The Recession Cuts Global Aid

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The world’s poorest nations no longer get the level of aid from the West that they did. The recession undermined that aid, which means troubled small countries will fall more deeply into economic stagnation of their own. The worldwide economic slowdown and a move toward austerity among OECD members likely have altered aid patterns permanently. That will radically change the chances that underdeveloped nations can bootstrap themselves out of poverty.

A new OECD survey shows that Spain, Portugal and Greece sharply pulled back aid payments in 2011. That may not be the worst news. Countries with stronger economies, like Germany and South Korea, barely increased total aid payments. The largest contributor to overseas aid — the U.S. — dropped its contributions as well.

The Organisation of Economic Co-operation and Development reports that:

The United States continued to be the largest donor by volume with net ODA (official developement assistance) flows amounting to USD 30.7 billion, representing a fall of -0.9% in real terms from 2010.

The U.S. change, more than any other factor, caused overall aid cuts of 2.7% to $133.5 billion last year.

Sub-Saharan Africa, the region that probably needs aid the most, saw a drop in contributions of 0.9% to $28 billion. That is hardly enough to lift the economic and humanitarian prospects of nations like the Democratic Republic of Congo and Kenya. With poor agricultural sectors and nearly no manufacturing, there is no way for these countries to emerge from poverty on their own. As aid decreases, their prospects move to from awful to worse.

Looking at the problem over a much longer term, the decades old increasing flow of financial help from the West and Japan to regions like Africa has bogged down. Recession and austerity considerations will not allow that to be change. And it is a great alteration. The OECD reports that:

Until 2011, aid had been steadily increasing for more than a decade. Net ODA rose by +63% between 2000 and 2010, the year it reached its peak. ODA has long been a stable source of development financing and has cushioned the immediate impact of previous financial crises.

It is more than unpleasant to say that the economic and humanitarian aid decline will doom some countries to long-term poverty and health problems. But that is how it has turned out, and there is no solution to fix it.

Douglas A. McIntyre