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Policy briefing
Recommendations
•	 Donors should advance their national interest by pursuing a principled aid allocation strategy.
•	 There is an urgent need for donors to be more public spirited in their aid allocations, maximising every opportunity to
achieve development impact.
•	 Member countries of the Organisation for Economic Co-operation and Development’s Development Assistance Committee
(OECD DAC) should hold each other accountable for delivering principled aid in the national interest.
•	 Development cooperation agencies should forge a new political consensus on principled aid across OECD DAC and
non-DAC providers.
Key findings
•	 The Principled Aid (PA) Index highlights the degree to which 29 DAC donors use official development assistance (ODA)
to advance their long-term national interest in a safer, more sustainable and more prosperous world.
•	 There is a worrying deterioration in donor commitment to public spiritedness, despite the fact that donors are becoming
more principled on average.
•	 Luxembourg tops the PA Index, followed closely by the United Kingdom and Sweden. At the bottom of the PA Index is
the Slovak Republic, followed by Greece and Austria.
The Principled Aid Index
Nilima Gulrajani and Rachael Calleja
March 2019
2
Introduction – aid in the national
interest
Amid a rising tide of political populism in
Europe and beyond, the idea that official
development assistance (ODA) should serve the
national interest is gaining currency. While there
has long been a desire to pursue, promote and
defend the national interest via aid spending
(Morgenthau, 1962), there is now a growing
emphasis and expectation that aid will and
should contribute a positive net return to a
donor country’s domestic interests. The rhetoric
of ‘win-wins’ and ‘mutual benefits’ is used to
argue for investing in development (Carter, 2016;
Keijzer and Lundsgaarde, 2017; 2018; Kharas
and Rogerson, 2017). Development is framed as
a critical pillar of foreign policy that reinforces
diplomatic and defence agendas, while national
aid strategies emphasise the importance of
simultaneously advancing domestic and global
development objectives.
These trends represent a marked change
from the post-Cold-War period, when a strong
international consensus existed on the singular
importance of poverty alleviation and global
solidarity (Collier, 2016; Mawdsley et al.,
2017). A number of intersecting factors explain
why development narratives that are more
self-regarding have been embraced by donors.
These include: the election of populist political
leaders who choose to present domestic and
global priorities as zero-sum; fiscal pressures
that squeeze public expenditure and lead aid to
serve multiple policy objectives; and growing
scepticism about aid effectiveness and spending
taxpayers’ money on other countries’ citizens
(Gulrajani, 2017).
A changing geography of power and politics
also contributes to shifting donor agendas and
ambitions in international aid spending. As the
archaic categories of ‘rich’ and ‘poor’ countries
dissolve and the power and influence arising from
South-South cooperation grows, some argue that
aid can no longer afford to be framed as charitable
giving (Kharas and Rogerson, 2017; Gulrajani
and Swiss, forthcoming). Instead, it is increasingly
a lubricant for diplomatic relations, international
trade and investment in strategic markets. As
those engaged in South-South cooperation
become development partners themselves, new
norms and principles for delivering development
assistance are also emerging to challenge the
traditional approaches of OECD DAC donors
(DAC High-Level Panel, 2017).
The overall result is growing public and
political acceptance of a narrative that aid
should pursue the national interest (Carter, 2016;
Gulrajani, 2017; Rabinowitz and Greenhill,
2018). And yet, aid oriented towards securing
domestic interests is not always the most efficient,
nor the most effective, way to maximise global
development ambitions (Girod, 2012; Steele,
2011; Kilby and Dreher, 2010).
The Principled Aid (PA) Index was created
to ensure donors remain steadfast in their
commitment to a principled national interest in
their aid allocation. The PA Index analytically
defines and empirically measures a principled
aid allocation – one that is oriented towards
achieving both global and domestic benefits in
the long run. This can minimise the strategic and
politicised use of ‘national interest’ vocabularies
that maintain only a rhetorical commitment to
global development while tending towards the
parochial in practice. It is hoped the PA Index
catalyses a much-needed conversation on the
nature of the national interest in aid, including
greater reflection on how it can be assessed
empirically across all aid providers and its
possible effects on development trajectories.
Aid in the national interest:
distinguishing dual meanings
The PA Index identifies two main types of aid in
the national interest:
Unprincipled aid in the national interest is self-
regarding, short-termist and unilateralist. Donors
concentrate on securing narrower commercial or
geopolitical interests from their aid allocations
while sidelining areas of real development need
or undervaluing global cooperation. Such donor
short-termism or ‘selfishness’ has been shown to
be developmentally suboptimal.
Principled aid offers the prospect of a safer,
more sustainable and more prosperous world.
It serves donors’ national interest in the long run
3
just as much as it benefits the aid-receiving state.
Climate change, infectious diseases, cross-border
migration, inequality and global terrorism are just
a few examples of development challenges that,
if resolved, would be in the national interest of
most, if not all, countries (Kaul, 2017; Blodgett
Bermeo, 2018). If aid is allocated to tackle
difficult development challenges, all nations can
be winners, and the mutual interests of all can
be served. This is the rationale underpinning the
positive-sum ‘nationalist case for globalism’ that
prominent voices are now making (Gates and
Gates, 2019).
What is the Principled Aid Index?
The PA Index is a composite index that
highlights how far the 29 DAC donors use their
ODA to advance a principled national interest.
It comprises three equally weighted dimensions
or ‘principles’. Each component is underpinned
by four quantitative indicators (Table 1).
1.	 Principled aid is allocated according to
recipient countries’ needs and vulnerabilities.
It serves the donor’s national interest as it
reduces the scope for political conflict and
social tension, increases the productivity
of human capital, generates more trade
and investment opportunities and furthers
development prospects overall.
2.	 Principled aid allocates resources to problems
that can only be solved by investing in greater
global cooperation. Such cooperation can
include both sectoral investments in under-
provided global public goods, as well as core
budgetary support for the robust functioning
of multilateral institutions.
