New report provides a comprehensive analysis of aid and other global financial flows to developing countries
A new report argues that extreme poverty can be ended by 2030. However, counting the poor and tracking resources available to get to zero poverty need to significantly improve for this to happen.
Investments to End Poverty reaffirms the critical role of international aid in tackling extreme poverty, but warns that it must be better targeted and better coordinated with other financial flows for it to be most effective.
The report by Development Initiatives, a leading independent organisation that provides research and analysis on poverty, maps the complex landscape of resource flows between more than 50 countries, including foreign direct investment (FDI), private giving and south-south cooperation.
Judith Randel, Executive Director of Development Initiatives, says: “This report comes at a crucial time, as world leaders are meeting to discuss the post-2015 development goals. Investments to End Poverty arms them with the independent and reliable data they need to make informed decisions about where to target resources to end poverty”.
The report reveals that:
- International aid plays a critical role in reaching the poorest people around the world where other resources (such as FDI and remittances) may not be available.
- Extreme poverty – the number of people living on less than $1.25 a day – has fallen from 43% in 1990 to 21% in 2010, making it possible to end poverty by 2030. But economic growth alone may not be enough to get there. Despite huge progress in poverty alleviation through growth, even the most optimistic scenarios of growth could leave more than 100 million people behind.
- The scale and diversity of international resources flowing into developing countries has increased rapidly, doubling since 2000 to reach $2.1 trillion in 2011. Long-term debt, FDI and remittances account for around two-thirds of all international flows. However, for the poorest countries, the resources going in are still limited. They face severe spending constraints that are likely to continue.
- Governments in developing countries have the greatest ability to end poverty in their own countries as they spend three times more than all resources coming in. However, 82% of the world’s extremely poor people live in countries where government spending is less than the equivalent of $1,000 per person per year, compared with $15,025 across OECD Development Assistance Committee (DAC) countries.
- Aid plays a critical role where governments can’t or won’t. It can be targeted at the poorest people, and used to leverage other funds. 400 million people in sub-Saharan Africa live in extreme poverty and require interventions beyond the broader benefits of growth to overcome risks and structural barriers to raise them out of extreme poverty by 2030.
ODA – official development assistance provided by key donor countries – needs to become more transparent and adapt to post-2015 development challenges if we want it to fulfil its vital role in ensuring the end of extreme poverty by 2030.
However, important decisions on where to direct resources to end poverty are made on the basis of unreliable or outdated data and information. Estimates of numbers of people in poverty are unreliable and often out of date and important decisions about where to allocate resources are based on weak assumptions and poor numbers.
Randel says: “The end of poverty is within our reach but a development data revolution is needed to get to zero poverty. Without better data, we can’t allocate resources for optimal results, monitor progress, learn lessons, or hold donors and recipients accountable.”
Over the coming week, Development Initiatives will join the Global Poverty Project and other organisations to rally support for the Zero Poverty 2030 campaign in securing hundreds of thousands of signatures calling on world leaders to commit the necessary support to end extreme poverty by 2030.
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