The Future of Official Aid Flows

In absolute dollar amounts official development assistance (ODA) reached an all-time high in 2021. But as a percentage of recipient country GDP, aid (and broader public investment) flows have been declining for some time. This paper looks at the scale of ODA and official financial flows (including multilateral flows) in comparison to donor and recipient GDP, and suggests some scenarios for the range of flows going forward, as well as examining the potential share of resources taken by climate finance. It concludes that there is a non-trivial chance that ODA for non-humanitarian and climate finance falls in absolute terms over the coming years and that aid becomes increasingly focused on richer countries. In terms of increasing aid available, the most promising strategy for bilateral ODA flows may be to increase the generosity of traditional donors but for broader finance for international development, and particularly multilateral finance, increasing the range of donors may have a larger payoff. This will be necessary, because demand for multilateral finance is likely to rise.

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