A Short History of International Aid (Part 2 of 2)

Part Two – From the Millennium Development Goals to the Present

Balloon Ventures has been invited to participate on a panel at the upcoming Bristol International Development Conference (February 6th, 2016). The panel’s topic is ‘The Future of Aid: Are we doing more harm than good?’. In preparation for this discussion, we have put together a short piece on the history of international aid. Knowing where we have come from will be critical in understanding where to go next.

Part one of this series, covered the history of international aid from the Second World War up until the turn of the century. It can be accessed here.

While many sources have been used in putting together this two-part series, ‘Aid and Development: a brief introduction’ by Myles Wickstead was a considerable source of inspiration and deserves special mention. It is an excellent account for anyone seeking to better understand the evolution of international aid.

The Millennium Decade

The international development targets (IDTs) set the scene for an even bigger development in 2000: The Millennium Declaration. This was by any standard, an extraordinary achievement. Every country in the world signed up to it, and amongst its many ambitious principles it had a section on the special measures necessary to address poverty and sustainable development in Africa. The Millennium Development Goals (MDGs) were eight international development goals established as a result of the Millennium Summit which built on the themes of the IDTs. 

The Millennium decade saw a grand shift in the thinking and position of international aid and its importance. In 2002 at the UN Conference on International Financing for Development, several financing mechanisms entered the mainstream discourse, such as international trade as an engine for development. The private sector as well as institutions such as the World Trade Organization were also more heavily involved. There was also a renewed call for meeting the commitment of 0.7% of GNI expenditure on aid. All steps in the right direction.

More Inclusive Aid

It was traditionally held that the G8 (and formerly G7) needed to be more inclusive of developing country views within their activities. At the G8 Summit in 2002, this is exactly what happened. A key outcome of the Summit was the ‘Africa Action Plan’ which was a response to, and provided support for the New Partnership for Africa’s Development, the and new African Union, which were African institutions created to support African development. The Summit also saw the creation of Africa Personal Representatives, whose role was to report directly to the G8 president or prime minister on progress towards the Africa Action Plan. The next Summits (Evian, and Bear Island) continued in this trend, with a number of African leaders invited. The G8 had become more inclusive. 

Wanting to build on this momentum, Tony Blair, after describing Africa as ‘a scar on the conscience of the world’ backed the establishment of a Commission for Africa in 2004. The commission’s purpose was to put forward new ideas and action for a strong and prosperous Africa. In 2005, its report ‘Our Common Interest’ was issued – and well received. Key tenants included that development be fuelled by economic growth (backed by involvement of the private sector); international trade (recognising the lack of export-quality goods) and the need to overhaul infrastructure that had been put in place during the colonial era with no explicit purpose to connect the continent. 

Other initiatives also helped to add to the continuing momentum behind international aid. The Paris Declaration on Aid Effectiveness in 2005 set out clear principles based on learning of the history of aid. The European Commission produced an Africa Strategy consistent with the Commission of Africa report and under the Luxembourg Presidency a decision was taken that long-standing members of the EU would meet the 0.7% target by 2015 while new member states would achieve 0.33% by the same deadline. A massive civil society campaign called ‘Make Poverty History’ also ran at this time and was aligned with the Commission of Africa Report calling for liberalised trade with the south, debt relief, and increased aid commitment (within the 0.7% target).

In reality, there was always a short fall in meeting the 0.7% target. Towards the end of the 2000s, the 2008 financial crisis meant that this would continue to be the norm as advanced economies turned their focus necessarily inwards. However, this global economic shock set the tone for a new world order in which countries outside the G8 would become more powerful and therefore more assertive and less reliant on the G8. 

Where we are now

In 2012, as the deadline for achieving the MDGs grew nearer, a High Level Panel was put together by the UN to put forward recommendations for what a new set of goals would look like. Learning from previous shortcomings, the panel was both inclusive and consultative, involving civil society, the private sector, academia, trade unions, youth and others. Similarly, to the MDGs there was a recognition that it had to be about more than increased economic prosperity. Even more so than before, particularly on the environment (which was considered one of the weaker areas of the MDGs). 

In 2015, the UN adopted a Resolution agreeing the Sustainable Development Goals (SDGs). 169 targets can be found under the 17 goals which once again focussed on economic development, social inclusion, and environmental sustainability.

The role that traditional aid has to play in the achievement of the goals enshrined in the SDGs is constantly shrinking. In 1990 total gross development aid amounted to $113 billion, while total international resource flow to developing countries approximated $450 billion. Aid therefore represented, approximately 25% of assistance. As a reference, total domestic developing country government expenditure was around $777 billion. In 2012 gross development aid was around $140 billion but international resources increased to $2 trillion and developing country expenditure was around $6.4 trillion! Traditional aid appears to matter much less today then it did in previous decades, an indication of how far we have come in international development.  

It has been a journey of continuous improvement regarding the provision of aid. The key question is, what next? Join us at the Bristol International Development Conference  (February 6th, 2016) to find out. We hope to see you there! 

Key Summary Points
  • Aid was heavily politically charged at its inception (in many cases deliberately) and only through conscious policy changes has this begun to change
  • Aid has evolved from a somewhat ‘command and control’ paradigm to a more inclusive and consultative approach
  • The focus has broadened from economic concerns to a much wider focus on social inclusion, equity, justice, and crucially the environment
  • The nature of aid has matured from basic hand outs to a broader focus on the systemic view (e.g. international trade, strengthening local governance, empowering approaches, etc.), with traditional aid shrinking considerably in terms of total resources dedicated to emerging economies
  • The landscape is incredibly complex and therefore change happens slowly building on each previous step in the right direction. Change has been brought about through evolution rather than revolution 

This piece was written by Nicholas Andreou. Nicholas leads the Insight & Impact function at Balloon Ventures. He holds a PhD from the University of Nottingham and has previously held research positions at Harvard University and the World Health Organization as a student.