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Aid in the national interest: how the UK ranks

Written by Rachael Calleja

In 2015, the UK launched an aid strategy that focused on aligning development resources to the UK’s national interest. The government has since doubled down on this rhetoric, with Theresa May insisting she is ‘unashamed’ to ensure British aid works for the country’s domestic interests.

While aligning aid to domestic motivations is not new, the current political climate has made it more common for donors to explicitly link aid spending to domestic gain. The UK is certainly not alone in advancing an aid policy aligned to the national interest; Australia, Japan and the Netherlands have also done so.

Yet, as donors increasingly look to the national interest to justify their aid spending, it's important to ask which ‘type of national interests’ donors are advancing. ODI’s new Principled Aid Index (PA Index) helps us answer this question. It benchmarks 29 donors on whether the type of national interest they pursue is ‘principled’ or ‘unprincipled’.

A principled national interest advances a donor's interest by engaging with development challenges to create a safer and more prosperous world. An unprincipled approach puts development outcomes second to the short-term political or commercial interests of donors.

Whether donors are considered principled or unprincipled in their aid activities depends on the degree to which aid allocations target countries where needs are the greatest; champion global cooperation; and promote a public-spirited action by constraining selfish behaviours (e.g. by avoiding tied aid).

How does the UK perform? Well, but getting worse

Britain was the 2nd most principled donor in 2017 due to high scores on the needs and global cooperation dimensions. The former is driven by comparatively high levels of support for conflict-affected countries and forcibly displaced populations; the latter by UK aid for climate finance.

In both cases, the UK’s performance can be linked to policies that prioritise these actions – DFID has committed to allocating 50% of its ODA to fragile states, while the UK government also pledged £5.8 billion for climate finance over five years to 2021.

However, the UK’s performance has fallen in the overall rankings from 1st place in 2015, mostly due to falling scores on the public spiritedness dimension. This measures donor indulgence in the ‘bad’ behaviours that use aid to advance domestic priorities, such as supporting their own firms or buying political support in international fora, rather than those of recipient countries.

In the UK, this decline can be attributed to lower scores on variables measuring degrees of aid tying and the correlation between arms exports and aid allocation.

While the UK’s falling score on public spiritedness suggests that it is increasingly seeking a return from aid investments beyond development outcomes, its strong performance in other dimensions points to a paradox that we see across donors where they use aid to both address development challenges while increasingly seeking a domestic return. 

This paradox could be a sign of the times. On one hand, donors (including the UK) are increasingly aware that development challenges across the globe have consequences at home. On the other, donor governments face competing demands on public budgets and intense pressure to show constituents how their aid dollars work for them. The challenge going forward is ensuring that the demands of the latter don’t compromise the work of the former.

How the UK can improve its performance

First, Britain should continue to champion development needs and support global cooperation. UK aid already does comparatively well on these fronts and its Aid Strategy shows a commitment to a principled policy direction.

However, rising levels of aid spending outside of DFID increases the likelihood of slippage due to differing regulations and mandates. DFID, for instance, is the only department legally bound by the International Development Act (IDA), which ensures that spending supports poverty reduction. The looser requirements for other departments could increase the space for ‘unprincipled’ action. Applying the IDA Act to all aid resources, regardless of the spending department, could safeguard for more principled performance.  

Second, the UK should seriously consider the sources of slippage on the public-spiritedness dimension. This may involve looking across the spectrum of development actors to understand where and when it is most susceptible to alignment with unprincipled objectives. The Independent Commission for Aid Impact (ICAI) could play a role in monitoring performance on key dimensions of unprincipled behaviour to avoid further decline.

If the UK wants to retain its influence as a ‘principled’ actor, then it needs to ensure that all aid works to deliver development outcomes. Otherwise, it risks losing its status as a global leader in development.