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Foreign development assistance has played a significant role in the history of both the United States and Europe.  International cooperation in this area surged following World War II and has resulted in the adoption of the Millennium Development Goals (MDGs) that set economic, environmental, and welfare objectives for the promotion of world development.

A 1970 UN General Assembly Resolution included 0.7% of countries’ GNI as a target for official development assistance (ODA).  Among the countries surveyed, European and Nordic countries tended to proportionally donate more than other regions surveyed.

Australia, India, Israel, Japan, Kuwait, South Korea, New Zealand, the Russian Federation, and South Africa were found to have directed large proportions of their ODA activities toward neighboring countries or those in their geographic region.  Former colonizing powers, such as France, apparently favor assistance to their former colonies; countries that still have overseas territories, such as the UK, give priority assistance to these areas.

Countries surveyed usually directed their ODA based on particular substantive areas of focus, such as elimination of poverty, health, education, food security, good governance, etc. Finland, Norway, and Sweden, were found to have given special attention to gender equality; similarly, Israel demonstrates contribution to rural-area training programs specifically for women.  The promotion of the rights of the child was another area that influenced the aid policies of the EU, Finland, and Israel.  Other criteria for prioritization applied in Australia, Finland, Sweden, the UK, and the EU were found to include levels of poverty as well as the aid’s potential effectiveness. 

In addition to other policy considerations for selection of recipients Australia, Finland, and Japan considered potential peace building and national security; Brazil and Israel the development of diplomatic relations, and France the facilitation and management of migratory flows.

Australia, Brazil, France, Germany, Japan, Norway, and the UK implement ODA policies through agencies that are dedicated to ODA distribution.  Finland, New Zealand, and Israel have special departments within their Ministries of Foreign Affairs (MFAs) that implement ODA.  In South Korea, some aspects of ODA planning and implementation are shared between the MFA and the Ministry of Strategy and Finance.  Kuwait and Saudi Arabia conduct their international development assistance mainly through public institutions governed by boards of directors.  ODA implementation was found to be fragmented in the Russian Federation, South Africa, and India, with some institutional changes expected in these countries in the future.

ODA implementation was found to be still lacking with regard to the untying of aid in countries such as Germany and the Russian Federation.  Restrictions on aid qualifying for dual use and prohibitions on exports in violation of military embargoes were imposed in countries like Finland, France, Israel, and the United Kingdom.  All countries surveyed appear to employ at least one oversight mechanism to ensure proper implementation of their ODA policies.

Whereas Australia, Germany, France, New Zealand and Sweden designate ODA as an independent budget allocation, in the UK, Finland, Israel, the Russian Federation, and India, ODA derives from general allocations to ODA dispensing agencies.  Kuwait and Saudi Arabia generally channel their ODA through special funds that are governed by boards of directors.  Japan and South Korea combine ODA with other financial resources.  In general, annual EU budgets are based on a multiannual financial framework (MFF) that is agreed upon by the European Parliament, Council, and Commission in an inter-institutional agreement. 

The United Kingdom was by far the largest donor of private donations for foreign aid purposes, followed by Sweden, Finland, Germany, and France. Additional types of foreign development assistance provided by the countries surveyed include emergency aid, scholarships to foreign students, guest worker programs, facilitation of remittances, and debt relief.  Further aid-related activities include a focus on trade-enabling policies by Australia, and the creation of incentives for companies to invest in research, development, and production capacity for new vaccines in the United Kingdom.

I.  Introduction

This collection of reports provides an overview of the way the European Union and eighteen selected countries from different continents around the world have handled their contributions to foreign development aid. Countries selected include members as well as nonmembers of the Organization for Economic Co-operation and Development (OECD) including countries with established and emerging economies.  The collection is composed of individual country and European Union studies prepared by the research staff of the Global Legal Research Center of the Law Library of Congress during 2011 and early 2012.  Each report provides information that was available at the time of its completion.  Appendix A includes GIS maps that depict various aspects of the survey;[1] Appendix B, a compilation of official development assistance (ODA) data in table format, reflects percentage change in ODA between 2003 and 2010.  Although the United States was not surveyed, some US data is reflected in the maps for comparison purposes only.

The reports provide historical and background information on international cooperation agreements regarding ODA and statistical data regarding both ODA and private contribution figures.  The reports further highlight priorities utilized by donor countries in selecting recipients and in determining the types of development assistance they provide.

The reportsincludeinformation on foreign agencies that are responsible for ODA planning and implementation, and discuss foreign countries’ appropriations processes for allocation of their ODA budgets.  The reports list restrictions imposed under foreign countries’ laws on the provision of ODA as well as on private contributions.

In addition to ODA and private donations, the reports discuss the contributions of foreign countries to development assistance by additional means, for example by providing scholarships to foreign students, instituting guest worker programs, facilitating remittances, and providing emergency aid.  

