Fact, Slwttt for the Honorable GAO I.,w H. Hamilt(jn Chairman, Joint, FOREIGN ASSISTANCE International Resource Flows and Development Assistance to Developing Countries III 142672 .. Uuited States GAO General Accounting Office Washington, D.C. 20648 National Security and International Affairs Division B-240424 October 23,199O The Honorable Lee H. Hamilton Chairman, Joint Economic Committee U.S. Congress Dear Mr. Chairman: As you requested, we obtained information on the amounts of interna- tional economic assistance provided to developing countries between 1980 and 1988. Specifically, we have provided the total value, composi- tion, and distribution of development assistance and resource flows from all major donors. You expressed particular interest in the develop- ment assistance levels of the United States and Japan. The data in this report is limited to economic development assistance and excludes grants, loans, and credits for military purposes, and loans and credits with maturities of less than one year. Net global public and private economic resource flows to developing countries, which consist of official development finance flows, private flows and export credits, have generally declined from $128.4 billion in 1980 to $101.8 billion in 1988.1 The decrease resulted largely from a drop in private flows, which generally take the form of direct invest- ments and international bank loans. While official development finance flows increased 38 percent, from $45.5 billion to $66.0 billion between 1980 and 1988, private flows declined 50 percent, from $66 billion to $32.9 billion, substantially increasing the relative share and importance of official flows. Export credits declined from $16.9 billion to $3 billion during this period. The decline in private flows is due primarily to reduced demand for international lending by those countries with rela- tively sound economies and curtailed access to capital markets for those with debt service problems. A drop in global export credits also contrib- uted to the decline in total net resource flows to developing countries. Development Assistance Committee members2 continued to provide about 80 percent of official development assistance. Between 1980 and 1988, the U.S. share of official development assistance increased from 16.3 percent to 18.3 percent., Japan increased its official assistance by ‘All dollar values in this report are expressed in current dollars unless otherwise stated. “The Committee members are Australia, Austria, Belgium, Canada, Demark, Finland, France, West Germany, Italy, Ireland, Japan, the Netherlands, New Zealand, Norway, Sweden, Switzerland, IJnited Kingdom, United States, and the Commission of European Communities. Page 1 GAO/NSIAD-91.26FS Foreign Assistance B240424 172 percent, and its share of global official assistance increased from 10.4 percent to 15 percent. While contributing proportionately more of their gross domestic products, the Organization of Petroleum Exporting Countries,3 nonetheless, decreased their shares of global official assis- tance from 23 percent to 9 percent. The Soviet Union and East European nations accounted for about 8 percent of all official assistance, with about 90 percent of this assistance coming from the Soviet Union. Overall, since 1980, donor nations have redirected their resource flows to developing nations away from upper middle income countries (defined by the World Bank as countries with over $1,300 annual per capita income) and toward lower income countries (countries with under $600 annual per capita income). The redirection was largely the result of reductions in private flows to middle income countries, and increased disaster relief measures to lower income countries. Regionally, Sub-Saharan Africa received 35 percent of the global official development assistance, while Asia received 33 percent, North Africa and the Middle East received 13 percent and Latin America received less than 2 percent. (The remaining 18 percent was not allocated by region.) Development assistance represents about 7.5 percent of the gross national product of Sub-Saharan Africa, 1.2 percent for Asia, 20 percent for Oceania, 1 percent for North Africa and the Middle East, and less than 1 percent for Latin America. Developing countries’ dependence on donor resource flows has increased. For example, in Sub-Saharan Africa, dependence on donor resource flows was only 4.1 percent of gross national product in 1980. While nearly all developing countries receive some development assis- tance, the distribution of this assistance remains largely independent of the relative development resource needs of these countries. In fiscal year 1988, for instance, 5 percent of the developing countries received nearly 21 percent of the global official bilateral assistance distributed bilaterally, and only one of these countries-Bangladesh-was among the 42 countries recognized by the United Nations as least developed. In fiscal year 1986, India, Israel, Egypt, Vietnam, and Bangladesh led all other developing countries in assistance received, totaling 21 .l percent of all official development assistance provided. During this period, the United States tended to concentrate its disbursements in the Middle East, while Japan focused its assistance mostly in the Far East. 3The Organization of Petroleum Exporting Countries include Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Page 2 GAO/NSI.AD-Bl-2iWS Foreign Adstance B240424 Multilateral assistance distribution patterns also show that 15 percent of developing countries received 28 percent of the official development assistance. Over time, donor nations tended to favor particular recipient countries. For instance, Japan disbursed an average of 14 percent of its official development assistance to Indonesia in the 1960s 