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GOAL AND TARGET ADDRESSED

Goal 8. Develop a global partnership for development

Official Development Assistance (ODA)

DEFINITION AND METHOD OF COMPUTATION

Definition
This indicator measures total official development assistance (ODA) and ODA to the least developed countries that is provided by donor countries of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) expressed as a percentage of their gross national income (GNI).

This indicator is expressed as a percentage.

Concepts
The Organisation for Economic Co-operation and Development/Development Assistance Committee (OECD/DAC) is a committee that consists of major bilateral donor countries and the European Commission, which coordinate their aid programmes around common objectives.

Gross national income (GNI) is equal to GDP less taxes on production and imports, less compensation of employees and property income payable to the rest of the world, plus the corresponding items receivable from the rest of the world. GNI at market prices was called gross national product (GNP) in the 1953 System of National Accounts. In contrast to gross domestic product (GDP), GNI is a concept of (primary) income rather than of value added.

Official development assistance (ODA) comprises grants and loans (i.e. flows or transfers of resources, either in cash or in the form of commodities or services) to developing countries and territories on the OECD/DAC list of ODA recipients and to multilateral development institutions that are provided by official agencies, including state and local governments, or by their executive agencies. The flows must have the promotion of the economic development and the welfare of the recipient countries as their main objective. ODA transactions are made at concessional terms and convey a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent). Technical cooperation is included. Grants, loans and credits for military purposes are excluded. Net ODA is disbursement flows (net of repayment of principal) that meet the DAC definition of ODA and are made to countries and territories on the DAC list of ODA recipients.

The list of least developed countries (LDCs) is designated by the United Nations General Assembly (see http://www.unohrlls.org/en/ldc/25/ for the official list).

Developing countries and territories for this indicator are considered as countries eligible for ODA according to the DAC list of ODA recipients. (See references for link to current list of countries).

Gross domestic product (GDP) is an aggregate measure of production equal to the sum of the gross values added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs).

Method of computation
Net ODA in total as a percentage of donor's GNI is calculated by dividing a donor’s total net ODA by the donor’s GNI and multiplying by 100.

Net ODA to LDCs as a percentage of donor's GNI is calculated by dividing a donor’s total net ODA to LDCs by the donor’s GNI and multiplying by 100.

RATIONALE AND INTERPRETATION

The objective of MDG 8 is to assist all developing countries in achieving the goals through a strengthened global partnership for international development cooperation, including by providing development assistance, improved access to markets and debt relief. Increases in ODA increase the likelihood that other MDGs will be met. At the High-level Plenary Meeting of the General Assembly on the Millennium Development Goals (MDGs) (the “MDG summit”), which was held from 20 to 22 September 2010, Governments committed themselves to strengthening the global partnership in order to “keep the promises” to the peoples of the world, particularly the poorest among them, which they had made 10 years previously in the Millennium Declaration.

The 2002 Monterrey Conference on Financing for Development stimulated commitments from major donors to reverse previous declines in official development assistance and focus assistance more on poverty reduction, education and health to help countries realize the Millennium Development Goals. In order to support the efforts of developing countries and LDCs toward achieving the MDGs, donor countries should aim to achieve ODA/GNI ratios of 0.7 per cent to all developing countries and at least 0.15 per cent to the LDCs.

SOURCES AND DATA COLLECTION

Data on ODA and GNI are part of DAC members’ official statistical reporting to the OECD. Non-DAC donors' reporting takes place on a voluntary basis. A network of national statistical correspondents collects data from aid agencies and government departments (central, state and local) on an ongoing basis. Their task is also to ensure that reporting conforms to the DAC Statistical Reporting Directives (definitions and classifications) agreed by the DAC. The DAC Secretariat responds to any question about the data and can also give users advice on data analysis.

DISAGGREGATION

Data on ODA flows can be disaggregated by type of aid, donor, recipient country or geographical region, sector and aid activity.

COMMENTS AND LIMITATIONS

The proportion of GNI that goes to ODA measures the quantity of ODA only. It says nothing about the development outcomes resulting from the ODA flows. Therefore, ODA flows should be considered in the context of making some contribution to MDG outcome indicators under goals 1 through 7.

Amounts of ODA to LDCs through multilateral institutions are estimated. Any methodology for imputing multilateral flows can only ever provide an approximation of flows.

GENDER EQUALITY ISSUES

ODA can support gender equality and women’s empowerment. Donors score relevant activities with a gender equality policy marker as defined by the DAC. This marker identifies activities that are focused principally or significantly on achieving gender equality and women’s empowerment.

DATA FOR GLOBAL AND REGIONAL MONITORING

The OECD is the organization in charge of publishing the international figures for this indicator. All data on ODA are collected by the OECD/DAC Secretariat from its 24 members, then checked and aggregated. The DAC Secretariat collects data from donors through two different systems:
  • The DAC Questionnaire is a set of six statistical tables completed annually by DAC members, who report the amount and destination of their official and private flows made in the previous year. Detailed information is collected regarding the destination, form, terms, sector and tying status of official flows. A simplified form of the questionnaire is completed by multilateral agencies. Non-DAC donors also report on a voluntary basis on an abridged questionnaire.


  • The Creditor Reporting System (CRS) is a system for reporting individual official aid activities (both ODA and other official flows) relevant to development. Reports are received directly from participating official agencies, including bilateral and multilateral aid agencies, and development lending institutions.

Regional and global aggregates are calculated by straight addition and do not involve any estimation for missing values.

Data are published annually by the OECD at the end of the calendar year in the International Development Statistics (IDS) database.

SUPPLEMENTARY INFORMATION



EXAMPLES



REFERENCES

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. DEVELOPMENT ASSISTANCE COMMITTEE (annual). Development Co operation Report. Paris. Available from http://www.oecd.org/dac/dcr

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. DEVELOPMENT ASSISTANCE COMMITTEE (annual). International Development Statistics. Paris. Available from http://www.oecd.org/dac/stats/idscd

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. DEVELOPMENT ASSISTANCE COMMITTEE (annual). Geographical Distribution of Financial Flows to Developing Countries. Paris. Available from http://www.oecd.org/dac/stats

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. DEVELOPMENT ASSISTANCE COMMITTEE (annual). Development Aid at a Glance – Statistics by Region. Paris. Available from http://www.oecd.org/dac/stats/regioncharts

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. DAC List of ODA Recipients. Paris. Available from www.oecd.org/dac/stats/daclist

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT . DAC Statistical Reporting Directives. Paris. Available from http://www.oecd.org/dac/stats/dacdirectives

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ().Directives for reporting to the aid activity database (Creditor Reporting System). Paris. Available from http://www.oecd.org/dac/stats/crsdirectives

UNITED NATIONS (2008). Handbook on the Least Developed Country Category: Inclusion, Graduation and Special Support Measures. New York. Available from http://www.un.org/en/development/desa/policy/cdp/cdp_ldcs_handbook.shtml

UNITED NATIONS, COMMISSION OF THE EUROPEAN COMMUNITIES, INTERNATIONAL MONETARY FUND, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT AND WORLD BANK (1994). System of National Accounts 1993 (SNA 1993). New York. Available with updates from http://unstats.un.org/unsd/sna1993

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