Foreign aid – the transfer of money, goods, technology or technical advice from a donor to a recipient - is an instrument of policy that has been used in foreign relations for centuries.
K.J. Holsti (1995, p. 180)
Official Development Assistance (ODA) is a form of foreign aid through which Northern donor states support and influence development activities and outcomes throughout the parameters of the RRD continuum23. In some respects ODA can be readily conceived as a theoretical variable with a discrete operational measure as it is formally defined by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) and is subject to an established range of practices and criteria. However, the theory and practice of ODA is constantly evolving as it is subject to a variety of influences and contexts; responding to the demands of new factors and processes of
implementation. Therefore, in order to fully realise the relationship of ODA with both development and the military, it is necessary to examine it within the context of foreign aid as a mechanism of policy engagement between states within the conduct of development assistance and the wider realm of international relations.
Foreign aid is one feature of the wider forms of development cooperation and international relations between states. It may be conducted bilaterally by both developed and developing states; by associations of states based upon shared economic, geographic, religious and/or developmental criteria (such as the EU, the Arab Fund for Economic and Social Development and the South Fund for Development and Humanitarian Assistance); or through multilateral agencies / IGOs (such as the UN or the Bretton Woods institutions) that represent the wider interests of member states as determined by their respective mandates. Modern forms of foreign aid gained a place within development consciousness after the
23 An example of this is reflected in the five core development goals of USAID which include the
provision of humanitarian relief, the strengthening of fragile states, and the promotion of transformational development (Natsios, 2005, pp. 5-6)
Second World War with the conduct of the Marshall Plan by the United States to facilitate reconstruction in non-communist Europe and the subsequent expansion of the paradigm to include a range of political interventions around the world (Wedel, 2005, p. 35). The evolution of foreign aid since the 1950s has reflected both the dominant characteristics of international relations – such as being conducted to secure bloc advantage and political influence during the Cold War (Natsios, 2006, p. 132; Tschirgi, 2006, p. 47) - and the evolutions in development theory and practice (Pronk, 2001, p. 612). In this regard, although foreign aid was initially linked to top-down approaches of economic modernisation (Willis, 2005, pp. 45-46), it did expand to incorporate other areas of the development milieu (Emmerij, 2002, pp. 250-251; Tschirgi, 2006, p. 47). This expansion became more notable in the post-Cold War period as the purpose of aid came to encompass wider notions of humanitarianism, state stability and conflict
prevention (Natsios, 2006, p. 132).
The provision of foreign aid within these contexts can be seen as having a twofold rationale – the satisfaction of the political interests of the donor states, and the altruistic conduct of assistance to enhance the welfare of developing countries (Gunning, 2005, p. 1). However, although there may be genuine reasons of compassion and concern, the overriding determinant of aid has been the fulfilment of the donor states’ political objectives (O'Brien, 2005, pp. 201- 203). This occurs as foreign aid is based upon the conduct of enforced taxation within the donor state (Martens, 2005, p. 651) - needing to satisfy the interests of the constituents of that state - and it is expressed through the foreign policies of those states or the policies enacted by the multilateral organisations that they support (Macrae, 2001, p. 170). In this regard, the actual form of aid varies across the different policies of the donor states (Natsios, 2006, p. 137) although it is noted that allocations increase when security is threatened and that current policies are being aligned with a range of other measures to address wider security and conflict management concerns (3rd High Level Forum on Aid Effectiveness, 2008, p. 2; Faust & Messner, 2005, p. 424; Natsios, 2006, p. 131). As a result, the paradigm of foreign aid includes many forms of assistance – reflecting the variety of motivations and capabilities of the donors concerned.
ODA functions within the wider paradigm of foreign aid as one identifiable mechanism of development assistance. Indeed, Peter Burnell states that ODA “is at the heart of foreign aid” (Burnell, 2002, p. 473) – a reflection of how it
incorporates a notable proportion of foreign aid finance and is enacted by the developed nations as represented by the 22 member states of the DAC and the EU [which represents the combined interests of many of those states and is the 23rd member of that body] (Burnell, 2002, pp. 473-474). ODA is conducted in concert with other national and international policies, particularly trade policies, as one aspect of how these donors support development within developing countries (Burnell, 2002, p. 476; Gunning, 2005, p. 4; UNDP, 1994, p. 61). The form and purpose of this interaction is established by the construct of ODA as a form of development assistance that encompasses financial flows and technical assistance; is provided to developing countries either directly by official agencies or indirectly through multilateral institutions; aims to promote the economic development and welfare of the recipient countries; and is provided at
concessional financial terms (Burnell, 2002, p. 473; Burnell & Morrissey, 2004, p. xiv; DAC/OECD, 2001, p. 1; OECD, 2005b, p. 32). This construct is one that is shaped by DAC guidelines as to the actual form and composition of ODA (DAC/OECD, 2001, pp. 2-3), and which has evolved to take cognisance of new circumstances and tasks - such as the criteria established in 2005 to guide the practical relationship between security and development within ODA
expenditure (Klingebiel, 2006, p. 4; OECD, 2005a). However, ODA is not a static construct, and is best realised through its interaction with the development process within the wider contexts of foreign aid, and national and international policies.