The Development Co-operation Directorate (DCD) is the Secretariat of the DAC and is the OECD Directorate within which the DAC operates.[2]
Members
As of 4 July 2023, there are 32 members of DAC (see list below), including the European Union which acts as a full member of the committee. In addition, there are "Participants" and "Observers". The listed Participants at this time are: Azerbaijan, Bulgaria, Kuwait, Qatar, Romania, Saudi Arabia and the United Arab Emirates. The Observers are: World Bank, the IMF, UNDP, the African Development Bank, the Asian Development Bank, and the Inter-American Development Bank.[3]
Known at first as the Development Assistance Group (DAG), the committee was set up on 13 January 1960 under the auspices of the OECD's forerunner, the Organisation for European Economic Co-operation (OEEC). Its first meeting took place in Washington, D.C. (U.S.A.) on 9–11 March 1960, chaired by ambassador Ortona, Italy.[1] A primary concern of the DAG, addressed at its second (July 1960) and third (October 1960) meetings, was to achieve accurate and comparable data reporting by its members on their aid flows to developing countries. In March 1961, the OEEC published the first comprehensive survey of The Flow of Financial Resources to Countries in Course of Economic Development, 1956-59. This was followed by annual reports until 1964.[1]
On 23 July 1961 [4] a Ministerial Resolution decreed that upon the supersession of the OEEC by the OECD, the DAG would become the DAC, and these changes came about in September 1961. The resolution also spelled out the DAC's mandate in five points, the first of which read:
The Committee will continue to consult on the methods for making national resources available for assisting countries and areas in the process of economic development and for expanding and improving the flow of long-term funds and other development assistance to them.
The origins of the so-called "DAC Secretariat" or DCD are as follows. A Development Department (DD), under the direction of Assistant Secretary-General Luciano Giretti of Italy was established within the OECD Secretariat in 1961. It consisted of two branches, a Technical Co-operation Branch and a Development Financial Branch. The latter became the Development Assistance Directorate (DAD) in 1969 and then the Development Co-operation Directorate (DCD) in 1975.
Along with the institution of the DAG/DAC, several developments in the early 1960s completed the institutional framework for aid that is still largely in place. In 1960, the World Bank opened a subsidiary, the International Development Association (IDA) to provide loans to developing countries on easier terms than the Bank's normal lending. The aid agencies of the large donor states were also set up at this time.[6]
Canada created an "External Aid Office" in 1960, which in 1968 became the Canadian International Development Agency (CIDA). France was the first country to establish a Ministry for Co-operation to be responsible for assistance to independent, mainly African, developing countries in 1961, the predecessor to the French Development Agency, Agence Française de Développement (AFD). Enactment in the United States in 1961 of the Foreign Assistance Act as the basic economic assistance legislation, established the United States Agency for International Development (USAID).
Later the rest of the member states followed, either establishing an aid agency under the command of its Foreign ministry or as a separate entity.
Functions
The work of the committee concentrates on
how international development cooperation contributes to the capacity of developing countries to participate in the global economy, and
the capacity of people to overcome poverty and participate fully in their societies.
To this end, the committee holds regular High Level Meetings and Senior Level Meetings where the ministers or heads of the national aid agencies and other development partners meet to discuss issues related to development and adopt recommendations and resolutions.
The member states are expected to have certain common objectives concerning the conduct of their aid programmes. The committee therefore issues guidelines on the management of development aid. It also publishes a wide range of reports, among them the annual Development Co-operation Report. In addition, as member states recognise the need for greater coherence in policies across sectors that affect developing countries, an OECD-wide initiative on Policy Coherence for Development explores ways to ensure that government policies are mutually supportive of the countries' development goals.
Advisory Group on Investment and Development (AGID), a joint subsidiary body with the OECD's Investment Committee
Since March 2023, its Chair is Mr. Carsten Staur, former Danish Ambassador to the OECD and UNESCO.
Achievements
As already noted, the DAC is a forum for the coordination of aid efforts. One of the principal questions that has emerged over the years was how to ensure that its member states contributed equal shares of development aid. In the early 1960s, some member states contributed a significantly larger share of their GNP than others.[8] To encourage that the aid effort was equally divided, the DAC quickly recognized the United Nations Conference on Trade and Development recommendation on having an International Aid Target, proposed in 1964.[9] The issue of the aid burden-sharing eventually led to the first report on "Total Official Contributions as Per Cent of National Income" in 1967, something that was accompanied by closely negotiated explanations.[10]
Another early question was what a donor could include when it reported its aid efforts to the committee. It was necessary to make the distinction between official transactions that were made with the main objective of promoting the economic and social development of developing countries, as opposed to other official flows (OOF) like military assistance. To that end, the committee adopted the concept of Official Development Assistance (ODA) in 1969. The DAC revised the definition in 1972, which has remained unchanged since then,[11] except for changes in the list of recipients for which it can be counted.
