Official development assistance


Official development assistance is a term coined by the Development Assistance Committee of the Organisation for Economic Co-operation and Development to measure aid. The DAC first used the term in 1969. It is widely used as an indicator of international aid flow. It includes some loans.
Most ODA comes from the 30 members of the DAC, or about $135 billion in 2013. A further $15.9 billion came from the European Commission and non-DAC countries gave an additional $9.4 billion. Although development aid rose in 2013 to the highest level ever recorded, a trend of a falling share of aid going to the neediest sub-Saharan African countries continued.

Definition

The full definition of ODA is:
In other words, ODA needs to contain the three elements:

undertaken by the official sector

with promotion of economic development and welfare as the main objective; and

at concessional financial terms.
This definition is used to exclude development aid from the two other categories of aid from DAC members:
Examples:

If a donor country accords a grant or a concessional loan to Afghanistan it is classified as ODA, because it is on the Part I list.

If a donor country accords a grant or a concessional loan to Bahrain it is classified as OA, because it is on the Part II list.

If a donor country gives military assistance to any other country or territory it is classified as OOF, because it is not aimed at development.
A recent OECD DAC Commique has seen the donor community update the definition of ODA to better reflect the Sustainable Development Goals.

Countries by development aid given

ODA volumes may be measured absolutely, by the amount transferred, or relatively, as a proportion of the donor country's economy. According to the Organisation for Economic Co-operation and Development, the top 15 countries giving the highest amounts in 2015 are as follows: The European Union accumulated a higher portion of GDP as a form of foreign aid than any other economic union.
  1. – $31.08 billion
  2. – $18.70 billion
  3. – $17.78 billion
  4. – $9.32 billion
  5. – $9.23 billion
  6. – $7.09 billion
  7. – $5.81 billion
  8. – $4.39 billion
  9. – $4.29 billion
  10. – $4.28 billion
  11. – $3.91 billion
  12. – $3.84 billion
  13. – $3.54 billion
  14. – $3.22 billion
  15. – $2.57 billion

    Donor countries by percentage of gross national income

The OECD also lists countries by the amount of ODA they give as a percentage of their gross national income. Seven countries met the longstanding UN target for an ODA/GNI ratio of 0.7% in 2015. The top 15 DAC and non-DAC countries for 2015 are shown below:
  1. – 1.40%
  2. – 1.09%
  3. – 1.05%
  4. – 0.93%
  5. – 0.85%
  6. – 0.76%
  7. – 0.71%
  8. – 0.56%
  9. – 0.54%
  10. – 0.52%
  11. – 0.52%
  12. – 0.42%
  13. – 0.37%
  14. – 0.36%
  15. – 0.32%
The average for European Union countries that are DAC members – 0.47%

Aid recipients

reports that Iraq was the top recipient of development aid in 2005 followed by Nigeria. However, this is due to the significant debt relief deals that were granted to these nations that year - when donor countries write off a portion of a recipient country's debt, it is counted as official development assistance from the donor country.
The OECD reports that in 2009 Africa received the largest amount of ODA, at $28 billion. Of that, $25 billion went to countries south of the Sahara, with Sudan receiving approximately $1.9 billion and Ethiopia getting $1.8 billion. Asia received the second largest amount at $24 billion. The top ODA receiving countries in order were Afghanistan, Iraq and Vietnam
According to estimates that the OECD made in 2014, 28 countries with an aggregate population of around 2 billion people will cease to be ODA eligible by 2030. They include emerging markets such as China, Brazil, Mexico, Argentina, Malaysia, Thailand and Turkey.

Criticism

Official development assistance has been criticized by several economists for being an inappropriate way of helping poor countries. The Hungarian economist Peter Thomas Bauer has been one of the most vocal of them. Another notable economist arguing against ODA is Dambisa Moyo in her book Dead Aid. She contends that a country accustomed to receiving ODA may become perpetually dependent on such aid.
Donor countries are most commonly compared by the amount of Official Development Assistance given and their quantity of aid as a percent of GDP. However, there is an increasing focus placed on the quality of aid, rather than simply the quantity. The Commitment to Development Index is one such measure that ranks the largest donors on a broad range of their "development friendly" policies. It takes into account the quality of aid, in addition to the quantity, penalizing countries for tied aid. Aid also does not operate in a vacuum; a country's policies on issues such as trade or migration also have a significant impact on developing countries.