One of the most controversial and debated issue in the arena of global politics is that of foreign aid or developmental assistance. Many people argue for and against foreign aid. Having stated a position on foreign aid, people find their own reasons to either reject or support foreign aid and they have their own justification. Obviously it is better to have a factual position on exactly what are the factors to be taken in to consideration on most discussions on foreign aid.
Foreign aid, the international transfer of capital, goods, or services from a country or International Organizations for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian (e.g., aid given following natural disasters) reads Britannica encyclopedia[i]. Also Dictionary.com defines it as economic, technical, or military aid given by one nation to another for purposes of relief and rehabilitation, for economic stabilization, or for mutual defense[ii].
Obviously in fact there are many forms of from food aid to humanitarian emergency assistance, military assistance, disaster relief etc. Most part development aid has long been recognized as decisive to help poor developing nations grow out of poverty, famine and unemployment.
In 1970, the world’s rich countries agreed to give 0.7% of their GNI (Gross National Income) as official international development aid, annually. Since that time, despite billions given each year, rich nations have rarely met their actual promised targets. For example, the US is often the largest donor in dollar terms, but ranks amongst the lowest in terms of meeting the stated 0.7% target (Shah 08 April 2012).
By any yardsticks economic aid has several dimensions and connotations as of currently. Countries typically offer economic aid to boost their own security. Thus, economic help could also be accustomed to stop friendly governments from falling below the influence of unfriendly ones or as payment for correcting to determine or use military bases on foreign soil. Economic aid conjointly could also be accustomed can succeed a country’s diplomatic goals, sanctioning it to realize diplomatic recognition, to garner support for its positions in international organizations, or to extend its diplomats’ access to foreign offices Different functions of economic aid embody promoting a country’s exports (e.g., through programs that need the recipient country to use the help to buy the donor country’s agricultural merchandise or factory-made goods) and spreading its language, culture, or faith. Countries conjointly offer aid to alleviate sufferings caused by natural or artificial disasters like famine, disease, and war, to market economic development, to assist establish or strengthen political establishments, and to deal with a spread of multinational issues together with illness, terrorist act and different crimes, and destruction of the surroundings.
Why non realization of socio economic development through foreign aid
All aid projects are good and welcome because it is ethical and politically correct to fill the stomach of empty bellies. Historically aid is correct in the sense that aid can offset the mistreatment and maltreatment envisaged by large group of people in one part of world by a minority of people from other part of world. Aid is not a charity. Aid is not gift. Aid is the right of those countries that need it. The real question needs to be explored is that who is benefitting from aid projects. Is it developed countries or poor nationalities.
Foreign Aid has been one of highly controversial and debated academic, political and popular issues in most of under-developed countries. Foreign aid us mostly a political issue in most of time in electoral politics of almost all developing nationalities. There are several reasons why Foreign Aid is controversial as well as politically jerking besides the non realization of socio-economic development pinpointed in the stated goal of such foreign aid programmes. Most obviously foreign aid is given by International development agencies, International organizations, rich nationalities etc. behind every currency being pumped through foreign aid programmes, there are stated rules and guidelines to be followed by recipient nationalities. Here comes the tragedy and dark side of aid projects all over the world.
Aid, especially the fund is often wasted due to the pre-conditions being stipulated by donor countries that the recipient must fulfill in practice has been a mockery and pretense and misplaced direction at the altar of aid projects with out really serving the purposes for which aid is being given.
Most notably the stipulations that the recipient countries should use expensive and costly goods and services from donor countries also act as a stumbling block to aid projects.
Nearly all aid funds and project does not in point of fact does not go to the poorest and marginalized people and countries who would in reality need it the most. This is largely because there are many numbers of considerations being taken for measuring the eligibility criteria and favouritism always prevails in aid allocation.
Aid amounts are dwarfed and zeroed by rich country protectionism especially at WTO stipulations that denies market access for poor country products on various unethical and misplaced standardization and quality stipulations, while rich nations use aid as a leverage to open and access poor country markets to their products and services.
Large projects or massive grand strategies often fail and fall short of achievement to help the vulnerable and teeming millions as money and aid can often be embezzled and misappropriated away by vested interests and moneyed classes.