3.	 Principled aid is public spirited and avoids
instrumentalising ODA to secure commercial or
Principle Definition Indicators
Needs Aid is allocated to countries to
address critical development
needs and vulnerabilities
A. Targeting poverty: Share of bilateral ODA/gross national income (GNI) targeted
to least developed countries (LDCs)
B. Supporting displaced populations: Share of ODA to developing countries that
cumulatively host 70% of cross-border forcibly displaced populations
C. Assisting conflict-affected states: Share of humanitarian ODA to countries
with active violent conflicts
D. Targeting gender inequality: Share of bilateral ODA to countries with the
highest levels of gender inequality
Global
cooperation
Aid is allocated to channels
and activities that facilitate and
support global cooperation
A. Enhancing global trade prospects: Share of bilateral ODA to reduce trade-
related constraints and build the capacity and infrastructure required to benefit
from opening to trade
B. Providing core support for multilateral institutions: Share of ODA as core
multilateral funding
C. Tackling the effects of climate change: Share of total ODA (bilateral and
imputed multilateral) for climate mitigation and adaptation
D. Constraining infectious diseases: Share of total ODA allocated to slow the
spread of infectious diseases
Public
spiritedness
Aid is allocated to maximise
every opportunity to achieve
development impact rather than
a short-sighted domestic return
A. Minimising tied aid: Average share of formally and informally tied aid
B. Reducing alignment between aid spending and United Nations (UN) voting:
Correlation between UN voting agreement across donors and recipients, and donor
ODA disbursements to recipients
C. De-linking aid spending from arms exports: Correlation between donor arms
exports to recipients, and ODA disbursements to recipients
D. Localising aid: Share of bilateral ODA spent as country programmable aid (CPA),
humanitarian and food aid
Table 1  The PA Index: principles and indicators
4
geo-strategic advantage over recipients.
This is because aid that actively cultivates
domestic constituencies can divert donor
attention away from core global development
objectives and shift effort and resources
towards securing vested interests (Collier, 2016).
This can result in less development impact than
would otherwise have been achieved.
Proxying donor motivations through the use
of aid allocation data is a commonly used
research technique, allowing us to go beyond
donor rhetoric and investigate their actual deeds
(Alesina and Dollar, 2000; Hoeffler and Outram,
2011; Maurits van der Veen, 2011). More details
on the theoretical approach, principles, indicators
and data tests can be found in the accompanying
methodology note (Gulrajani and Calleja, 2019).
Key findings
The PA Index explores recent trends and
trajectories in aid allocation and donor motivation
over the 2013–2017 period. As explained in the
methodological note (ibid.), every year a country
receives a score out of 10 for performance against
each of the three principles, generating an overall
PA score out of 30.1
Table 2 presents the PA Index
2017 results, while Annex 1 includes overall
ranking by year since 2013.
1  Luxembourg tops the PA Index, followed
closely by the United Kingdom and Sweden.
At the bottom of the PA Index is the Slovak
Republic, followed by Greece and Austria.
Luxembourg scores in the top ten along all
three principles but does especially well on
public spiritedness. Its lowest rank is on the
principle of global cooperation, owing mainly
to its performance on the aid-for-trade and core
multilateral variables. The UK is second as it
continues to do well on the principle of needs-
based allocation, but it has slipped on both public
spiritedness and global cooperation since 2016.
Sweden takes third place, with a strong showing
on the needs principle but weaker performance
(14th position) on public spiritedness.
1	 Scores represent absolute improvement irrespective of other donors but ranks capture relative improvements including
changes driven by the performance of others.
The Slovak Republic ranks bottom of the
PA Index. It places among the bottom three
donors on all dimensions, ranking 29th on the
needs dimension and 27th on both the global
cooperation and public spiritedness dimensions.
Greece ranks 28th on the Index. Its position
is due to poor performance on the global
cooperation dimension (29th) and the public
spiritedness dimension (28th). Austria ranks 27th
overall in 2017.
Table 2  Rank overall and by sub-component
Overall Needs Global
co-op
Public
spirit
Luxembourg 1 4 9 1
UK 2 3 4 7
Sweden 3 2 7 14
Ireland 4 1 15 4
Norway 5 5 5 13
Canada 6 8 3 15
Japan 7 22 1 2
Finland 8 9 6 12
US 9 6 10 20
France 10 21 2 18
Denmark 11 7 19 6
Korea 12 20 8 5
Iceland 13 11 17 3
Australia 14 16 11 9
Switzerland 15 19 12 10
Germany 16 12 14 22
Netherlands 17 14 16 19
Belgium 18 17 22 8
New Zealand 19 28 13 11
Italy 20 23 18 24
Spain 21 24 20 23
Portugal 22 27 24 17
Czech Republic 23 13 23 26
Hungary 24 25 25 21
Slovenia 25 26 26 16
Poland 26 10 28 25
Austria 27 18 21 29
Greece 28 15 29 28
Slovak Republic 29 29 27 27
5
2  Donors are becoming more principled on
average, largely because of improved scores on the
two dimensions of global cooperation and needs.
Notwithstanding populist pressures, there is
limited evidence of a tendency towards less
principled aid across the DAC. Principled aid
scores were at their lowest average in 2015
(14.91) and their highest in 2017 (16.07).
Overall, there are only nine donors whose
score in the PA Index has declined overall
between 2013–2017 (Figure 1). The trend
towards principledness is mainly driven by
improving performance on the principles of
needs and global cooperation. The average
score on the needs principle in our sample rose
by approximately 10% over the 2013 average
(0.42 points) between 2013–2017. Twenty
donors improved their score on needs between
2013 and 2017, while nine had their score fall
and one saw no change.2
The average score on
global cooperation increased by 9% (0.44 points)
between 2013 and 2017. Seventeen donors
2	 The nine donors with falling scores on the needs dimension are: Australia, Belgium, Finland, Hungary, Japan, Korea,
Slovak Republic, the UK and the US. We can only calculate scores for Hungary since 2016, the year of its accession to the
DAC, where it was formally obliged to report in full.
3	 The twelve donors with declining scores on global cooperation are: Austria, Belgium, Canada, Czech Republic, Denmark,
Germany, Hungary, Iceland, Korea, the Netherlands, Slovak Republic and the UK.
improved their score on this principle, while 12
saw their score fall.3
3  Donors display a worrying deterioration
in their commitment to public spiritedness.
