over of certain large and well established mortgage providers. In an attempt to fix these economic problems, the United States federal government passed a series of costly economic stimulus and bailout packages. As a result of this, in fiscal year 2008, the deficit would increase to $455 billion and is projected to continue to increase dramatically for years to come due in part to both the severity of the current recession and the high-spending fiscal policy the federal government has adopted to help combat the nation's economic woes. As a result, the federal budget deficit increased to $1.2 trillion in fiscal year 2009, or 9.8% of the gross domestic product (GDP). Over subsequent years both the economy and the deficit recovered to some extent, and the government enacted several laws with significant budget impact, including the Affordable Care Act in 2010, the Budget Control Act in 2011, and the American Taxpayer Relief Act in 2012. The Congressional Budget Office projected a $534 billion deficit in fiscal year 2016, or 2.9 percent of GDP. If current policy remains unchanged, the CBO projects the deficit will increase to 4.9 percent of GDP by 2026, or a cumulative total of $9.3 trillion over the period. As a percentage of the GDP, within the context of the national economy as a whole, the highest deficit was run during fiscal year 1946 at nearly 30% of GDP, but that rebounded to a surplus by 1947. By contrast, deficits during the 1980s reached 5–6% of GDP and the deficit for 2005 was 2.6% of GDP, close to the post-World War II average. In 2009, the deficit was 9.8% of GDP, the highest since World War II.