Why do some countries get more aid than others?

How much aid flows to each low- and middle-income country? And how is it decided? To what extent is aid to a country based on the relative level of poverty, inequality, or need? In order to answer these questions, Devex looked into the data on official development assistance, or ODA, grants from the Organisation for Economic Co-operation and Development, and population and gross national income per capita data from the World Bank. The loose trend shows that lower-income countries do receive more aid, but it is clear that other factors are also at work. Some comparatively rich countries receive far more aid than those with lower incomes, and there are glaring disparities even among outwardly similar nations. Mozambique, for example, receives more than twice as much grant ODA per capita as nearby Madagascar, even though the two countries have very similar levels of poverty. Meanwhile, Georgia, Armenia and Azerbaijan are all neighbors, but Armenia gets nearly five times as much aid as Azerbaijan, and Georgia gets almost twice as much aid as Armenia. Among countries in different parts of the world, the differences are even more glaring. The Philippines has an almost identical GNI per capita to Eswatini, for example, but only gets a little under $6 per capita in grant ODA, compared to $97.8 per capita for Eswatini. In order to build a picture, we first looked at grant ODA per capita — found by dividing a country’s total grant funding from OECD Development Assistance Committee donors in 2021, the most recent year for which we have final data, by its population. We also looked at GNI per capita, which involves dividing total GNI by population. Since these two numbers would be expected to move in opposite directions — the higher the GNI, the lower the ODA — we need to invert one figure to plot the two against each other. So we divided the average world GNI per capita in 2021 — $12,055 per annum — by each country’s GNI per capita. If aid correlated with a country’s relative levels of income, these two figures should rise in parallel, and the ratio between them should be consistent. Clearly, the driving force behind ODA disbursement must be other factors. Countries with the lowest ODA ratio — that is, those that receive the lowest amount of ODA relative to their income per capita — include India, China, Pakistan, Burundi, and Madagascar. Countries with the highest ODA ratios — that is, they receive the highest amount of ODA relative to their income per capita — are all small island states such as Tuvalu, Nauru and the Marshall Islands, which we excluded from our wider analysis because they are subject to special rules on aid. After these, the top three are the West Bank and Gaza Strip, Montenegro, and Lebanon, although if more recent data was included, Ukraine would likely make the list. So what’s going on? Experts identified many factors which might affect a country’s ODA, other than its relative level of need. Multilateral development banks, or MDBs, and similar funders might have funding levels that are more aligned with GNI, said Stefan Dercon, who served as chief economist in the defunct Department for International Development in the United Kingdom. Dercon has since written a book about why some countries succeed, “Gambling on Development.” MDBs and similar organizations allocate funding according to quotas that look at factors such as income per capita and inequality levels, Dercon said. However, even these relatively egalitarian funders will also consider other factors such as the ability of the country’s institutions to absorb capital, and the policy approach of the country’s government, using a process known as the Country Policy and Institutional Assessment. This basket of indicators, when combined, gives a score that governs how much funding a country can attract. Among bilateral funders, the process is far more subjective. Dercon said that during his time at DFID, the U.K. would perform a needs-based assessment of how much cash each country required, based on GNI per capita and other similar factors. But aid leaders would also accept that it was not possible to set up a program in every country in the world, and pick out the countries that were felt to be the highest priorities. These prioritization decisions can be based on political or geographic alignment. For some funders, aid is explicitly local. The European Union, for example, gives significant aid to countries near its borders, through its NEAR network. And both Japan and Australia have adopted aid policies that prioritize east and southeast Asia. For other funders, the ties are more historical, said Charles Kenny, a senior fellow at the Center for Global Development in the United States. Both the U.K. and France are likely to give more to their former colonies. And the ties are also linguistic. France is a significantly greater donor to Francophone countries. Other donors, more comfortable in English, tend to give less to these nations, and more to English-speaking ones. Aid is also driven by a desire to influence and control policy. The United States in particular has been identified as significantly more likely to give aid to countries that vote the “right” way at the U.N. All donor countries are likely to identify strategically important countries that can act as keystones in a region, such as Jordan in the Middle East or Kenya in East Africa, and commit more funds to these locations. A group of “donor darlings” which receive high levels of aid may actively court funders and set themselves up to receive ODA, or they may simply find their needs aligned with the world’s richer nations. They might also receive aid for historical and cultural reasons, or they may be seen as particularly committed to the “development bargain.” An additional factor is the logistical ability of a country to accept aid, said Euan Ritchie, a senior policy adviser at Development Initiatives. He said that while donors might want to commit aid to certain countries, they must first be able to deliver it. “One country that springs to mind is South Sudan,” he said. “It is by any measure one of the countries in the greatest need in the world, but it's not an easy place to operate.” Similarly, as countries see an increase in the amount of humanitarian aid they receive, as a result of a crisis situation, the amount of development spending is likely to decrease, simply because of the difficulties of delivering health services, education, and infrastructure projects in an unstable state. And by the same measure, countries that are perceived as corrupt, or likely to siphon off aid, are also likely to receive significantly less funds. Finally, countries receive aid based on population size. Devex’s own data shows clearly that almost all countries that receive the most aid are smaller nations, particularly small island states, although Turkey is an outlier, largely due to huge spending to support refugees and asylum-seekers fleeing conflict in the Middle East. On the other hand, experts said, some larger countries, despite high levels of poverty, are perceived as having the financial muscle to address their own problems, and are also seen as too large for donors to make a measurable impact. In India’s case, despite high levels of poverty, it has taken a choice to become a net donor as part of a drive to build its influence on the world stage. While it is difficult to map countries based on geopolitical importance, it is easy to rank them in order of population size. Here, the relationship can be seen clearly. The graph below ranks countries receiving ODA in order of population size, and compares ODA per capita. We’ve excluded small island states, because they receive so much aid per capita it would make it impossible to compare. So what are the consequences of this? In short, said Kenny, aid is not always getting to the places where it is most needed. If political and practical considerations take precedence, this means that not as much aid is being spent in the world’s 50 lowest-income countries. And the process of lifting individuals out of poverty is progressing more slowly than it might.