Foreign countries’ experience may be relevant to the current discussion regarding foreign aid development appropriations in the United States.[2]  The recent global economic downturn seems to have reignited a debate in the United States and other countries over the role, extent, and impact of foreign aid on foreign policy.[3]  Facing budgetary cuts in domestic programs, as well as other austerity measures to revamp the economy, some have called for a reevaluation of donor countries’ undertakings to provide international assistance and in particular for a reevaluation of the aid’s effectiveness.

This study provides some comparative perspectives relevant to the discussion of foreign development aid.

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II. International Cooperation in Providing Foreign Aid

A.  Historical Background

Foreign aid is not a new concept in world affairs.  In US history the significance of French assistance during the American Revolution is well known;[4] its impact on the donor, however, was said to have “plunged France into a precarious financial situation and accelerated the crisis of the monarchy.”[5]

International development cooperation has surged in the last century, particularly after the American Marshall Plan to help Europe following World War II.[6]  On January 13, 1960, the Development Assistance Group (DAG) was created as a forum for consultations among donors on assistance to developing countries.  The DAG at that time included Belgium, Canada, France, Germany, Italy, Portugal, the United Kingdom, the United States, and the Commission of the European Economic Community, with Japan and the Netherlands joining shortly thereafter.[7]  With the entry into operation of the Organization for Economic Co-operation and Development the DAG merged with the Development Assistance Committee (DAC).  The OECD’s Development Co-operation Directorate (DCD) works with the DAC on formulating international development commitments.[8]

B.  The Millennium Development Goals

In 2000, the UN General Assembly adopted the Millennium Development Goals (MDGs), which consist of eight specific objectives, including

  • eradication of extreme poverty and hunger;
  • achievement of universal primary education;
  • promotion of gender equality and empowerment of women;
  • reduction of child mortality;
  • improvement of maternal health;
  • combating HIV/AIDS, malaria, and other diseases;
  • ensuring environmental sustainability; and
  • building a global partnership for development.[9]

These goals were accepted by major donor countries as guiding principles for their assistance activities.

C.  The Four High-Level Forums on Aid Effectiveness

Four High-Level Forums on Aid Effectiveness (HLFs) sponsored by the DAC Working Party on Aid Effectiveness (WPAE) have been convened since 2000 to assess and meet the ambitious targets set by the MDGs; in Rome (2003), Paris (2005), Accra (2008), and Busan (2011).[10]  The following is a brief summary of the principles adopted at these forums.[11]

1.  HLF1 (Rome, 2003)

The Rome forum resulted in the adoption of the following priority actions, embodied in the Rome Declaration:[12]

  • that development assistance be delivered based on the priorities and timing of the countries receiving it
  • that donor efforts concentrate on delegating co-operation and increasing the flexibility of staff on country programmes and projects
  • and that good practice be encouraged and monitored, backed by analytic work to help strengthen the leadership that recipient countries can take in determining their development path.[13]

2.  HLF2 (Paris, 2005)[14]

The Paris Declaration, a product of HLF2, outlined the following five fundamental principles for making aid more effective:

  1. Ownership: Developing countries set their own strategies for poverty reduction, improve their institutions and tackle corruption.
  2. Alignment: Donor countries align behind these objectives and use local systems.
  3. Harmonisation: Donor countries coordinate, simplify procedures and share information to avoid duplication.
  4. Results: Developing countries and donors shift focus to development results and results get measured.
  5. Mutual accountability: Donors and partners are accountable for development results.[15]

3.  HLF3 (Accra, 2008)

This forum convened in order to strengthen and deepen implementation of the Paris Declaration.  The Accra Agenda for Action (AAA) centered on capacity development and proposed improvement in ownership, partnerships, and the delivery of results.[16]  The key points agreed as part of the AAA are:

  • Predictability – donors will provide 3–5 year forward information on their planned aid to partner countries.
  • Country systems – partner country systems will be used to deliver aid as the first option, rather than donor systems.
  • Conditionality – donors will switch from reliance on prescriptive conditions about how and when aid money is spent to conditions based on the developing country’s own development objectives.
  • Untying – donors will relax restrictions that prevent developing countries from buying the goods and services they need from whomever and wherever they can get the best quality at the lowest price.[17]

 4.  HLF4 (Busan, 2011)[18]

The Busan Partnership for Effective Development Co-operation reinforced the principles that were adopted in the three earlier forums and specifically reemphasized the following:

  • Ownership of development priorities by developing countries
  • Focus on results
  • Inclusive development partnerships
  • Transparency and accountability to each other[19]

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III.  Official Development Assistance and the 0.7% Gross National Income Goal

A.  Definition of ODA

The DAC adopted the concept of Official Development Assistance (ODA) in 1969 to standardize the measurement of the resource flows from DAC government donors to developing countries.  According to the DAC, ODA is composed of

[t]hose flows to countries and territories on the DAC List of ODA Recipients and to multilateral development institutions which are:

