2017-05-21
International aid and
development assistance are important contributors to the economies of the Lower
Mekong region. All Lower Mekong countries receive official development
assistance (ODA), with Thailand also contributing ODA as a donor. Nevertheless,
the region accounts for just 3.6 percent of the world’s total ODA received, a
low figure considering the significant military conflicts that the region has
faced in the last five decades and the resulting developmental and humanitarian
challenges.
Total ODA figures
ODA is the flow of
resources from official agencies (including governments and government
agencies) where economic development and welfare is the main objective. The
assistance must be concessional – there must be a grant element.
The total amount of ODA
received in the Lower Mekong was US$5.5 billion in 2015, US$1.7 billion less
than the previous year.1 While ODA to Laos was
basically unchanged, there were falls for Vietnam (US$1 billion less), Thailand
(US$296 million less), Myanmar (US$216 million less) and Cambodia (US$125
million less). Over the last decade, Vietnam has received the highest
annual amount of ODA among the Lower Mekong countries by far; in 2015, its
US$3.2 billion ODA income made up over half the total amount of the five
countries together.2
In 2013, the amount of
ODA Myanmar received increased almost seven times to US$3.9 billion.3
Myanmar’s increase came as it continued to remove barriers to trade and
restrictions on foreign entities operating within its borders. Western donors,
such as Australia, the European Union and the United States, had committed only
limited humanitarian aid in Myanmar following the 1962 military coup,
complaints of the repression or rights, and intermittent political instability
over several decades. They began expanding assistance and re-establishing local
offices following moves towards greater transparency and democracy, especially
after 2011.4 The massive increase was
not sustained, however, and Myanmar’s 2015 ODA figure of US$1.2 billion was
less than a third of the figure of 2 years earlier.
In 2015, ODA comprised
4.0 percent of Cambodia’s gross national income (GNI), 4.0 percent of Laos’
GNI, 2.0 percent of Myanmar’s, 1.7 percent of Vietnam’s and close to 0 percent
for Thailand. This places Cambodia and Laos in the “medium aid dependency”
category and the others in the “low aid dependency” category.5 Although Vietnam received
the highest level of ODA in 2015, Laos and Cambodia both received a higher rate
of ODA per capita at US$69 and US$43 respectively, followed by Vietnam (US$34),
Myanmar (US$22) and Thailand (US$0.9).6 The average for the Lower
Mekong was US$33, compared to the world average of US$21.7
Top donors
The majority of ODA to
developing countries comes from the 29 members of the Development Assistance
Committee (DAC) of the Organization for Economic Co-operation and Development
(OECD). Fifteen of these are among the region’s top donors.
A donor country’s aid
commitments can change significantly after a change in national
administration. In March 2017, for example, plans for enormous changes for
funding by USAID to developing countries were unveiled in the United States.8 Although the details are
not yet settled, proposals include cutting aid to developing nations by over a
third, merging USAID with the State Department and realigning funding to tie it
more closely to US national security objectives. The proposed changes would
take place in fiscal year 2018.
Chinese contributions
Although not listed in
the chart of the 15 top donors to the Lower Mekong, China is a large
contributor to the region. The exact amount is difficult to determine, as China
does not classify its assistance according to ODA standards set by the
Development Assistance Committee (DAC). Some of its contributions are not
transparent, and observer estimates vary enormously, partly depending on where
the line is drawn with concessional loans. For example, JICA Research Institute
has estimated China’s total “net foreign aid” at US$5.4 billion in 20139, while the RAND
Corporation estimated China’s foreign aid programmes for 2013 at US$317 billion10 – a massive difference.
While many western aid programmes are based on grants, China’s aid is largely
made up of pledges to lend. Another key difference is the focus: 75% of Chinese
aid reportedly goes to natural resource and infrastructure projects, with less
than a quarter to humanitarian work.11
See below for a map of
Chinese financial aid projects in the Lower Mekong, and explore the
full profiles dataset here.
The establishment of the
China-led Asian Infrastructure Investment Bank in October 2014 will add a
further US$40 billion for infrastructure, while also giving China greater
influence in regional development and policy.
Aid for infrastructure
development
Donors and development
assistance agencies such as the Asian Development Bank (ADB), have prioritized
infrastructure projects to meet the demands of these transitions. These
projects include hydropower generation and grid extension, road and bridge
construction.12 The ADB alone has funded
infrastructure projects worth about US$11 billion since 1992.
A man operates a bulldozer during the leveling of and upgrading of a road base in Cambodia. Photo by Asian Development Bank, taken on 15 February 2011. Licensed under CC BY-NC-ND 2.0.
A man operates a
bulldozer during the leveling of and upgrading of a road base in Cambodia. Photo by
Asian Development Bank, taken on 15 February 2011. Licensed under CC BY-NC-ND 2.0.
Finding a balance
Large projects, such as
infrastructure development, have far-reaching and sometimes unintended
effects. The environmental and social impact of such projects, such as the
mass relocation of people living on affected lands, sometimes results in
criticism of the donors involved. In providing aid to promote economic
development, responsible donors aim to balance the needs of governments, the
private sector and the rights of local communities.
Both country donors and
large institutions are sometimes criticised for the projects they support. In
March 2017, the advocacy group Inclusive Development International (IDI) and
partners released a report looking at the activities of the International
Finance Corporation (IFC), the World Bank’s private-sector arm.13 It found that the IFC
provides funding that supports development with profound environmental and
social impacts, including displacing local populations and damaging their
livelihoods. This is despite IFC’s purpose of reducing poverty through
sustainable development and requirements that it protect people and the
environment.
