Podcast Summary

The CGD Podcast

Episode: Countries Most in Need of Aid Are Less Likely to Get It – Owen Barder
Date: February 1, 2016
Host: Rajesh Merchandani (B)
Guest: Owen Barder (A), Senior Fellow, Center for Global Development

Overview

This episode investigates global aid distribution, focusing on the paradox that the poorest countries are receiving a declining share of rising aid budgets. Owen Barder explains recent aid data, highlights national differences in aid quantity and quality, and discusses what donor countries can do to optimize their impact. The conversation also explores the broader context of international development, including policy changes beyond aid and visions for the future of global cooperation.

Key Discussion Points & Insights

1. Rising Aid Levels, Falling Proportion for the Poorest

• Global Aid at a Historic High: In 2014, aid from OECD countries reached $137.2 billion, a record amount and a 1% increase over the previous year.

  • [00:05]
  • “Sounds a great deal of money, right? ... despite a new high total, the proportion of aid going to the poorest countries has fallen.” — Rajesh [00:17]

• Declining Proportion to Least Developed Countries (LDCs):

  • The share of aid to the poorest countries decreased from 0.33% to 0.3% of total aid and is down in absolute terms as well.
    • [01:44]
  • These are “countries which arguably need aid most ... ought to be getting more aid and if anything, we're giving them a little bit less.” — Owen [01:52]

2. Factors Behind the Shift

• Refugee Crisis:

  • Aid is being diverted to support refugees, especially those from Syria, primarily in middle-income countries like Turkey and Lebanon. This pulls resources away from the very poorest nations.
    • [02:56]
    • “Money ... used mainly in middle income countries, not in the poorest countries, to look after ... Syrian refugees. But that doesn't count as aid to least developed countries.” — Owen [03:03]

• Aid for Economic Growth:

  • Donors favor investments in middle-income countries with better growth prospects, such as Indonesia or Vietnam, over LDCs like Mozambique or Malawi. [03:33]

• National and Strategic Interests:

  • Countries align aid with their own commercial or strategic objectives, focusing on nations where they have greater stakes (e.g., China, India, bordering states of EU).
  • The European Commission spends only 27% of its aid on LDCs, prioritizing neighboring countries. [04:49]

3. What Makes for “Good” Aid?

• Different Aid Objectives:

  • There's tension between using aid to spur broad economic growth/private sector investment, and its use to help those who’d otherwise be left behind.
    • “If you think the job of aid is to reach people that nothing else is going to reach, then this is probably not spending aid in the best possible places.” — Owen [05:44]

• International Target for LDC Aid:

  • The global target is 0.15–0.2% of GNI; currently, rich countries provide only about 0.1%. Hitting the target would require a 50% increase. [06:13]

4. Aid Rankings: Quantity vs. Quality

• Commitment to Development Index (CDI):

  • CGD's CDI ranks countries by the development-friendliness of their policies, including but not limited to aid. [06:32]
  • “One of which is aid. We also have trade, migration, finance, environment, security and technology.” — Rajesh [06:49]

• Who Does Aid "Best"?

  • Top performers:
    • Denmark: most generous and effective.
    • Ireland: high quality of aid despite lower volume, ranking second. [08:16]
  • Quality Metrics:
    • The Quality of Aid Index (“Quoda”) uses 31 indicators to assess factors like recipient-country alignment, predictability, transparency, burden, and lesson learning. [08:22]
    • “Irish aid is the only bilateral donor that does better than the World Bank.” — Owen [09:29]

• Quantity vs. Quality Correlation:

  • Some correlation exists, but notable outliers:
    • Luxembourg and Norway: High quantity, lower quality.
    • Ireland and Canada: Lower quantity, higher quality.
    • “[T]here are outliers in both directions.” — Owen [09:57]

5. Lessons and Future Directions

• Improving Aid Quality:

  • With tight budgets, improving effectiveness is vital:
    • “There is an awful lot that we can do to improve the quality of the aid we're already spending.” — Owen [10:49]

• Risks:

  • Shift toward national-interest-driven aid may undermine effectiveness (“unlearning hard-won battles of the last decade or so ...”).
    • Country ownership remains essential: “If you don't have ownership of aid programs in developing countries, that aid will be ineffective.” — Owen [11:22]

• Aid's Place in the Broader Development Picture:

  • Aid is shrinking as a proportion of overall development finance but is still crucial for the poorest countries. [12:40]
  • Many impactful policies are non-aid: trade, migration, intellectual property, environment. [13:11]

6. Evolution and Future of Global Development

• Changing Mindsets:

  • There’s been major progress: from a “rich countries giving aid to poor countries” view to more complex, interconnected global cooperation as reflected in the SDGs.
    • “[T]he set of objectives ... are not merely those where we can provide aid to finance better public services ... now we’re looking for sustainable, prolonged economic growth, rising prosperity, ... tackling inequality and improving the quality of people’s lives.” — Owen [13:54]

• Looking Ahead 15 Years:

  • Hope for near-eradication of absolute poverty, but ongoing need for global frameworks to support those still vulnerable.
  • Envisions a “global safety net” as a new normal:
    • “[W]e'll be thinking about how the world's richest people can make a small contribution to ensure that everybody has some basic minimum to live on... in 15 years’ time.” — Owen [16:59]

Notable Quotes & Memorable Moments

• On shifting aid priorities:

  • “Most rich countries have more at stake commercially and strategically in countries like... China, India, Indonesia than they do in some of the poorest, least developed countries.” — Owen [04:16]

• On effectiveness:

  • “The more I study aid, the less I feel I understand it. But ... aid programs that are not really driven by countries themselves... will be ineffective.” — Owen [11:00]

• On non-aid levers:

  • “There are many things that wealthy countries can do that impact on the poorest countries that are not to do with development finance at all. They're to do with trade policy or intellectual property or migration.” — Owen [13:00]

Key Timestamps

• [00:05] Aid at record levels but declining proportion for LDCs
• [01:44] Poorest countries getting less aid
• [02:56] Impact of Syrian refugee crisis and middle-income countries
• [04:49] EU aid allocation example
• [06:32] Introduction of the Commitment to Development Index
• [08:16] Denmark and Ireland’s aid performance
• [09:29] Multilaterals vs. bilaterals on aid quality
• [10:49] Lessons for improving aid quality
• [12:40] Aid’s relative importance for development finance
• [13:54] SDGs and evolving development paradigms
• [15:46] 15-year future vision and the idea of a global safety net

Closing Reflection

Owen Barder and Rajesh Merchandani provide a nuanced look at both the promise and pitfalls of international aid. While total aid is rising, its impact risks diminishing for those who need it most—a challenge compounded by political, strategic, and economic shifts in donor countries. Quality, not just quantity, matters; country ownership and effectiveness need to remain at the forefront. Broader international policy coherence—across trade, migration, the environment, and more—is essential for meaningful, sustainable development.