April 4, 2022

Weekly EconMinute—Canada’s contribution to foreign aid

In this week’s EconMinute, we’re talking about Canada’s contribution to foreign aid.

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Canada talks a big game when it comes to its leadership on foreign aid contributions. Most recently, the federal government announced $100 million in aid for Ukraine.

Canadians generally believe their country to be generous and tend to overestimate the extent of the country’s aid contributions. Upon closer examination, the appearance of generosity and leadership is not backed by significant dollars. In fact, compared to its peers in the G7, Canada has one of the lowest levels of foreign aid as a percentage of gross national income.

The best-known indicator of foreign aid is a measure set by the OECD called official development assistance (ODA)—resources to support the economic development and welfare of developing countries. The OECD set ODA targets at 0.7% of donors’ gross national income (GNI)—that’s 70 cents of foreign aid for every $100 of income. Canada has yet to come close to meeting that target.

Here’s what the data shows:

  • Of the G7 countries, only the UK meets the OECD’s aid target, although Germany is relatively close.
  • Since 2000, Canada has consistently contributed less than half of the OECD target with ODA/GNI ratios between 0.22-0.34%.
  • In 2020, Canada spent $6.6 billion on international assistance—up 7.7% from 2019. The increase was driven by higher climate financing and spending on hosting refugees.
  • The largest recipients of Canada’s 2020 ODA include: Afghanistan ($189 million), Ethiopia ($176 million), Bangladesh ($167 million), and the Democratic Republic of Congo ($150 million).

Increasing Canada’s foreign aid contributions isn’t just about warm, fuzzy feelings. Reasons include: doing our part to eliminate severe poverty; reduce the spread of infectious diseases; create trade and economic opportunities; and prevent violence and security threats.

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