Why 0.7 % of GDP?

0.7 % of GDP, that is what developed economies pledged to pay as development aid to poorer nations. The DAC monitors closely how much is spent.

The target stands in the public for at least 30 years. Once it has even been 1% of GDP. Does this target make sense?

To me it seems a bit like the stability pact for the Euro Zone. The stability pact demands of a country to have a national deficit below 3% of GDP and your debt to GDP ration has to be below 60%. I will not discuss the pros and cons, but nobody disputes that the numbers are more or less randomly chosen. There is no argument in theory or empirically in favor of these numbers.

Back to development economics: It is also bothersome that the 0.7% target of development aid is completely arbitrarily chosen. There is no justification for the figure.

It is sth. different if countries like the nordics meet the 0.7% target or Germany and the US would fulfill their commitments. These big countries always refused to give a timetable for the increase - for good reasons. Domestically it is still more popular to announce a special programme that increases health services instead of augmenting the development aid. But is it really only out of selfishness that Germany and the USA spend way less money on developing countries?

Ultimately we should adress the problem from the other side. Do the developing countries need the additional funds. In talks to development experts in Germany and government officials I often heard: "The absorption capacity of many African countries is reached." And anyone familiar with the aid business probably agrees that a lot of "partner countries" are so busy meeting with donors, that the actual stakeholders, i.e. the people of the country, may wonder to whom their politicians are accountable. Furthermore donors finance nearly 50% of public budgets in some developing countries. To name just two points. (Of course here again we end up with the good old Sachs vs. Easterly debate)

One example what happens if money has to be spent, regardless of development impact: Today a high level official of the German Foreign Ministry said that he recently received an increasing number of reports of ambassadors, who expressed their deep concerns about the instrument "budget support". Apparently some partner countries do not exactly what the donors would like them to do.

To still emphasize the 0.7% target has also other undesirable effects. It sends the message to the public that if only the rich countries of the north would fulfill their commitments, many problems in developing countries could be solved. So the public opinion is right if they blame officials not to hold to their promises and to state that they do not act resolutely against poverty. By highlighting the target we always suggest that this is the case. So why don't politicians just say, hey folks, the target makes no sense and it is not so easy to solve some of the most pressing problems of the world?

Reasons why it is difficult to get the target out of the world could be the feared reactions of the countries in the south and civil society in the north. It is more comfortable to adhere to 0.7% as we do since 3o years and not to fulfill it. Furthermore you would be in the middle of the whole aid effectiveness debate - and you must be really familiar with the topic to withstand the expected public outrage, unleashed by journalists and civil society who were educated by Sachs, Bono etc. Apart from the fact that most politicians probably lack the required knowledge, there is absolutely no incentive for anyone in bringing the topic on the agenda. Why risking so much when, as it may seem, there is so little to gain?

Another point worth discussing would be the accounting framework of the OECD of ODA. Why do you account 6% of total expenditures for a UN peace mission as development aid? Angela Merkel touched the point in one of speeches in the beginning of the year. She faced instantely a strong headwind.

I think the public deserves an open debate on these point. Finally it is our goal to help the poor and to use aid as effectively as possible. An honest debate would be not the worsed thing to start with.