8.5 ODA received in small island developing States as a proportion of their gross national incomes

Modified on 2012/11/05 13:42 by MDG Wiki Handbook — Categorized as: Goal 8

Contents

GOAL AND TARGET ADDRESSED

Goal 8. Develop a global partnership for development Target 8B. Address the special needs of the least developed countries. Includes: tariff and quota-free access for least developed countries’ exports; enhanced programme of debt relief for HIPCs and cancellation of official bilateral debt; and more generous ODA for countries committed to poverty reduction. Target 8.C. Address the special needs of landlocked countries and small island developing States (through the Programme of Action for the Sustainable Development of Small Island Developing States and the outcome of the twenty-second special session of the General Assembly).

DEFINITION AND METHOD OF COMPUTATION

Definition
The indicator is the amount of official development assistance (ODA) received by an individual small island developing State (SIDS) as a proportion of the country’s gross national income (GNI) .

The indicator is expressed as a percentage.

Concepts
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 Organisation for Economic Co-operation and Development/Development Assistance Committee (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.

The small island developing States (SIDS) include low-lying coastal countries that share similar sustainable development challenges, including small population, limited resources, remoteness, susceptibility to natural disasters, vulnerability to external shocks, and excessive dependence on international trade. Their development is often further hindered by high transportation and communication costs, disproportionately expensive public administration and infrastructure due to their small size, and little to no opportunity to create economies of scale.

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.

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
The indicator is calculated by dividing the net ODA received by each SIDS by its GNI and multiplying by 100.

RATIONALE AND INTERPRETATION

The ODA to GNI ratio of SIDS is used to monitor development assistance toward meeting the special needs of small island developing states. SIDS are often constrained in their development efforts by narrow resource bases, difficulty in achieving economies of scale, small domestic markets, long distances from export markets and import resources, low and irregular international traffic volumes, and fragile natural environments. Hence, increases in technical and financial ODA to SIDS can support progress towards overcoming these challenges and achieving development goals.

The ODA/GNI ratio provides an indication of donor countries’ efforts to increase aid to SIDS in relation to the size of their economies. For SIDS, the ODA to GNI ratio indicates the importance of ODA in relation to the size of their economies.

SOURCES AND DATA COLLECTION

Data on ODA 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 Statistical Reporting Directives (definitions and classifications) agreed by the DAC. The DAC Secretariat responds to any questions about the data and can also give users advice on data analysis.

GNI data are obtained from national accounts. Guidelines for measurement of GNI are outlined in the System of National Accounts 1993.

DISAGGREGATION

For each SID, data can be disaggregated by type of aid, sector and type of activity.

COMMENTS AND LIMITATIONS

The ODA to GNI ratio 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 LLDCs through multilateral institutions are estimated. Any methodology for imputing multilateral flows can only ever provide an approximation of flows.

There are no GNI estimates for some SIDS.

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 which are focused principally or significantly on achieving gender equality and women’s empowerment.

DATA FOR GLOBAL AND REGIONAL MONITORING

The OECD is the international organization in charge of publishing the global estimates 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:
Data are published annually at the end of the calendar year in the International Development Statistics (IDS) database.

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

GNI data for SIDS are obtained from the World Bank which assembles data from national sources.

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. DAC List of ODA Recipients. Paris. Available from www.oecd.org/dac/stats/daclist

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 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, 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

UNITED NATIONS. OFFICE OF THE HIGH REPRESENTATIVE FOR THE LEAST DEVELOPED COUNTRIES, LANDLOCKED DEVELOPING COUNTRIES AND SMALL ISLAND DEVELOPING STATES (annual). New York. Internet site http://www.un.org/ohrlls