Professor William Easterly, a noted mainstream economics professor on development and aid issues has criticized foreign aid for not having achieved much, despite grand promises. “A tragedy of the world’s poor has been that] the West spent $2.3 trillion on foreign aid over the last five decades and still had not managed to get twelve-cent medicines to children to prevent half of all malaria deaths. The West spent $2.3 trillion and still had not managed to get four-dollar bed nets to poor families. The West spent $2.3 trillion and still had not managed to get three dollars to each new mother to prevent five million child deaths.… It is heart-breaking that global society has evolved a highly efficient way to get entertainment to rich adults and children, while it can’t get twelve-cent medicing to dying poor children[iii]”
The United Nations Economic and Social Council, at the same time when assessing that effectiveness of aid to poor countries necessitates a focus in economic infrastructure also illustrated that Organisation for Development Assistance was impeding foreign aid programmes altogether[iv]. Jose Antonio Ocampo, Under-Secretary-General for the United Nations Economic and Social Affairs said that, commodities, debt, official development assistance and, at times, the risk of conflict is hindering development in the least developed countries for most part.
More over, loads of developing nations are in debt and poverty in part due to the policies of international financial institutions such as the International Monetary Fund (IMF) and the World Bank and obviously the programmes these organizations has had over the years resulted not in eliminating the problems of poor nations but rather furthering poverty, unemployment and enhancing debt crisis[v].
Subsequent to an ideology known as neo-liberalism and steered by WB and IMF and other institutions known as the “Washington Consensus” [for being based in Washington D.C.] and Structural Adjustment Policies (SAPs) have been forced to guarantee debt repayment and economic restructuring in reality. However, the way it has occurred has required poor countries to trim down expenses on things like health, infrastructure, development, and education while debt repayment and other economic policies have been made the priority for the poor nations by such international agencies. Practically, institutions like the IMF, World Bank have commanded that poor nations lowered the standard of living of their people and in reality debt trap has actually misplaced the price of foreign aid.
Besides opening up of economy has created bgger challenges for poorer economies in the words of John Madeley who said that “Competition between companies involved in manufacturing in developing countries is often ruthless. We are seeing what Korten described as “a race to the bottom. With each passing day it becomes more difficult to obtain contracts from one of the mega-retailers without hiring child labor, cheating workers on overtime pay, imposing merciless quotas, and operating unsafe practices[vi].”
Foreign aid thus gives a gloomy side of a global state of affair between rich and poor. However, the empirical evidence on the effectiveness of foreign aid is discouraging. Recent literature on the topic provides ambiguous results on whether foreign aid helps or hinders developing countries. Foreign aid, however, may affect economic growth through indirect channels that cannot be captured by analyzing only the direct effect of aid on growth. Aid may alter the investment share of GDP, which indirectly affects economic growth, or may also affect government consumption, which is known to have a negative effect on economic growth (Djankov et al., 2006). For instances, Sachs et al. (2004) argued, unrestrained aid may augment public consumption rather than enhancing investment.
In the empirical study by Djankov et al., 2006 argued that foreign aid has a negative impact on the democratic stance of developing countries and on economic growth by reducing investment and increasing government consumption. The contention is that empirical findings suggest foreign aid do not support the democratization processes in developing countries nor it reflect a development effect there.
Criticism to foreign Aid
Noteworthy criticisms are leveled at against of the donors and therefore the recipients of economic aid are also subjected to crticism. Some teams in recipient countries have viewed economic aid suspiciously as nothing more than a quite tool of influence of donor countries. For instances,, critics of the UN agency say that the specified structural changes are too politically troublesome and too painstaking which the debts incurred through UN agency loans facilitate to form impoverishment, and aid instead was channeled into debt reimbursement. The World Bank critics claimed within the ’70s and ’80s was insensitive to native desires and infrequently approved and aid comes through that did a lot of damage than smartening economy and polity , altered several of its policies. In general, opponents of the means that economic aid programs have operated charge that economic aid has been dominated by multinational company interests, has shaped to some degree unreasonable debt burden on developing countries, and has forced countries to avoid victimization and ways that may defend their economies from the open market. Additionally, several critics of U.S. aid illustrate the continued importance of political issues over organic process of aid projects, citing as an example the rise in aid to countries allied with the USA within the fight against act of terrorism following the September 11 attacks in 2001, notwithstanding their commitment to democracy and human rights.
