Financing development

External finance through FDI

Foreign Direct Investment (FDI) refers to the flows of real capital between countries that accompany overseas investment decisions. A single flow of capital between two countries can be described as outward for the investing country and inward for the recipient country. Both private sector firms and by governments undertake FDI.

Government assistance

Governments can help provide financial aid for developing economies, called foreign aid, in two ways; from bi-lateral aid, which is assistance directly from one country, and from multi-lateral aid, which means giving assistance to more than one country, usually through an agency or through charities.

Official development aid (ODA)

There are two basic types of ODA – long term aid to relive poverty and short term humanitarian aid for relief following disasters. In 2009, the UK’s development assistance totalled £7.3 billion ($11 billion) approximately 0.55% of its GDP. (Source: DFID – The Department for International Development, 2010). The UK has agreed to implement the UN Millennium aid goal of 0.7% of GDP by 2015. The USA is the single biggest provider of development aid. In 2015, total world ODA was $152.5bn. (Source: OECD).

Aid Flows

ODA Trends

Aid Flows 2015