Moving on Slippery Grounds: Aid Defined
By Fonju Ndemesah
The development debate has been surrounded and dominated in recent decade with the idea of aid. While resource transfer optimists are arguing for more aid efforts from the developed countries; the aid pessimists are arguing that aid has proved to be a liability than an asset ; aid can be seen as a developer of underdevelopment.
But what is really aid? What is it made of? Is aid free of any implication? Who are the main actors in this process and what are their motives? In the lines below, we will endeavor to understand and explain some of the explicit and implicit factors surrounding the aid business. Before going any further, we need to define and trace the origin of aid.
Trying to define a concept that has been use to foster different and sometimes contradictory objectives is not an easy task. When in 1884 the various European met in Berlin to organize the plunder of the African continent, they justified their intent saying they were going to Africa to spread “civilization”. When thousand of Nongovernmental Organizations (NGOs) are spread all over the world; some out to fight poverty, others for their egoistic interests, they all put forward the word aid to justify their actions.
This can be proved by the various synonyms of aid in the development discourse, depending on the organization, institution or person. Development aid, development cooperation, development assistance, technical assistance, international aid, overseas aid, official development assistance (ODA), or foreign aid may have little or no significant difference.
Since the concept aid depends more on the user and the context, most definitions will hardly capture all the contours of what is intended by the term aid. Indeed, if we agree with the “patron saint of free enterprise”[i], Adam Smith, who argues in his famous book, The Wealth of Nations, that, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their interest”[ii], then we will doubt any aid freed of any explicit or implicit intention from the donor. It may not be strictly for “self interest” as supported by Adam Smith, but it will hardly be free of some interest.
That said, drawing from some credible mainstream sources and scholars who have endeavor to conceptualize what current international aid is all about, we will try to understand what aid is. My choice of these definitions is not judgmental, neither do I think they are complete or that I adhere to their definition. My choice is based on the current importance of the institution, the expertise of the scholar or the depth of the definition.
Aid is financial assistance given by governments and other agencies to support the economic, environmental, social and political development of developing countries. It is distinguished from humanitarian aid by focusing on alleviating poverty in the long term, rather than a short term response.
About 80-85% of developmental aid comes from government sources as official development assistance (ODA). The remaining 15-20% comes from private organizations such as "non-governmental organizations" (NGOs), foundations and other development charities (e.g., Oxfam).[iii] In addition, remittances received from migrants working or living in diaspora form a significant amount of international transfer.[iv]
The DAC defines ODA as “those flows to countries and territories on the DAC List of ODA recipients and to multilateral institutions which are:
The above definition just tells us the source of ODA and what are the motives. However, it is unable to tell us whether it is hard or soft aid. Was the offer really a grant, or a grant with hidden political intentions?
The Financial Times Lexicon describes international aid as “Money, goods and services given by the government of one country or a multilateral institution such as the World Bank or IMF to help another country”. This description is not different from the above definition, except for the fact that the OECD definition proceeds to give some details of the purpose and the source.
However, one word draws my attention in the Financial Times Lexicon’s definition; that is, help. If we go back to Adam Smith idea which is one of the foundational idea of the present dominant “Laissez faire” economy, which posits that, “every human being is motivated by self interest”, then we all need to question the “help” found in the above definition, since the “divine hand” Smith said will adjust every aspect is still to do the required adjustment. In addition, even if we don’t have the egoistic perspective of human relationship as expressed by Adam Smith, the unfolding of events in the recent decades will push any critical mind to question how helpful is the help.
Scholars like Hans W. Singer and Javed A. Ansari, in Rich and Poor Countries (1992) say “aid implies the idea of gift, of assistance rendered, of unilateral transfer, of a quid sine quo. This means that not everything which results in a transfer of resources, and that is loosely referred to as aid, is in fact included in our definition. For instance, private foreign investment, export credits, and public loans at commercial rates of interest do not represent aid, even though they may be useful to the recipient, since there is a quid pro quo – in fact, sometimes the quo, is a lot bigger than the quid!”
The above analysis portrays the complexity of the word aid. However, it is clear that not every transaction termed by some media organs or analysts as aid is really one; it makes it clear to us that not all aid helps, and that not all aid is really aid.
Sources
[i] Robert B. Downs (1952) Books that changed the world. New York, New American Library of World Literature.
[ii] Adam Smith. The Wealth of Nations: A modern-day interpretation of an economic classic. Karen McCreadie, 2009, Infinite Ideas, Oxford
[iii] OECD, DAC1 Official and Private Flows (op. cit.). The calculation is Net Private Grants / ODA.
[iv] Development aid, From Wikipedia, the free encyclopedia, Visted on 27 November, 2013
[v]OECDD. Official development assistance – definition and coverage, http://www.oecd.org/dac/stats/officialdevelopmentassistancedefinitionandcoverage.htm. Visited on 27 November, 2013
The development debate has been surrounded and dominated in recent decade with the idea of aid. While resource transfer optimists are arguing for more aid efforts from the developed countries; the aid pessimists are arguing that aid has proved to be a liability than an asset ; aid can be seen as a developer of underdevelopment.
