Reports | 12 July 2011

The future state of the world: what it means for Australia foreign aid program

In January 2011, the Australian Government’s Independent Panel to Review Aid commissioned the Lowy Institute to undertake a study of the future state of the world and its potential impact on the government’s aid program. The report, written against the background of a strong focus by the government on the Millennium Development Goals, looked at what the major influences on global development and aid were likely to be over the rest of the decade to 2020. It looked too at the potential ‘swing factors’ which could significantly reshape anticipated trends and have a major impact on Australia’s aid program.

  • Lowy Institute for International Policy
  • Michael Wesley
  • Annmaree O’Keeffe
  • Jenny Hayward-Jones
  • Mark Thirlwell

In January 2011, the Australian Government’s Independent Panel to Review Aid commissioned the Lowy Institute to undertake a study of the future state of the world and its potential impact on the government’s aid program. The report, written against the background of a strong focus by the government on the Millennium Development Goals, looked at what the major influences on global development and aid were likely to be over the rest of the decade to 2020. It looked too at the potential ‘swing factors’ which could significantly reshape anticipated trends and have a major impact on Australia’s aid program.

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Key Findings

  • Least developed countries will struggle to register development progress due to high fertility, sluggish economic growth, rapid urbanisation, rampant corruption, collapsing ecosystems and endemic disease.
  • China’s unwillingness to attach accountability conditions to its development assistance is changing the dynamics of the relationship between donors and recipients.
  • There will be a growing linkage between the Australian government’s security and development agendas.

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Executive Summary

The currently observable trends suggest that over the next decade Australia’s development aid policy will be framed by a world of development challenges quite different from those that have shaped it for the past half century. Sustained economic growth in the developing world and remarkable progress on poverty reduction will mean that the traditional development agenda – boosting economic growth, fostering effective institutions, reducing poverty and disease, all broadly across the developing world – will be increasingly confined to sub-Saharan Africa, South Asia, and parts of the South Pacific. There may be an opportunity for Australia and other developed donors to establish either a modus vivendi or a form of collaboration with the emerging donors. It is less likely that such collaboration will be centrally negotiated through the OECD DAC or the World Bank than sequentially and separately in different contexts among the donors on the ground. Competition in development assistance may increase. This may necessitate a rebalancing of the imperatives of Australian aid policy much more in favour of geopolitical and national interest considerations, particularly in regions such as the South Pacific, where emerging donors will pose a challenge to Australia’s traditional role of influence.