IDSA01 Chapter 8 Notes.docx

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International Development Studies
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Leslie Chan

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IDSA01 Introduction to International Development Chapter 8-National Development Agencies and Bilateral Aid Clarifying the Terminology  the providers of development assistance are referred to as donors though “lenders” is a more appropriate term in the cases where assistance is in the form of a loan  bilateral aid is government-to-government aid while multilateral aid is aid channeled through multilateral organizations  official development assistance (ODA) refers to the flows of official (must be provided by the government) financing administered with the promotion of the economic development and welfare of developing countries as the main objective, which are concession in character with a minimum 25% grant element  ODA financing can be provided in the form of a grant or loan but if it is a loan its terms must be significantly better than what is available on the commercial market (lower interest rate and extended period of repayment and grace period for first repayment)  it also includes administrative costs, such as the costs of maintaining aid agency offices and the salaries of staff both at home and abroad Overview of Aid Donors  most industrialized countries that provide aid belong to a donors’ club called the Development Assistance Committee (DAC) of that Organization for Economic Co-operation and Development (OECD), constitute 95% of the global ODA (not development aid)  also the US followed by Germany, the UK, France and Japan provided the most ODA out of the DAC countries, the dollar value of assistance doesn’t show how generous the countries actually were; relative generosity is measured by dividing ODA by gross national income (GNI), gross national product (GNP) or gross domestic product (GDP) according to which Sweden, Luxembourg, Norway, Denmark and the Netherlands come on top Donor Motivations  to simply help the less fortunate abroad, just as social assistance provides assistance to people at home, ODA focuses on helping people in other countries meet their basic necessities and find opportunities  can be motivated by charity, by religious believes or by solidarity (framing actors and recipient country as equal partners)  aid is a means to pursue other foreign policy objectives, including diplomatic, commercial and security interests; aid should be used to promote diplomatic objectives particularly security objectives  can rise the donor’s profile internationally, providing it with the prestige among its peers as a country that makes an important contribution on a global level, donor countries should prioritize to maximize the direct and indirect benefits  tied aid is foreign aid that must be used to purchase goods and services from the donor country; manifestation of the idea that the donor’s economy must benefit from the aid it provides  ODA is also seen as a form of compensation for past or present injustices under colonial exploitation or the unjust international economic system which still benefits wealthier countries  under some interpretations of international human rights law foreign aid can be considered an obligation Characteristics of Donors  individual donor countries often choose to focus on a particular region on the basis of geography, security interest or former colonial ties  some countries transfer a large proportion of their aid to multilateral institutions than they disburse to d
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