What OECD Preliminary Data is Telling Us?
By Javier Surasky
Falling Official Development Assistance can deepen the digital divide when funding cuts coincide with the low priority still given to digital infrastructure in many recipient countries. This article examines recent ODA data and shows how shrinking resources, combined with sectoral allocations that remain centered on traditional infrastructure, may reinforce new forms of inequality in international development.
ODA remains one of the main instruments of international development cooperation, making changes in its volume and allocation particularly significant.
Once again,
this critical development flow faces a crossroads. After several years of
sustained growth, ODA from member countries of the OECD’s Development
Assistance Committee (DAC) is entering a phase of contraction. The data suggest
that the expansionary cycle of international development financing has come to
an end, driven by budget adjustments in donor countries and shifting political
priorities in how those resources are used.
The Most Recent ODA Data
In April
2025, the OECD published preliminary data for 2024, placing total DAC ODA at
around USD 212 billion. When the final statistics were consolidated, the figure
was slightly revised upward to USD 214.6 billion. Even so, this represented the
first year-over-year decline in ODA since 2020, after flows had reached USD
228.9 billion in 2023.
The OECD’s 2025 Outlook Report
Behind that
shift were fiscal adjustments already underway in donor countries, which were
beginning to affect their cooperation budgets. In that context, the OECD
published the report Cuts in Official Development Assistance in June
2025, aiming to estimate the short-term evolution of aid flows.
The report
presented two forward-looking scenarios for 2025. One projected a moderate
reduction (the “lower cut”), in which DAC ODA would fall to around USD 186
billion (−9%). The second projected a more severe contraction (the “higher
cut”), bringing flows down to approximately USD 170 billion (−17%).
There is,
however, a key methodological element needed to interpret these figures
correctly. When the OECD prepared the Cuts in Official Development
Assistance report (June 2025), the preliminary 2024 data had already been
published (around USD 212 billion), but the projections for 2025 were
calculated using data expressed in constant 2023 dollars, that is, adjusted for
inflation and exchange rates. For this reason, the baseline used in the report
was lower than the preliminary nominal 2024 DAC figure: it used an estimated
2024 ODA level of roughly USD 204.5 billion.
This
difference explains why the percentages of decline used in the report do not
exactly match comparisons made using the final nominal ODA value for 2024.
Preliminary Estimates for 2025
Preliminary estimates for 2025 suggest that DAC ODA could fall to around USD 174.3 billion.
Compared with the final 2024 figure, this would imply a nominal decline of
about 18.8%, which, in real terms (inflation-adjusted), approaches a 23% drop.
If these
figures are confirmed once the final data are released, it would represent one
of the sharpest contractions in ODA in recent decades. After several years of
expansion, international development cooperation would be entering a phase of
fiscal constraint.
The causes
of this decline are multiple, but several stand out: budget cuts among major
donors, reduced spending on refugees within donor countries, declining
assistance to Ukraine, and the reallocation of resources toward defense
budgets. Adding to this is an unprecedented development: for the first time,
the five largest donors in nominal terms are simultaneously reducing their ODA
levels (United States −25%; Germany −26.4%; Japan −14.8%; United Kingdom
−19.6%; France −18.7%).
Digital Infrastructure and Investment Priorities
Beyond the
total volume of aid, an analysis of its sectoral allocation reveals another
important trend. Despite the fact that digital technologies are expected to
play a central role in the productive transformations of the twenty-first
century, and despite the already significant digital divide between countries, financing
for digital infrastructure remains limited.
Here, a
second methodological issue appears. In the DAC statistical classification
system, there is no specific category grouping all cooperation related to the
digital domain. As a result, any estimate must be constructed from projects
classified under telecommunications and information technology codes.
This measurement gap also matters because closing digital gaps has become part of the broader debate on AI governance and sustainable development.
Using that
approximation, ODA directed toward telecommunications networks, internet
connectivity, information systems, and other digital infrastructure in
recipient countries amounts to between USD 3 and 5 billion.
By
contrast, financing for energy infrastructure, considering projects linked to
electricity generation, renewable energy, transmission networks, and
electrification, ranges between USD 18 and 25 billion. In other words,
concessional financing for energy infrastructure is four to six times larger
than that devoted to digital infrastructure.
Implications for International Cooperation
This
difference is not accidental. It largely reflects the historical priorities of
international cooperation, which have traditionally focused on physical
infrastructure tied to the classic industrial model. That raises questions
about the type of integration into the global economy that the current aid
architecture is promoting.
What
emerges is a pattern in which donors reinforce a model in which developing
countries continue to serve as suppliers of strategic inputs, energy in this
case, to sustain the global economy. In doing so, the system reproduces dynamics reminiscent of the historical integration of developing economies as
providers of raw materials within the industrial economic order.
The figures
reveal two parallel trends. On the one hand, ODA is responding to fiscal
adjustments among DAC member countries, closing a cycle of growth that may
remain subdued in a context of global tensions. On the other hand, this
contraction does not alter the sectoral structure of development cooperation,
which continues to prioritize more traditional infrastructure over investments
in digital systems.
In this context, ODA is entering a phase of budgetary retrenchment while continuing to reproduce, within the emerging digital international system, the same structures of inequality that characterized the economic system we are now leaving behind.