by Mahtab Uddin
Doctoral Researcher, GDI, the University of Manchester
Assistant Professor, Economics, University of Dhaka
For decades, the promise of global development was rooted in a simple idea: the world, though unequal, could move forward together. Richer countries would support poorer ones through aid, trade, and investment, not out of charity, but out of shared interest and historical responsibility. However, that tide is shifting with the increased geopolitical tensions in the Middle East and Europe, and the rise of ultra-nationalism in the Western world.
National security has become a priority in recent years, putting global solidarity in the backseat. In June 2025, NATO countries announced plans to raise military spending to 5% of their GDP within a decade, up from the current 2% benchmark. The United States, once a major advocate of globalisation, has slashed its USAID budget by nearly 90%, a cut of around $60 billion. Across the West, aid budgets are shrinking as defence budgets grow.
Many developing countries are already struggling with rising debt, climate shocks, and fragile health systems. Against that backdrop, such a shift in tides signals more than policy alterations. It marks a turning point.
Every economic decision has an opportunity cost. Increasing military spending inevitably means cutting back elsewhere. Cutting development assistance may seem like an obvious choice to countries facing domestic challenges and struggling economies, with many rich countries already falling short of the UN’s target of 0.7% of gross national income (GNI). However, such cuts have the potential to inflict disastrous consequences on hundreds of millions of people in the Global South.
Development aid supports basic services that millions rely on in countries across Africa, Asia, and Latin America. Aid fills crucial gaps, from education and clean water to maternal health and disease prevention. When that support disappears, the poorest and most vulnerable suffer most.
There is a vast literature that argues why and how development aid is harmful for developing countries. In places with weak institutions and corruption, it has sometimes buoyed bad governance. Critics point to cases where aid became a tool of control, used to buy influence or impose policies that didn’t fit local needs. Many have conceptualised aid as a means to set up a neo-colonial establishment in the global order.
Nevertheless, the evidence contradicting aforementioned challenges is also aplenty in academic literature.
Bangladesh is a good example. In the 1970s, it was dismissed by Henry Kissinger as a “international basket case”, a country supposedly too broken to fix. Yet over the past five decades, Bangladesh has seen remarkable progress. Life expectancy has risen, child mortality has dropped, and millions have been lifted out of poverty.
Development aid played a part in this story. Between 1972 and 2023, Bangladesh received $60 billion from the Development Assistance Committee (DAC) countries in the forms of Official Development Assistance (ODA) and Other Official Finances (OOF). More than one-third of this aid came from the US, the UK, and Germany.
Such development aid helps in a multitude of ways. It helps in generating knowledge, transfer technology, strengthen education and healthcare structures, amongst other benefits. ICDDR,B, for instance, a world-renowned health research centre in Dhaka, set up with support from USAID in late 1970s, helped pioneer research and treatments that have saved millions of lives across the world. Since its inception, the centre has provided training to 27,000 health professionals from over 78 countries – one of its many contributions. Or think about the international response to the Rohingya refugee crisis, hosting nearly a million people displaced from Myanmar. Without global support, Bangladesh could not have managed this humanitarian challenge alone.
Development assistance is not just about projects or budgets. It’s about building the foundation for a more stable, equitable world. It enables technology transfer, strengthens public institutions, and creates pathways out of poverty. It supports young people with scholarships, empowers women through social programmes, and helps countries prepare for climate change.
And it has spillover effects. As the COVID-19 pandemic showed, public health isn’t local – it’s global. The recent cut in aid is feared to cause hundreds of thousands of children from the poorer countries to miss their immunisations – resulting in life changing consequences. When vaccine programmes are cut due to aid reductions, diseases don’t stay within borders.
Much of the inequality we see today is not accidental; it’s historical. Colonialism extracted wealth from the Global South to enrich the Global North. The institutions it left behind were often weak by design. Scholars like Daron Acemoglu, Simon Johnson, and James Robinson have shown how this legacy still shapes development outcomes today.
Seen this way, aid is not generosity. It’s a form of repayment. It can never fully undo the damage, but it can help build a more just global order.
That said, history does not trap us. Countries like Indonesia, once colonised and impoverished, have found ways to rise. The story of development is complex, and success depends on both internal reform and external support.
Against these turbulent times, there are a few things that the developing countries can align themselves with. As such, the idea of South-South cooperation (SSC) has long been in discussion. It is high time for countries of the Global South to boost their development collaboration. The countries can also focus on a “Look East” policy or on strengthening cooperation with alternative sources, such as the BRICS and GCC countries. Lastly, there is no alternative to collective dialogues. Developing countries should raise this issue at the UN forum, where the rich countries have committed to allocating 0.7% of their GNI to ODA.
The future of development cooperation is at a crossroads. If rich countries retreat from their commitments, they may save money in the short term, but at great cost. The world will become more divided, more fragile, and more prone to crisis.
Development aid is not a handout. It is a shared investment in a future that works for all of us.
Top image by NastyaSensei.
Note: This article gives the views of the author/academic featured and does not necessarily represent the views of the Global Development Institute as a whole
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