The landscape of international development and aid is changing. While the traditional powerhouses of the global economy face fiscal crises, aid from emerging economies is increasing and many aid recipients themselves are experiencing dramatic economic growth.
Meanwhile, new figures from the Organisation of Economic Cooperation and Development (OECD) show that global aid fell in 2011 for the first time in 14 years. The cut of nearly 3% will impede progress in reducing poverty and cost children's lives.
Sixteen countries cut their aid budgets in real terms last year. The biggest cuts were made by Austria, Belgium, Japan, Greece and Spain. Austria and Belgium, whose economies are in considerably better states than Greece or Spain, made cuts of 14% and 13% respectively. This is particularly disappointing, given that Austria was already only giving 0.32% of its national income in aid.
It would be easy to use the changing economic landscape to justify these cuts. But it would be a grave mistake to assume that the economic growth of a few developing countries means that other countries have sufficient revenues to protect the poor and vulnerable.
The OECD has already suggested that aid alone will not be sufficient to meet the Millennium Development Goals (MDGs). While some of the growing economies will have enough money to meet the MDGs, others have no hope of raising enough tax to do so. In 20 low-income countries, there is an estimated financing gap of $62.1bn between what they have and what they need to meet the MDGs. Here aid is crucial.
Neither can we assume these cuts will be compensated by aid from emerging powers. Although South-South flows are increasing they are still only a tenth of total aid. A considerable decline in aid from OECD countries will leave a big shortfall.
An equally grave error would be to assume that economic growth in countries like Ghana automatically means that the poor will benefit. Even in countries where economic growth is making billionaires, there are millions of children going hungry, without access to primary healthcare.
In the long term it makes sense that countries raise their own revenue to invest in basic services and protect their vulnerable children. As discussions on the future of development gather pace, these new forms of financing will be crucial.
But the situation now is quite different. Burundi, Democratic Republic of Congo, and Ethiopia collected as little as $35 per person through tax - hardly enough to provide the services needed to improve maternal mortality or provide universal education.
We should not forget that aid is crucial and it works. UK aid, for example, has saved the lives of millions of men, women and children, and has helped to educate many more.
The UK's contribution to the Global Alliance on Vaccines and Immunizations will vaccinate one child every two seconds for the next five years, ultimately saving 1.4 million lives. UK participation in global efforts to achieve the goal of universal primary education by 2015, has helped reduce the number of kids not in school by one third in the past decade.
The UK should therefore be congratulated for keeping its promise to the world's poor. We know that aid saves lives and at a time when other countries are making cuts, the UK's leadership is vital. UK aid not only provides timely responses to humanitarian emergencies, but also builds the capacity of public services and state institutions in developing countries on a scale that few private organisations or charities can replicate.
The UK is on track to hit the target of spending 0.7% of Gross National Income on aid by 2013. At less than a penny in every pound, a commitment to 0.7% is affordable and worth it - even in the current economic climate.
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