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  • Radoje Laušević

Official Development Assistance

Tool for the economic development and welfare of developing countries

Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) coined the term “Official Development Assistance (ODA)” back in 1969 with some further clarification in 1972. Since that time ODA is defined as “those flows to countries and territories on the DAC List of ODA Recipients and to multilateral institutions which are: (i) provided by official agencies, including state and local governments, or by their executive agencies; and (ii) each transaction of which: a) is administered with the promotion of the economic development and welfare of developing countries as its main objective; and b) is concessional in character and conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent).” ODA is the key measure used in practically all aid targets and assessments of aid performance.

Although DAC members extended $131.6 billion in official development assistance (ODA) in 2015, which represented an increase of 6.9 percent in real terms from 2014 and of 83 percent from 2000, ODA still accounts for a small share of donors’ gross national income (GNI), averaging 0.3 percent. Just six DAC countries exceeded the UN benchmark for ODA contributions of at least 0.7 percent of GNI (SDG17: Partnership for Global Development, target 17.2). In addition, much of ODA is still allocated as humanitarian aid rather than to development projects and programs.

Source: World Bank. 2017. Atlas of Sustainable Development Goals 2017: World Development Indicators. Washington, DC: World Bank. doi:10.1596/978-1-4648-1080-0. License: Creative Commons Attribution CC BY 3.0 IGO

Although widely accepted as an important tool for the economic development and welfare of developing countries, ODA has been criticized by several economists for being an inappropriate way of helping poor countries. Criticism usually points on fact that a country used to receiving ODA may be perpetually bound to depend on handouts.

I personally participated in several ODA funded projects in Middle East, North Africa and South-East Europe. My suggestions to make ODA more efficient are:

  • make ODA responsive to the needs of the recipient country (relevance of ODA)

  • measure how the total aid effort contributes - positively and negatively - to the achievement of desired development outcomes at country level (effectiveness of ODA)

  • measure of how economically resources are converted to results (outputs and outcomes) (efficiency of ODA)

  • assess positive and negative, primary and secondary long-term effects produced by a development intervention, directly or indirectly, intended or unintended (impact of ODA)

  • focus on ex-post evaluation projects and follow-up measures (sustainability of ODA)

What is your opinion?

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