Laying to rest the Ghost of 0.7%

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For all the hotly contested issues of the General Election, one area of cross-party consensus is to spend more on development aid. The campaign manifestos of Labour, the Conservatives and the Liberal Democrats all commit themselves to a “United Nations target” of at least 0.7 per cent of national income on aid and to make that legally binding.

A 0.7% target makes no sense now and never did. It looks not outward at what might help the poor but only inward at the resources in rich economies. It offers to increase aid as an input without considering what results might be. A new paper published today by International Policy Network, “The Ghost of 0.7%”, dismantles the cross-party consensus target and demands a radical rethink for the next government.

The report documents how the 0.7% target was first tabled in the 1960s and has been endorsed by campaigners ever since. Yet the methodology behind the target, based on the “gap” theory, has been discredited.

Even if the justification were sound, recalculating with up-to-date statistics shows the “capital need” in poor countries has fallen to below 0.05% of national income in rich countries – less than 10 per cent of the aid that is currently being spent under the Labour government, which is still £2 billion less than it would be compelled to spend should a legally binding target of 0.7% be introduced.

This hasn’t stopped rock star “economists” from telling us that our money still needs to be thrown away. Bono said just a few months ago that the pledge to make a 0.7% target legally binding “is not just a great announcement, it is transformative of real lives … and the next step is making sure this becomes law as soon as possible, in 2010."

The rapid and welcome economic growth in Brazil, China, India and many other countries (with insignificant amounts of aid) is the most effective anti-poverty campaign in history, thanks to sensible policies in the countries that actually are developing rather than stagnating under aid-dependency.

UK development policy must reject input targets and assess outcomes and evidence of what really works.

Alec van Gelder is Project Director at International Policy Network.