Sustainable Development
Goals
An important global guide
to aid and development is the 2030 Agenda for Sustainable Development adopted
at the United Nations Sustainable Development Summit in September 2015.14 The Agenda includes 17
Sustainable Development Goals (SDGs) – successors to the UN’s Millenium
Development Goals that ended in December 2015. The 17 SDGs are: (1) No poverty
(2) Zero hunger (3) Good health and well-being (4) Quality education (5) Gender
equality (6) Clean water and sanitation (7) Affordable and clean energy (8)
Decent work and economic growth (9) Industry, innovation and infrastructure
(10) Reduced inequalities (11) Sustainable cities and communities (12)
Responsible consumption and production (13) Climate action (14) Life below
water (15) Life on land (16) Peace, justice and strong institutions and (17)
Partnerships for the goals. There are 169 associated targets.
Each country localizes
the programme, setting indicators against which local progress can be measured.
The SDGs are then integrated into national planning.
Aid and development
terms
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Official Development
Assistance (ODA):
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Financial aid given by
governments and related agencies of developed countries to promote the
economic development and welfare of developing countries. Aid may take the
form of grants or concessional loans. Loans and credits for military purposes
are generally excluded.
|
Bilateral aid:
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Bilateral ODA flows
direct from one donor government to one recipient government. Some key
bilateral donors include Japan (JICA), China, Australia, France (AFD),
Switzerland (SDC), and the United States (USAID).
|
Multilateral aid:
|
Multilateral ODA is
channelled through development agencies such as the World Bank, the European
Union, the Asian Development Bank (ADB), and various United Nations (UN) organizations
that draw from more than one government’s assistance to provide support to a
country.
|
Development Assistance
Committee (DAC) donors:
|
The majority of ODA to
developing countries comes from the 29 members of the Development Assistance
Committee (DAC) of the Organization for Economic Co-operation and Development
(OECD). The DAC donors have to abide by the DAC guidelines in formulating and
reporting on the national development cooperation programs. DAC members are
mostly European states, but also include Australia, Canada, and the USA.
|
Non-DAC donors:
|
Donors are outside the
OECD-DAC member group. They are often referred to as ‘new’, ‘emerging’,
‘non-traditional’, or ‘non-western’ donors. Non-DAC donors as a whole are
increasingly using ‘aid’ as one part of a larger set of foreign policy
instruments—which may encompass traditional grant aid, lines of credit,
concessional loans, trade, investment, and technical cooperation—in their
engagement with partner countries. With non-DAC donors such as the BRICS
(Brazil, Russia, India, China and South Africa) growing in economic clout,
the role and influence of non-DAC donors in changing the aid landscape is set
to increase, particularly in the Lower Mekong region.
|
Related to aid and
development
References
1. World Bank. “Net Official
Development Assistance and Official Aid Received (Current US$). Accessed 5 May
2017. http://data.worldbank.org/indicator/DT.ODA.ALLD.CD.
2. Ibid.
3. Ibid.
4. “Burma, History.”
Accessed 5 May 2017. http://www.usaid.gov/burma/history.
5. OECD defines “low aid
dependency” as an ODA/GNI ratio below 3 percent and “high aid dependency” as
greater than 9 percent. OECD. 2003. Harmonising Donor Practices for Effective
Aid Delivery. Paris: OECD, 111; World Bank. “Net Official Development
Assistance and Official Aid Received (Current US$).” Accessed 5 May 2017.
http://data.worldbank.org/indicator/DT.ODA.ALLD.CD.; World Bank. “GNI, Atlas
Method (Current US$).” Accessed 5 May 2017.
http://data.worldbank.org/indicator/NY.GNP.ATLS.CD.
6. World Bank. “Net ODA
Received Per Capita, (Current US$).” Accessed 5 May 2017.
http://data.worldbank.org/indicator/DT.ODA.ODAT.PC.ZS.
7. Figures based on 2013 ODA
levels reported by OECD, and 2013 population figures provided by the Asian
Development Bank.
8. Bryant Harris, Robbie
Gramer, Emily Tarkin, 2017. “The End of Foreign Aid As We Know It”, Foreign
Policy, April 24 2017. http://foreignpolicy.com/2017/04/24/u-s-agency-for-international-development-foreign-aid-state-department-trump-slash-foreign-funding/?utm_content=buffer916c7&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
Accessed 5 May 2017
9. JICA Research Institute
2016. “JICA Research Institute Releases an Update on the Estimation of Chinese
Foreign Aid”, June 30 2016. https://www.jica.go.jp/jica-ri/news/topics/post_309.html
Accessed 5 May 2017.
10. Charles Wolf Jr 2015.
“China’s Foreign Aid Offensive”, June 29 2015, http://www.rand.org/blog/2015/06/chinas-foreign-aid-offensive.html
Accessed 5 May 2017.
11. Ibid
12. For example, JICA funded
the Can Tho Bridge in Vietnam. JICA. 2010. JICA and Mekong Delta. Hanoi,
Vietnam: JICA. Accessed 22 July 2015.
http://www.jica.go.jp/vietnam/english/office/others/c8h0vm000001siky-att/brochure_05_en.pdf.
13. Inclusive Development
International, 2017. Reckless Development: The IFC’s Dodgy Deals in Southeast
Asia Outsourcing Development: Lifting the Veil on the World Bank Group’s
Lending Through Financial Intermediaries, Part 3, March 2017. IDI March 2017. http://www.inclusivedevelopment.net/wp-content/uploads/2017/03/Outsourcing-Development-Part-3.pdf
Accessed 5 May 2017.
14. United Nations 2015.
“Transforming our world: the 2030 Agenda for Sustainable Development.” https://sustainabledevelopment.un.org/post2015/transformingourworld
Accessed 5 May 2017.
SOURCE:
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