International aid to developing countries fell for the second year in a row, as the European debt crisis continued to weigh heavily on the wealthiest nations. Grants and loans intended to benefit developing nations declined by 4% in 2012, after falling 2% in 2011.
The United States gave just over $30 billion in aid last year, roughly 1% less than the previous year. Nevertheless, it was still more than double the second largest contributor. While significant, the amount accounted for less than 0.2% of the country’s gross national income (GNI), far less than most contributing countries.
Developed countries measured by the Organization for Economic Cooperation and Development (OECD) gave an average of 0.31% of gross national income to developing countries in aid. Some countries, generally the ones able to afford it, contributed much more to foreign aid. Eleven countries spent at least 0.45% of their GNI in aid to developing nations, with Luxembourg spending a full 1%. Based on a recent OECD report, 24/7 Wall St. reviewed the world’s most generous countries.
As European economies continue to struggle, the majority of the 11 nations also gave less money in 2012 than they did the prior year, both as a percentage of GNI and in absolute dollars. Spending in the Netherlands, which had the biggest drop among the countries giving the most, declined by nearly 13%. OECD Secretary-General Angel Gurría described the general decline in aid as “worrying” and said that the trend would hopefully reverse as the OECD’s 2015 development goals nears.
As might be expected, many of the countries that give more relative to the size of their economies have the financial means to do so. These nations include four Scandinavian countries, as well as Luxembourg and Switzerland. All of them have a perfect Aaa currency rating, according to Moody’s Investors Service. They also have relatively low debt. In 2011, debt represented less than half of gross domestic product (GDP) in these six countries. In the United States, debt accounted for 102.9% of GDP that year.
Not all the countries that are giving more to developing nations are free of financial strain. Countries such as Ireland, France and the United Kingdom have been hurt by the European debt crisis and economic slowdown. These countries have rising debt and less-than-perfect credit ratings.
Ireland, in particular, could stand to keep the $1.3 billion it sent to developing nations last year. The country has a poor credit rating, the 10th-highest debt as a percentage of GDP among countries measured by the International Monetary Fund (IMF), and an unemployment rate of 14.8% in 2012. Because of its continuing budgetary constraints, Ireland cut aid in 2012 by 5.8%.
For many of these countries, the trend of generosity can be seen within their own borders. Many also spend a great deal on social programs domestically. Of the 11 nations, 10 spent more than the OECD average of 21.7% of national GDP on social programs. These include Finland, Belgium, Denmark and France, the four countries spending the most on social programs. The French government spent 32.1% of its GDP in 2012 on social programs, the most among all countries measured by the OECD.
Based on the latest OECD data, 24/7 Wall St. reviewed the 11 countries that gave the most in foreign aid to developing countries, listed by the OECD as official development assistance as a percent of gross national income. 24/7 Wall St. looked at additional data provided by the OECD, including previous years of development assistance, gross national income, unemployment rates for 2012, net financial liabilities as a percentage of GDP, and social spending as a percentage of real GDP, which includes pensions and health care as well as public assistance programs like unemployment benefits and welfare. From the IMF, we reviewed government debt as a percentage of GDP for 2011. Moody’s provided foreign currency ratings as of April 4, 2013. All data are for the most recent available full years.
These are the most generous countries in the world.