  • provided by official agencies, including state and local governments, or by their executive agencies; and
  • each transaction of which:
  • a)   is administered with the promotion of the economic development and welfare of developing countries as its main objective; and

  • b)   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).[20]

The OECD website has further clarified that ODA reporting should not include military aid or antiterrorism activities.  The cost of using donors’ armed forces to deliver humanitarian aid and some closely defined developmentally relevant activities within peacekeeping operations are, however, included.  Additionally, nuclear energy is reportable as ODA, provided it is for civilian purposes.  Support for cultural programs for the purpose of building “the cultural capacities of recipient countries” is similarly reportable, unless the programs are “one-off tours by donor country artists or sportsmen, and activities to promote the donors’ image.”[21]

B.  The 0.7% Goal

The world’s governments have repeatedly committed to donate 0.7% of donor countries’ gross national income (GNI) to Official Development Assistance.  The 0.7% target was first pledged thirty-five years ago in a 1970 UN General Assembly Resolution, and has been affirmed in many international agreements over the years.  To date, most donor countries have not met the 0.7% target.[22]

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IV.  Foreign Development Assistance by Selected Countries

The attached reports address various policies and regulatory frameworks that are applied by selected foreign countries and by the European Union in providing foreign development aid.  Individual foreign countries surveyed include members as well as nonmembers of the OECD as highlighted in Map 1 (Appendix A).  In some cases, specifically those of newly emerging donor countries, surveyed jurisdictions were both donors as well as recipients of ODA.

A.  ODA Contribution Amounts[23]

The following reports and Maps 2–4 (Appendix A) indicate ODA expenditure in 2003 and 2010 by the European Union and the countries surveyed.  A table depicting actual figures is set forth in Appendix B.

Map 2 illustrates that in 2003, with the exception of the European Union (at US$41,427.53 million, hereafter M), the highest donor was Japan, with a US$12,970.87M contribution.  Without the strong outlier (EU), US$3,958M was the average amount given by the countries surveyed in 2003.  By comparison, the United States gave US$18,257.49M in 2003, about 4.6 times more than the average amount given by the surveyed countries.

Map 3 reflects that in 2010, with the exception of the European Union (at US$73,733.23M), the highest amount was again given by Japan, at US$18,861.66M.  That year, without the strong outlier (EU), the average amount given by the surveyed countries was US$5,622.91M.  By comparison, the United States gave US$31,159.3M, over 5.5 times more than the average.

A comparison between ODA monetary contributions in 2003 and in 2010 in the countries surveyed (illustrated in Map 4)[24] shows that all the countries contributed more in 2010 than in 2003, and the largest change was in Australia, with a 314% increase.  The United States, in comparison, increased its ODA contribution by 171%. 

Map 5 (Appendix A) shows the makeup of ODA contributions relative to each country’s GNI in 2010.  The lowest percentage was Brazil, with just 0.03% of GNI related to ODA contributions.  The highest percentage was Norway, which devoted 1.1% of its GNI towards ODA contributions.  The average percentage given by the countries surveyed was 0.39%.  Overall, the Continental European and Nordic countries tended to donate more proportionally than other regions.  Data regarding the makeup of ODA contributions as a percentage of the countries’ GNI in 2003 has not been identified.

Considering the recent global economic downturn, mainly in Europe and in the US, patterns of ODA contributions and ODA GNI percentages, as demonstrated in Maps 4 and 5, may change, with traditional “rich” donors potentially limiting their spending and emerging market countries increasing their aid involvement.

B.  Private Donations

In addition to ODA rates, private contribution figures were surveyed.  Some have argued that private donations can be considered as an indirect form of states’ assistance because tax exemptions or credits associated with such donations include an element of a state concession.[25]

According to the attached country reports, the United Kingdom was by far the largest donor of such aid, with an estimated US$17,000M given for 2009–2010, followed by Sweden, Finland, Germany, and France.  The lowest amount, US$18M, came from Norway.  This contrasts with governmental aid from Norway, which is the highest of any surveyed country. 

C.  Geographic Focus

A survey of the geographic focus of foreign aid activity, represented in Maps 6–9 (Appendix A), partially reflects donor countries’ geopolitical interests.  The Russian Federation, for example, has directed its foreign aid assistance to neighboring countries, mostly members of the former Soviet Union.  Assistance to other regions, focusing on specific sectors of industry and the public sector, was mainly formulated under the influence of the Russian Federation’s presidency of the G8 in 2006.

A geographical focus is also reflected in the policies of Kuwait, which for the fiscal year 2009/2010 contributed 53.94% of its total aid to the Arab countries, and the rest to countries in Africa, Southeast Asia, the Pacific region, Europe, Latin America, and the Caribbean.  Israel, a country that has entered into regional peace agreements with some of its neighbors, refocused its aid from Africa and Asia, which were the focus during the 1970s and 1980s, to Egypt, Jordan, and the Palestinian Authority in the mid to late 1990s.  South Africa, a country that has undergone significant transformation since the end of apartheid eighteen years ago, has also engaged in foreign development assistance with a focus on other African countries.