11 percent in the 197Os, and 6 percent in the 1980s. The United States, on the other hand, disbursed an average of 18 percent of its net official development assistance to Israel in the 1960s 8 percent in the 197Os, and 13 percent in the 1980s. Donor nations tended to direct their official assistance to differing sectors. In 1987, the latest year for which data were available on sectoral commitments of donors, the United States provided 33 percent of its official development assistance to program assistance-general program loans, loans to purchase commodities, and government budget support- and 5 percent to economic infrastructure development. In con- trast, Japan directed about 64.6 percent of its aid to economic infra- structure development and industrial production, and only 14 percent to program assistance. Economic assistance from the Organization for Petroleum Exporting Countries concentrated on general program sup- port, and Soviet assistance favored infrastructure development and min- eral exploration and extraction. Appendixes I through VII provide more detailed information on each of the above topics. Information in this report is based on data compiled between 1978 and 1988 by the Development Assistance Committee of the Organization for Economic Cooperation and Development. The Development Assistance Committee is an organization of donors that monitors the flow of eco- nomic assistance to developing countries. It collects and publishes data on both donors and recipients. Its annual publication, Development Cooperation, contains a standardized data base that we used for com- paring types, amounts and purposes of developing assistance. We used another committee publication, Geographical Distribution of Financial Flows to Developing Countries, to trace the flow of development assis- tance to all developing countries. As requested, we did not obtain official agency comments. We conducted our review from February 1989 to March 1990. Page 3 GAO/NSIABB132F6 Foreign Asdatance B-240424 As arranged with your office, unless you publicly announce its contents earlier, no further distribution of this report will be made until 30 days from its issue date. At that time, copies will be sent to the Adminis- trator, Agency for International Development, and to other interested parties upon request. Please call me on (202) 276-6790 if you or your staff have questions on this report. Major contributors to this fact sheet were David Martin, Assistant Director, and Gezahegne Bekele, Project Manager. Sincerely yours, Harold J. Johnson Director, Foreign Economic Assistance Issues Page 4 GAO/NSIADBl-26FS Foreign Assistance Page 6 GAO/NSIAD-9135FS Foreign As&tame Contents Letter 1 Appendix I 10 Introduction Appendix II 11 ResourceFlows to Developing Countries Appendix III 19 Official Development Assistance to Developing Countries Appendix IV 26 Development Assistance Donor Burden Sharing Appendix V 29 Development Assistance Distribution Patterns Appendix VI 34 Development Assistance Geographical Distribution Page 6 GAO/NSIAD-Bl-26FS Foreign Adstance Appendix VII Development Assistance Sectorial Distribution Tables Table I. 1: Selected Indicators of Economic and Financial 10 Relationships With Developing Countries Expressed as Percent of Donors’ GNP, 1986 and 1987 Table 111.1:Bilateral Official Grants U.S. Dollars in 23 Billions Table V. 1: Major Recipients of Bilateral Official 29 Development Assistance in 1988 by Percentage of Donors’ Gross Disbursements Table V.2: U.S. Net Disbursements of Foreign Economic 30 Assistance to Major Recipients Table V-3: Japan’s Net Disbursements of Economic 31 Assistance to Major Recipients Table V.4: Major Recipients of DAC Member Economic 32 Assistance, Excluding Japan and the United States Table V-6: Major Recipients of Non-DAC Donors 33 Table VII. 1: Development Assistance by Major Purpose, 40 1986-1987 Percent of Total Commitments Figures Figure 11.1:Net Global Resource Flows to Developing 12 Countries Figure 11.2:Composition of Private Flows to Developing 13 Countries Figure 11.3:Net Export Credits 14 Figure 11.4:Net Total Resource Flows by Major Donors 16 Figure 11.6:Net Private Flows by Major Donors 16 Figure 11.6:Distribution of Global Net Total Resource 17 Flows to Developing Countries by Income Group Figure 11.7:Regional Distribution of Global Net Total 18 Resource Flows Figure 111.1:Official Development Assistance and Net 20 Resource Flows in Current and Constant Dollars Figure 111.2:Official Development Assistance by Major 21 Donors Page 7 GAO/NSIAIMl-ZISFS Foreign AtwMame Figure 111.3:Official Bilateral Development Assistance by 22 Members of Donor Organizations and Multilateral Assistance Figure 111.4:Distribution of Official Development 24 Assistance by Income Groups Figure 111.6:Regional Distribution of Official Development 26 Assistance Figure IV. 1: Shares of Global Official Development 26 Assistance of Selected Donors Figure IV.2: Ratios of Official Development Assistance to 27 Gross National Product of Selected Donors Figure IV.3: Distribution of Development Assistance 28 Among Selected DAC Members Figure VI. 1: Distribution of Official Development 36 Assistance to Sub-Saharan Africa Figure VI.2: Distribution of Official Development 36 Assistance to North Africa and the Middle East Figure VI.3: Distribution of Official Development 37 Assistance to South Asia Figure VI.4: Distribution of Official Development 38 Assistance to the Far East and Oceania Figure VI.6: Distribution of Official Development 39 Assistance to Latin America and the Caribbean Abbreviations DAC Development Assistance Committee GNP Gross National Product Page 8 GAO/NSIADBl-25FS Foreign A.