How Is the OECD's Development Aid Used?

Set up as the Development Assistance Group in 1960, the Development Assistance Committee (DAC) has become a key pillar in the OECD's strategy of furthering economic development in so-called developing countries and consists of 32 of the OECD's 38 members. In 2023, according to preliminary figures, DAC members disbursed around $213 billion of the total $224 billion in development aid handed out by all OECD and non-OECD members as well as the DAC participants Bulgaria, Romania, Qatar and the United Arab Emirates. The highest-spending donor countries alone were responsible for 70 percent of the total DAC disbursements. But which projects and programs do these countries direct their funds to?

The largest shares of each country's spending relate to bilateral projects and technical cooperation. These can include, for example, investments in social infrastructure and services like education, economic infrastructure like the energy industry or production like agriculture and tourism. While the OECD doesn't disaggregate specific bilateral projects on a micro level in its annual roundup, it does highlight some key avenues of aid spending related to exceptional crises like wars or natural disasters. The United States, for example, spent one third of its development aid on in-donor refugee costs ($6.2 billion) and humanitarian aid ($14.5 billion). According to the UN definition, the former includes "cost for the first year of receiving refugees and asylum seekers in donor countries". The latter is a broader and more vague term including a variety of aid programs.

Germany's share of refugee costs and humanitarian aid stood at around 28 percent of the total spending of $32.2 billion, while Japan, a nation notoriously unwilling to recognize refugees and having only granted the status to about 1,000 people between 1982 and 2022, spent less than $30 million on in-donor refugees and provided about $1.1 billion in humanitarian aid out of a total of $19.3 billion.

As with the year prior, a primary target for development assistance due to the ongoing war in the country is Ukraine. In 2023, around $20 billion or nine percent of the total development aid disbursements went to the Eastern European country, 16 percent of which went towards humanitarian aid. In terms of the countries contributing the most spending on humanitarian assistance to Ukraine, Japan ranked second behind the United States and ahead of Germany and Norway.

Even though development aid is likely thought of as a net positive on first glance, this perspective is often inhabited by members of the nations giving out said aid. The efficacy of development aid has long been criticized on a variety of aspects. For example, critics claim that some governments receiving aid funnel them towards other causes and that development aid can spark corruption and dependencies rather than enable economic growth of the recipient countries.