In 2020, new official development assistance (ODA) maximum thresholds were set in the world. ODA has been defined by OECD as government aid attributed to middle and low-income countries, or multilateral development institutions, to promote economic development and welfare. In Europe, the largest world contributor, ODA is now $80bn (on average 0,5% of GNI) from a total of $161bn worldwide (on average 0,32% of GNI).
An important part of this aid was related to health care expenses, to fight the ongoing pandemic. These numbers may seem encouraging, but are still below the United Nations Sustainable Development Goal (SDG) of 0,7% of GNI, to be achieved by 2030.
For developed countries, ODA may be a small part of its GNI, but for some of the receiving countries, it is very impactful. UNDP (2011) showed that in 2008 net ODA flows accounted for more than 10% of GNI in 26 countries. This group was mainly constituted by countries who have recently been involved in a conflict or were in the UN’s list of least developed countries.
With the arrival of the pandemic in 2020, the need for funds in developing countries increased a lot. For example, a study conducted with countries from sub-Saharan Africa suggests that to recover to pre-pandemic levels they would need an additional $50bn from ODA per year for 2 to 3 years (Adam, Henstridge, and Lee, 2020).
One last point to take into account is the $9bn provided in 2020 has aid for health care purposes. Brown (2021) suggests that due to the Covid 19 pandemic, foreign aid will shift its focuses from investment in infrastructures to health and well-being, which may harm long-term economic growth.
In conclusion, foreign aid has increased this past year, but it still falls below the levels needed to fulfill both the SDGs and the needs of developing countries, especially taking into account the effects of the pandemic.
- Adam, Christopher, Mark Henstridge, and Stevan Lee. 2020. “After the Lockdown: Macroeconomic Adjustment to the COVID-19 Pandemic in Sub-Saharan Africa.” Oxford Review of Economic Policy 36 (May): S338–58.
- Brown, Stephen. “The Impact of COVID-19 on Development Assistance.” International Journal 76, no. 1 (2021): 42–54.
- Foreign-aid champion Europe is giving more than ever. 2021. The Economist. https://www.economist.com/europe/2021/07/01/foreign-aid-champion-europe-is-giving-more-than-eve
- UNDP. 2011. “Towards Human Resilience: Sustaining MDG Progress in an Age of Economic Uncertainty. United Nations Development Programme.” Undp, 1–312.
Student of the Bachelor’s Degree in Economics
Nova School of Business and Economics