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Aid, exports and employment in the UK

Briefing/policy papers

Written by Maximiliano Mendez-Parra, Dirk Willem te Velde

In 2014, the UK gave $5.9 billion (£3.7 billion using 2014 Bank of England exchange rates) in direct bilateral development assistance, making it one of the largest individual aid donors in the world. UK development assistance funds initiatives to improve education, prevent disease and allow developing countries to become more productive and competitive in international markets, and thus it is considered by many to be a moral imperative. However, there is evidence that the giving of development assistance has a positive effect on the economy of the donor country, too.

Drawing on an econometric analysis of the impact of EU development assistance on the EU economy and job creation, this briefing details how, in 2014, UK direct bilateral development assistance generated an increase in UK exports of $0.22 for every $1 of aid spent, increasing trade revenue and providing an estimated 12,000 extra UK jobs. The briefing concludes, however, that the driving motivation behind the giving of development assistance should remain the alleviation of poverty in the developing world, not any benefit brought to the UK's economy.

Maximiliano Mendez-Parra and Dirk Willem te Velde