are foreign aids effective and helpful?what are the advantages and disadvantages of foreign aids?

Question

this is a repost of my question. Im referring to development assistance ( the one offered by countries to help developing countries in terms of social, military, political, and economic growth)

Answer 1

Foreign Aid ("Aid") can be defined as as

"administered transfer of resources from a donor country or international agency or NGO organisation to an LDC to encourage economic growth"

Aid can be between two (bilateral) or many (multilateral) countries/institutions

- Bilateral aid is usually tied aid is when recipients must purchase products from the donor country. An IMF loan with a conditional SAP attached is another example of tied aid

· Multilateral aid is usually untied aid that can be spent in any country.

Argument for tied aid: the donor country ensures aid is used for appropriate purposes and its own economy benefits

Argument against tied aid: purchases may not represent best value for money
o Tied aid is often conditional eg on market reforms

· Grants which do not have to be repaid
· Concessional loans repaid at lower interest rates and over longer periods than commercial bank loans.

Aid can be in the form of money, goods or technical assistance

Aid helps if

· Aid is used to increase productive capacity and the benefits of resultant growth is widely spread and results in a reduction and elimination of poverty, inequality and unemployment

· Aid represents an injection of resources into the economy that enable investment hence growth,

· Aid can help the transmission of new ideas

Aid hinders if

· Aid is spent on current consumption

· Aid is spent on inappropriate capital as opposed to appropriate technology making intensive use of labour

· Aid is spent on ‘showcase’ infrastructure projects that damage the environment and have little impact in raising living standards eg dams

· Aid can lead to dependency rather than self-reliance and self-sufficiency.

·Aid is in the form free/cheap food in non-crisis situation as the increase in supply reduces agriculture prices for local farmers disrupting markets

· If the ‘right’ social, political, cultural and institutional conditions are not in place;

· Corrupt governments can intercept much assistance;

Aid is unsustainable. What happens when aid stops?

Answer 2

The biggest obstacle toward effective foreign aid is corruption. Outright cash/material aid to developing countries is most necessary in emergencies like a natural disaster and when the people of the country are in such extreme poverty that economic promotion methods like free trade and microfinance wouldn't work or wouldn't work fast enough. The problem then arises when donor countries dump a huge chunk of cash without close auditing of where it's going. Why would donor countries NOT insist on audits? Because of classic post-colonial politics. Developing countries want to feel "empowered" and view audits and other conditions on aid as neo-imperialistic and an affront to their freedom. Donor countries are thus stuck between looking like Big Brother or looking financially irresponsible. Yet at the same time and in many cases, it's the very governments that are guilty of corruption that are the biggest bellyachers about "imperialism." Case in point: Zimbabwe. When everybody in the government, and their brother, and their second cousin three times removed, all get a cut, nobody that matters wins.

Answer 3

I tell you that foreign aids can be helpful theoretically but practically its very rear when aid is effective.
there are many advantages and disadvanages can be at the time for same foreign aid...what is matter - for whom this advantage or disadvantage is counted.

another issue in development world is to define what is considered to be advantage cause this definition can be different for different levels of community and society.

I think that foreign aid should not be taken seperately from overall goals of the countries involved into the process (recipient and donor) cause this defines alot...did you see movie "Quite American"? or "Spy Game"? it shows WHY and HOW foreing aid is works...its true cause I know it.

Answer 4

I am currently reading a book that might just be your answer. It's "Globalization and its discontents" by Joseph Stiglitz, the former President of World Bank.

Foreign aids are very important sources of revenues especially to the world's poorest nations like Ethiopia. But often than not, countries that are indebted to aid providers - be it international financial institutions or highly industralized countries- find themself losing sovereighty. It is liken to a new form of colonialism - except it is more ambiguous and thus, more pervasive (than "traditional" colonisation).

Answer 5

Apparently it will be done at the expense of the military with the objective being to pay off countries so they will pretend to like us. The problem with that approach is that when you pay a bully not to be a bully they become bigger bullies. ...and since our military will have been gutted by then we will be at the mercy of whoever and whenever. Obama is a fool, but the ones who vote for this scheme are even bigger fools.

Answer 6

Foreign aids are not effective because it is just used by rich countries to harass poor countries in exchange to exploit their resources.

Answer 7

my first pair of shoe was from foreign aid i got it when i was fifteen.it was the biggest moment of my life.

Answer 8

Foriegn aid is useful for short periods or for nations that support us and our way of life. Aid for terrorists is very stupid.