A preference in favor of assisting neighboring countries was also found in Australia and in New Zealand, countries that primarily provide aid to East Asia and the Pacific region.  Such preference is also found in India, where the focus is on neighboring countries such as Bhutan, Afghanistan, Nepal, and Burma.  In the last decade, however, India has reportedly attempted to broaden its influence through aid to Africa.  Like other Asian countries, Japan and South Korea have historically aided countries in the region.

In addition to a geographical focus on neighboring countries, this study also found that former colonizing powers, such as France, tend to favor assistance to their former colonies; countries that still have overseas territories, such as the UK, give priority assistance to these areas.

D.  Substantive Focus Areas

Areas of contribution vary among the countries surveyed.  Whereas some countries tend to focus on health, education, food security, good governance, and economic growth, others tend to focus on professional training and technical assistance, development of energy sources, and agriculture in recipient states.

The major objective of the foreign aid policy of the EU is the reduction and the eventual elimination of poverty.  In pursuing its foreign aid policy, the EU aims to promote human rights, gender equality, democracy, the rule of law, access to justice and civil society, the rights of the child and indigenous people, protection of the environment, and the fight against HIV/AIDS.  A similar focus is shared by individual countries such as Japan, Norway, Sweden, and Finland.

According to the attached country reports, Finland, Norway, and Sweden give special attention to gender equality; Israel provides rural-area training programs specifically for women.

The reports on the EU and Finland as one of the EU Member States specifically highlight promoting the rights of the child in foreign aid recipient countries; the report on Israel additionally lists youth programs and early childhood education as areas of prioritization of such aid.

E.  Selection of Recipients

The survey indicates donors’ prioritization of recipients based on general principles of poverty status as well as the aid’s potential effectiveness.  Such prioritization is applied in Australia, Finland, Sweden, the UK, and the EU as a community.

Finland and Germany also consider recipients’ political situations and respect for human rights as determining factors in the prioritization of aid.  France funds emerging market countries such as Brazil and China.  Brazil, a recipient as well as a donor, selects aid recipients based on whether they share similar social and economic problems as those of Brazil itself.

F.  Policy Considerations

Countries surveyed view foreign aid as contributing to both regional and to global economic and security interests.  The Australian government, for example, has agreed to the following core purpose statement relating to Australia’s aid program:

The fundamental purpose of Australian aid is to help people overcome poverty.  This also serves Australia’s national interests by promoting stability and prosperity both in our region and beyond.  We focus our effort in areas where Australia can make a difference and where our resources can most effectively and efficiently be deployed.[26]

Finland’s policy of foreign aid is said to include the provision of “support for peace-building processes.”[27]  South Africa’s current assistance programs similarly emphasize cooperation with African countries through promotion of conflict resolution.  South Africa’s assistance disbursement patterns further show that its aid policy favors peacekeeping assistance in addition to education.[28]

A concern for regional stability is specifically expressed by Japan’s current Official Development Assistance Charter, which provides that “[t]he objectives of Japan’s ODA are to contribute to the peace and development of the international community, thereby helping to ensure Japan’s own security and prosperity.”[29]

According to the Russian Federation’s International Development Assistance (IDA Concept), its economic and political interests will be met by “strengthening Russia’s international position and credibility; stabilizing [the] socioeconomic and political situation in the partner countries; establishing a belt of good neighborliness; prevent[ing] the occurrence of potential focal points of tension and conflict, primarily in the regions neighboring Russia; [and] creating a favorable external environment for Russia’s own development.”[30]

The focus on developing diplomatic relations plays an important role in the policies of Brazil and Israel.  Although Brazil is generally said to provide aid to foreign countries independent of any conditions or political goals in exchange for grants, the Brazilian Agency for Cooperation defines technical assistance “as a contribution to the strengthening of Brazilian relations with developing countries.”[31]

Israel’s selection of recipients is similarly viewed as furthering diplomatic goals, including the use of development cooperation to forge bonds of peaceful cooperation with Israel’s neighbors based on its peace agreements.

Although representing a small part of its total ODA, France has instituted a special program that gives ODA preferential treatment to countries that have signed agreements with France for the concerted management of migratory flows, in an effort to facilitate the management of migratory flows and encourage immigrants to voluntarily return to their countries of origin.[32]

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V.  Legal Framework

A.  Implementing Agencies

Some countries surveyed, as well as the European Union, have special agencies that provide advice on and implement aid policies and programs.  These agencies usually enjoy discretion in spending ODA appropriations, subject to guiding policies and legal restrictions.  Although dedicated to planning, coordinating, developing, and delivering aid programs, ODA agencies are often not the only ones handling foreign development assistance in their countries; some aspects of ODA may be handled by other agencies.