&stance Page 9 GAO/NSIADBl-26FS Foreign Assistance Development assistance consists of transfers of resources to less devel- oped countries on concessional terms. Nearly all industrialized countries participate in providing development assistance. Donors provide devel- opment assistance for a number of reasons, including responding to humanitarianconcerns, obtaining commercial access to growing mar- kets, and for political and strategic purposes. In 1988, total net resource flows to developing countries averaged 3.6 percent of the per capita income of all recipient countries. Table I. 1 shows some of the economic and financial relationships between developing countries and selected development assistance donors. Table 1.1: Selected Indicators of Economic and Financial Relationships DACb United States Japan With Developing Countries Expressed as Net resou(ce flows 0.64 0.36 1.Ol Percent of Donors’ QNP, 1988 and 1987’ Net official development assistance 0.35 0.51 0.30 Imports from developing countries excluding oetroleum 2.35 2.58 1.62 Exports to developing countries 2.91 1.76 3.63 Debt claims on developing countries excluding official develooment debts 1.39 1.03 0.85 aAverage values for 1986 and 1967 “Average of Development Assistance Committee (DAC). Development assistance is a complex global program without a global coordinating body. Dozens of donor organizations, multilateral develop- ment banks and funds, United Nations agencies, and several hundred nongovernmental organizations currently provide development assis- tance. Additionally, export credit agencies and commercial banks pro- vide finance to countries of their choice. The allocation of development assistance funds is complicated by com- peting international and domestic priorities of donors. Economic assis- tance is generally recognized as being in the national interests of donor nations. The November 1983 report of the Commission on Security and Economic Assistance concluded that development assistance “makes an indispensable contribution to achieving foreign policy objectives.” How- ever, the beneficial effects of economic assistance are often overshad- owed by skeptical evaluations of the efficiency of donor resources. While 40 years of development assistance have had dramatic impacts in such areas as life expectancy and literacy rates in many developing countries, some developing countries achieved very little in economic development and some are worse off now than 10 years ago. Page 10 GAO/NSIAD-Ql-26FS Foreign Assistance Appendix II FtesourceFlows to Developing Countries~ Total resource flows to developing countries, in addition to aid,’ include grants from private agencies, commercial bank lending and portfolio investment by residents or institutions in donor countries; direct invest- ment (including reinvested earnings); and purchases of securities of international organizations active in development. Net resource flows are total resource flows, excluding capital repayments on earlier loans. Net global private and public resource flows to developing countries have declined from $128.4 billion in 1980 to $101.8 billion in 1988 (see fig. 11.1). The largest decreases occurred between 1981 and 1985, when developing countries experienced a decrease of 41 percent in net resource flows largely due to a drop in private financial flows (see fig. 11.2). Flows from the private international bank sector to developing countries in 1988 stood at 10 percent of their 1981 value, a decrease of $47 billion. The combination of reduced demand for international lending by countries with relatively sound economies and curtailed access to capital markets for those with debt service problems contrib- uted to the decline in private flows. ‘Aid refers only to flows that qualify as official grants or loans; in addition to financial flows, tech- nical cooperation is included. Technical cooperation comprises grants (and a very small volume of loans) to nationals of developing countries receiving education or training at home or abroad, and grants to defray the costs of teachers, admiitrators, advisers, and similar personnel serving in developing countries. Page 11 GAO/NSIAD-91-25FS Foreign Assistance AppendixII , ltesouree Flows to Developing Coun* Flgure 11.1:Net Qlobal Rerource Flowr to DovelopIng Countries 160 Blllionm U.S. dollar. 1980 1981 1982 1983 1984 lOB5 10S6 1987 YOM@ - OHkial Dewbpment Finance ---- ExportCmdiu B PrivateFbwa mmmm TotalNetfWourceFlow Page 12 GAO/NSIAD-91.26FS Foreign A.ssistance Appendix II ltesoume Flowt~ to Developing Chuntrie~ Figure 11.2:Comporltlon of Private Flowa to Developing Countrlea 80 Sllliom U.S. dollan 70 60 40 ;-. . c a0 . 20 10 - 0 1980 other Bonds International Sank Sector Flows Direct Investment As shown in figure 11.3,a decline in export credits also contributed to the decline in total net resource flows to developing countries. Global export credits, whose primary sources are members of the Organization for Economic Cooperation and Development, decreased from 13.2 per- cent of the total to approximately 3 percent. Page 13 GAO/NSIAD-91.26FS Foreign Assistance Appendix II Resoures Flow8 to Developing Countries Bllllonr U.S. dollan I A!