The trend towards increased principledness
masks a sharp and notable deterioration in public
spiritedness. Here, average scores declined by 6%
(or 0.39 points) between 2013 and 2017, with an
absolute decline in the scores of 23 donors over
this period (Figure 2). Luxembourg, Japan, Iceland,
Ireland and Denmark consistently ranked in the
top band on public spiritedness between 2013 and
2017, while Poland, the Czech Republic, the Slovak
Republic, Greece and Austria were consistently
among the lowest ranked donors over the same
period. New Zealand showed the greatest relative
improvement over time, rising 12 places from 23rd
in 2013 to 11th in 2017. Conversely, the US and
Canada show the largest relative drop in public
spiritedness, each falling eight places between 2013
and 2017 to 20th and 15th, respectively.
Figure 1  Countries declining in PA Index score, 2013–2017
0 5 10 15
PA Index score
20 25 30
2017 Difference
-3.55
-3.47
-1.99
-1.68
-1.50
-1.46
-1.19
-1.00
-0.08
2013
Japan
Germany
US
Iceland
Denmark
Netherlands
UK
Slovak Republic
Belgium
6
4  There is a positive association between DAC
donors’ ODA as a share of their GNI and scores
on the PA Index.
As Figure 3 shows, more generous donors are
likely to be more principled, though the direction
of causality is unknown (i.e. being principled
could be a driver of donor generosity just as
much as generosity inspires a principled aid
allocation). While a high ODA/GNI ratio is not
required to be principled (Canada, Japan and
Ireland perform among the top 10 despite small
ODA/GNI), we see a tendency for more generous
donors to be ranked higher on the PA Index.
4	 The Asia Pacific region is populated by a large number of middle-income countries, as opposed to LDCs, which may
exert downward pressure on its ranking on the principle of needs. Conversely, donors of this region share interests in
fostering intra-regional collaboration on both trade and climate change that explain their higher scores on the principle
of global cooperation.
Other notable findings
•• Canada and Japan are consistently in the top
third of the table across all years.
•• Germany, France, the Netherlands and
Switzerland are consistently located in the
middle of the PA Index across all years.
•• Central and Eastern European donors are
consistently in the bottom third of the
PA Index between 2013–2017. The only
exception is Poland, which jumped six places
to 15th position in 2016 but fell back into the
bottom third in 2017.
•• Newer donors (post-2013 accession to the
DAC) rank towards the bottom of the PA
Index across all years. The only exception
is Iceland, which acceded in 2013 but has
consistently ranked in the top half of donors.
•• Italy is the lowest-performing G7 country.
•• Donors of the Asia Pacific region (Australia,
New Zealand, Korea and Japan) all rank in
the bottom half of the PA index on needs but
are among the top half on global cooperation.
This uneven performance may be explained
by the strong regional focus adopted by these
four donors.4
Recommendations
1  Donors should advance their national interests
by pursuing a principled aid allocation strategy.
Aid allocation strategies should prioritise
principled aid, avoiding the short-termism,
self-regard and unilateralism of unprincipled
approaches. Doing so involves allocating aid on
the basis of development needs and vulnerabilities,
supporting global cooperation and displaying
greater public spiritedness. Examples of key
actions that could be taken include ensuring that
at least 50% of ODA is targeted at LDCs or
reversing the trend of strictly earmarking the aid
that goes to multilateral institutions.
The PA Index is deliberately focused on ODA
because many donors allude to both the desire
Figure 2  Change in PA score on public-spirited
dimension by donor, 2013–2017
-2 -1 0
Change in PA Index score
1 2 3
Greece
New Zealand
Hungary
Norway
Korea
Sweden
Ireland
Japan
Switzerland
Slovenia
Italy
Luxembourg
Finland
Austria
Spain
Denmark
Belgium
France
Australia
Czech Republic
Portugal
Iceland
Canada
Germany
UK
Netherlands
US
Slovak Republic
Poland
7
and feasibility of using aid to advance national
aims and ambitions. Clearly foreign aid is
only one vehicle to realise global development
objectives. Donors should explore all possible
domestic policy levers to reinforce and support a
principled approach to the national interest.
2  There is urgent need to focus attention on
improving donors’ public spiritedness.
Public spiritedness is in decline: reversing this
trend should be an urgent donor priority. The
decline in this principle suggests that many
donors are adopting a more short-sighted
approach to aid, targeting it to help domestic
constituencies and firms and supporting short-
term foreign policy objectives, rather than taking
a longer-term, principled approach. Examples of
key actions that could be taken to reverse this
trend would include committing to formally and
informally untying all aid and increasing the
share of ODA that is spent in recipient countries.
3  Donors should hold each other accountable for
delivering principled aid in the national interest.
Donors should cultivate new relationships and
mechanisms within the OECD DAC to advance
principled aid. Our rankings highlight the
potential for atypical alliances and coalitions;
for example, between Japan, Canada and
Ireland that are all consistent performers on the
PA Index. Like-mindedness is also identifiable
at the level of each principle if consistent
performance in one dimension can be taken as
representing an opportunity for alliance-building
(Table 3). Separately, assessments of whether
donors are pursuing a principled aid approach
could feature in the DAC peer review process.
Advancing mechanisms whereby donors are held
Figure 3  PA Index score and ODA/GNI (2017)
5 10 15
PA Index score
20 25
0.0
0.4
0.8
ODA/GNI
1.2
Norway
Denmark
Germany
Switzerland
Finland
Iceland
Australia
New
Zealand
Czech
Republic
Ireland
R2=0.3993
Canada
Japan
US
Korea
Netherlands
Belgium
Austria
SloveniaPortugal
Hungary
Poland
GreeceSlovak
Republic
Italy
Spain
Sweden
Luxembourg
UK
France
Principle Consistent top band performance, 2013–2017
Needs Ireland, Sweden, UK, Luxembourg, Norway
Global cooperation Japan, France, Canada, UK
Public spiritedness Luxembourg, Japan, Iceland, Ireland, Denmark
Table 3  Potential coalitions by principle
8
accountable by a wider range of stakeholders for
principled aid is critical.
4  OECD DAC and non-DAC aid providers should
forge a new political consensus on principled aid.
