Five ways to deliver UK aid in the national economic interest

Briefing papers
September 2016
Paddy Carter

The national interest is now a guiding principle behind UK aid spending, as evident in the new UK aid strategy and statements by the new Secretary of State for International Development.

This briefing highlights five ways in which aid brings benefits to the UK, and actions that the Secretary of State can take to accomplish her mission of building a safer, more prosperous world, in a way that delivers for our national interest. In this briefing we set aside important issues like migration and security, in order to focus on the national economic interest.

Our five recommendations are:

  1. When the UK spots cost-effective opportunities to help the world’s most vulnerable, even if there is no obvious benefit to the UK, it should take them. The UK should look for opportunities to promote development overseas and which bring benefits at home, but self-interest must not become a necessary condition for all UK aid spending.
  2. The UK should keep the focus of export promotion on addressing market failures in international trade, rather than indirectly using aid to finance export sales.
  3. Aid can benefit UK investors by driving inclusive and sustainable growth overseas and by addressing market failures in capital markets. However, the Secretary of State must ensure that support from the aid budget is proportional to poverty impact.
  4. The UK should take the lead in reforming the humanitarian system by creating insurance-based financing structures that disburse funds rapidly to organisations with well-defined roles, complemented by investments in country disaster risk management systems.
  5. The UK should continue to use aid to bring stability to fragile states, and build on initiatives like the Ross Fund, the Global Innovation Fund and Innovation UK, to develop new transformative technologies to share with the world.