+ P P Q h h P B I-J Organization for Economic Cooperah and Development Others Enttbs are sums of official and private export credits Global net resource flows are greatly influenced by trends and events within DAC member countries, because over one-half of all resource flows come from these countries (see fig. 11.4). Since 1980, net resource flows from these countries have exhibited large fluctuations, primarily because of a rapid buildup and subsequent declines in private flows (see fig. 11.6). Private flows, which were the largest component resource flows until 1986, declined from their peak of $54 billion in 1981 to $9 billion in 1986 before posting a mild recovery in 1988. Moreover, bilat- eral private investment in developing countries by DAC member countries reversed course, from a $25-billion inflow to developing countries in 1981 to net outflows of $4.5 billion in 1985, and $2.4 billion in 1987. Page 14 GAO/NSIAD-Sl-26FS Foreign Assistance Appendix II Rem-. Flows to Developing Cmntriee Flgure 11.4:Net Total Resource Flow8 by Major Donor8 120 Bllllons U.S. dollars 140 120 100 90 60 49 20 1 1 others DAC. exduding the United States and Japan Japan United States Page 16 GAO/NSIAD-9115FS Foreign AmMance Appendix II Etesource Flows to Developing Cmntrles Figure 11.5:Net Private Flow8 by Major Donor8 40 BIlliona U.S. ddlam -20 1950-92 AVQ. 1953 1994 1955 1995 1997 1990 I I Unbd State8 Japan DAC, excluding the United StatesandJapan other8 U.S. resource flows exhibited a similar trend. These increased from 1980 through 1982 due to the proliferation of private bilateral investments in developing countries, and subsequently declined. In 1985, 1987, and 1988, private bilateral flows from the United States were negative, indi- cating that developing countries actually experienced an outflow of these investments to the United States. Since 1986, Japan’s net resource flows-public and private-to devel- oping countries have exceeded those of the United States. Between 1980 and 1988, Japan more than tripled its net resource flows to developing nations, from $6.8 billion to $21.4 billion. The largest component of the increase in Japan’s resource flows occurred in private flows, which increased from approximately $2 billion in 1980 to $12.8 billion in 1988. Unlike the United States and other members of DAC, this increase in pri- vate flows was accompanied by an increase in net official development Page 16 GAO/NSIAD-91-26FS Foreign Assistance Appendix II lt4xwurce Flows to Developing Ckmntrk~ finance flows, from $4.8 to $8.5 billion, Japan’s official development finance flows, however, continue to lag behind that of the United States. The decrease in net resource flows has not been uniformly distributed across recipients. As shown in figure 11.6,countries defined by the World Bank as upper middle income countries, which until 1984 had received over 60 percent of net flows, have experienced a dispropor- tionate decrease in net resource flows. Net flows to upper middle income countries were approximately 30 percent in 1988. Low income countries were the beneficiaries of the decreased distribution to upper middle income countries, receiving 52 percent of total net resource flows and 69 percent of all official development assistance. Figure 11.6:Distribution of Global Net Toial Resource Flows to Developing Countries by Income Group 209 Billions U.S 1997 constant dollars 100 150 149 129 100 00 50 40 20 I - 1 Umer ” Middle lname Countries Law Middle Income Countries Omer Lcw Income Countries 111 Least Developed Countries The total for Low Income Countries is the sum of Least Developed and other Low Income Countries. Net flows to developing countries in the Western Hemisphere experi- enced a decline of $55 billion (in 1987 dollars) from 1980. Sub-Saharan Page 17 GAO/NSIAD-91.26FS Foreign Assistance Appendix II I Besource Flows to Developing Cmntriee Africa experienced a slight increase in net resource flows. (See fig. 11.7.) The decrease in net resource flows to upper middle income countries and the Western Hemisphere may reflect their debt service problems and the subsequent reluctance of private lending institutions to provide new loans. Figure 11.7:Regional Distribution of Global Net Total Resource Flows 199 Billlons U.S. 1997 constant dollars 160 140 129 100 00 69 40 20 0 J Regiinallyunallocated The Western Hemisphere Asia North Afrka and the Middle East SubSaharan Africa Page 18 GAO,‘NSIADsl-!&FS Forei@ Assistance Appendix III - Official Development Assistance to Developing Countries Official development assistance is defined by DAC as those resources pro- vided to developing countries and multilateral institutions by official agencies, including state and local governments. Official development assistance must (1) promote the economic development and welfare of developing countries as its main objective and (2) be concessional in character and contain a grant element of at least 25 percent. It consists of grants (e.g., technical assistance, food aid, administrative costs), development loans, loans for food, debt reorganization, and contribu- tions to multilateral institutions. As shown in figure III. 1, the decrease in private flows and export credits discussed earlier substantially increased the relative share and impor- tance of official development finance flows. The share of official devel- opment finance flows increased from 35.5 percent in 1980 to 65 percent of global net resource flows in 1988. Until 1985, private flows were the largest component of net resource flows. Global official development assistance increased from $37.5 billion in 1980 to $51.6 billion in 1988, equivalent to a decrease of $2 billion in constant 1987 dollars (see fig. 111.2). Page 19 GAO/NSIAB91-25FS Foreign Amidstance Appendix III Official Development Asdrdance to Developing Conntries Figure 111.1:Official Development Assistance and Net Resource Flow8 in Current and Constant Dollars 200 BIllions U.S. dollars 180 160 149 120 100 90 so 40 20 0 1999 1991 1992 1983 1994 199s 1999 1997 1999 - Net Rtxwurw Flows in Current Dollars I I II Net Rssource Flows in Constant 1987 Dollars m Offidal Development Assistance: 1967 Dollars n n mn Cffidal Development Assistance Page 20 GAO/NSIAD-91-26FS Foreign Assistance Appendix IlI Officid Development Assistance to Developing Countries Figure 111.2:Official Development Assistance by Major Donors 60 Sllllon8 U.S. dollar9 O-B-B aa-- 1999 1961 1932 1933 1934 1985 1999 1937 1939 n Non-DAC Donors DAC. exduding the United States and Japan Official development assistance from DAC members