Washington – As the world approaches its 2015 deadline for achieving the
Millennium Development Goals outlined in 2000, development aid by the 26 members
of the Development Assistance Committee (DAC) of the Organisation for Economic
Co-operation and Development declined in 2012 for the second year. Preliminary data
indicate that official development assistance (ODA) totaled $128.4 billion (in 2011
dollars) that year, down 4 percent from 2011’s $133.7 billion. The 2012 figure
marks a 6 percent decline from 2010, when global ODA peaked at $136.7 billion, write
Worldwatch staff in the latest Vital Signs Online trend.The United States provided the largest amount of ODA, with a total of $29.9 billion
in 2012, which was 23.3 percent of the DAC total. Trailing the United States are
the United Kingdom, Germany, France, and Japan. When tracking ODA as a percentage
of gross national income (GNI), however, a different picture emerges. Since 1970
the United Nations has set 0.7 percent of GNI as the target for ODA: in 2012, only
Luxembourg, Sweden, Norway, and Denmark exceeded this target. In comparison, the
U.S. figure was only 0.19 percent. Not surprisingly, given the severity of the
Eurozone crisis, the 15 European Union members of DAC decreased their assistance
by a total of 7.4 percent, with the most severe cuts coming from Spain, Italy,
Greece, and Portugal.
It should be noted that DAC governments are not the only ones that provide development
assistance: according to a 2012 UN report, non-DAC countries donated a total of
$7.2 billion in development aid in 2010, with Saudi Arabia providing almost half
of the total. Furthermore, assistance from private sources was estimated at $56
billion that same year, but reporting on such flows is much weaker than for government
funds.
Humanitarian assistance, or short-term aid provided in response to disasters and
humanitarian crises, is a numerically small but highly visible portion of ODA.
Preliminary data indicate that in 2012 assistance provided by governments for such
purposes fell 6.5 percent from the previous year, from $13.8 billion to $12.9 billion.
(When including non-governmental sources, humanitarian aid fell by 7.7 percent.)
This decline is not totally unexpected, as many of the world’s leading economies
are still recovering from the financial crisis. Also, in 2012 the United Nations
categorized 76 million people as in need of humanitarian assistance, fewer than
the 93 million in 2011.
“ODA is far from the only mechanism of international capital flows to or from developing
countries and emerging markets,” said Cameron Scherer, report co-author and program
associate at Internews. “A multitude of vehicles—-private and public, bilateral
and multilateral—-fill the global finance landscape. And against this broader
canvas, ODA involves relatively small amounts of money.”
Among public funds, outflows have actually exceeded inflows into developing countries
and emerging markets for most of the past decade. According to the International
Monetary Fund, net outflows of more than $180 billion in 2006 turned into net inflows
of close to $140 billion in 2009, but by 2012 there was once again a net outflow
of close to $42 billion.
Among private flows, the largest amounts are accounted for by foreign direct investment
(FDI). Net FDI rose from under $100 billion per year in the 1980s and early 1990s
to a peak of $480 billion in 2008. The financial crisis then caused a dip to $335
billion in 2009, but 2011 saw a recovery to $473 billion. The bulk of FDI flowing
to developing countries is going to Asia and Latin America. In East Asia and South
Asia, almost 90 percent of FDI goes to China and India; in Latin America and the
Caribbean, about half goes to Brazil. Only 10 percent of global FDI is destined
for Africa.
“In general, FDI is more stable than other forms of private investments, especially
where “greenfield” investments in new productive capacity are concerned, FDI is
usually undertaken with a longer time horizon in mind, and happens mostly where
macroeconomic conditions are stable,” said Michael Renner, trend co-author and Worldwatch
Senior Researcher. “In contrast, portfolio investment and cross-border interbank
lending are often driven by short-term considerations such as changes in interest
rates.”
However, the United Nations points to evidence that a growing portion of FDI in
recent years is going to investments in financial companies or to intra-company
debt. Also, a considerable portion of FDI relates to mergers and acquisitions—-and
thus represents a transfer of ownership rather than fresh investment. These shifts
imply that capital can be moved more easily among countries, and indeed the share
of short-term and more volatile financial FDI flows has increased.
Further highlights from the report:
The United States tops the list of assistance in absolute amounts, with $3.8 billion
in 2012, or 29.4 percent of all humanitarian aid (a number that was $483 million
below the figure in 2011). Luxembourg (at 0.16 percent of GNI) and Sweden (at
0.14 percent) top the relative standings.
In 2011, the most recent year for which data are available, Pakistan, Somalia,
and the West Bank and Gaza Strip were the three areas to receive the greatest
amount of humanitarian assistance, together taking in over a quarter of global
assistance.
In 2002, FDI to Africa stood at just $15 billion; in 2012, it totaled $50 billion,
having peaked at $59 billion in 2008. – Worldwatch Institute
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