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Talking Points

Aid and beyond: mobilizing more resources for financing development

07-12-2012

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This article was published on 7 December and is available on the website of Friends of Europe.  

The scenario is quite familiar. If budget cuts are to be made in times of crisis, development spending is the first and easiest target for European policymakers. In preparing for the 2013 budget, several EU member states seem to have forgotten about their longstanding commitments to reach the 0,7% target of GDP as Official Development Assistance (ODA) by 2015.

Cutting development budgets first is also common practice in EU institutions. In trying to broker a compromise deal on the multi-annual budget for 2014-2020, EU Council President Herman Van Rompuy, has proposed the biggest proportional cuts in the ‘Global Europe’ chapter (-9%) and the European Development Fund (-11%). Clearly these proposals provoke less opposition than cutting budgets that directly affect European citizens such as the Common Agricultural Policy or Cohesion funds.

How much should we be worried that global and EU aid budgets are declining for the first time since 2000? Let there be no misunderstanding: at least 15 African low income countries still very much depend on foreign aid. In proportional terms the aid share is substantially higher than the revenue generated by these developing countries themselves.

However, while global aid counts for roughly 100 billion Euros a year, its share is largely surpassed in many middle income developing countries by other financial flows such as remittances, foreign direct investments and revenues from the extractive industries. These other financial flows are increasingly important to tackle longstanding development problems and the immense new global challenges.

…continue reading the full article on the website of Friends of Europe.

Geert Laporte is ECDPM’s Deputy Director.

This blog post features the author’s personal views and does not represent the view of ECDPM.

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Economic Transformation and TradeEuropean external affairsDevelopment Finance and TaxationEuropean Union (EU)Official Development Assistance (ODA)Africa