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Official development assistance (ODA) is a statistic compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development to measure aid. The DAC first compiled the statistic in 1969. It is widely used by academics and journalists as a convenient indicator of international aid flow. It includes some loans.

Definition

The full definition of ODA is:

In other words, ODA needs to contain the three elements:

(a) undertaken by the official sector;

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

(c) at concessional financial terms (if a loan, having a grant element of at least 25 per cent).

This definition is used to exclude development aid from the two other categories of aid from DAC members:
  • Official Aid (OA): Flows which meet conditions of eligibility for inclusion in Official Development Assistance (ODA), other than the fact that the recipients are on Part II of the Development Assistance Committee (DAC) List of Aid Recipients.
  • Other Official Flows (OOF): Transactions by the official sector with countries on the List of Aid Recipients which do not meet the conditions for eligibility as Official Development Assistance or Official Aid, either because they are not primarily aimed at development, or because they have a grant element of less than 25 per cent.


Examples:

If a donor country accords a grant or a concessional loan to Afghanistanmarker 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 Bahrainmarker 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.

Uses

There are normally two ways of looking at the volume of ODA:
  • In real terms - the amount transferred
  • As percentage of GNP - aid burden-sharing


In real terms the United Statesmarker is by far the largest donor. It is also the country that produces the greatest value of goods and services, i.e. GNP. However, the U.S. federal government's aid budget is ~0.2% of its GNI, whereas Sweden's is ~1%.


As a percentage Swedenmarker is the largest donor among developed countries, and together with Luxembourgmarker, Norwaymarker, the Netherlandsmarker and Denmarkmarker it meets the International Aid Target of dedicating 0.7 percent of GNP. As percentage of GDP, Arab states of the Persian Gulfmarker are the most generous, with Kuwaitmarker contributing 8.2% of its gross national product and Saudi Arabiamarker contributing 4% in 2002.



Distribution

Official development assistance in 2005
World Bank 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.

Criticism

Official development assistance has been criticized by several economists for being an inappropriate way of really helping poor countries. The Hungarian economist Peter Thomas Bauer has been one of the most vocal of them.

See also



References



External links




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