Annex B. Supplemental data on financial flows to fragile states and economies
This annex elaborates on some of the findings in the main body of this report, providing additional statistical data particularly for Chapter 3 and Chapter 4. It also summarises supplemental data on financial flows to fragile states compared to other developing countries, provides country by country snapshots of per capita and percentage gross domestic product (GDP) flows, and provides details on the major providers of development co-operation and foreign direct investment.
Development co-operation in fragile states
Chapter 3 noted the uneven distribution of official development assistance (ODA) across fragile states, where it is often allocated to situations of geopolitical importance to development co-operation providers. Figure B.1 illustrates both of these points, showing flows to Iraq peaking dramatically in 2005 at over USD 9 billion and decreasing just as sharply while ODA flows to Afghanistan steadily increased throughout the period to 2012. When ODA allocation is politically driven, the countries that benefit often also suffer from volatility in those flows.
Source: OECD (2014a), “Detailed aid statistics: ODA official development assistance: Disbursements”, OECD International Development Statistics (database), https://doi.org/10.1787/data-00069-en.
ODA, even excluding debt relief, includes elements such as humanitarian aid that can vary significantly from year to year. Country programmable aid (CPA) can give a better picture of aid flows. CPA is the portion of aid donors’ programme for individual countries, and over which partner countries could have a significant say. It excludes, among other things, spending which is inherently unpredictable or entails no flows to the recipient country. Table B.1 presents CPA between 2003 and 2012. Some fragile states, such as Afghanistan, which received the largest amount of CPA in 2012 among those on the fragile states list, show a strong increase in CPA over the decade. Others, such as Bosnia and Herzegovina, received far less in 2012 than they did in 2003. Another group of fragile states and economies, among them Timor-Leste, received about the same amount of CPA in 2012 as in 2003.
Remittances to fragile countries and economies
While development co-operation is critical for many states, remittances are an even larger aggregate financial flow to fragile situations (see Chapter 3). Both fragile and non-fragile developing countries have received increasing remittance flows per capita, but remittance inflows per capita to fragile states have outpaced those to other developing countries consistently since 2000 as shown in Figure B.2.
Sources: World Bank (2014c), “Personal remittances, received (current USD)”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/BX.TRF.PWKR.CD.DT; World Bank (2014d), “Population total”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/SP.POP.TOTL.
Remittances are also shown on a per capita and percentage GDP basis in Table B.2 and Table B.3. Countries and economies depend on remittance inflows to varying extents. Haiti, Nepal, and the West Bank and Gaza Strip all received remittance inflows worth more than 20% of their total GDP for the year in 2012. That is significant, especially considering these flows go directly to households.
Foreign direct investment and other official flows to fragile situations
Fragile states receive more ODA and remittances per capita than other developing countries. The opposite is true in regard to foreign direct investment (FDI) inflows (Figure B.3). In 2012, on average, fragile states received per capita inflows that were only one-fifth of those of other developing countries.
Separating flows by fragile and other developing economies underscores the extreme volatility of FDI between 2000 and 2012 to all developing countries. Developing countries, fragile states included, received increased flows in the 2000s, but these dropped sharply during the financial crisis of 2008 and 2009. FDI to non-fragile developing states then steadily recovered, and reached near pre-crisis levels by 2012. However, FDI to fragile states has continued to steadily decline.
Sources: World Bank (2014a), “Foreign direct investment, net inflows (% of GDP)”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS; FDI as a percentage of GDP converted to USD using World Bank (2014b), “GDP (current USD)”, World Development Indicators, available at: http://data.worldbank.org/indicator/NY.GDP.MKTP.CD; World Bank (2014d), “Population total”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/SP.POP.TOTL.
Nonetheless, FDI remains an important financial flow for many fragile states. As an example, Cameroon receives almost as much FDI per capita (USD 24.43) as it does ODA (USD 27.47). In the Republic of the Congo, FDI inflows per capita (USD 635.90) are far greater than ODA per capita (USD 31.08) (Table B.2).
