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Y376 International Political Economy

Y376 International Political Economy. February 8 , 2012. North-South Aid Issues: What the Developing Countries Want. Increasing the total amount Untying “tied” aid Increasing the proportion of aid channeled through multilateral agencies Making aid more automatic

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Y376 International Political Economy

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  1. Y376 International Political Economy February 8, 2012

  2. North-South Aid Issues: What the Developing Countries Want • Increasing the total amount • Untying “tied” aid • Increasing the proportion of aid channeled through multilateral agencies • Making aid more automatic • Giving LDCs more control over the spending of aid

  3. What is Aid (Official Development Assistance)? Undertaken by governments Main objective to promote economic development and welfare Made on concessional terms with a grant element of at least 25 percent

  4. Figure 6-1. Annual Bilateral ODA by the G-5 Countries, 1960-2007, in Billions of Constant 2006 Dollars Source: OECD Statistics online.

  5. Figure 6-3. ODA from DAC Countries, OPEC, CMEA, and non-DAC Countries, 1956-2007, in Billions of Current Dollars Source: OECD Statistics Online.

  6. ODA, 2000-2006

  7. ODA by Major Donors, 2006

  8. Aid as Percentage of GDP

  9. Example of US Aid to Iraq • Infrastructure • Water • Electricity • Health system • Schools • Reconstruction • Elections Source: http://www.usaid.gov/iraq

  10. US Aid to Iraq, 2004-2007

  11. US Aid to Iraq in Comparison with Aid to Germany and Japan

  12. Why Hasn’t US Aid to Iraq Worked? Preference for US over Iraqi contractors (higher costs) Huge proportion of spending went to private companies like Bechtel US concentration on rebuilding oil fields and other infrastructure projects Al Qaeda disruption of aid work, especially in the rebuilding of infrastructure

  13. Table 6-2. U.S. Foreign Aid Programs, 2004 Source: Carol Lancaster and Ann Van Dusen, Organizing U.S. Foreign Aid (Washington, D.C.: Brookings Institution, 2005), p. 14.

  14. Table 6-1. Bilateral Aid to Former Colonies, 1970-1994 Source: Alberto Alesina and David Dollar, “Who Gives Foreign Aid and Why? Journal of Economic Growth, 5 (March 2000), p. 37.

  15. Summary • Aid flows are strongly influenced by former colonial relationships and power politics • Net aid flows do not always remain positive because some aid takes the form of loans that must be paid back • The US share of total aid to LDCs declined markedly over time • Aid is primarily needed to deal with poverty, disasters, and wars and cannot be used in general to promote long-term economic development

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