Is Canada cheap because it plans to cut its ODA?

Slashing aid budgets during harsh economic times is not a new phenomenon. While President Obama claims to increase aid during the time of his presidency, U.S.’s northern neighbor is slashing its aid, as was disapprovingly reported on by Jeffrey Simpson in the Globe and Mail on Monday. In this piece, Mr. Simpson points to the new 2008 numbers released by the OECD which show that Canada by only providing .33% of its GNI to foreign aid, lags behind most of Europe. The article also does not hesitate to point out that the U.S. and Japan are even lower than Canada at .22%, while Norway has nearly reached the whopping 1%.

So is Canada just being cheap and selfish?

What this article does not pay attention to is the amount of voluntary contributions that Canada gives to developing countries, which in 2008 amounted to $1.5 billion. Furthermore, FDI from Canada nearly doubled from 2007 to 2008, reaching $14.9 billion in 2008, which exceeds the FDI from any of the Scandinavian nations. Sure, grants by voluntary agencies and FDI are not the same thing as government aid, but Mr. Simpson himself points out that foreign has fallen short of its promise. So if that’s the case, then what’s the point of using government aid as the sole measurement of donor commitment, especially in a time when other resource flows are larger in volume and may even be more effective at promoting development.

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