Brazil gives as much aid as Canada and Sweden? Maybe not...
Brazil isn’t acting like more traditional non-DAC donors that rely on large cash transfers and heavily structured infrastructure projects. Instead, it is leveraging its comparative advantages to provide assistance to other developing countries.
The following is a post by one of our research assistants at the College of William and Mary, Eva Baker ('12).
As policymakers and observers discuss the practices of non-DAC donors and their intentions, many of those donors are meanwhile becoming increasingly wealthy and increasingly involved in aid. A recent Economist article on Brazil’s vast, and growing, development funds pegged the total amount for 2010 near $4 billion, which the author suggested is “similar to generous donors such as Sweden and Canada.” For most readers, it’s a surprising comparison, and it has already been used in further discussions of Brazil’s aid.
However, the Economist’s comparison is somewhat misleading. Total aid figures for most Western donors are calculated according to the definition of Official Development Finance (ODA) set by the OECD’s Development Assistance Committee’s definition of Official Development (DAC) . In 2008, the last year of DAC statistics available, Canada and Sweden spent $5.5 billion and $4.2 billion USD on foreign aid, respectively. Applying ODA guidelines to Brazil’s aid calls into question the $3.3 billion in loans by the BNDES. According to the DAC, an ODA-eligible loan is “concessional in character and conveys a grant element of at least 25 per cent”. Without project level data specifying the interest rate, repayment schedule, and grace period, it’s impossible to calculate the grant element of the BNDES’ loans. Dropping them completely puts Brazil’s foreign aid budget back to $1.2 billion, closer to the company of Finland, Ireland, and new DAC member Korea.
While we’re left making estimates of Brazil’s total aid for 2010, the project level information that ABC is reporting to AidData gives us a more detailed view of Brazil’s recent aid. The Economist article highlights Brazil’s focus on agriculture, social aid, and renewable energy like ethanol. Using the information we’ve received from 1998 through part of 2009, we can see just how much attention those sectors have received.
Brazil’s aid to agriculture and social programs (health, education, population programs, and social services) comprised 56% of its $42,266,773 in reported commitments. For providing aid for renewable energy like bio-fuels, the picture is even clearer:
Of the $910,813 Brazil donated in energy generation and supply, 84% went to promoting renewable energy.
So what’s the data saying at the end of the day? First, that ABC’s actions really are following its rhetoric. Brazil isn’t acting like more traditional non-DAC donors such as Kuwait, Saudi Arabia, and India, which rely on large cash transfers and heavily structured infrastructure projects. Instead, as the head of ABC stated in the article, Brazil is leveraging its comparative advantages to provide assistance to other developing countries. Most of these projects are consultancies and technical assistance in areas that Brazil has seen considerable success. Brazil and many other middle income countries see this as a new era in "South-South Cooperation", where developing countries exchange resources and expertise.