The allocation of aid to support the national
interest is a very real political pressure for both
DAC and non-DAC aid providers. In cases
where pressures to instrumentalise aid to serve
geopolitical or commercial objectives loom
large, a stronger joint commitment could be
made by all providers to principled aid. The
post-BAPA+40 framework5
on development
cooperation can provide an opportunity to
advance shared commitments to principled
engagement. This cause would be greatly assisted
if all development cooperation providers released
relevant data sets based on common definitions
of concessional development finance flows that
would allow for greater analytical assessment
across all donors.
5	 In March 2019, the Second UN Conference on South-South Cooperation (BAPA+40 Conference) is being
held to mark the 40th anniversary of the Buenos Aires Plan of Action on technical cooperation among
developing countries. It’s outcome document will provide an important reference point for the future
development cooperation across all providers.
Conclusion
Like so many areas of development policy,
the case for principled aid rests on taking an
expansive long-term understanding of what
is meant by the national interest. This is
inherently at odds with the short-termism of
the electoral cycle and acute public pressures
on foreign aid budgets in many countries.
Measuring donor ‘principledness’ provides an
independent, evidence-based assessment of the
nature of a donor’s motivation – as revealed
by its aid allocation – allowing the expressions
of its national interest to be tracked and
monitored over time. By looking at such revealed
preferences, the PA Index offers insights into
trends across the community of DAC donors
that can inform the search for alliances based on
shared values, as well as foster greater dialogue
and discussion on the role of national interests
and agendas in relation to aid spending.
9
References
Alesina, A. and Dollar, D. (2000) ‘Who gives foreign aid to whom and why?’ Journal of Economic
Growth 5(1): 33–63
Blodgett Bermeo, S. (2018) Targeted development: industrialized country strategy in a globalising world.
Oxford: Oxford University Press
Carter, P. (2016) ‘Five ways to deliver UK aid in the national economic interest’. ODI Briefing
Note. London: Overseas Development Institute (www.odi.org/sites/odi.org.uk/files/resource-
documents/10897.pdf)
Collier, P. (2016) The ethical foundations of aid: two duties of rescue. Oxford: Blavatnik School of
Government, Oxford University (www.bsg.ox.ac.uk/sites/default/files/2018-05/BSG-WP-2016-016.pdf)
DAC High-Level Panel (2017) A new DAC in a changing world: setting a path for the future. Report
of the High-Level Panel, January. Paris: Organisation for Economic Co-operation and Development
(www.oecd.org/dac/Report-High-Level-Panel-on-the-DAC-2017.pdf)
Dreher, A., Eichenauer, V.Z. and Gehring, K. (2016) ‘Geopolitics, aid, and growth: the impact of UN
Security Council membership on the effectiveness of aid’ World Bank Economic Review 32(2): 1–25
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International Political Economy Society. Philadelphia, PA, 14-15 November
Girod, D. (2012) ‘Effective foreign aid following civil war: the nonstrategic-desperation hypothesis’
American Journal of Political Science 56(1): 188–201
Gulrajani, N. (2017) ‘Bilateral donors and the age of the national interest: what prospects for
challenge by development agencies?’ World Development 96: 375–389
Gulrajani, N. and Swiss, L. (forthcoming) ‘Donorship in a state of flux’ in I. Olivia and Z. Perez (eds.)
Aid, power and politics. London: Routledge
Hoeffler, A. and Outram, V. (2011) ‘Need, merit, or self-interest – what determines the allocation of
aid?’ Review of Development Economics 15(2): 237–250
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publications/10940-global-development-trends-and-challenges-horizon-2025-revisited)
Kilby, C. and Dreher, A. (2010) ‘The impact of aid on growth revisited: do donor motives matter?’
Economics Letters 107(3): 338–340
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11
Annex 1  Overall PA Index ranks by year
2017 2016 2015 2014 2013
1  Luxembourg Luxembourg UK UK UK
2  UK UK Luxembourg Luxembourg Canada
3  Sweden Ireland Ireland Japan Luxembourg
4  Ireland Sweden Japan Ireland Japan
5  Norway Japan Canada Finland Sweden
6  Canada Canada Norway Belgium Ireland
7  Japan Korea Finland US US
8  Finland Norway Belgium Denmark Denmark
9  US Australia Iceland Canada Iceland
10  France Denmark US Sweden Finland
11  Denmark Iceland Sweden Norway Korea
12  Korea France Korea Korea Belgium
13  Iceland US Denmark Iceland Norway
14  Australia Finland France Germany Netherlands
15  Switzerland Poland Switzerland Switzerland Germany
16  Germany Belgium Australia Australia Australia
17  Netherlands Netherlands Germany Netherlands France
18  Belgium Switzerland Italy France Switzerland
19  New Zealand Germany Netherlands Spain Italy
20  Italy New Zealand New Zealand Italy New Zealand
21  Spain Italy Poland New Zealand Spain
22  Portugal Hungary Spain Poland Czech Republic
23  Czech Republic Portugal Czech Republic Czech Republic Slovak Republic
24  Hungary Czech Republic Slovak Republic Austria Austria
25  Slovenia Slovak Republic Portugal Portugal Poland
26  Poland Spain Austria Slovak Republic Portugal
27  Austria Slovenia Slovenia Slovenia Slovenia
28  Greece Austria Greece Greece Greece
29  Slovak Republic Greece
ODI is an independent, global think tank, working for a sustainable and peaceful world in which
every person thrives. We harness the power of evidence and ideas through research and partnership to
confront challenges, develop solutions, and create change.
Readers are encouraged to reproduce material for their own publications, as long as they are not being
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we ask readers to link to the original resource on the ODI website. The views presented in this paper are
those of the author(s) and do not necessarily represent the views of ODI or our partners.
This work is licensed under CC BY-NC-ND 4.0.
Evidence.
Ideas.
Change.
