The Evolution of Official Development Assistance
Achievements, Criticisms and a Way Forward

The definition of Official Development Assistance (ODA) has for 40 years been the global standard for measuring donor efforts in supporting development co-operation objectives. It has provided the yardstick for documenting the volume and the terms of the concessional resources provided, assessing donor performance against their aid pledges and enabling partner countries, civil society and others to hold donors to account. Yet for all its value, the ODA definition has always reflected a compromise between political expediency and statistical reality. It is based on interpretation and consensus and therefore allows for flexibility. It has evolved over the decades, while preserving the original concepts of a definition based on principal developmental motivation, official character and a degree of concessionality. While agreement on the ODA concept was a major achievement, discussion of the appropriateness of this measure has never ended. The section documents the evolution of the ODA concept and proposes a possible new approach to measuring aid effort.

Research and Data

The DAC’s collection of statistics on resource flows to developing countries has its origins in US-inspired attempts to share the burden of development assistance. The Common Aid Effort agreed by the members of the Development Assistance Group in March 1961 set the stage by recognising the need to help the less-developed countries help themselves through increasing economic, financial and technical assistance and by adapting this assistance to the requirements of the recipient countries (OEEC, 1961). This cause was taken up the Development Assistance Committee in the newly formed OECD from late 1961 with the aims of expanding the flow of resources to less developed countries, improving the terms and conditions of aid, and increasing its developmental effectiveness (OECD, 1985).

Problems with ODA

If the vision of the Sustainable Development Goals (SDGs) is that Mother Earth is heading for trouble and we must collectively solve global problems, then the underfunding of global public goods (GPGs) must be addressed. As the world becomes increasingly globalized, the need for global public goods increases: from action on climate change, financial stability, limiting the spread of diseases, management of conflicts, responding to natural disasters, terrorism, and cyber-warfare. At some level even the eradication of extreme poverty and more inclusive and sustainable development could be considered a global public good because more poverty and unequal development breeds conflict, increases environmental stress, state failure, terrorism, and piracy, thereby increasing the need for the global public goods required to address these issues.

Opportunity for ODA

Country level ownership is critical for effective management of international and domestic development finance and is central to the Busan partnership agreement. As stated in the document “partnerships for development can only succeed if they are led by developing countries, implementing approaches that are tailored to country-specific situations and needs.” In terms of commitments to development effectiveness relevant to this discussion two that stand out are those related to country systems and tied aid. Both of these commitments are crucial to ensuring country level democratic ownership of development finance and both require revitalised political attention. A third area that is glaringly omitted from the effectiveness agenda is that of economic policy conditionality. If not dealt with these issues bind the hands of partner countries and challenge their ability to use development finance to its greatest ability and efficiency.