2000s
At the DAC High Level Meeting in May 2000, members agreed to untie their aid (with the exception of technical cooperation and food aid) from January 2001 onwards to the Least Developed Countries and to promote buying goods and services locally in these countries, rather than in donor countries. This agreement was extended in 2008 to 39 highly indebted poor countries (HIPCs). As a consequence, in 2008 80% of total ODA (minus administrative costs) was provided untied, 4% tied and of 16% the tying status was not reported.[7]
A 2009 independent evaluation of DAC members' policies and practices towards untying by the Danish Institute for International Studies concluded that on the basis of the available information, the overall picture was positive. The report recommended more frequent and transparent reporting by donor countries on the status of tied aid to the OECD and DAC, removal of obstacles to untying on the donor side, and initiatives to encourage competition for aid-supported contracts on the recipient side.[12]
As a forum for and by the bilateral donors, each donor's aid efforts are evaluated in peer reviews where major findings and recommendations are presented. Each DAC member country is reviewed roughly once every five years.[13][non-primary source needed]
More recently, the DAC has been involved in questions related to aid effectiveness. At the DAC High Level Meeting in April 2005, participants adopted the Paris Declaration on Aid Effectiveness. Progress in implementing the Paris Declaration commitments was reviewed at the third High Level Forum on Aid Effectiveness in September 2008 in Accra Ghana, an event co-ordinated by the DAC's Working Party on Aid Effectiveness, the government of Ghana and the World Bank.[14]The International Health Partnership (IHP+) was created in 2007 in order to put the Paris and Accra principles on aid effectiveness into practice.[failed verification][15] At the Fourth High Level Forum on Aid Effectiveness, held in Busan, Korea in 2011, participants endorsed the "Busan Partnership for Effective Development Co-operation," which expanded on the Paris Declaration and established the Global Partnership for Effective Development Co-operation. In April 2014, the Global Partnership -- for which the OECD and UNDP assure a joint support team -- held its first High Level Meeting in Mexico City. UNCTAD has noted that, since the turn of the century, DAC has become one of the dominant institutions with regards to development aid.[16]
The Center for Global Development, a non-profit think-tank in Washington DC, created the Commitment to Development Index which ranks and evaluates the achievements of DAC countries to the developing world. It measures the "development-friendliness" of the donor nations, moving beyond standard comparisons of Official Development Assistance. The Index quantifies a wide range of policies on seven indicators: aid, trade, investment, migration, environment, security, and technology. In 2009, Sweden and Denmark received the highest rankings, while Japan and South Korea fell toward the bottom.[17]
In 2010, South Korea became the first major recipient of ODA from the OECD to turn into a major donor when it became a DAC member. In 2013, the country provided over $1.7 billion in aid.
The European Union accumulated a higher portion of GDP as a form of foreign aid than any other economic union.[18]
The DAC’s 2020 communiqué notes by members’ efforts in responding to the COVID-19. For civil society organizations, “the OECD-DAC continues its narrative of leveraging the private sector, with only some mention of safeguards in private sector involvement”. [19]
Statistics
Since its inception, one of the DAC's main functions has been to collect and publish statistics on aid flow. As noted in the Achievements section of this article, in 1969 the DAC's members adopted a criterion for calculating their aid contributions. They called the resulting measure of aid contributions Official Development Assistance (ODA). It has become widely used by other organisations, and scholars, as a general measure of aid; for example, the United Nations and the World Bank both commonly use ODA as calculated by the DAC as their measure of aid. This is in spite of the fact that it is not an entirely comprehensive measure. It includes only aid from government sources; aid from private sources, including NGOs, is not counted. About ten to fifteen percent of aid comes from private sources.[20]
ODA includes developmental and humanitarian aid, the latter being much the smaller of the two.[21] It does not include aid for military use. It includes both outright grants and loans, as long as the loans are on significantly easier terms than the commercial norm: the DAC calls these "concessional" loans. The change to the definition of ODA in 1972 involved tightening the definition of "concessionality". The DAC defines concessionality according to a mathematically computed "grant element"; loans with a grant element of at least 25 percent are considered concessional and count as ODA. This criterion has not been changed since 1972.[22]
Loans made in a given year that are counted towards ODA are counted net of repayments made that year on the principal of old loans, but not net of interest payments. Therefore, after a loan has been paid back its overall effect on ODA figures is zero (Its overall direct fiscal effect on the recipient is of course that the recipient has had to pay back some amount of interest).