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The principled aid index 2019

  • 1. Policy briefing Recommendations • Donors should advance their national interest by pursuing a principled aid allocation strategy. • There is an urgent need for donors to be more public spirited in their aid allocations, maximising every opportunity to achieve development impact. • Member countries of the Organisation for Economic Co-operation and Development’s Development Assistance Committee (OECD DAC) should hold each other accountable for delivering principled aid in the national interest. • Development cooperation agencies should forge a new political consensus on principled aid across OECD DAC and non-DAC providers. Key findings • The Principled Aid (PA) Index highlights the degree to which 29 DAC donors use official development assistance (ODA) to advance their long-term national interest in a safer, more sustainable and more prosperous world. • There is a worrying deterioration in donor commitment to public spiritedness, despite the fact that donors are becoming more principled on average. • Luxembourg tops the PA Index, followed closely by the United Kingdom and Sweden. At the bottom of the PA Index is the Slovak Republic, followed by Greece and Austria. The Principled Aid Index Nilima Gulrajani and Rachael Calleja March 2019
  • 2. 2 Introduction – aid in the national interest Amid a rising tide of political populism in Europe and beyond, the idea that official development assistance (ODA) should serve the national interest is gaining currency. While there has long been a desire to pursue, promote and defend the national interest via aid spending (Morgenthau, 1962), there is now a growing emphasis and expectation that aid will and should contribute a positive net return to a donor country’s domestic interests. The rhetoric of ‘win-wins’ and ‘mutual benefits’ is used to argue for investing in development (Carter, 2016; Keijzer and Lundsgaarde, 2017; 2018; Kharas and Rogerson, 2017). Development is framed as a critical pillar of foreign policy that reinforces diplomatic and defence agendas, while national aid strategies emphasise the importance of simultaneously advancing domestic and global development objectives. These trends represent a marked change from the post-Cold-War period, when a strong international consensus existed on the singular importance of poverty alleviation and global solidarity (Collier, 2016; Mawdsley et al., 2017). A number of intersecting factors explain why development narratives that are more self-regarding have been embraced by donors. These include: the election of populist political leaders who choose to present domestic and global priorities as zero-sum; fiscal pressures that squeeze public expenditure and lead aid to serve multiple policy objectives; and growing scepticism about aid effectiveness and spending taxpayers’ money on other countries’ citizens (Gulrajani, 2017). A changing geography of power and politics also contributes to shifting donor agendas and ambitions in international aid spending. As the archaic categories of ‘rich’ and ‘poor’ countries dissolve and the power and influence arising from South-South cooperation grows, some argue that aid can no longer afford to be framed as charitable giving (Kharas and Rogerson, 2017; Gulrajani and Swiss, forthcoming). Instead, it is increasingly a lubricant for diplomatic relations, international trade and investment in strategic markets. As those engaged in South-South cooperation become development partners themselves, new norms and principles for delivering development assistance are also emerging to challenge the traditional approaches of OECD DAC donors (DAC High-Level Panel, 2017). The overall result is growing public and political acceptance of a narrative that aid should pursue the national interest (Carter, 2016; Gulrajani, 2017; Rabinowitz and Greenhill, 2018). And yet, aid oriented towards securing domestic interests is not always the most efficient, nor the most effective, way to maximise global development ambitions (Girod, 2012; Steele, 2011; Kilby and Dreher, 2010). The Principled Aid (PA) Index was created to ensure donors remain steadfast in their commitment to a principled national interest in their aid allocation. The PA Index analytically defines and empirically measures a principled aid allocation – one that is oriented towards achieving both global and domestic benefits in the long run. This can minimise the strategic and politicised use of ‘national interest’ vocabularies that maintain only a rhetorical commitment to global development while tending towards the parochial in practice. It is hoped the PA Index catalyses a much-needed conversation on the nature of the national interest in aid, including greater reflection on how it can be assessed empirically across all aid providers and its possible effects on development trajectories. Aid in the national interest: distinguishing dual meanings The PA Index identifies two main types of aid in the national interest: Unprincipled aid in the national interest is self- regarding, short-termist and unilateralist. Donors concentrate on securing narrower commercial or geopolitical interests from their aid allocations while sidelining areas of real development need or undervaluing global cooperation. Such donor short-termism or ‘selfishness’ has been shown to be developmentally suboptimal. Principled aid offers the prospect of a safer, more sustainable and more prosperous world. It serves donors’ national interest in the long run
  • 3. 3 just as much as it benefits the aid-receiving state. Climate change, infectious diseases, cross-border migration, inequality and global terrorism are just a few examples of development challenges that, if resolved, would be in the national interest of most, if not all, countries (Kaul, 2017; Blodgett Bermeo, 2018). If aid is allocated to tackle difficult development challenges, all nations can be winners, and the mutual interests of all can be served. This is the rationale underpinning the positive-sum ‘nationalist case for globalism’ that prominent voices are now making (Gates and Gates, 2019). What is the Principled Aid Index? The PA Index is a composite index that highlights how far the 29 DAC donors use their ODA to advance a principled national interest. It comprises three equally weighted dimensions or ‘principles’. Each component is underpinned by four quantitative indicators (Table 1). 1. Principled aid is allocated according to recipient countries’ needs and vulnerabilities. It serves the donor’s national interest as it reduces the scope for political conflict and social tension, increases the productivity of human capital, generates more trade and investment opportunities and furthers development prospects overall. 2. Principled aid allocates resources to problems that can only be solved by investing in greater global cooperation. Such cooperation can include both sectoral investments in under- provided global public goods, as well as core budgetary support for the robust functioning of multilateral institutions. 