The Donors’ Dilemma: Emergence, Convergence and the Future of Aid: An Introduction

This Column from Andy Sumner represents the opening contribution to Global Policy’s first e-book, The Donors’ Dilemma: Emergence, Convergence and the Future of Aid, edited by Andy Sumner. Contributions from academics and practitioners will be serialised on Global Policy until the e-book’s release in the first quarter of 2014. Find out more here or join the debate on Twitter #GPfutureofaid.

Today is the twentieth anniversary of the international day for the eradication of poverty. The day has been observed by the UN since 1993 although it originated in a Paris demo in 1987.

This year the day has a slightly different resonance to it than previous years. Why?

This year the day has a different resonance because it appears increasingly likely the new set of UN global development goals, due in 2015, will put at their fore an aspiration to end poverty, possibly in all its forms, by 2030.

Indeed, the prospects for ending poverty are good. Income per person in two-thirds of developing countries is on a convergence trajectory with incomes in the OECD (of course most have a long way to go). And just 30 countries and 10 islands remain aid dependent.

As poverty declines the remaining poor are likely to be split between middle-income countries and fragile states.

This means aid agencies could face a ‘double dilemma’:

What if remaining global poverty is increasingly focused either in countries where aid is already on the way to becoming irrelevant as domestic resources grow - such as some middle income countries - or in countries which cannot absorb aid easily and quickly – meaning many fragile states?

This is the question we have posed to a range of the great and the good inside and outside of aid agencies. Their responses will be serialized here over the next three months and collated in an e-book to be released in the first quarter of 2014.

We have said contributing authors may wish to consider various entry points. For example, authors might disagree partially or outright with the basic assumption(s) within the question above or consider the consequences for foreign aid (however defined) of relatively few very poor countries and/or very few absolute poor people by 2025-2030.

Or authors may consider the consequences for foreign aid if poverty fails to decline drastically. If this is the case it may be that many of the world’s poor live in countries where poverty is a result of inequality or poor governance.

Yet another angle is to consider the consequences for foreign aid of the continuing emergence of new donors. In this vein, authors may wish to focus on bilateral aid or consider the consequences for the multilateral aid system and/or global public goods.

Developing this a little further, one might say that looking ahead to 2025-2030 it is plausible the context for foreign aid could have three defining characteristics.

First, the group of poorest, conflict, and post-conflict countries might actually account for as few as 15-20 countries. It may be that these countries will never be financially independent entities. What does the future of foreign aid look like for countries which may be poor for the foreseeable future?

Second, most developing countries will be middle-income and some may even attain status as high-income by 2025-2030. Even if traditional – meaning OECD - donors wanted to give aid to these countries it will be insignificant as a percent of recipient GDP.

What does the future of aid look like for countries where aid is likely to be irrelevant by 2025-2030 and some of these countries may even be new donors themselves?

Further, some of these middle-income countries may also be ‘fragile states’, and thus resource constraints may not be pressing concerns as they might be in poorer fragile states. How should donors approach aid in such countries?

Third, absolute poverty could be drastically reduced if growth is strong and changes in distribution favourable. However, this may lead to a burgeoning number of people who are neither very poor nor leading secure, middle class lifestyles but something in-between. How, if at all, can development cooperation contribute in such contexts?

Finally, it is plausible, climate finance may have engulfed the traditional aid budget and possibly be on the way to replacing it. What does aid look like if it is entirely framed by climate change?

Of course the level of uncertainty looking 15-20 years ahead is enormous. Who would have predicted the global crash? A drastic slowing down of emerging economies is not just a possibility - it is the subject of a live debate right now. What one would hope is that the number of very poor countries and very poor people will fall in line with the aspirations of the international day for the eradication of poverty.

This Global Policy e-book seeks to address the various questions over foreign aid over the next twenty years. I look forward to seeing reactions to the twenty or so articles we’ll post in the coming months and hope this debate on Global Policy triggers wider discussions, not least on Twitter and other social media where many of the contributing authors can respond (#GPfutureofaid).