This paper talks about the adverse side-effects on a recipient country`s economy of the foreign aid as a form of international financial cooperation. These possible negative impacts are demonstrated in several cases cited by this paper. The foreign aid initiatives should promote active actions.
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uals, organizations and governments in order to assist people or governments experiencing distress, suffering, war, disasters and other emergencies provide humanitarian aid. For instance, governments could provide aid through the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) in cases of emergencies that occurred as a result of natural disasters. Development aid is the main focus of this paper. It is the financial and other resources provided by wealthy countries to low-income states in order to help spur economic development, reduce poverty, improve governance, solve population explosion, expand access to basic education and healthcare, protect the environment, promote stability in conflictive regions, protect human rights, among other objectives (Tarnoff, 2010, p.3). It is distinguished from the humanitarian assistance by the fact that the intent to alleviate suffering and poverty is aimed at the long-term as opposed to the latter's emphasis on the short-term relief. Industrialized countries have institutionalized development aid through their respective Official Development Assistance (ODA). Financial resources are provided through different channels such as international aid organizations, non-government organizations and global bodies such as the UN and the World Bank. The flow of financial resources and the part of it that is normally called aid, wrote Singer and Ansari (1988, p.180), is only a part - and a comparatively small part - of the total aid relationship between rich and poor countries. This is because other types of aid could also emerge. For instance, there are those who argue that when a rich country opens up its market to the exports of low-income countries, it is providing a meaningful aid. Ideally, the effect of foreign...
This essay investigates the theme of relative ineffectiveness of foreign aid, compared with other forms of financial cooperation. The essay identifies a comprehensive list of problems that are either directly or indirectly associated with large amount of foreign aid. It is expected that through the information, corrective measures could be identified made so that the delivery of financial aid is effective and could achieve more meaningful effects.
Foreign aid is supposed to be an altruistic initiative. However, aids are often granted to beneficiaries in exchange for something or tied with several conditions. Then, there is also the claim that foreign aid could give rise to numerous problems on the part of the beneficiary such as its incapacitating effect on people in determining and building their own solutions to their problems. These variables, among others, underpin the manner by which large amount of financial resources and other forms of aid could cause harm to recipient countries.
The absorptive capacity is the ability of a country to employ both domestic and foreign capital productively in the sense that the resources yield some minimum rate of return. This concept explains the problems and negative impacts for foreign aid beneficiaries listed by this paper. The lack of competence and capability for example, led to wastage in the financial aid, which often fall prey to unscrupulous government officials. It provided insights with regards to addressing the pitfalls entailed in giving aid.
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“Adverse Effects of the Foreign Aid Essay Example | Topics and Well Written Essays - 3000 Words”, n.d. https://studentshare.org/macro-microeconomics/1397034-adverse-effects-of-the-foreign-aid.
Despite the lack of solid empirical evidence, foreign aid improves the economic growth of a country through indirect channels, which are not evident by the analysis of direct effect of foreign aid on economic growth. Some of the channels include the alteration of investment share of the country’s Gross Domestic product (GDP) that affects economic growth indirectly, and the effect on government consumption (Lancaster 2007:21).
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Rather than being coherent with wider political objectives, humanitarian aid should be kept separate and distinct from them. In practice, aid agencies are likely to be simultaneously providing a mixture of humanitarian,
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