What is aid?

Broadly speaking, aid is the transfer of resources (ie. money, or actual ‘things’) from one country to another; historically, this has generally been in the direction of rich countries to poorer countries. Increasingly, though, South-South cooperation is becoming more common, as is the two-way transfer of resources rather than simply as a one way transfer.

Aid isn’t just cash from government to government, though – it comes in lots of different forms. Sometimes, it is transferred to poorer countries as cash, or as food or commodities that they need; but some of it never actually leaves the donor country, and is used to help citizens of poorer countries, like students, or refugees (or, more controversially, on development consultancies in donor countries)

Bilateral and multilateral disbursements US$ billions, 2011

Aid flows can go from governments to governments (known as bilateral aid), or from governments to multilateral organisations like United Nations agencies, international organisations like the International Land Coalition, or regional organisations like the African Development Bank; known as multilateral aid, who then distribute it among various countries.

Watch out: last year, researchers found that over $22 billion of the $100 billion plus which was reported by donors as bilateral Official Development Assistance never reached the developing countries; so, bear this in mind when thinking about financial flows that are, (in theory) going to developing countries

Broadly speaking, aid can be split up into two different types: development aid, and humanitarian, or emergency, aid.

Development aid is aimed at alleviating poverty in the long term; there are many different types within this, like budget aid, project-specific aid, and charitable aid, for example. We’ll go into these in more detail in a future module. By its very nature, in theory, being planned in advance, there is much more data available about this type of aid.

Humanitarian, or emergency aid, is focused on the short term response in times of emergency; naturally, there is only short-term data available on this, and naturally no forward-looking data, as it is organised at short notice.

Get the context

To provide a little bit of context: OECD countries have set a target of providing 0.7% of their Gross National Income as ‘Official Development Assistance’. This target was set back in 1970, and reaffirmed multiple times since then; however, this doesn’t mean to say that all countries are meeting it, even 40 years later.

Here’s an interactive chart showing how they’re doing at hitting that target, from the OECD.

It’s also worth noting that the public in many donor countries tend to wildly overestimate the amount of money that their government is spending on foreign assistance; for example, a study from 2013 showed that Americans estimate that 28% of their budget is being spent on foreign assistance. In actual fact, it’s less than 1%.