But what is really aid? What is it made of? Is aid free of any implication? Who are the main actors in this process and what are their motives? In the lines below, we will endeavor to understand and explain some of the explicit and implicit factors surrounding the aid business. Before going any further, we need to define and trace the origin of aid.
Trying to define a concept that has been use to foster different and sometimes contradictory objectives is not an easy task. When in 1884 the various European met in Berlin to organize the plunder of the African continent, they justified their intent saying they were going to Africa to spread “civilization”. When thousand of Nongovernmental Organizations (NGOs) are spread all over the world; some out to fight poverty, others for their egoistic interests, they all put forward the word aid to justify their actions.
This can be proved by the various synonyms of aid in the development discourse, depending on the organization, institution or person. Development aid, development cooperation, development assistance, technical assistance, international aid, overseas aid, official development assistance (ODA), or foreign aid may have little or no significant difference.
Since the concept aid depends more on the user and the context, most definitions will hardly capture all the contours of what is intended by the term aid. Indeed, if we agree with the “patron saint of free enterprise”[i], Adam Smith, who argues in his famous book, The Wealth of Nations, that, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their interest”[ii], then we will doubt any aid freed of any explicit or implicit intention from the donor. It may not be strictly for “self interest” as supported by Adam Smith, but it will hardly be free of some interest.
That said, drawing from some credible mainstream sources and scholars who have endeavor to conceptualize what current international aid is all about, we will try to understand what aid is. My choice of these definitions is not judgmental, neither do I think they are complete or that I adhere to their definition. My choice is based on the current importance of the institution, the expertise of the scholar or the depth of the definition.
Aid is financial assistance given by governments and other agencies to support the economic, environmental, social and political development of developing countries. It is distinguished from humanitarian aid by focusing on alleviating poverty in the long term, rather than a short term response.
About 80-85% of developmental aid comes from government sources as official development assistance (ODA). The remaining 15-20% comes from private organizations such as "non-governmental organizations" (NGOs), foundations and other development charities (e.g., Oxfam).[iii] In addition, remittances received from migrants working or living in diaspora form a significant amount of international transfer.[iv]
The DAC defines ODA as “those flows to countries and territories on the DAC List of ODA recipients and to multilateral institutions which are:
- provided by official agencies, including state and local governments, or by their executive agencies; and each transaction of which;
- is administered with the promotion of the economic development and welfare of developing countries as its main objective; and
- is concessional in character and conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent).[v]
The above definition just tells us the source of ODA and what are the motives. However, it is unable to tell us whether it is hard or soft aid. Was the offer really a grant, or a grant with hidden political intentions?
The Financial Times Lexicon describes international aid as “Money, goods and services given by the government of one country or a multilateral institution such as the World Bank or IMF to help another country”. This description is not different from the above definition, except for the fact that the OECD definition proceeds to give some details of the purpose and the source.
However, one word draws my attention in the Financial Times Lexicon’s definition; that is, help. If we go back to Adam Smith idea which is one of the foundational idea of the present dominant “Laissez faire” economy, which posits that, “every human being is motivated by self interest”, then we all need to question the “help” found in the above definition, since the “divine hand” Smith said will adjust every aspect is still to do the required adjustment. In addition, even if we don’t have the egoistic perspective of human relationship as expressed by Adam Smith, the unfolding of events in the recent decades will push any critical mind to question how helpful is the help.
Scholars like Hans W. Singer and Javed A. Ansari, in Rich and Poor Countries (1992) say “aid implies the idea of gift, of assistance rendered, of unilateral transfer, of a quid sine quo. This means that not everything which results in a transfer of resources, and that is loosely referred to as aid, is in fact included in our definition. For instance, private foreign investment, export credits, and public loans at commercial rates of interest do not represent aid, even though they may be useful to the recipient, since there is a quid pro quo – in fact, sometimes the quo, is a lot bigger than the quid!”
The above analysis portrays the complexity of the word aid. However, it is clear that not every transaction termed by some media organs or analysts as aid is really one; it makes it clear to us that not all aid helps, and that not all aid is really aid.
Sources
[i] Robert B. Downs (1952) Books that changed the world. New York, New American Library of World Literature.
[ii] Adam Smith. The Wealth of Nations: A modern-day interpretation of an economic classic. Karen McCreadie, 2009, Infinite Ideas, Oxford
[iii] OECD, DAC1 Official and Private Flows (op. cit.). The calculation is Net Private Grants / ODA.
[iv] Development aid, From Wikipedia, the free encyclopedia, Visted on 27 November, 2013
[v]OECDD. Official development assistance – definition and coverage, http://www.oecd.org/dac/stats/officialdevelopmentassistancedefinitionandcoverage.htm. Visited on 27 November, 2013