Examples of countries that have dedicated agencies for foreign development assistance include Australia, Brazil, France, Germany, Japan, Norway, and the UK.  In addition, special departments for ODA exist within the Ministries of Foreign Affairs (MFAs) of New Zealand, Finland, and Israel.  These departments work on policy development, planning, financing, and other activities relevant to foreign aid.  Both Finland and Israel utilize the services of public companies to implement various ODA tasks.  In South Korea some aspects of ODA planning and implementation are shared between the MFA and the Ministry of Strategy and Finance.  In addition, about thirty institutions, including national government agencies and municipal governments, participate in the execution of ODA programs.

Instead of government agencies or ministries’ departments, Kuwait and Saudi Arabia conduct their international development assistance through public institutions governed by boards of directors.

At the time the reports on the Russian Federation, South Africa, and India were completed (in November 2011 and September 2011, respectively), these countries did not have a specialized government agency for development assistance.  Their delivery of ODA was therefore fragmented among many organizations and lacked centralized implementation.  In the Russian Federation, however, plans to establish such an agency were announced by the Finance Ministry on August 26, 2011.  The agency is expected to be subordinate to the Ministry of Finance and to coordinate its activities with the Ministry of Foreign Affairs.

B. Restrictions

In 2001 the DAC recommended the untying of ODA to the least developed countries.  The goal of untying ODA was also recognized by the Paris Declaration on Aid Effectiveness as a commitment designed to get “better value for money.”[33]  In 2008 at HLF3 in Accra the OECD Development Assistance Committee (DAC) further agreed to extend the original 2001 recommendation to cover additional countries.[34]  The concept of untying aid was again reaffirmed at HLF4 (Busan, 2011).[35]

A review of the policies of the countries surveyed, however, indicates that in 2008, 41% of German technical assistance was provided in the form of tied aid; in the Russian Federation that percentage for 2008 was estimated at approximately 25%.  Data indicates that France has already untied up to 91% of its total aid; Australia and the United Kingdom claim to have untied 100% of their ODA.

A review of additional current restrictions imposed on development assistance by the countries surveyed indicates the continued existence of limitations related to dual use and to prohibitions on exports in violation of military embargoes (e.g., Finland); or to export to hostile states (e.g., France, Israel, and the UK).

France links ODA to a requirement from the recipient state to promote democratic values, the rule of law, and human rights and principles as guaranteed by the UN Charter and by inter-national law.  Norway specifically conditions aid by requiring “gender-equal” implementation.

C.  Oversight

Countries surveyed maintain a variety of systems of ODA oversight.  These include an internal annual performance report, such as in Australia; an audit by a national auditor or state comptroller, as is the case in Finland, Israel, New Zealand, and South Africa; a governmental audit, as in Japan and the Russian Federation; an audit by the ODA agency itself, as is the case in South Korea; or a combination of national, parliamentary, ministerial, and judicial audits, as is the case in France, Germany, Sweden, and the United Kingdom.

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VI.  Regulation of Private Contributions

To encourage private donations, Australia authorizes donors to receive tax deductions under specified conditions relating to the identity and operation of the NGO concerned.  Australia also grants income and other tax concessions and exemptions to NGOs that are involved in foreign aid.  Israel, Japan, New Zealand, Norway, the Russian Federation, and South Africa similarly provide for tax deductions or credits to qualified charitable organizations.  The UK provides a tax refund for registered domestic charities under certain circumstances.

Donations to the Red Cross Society of China (RCSC) for the purpose of international humanitarian aid may trigger a full deduction for the purpose of corporate or personal income tax, provided that the RCSC meets the qualifications for accepting donations.

The French General Tax Code provides for a number of tax incentives for private contributions.  These include tax credits for individual donations to officially approved public-interest and charitable organizations for recipients located in the EU, Norway, or Iceland; and for donations to organizations that provide food, lodging, and health care.  French law further exempts donations from estate tax, and reduces corporate tax for donations to nonprofit organizations.

German law exempts nonprofit corporations, associations, and foundations from corporate income tax liability and allows individuals and corporations to deduct a certain percentage of their annual income for qualifying “nonprofit purposes,” including for development aid.  Alternatively, such bodies may elect to be limited in their qualifying nonprofit spending.  Individual taxpayers also enjoy certain tax deductions over a one- to ten-year period if they donate funds toward the establishment of a charitable foundation.  As preconditions for tax benefits Germany requires proof that the aid enhances its image and that donor organizations do not engage in subversive or extremist conduct.  These two requirements are controversial and their constitutionality has been challenged by the Tax Authority.[36] 

It is important to remember that countries’ export rules also apply to development aid, just as those rules apply to other types of goods and services.  Development aid is therefore subject to dual use restrictions in some countries—for example Sweden and Finland.

