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Is the 0.7% goal of ODA/GNI still adequate for the recipients? An overview of the recipients’ situation with a focus on Africa

Author

Listed:
  • Manuel Ennes Ferreira
  • Bárbara Muniz

Abstract

This paper aims to verify if the international aid target of 0.7% of the rich countries’ national income destined to development aid is still adequate in the current world conditions. Hence, it investigates the target’s origins, the main economic theories and the political context that underpinned it. The theoretical review showed that the economic theories and models that supported the target and its aid rationale are mostly considered outdated in the academic field. The empirical analysis used the Two-Gap Model methodology - with the same assumptions made to create the target in the 1960s but using current data - to estimate the target's values for the years 2014-2019. The results showed that on almost all assumptions, the amount of aid needed for the development of poor countries would be less than the target suggests. Moreover, when analyzing different regions, distinct figures were found for the target, which reveals that the 0.7% target has wrongly generalized the developing countries’ needs.

Suggested Citation

  • Manuel Ennes Ferreira & Bárbara Muniz, 2022. "Is the 0.7% goal of ODA/GNI still adequate for the recipients? An overview of the recipients’ situation with a focus on Africa," Working Papers Department of Economics 2022/04, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    • Handle: RePEc:ise:isegwp:wp042022
    as

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    References listed on IDEAS

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    1. Bacha, Edmar L., 1990. "A three-gap model of foreign transfers and the GDP growth rate in developing countries," Journal of Development Economics, Elsevier, vol. 32(2), pages 279-296, April.
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    4. Andy Sumner & Jonathan Glennie, 2015. "Growth, Poverty and Development Assistance: When Does Foreign Aid Work?," Global Policy, London School of Economics and Political Science, vol. 6(3), pages 201-211, September.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Aid; ODA/GNI; DAC-OECD; dual-gap model; development. JEL Classification: F35; F63; O21; O47;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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