The Perceived Effects of US Foreign Aid: the American Policies that shape Global Diplomacy - Research Paper Example

Download file to see previous pages... The general characteristics of under developed countries such as low level of per capita income, savings and investment require foreign financial support for their economic development and a balanced growth of the world economy could be ensured by the effective foreign financial aid along with the development of the recipient nation. Foreign aid plays a key role in forming the foreign policy of developed nations as it helps to build better relationships with other countries which in turn benefit the donor nations in expanding their markets. Tied foreign aid explains the benefit of donor nations as it compels the recipient nation to purchase certain goods from the donor country alone (Reasons for Foreign Aid). Most of the developed nations have been contributing to support the less developed countries and these aids have changed the foreign and domestic policies of different nations .The United States is the supreme player among all the supporters and hence it is important to have a look at the perceived effects of US foreign aid and the American policies that shape global diplomacy. This paper is an attempt to answer the question “How is US foreign Aid perceived and how does this shape international diplomatic policies?” and the paper seeks to analyse the effect of US foreign aid in shaping the foreign and domestic policies of the recipient countries in such a way that it support the US to achieve certain diplomatic goals. Review of literature There have been a number of studies carried out so as to analyse the effects of foreign aid. There are experts who believe that foreign aids benefit only to the donor nations which allows a dependant development to the recipient countries and one could also find literature which expose the harmful effects of foreign aid and studies which proves that foreign aids benefit both the recipient and donor nations. Foreign aid and policies of United States Daniel Ehrenfeld unearths the effectiveness of foreign aids on the recipient nations and for him bilateral aids such as offered by the United States to Egypt are so “structured to recap gains for the benefactor and not for humanitarian purposes” (Ehrenfeld ) whereas multilateral aids catered better to the development process of the South. The author also purports that the presence or absence of political and civil rights in the recipient country play a pivotal role in the effectiveness of such foreign aids. Even though there have been a number of foreign aid initiatives from the Soviet Union, the United Nations Relief and Rehabilitation Agency (UNRRA), the World Bank, or the International Bank for Reconstruction and Development, the 1950s marked the US hegemony in aid distribution. The foreign aids aim at the promotion of economic development and the welfare of the recipient state and such foreign aids have been proved to be extremely beneficial to the less developed nations. It has often been argued that foreign aid “closes the gap between investment and domestic savings, overcoming shortages of capital and low levels of skills, it supplements export earnings to finance imports generally and capital goods more specifically, and helps to close the foreign exchange gap” (Ehrenfeld ). The United States’ ...Download file to see next pagesRead More