Is the 0.7% goal of ODA/GNI still adequate for the recipients? An overview of the recipients’ situation with a focus on Africa

Manuel Ennes Ferreira and Bárbara Muniz

No 2022/04, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: This paper aims to verify if the international aid target of 0.7% of the rich countries’ national income destined to development aid is still adequate in the current world conditions. Hence, it investigates the target’s origins, the main economic theories and the political context that underpinned it. The theoretical review showed that the economic theories and models that supported the target and its aid rationale are mostly considered outdated in the academic field. The empirical analysis used the Two-Gap Model methodology - with the same assumptions made to create the target in the 1960s but using current data - to estimate the target's values for the years 2014-2019. The results showed that on almost all assumptions, the amount of aid needed for the development of poor countries would be less than the target suggests. Moreover, when analyzing different regions, distinct figures were found for the target, which reveals that the 0.7% target has wrongly generalized the developing countries’ needs.

Keywords: Aid; ODA/GNI; DAC-OECD; dual-gap model; development. JEL Classification: F35; F63; O21; O47 (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-afr
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