The abrupt recent decisions made by several countries to slash their aid budgets spotlight something that has actually been unfolding for years: a broad erosion of support for international development assistance.
By 2027, official development assistance is projected to return to 2020 levels, and there is little doubt that this will have devastating human costs.
The decline threatens greater divergence in human development, or a widening of the gap between those at the top and those at the bottom – halting decades of progress made in the opposite direction.
Recently, top chief economists were asked to weigh in on the likely specific impacts of further aid cuts, for the World Economic Forum’s Chief Economists’ Outlook. About 85% of the respondents think increased global health risks are a likely or highly likely result, 77% believe increased migration flows are likely or highly likely, 75% see the same odds for increased global security risks, and 69% see those odds for increased global climate risks.
Perhaps surprisingly, just 67% foresee further divergence between advanced and developing economies as a likely or highly likely result of official development aid dwindling more dramatically. That is surprising because a key premise of international development cooperation is that it will help lower-income countries converge towards higher standards of living.
At first glance, this may appear to be a mix of disparate potential impacts. But there is something that connects them all: reducing development aid also reduces the provision of global public goods.
Reasons to worry, new ideas for action
A global public good is anything that affects all countries as a result of their interdependence. That interdependence may result from policy choices, like the degree to which countries open their borders to trade or migrant flows. Or it might be the result of how shared planetary challenges, like a changing climate, are addressed. When it comes to public goods, even a country with vast resources and all the right policies can be affected by decisions made elsewhere.
The potential impacts of additional aid cuts flagged in the Chief Economists’ Outlook give us reasons to worry, but also some ideas about what can be done to reinvigorate international development cooperation.
Justifications for aid cuts rarely factor in the cost of inaction. This cost was cast into particularly sharp relief during COVID-19, when the global good of pandemic prevention and control was undermined and the projected poverty rate for 2030 jumped to 6.8% from 6.5% of the population.
In high-income countries, aid cuts are often framed as the result of a fiscal squeeze caused by competing spending demands – related to ageing populations in need of care, low-carbon and digital transformations that require new infrastructure and skills, geopolitical upheaval and related security needs, and marginalized populations who must be shielded from the temptation of extreme political views through greater public investment.
While these competing demands must be heeded, the net benefits of providing global public goods have been estimated in the trillions of dollars, and often favor lower-income countries.
Better articulating the case for mutual investment in global public goods could bolster the argument in favor of mobilizing greater public support for transferring resources across borders.
Aid can be motivated by charity, because people do feel compelled to help others afflicted by conflict or disaster, or by a sense of justice; people in wealthy countries with large historical greenhouse-gas emissions may feel a duty to support climate-change mitigation in low-income countries with minimal emissions.
International financing should expand beyond official development assistance to include the underwriting of domestic contributions in lower-income countries to global public goods. Evidence gathered from 60 countries, representing 85% of the global population, points to a strong correlation between support for the poor abroad and the protection of the global environment.
Aid cuts are already having tragic consequences for too many people. But they may just be a symptom of even deeper challenges, which must be addressed by investing more in one another, and in the multilateral institutions needed to provide global public goods.
Because in an interdependent world, kicking away the ladder to prevent disadvantaged countries from ascending higher is not a good idea.
Source: World Economic Forum
