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Ghost of 0.7%: Origins and Relevance of the International Aid Target

Author

Listed:
  • Michael Clemens

    (Center for Global Development)

  • Todd Moss

    (Center for Global Development)

Abstract

The international goal for rich countries to devote 0.7% of their national income to development assistance has become a cause célèbre for aid activists and has been accepted in many official quarters as the legitimate target for aid budgets. The origins of the target, however, raise serious questions about its relevance. First, the 0.7% target was calculated using a series of assumptions that are no longer true, and justified by a model that is no longer considered credible. When we use essentially the same method used to arrive at 0.7% in the early 1960s and apply today’s conditions, it yields an aid goal of just 0.01% of rich-country GDP for the poorest countries and negative aid flows to the developing world as a whole. We do not claim in any way that this is the 'right' amount of aid, but only that this exercise lays bare the folly of the initial method and the subsequent unreflective commitment to the 0.7% aid goal. Second, we document the fact that, despite frequent misinterpretation of UN documents, no government ever agreed in a UN forum to actually reach 0.7%—though many pledged to move toward it. Third, we argue that aid as a fraction of rich country income does not constitute a meaningful metric for the adequacy of aid flows. It would be far better to estimate aid needs by starting on the recipient side with a meaningful model of how aid affects development. Although aid certainly has positive impacts in many circumstances, our quantitative understanding of this relationship is too poor to accurately conduct such a tally. The 0.7% target began life as a lobbying tool, and stretching it to become a functional target for real aid budgets across all donors is to exalt it beyond reason. That no longer makes any sense, if it ever did.

Suggested Citation

  • Michael Clemens & Todd Moss, 2005. "Ghost of 0.7%: Origins and Relevance of the International Aid Target," Development and Comp Systems 0509006, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpdc:0509006
    Note: Type of Document - pdf; pages: 20
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. 0.7% of GDP Aid Target: Where Did It Come From?
      by Emmanuel in International Political Economy Zone on 2010-04-27 04:09:00

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    Cited by:

    1. Tierney, Michael J. & Nielson, Daniel L. & Hawkins, Darren G. & Roberts, J. Timmons & Findley, Michael G. & Powers, Ryan M. & Parks, Bradley & Wilson, Sven E. & Hicks, Robert L., 2011. "More Dollars than Sense: Refining Our Knowledge of Development Finance Using AidData," World Development, Elsevier, vol. 39(11), pages 1891-1906.
    2. David Roodman, 2006. "Aid Project Proliferation and Absorptive Capacity," Working Papers 75, Center for Global Development.
    3. repec:unu:wpaper:wp2012-69 is not listed on IDEAS
    4. Cepparulo, Alessandra & Giuriato, Luisa, 2009. "Aid Financing of Global Public Goods: an Update," MPRA Paper 22625, University Library of Munich, Germany.
    5. DeCanio, Stephen J. & Fremstad, Anders, 2011. "Economic feasibility of the path to zero net carbon emissions," Energy Policy, Elsevier, vol. 39(3), pages 1144-1153, March.
    6. Acharya, Arnab & Martínez-Álvarez, Melisa, 2012. "Aid Effectiveness in the Health Sector," WIDER Working Paper Series 069, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    aid; foreign aid; development; mdg; mdgs; millennium development goals; oda; united nations; un; overseas development assistance; africa;

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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