Arab Aid Isn't What It Used To Be...

My colleagues here at William and Mary, Debra Shushan and Chris Marcoux, have used AidData in order to describe variation in the allocation of Arab aid over time. They have posted a short article on Foreign Policy’s “Middle East Channel” that draws from a longer working paper on Arab aid. They write:

So what does it mean to say that these Arab donors have become less "generous"? Following convention, generosity measures a country's aid as a percentage of its gross national income (GNI). In 1970, the United Nations called on all states to give a minimum of 0.7 percent of their GNI as official development assistance, and Arab donors generally have compared favorably with the established donors which are members of the OECD's Development Assistance Committee in terms of their aid generosity. We find that the decline in the generosity of bilateral Arab aid since 2000 is due not to a decline in aid levels (which have remained relatively flat) but to soaring GNI as Arab countries have harvested tremendous profits from oil sales. Simply put, generosity seems to have fallen because Arab donors haven't increased their aid commensurate with their ascending national wealth. This makes the recent period different from the 1980s, when aid from Arab countries declined along with state revenue, diminished by lower oil prices.

The chart below illustrates their point. Kuwait’s aid effort has remained relatively constant over the past 25 years. However, over the same time period Gross National Income and domestic spending has skyrocketed. So, as a proportion of either GNI or total government spending, Kuwait has reduced its aid spending. The gap between income and aid allocation has grown sharply over the past 10 years:
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The Arabs could do more by way of aid, and the gap you underline is a fact. <br /><br />However, as Shushan-Mercoux would agree, you have also to recall three other facts.<br /><br />First, what is counted as the GNI of these countries is, in fact, "padded". Their revenues come very largely from the sale of oil, a non-renewable resource, and thus a good part of what is considered 'income' actually comes from the depletion of capital stock. These countries are spending, or giving away portions of their future. Discounted in that light, the gap between Arab GNI and aid would be less sharp.<br /><br />Second, the 2008 boom that boosted wealth in these countries abated as abruptly amid a global financial crisis originating in the meltdown of the US mortgage market. That external crisis left these countries' investments and prospects in disarray, and a degree of aid retrenchment is inevitable until they can stabilize their economies again. This is exactly the same pattern we see in our own countries of the West: when the going gets tough, aid is among the first expenditures to suffer.<br /><br />And third, while current levels are indeed flat, they remain considerable and, in the past ten years, have averaged close to, or above, the level of 0.7% of GNI mandated by the UN. The same cannot be said of the largest economy in the West.