3. Principled aid is public spirited and avoids instrumentalising ODA to secure commercial or Principle Definition Indicators Needs Aid is allocated to countries to address critical development needs and vulnerabilities A. Targeting poverty: Share of bilateral ODA/gross national income (GNI) targeted to least developed countries (LDCs) B. Supporting displaced populations: Share of ODA to developing countries that cumulatively host 70% of cross-border forcibly displaced populations C. Assisting conflict-affected states: Share of humanitarian ODA to countries with active violent conflicts D. Targeting gender inequality: Share of bilateral ODA to countries with the highest levels of gender inequality Global cooperation Aid is allocated to channels and activities that facilitate and support global cooperation A. Enhancing global trade prospects: Share of bilateral ODA to reduce trade- related constraints and build the capacity and infrastructure required to benefit from opening to trade B. Providing core support for multilateral institutions: Share of ODA as core multilateral funding C. Tackling the effects of climate change: Share of total ODA (bilateral and imputed multilateral) for climate mitigation and adaptation D. Constraining infectious diseases: Share of total ODA allocated to slow the spread of infectious diseases Public spiritedness Aid is allocated to maximise every opportunity to achieve development impact rather than a short-sighted domestic return A. Minimising tied aid: Average share of formally and informally tied aid B. Reducing alignment between aid spending and United Nations (UN) voting: Correlation between UN voting agreement across donors and recipients, and donor ODA disbursements to recipients C. De-linking aid spending from arms exports: Correlation between donor arms exports to recipients, and ODA disbursements to recipients D. Localising aid: Share of bilateral ODA spent as country programmable aid (CPA), humanitarian and food aid Table 1  The PA Index: principles and indicators
  • 4. 4 geo-strategic advantage over recipients. This is because aid that actively cultivates domestic constituencies can divert donor attention away from core global development objectives and shift effort and resources towards securing vested interests (Collier, 2016). This can result in less development impact than would otherwise have been achieved. Proxying donor motivations through the use of aid allocation data is a commonly used research technique, allowing us to go beyond donor rhetoric and investigate their actual deeds (Alesina and Dollar, 2000; Hoeffler and Outram, 2011; Maurits van der Veen, 2011). More details on the theoretical approach, principles, indicators and data tests can be found in the accompanying methodology note (Gulrajani and Calleja, 2019). Key findings The PA Index explores recent trends and trajectories in aid allocation and donor motivation over the 2013–2017 period. As explained in the methodological note (ibid.), every year a country receives a score out of 10 for performance against each of the three principles, generating an overall PA score out of 30.1 Table 2 presents the PA Index 2017 results, while Annex 1 includes overall ranking by year since 2013. 1  Luxembourg tops the PA Index, followed closely by the United Kingdom and Sweden. At the bottom of the PA Index is the Slovak Republic, followed by Greece and Austria. Luxembourg scores in the top ten along all three principles but does especially well on public spiritedness. Its lowest rank is on the principle of global cooperation, owing mainly to its performance on the aid-for-trade and core multilateral variables. The UK is second as it continues to do well on the principle of needs- based allocation, but it has slipped on both public spiritedness and global cooperation since 2016. Sweden takes third place, with a strong showing on the needs principle but weaker performance (14th position) on public spiritedness. 1 Scores represent absolute improvement irrespective of other donors but ranks capture relative improvements including changes driven by the performance of others. The Slovak Republic ranks bottom of the PA Index. It places among the bottom three donors on all dimensions, ranking 29th on the needs dimension and 27th on both the global cooperation and public spiritedness dimensions. Greece ranks 28th on the Index. Its position is due to poor performance on the global cooperation dimension (29th) and the public spiritedness dimension (28th). Austria ranks 27th overall in 2017. Table 2  Rank overall and by sub-component Overall Needs Global co-op Public spirit Luxembourg 1 4 9 1 UK 2 3 4 7 Sweden 3 2 7 14 Ireland 4 1 15 4 Norway 5 5 5 13 Canada 6 8 3 15 Japan 7 22 1 2 Finland 8 9 6 12 US 9 6 10 20 France 10 21 2 18 Denmark 11 7 19 6 Korea 12 20 8 5 Iceland 13 11 17 3 Australia 14 16 11 9 Switzerland 15 19 12 10 Germany 16 12 14 22 Netherlands 17 14 16 19 Belgium 18 17 22 8 New Zealand 19 28 13 11 Italy 20 23 18 24 Spain 21 24 20 23 Portugal 22 27 24 17 Czech Republic 23 13 23 26 Hungary 24 25 25 21 Slovenia 25 26 26 16 Poland 26 10 28 25 Austria 27 18 21 29 Greece 28 15 29 28 Slovak Republic 29 29 27 27
  • 5. 5 2  Donors are becoming more principled on average, largely because of improved scores on the two dimensions of global cooperation and needs. Notwithstanding populist pressures, there is limited evidence of a tendency towards less principled aid across the DAC. Principled aid scores were at their lowest average in 2015 (14.91) and their highest in 2017 (16.07). Overall, there are only nine donors whose score in the PA Index has declined overall between 2013–2017 (Figure 1). The trend towards principledness is mainly driven by improving performance on the principles of needs and global cooperation. The average score on the needs principle in our sample rose by approximately 10% over the 2013 average (0.42 points) between 2013–2017. Twenty donors improved their score on needs between 2013 and 2017, while nine had their score fall and one saw no change.2 The average score on global cooperation increased by 9% (0.44 points) between 2013 and 2017. Seventeen donors 2 The nine donors with falling scores on the needs dimension are: Australia, Belgium, Finland, Hungary, Japan, Korea, Slovak Republic, the UK and the US. We can only calculate scores for Hungary since 2016, the year of its accession to the DAC, where it was formally obliged to report in full. 3 The twelve donors with declining scores on global cooperation are: Austria, Belgium, Canada, Czech Republic, Denmark, Germany, Hungary, Iceland, Korea, the Netherlands, Slovak Republic and the UK. improved their score on this principle, while 12 saw their score fall.3 3  Donors display a worrying deterioration in their commitment to public spiritedness. The trend towards increased principledness masks a sharp and notable deterioration in public spiritedness. Here, average scores declined by 6% (or 0.39 points) between 2013 and 2017, with an absolute decline in the scores of 23 donors over this period (Figure 2). Luxembourg, Japan, Iceland, Ireland and Denmark consistently ranked in the top band on public spiritedness between 2013 and 2017, while Poland, the Czech Republic, the Slovak Republic, Greece and Austria were consistently among the lowest ranked donors over the same period. New Zealand showed the greatest relative improvement over time, rising 12 places from 23rd in 2013 to 11th in 2017. Conversely, the US and Canada show the largest relative drop in public spiritedness, each falling eight places between 2013 and 2017 to 20th and 15th, respectively. Figure 1  Countries declining in PA Index score, 2013–2017 0 5 10 15 PA Index score 20 25 30 2017 Difference -3.55 -3.47 -1.99 -1.68 -1.50 -1.46 -1.19 -1.00 -0.08 2013 Japan Germany US Iceland Denmark Netherlands UK Slovak Republic Belgium