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VII.  Foreign Aid Appropriations Process

An ODA budget allocation is usually included in the surveyed countries’ annual budget bills, which are typically proposed by their governments for parliamentary approval based on the advice and submissions by executive agencies and ministries.  Several variations exist, however, as summarized below.

A.  ODA as an Independent Budget Allocation(s)

In some countries, such as in Australia, ODA is an independent item in the annual Budget and is separate from that of the Department of Foreign Affairs and Trade.  The Australian agency for development, AusAID, prepares its own advice and documentation in support of its request for annual appropriation.

New Zealand similarly has a separate appropriation for ODA in its appropriation bill and any supplementary estimates bills.  Following a review of ministerial and executive agencies’ proposals, the New Zealand Cabinet makes final budget decisions according to the government’s budget strategy and submits its bill for parliamentary approval.  New Zealand ODA budget allocations include funding for multilateral and bilateral aid.  In addition to the specified ODA budget, other agencies may receive ODA-related funding as part of their own appropriations, particularly the New Zealand Police and New Zealand Defence Force.

Swedish budget allocations for ODA are also specified in the annual budget law, based on a governmental request.  After approval, ODA is distributed by the government to implementing agencies that are notified by “letter of appropriation” of their relevant allocation of both bilateral and multilateral aid, as well as administrative costs.

Instead of a single designation of ODA, the French government presents its draft Finance Law in the form of major public policies, called “missions,” to be examined and approved by Parliament.  In 2011, French ODA comprised twenty-three programs that were distributed among ministries.  Additional French ODA expenditures can be found under other missions and programs whose resources are only partly earmarked for development assistance.

While specifically allocated in its annual budget laws, ODA allocations in Germany frequently employ commitment plans extending three to five years, which may include reservations allowing the Federal Cabinet to block funds if other contributor countries do not live up to their obligations.  The consent of parliamentary committees may sometimes be required to unblock such funds.[37]

B.  ODA Funded by Agencies from Their Appropriated Budgets

Unlike countries where ODA is either listed as an independent item or as an item in a yearly appropriations bill, in several countries surveyed ODA funding is derived from the general appropriations to agencies that dispense ODA.

In the UK, for example, the ODA budget is not specified in the annual budget but rather constitutes a part of the budget allocation for the Department for International Development. In Finland, ODA likewise constitutes a component of the budget allocated to the Ministry of Foreign Affairs.

Israel’s foreign aid budget is allocated to a number of government agencies, including the Bank of Israel, the Foreign Ministry (MASHAV), the Ministry of Finance, the Ministry of Industry and Trade, and the Ministry of Labor, among others.  The budget is set according to a government plan and is discretionary.

Similarly, the Russian Federation’s ODA is composed of budget allocations to various official bodies and ministries based on approval of the government’s appropriation bill.  ODA appropriations involve the submission of yearly proposals by different federal agencies to the Ministry of Finance based on ODA volumes agreed upon with the Ministry of Foreign Affairs, together with each agency’s justification for the inclusion of its proposals in the long-term financial plans and the federal budget.

In India, funding for foreign assistance programs is proposed in an appropriation bill submitted by the Ministry of Finance (MoF) based on multiple ministries’ proposals.  Funding requires parliamentary approval.  The MoF’s expenditure proposal for 2010‑2011 included separate allocations to multinational organizations, and for multilateral and bilateral cooperation agreements.

Additional countries where ODA allocation amounts are not clearly identified include the emerging market countries of Brazil and China.  In Brazil there are more than 100 institutions of the Brazilian federal government, ministries, and related entities that are directly involved in international cooperation.

Similarly, in China each department authorized to handle respective foreign aid matters under the State Council draws up its own budget for foreign aid projects separately every year and submits it to the Ministry of Finance for examination, and then to the State Council and the National People’s Congress for approval and implementation.  Each department controls and manages its own funds for foreign aid projects in its budget.

C.  ODA Through Public Institutions Governed by Board of Directors

Kuwait and Saudi Arabia have other arrangements for allocating ODA.  Kuwait channels its ODA through the Kuwait Fund for Arab Economic Development, a public institution, based on its charter.  Similarly, Saudi Arabia distributes ODA according to decisions by the Board of Directors of the Saudi Fund for Development.  In addition, both countries contribute to regional and international development institutions.[38]

D.  ODA Combined with Other Financial Sources

In South Korea the ODA budget supports the activities of the Ministry of Foreign Affairs and Trade (MOFAT), which controls grants and technical cooperation, as well as of the Ministry of Strategy and Finance (MOSF), which is responsible for loans to developing countries.  The South Korean budget for development assistance consists of several sources: the government’s general and special budget account for loans and funds from other financial sources, such as contributions from governmental funds, deposits from the National Bond Management Fund, and profit earned from the operation of the Economic Development Cooperation Fund of Korea’s Export-Import Bank.  South Korea’s allocation of ODA from government funds is included in the government appropriation bill based on proposals made by ministries and agencies to the Ministry of Planning and Budget.  The appropriation bill has to be approved by both the State Council and National Assembly.