has shown a steady, but slow, growth since 1980. US. official development assistance increased by approximately $3 billion. In 1988, bilateral official development assistance represented 78 percent of official development assistance and 40 percent of all net resource flows to developing countries (see fig. 111.3).Between 1980 and 1988, bilateral official development assistance increased 35 percent. This growth was achieved mostly because members of the Organization for Economic Cooperation and Development increased their share of official bilateral assistance from 60 to 83 percent by increasing their net bilat- eral disbursements from $18 billion to $33 billion. The share of bilateral official development assistance from the Organization of Petroleum Exporting Countries, on the other hand, declined from 29 percent in 1980 to 4.9 percent in 1988. Page 21 GAO/NSIAD-91-26FS Foreign Assistance I Appendix Ill Offlcld Development Adstance to Developing c4luntrles Figure 111.3:Official Bilateral Development Assistance by Members of Donor Organizations and Multilateral 60 Bllllo~ U.S. dollwn Assistance 50 10 0 A A A A A L A A 1991 1992 1993 lw4 1985 1999 lQ87 1999 MulUhtsral Aseistanw Members of Other Bilateral Organkatiana Coundl for Mutual Economic Assistance m OPEC Organization for Economic CooperaMn and Devebpment The grant component of INC bilateral official development assistance also shows a gradual growth throughout the decade, largely due to the growth of special bilateral assistance arrangements, such as the U.S. Economic Support Fund (see table 111.1).U.S. bilateral official grants, for instance, have increased by approximately $3.6 billion since 1980. Between 1980 and 1988, U.S. official development assistance contained an average of 62 percent in bilateral grants compared to 27 percent for Japan. On the other hand, Japanese official development assistance averaged 40 percent in development loans, as compared with 23 percent for the United States. Page 22 GAO/N&W-91-2SFS Foreign Assistance API.=- m Offldd Development Aw3Mance to Developlngconntriee Table 111.1:Bilateral Official Grants U.S. Dollars in Billions 1980 1981 1982 1983 1984 1985 1986 1987 1988 Technical Assktarce DAC 55.48 $5.25 $5.39 $5.84 $5.92 $6.03 $7.49 $8.96 $10.22 ""iled siates -_--'-..-.--.-..-o.72 ..-. .--.--- 0.95 1.08 1 .43 1.61 1.46 1.51 1.75 2.13 Japan 0.28 0.34 0.35 0.39 0.44 0.42 0.60 0.74 1.09 Food Aid DAC _... _.~......- . .__._~____ 0.80 0.85 0.84 0.94 1.22 1.35 1.50 i .48 1.83 United States 0.47 0.43 0.39 0.49 0.65 0.78 0.84 0.81 0.99 Japan 0.01 0.02 0.04 0.05 0.05 0.05 0.07 0.10 --- 0.09 Administrative Cost DAC .._...~...-.... 0.81 0.45 0.84 0.90 0.94 0.98 1.22 1.44 1.60 United siaies --.------~.32 0.35 0.39 0.41 0.44 0.47 0.48 0.49 0.51 Japan 0.05 0.04 0.04 0.07 0.08 0.09 0.16 0.21 -- 0.27 Other -__ _____- DiC 5.89 6.41 6.27 6.30 9.05 9.48 10.87 11.40 12.39 United Statesa 1.46 1.78 1.94 ___-- 2.14 2.95 4.60 4.22 3.65 .- 2.85 Japan 0.36 0.41 _____--- 0.37 0.49 -- 0.49 0162 0.88 -- 1.05 1.46 Totals DAC -. ._.~~. -$14.12 .._. $13.18 $13.41 514.13 $17.13 $17.84 $21.06 $23.25 $26.04 United Stat& 2.98 3.52 3.79 4.47 5.64 7.31 7.03 6.69 6.47 JaDan. 0.70 0.81 0.81 0.99 1.06 i.18 1.70 2.11 2.91 aThese amounts primarily are Economic Support Fund disbursements Figures III.4 and III.5 show the distribution of official development assistance by recipient countries’ income levels and regions, respec- tively. Figure III.4 shows that upper middle income countries’ began receiving proportionately decreased official development assistance, relative to lower income countries, as the decade progressed. Figure III.5 shows that during the 1980s the Asia and Sub-Saharan Africa regions received larger proportions of official development assistance than other recipient regions. Page 23 GAO/NSIADSl-26FS Foreign Asdstance Appendix III Offlcid Development Assistance to Developing Countries Figure 111.4:Distribution of Official Development Arslstance by Income Groups 90 Bllllone eonstmt 1987 U.S. dollam 60 I 40 30 20 10 0 L L A L A L A B 1980 1981 1962 1983 1984 1985 1985 1967 19w I Upper Middle Income Countries Low Middle Income Countries Other Low Income Countries Leaat Dewloped Countries Page24 GAO/NSIAD91-26FS Foreign Assistance Appendix llI Offlclal Development Ad.stance to Developing Countries Figure 111.5:Regional Distribution of Official Development Assistance so Bllllons Constant 1987 U.S. dollars SO 40 30 20 10 0 A 1980 1883 1984 l9ss 1986 1987 1988 I- Other and Unallocated The Western Hemisphere I Asia I North Africa and the Middle East I Sub-Saharan Africa Page 25 GAO/NSIAD-91-26FS Foreign Assistance Appendix IV Development Assistance Donor Burden Sharing ’ Development Assistance burden sharing among industrialized countries is measured using two indices designed to reveal their relative and abso- lute “generosity.” One index is the ratio of a donor’s official develop ment assistance to its gross national product. This index shows whether a donor participates in development assistance in proportion to its eco- nomic stature. A second index measures the extent to which each donor contributes to the total official development assistance relative to other donors, such as the ratio of a donor’s official development assistance to the total official development assistance. Members of DAC contribute roughly 80 percent of development assis- tance to less developed countries (see figs. IV.1 and IV.2). FIQU~OIV.l: Shares of Qiobai Offlciai D&eiopment Assistance of Wetted Donors 40 Perwntags n 19rol71 197W76 Fiscal Yom I II Unlted States Japan European Economic Community m OPEC The Soviet Union Page 20 GAO/NSIAD-91-26FS Foreign AssMance Appendix IV Development Assistance Donor Burden Sharing Figure IV.2: Ratios of Official Development Assistance to Gross National Product of