This report also examines non-concessional other official flows (OOF). OOF are transactions by the public sector with developing countries which do not meet the conditions for eligibility as ODA, either because they are not primarily aimed at development or because they have a grant element of less than 25%. As with FDI, considerably more OOF per capita flows to non-fragile developing countries than to fragile states, as seen in Figure B.4. It may be more challenging for fragile states to seek and/or be offered OOF.
While OOF to fragile states tends to be much smaller in magnitude, in several fragile states, such as Guinea, Liberia, Mauritania and the Solomon Islands, OOF inflows consisted of more than 2% of GDP in 2012.
Sources: OECD (2014c), “Detailed aid statistics: Other official flows OOF”, OECD International Development Statistics (database), https://doi.org/10.1787/data-00075-en; World Bank (2014d), “Population total”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/SP.POP.TOTL.
Relative financial flows to fragile states by country
As Table B.2 and Table B.3 demonstrate, there is a degree of variation in the individual per capita and percentage GDP flows to each fragile state and economy. Afghanistan received far more in ODA than any other flow per capita in 2012; at the same time, the Republic of the Congo and Egypt received far more in FDI and remittances respectively. A few states, such as Guinea and Mauritania, received significant OOF when measured in terms of both per capita and percentage GDP. These variations underscore the importance of assessing financial flows to individual fragile states, which can shift dramatically from one point in time to another, as well as looking at the overall picture of financial flows to fragile states.
Providers of development co-operation and foreign direct investment to fragile states and economies
Most of this report explored financial flows from the recipient perspective. It is also important, however, to look at the source of such flows. Figure B.5 shows the top providers of ODA to fragile states and economies in 2012. This list largely comprises OECD countries as well as some non-OECD aid donors who choose to voluntarily report their ODA contributions to the OECD.
OECD donors provide the largest amount of aid to fragile states, with the United States topping the list, followed by EU institutions and the United Kingdom. Other bilateral donors and multilateral organisations are also playing a key role in providing development co-operation to fragile states.
Table B.4 shows the largest providers of FDI to fragile states. It is important to note that these figures only present data on OECD member countries for which there is matched FDI data, so this dataset excludes most non-OECD FDI investors in fragile states. Figures for the average FDI investment between 2008 and 2012 were used as year-on-year point estimates and vary quite significantly. Nonetheless, the picture looks similar to that of the ODA donors with some exceptions.
The United States outpaces other top FDI investors in fragile states, followed by the United Kingdom, France and Italy. FDI in fragile states from France and Italy was larger in 2012 than public aid flows from those two countries, which underscores the significant investments made by their private sectors.
Source: OECD (2014a), “Detailed aid statistics: ODA official development assistance: Disbursements”, OECD International Development Statistics (database), https://doi.org/10.1787/data-00069-en.
References
OECD (2014a), “Detailed aid statistics: ODA official development assistance: Disbursements”, OECD International Development Statistics (database), https://doi.org/10.1787/data-00069-en.
OECD (2014b), “Detailed aid statistics: Country programmable aid (CPA)”, OECD International Development Statistics (database), https://doi.org/10.1787/data-00585-en.
OECD (2014c), “Detailed aid statistics: Other official flows OOF”, OECD International Development Statistics (database), https://doi.org/10.1787/data-00075-en.
OECD (2014d), “Foreign direct investment: Flows by partner country”, OECD International Direct Investment Statistics (database), https://doi.org/10.1787/data-00335-en.
World Bank (2014a), “Foreign direct investment, net inflows (% of GDP)”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS.
World Bank (2014b), “GDP (current USD)”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/NY.GDP.MKTP.CD.
World Bank (2014c), “Personal remittances, received (current USD)”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/BX.TRF.PWKR.CD.DT.
World Bank (2014d), “Population total”, World Development Indicators (database), available at: http://data.worldbank.org/indicator/SP.POP.TOTL.
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(43 2015 01 1 P) ISBN 978-92-64-22178-9 – 2015
States of Fragility 2015
MEETING POST-2015 AMBITIONS
Contents
Chapter 1. Fragility in the post-2015 framework
Chapter 2. The changing face of fragility and its implications post-2015
Chapter 3. Taking stock of financing to address fragility
Chapter 4. Moving from fragility to resilience post-2015
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