Select Committee on International Development Minutes of Evidence


Letter to the Clerk of the Committee from Development Initiatives

  Thank you very much for your letter. We were pleased to have the opportunity to give evidence to the Committee.

  I am enclosing some files I have which will supply the additional information that you asked for. The data needs a little explanation:

1.  THE PROPORTION OF AID WHICH IS TIED

  We have given you the breakdown by donor for the year 2000 ( the most recent year for which comparative figures are available). You will notice that the USA is not included. This is because the USA has not reported to the DAC on its tied aid since 1996. However, the most recent OECD Aid Review of the USA (1998) notes that the USA supported the principle of untying aid to Least Developed Countries.

  The Committee asked about possible linkages between aid tying and aid volume.

  Several donors, notably Denmark (giving over 1 per cent GNP) and Japan (the world's largest donor in volume, currently giving 0.28 per cent GNP) have made the case that involving domestic constituencies including the private sector in aid programming helps to sustain public support for aid.

    —  Denmark's Strategy for Danish Cooperation Development Policy Towards the Year 2000[18] notes the importance of involving the Danish "resource base" including the business and research communities which contribute to the Danish development effort.

    —  Prior to 1997, the growth in Japanese aid was seen to have been supported by a pro-aid consensus which involved business, bureaucrats and politicians and which explicitly stressed the economic and political benefits accruing to Japan as a result of aid.[19]

But whilst the case for tying aid in order to broaden support for aid is easy to make, there is no real evidence that such a policy works. The UK's own experience is that in the years which followed the 1980 decision to "give greater weight in the allocation of our aid to political, industrial and commercial considerations" aid fell substantially both in volume and GNP percentage.[20]

The conclusions that we would draw from the evidence are:

    —  That government commitment has a much greater impact on aid levels than either commercial or public attitudes.

    —  That tying aid is not a very effective way to generate support for aid.

2.  THE PROPORTION OF AID WHICH IS HUMANITARIAN ASSISTANCE

  The graph shows total humanitarian assistance as a share of total ODA. Total humanitarian assistance is made up of bilateral emergency and distress relief, plus multilateral ODA to UNHCR, ECHO and UNRWA along with the relief share of multilateral ODA to WFP.

  In addition we have given you humanitarian assistance net of the amount that is spent on refugees in the donor country. This is quite interesting from a UK perspective. As I mentioned at the IDC session, the UK has taken the honourable path of choosing not to include its expenditure on refugees in Britain in their first year of residence as part of its ODA—even though this is a legitimate expenditure under DAC rules. When this domestic expenditure is excluded the UK is the second-largest bilateral donor of humanitarian assistance by a significant margin.

3.  ESTIMATES AVAILABLE ON THE PROPORTION OF VOLUNTARY GIVING TO DEVELOPING COUNTRIES

  I have included an extract from the background paper[21] we did for DFID on voluntary flows for development. I am afraid it is rather long, largely because there is no conclusion on the volume of voluntary flows and it is explaining this, but just to pull out a few of the main points:

    —  Available data shows a range of NGO income (including funding from governments) of $7 billion to more than $15 billion in 1998.

    —  UK Development NGOs had an income of between £900 million and £1.1 billion in 1998.

    —  Voluntary income in 1998 was in excess of £430 million.

    —  Development NGOs in the UK raise a higher proportion of their total income from the public than charities as a whole. Development NGOs raise 21 per cent of money given by the public to charitable causes but are responsible for only 15 per cent of total UK charitable income.

  If you would like further breakdowns of this data or other information on aid flows we would be happy to help.

Development Initiatives

April 2002




DonorTotal Bilateral
Commitments
Total UntiedTied
Australia379.68293.87 85.81
Austria270.83160.26 110.57
Belgium241.53211.46 30.07
Canada935.03232.89 702.15
Denmark814.3655.53 158.77
Finland125.03111.84 13.19
France1,929.231,802.88 126.44
Germany1,144.451,066.12 78.33
Greece76.5117.95 58.55
Italy680.77259.72 421.05
Japan10,407.769,042.76 1,365
Luxembourg89.7686.77 2.99
Netherlands2,309.51 2,215.6693.86
Norway650.98636.22 14.76
Portugal229.56227.74 1.82
Spain844.67399.27 445.39
Sweden940.98905.95 35.02
Switzerland549.24514.32 34.93
United Kingdom1,671.32 1,528.88142.44
The USA, New Zealand and Ireland do not report to the DAC on tied aid.






18   Published 1994. Back

19   See Public Attitudes and International Development Cooperation, OECD Paris 1998. Back

20   See for instance British Aid and International Trade, Morrisey, Smith & Horesh, OUP 1992, which argued that tying was not only "at variance with free market and trade liberalisation arguments" but that "it is far from obvious that it generates a net economic gain". Back

21   Not printed. Copy placed in the Library. Back


 
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