Selected Donors II Percwbtage 4 197Offl i976n6 1060/81 1905i06 1887/88 Flwal Yearn United States Japan European Economic Community OPEC The Soviet Union 1987K38data for the Soviet Union is not availlable. Organization of Petroleum Exporting Countries members dominate assistance relative to gross national product. However, between 1980 and 1988, their share of global official development assistance declined from 23 percent to 5 percent. The U.S. share of global official development assistance has decreased despite a 42-percent increase in US. official development assistance since 1980. This occurred primarily because of increases in the economic assistance of other donors. The United States, in 1970 and 1971, was responsible for over one-fourth of all official development assistance, but accounted for 18 percent in 1988. Nevertheless, in 1988, the United States was the largest single donor, accounting for 21 percent of official development assistance from DAC members (see fig. IV.3). The United Page 27 GAO/NSIAD-Bl-25FS Foreign Assistance Appendix IV Development Aseietance Donor Burden Sharing States, however, provided less official development assistance as a per- centage of gross national product than most other DAC members. Assistance Among Selected DAC 100 Percentage Members so so 70 60 50 40 30 20 10 0 1970-71 1976-76 1980.81 1987.88 Fiscal Yearn r United States m FraflCe United Kingdom West Genany Japan has continued to increase its levels of development assistance. In 1962, Japan’s official development assistance was one percent of the DAC members’ official development assistance, while in fiscal years 1981, 1986, and 1988 it accounted for approximately 8, 12.4, and 15 percent, respectively. Since 1980, Japan has increased its official development assistance by 172 percent. Historically, the Soviet Union and East European nations contributed relatively small portions of their gross national products to development assistance. They typically accounted for 8 percent of all official assis- tance. In 1987 and 1988, the Soviet Union’s allocation to development assistance was roughly 45 percent of that of the United States. Page 28 GAO/NSLAD91-2SFS Foreign Assistance Appendix V Development Assistaxe Distribution Patterms There are significant differences among donors in the patterns of distri- bution of their development assistance. Most developing countries receive some kind of development assistance. Some, such as India, Paki- stan, Bangladesh, Indonesia, and Egypt, tend to consistently rank as major official development assistance recipients. Some redirection and redistribution of assistance, due to shifts in political and economic rela- tionships between donors and recipients, are also noticeable. As shown in table V. 1, Indonesia, Egypt, India, Israel, and China accounted for 15 percent of I countries’ gross disbursements in 1988. Israel, Egypt, El Salvador, Philippines, and Pakistan received nearly 30 percent of U.S. disbursements, while Indonesia, China, the Philippines, Thailand, and Bangladesh received 32 percent of Japan’s gross disbursements. Table V.l: Major Recipients of Bilateral Official Development Assistance in 1988 by Percentage of Donors’ Gross Disbursements Figures in percents U.S. Japan DAC’ ~-.. ____ Israel 12.0 Indonesia 11.9 Indonesia 3.7 ESYPf 9.4 China 6.6 Egypt 3.4 El Salvador 3.3 Philippines 5.7 India 2.9 Pakistan 2.7 Thailand 4.3 Israel 2.8 Philippines 1.8 Bangladesh 3.9 China 2.2 India 1.7 India 3.6 Banaladesh 2.0 Pacific Isles 1.6 Pakistan 2.7 Pakistan 1.9 Honduras 1.5 Malaysia 2.6 Philippines 1.8 Guatemala 1.4 Burma 2.5 Tanzania 1.4 Costa Rica 1.3 Korea 2.4 Mozambiaue 1.2 Bangladesh 1.3 Sri Lanka 1.8 Kenya 1.2 Sudan 0.9 Turkey 1.8 Reunion 1.2 BDACdisbursements, including those of the United States and Japan A decade by decade comparison of distribution patterns of net official development assistance disbursements shows that donor and recipient relationships have generally remained stable, although some adjust- ments have occurred that reflect changes in political or economic rela- tionships. Table V-2 shows, for example, that during 1962 through 1969, Israel, Vietnam, Pakistan, Korea, and Brazil received an average of about 42 percent of the annual net disbursements of U.S. official assis- tance. In the 197Os, Israel, Vietnam, Egypt, India, and Bangladesh Page 29 GAO/NSIAD91-25F’S Foreign Assistance Appendix V Development Adatance DMrlbution Patterns received 26 percent of the US. assistance, and in the 19SOs,30 percent of US. net disbursements went to Israel, Egypt, El Salvador, Ban- gladesh, and the Pacific Isles trust territories. Table V.2: U.S. Net Dlabunementr of Foreian Economic Assistance to Major Recipientsa Figures -..- in percents 1962-1969 1970-1979 1980-1986 Israel 17.1 Israel 7.7 Israel 13.4 Vietnam .-....-- 8.3 Vietnam 6.8 Egypt 11.4 Pakistan 7.1 Eavpt 5.5 El Salvador 2.0 Korea 4.7 India 3.3 Bangladesh 1.8 Brazil --_ 4.5 Bangladesh 2.8 Pacific Isles 1.7 Turkev 3.1 Indonesia 2.8 Sudan 1.6 Eavpt 2.8 Pakistan 2.4 Turkev 1.6 Yugoslavia 2.5 Cambodia 2.1 Philippines 1.4 Chile 2.0 Korea 2.0 Costa Rica 1.2 Indonesia 1.9 Pacific Isles 1.4 Pakistan 1.1 Colombia 1.6 Turkey 1.3 Honduras 1.0 Tunisia 1.1 Brazil 1.3 Peru 1.o Laos --- 1.1 Jordan 1.1 Jamaica 0.9 Dominican Rep. 1.1 Colombia 1.1 Indonesia 0.8 Morocco 1 .o Philippines 1.0 India 0.8 Taiwan --- 1.o Portugal 0.8 Dominican Rep. 0.7 Jordan -_ _... -__-~- 0.9 Laos 0.8 Sri Lanka 0.7 Israel 0.8 Svria 0.6 Liberia 0.6 Zaire-- ___..._. 0.8 Morocco 0.5 Kenya 0.6 Thailand _.--_ 0.8 Greece 0.5 Somalia 0.6 Bolivia 0.7 Bolivia 0.5 Morocco 0.6 Venezuela . .---.-- 0.7 Sri Lanka 0.4 Bolivia 0.6 Nigeria 0.6 Chile 0.4 Haiti 0.5 Afghanistan -,---_~.