Meanwhile, some teams in donor countries have criticized economic aid as ineffective and wasteful. within the US, as an example, popular opinion polls systematically show that almost all Americans believe that economic aid consumes twenty percent of the country’s budget—the actual figure is a smaller amount than one percent—and that almost all recipients of economic aid don't merit it or don't use it showing wisdom. Such criticisms are bolstered by the commonly unsatisfying results of economic aid programs in geographical region, wherever several countries stay involved in impoverishment, corruption, and war despite the disbursement of serious economic aid. With efforts to build Iraq and Asian country, curtail drug production and trafficking, and battle HIV/AIDS, ODA—which had declined throughout the 1990s—increased within the early twenty first century.
In a 1987 study, Michael Hunt contended that "development was the younger sibling of containment" and "drew its inspiration from the old American vision of appropriate or legitimate processes of social change and an abiding sense of superiority over the dark-skinned peoples of the Third World. In many ways, of course, foreign aid does continue the relationship that began under an earlier, imperialist past, particularly for colonial powers like Britain, France, and Belgium. Yet many other countries, such as the Scandinavian nations and Canada, who lack an imperialist history, have also become foreign aid donors, as Olav Stokke noted in a 1996 article. An overemphasis on the imperialism of foreign aid overlooks the importance of their "humane internationalism," which he termed "an acceptance of the principle that citizens of industrial nations have moral obligations" to the outside world[vii].”
Moyo, a Zambian economist with degrees from Harvard and Oxford, in a short, polemical book, Dead Aid: Why Aid Is Not Working and How There Is A Better Way for Africa, blames aid for nearly every ill Africa has endured. "Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased," she writes. "Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world[viii]."
In short foreign has done little good to poor and developing nationalities. It is just another forms of economic imperialism practiced in new forms. Aid is good but on what ground and for what matter it is given and stipulations on how it is to be utilized create lot of problems for many African, Asian and Latin American countries. Therefore, developing countries are unable to make use of the real potential of foreign aid rather they are victimsed for their debt trap at the altar of foreign aid pogrammes.
Foreign aid does no good. It is used by rich countries especially USA as a tool in foreign policy and pump funds to developing countries as a strategic policy for their military and other imperialist concerns. For USA aid is a political project and foreign policy component. For many other erstwhile European colonial masters, aid is still a new form of civilizing mission by which Whiteman’s burden is done and articulated in a new form of cultural project.
[i] See http://www.britannica.com/EBchecked/topic/213344/foreign-aid
[ii] See (http://dictionary.reference.com/browse/foreign+aid) accessed on 13-03-2013
[iii] William Easterly, The White Man’s Burden; Why the West’s Efforts to Aid the Rest have Done So Much Ill and so Little Good, (Penguin Press, 2006), p. 4
[iv] See UN report, Aid to poor countries should focus on building good economies, (http://www.un.org/apps/news/story.asp?NewsID=11188&Cr=ecosoc&Cr1=#.UT_XOTeDKE4) accessed on 13-03-2013.
[v] Susan George, A Fate Worse Than Debt, (New York: Grove Weidenfeld, 1990), pp. 143, 187, 235
[vi] John Madeley, Big Business Poor Peoples; The Impact of Transnational Corporations on the World’s Poor, (Zed Books, 1999) p. 103
[vii] Cited in Foreign Aid - Foreign aid's critics, Encyclopedia of New American Nation,
(http://www.americanforeignrelations.com/E-N/Foreign-Aid-Foreign-aid-s-critics.html#ixzz2NNnyrAES) accessed on 13-03-2013.
[viii] Cited in Michelle Goldberg, April 7, 2009, Is Foreign Aid a Bad Thing?,The American Prospect, (http://prospect.org/article/foreign-aid-bad-thing) accessed on 13-03-2013
Djankov, Simeon, Jose G. Montalvo, and Marta Reynal-Querol 2006, DOES FOREIGN AID HELP?, (http://www.cato.org/sites/cato.org/files/serials/files/cato-journal/2006/1/cj26n1-1.pdf) accessed on 13-03-2013
Shah,Anup. 08 April 2012, Foreign Aid for Development Assistance,Global Issues, (http://www.globalissues.org/article/35/foreign-aid-development-assistance) accessed on 13-03-2013
Sachs, J.; McArthur, J. W.; Schmidt-Traub, G.; Kruk, M.; Bahadur, C.; Faye, M.; and McCord, G. (2004) “Ending Africa’s Poverty Trap.” Brookings Papers on Economic Activity, No. 1: 117–240.