Development assistance from external sources, also referred to as foreign aid, has long been an important issue in today's society. The risk of supporting countries and governments who may be corrupt is an ever-present one any time a country opts to lend aid to another. No matter the good intentions behind such actions, risk is always present for countries who choose to lend such help that their debtors will ultimately fail to deliver on the promise of financial restitution in times to come. Furthermore, countries promising Official Development Assistance (ODA) do not always deliver on their promises to those who stand in need of such aid and are depending upon the promise of it.
The Importance of ODA in Domestic and Foreign Affairs
The primary goal of lending developmental aid to another country is to help lessen poverty and enhance the development of the economic situation of the countries who are in need of assistance. Net Official Development Assistance (ODA) includes the most important parts that make up such aid. When the net ODA is given based on per capita distribution, it typically will consist of the disbursement of loans made on concessional terms. Under these terms, the net of the repayments of the principal and the grants by official agencies which are members of the Development Assistance Committee (DAC) will be regulated by fellow members of that same committee. There may also be international institutions involved, as well non-DAC states. The purpose, regardless of the DAC affiliation of the recipient, is to initially ensure the enhancement of economic development and the overall welfare of the countries and territories of those who are to receive ODA by members of the DAC list. The figure is calculated by, then, dividing the net ODA received by the midyear estimation of the population of the receiving state. ODA includes such items as loans with grant elements with a percentage of at least 25 percent as well, with a discount rate of 10 percent also being calculated as part of this figure. Unfortunately, some of the countries who have made a promise to assist haven't kept that promise. The risk may be due to the idea that some of that countries who need to optimize their economy never actually use it for that purpose. At times, a misappropriation of funds may take place, among other common reasons for shortcomings.
Countries with Markedly Low Net per Capita ODA
The country with the lowest relative ODA today is without question Indonesia, with $0.21 USD/received per capita in annual ODA. Coming in second is Argentina, at $0.73 USD/received per capita in annual ODA. The top 5 is rounded out by Venezuala, Iran, and Panama, at $1.16, $1.70, & $1.78 received per capita in annual ODA, respectively. A common theme among most of the countries in the bottom 25 is that they generally have a high degree of strife in governmental affairs. This includes poor international diplomacy that has left them with few allies to source aid from, and internal conflicts that leave other nations hesitant to proffer assistance for fear that funds will be misallocated or otherwise lost amidst the turmoil.
Pakistan: A Case Study in ODA
Among the countries with low levels of net official development assistance per capita today, we see the state of Pakistan in 23rd place, receiving $11.94 annually per capita in ODA. After Pakistan was created in 1947, the United States promised to assist in the economic development of the country, and began to offer aid for social welfare, military defense, and infrastructural purposes alike. Between 1951 and 2011, the United States has given the Pakistan access to funds of over $60 billion. However, more recently, the figure has declined and assistance offered to Pakistan has arrived at a much slower pace. The United States had decided to make an attempt to renew the ODA's structure to help facilitate matters in Pakistan's economy and development. Regardless, the ultimate result relies upon Congressional approval for such requests to be fulfilled.
How Can We Improve ODA Internationally?
When money is given to a country in need, the country then has to form a system in which to spend the money to their greatest benefit. Countries such as Pakistan have attempted to meet this challenge by appropriating the funds they do have to their advantage. When corruption and natural disasters occur, however, such challenges become even more difficult. The protection of a country domestically by means of providing internal security for all citizens is a factor as well.
Countries with the smallest net official development assistance per capita have many challenges when their financial activities are set into motion. The country which lends the money wants to ensure that the funds will be wisely utilized, spent in the best possible way to optimize the economy. For those countries who are recipients of ODA funding, there are often complications in determining where to allocate the funds for the same reason. Initially, countries on both sides of the equation do indeed aspire to reach the same goal. The challenge, then, often comes down to putting the most beneficial plan in place to ensure that improvements will occur for countries who are in need of assistance.