On the other hand, loans involve transfers made in cash or goods provided to developing countries on concessional terms and on more favorable conditions than private sector funds, and for which repayments are required. Grants refer to transfers made in cash, goods or services to developing countries for which no repayments are required. There are two types of bilateral ODA – grants and concessional loans. Upper Middle Income Countries : Over 10%ĭepending upon the delivery channel, ODA is categorized into bilateral and multilateral ODA.Lower Middle Income Countries : Over 15%.* Least Developed/Low Income Countries : Over 45% The OECD DAC defines ODA as flows of resources to developing countries that are provided by official agencies, including central and local governments or their executive agencies are administered with promotion of the economic development and welfare of developing countries as their main objective (meaning that aid for military and commercial purposes is excluded) are provided to countries on the DAC list of ODA recipients and to multilateral institutions as defined by the OECD DAC as qualified international organizations and are concessional in nature and fulfill grant element thresholds*. Today, however, in reflection of the increasing focus on ‘collaboration’ with developing countries through inclusive partnerships, ‘international development cooperation’ has become the most commonly used term. In the past, terms such as development assistance, foreign aid and overseas aid were used to indicate development cooperation. In addition, in the development cooperation landscape of recent years, the importance of new sources of development financing has continued to grow.
In line with this trend, the approaches to development have been diversified to include efforts to achieve ▲the development of economic and social infrastructures, ▲political stabilization, ▲capacity building and ▲sustainable development. However, the international community has come around to a view that multidimensional efforts to promote not only economic development but also social development as a whole are required to put an end to poverty.
In the past, promoting economic growth was viewed as a main solution to the problem of poverty. Since political, economic, social, cultural and historical factors drive poverty in developing countries, this is not an issue that involves developing countries alone, but a global one requiring long-term, coordinated international efforts. The international community has used this definition of ODA since the establishment of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) in 1961.Īs a broader concept encompassing ODA, International Development Cooperation refers to international efforts and actions to reduce inequalities between developed and developing countries, between different developing countries and within developing countries, and to protect people’s fundamental rights by ending poverty. Official development assistance (ODA) is defined as government aid that is designed to promote the economic development and welfare of developing countries, and includes the provision of grants, loans and technical assistance to developing countries or international organizations. International Development Cooperation and ODA
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