Financing the global sharing economy

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recipient country the space to lead its own development plans – has also increased, if only marginally, from 51% to 55% of total aid flows since 2006.37 However, the ODA figures for 2011 cast a shadow over these marginally positive developments. NGOs expressed particular concern that aid has fallen to the world’s 48 poorest countries, along with a fall in bilateral aid to sub-Saharan Africa – the poorest region of the world. Campaigners also said that “alarm bells should be ringing across Europe” following the confirmation that 12 EU countries have cut overseas aid, including some that have weathered the economic crisis more easily, such as Austria and France.38 Cuts to aid budgets in Spain and Greece, where fiscal tightening policies are severe, were in the order of 40%. Although some EU countries managed to increase their aid, many countries are seeking to further reduce their ODA budgets this year, and it looks increasingly improbable that the EU will hit its official 0.7% target by 2015. For non-EU developed countries such as the US, Canada, Australia and New Zealand, such a target is a pipe dream judged by current standards.39 A chronic lack of ambition Notwithstanding the wider problems of aid effectiveness and the unequal power relationships between donor and recipient governments, the quantity of aid donated falls far short of the amount urgently needed to reach the MDGs – and will continue to be insufficient even if G8 donors meet all their existing and future promises on aid. Although the MDGs are widely considered to be grossly inadequate targets for ending poverty, it is also true that ‘good quality’ aid can make a real impact on poverty reduction, especially when provided in sufficient quantities. For example, if governments had provided all the aid they committed to in 1970, Oxfam calculated that extreme poverty could have been ended 22 times over – a prolonged failure they describe as the greatest missed opportunity in history.40 Against the backdrop of a worsening global financial crisis and widespread austerity, there is a great risk that rich countries will continue to cut investments in effective programmes that benefit the world’s poorest people. Many development organisations now fear that both public and political support for increased aid has passed its peak owing to the financial downturn and domestic austerity measures, as well as the perception that many developing countries are experiencing high economic growth and no longer need the same level of support. In the UK, the House of Lords economics affairs committee even published a report that called to abandon the 0.7% target for overall aid spending that was previously enshrined in legislation – with cross-party political support – in 2010.41 Aid advocates challenge these attitudes, however, particularly by pointing out that aid is a tiny part of national budgets and will have no discernible impact on deficits if cut.42 Public support for ODA also tends to rise when people are informed of how little governments actually spend on aid, compared to other priorities.43 As many NGOs and development analysts maintain, life-saving programmes in poor countries are critically affected by reducing aid, especially when people in developing countries are struggling to cope with the impacts of the financial crisis.44 Numerous reports and campaigns since the 0.7% UN resolution have advocated for an increase in official aid to 1% of GNI or more, including the influential proposal by the Brandt Commission in 1980 which also recommended an immediate and large-scale transfer of resources from North to South.45 The Network of Spiritual Progressives go much further and advocate that the US government spends 1 to 2% of GDP on foreign aid for the next 20 years in order to eliminate poverty once and for all and heal the environmental crisis. If all the advanced industrialised countries committed to a ‘Global Marshall Plan’ along such lines, they estimate that the costs could reach 3 to 5% of world GDP.46

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