  • 6. 6 4  There is a positive association between DAC donors’ ODA as a share of their GNI and scores on the PA Index. As Figure 3 shows, more generous donors are likely to be more principled, though the direction of causality is unknown (i.e. being principled could be a driver of donor generosity just as much as generosity inspires a principled aid allocation). While a high ODA/GNI ratio is not required to be principled (Canada, Japan and Ireland perform among the top 10 despite small ODA/GNI), we see a tendency for more generous donors to be ranked higher on the PA Index. 4 The Asia Pacific region is populated by a large number of middle-income countries, as opposed to LDCs, which may exert downward pressure on its ranking on the principle of needs. Conversely, donors of this region share interests in fostering intra-regional collaboration on both trade and climate change that explain their higher scores on the principle of global cooperation. Other notable findings •• Canada and Japan are consistently in the top third of the table across all years. •• Germany, France, the Netherlands and Switzerland are consistently located in the middle of the PA Index across all years. •• Central and Eastern European donors are consistently in the bottom third of the PA Index between 2013–2017. The only exception is Poland, which jumped six places to 15th position in 2016 but fell back into the bottom third in 2017. •• Newer donors (post-2013 accession to the DAC) rank towards the bottom of the PA Index across all years. The only exception is Iceland, which acceded in 2013 but has consistently ranked in the top half of donors. •• Italy is the lowest-performing G7 country. •• Donors of the Asia Pacific region (Australia, New Zealand, Korea and Japan) all rank in the bottom half of the PA index on needs but are among the top half on global cooperation. This uneven performance may be explained by the strong regional focus adopted by these four donors.4 Recommendations 1  Donors should advance their national interests by pursuing a principled aid allocation strategy. Aid allocation strategies should prioritise principled aid, avoiding the short-termism, self-regard and unilateralism of unprincipled approaches. Doing so involves allocating aid on the basis of development needs and vulnerabilities, supporting global cooperation and displaying greater public spiritedness. Examples of key actions that could be taken include ensuring that at least 50% of ODA is targeted at LDCs or reversing the trend of strictly earmarking the aid that goes to multilateral institutions. The PA Index is deliberately focused on ODA because many donors allude to both the desire Figure 2  Change in PA score on public-spirited dimension by donor, 2013–2017 -2 -1 0 Change in PA Index score 1 2 3 Greece New Zealand Hungary Norway Korea Sweden Ireland Japan Switzerland Slovenia Italy Luxembourg Finland Austria Spain Denmark Belgium France Australia Czech Republic Portugal Iceland Canada Germany UK Netherlands US Slovak Republic Poland
  • 7. 7 and feasibility of using aid to advance national aims and ambitions. Clearly foreign aid is only one vehicle to realise global development objectives. Donors should explore all possible domestic policy levers to reinforce and support a principled approach to the national interest. 2  There is urgent need to focus attention on improving donors’ public spiritedness. Public spiritedness is in decline: reversing this trend should be an urgent donor priority. The decline in this principle suggests that many donors are adopting a more short-sighted approach to aid, targeting it to help domestic constituencies and firms and supporting short- term foreign policy objectives, rather than taking a longer-term, principled approach. Examples of key actions that could be taken to reverse this trend would include committing to formally and informally untying all aid and increasing the share of ODA that is spent in recipient countries. 3  Donors should hold each other accountable for delivering principled aid in the national interest. Donors should cultivate new relationships and mechanisms within the OECD DAC to advance principled aid. Our rankings highlight the potential for atypical alliances and coalitions; for example, between Japan, Canada and Ireland that are all consistent performers on the PA Index. Like-mindedness is also identifiable at the level of each principle if consistent performance in one dimension can be taken as representing an opportunity for alliance-building (Table 3). Separately, assessments of whether donors are pursuing a principled aid approach could feature in the DAC peer review process. Advancing mechanisms whereby donors are held Figure 3  PA Index score and ODA/GNI (2017) 5 10 15 PA Index score 20 25 0.0 0.4 0.8 ODA/GNI 1.2 Norway Denmark Germany Switzerland Finland Iceland Australia New Zealand Czech Republic Ireland R2=0.3993 Canada Japan US Korea Netherlands Belgium Austria SloveniaPortugal Hungary Poland GreeceSlovak Republic Italy Spain Sweden Luxembourg UK France Principle Consistent top band performance, 2013–2017 Needs Ireland, Sweden, UK, Luxembourg, Norway Global cooperation Japan, France, Canada, UK Public spiritedness Luxembourg, Japan, Iceland, Ireland, Denmark Table 3  Potential coalitions by principle
  • 8. 8 accountable by a wider range of stakeholders for principled aid is critical. 4  OECD DAC and non-DAC aid providers should forge a new political consensus on principled aid. The allocation of aid to support the national interest is a very real political pressure for both DAC and non-DAC aid providers. In cases where pressures to instrumentalise aid to serve geopolitical or commercial objectives loom large, a stronger joint commitment could be made by all providers to principled aid. The post-BAPA+40 framework5 on development cooperation can provide an opportunity to advance shared commitments to principled engagement. This cause would be greatly assisted if all development cooperation providers released relevant data sets based on common definitions of concessional development finance flows that would allow for greater analytical assessment across all donors. 5 In March 2019, the Second UN Conference on South-South Cooperation (BAPA+40 Conference) is being held to mark the 40th anniversary of the Buenos Aires Plan of Action on technical cooperation among developing countries. It’s outcome document will provide an important reference point for the future development cooperation across all providers. Conclusion Like so many areas of development policy, the case for principled aid rests on taking an expansive long-term understanding of what is meant by the national interest. This is inherently at odds with the short-termism of the electoral cycle and acute public pressures on foreign aid budgets in many countries. Measuring donor ‘principledness’ provides an independent, evidence-based assessment of the nature of a donor’s motivation – as revealed by its aid allocation – allowing the expressions of its national interest to be tracked and monitored over time. By looking at such revealed preferences, the PA Index offers insights into trends across the community of DAC donors that can inform the search for alliances based on shared values, as well as foster greater dialogue and discussion on the role of national interests and agendas in relation to aid spending.
