Aid

Details

Foreign aid is the first policy that comes to mind when people in rich countries think of helping poorer countries, and despite the importance of “beyond aid” policies, development assistance remains an important source of finance for many of the poorest countries. Most comparisons between donors are based only on how much aid each gives: in the CDI, quantity is only half of the picture, because quality is also taken into account. The CDI uses the Quality of Official Development Assistance (QuODA) to assess the quality of donor’s aid programs. QuODA offers a comprehensive assessment of each donor’s development assistance by analyzing 31 indicators focusing on development impact, fostering institutions, reducing burden, and promoting transparency. The aid quality score for each country reflects the quality of its bilateral aid institutions, and the quality of the multilateral institutions through which it spends its aid.

 

Luxembourg takes first place on aid quantity expressed as a share of gross national income (GNI). In 2012 Luxembourg allocated 1 percent of its GNI to development assistance; Sweden and Norway closely followed with 0.97 and 0.93 percent respectively. Although the United States was the largest donor in absolute terms, allocating $US 30.7 billion for aid, this represents only 0.19 percent of the US national income. Compared to other CDI countries, Poland and Slovakia were the least generous aid donors, contributing only 0.09 percent of their gross national incomes. For aid quality, Ireland ranks top, followed by Denmark and United Kingdom. Luxembourg drops to seventh place on the index overall because of the poor quality of its aid, despite having the highest aid volume. Ireland has the best bilateral program, whereas according to the QuODA measures, Canada channels its multilateral assistance through the most effective multilateral agencies. Italy and Belgium have the poorest quality of their bilateral aid, while New Zealand and Greece tend to channel aid through lower quality multilateral agencies. Denmark ranks best on aid because it consistently performs above average in aid quality, as well as being relatively generous. On the opposite end of the ranking is South Korea, which contributed only 0.14 percent of GNI to ODA and scores relatively poorly on aid quality.