Report

Robin Hood in reverse

This report from UK think tank the Institute of Economic Affairs looks at foreign aid spending in regions that are richer than parts of the UK.

UK Official Development Assistance (ODA) spending has gone to regions of upper-middle-income countries with GDP per capita figures equal to or in excess of those reported in large parts of the UK over the last five years. The relatively wealthy regions in receipt of UK foreign aid were in Mexico (Mexico City and Campeche), Malaysia (Kuala Lumpur) and China (Shenzhen, Shanghai, Beijing, Guangzhou and Ordos).

The richest regional recipient of UK ODA was Ordos in China, with a GDP per capita of £27,500 – on par with Swansea and richer than 69 other regions of the UK. Projects in these relatively well-to-do regions involved AI-driven anti-congestion measures for Kuala Lumpur, flood prevention in Mexico City and all-female traditional Chinese opera in Shanghai. According to the UN Development Assistance Committee’s (DAC) income-level cut-offs for aid-qualifying countries and territories, a GNI per capita of $13,845 (£10,914) in 2022 determines eligibility for receipt of aid flows in 2024 and 2025.

Using public choice theory, we argue that civil servants are incentivised to disproportionately focus on the most developed regions of otherwise lower-middle-income countries, leading to a misalignment of personal incentives with the objectives of ODA spending.

We propose an amendment to the International Development Act 2002 to require ODA spenders to target regions with a regional GDP per capita equal to or below the DAC’s cut-off. This would prevent a recurrence of ‘Robin Hood in reverse’ aid, where UK taxpayers’ money is sent overseas to areas that are richer than their own communities.