  • 9. 9 References Alesina, A. and Dollar, D. (2000) ‘Who gives foreign aid to whom and why?’ Journal of Economic Growth 5(1): 33–63 Blodgett Bermeo, S. (2018) Targeted development: industrialized country strategy in a globalising world. Oxford: Oxford University Press Carter, P. (2016) ‘Five ways to deliver UK aid in the national economic interest’. ODI Briefing Note. London: Overseas Development Institute (www.odi.org/sites/odi.org.uk/files/resource- documents/10897.pdf) Collier, P. (2016) The ethical foundations of aid: two duties of rescue. Oxford: Blavatnik School of Government, Oxford University (www.bsg.ox.ac.uk/sites/default/files/2018-05/BSG-WP-2016-016.pdf) DAC High-Level Panel (2017) A new DAC in a changing world: setting a path for the future. Report of the High-Level Panel, January. Paris: Organisation for Economic Co-operation and Development (www.oecd.org/dac/Report-High-Level-Panel-on-the-DAC-2017.pdf) Dreher, A., Eichenauer, V.Z. and Gehring, K. (2016) ‘Geopolitics, aid, and growth: the impact of UN Security Council membership on the effectiveness of aid’ World Bank Economic Review 32(2): 1–25 Gates, W. and Gates, M. (2019) ‘Our 2019 annual letter’ (www.gatesnotes.com/2019-Annual-Letter) Girod, D. (2008) ‘Cut from the same cloth? Bilateral vs multilateral aid’ in Annual Meeting of the International Political Economy Society. Philadelphia, PA, 14-15 November Girod, D. (2012) ‘Effective foreign aid following civil war: the nonstrategic-desperation hypothesis’ American Journal of Political Science 56(1): 188–201 Gulrajani, N. (2017) ‘Bilateral donors and the age of the national interest: what prospects for challenge by development agencies?’ World Development 96: 375–389 Gulrajani, N. and Swiss, L. (forthcoming) ‘Donorship in a state of flux’ in I. Olivia and Z. Perez (eds.) Aid, power and politics. London: Routledge Hoeffler, A. and Outram, V. (2011) ‘Need, merit, or self-interest – what determines the allocation of aid?’ Review of Development Economics 15(2): 237–250 Kaul, I. (2017) Providing global public goods: what role for multilateral development banks? ODI Report. London: Overseas Development Institute (www.odi.org/ publications/10784-providing-global-public-goods-what-role-multilateral-development-banks) Keijzer, N. and Lundsgaarde, E. (2017) When unintended effects become intended: implications of ‘mutual benefit’ discourses for development studies and evaluation practice. Ministry of Foreign Affairs of the Netherlands Working Paper No. 2017/7. The Hague: Ministry of Foreign Affairs (www.ru.nl/publish/pages/814787/keijzer_lundsgaarde_2017_7.pdf) Keijzer, N. and Lundsgaarde, E. (2018) ‘When “unintended effects” reveal hidden intentions: implications of “mutual benefit” discourses for evaluating development cooperation’ Evaluation and Program Planning 68(September): 210–217 Kharas, H. and Rogerson, A. (2017) Global development trends and challenges: horizon 2025 revisited. ODI Report. London: Overseas Development Institute (www.odi.org/ publications/10940-global-development-trends-and-challenges-horizon-2025-revisited) Kilby, C. and Dreher, A. (2010) ‘The impact of aid on growth revisited: do donor motives matter?’ Economics Letters 107(3): 338–340 Maurits van der Veen, A. (2011) Ideas, interests and foreign aid. Cambridge, UK: Cambridge University Press Mawdsley, E., Murray, W.E., Overton, J., Scheyvens, R. and Banks, G. (2017) ‘Exporting stimulus and ‘shared prosperity’: Re-inventing foreign aid for a retro liberal era’ Development Policy Review 36(S1): 25–43
  • 10. 10 Morgenthau, H. (1962) ‘A political theory of foreign aid’ American Political Science Review 56(2): 301–309 Rabinowitz, G. and Greenhill, R. (2018) Background paper: aid in the national interest (mimeo) Steele, C. (2011) ‘Disease control and donor priorities: the political economy of development aid for health’. PhD 3496673, University of Illinois at Urbana-Champaign Stone, R.W. (2010) Buying influence: development aid between the Cold War and the War on Terror. Working Paper. Rochester, NY: University of Rochester (www.sas.rochester.edu/psc/stone/working_ papers/buying_influence.pdf)
  • 11. 11 Annex 1  Overall PA Index ranks by year 2017 2016 2015 2014 2013 1  Luxembourg Luxembourg UK UK UK 2  UK UK Luxembourg Luxembourg Canada 3  Sweden Ireland Ireland Japan Luxembourg 4  Ireland Sweden Japan Ireland Japan 5  Norway Japan Canada Finland Sweden 6  Canada Canada Norway Belgium Ireland 7  Japan Korea Finland US US 8  Finland Norway Belgium Denmark Denmark 9  US Australia Iceland Canada Iceland 10  France Denmark US Sweden Finland 11  Denmark Iceland Sweden Norway Korea 12  Korea France Korea Korea Belgium 13  Iceland US Denmark Iceland Norway 14  Australia Finland France Germany Netherlands 15  Switzerland Poland Switzerland Switzerland Germany 16  Germany Belgium Australia Australia Australia 17  Netherlands Netherlands Germany Netherlands France 18  Belgium Switzerland Italy France Switzerland 19  New Zealand Germany Netherlands Spain Italy 20  Italy New Zealand New Zealand Italy New Zealand 21  Spain Italy Poland New Zealand Spain 22  Portugal Hungary Spain Poland Czech Republic 23  Czech Republic Portugal Czech Republic Czech Republic Slovak Republic 24  Hungary Czech Republic Slovak Republic Austria Austria 25  Slovenia Slovak Republic Portugal Portugal Poland 26  Poland Spain Austria Slovak Republic Portugal 27  Austria Slovenia Slovenia Slovenia Slovenia 28  Greece Austria Greece Greece Greece 29  Slovak Republic Greece
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