Debt forgiveness is counted explicitly as a category of ODA.
The DAC computes ODA from data submitted by its member states. It also has collected some data from its participants and observers, which are often significant: in fact their donations are roughly in line with that of the DAC countries' as a fraction of donor gross national income as can be seen in the List of development aid country donors.[23]
Only aid to countries on the DAC List of ODA Recipients counts as ODA. Initially it included most developing countries. After the fall of Communism in Europe in the early 1990s, the Eastern European countries and the Soviet Union, which had formerly been donors of aid,[24] became aid recipients, albeit wealthier ones than most developing countries. Because of this and because some formerly poor East Asian countries were now middle-income, the DAC in 1993 divided the list of recipients into two parts, on the basis of national income. Only aid to countries in the lower income part (Part I) counted as ODA. Aid to countries in the upper income part was put into a new category called Official Assistance (OA), separate from ODA. This bifurcated list was abolished in 2005, however, because of the confusion and accounting difficulties that were occasioned when countries moved from one part to the other of the list. The current list (2007) includes all countries with per capita GNI less than $11455, except that it excludes countries that are members of the G8, or the EU, or that have a firm accession date for EU membership. Movement of countries on or off the list has caused the DAC to retroactively change past ODA figures for some group categories.[25]
Besides ODA, the DAC keeps statistics on three other major categories:
Other Official Flows (OOF) are transactions by the official sector (not private) that are not "development-motivated" or not concessional. The main items in OOF are export credits, official sector equity and portfolio investment, and debt reorganisation.
Private Flows consists mostly of investment by transnational corporations and private banks, and export credits given by industries. The figures for Private Flows and OOF are quite volatile from year to year because they represent a balance between positive and negative flows.
Net Private Grant. This is mostly aid from private sources such as NGOs.
An aid agency, also known as development charity, is an organization dedicated to distributing aid. Many professional aid organisations exist, both within government, between governments as multilateral donors and as private voluntary organizations or non-governmental organisations. The International Committee of the Red Cross is the world's second oldest humanitarian organisation and is unique in being mandated by international treaty to uphold the Geneva Conventions. The Sovereign Order of Malta, established in 1099 as the Order of St. John of Jerusalem, has an unbroken tradition of over 900 years of hospitaller activities, continuing to this day. Even in its modern guise under international law, it was recognized at the Congress of Verona of 1822, and since 1834 headquartered in Palazzo Malta in Rome, decades before the Red Cross.
Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid. The DAC first adopted the concept in 1969. It is widely used as an indicator of international aid flow. It refers to material resources given by the governments of richer countries to promote the economic development of poorer countries and the welfare of their people. The donor government agency may disburse such resources to the government of the recipient country or through other organizations. Most ODA is in the form of grants, but some is measured as the concessional value in soft (low-interest) loans.
Development aid is a type of foreign/international/overseas aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries. Closely related concepts include: developmental aid, development assistance, official development assistance, development policy, development cooperation and technical assistance. It is distinguished from humanitarian aid by aiming at a sustained improvement in the conditions in a developing country, rather than short-term relief. Development aid is thus widely seen as a major way to meet Sustainable Development Goal 1 for the developing nations.
Aid effectiveness is the degree of success or failure of international aid. Concern with aid effectiveness might be at a high level of generality, or it might be more detailed.
In international relations, aid is – from the perspective of governments – a voluntary transfer of resources from one country to another.
The Federal Ministry for Economic Cooperation and Development, abbreviated BMZ, is a cabinet-level ministry of the Federal Republic of Germany. Its main office is at the former German Chancellery in Bonn with a second major office at the Europahaus in Berlin.
Japan has been establishing its foreign aid contributors since the 1990s. The three government institutions involved in disbursing this are: the Japan International Cooperation Agency (JICA), and the Japanese Bank of International Cooperation (JBIC). This is now the nodal agency for all Japanese concessional loans, and replaced Japan Export-Import Bank (JEXIM) and the Overseas Economic Cooperation Fund (OECF) in 1999.
Japan emerged as one of the largest foreign aid donors in the world during the 1980s.
Tied aid is a kind of foreign aid. It must be spent on products & services provided by companies that are from the country providing the aid or in a group of selected countries.
The Directorate-General for International Partnerships is the European Commission department responsible for international development policy. It operates under the authority of the European Commissioner for International Partnerships, Jutta Urpilainen.
Untied aid is assistance given to developing countries which can be used to purchase goods and services in virtually all countries. It is contrasted with tied aid which stipulates that goods and services bought with it can only be purchased from the donor country or from a limited selection of countries.
