Hi there, welcome back. In the previous video we looked at the recent literature on aid allocation. We saw how the analysis was determined by the behavior of the big five donors. We also commented that the motivation is imputed from their perceived behavior, in other words, what they did is what they intended to do. Well, in this video, we're going to look what I call the real aid givers, those that regularly hit the 0.7% of GNI aid target established by the United Nations. Now where did that 0.7% target come from? Well, for much of the 1950s, the largest aid giver had been the United States. It had been responsible for the Marshal Plan, and it had provided most of the initial capital for the World Bank. By the end of the 1950s, it still provided almost 40% of bilateral development aid. But by the end of the decade three things were beginning to change. Firstly, United States was experiencing balance of payments problems. Secondly, African countries were gaining their independence, so there were more countries looking for aid. And thirdly, the Soviet Union was entering the foreign aid field and securing footholds of interest in Africa. So as a result, the American government called on it's allies to share the aid burden. Coincidently, the United Nations declared the 1960s to be the development decade. They'd adopted aid target for 1% of gross national income by 1970. Well, the result was disappointing. The figure reached by the OECD donor countries in 1970 was 0.34%. So the UN now revised its target to 0.7%, a doubling of the actual level reached in 1970. The target's still there. You can see it and tried in the Millennium Development Goals. Now 20 years of development assistance have yielded very little by way of results. Aid recipients were still mired in poverty and many large scale projects were proving economically unviable, running under capacity and expensive to sustain. But by the 1950s, 1960s, new ways were opening for a new strategy. The so-called Green Revolution based on new hybrid crops, insecticides and fertilizers, were demonstrating their investment in rural areas could be worthwhile. You don't have to wait for the trickle-down effect to relieve rural poverty. And the World Bank now shifted its emphasis to a more rural strategy aimed at relieving the poverty of the poorest. In 1975, Sweden and the Netherlands were the first countries to meet the 0.7% target. Norway's aid effort hit that effort the following year and Denmark reached it in 1978, and they've stayed there ever since. Meanwhile the OECD effort as a whole has managed to fluctuate around 0.3%. At this stage in the 1970s, Norway and the Netherlands especially, were at the head of a movement to establish a new economic order. Now this would redress the systemic bias against the trade returns of poor primary producing countries. Okay, without being too cynical, I think that this was a triumph of rhetoric over substance, and I doubt whether either of the governments would have been prepared for the sacrifices that a new economic order would entail. By 1980, anyway all four countries had also met another U.N. aid target, mainly directing 0.15% of its gross national income towards the least developed of the poorer countries. Now why out of the whole wide world should these be the only countries to consistently maintain such a high level of commitment to foreign development assistance? Well, several answers have been suggested. Firstly, following their experience in the depression of the 1930s, then the second world war, there was general support for a strong international order, both for security and for economic interests. Secondly, it's been suggested that they needed a third world approach to sort of counter balance their otherwise pro western security and economic policies. Thirdly, there was and still is strong public support for such policies. This is derived from the influence of the churches and the mainstream social democratic ideology. So adopting a high profile on third world issues served both domestic and foreign policy interest. Now this link between domestic and foreign policy is interesting. All four countries were heavily dependent on foreign markets and all four countries had large redistributive welfare budgets. And the link between these two factors has been suggested by the work of Peter Katzenstein. He suggests that large social sectors were a way of sharing the risks of adjustment necessary for smaller states like these to remain competitive. So one consequence is that they're all relatively egalitarian societies. And not surprisingly, they also topped most of the analyses of interpersonal and generalized trust indicators. And as we've seen, they're also extremely generous aid-givers. Now, the link between these factors has been offered by Robert Ruggie. He suggested that foreign policy aims were a reflection of domestic policy approaches. But interesting, but there's also a reverse flow, by looking in the mirror of ones own firm policy reinforces a self image and strengthens domestic institutions, after all giving aid makes you feel good about yourself. A colleague of mine, an anthropologist as described the in terms of to a religion. The 0.7% norm is an article of faith, and there's a whole church made up of NGOs and other dependent lobby groups determined to keep it there. One final reflection by my good friend Professor of International History in Oslo, in a world of big states and hard policy, he said it's a relatively inexpensive way of getting to the top of what is really a pretty good list to be the top of. In this video, then, to sum up, we've described how the UN came to set a target for the foreign aid effort. And we saw how only four countries reached that target and adhered to it for the next 30 years or more. We looked at some of the motives ascribed to them. But we stated the interface between economic structures and domestic policy and the relationship between domestic and foreign policy. In the next video, we'll look at the question of aid effectiveness. And we'll ask ourselves whether it's possible to grow good governance on the back of the aid effort.