- 0.6 Nigeria 0.4 Portugal 0.5 Philippines 0.6 Peru 0.4 Seneca1 0.5 aPercentages are annual averages for the period. Table V.3 provides similar analysis for Japan’s official bilateral eco- nomic assistance. It shows, for example, that between 1962 and 1969, Japan directed 49 percent of its average net annual official development assistance disbursements to Indonesia, India, Korea, the Philippines, and Pakistan. Between 1970 and 1979, 29 percent went to Indonesia, Korea, Philippines, Bangladesh, and Burma, and from 1980 through 1986,25 Page 30 GAO/NSIAI&91~2fWS Foreign Assistance Appendix V Development Assintance Dlatrlbution Patterns percent went to China, Indonesia, Thailand, Philippines, and Bangladesh. Table V.3: Japan’s Net Dlrburrements of Economic Assistance to Major Recipients Figures in percents 1962-1969 1970-1979 1980-1986 Indonesia 13.5 Indonesia 10.8 China 6.4 India 11.5 Korea 6.1 Indonesia 5.3 Korea 9.7 Philippines 4.4 Thailand 5.0 Philippines ..__..- .-.__--.. .--____ 8.4 Bangladesh 4.3 Philippines 4.5 Pakistan. . -_. -.-..-- 6.0 Burma 3.3 Bangladesh 3.7 Braz.i,.__ ._.II...--.-- 5.2 Thailand 3.2 Burma 3.1 Burma._..-- ..-_-. 4.2 India 3.0 Korea 2.8 Taiwan __..._-_.----.- _ 2.7 Egypt 2.6 Pakistan 2.3 Vietnam ..__._.._. .^ -_. --. ...- 2.1 Pakistan 2.5 Malaysia 2.2 Thailand _._-. .- ___-....-__. ..--.-_--- 1.4 Malaysia 2.1 Egypt 1.9 Sri .^ Lanka _ l,_l_-__--. ^ ___--.-. -.-_--__- 0.6 Vietnam 1.5 Sri Lanka 1.6 Laos __...-. .- ~. ..-._ 0.6 Brazil 1.4 India 1.5 Malaysia 0.5 Iran 1.3 Nepal 0.9 Cambodia 0.3 Sri Lanka 1.0 Tanzania 0.8 Chile __._,........__ -~ ..._- - --- 0.3 Iraq 0.9 Turkey 0.8 Yugoslavia ._ ..^I_^.-.__.--.-.---.-- 0.3 Peru 0.8 Brazil 0.8 Mexico 0.2 Kenya 0.5 Kenya 0.7 Iran __ -_._.. - ..-.. 0.1 Zambia 0.5 Mexico 0.7 Tanzania 0.1 Nigeria 0.5 Bolivia 0.6 Kenya 0.1 Yugoslavia 0.5 Zaire 0.6 Table V-4 shows that the remaining DAC members concentrated their annual net disbursements on Reunion, Papua, New Guinea; Martinique, Guadaloupe, and Algeria during 1962 through 1969; Reunion, Marti- nique, Guadaloupe, Guiana, and French Polynesia from 1970 through 1979; and on Reunion, Martinique, French Polynesia, Guadaloupe, and Guiana during the 1980s. Page 31 GAO/NSIAD-91-2BFS Foreigu Assistance . Appendix V Development A&stance Dlstrlbution Patterns Table V.4: MaJor Reciplentr of DAC Member Economic AsBistanCe, Excluding Japan and the United States. Figures in percents 1962-1969 1970-1979 1980-l 996 Reunion 7.0 Reunion 13.9 Reunion 15.4 Papua New Guinea 6.0 Martinique 8.9 Martinique 7.7 Martinique 5.0 Guadaloupe 6.7 French Polynesia 3.9 Guadaloupe 4.0 Guiana 2.8 Guadaloupe 3.5 Algeria 2.2 French Polynesia 2.6 Guiana 2.7 India 1.8 New Caledonia 2.6 New Caledonia 2.3 Guiana 1.6 Paoua New Guinea 2.0 India 1.6 Israel ..-..-__ ____--__ --- 1.3 India 1.8 Netherlands Antilles 1.2 French Polynesia 1.1 Surinam 1.4 Indonesia 1.1 Surinam 1 .o Bangladesh 1.0 Tanzania 1 .o New Caledonia . ..._^... -. -_-.--.. ...~ 0.9 Netherlands Antilles 1.o Bangladesh 1.0 Yemen, Democratic _. ..___.-..-. ._-.._-..I-._-..-Republic _____- 0.8 Indonesia 1 .o Papua New Guinea 0.9 Pakistan _ ....__ ~..-._-. -...-___-__~- 0.8 St. Pierre and Micquelon 0.8 St. Pierre and Micquelon 0.9 Zaire 0.7 Mayotte 0.7 Turkey 0.9 Virgin -..-. Islands .-..._..___..__-- .._____-__ 0.7 Tanzania 0.7 Zaire 0.8 Netherlands Antilles 0.7 Djibouti 0.7 Mayotte 0.7 SpainI.__. -.. .-.--.--.-------__ 0.6 Pakistan 0.7 Morocco 0.7 Djibouti ..-. .- 0.6 Zaire 0.7 Egypt 0.7 Comoros 0.6 Morocco 0.6 Kenya 0.6 aNet disbursements Donors other than DAC members distributed 35 percent of their average annual net official development assistance disbursements to India, Paki- stan, Brazil, Jordan, and Mexico during the 1960s; 13 percent to Egypt, India, Syria, North Korea, and Jordan during the 1970s; and 13 percent to India, Syria, Jordan, Bangladesh, and Morocco during the 1980s. (See table V.S.). Page 32 GAO/NSIAD-Sl-26Fs Foreign Assistance Appendix V Development Aadihnce Distribution Patterna Table V.6: Major Reclplent8 of Non-DAC DonoW Figures .._. in percents - __._--..~ 1962-l 969 1970-1979 1980-1986 India ..~. 19.2 Egypt 4.0 India 3.7 Pakistan 5.7 India 2.5 Svria 3.4 Brazil 4.1 Syria 2.4 Jordan 2.7 Jordan . .. . _. _-.------~ 3.5 North Korea 2.1 Bangladesh 1.5 Mexrco 2.1 Jordan 1.4 Morocco 1.4 Turkev 2.0 Pakistan 1.3 Pakistan 1.3 Argentina -.--..-_- ..__ --__-__- 1.8 Bangladesh 1.1 Sudan 1.2 Chile ..-.-.- .._---.- 1.8 Oman 0.7 China 1.0 Eavpt 1.8 Sudan 0.7 Yemen 1 .o Zaire 1.7 Yemen 0.6 Bahrain 0.9 Colombia _- ..-___- ..^._ 1.5 Morocco 0.6 Oman 0.8 Lebanon ____ - __..___ ..._.. --.----- 1.3 Indonesia 0.5 Guadaloupe 0.7 Reunion 1.3 Bahrain 0.4 Martiniaue 0.7 Nigeria 1.1 Mauritania 0.4 Somalia 0.7 Iran ..-. .-._ ._.. - .._----- 1.1 Somalia 0.4 Ethiopia 0.6 Syria 1.0 Lebanon 0.3 Egypt 0.6 Peru _. ..- ._. __... -~ .-...- .----. .-_ 0.9 Brazil 0.3 Lebanon 0.6 Israel 0.9 Mexico 0.3 Tanzania 0.5 Kenya -. _..._~~..__-.-. 0.9 Yemen, Democratic Republic 0.3 Turkey 0.5 Korea.._ _ . . -. ..- -_- 0.9 Zaire 0.3 Sri Lanka 0.4 Tanzania - .._ ^_- .-.. .~--I_ _... Vietnam 0.3 Reunion 0.4 Algeria ._. .._-. .__........._..___- .