Official development assistance

Promoting economic and social development in partner countries has been a principal objective of the OECD since its foundation. The share of national income devoted to official development assistance (ODA) is a key indicator of a country’s commitment to international development. A long-standing United Nations target is that developed countries should devote 0.7% of their gross national income (GNI) to ODA.

Definition

ODA is defined as government aid designed to promote the economic development and welfare of developing countries. Loans and credits for military purposes are excluded. Aid may be provided bilaterally, from donor to recipient, or channelled through a multilateral development agency such as the United Nations or the World Bank. Aid includes grants, “soft” loans and the provision of technical assistance. Soft loans are those where the grant element is at least 25% of the total.

The OECD maintains a list of developing countries and territories; only aid to these countries counts as ODA. The list is periodically updated and currently contains over 150 countries or territories with per capita incomes below USD 12 745 in 2013. Data on ODA flows are provided by the 29 OECD members of the Development Assistance Committee (DAC).

Comparability

Statistics on ODA are compiled according to directives drawn up by the DAC. Each country’s statistics are subject to regular peer reviews by other DAC members.

As part of its overall engagement strategy, the DAC encourages donors that are not members of the Committee, to report their aid flows to the OECD/DAC Secretariat. This reporting is voluntary and currently about 20 non-DAC bilateral donors as well as about 35 multilateral agencies (regional development banks, UN agencies, international financial institutions, etc.) provide their data on their outflows to developing countries to the DAC.

Overview

From 1960 to 1990, official development assistance (ODA) flows from the 29 OECD countries of the Development Assistance Committee (DAC) to developing countries rose steadily. By contrast, total ODA as a percentage of DAC countries’ combined gross national income (GNI) fell between 1960 and 1970, and then oscillated between 0.27% and 0.36% for a little over twenty years. Between 1993 and 1997, ODA flows fell by 16% in real terms due to fiscal consolidation in donor countries after the recession of the early 1990s.

Aid then started to rise in real terms in 1998, but was still at its historic low as a share of GNI (0.22%) in 2001. Since then, a series of high-profile international conferences have boosted ODA flows. In 2002, the International Conference on Financing for Development, held in Monterrey, Mexico, set firm targets for each donor and marked the upturn of ODA after a decade of decline. In 2005, donors made further commitments to increase their aid at the Gleneagles G8 and UN Millennium + 5 summits. In 2005 and 2006, aid peaked due to exceptional debt relief operations for Iraq and Nigeria.

In the past 15 years, net ODA has been rising steadily and has increased by nearly 70% in real terms since 2000. In 2014, net ODA flows from DAC member countries totalled USD 137.2 billion, marking an increase of 1.2% in real terms over 2013 and surpassing the all-time high in 2013. As a share of GNI, ODA was 0.30%.