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

20 Pages Posted: 15 Sep 2005

See all articles by Michael A. Clemens

Michael A. Clemens

Center for Global Development; IZA-Institute for the Study of Labor

Todd J. Moss

Center for Global Development

Multiple version iconThere are 3 versions of this paper

Date Written: September 6, 2005

Abstract

The international goal for rich countries to devote 0.7% of their national income to development assistance has become a cause celebre 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.

Keywords: foreign aid, development assistance, oda, 0.7, MDG, millennium development goals, poverty, history, aid, politics

JEL Classification: O19

Suggested Citation

Clemens, Michael Andrew and Moss, Todd J., Ghost of 0.7%: Origins and Relevance of the International Aid Target (September 6, 2005). Available at SSRN: https://ssrn.com/abstract=800177 or http://dx.doi.org/10.2139/ssrn.800177

Michael Andrew Clemens

Center for Global Development ( email )

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IZA-Institute for the Study of Labor ( email )

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Todd J. Moss (Contact Author)

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

HOME PAGE: http://www.cgdev.org

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