Japan’s development assistance budget incorporates four financing sources: the General Account, the Special Account, issuance of government bonds, and fiscal loans and investments.  The General Account portion of funding is approved by the Diet (Japan’s Parliament) based on requests submitted by different ministries.  In 2010 the General Account consisted of 35% of the gross ODA budget.[39]


In general, annual EU budgets are based on a multiannual financial framework (MFF) that is agreed upon by the European Parliament, Council, and Commission in an inter-institutional agreement.  The MFF establishes the annual limits on appropriations in the EU budget for the various EU policy areas and sets an annual ceiling on payments and commitments.  In June 2011, the European Commission proposed a budget for the period 2014–2020.[40]  The total amount dedicated to foreign aid in the proposal was €70 million (about US$92.06 million).[41]

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VIII.  Other Types of ‘Aid’

In addition to ODA allocations, countries have contributed to foreign aid in a variety of ways.  Most countries surveyed, as well as the European Union, contributed emergency aid beyond their ODA appropriations.

Most countries surveyed have also extended scholarships to foreign students.  In addition, Australia and New Zealand have operated guest worker programs.  These countries as well as Finland, the Russian Federation, Sweden, and South Korea facilitated remittances.  China and the European Union authorized debt relief.

Trade-enabling policies can also be viewed as additional means of foreign aid.  For instance, the Swedish project Kosmopolit allocates special funds to stimulate and increase foreign trade with immigrants’ native countries.[42] 

While not allocating funds specifically for such a purpose, Australia recognizes that a rules-based multilateral trading system and freer trade and investment are of great benefit to developing countries.  Trade-enabling policies therefore form part of the Australian overall approach to foreign policy and international development.

Among health-related types of aid, the United Kingdom provided financing to the Advance Market Commitment (AMC), which aims to create a market for vaccines in developing countries by creating incentives for pharmaceutical companies “to invest in research, development and production capacity for new vaccines that serve the poor.”[43]

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IX.  Concluding Remarks

The list of donors to foreign development aid has expanded in recent years beyond the traditional donor countries to include new emerging markets.  Some countries appear to be both recipients as well as donors of aid.  Such countries’ contributions naturally fall into different geographic and substantive categories than those of donor-only countries.

The accompanying individual reports illustrate the experience gained by eighteen countries and by the European Union in formulating ODA policies and legislation and in streamlining their ODA activities during the past several decades.  These reports are intended to provide a comparative perspective for consideration of the issue. 

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Prepared by Ruth Levush, Coordinator
Senior Foreign Law Specialist
March 2012

[1] GIS maps utilize the geographic information system (GIS) for capturing, managing, analyzing, and displaying relevant geographically referenced information. See What Is GIS?, Geographic Information Systems, (last visited Mar. 1, 2012).  The maps in Appendix Awere produced by Colin Hess, Law Library of Congress intern, under the supervision of Professor Brian Rizzo of the University of Mary Washington, Fredericksburg, Virginia, based on information derived from the attached individual reports as well as from data posted on Feb. 6, 2012, on the OECD website, http://stats.oecd/org.

[2] See, e.g., The Agency for International Development and the Millennium Challenge Corporation: Fiscal Year 2012 Budget Requests and Future Directions in Foreign Assistance: Hearing Before the H.  Comm. on Foreign Affairs, 112th Cong. (2011),  Foreign aid has been described by the current US administration “as ‘smart power’ . . . , one that emphasizes diplomacy and development as a complement to American military power.”  Steven Lee Myers, Foreign Aid Set to Take a Hit in U.S. Budget Crisis, N.Y. Times (Oct. 3, 2011), 2011/10/04/us/politics/foreign-aid-set-to-take-hit-in-united-states-budget-crisis.html?pagewanted=all; see also David Gartner, Congress and Foreign Aid, Brookings Institution (Jan. 20, 2012), http://www.brookings. edu/opinions/2011/1005_congress_foreign_aid_gartner.aspx.  Polls have shown, however, that the majority of Americans support foreign economic aid cuts to the federal budget.  See Harris Interactive, Cutting Government Spending May Be Popular But Majorities of the Public Oppose Cuts in Many Big Ticket Items in the Budget, Harris Interactive (Mar. 1, 2012), http://www.harrisinteractive. com/NewsRoom/HarrisPolls/tabid/447/ctl/ReadCustom%20Default/mid/1508/ArticleId/972/Default.aspx.

