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Development assistance is distributed through several means, including development banks, government and international agencies, and non-governmental organizations.
Development Banks
As described in the Issue Brief on International Financial Institutions, the World Bank, established in 1945, aims to foster development by providing low-interest loans, interest-free credit, and grants. In 2010, the World Bank provided $58.75 billion in grants and loans to middle- and low-income nations. Africa received $11.75 billion, while South Asia borrowed $11.16 billion. The figure below displays these numbers; Latin American and Caribbean’s loans represent the largest fraction of the total aid provided by the World Bank.1
In addition to the World Bank, there are also a number of major regional development banks similarly dedicated to providing low-interest financing for development projects. These banks have considerable expertise in understanding and reacting to the special needs and conditions of the regions which they operate. Prominent examples of regional development banks are the Inter-American Development Bank (IADB), the Asian Development Bank, and the African Development Bank.
In 2010, the IADB approved $12.136 billion in loans,2 the Asian Development Bank $17.51 billion,3 and, in 2010, the African Development Bank gave $4.1 billion in development assistance. Examples of its work include funding the development of credit institutions in Mongolia for the rural poor, primary school education in the Dominican Republic, and road construction in Malawi.3
For more information on the World Bank, refer to The IMF and the World Bank Issue in Depth.
United Nations Development Program
The United Nations Development Program (UNDP) is the agency of the United Nations that directs development policy in member nations. It specifically concentrates on increasing development by focusing on the following issues:
- democratic governance, that is, helping countries create legislatures, courts, and bureaucracies;
- poverty reduction, such as debt relief and promotion of foreign investment,
- crisis prevention and recovery, such as dealing with post-war reconstruction and recovery from natural disasters;
- energy and environment, that is, providing efficient energy sources for the poor and improving their environment, such as ensuring clear water sources;
- information and communications technology, such as helping poor countries develop phone systems; and
- preventing the spread of HIV/AIDS.4
Examples of its work include a program to promote the use of text messages as a way to raise voter turnout in Haitian elections, and a program that helped 15 poor countries connect to the Internet.5
Government Aid Agencies
Wealthy countries disburse development assistance through development departments or agencies that are part of their national governments. These agencies build infrastructure in developing countries, provide famine relief, advise developing countries on public policy, and make grants to regional development banks.
Some of the world’s largest government aid agencies are the Japan International Cooperation Agency (JICA), the U.S. Agency for International Development (USAID), Britain’s Department for International Development (DFID) and the German Gesellschaft fur Technische Zusammenarbeit (GTZ). Examples of their work include a U.S. program to provide medicine and training to doctors and midwives in Ethiopia, Mali, Zambia, and Indonesia to reduce women’s death during childbirth, and a British program to provide £104 million in in HIV/AIDS prevention and treatment to Zimbabwe over the past five years.6
The U.S. Peace Corps is also a government agency, but operates more like an non-governmental organization (NGO). The Peace Corps sends people to work directly with local populations for extended periods of time, especially in remote locations, to focus on major issues within that area. Peace Corp volunteers work in many different fields, such as teaching high school science and math, teaching farmers advanced agricultural techniques, and building water and sewage systems.
Non-Governmental Organizations
Non-governmental organizations are bodies organized by private citizens to give financial and technical assistance to developing countries. NGOs are, by definition, independent of any government and of the various development banks. They generally focus on “grassroots” development and often come into conflict both with the governments of the countries in which they operate and the official development world. At the same time, much of NGOs’ funding comes from governments and international organizations, such as the UN, so they function in a complex environment, sometimes cooperating with and sometimes in opposition to, other development institutions. Sometimes, for example, they push official institutions by rallying the public in both wealthy and poor countries against policies they think are bad for the poor countries.
Some of the prominent NGOs are Oxfam International, CARE, and World Vision. Examples of their work include running a media campaign for HIV/AIDS awareness in Ukraine, providing relief and reconstruction after a hurricane hit Honduras, and delivering meals in urban schools in Zimbabwe.
For more information on NGOs, refer to the Human Rights Issue in Depth: The Rise of Non-Governmental Organizations (NGOs) and Global Civil Society.
1 The World Bank Annual Report 2010.” The World Bank.
2 Inter-American Development Bank Annual Report 2010.
3 African Development Bank Group Annual Report 2008
4 United Nations Development Programme “About UNDP: A World of Development Experience.”
5 Untied Nations Development Programme “Phone Text Messaging Aims to Boost Participation in Haitian Elections.”
6 Department for International Development “DFID Programs in Zimbabwe”