__--_.. -_____ Turkey 0.2 Burma 0.4 Bolivia 13 Senegal 0.2 Indonesia 0.4 Madagascar 0.7 Burma 0.2 Kampuchea 0.4 Indonesia 0.7 Thailand 0.2 Mali 0.4 ‘Net disbursements Compared to earlier years, disbursements are no longer concentrated in a few developing nations. In 1970 and 1971, for instance, the five largest recipients of Japan’s assistance received 65 percent of its dis- bursements, compared to 32 percent in 1987 and 1988. The five top recipients in 1970 and 1971 received 32 percent of DX members’ dis- bursements, as compared to 15 percent in 1987 and 1988. The share of the top five global official development assistance recipients (Egypt, India, Pakistan, Bangladesh, and Indonesia) in 1975 and 1976 was 32 percent, as compared to 21 percent a decade later. Page 33 GAO/NSIAD-91-25FS Foreign Assistance Appendix VI Development Assistance Geographical Distribution The geographical distribution of official development assistance, excluding emergency relief, is primarily determined by historical and commercial links between the donor and recipient, as well as the stra- tegic value of the recipient to the donor. For example, Australia and New Zealand allocate over 80 percent of their assistance to Oceania; Italy sends over 66 percent of its assistance to Africa, and the United States distributes over 45 percent of its assistance to the Middle East. Japan concentrates 79 percent of its development assistance in Asia and distributes the balance fairly equally to other regions. As shown in figure VI. 1, all DAC member nations have increased their bilateral assistance to Sub-Saharan Africa. Italy, France, and the Nordic Countries (Denmark, Finland, Norway, and Sweden) are the major bene- factors of Sub-Saharan Africa, with Japan, Australia, and New Zealand trailing all others that assist Sub-Saharan Africa. Africa also figures prominently in distribution of assistance from multilateral institutions, receiving approximately 60 percent of the European Community’s multi- lateral assistance. Page 34 GAO/NSIAD-Bl-26FS Foreign Assistance Appendix VI Development AasLetnnce Qeo&ra~hid DLstribution Figure VI.1: Dlrtributlon ot Official Development Arsistancs to Sub-Saharan Africa loo Pm4ntago 90 70 00 60 40 30 20 10 0 197w70 lBEoB1 1oBlvl 1087/W Fiscal Yom United States Japen DAC All Donora UN Agendes The Middle East and North Africa received approximately 50 percent of U.S. bilateral development assistance in 1986 and 1986, an increase from about 32 percent in 1976 and 1976 (see fig. VI.2). Italy was the major donor to the Middle East in 1976 and 1976, but has since drasti- cally reduced its assistance. Page 36 GAO/NSJ.AWU-26F8 Foreign As&tame Appendix VI Development A~~btance Geographical Metrlbutlon Flgure Vl.2: Distribution of Offlclal Development Assistance to North Africa and the Middle East loo Polwnt8go 90 90 m 90 60 40 30 20 10 0 197&76 lwoml Flaoal Ym I United States Japan DAC I All Donora I UN Agendee Reported values include assistance to the small European developing nations. Virtually all DACmember countries have reduced the percentages of their development assistance to South Asia (see fig. VI.3). U.S. assis- tance, for instance, has fallen from 28 percent to 12 percent. Page a6 GAO/NSIAJHl-2SPS Foreign Assidance AppendJx VI Development Assistance Geographical Retribution Figure Vl.3: Dlrtrlbution of Official Development Assistance to South Asia 100 Porcontago 90 90 m 60 60 40 30 20 10 0 1975m 1wom 19&i/86 1987/88 Fbcal years DAC All Donors UN Agencies As shown in figure VI.4, the Far East and Oceania receive a large share of assistance from Australian and Japanese. France, Netherlands, and the United States are the main donors of economic assistance to Latin America and the Caribbean (see fig. VI.5). Page 37 GAO/NSIALbSl-25FS Foreign Assistance , I Appendix VI l Development A.8sMance Geographical Distribution Figure Vl.4: Distribution of Official Development Assistance to the Far East and Oceania 1M) Pwcentago 80 80 m 60 60 40 80 20 10 0 107w76 1880181 lQ85l86 1Q87l88 Fiscal Yoan I 1 ’ J United States Japan DAC All Donors UN AQendes Page 38 GAO/NSIAD-91-26FS Foreign Assistance Apwndix VI Development Addance Geographical Distibution Flgure Vl.6: Distribution of Official D&lopment Assistance to Latin America and the Carlbbean 100 90 80 m 60 60 40 30 20 197MB 1980/61 Floeal Yom United States Japan DAC All Donon UN Agendea Y Page 39 GAO/NSIAD91-25F8 Foreign Adstance c Appendix VII I. Development Assistance Sectorid Distribution Donors are guided by different aid philosophies in distributing their eco- nomic assistance. Some direct their assistance toward meeting the basic necessities of living; others address long-term economic development problems; and still others prefer to build institutional infrastructure such as stable government and improved educational opportunities. In 1986 and 1987,51.2 percent of U.S. development assistance was com- mitted for program assistance (commodity loans, budget support and general program loans); 4.1 percent to economic infrastructure (Le, transportation, communication, energy, etc.); 10 percent to agricultural production; 14 percent to food aid; and less than 1 percent to industry, mining, and construction. The United States led all major donors in per- centage commitments to food aid and program assistance, but trailed other donors in commitments to industry and economic infrastructure. In contrast, 21.8 percent of Japan’s official development assistance was committed to program assistance; 43.9 percent to economic infrastruc- ture; 7.6 percent to industry, mining, and construction; and 1.3 percent to food aid. These percentages are compared with those for DAC as a whole, multilaterals and overall global figures in table VII.1. Table Vll.1: Development Assistance by Major Purpose, 1966-l 987 Percent of United Total Commitments Type States Japan DAC’ Multilaterals Global Social and Administrative infrastructure 20.2 15.4 24.7 17.6 21.3 Economic infrastructure 4.1 43.9 20.0 28.5 24.1 Agriculture 10.0 10.0 12.1 24.1 17.9 Industry and Production 0.5 7.6 5.1 14.2 9.8 Food Aid 14.0 1.3 5.4 3.1 4.3 Program Assistance 51.2 21.8 32.0 12.5 22.6 %xludes all DAC members. (472189) Page 40 GAO/NSLADSldBFS Foreign Assistance IT.!+. General Accounting Office I’.(). Hex 6015 Gaithtv-sburg, MD 20877 Orders may also be placd by calling (202) 2756241.. I Permit. No. G 100 I
Foreign Assistance: International Resource Flows and Development Assistance to Developing Countries
Published by the Government Accountability Office on 1990-10-23.
Below is a raw (and likely hideous) rendition of the original report. (PDF)