Sharp decline in development aid from OECD countries

Preliminary OECD figures show that public expenditure on development aid in 1997 amounted to about NOK 47.6 billion, 0.22 per cent of the member countries' combined gross national product (GNP). This is the lowest level seen since the United Nations set a target of 0.70 per cent nearly 30 years ago. Norway's contribution totalled USD 1.3 billion, or NOK 9.3 billion, equivalent to 0.86 of GNP.

The level of development assistance is usually measured as a percentage of GNP. In 1970 the United Nations resolved that development aid should amount to 0.7 per cent of GNP. The Scandinavian countries achieved this goal in the course of the 1970s. In 1997 only Denmark, Norway, The Netherlands and Sweden met the target. The OECD-effort as a whole was 0.22 per cent in 1997, compared with 0.25 per cent in 1996. This is equivalent to a nominal decline of 14.2 per cent measured in dollars.

There are several reasons for the sharp decline in development assistance from OECD countries. One is that development aid from the United States varies widely from year to year. In 1997, US foreign aid was down 34 per cent from 1996. This alone accounted for a reduction of USD 3.2 billion, or 41 per cent of the nominal decline in the OECD countries' development aid in 1997.

There were great variations among European countries too. One possible explanation is that several of the countries struggled to comply with the convergence criteria for joining the Economic and Monetary Union (EMU). In particular, the requirement that public deficits must not exceed three per cent of gross domestic product (GDP) may have contributed to the decrease in development aid from some countries. Italy nearly cut its contribution in half from 1996 to 1997, and large donors such as Germany and France also reduced their assistance substantially from 1996 to 1997.

Norway's aid effort was virtually unchanged from 1996 too 1997 measured in dollars. If we calculate in Norwegian kroner and correct for price inflation, Norwegian aid grew 5.9 per cent in real terms in the wake of the krone's significant decline against the dollar from 1996 to 1997.

New Statistics
Expenditure on development aid, preliminary figures from OECD, 1997.
The statistics are published annually in the Weekly Bulletin of Statistics. For more information contact: Thomas.Olsen@ssb.no, tel. +47 21 09 48 56 or Jon.Petter.Nossen@ssb.no, tel. +47 21 09 45 01.

Weekly Bulletin issue no. 3, 1999