Developing Nations as Donors or Investors

Extracted 17AUG2011 from http://www.economist.com/node/21525836?fsrc=scn/tw/te/ar/charitybeginsabroad

BETWEEN 1951 and 1992 India received about $55 billion in foreign aid, making it the largest recipient in history. Now it seems on the verge of setting up its own aid-giving body... India’s switch from the world’s biggest recipient to donor is part of a wider change shaking up foreign aid. Ten years ago the vast majority of official development assistance came from about 15 rich industrialised countries that are members of the Development Assistance Committee (DAC), a 50-year-old club of the aid establishment...

According to a new report by a non-governmental organisation called Global Humanitarian Assistance, aid (conservatively defined) from non-DAC countries rose by 143% in 2005-08, to $11.2 billion, before falling during the financial crisis. Aid from the BRICs (Brazil, Russia, India and China) more than doubled... Most new donors give priority to their neighbours. Saudi Arabia gives much of its aid to other Arab states. During the 2009 financial crisis Russia helped out the struggling countries in its “near abroad”, including Tajikistan and Armenia. Russia keeps afloat the thuggish and autocratic regime in Belarus through low energy prices and gives roughly $1.5 billion to Abkhazia and South Ossetia, areas which have broken away from Georgia and are recognised by Russia as sovereign states...

The big unresolved question for the new donors, argues Duncan Green, head of research at Oxfam, an NGO, is how far they adopt the policies and institutions of Western donors or how far they go their own way, blurring boundaries between aid and investment.