What is the 0.7% Pledge?

The 0.7% Pledge is the commitment of the world's developed countries to donate 0.7% of their gross national product (GNP) to the economic development of poor countries.

GNP - The total number of goods and services produced by a country's factors of production and sold on the market in a given time period. Production from citizens working outside of the country does count toward to GNP. Production from non-citizens living inside the country does not.

The timeline below follows the 0.7% pledge from its inception to its place in the world today:

  • 1969 - The president of the World Bank asks Canadian Prime Minister Lester B. Pearson to form the Commission on International Development. The Commission's report, "Partners in Development," makes the recommendation that developed countries commit 0.7% of their GNP to official development assistance (ODA).
  • 1970 - The UN General Assembly makes this target a commitment by passing Resolution 2626. The Canadian Parliament also commits to reaching the 0.7% pledge by the mid 1970’s. A key paragraph from Resolution 2626 states:

    “In recognition of the special importance of the role which can be fulfilled only by official development assistance, a major part of financial resource transfers to the developing countries should be provided in the form of official development assistance. Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum net amount of 0.7 per cent of its gross national product at market prices by the middle of the Decade."

    - International Development Strategy for the Second United Nations Development Decade, UN General Assembly Resolution 2626 (XXV), October 24, 1970, para. 43

  • 1975 - The Canadian government discusses their failure to reach the 0.7% pledge, and re-adjusts their goals to achieve the commitment by 1985.
  • 1985 - The Canadian government cannot fulfill the 0.7% pledge because there is not enough money in the bank.
  • 2002 - Attendees at the International Conference on Financing for Development in Monterrey, Mexico reaffirm their commitment to the 0.7% pledge in Paragraph 42 of the Monterrey Consensus, stating that "we urge developed countries that have not done so to make concrete efforts towards the target of 0.7% of gross national product (GNP) as ODA to developing countries." This commitment is repeated again at the World Summit on Sustainable Development in Johannesburg later in the year.
  • 2005 - At the G8 Summit in Gleneagles, Scotland, all G8 members from the European Union commit to reaching the 0.7% target by 2015.
  • 2007 -The G8 Summit takes place in Germany from June 6–8.

What is Official Development Assistance (ODA)?

According to the OECD:
“Flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective, and which are concessional in character with a grant element of at least 25 percent (using a fixed 10 percent rate of discount). By convention, ODA flows comprise contributions of donor government agencies, at all levels, to developing countries ('bilateral ODA') and to multilateral institutions. ODA receipts comprise disbursements by bilateral donors and multilateral institutions."

In real words:
Aid given for the main objective of promoting economic development in developing countries, of with at least 25% must be a grant. Aid can be country-to-country (bilateral aid) or to multilateral institutions (like the World Bank), which then distribute the money to developing countries.

In the original UN Resolution, ODA was defined as untied aid for the specific purpose of promoting economic and social development, as seen in the following:

"Financial aid will, in principle, be untied. While it may not be possible to untie assistance in all cases, developed countries will rapidly and progressively take what measures they can to reduce the extent of tying of assistance and to mitigate any harmful effects [and make loans tied to particular sources] available for utilization by the recipient countries for the purpose of buying goods and services from other developing countries."

"Financial and technical assistance should be aimed exclusively at promoting the economic and social progress of developing countries and should not in any way be used by the developed countries to the detriment of the national sovereignty of recipient countries."

"Developed countries will provide, to the greatest extent possible, an increased flow of aid on a long-term and continuing basis."

International Development Strategy for the Second United Nations Development Decade, UN General Assembly Resolution 2626 (XXV), October 24, 1970, para. 45-47

However, the definition of ODA has expanded in the subsequent years to include a number of other causes. Some new categories for ODA include:

  • Debt relief
  • Subsidies on exports to developing countries
  • Food aid which disposes of agricultural surpluses resulting from government subsidies
  • Provision of surplus commodities of little economic value
  • Administrative costs
  • Payments for care and education of refugees in donor countries
  • Grants to NGOs and to domestic agencies to support emergency relief operations
  • Technical co-operation grants which pay for the services of nationals of the donor countries

This re-distribution of funds results in less money being invested directly for the economic development of poor countries. Thus, even though it may appear as though a particular country's ODA budget has increased, less of that money may be reaching those who need it most.