United States foreign aid, also known as US foreign assistance consists of a variety of tangible and intangible forms of assistance the United States gives to other countries. Foreign aid is used to support American national security and commercial interests and can also be distributed for humanitarian reasons. Aid is financed from US taxpayers and other revenue sources that Congress appropriates annually through the United States budget process. It is dispersed through "over 20 U.S. government agencies that manage foreign assistance programs," although about half of all economic assistance is channeled through the United States Agency for International Development (USAID).
The Korea International Cooperation Agency was established in 1991 by the Ministry of Foreign Affairs of South Korea as a governmental organization for Official Development Assistance (ODA). KOICA's goal is to enhance the effectiveness of South Korea's grant aid programs for developing countries by implementing the government's grant aid and technical cooperation programs. KOICA is led by three-year-term president of the board who is appointed by the President upon the recommendation of Foreign Minister.
The East Asia Climate Partnership (EACP) is Korea's international initiative for global cooperative development. Led by the Korea International Cooperation Agency (KOICA), a Korean government agency responsible for providing overseas grant aid, the EACP helps tackle climate change in developing countries and promotes green growth in Asia.
AidData is an Aid Transparency, Information Technology, and Geocoding institute formed on March 23, 2009. Its headquarters are in Williamsburg, Virginia. Its website provides access to development finance records from most official aid donors.
The DAC Network on Development Evaluation is a subsidiary body of the Development Assistance Committee (DAC). Its purpose is to increase the effectiveness of international development programmes by supporting robust, informed and independent evaluation.
Chinese foreign aid may be considered as both governmental (official) and private development aid and humanitarian aid originating from the People's Republic of China.
Irish Aid is the Government of Ireland's official international development aid programme. Irish Aid is managed by the Development Co-Operation and Africa Division (DCAD) of the Department of Foreign Affairs (DFA). According to the OECD, Ireland’s total ODA increased in 2022, mostly due to higher in-donor refugee costs and higher contributions to international organisations. ODA represented 0.64% of gross national income (GNI). The Irish Aid programme is an integral part of Ireland's foreign policy.
Four high level forums on aid effectiveness were held between 2003 and 2011 as part of a "continuous effort towards modernising, deepening and broadening development co-operation and the delivery of aid" coordinated through the OECD. They took place at Rome (2003), Paris (2005), Accra (2008) and Busan (2011).
↑ OECD Statistics Portal >> Extracts >> Development >> Other >> Official and Private Flows. Retrieved April 2009.
↑ In 2001, of ODA from DAC members states, humanitarian aid was 4.5 percent of total ODA, the rest being primarily developmental; in 2007 it was 7.5 percent of total. Source: OECD Statistics Portal >> Extracts >> Development >> Aggregate Aid Statistics >> ODA by Sector.
↑ Helmut Führer, The Story of Official Development Assistance, sections: "1969" and "1972". Also, OECD, "The DAC in Dates", same sections.
↑ In 2005, according to DAC figures, "Arab countries" gave $1.36 billion U.S. in ODA, which was 0.44 percent of their GNI. In 2006, they gave $2.50 billion; 0.81 percent of their GNI. The DAC countries gave 107 billion (0.33 percent of their GNI) and 104 billion (0.31 percent of GNI) in those years, respectively. Formerly, OPEC aid was even more significant. In 1981 they donated $7.8 billion while the DAC countries donated 25 billion. Source: OECD Statistics Portal >> Extracts >> Development >> Aggregate Aid Statistics >> ODA by Donor. Also OECD, Development Co-operation Efforts and Policies of the Members of the Development Assistance Committee, 1982 Review, Table 1.7, p 183. Note that the 2005-2006 data are for "Arab countries" which is not exactly synonymous with OPEC.
↑ The DAC used to keep partial statistics on aid donations from the European Communist countries and the Soviet Union. For example it reported, as a rough amount, that those countries gave $2.1 billion of aid in 1981. Source: OECD 1982 op. cit., Table 1.7, p. 183.
↑ OECD, "History of DAC lists of aid recipient countries" has a good account of the history of the lists. It mentions the exclusion of G8, etc. The section, "Chronology of Changes ..." mentions the retroactive changing.
Statistics. The OECD publishes a large quantity of statistics on-line, including DAC statistics. Full access is only by subscription, but large extracts are available free.
OECD Statistics Portal is the place to start for all statistics. For the free stuff click "OECD.Stat Extracts", or try going directly to extracts:
International Health Partnership A group of partners committed to putting international principles for effective aid and development cooperation into practice in the health sector
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