[3] See, e.g., Clare Feikert-Ahalt, The UK: Foreign Aid and Political Pressures, In Custodia Legis (Jan. 19, 2012),  For Canada, see Budget to Cut Spending Nearly $6B Over 3 Years, CTVNews (Mar. 29 2012), ]TopStories/20120329/federal-budget-flaherty-ottawa-20120329 /; for Australia see Ben Packham & James Massola, Julie Bishop Wins in Row Over Budget Cuts, Preventing Proposed Axe for Africa Aid, The Australian (Feb. 08, 2011),, and Phil Mercer, Australian Business Group Wants Government to Cut Foreign Aid, Voice of America (Feb. 14, 2011), http://www.voanews. com/english/news/asia/Australian-Business-Group-Says-Government-to-Cut-Foreign-Aid--116148489.html.

[4] Milestones: 1776–1783, French Alliance, French Assistance, and European Diplomacy during the American Revolution, 1778–1782, United States Department of State Office of the Historian, (last visited Jan. 24, 2012).

[5] The American Revolution (1775–1783), Site for Language Management in Canada, (last visited Jan. 24, 2012).

[6] Containment and the Marshall Plan, Postwar Challenges, US History: Pre-Columbian to the New Millennium, (last visited Mar. 19, 2012).

[7] OECD, DAC in Dates, The History of OECD’s Development Assistance Committee 8 (2006 ed.)

[8] OECD, The DAC: 50 Years, 50 Highlights at 6, pdf?contentId=47072130 (last visited Mar. 26, 2012).

[9] Official List of MDG Indicators, Millennium Development Goals Indicators, United Nations, (last visited Jan. 24, 2012).

[10] Id.

[11] For additional information see Marian Leonardo Lawson, Cong. Research Serv., R 41185, Foreign Aid: International Donor Coordination of Development Assistance 4–6 (Apr. 5, 2010).

[12] Rome Declaration on Harmonisation (Feb. 2003),

[13] The High Level Fora on Aid Effectiveness: A History, OECD, Development Co-operation Directorate (DCD-DAC),,3746,en_2649_3236398_46310975_ 1_1_1_1,00.html (last visited Jan. 25, 2012). 

[14] The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action, OECD, (last visited Jan. 25, 2012).

[15] DCD-DAC, supra note 14.

[16] Id.

[17] The Accra High Level Forum (HLF3) and the Accra Agenda for Action, OECD,,3746,en_2649_3236398_43553372_1_1_1_1,00.html (last visited Jan. 25, 2012).

[18] Fourth High Level Forum on Aid Effectiveness, OECD, busanhlf4/images/stories/hlf4/OUTCOME_DOCUMENT_-_FINAL_EN.pdf (last visited Jan. 25, 2012).

[19] Id. at 3.

[20] Official Development Assistance – Definition and Coverage, OECD, document/4/0,3746,en_2649_34447_46181892_1_1_1_1,00.html#Definition (last visited Feb. 3, 2012).

[21] Id.  See also Is It ODA?, OECD (Nov. 2008),

[22] The 0.7% Target: An In-Depth Look, UN Millennium Project (2006), http://www.unmillennium

[23] Figures quoted in this section reflect data derived from the OECD website, (Feb. 6, 2012), as well as the attached country and EU reports (individually dated).

[24] Due to the absence of ODA GNI percentages for 2003, the percentage change between 2003 and 2010 is not provided.

[25] Charles O. Flickner Jr., Former Staff Director, House Appropriations Committee, Subcommittee on Foreign Operations, Statement at Woodrow Wilson Center Seminar: Is Foreign Aid Worth the Cost? (Jan. 23, 2012).

[26] See country report, Australia, infra, at 48–49.

[27] Finland’s Development Policy Programme, Ministry of Foreign Affairs of Finland (Feb. 22, 2008),; see also country report, Finland, infra, at 98, note 29.

[28] See country report, South Africa, infra, at 230.

[29] See country report, Japan, infra, at 161.

[30] See country report, Russian Federation, infra, at 212–13.

[31] See country report, Brazil, infra, at 69.

[32] See country report, France, infra, at 114.

[33] OECD, The Paris Declaration on Aid Effectiveness (2005) and the Accra Agenda for Action (2008) at 19,  The untying of aid is listed as the eighth indicator of progress under the objective of “Alignment.”  Id.

[34] Id., The Accra Agenda for Action § 18.

[35] Fourth High Level Forum on Aid Effectiveness, supra note 19, para. 18e.

[36] See country report, Germany, infra, at 131–33.

[37] Id. at 133.

[38] See country report, Saudi Arabia, infra, at 220–21.

[39] See country report, Japan, infra, at 167.

[40] News Release, European Commission Financial Programming and Budget, The Commission Proposes the Next Multiannual Financial Framework, 2014–2020 (June 29, 2011), article_en.cfm?id=201106292310.

[41] See Annex of Proposal for a Council Regulation Laying Down the Multiannual Financial Framework 2014–2020, COM (2011) 398 final (June 29, 2011), 1420/proposal_council_regulation_COM-398_en.pdf; see also country report, European Union, infra, at 40–42.

[42] See country report, Sweden, infra, at 257.

[43] See country report, United Kingdom, infra, at 278.