We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Foreign Aid: Does it promote growth or is it ineffective in promoting growth - Essay Example

Comments (0) Cite this document
Summary
 This paper examines whether foreign aid promotes socio-economic growth and development. It presents the argument that it does promote growth as well as the argument that it is ineffective in promoting growth. The short case study of Pakistan to illustrate the points raised.  …
Download full paper
GRAB THE BEST PAPER
Foreign Aid: Does it promote growth or is it ineffective in promoting growth
Read TextPreview

Extract of sample
Foreign Aid: Does it promote growth or is it ineffective in promoting growth

Download file to see previous pages... The donors are usually wealthy countries or multilateral institutions such as the International Development Association and the World Bank and NGOs, and the recipients are usually less developed countries that need external help for supporting their growth. A significant and influential study that showed foreign aid to have a positive impact on growth in LDCs was conducted by Burnside & Dollar (2000). However, they also mentioned the need for good fiscal, monetary and trade policies for the impact to be effective. On the other hand, its inability to impact positively on growth is usually given as the main reason for not recommending the practice. The rationale for giving foreign aid The traditional rationale behind giving foreign aid has been that it helps to close the ‘finance gap’. This gap is the difference between the amount of investment required for a specific economic growth rate, and the amount of domestic resources available from savings and private financing (Rao, 2003: 102), or put simply, between planned investment and available savings. The situation in which a finance gap exists is created when there is a lack of physical and human capital. The finance has therefore mainly been directed at large-scale infrastructural projects, as recommended in the Harrod-Domar model for promoting economic development (Picard et al., 2007: 10). Furthermore, the assumption made is that the aid takes the place of the gaps in investment the magnitude of which is directly proportional to economic growth (Rao, 2003: 102), which is questionable. The giving of foreign aid also promotes social interaction between nations. It is a useful means for the redistribution of wealth so the practice has an ethical dimension too. The surplus generated by richer economies can be used to help the poorer economies as a moral responsibility. For the latter, it could be a very important source of finance “to tide over financial crises, enhance economic development, [and] promote economic integration with the global economy” (Rao, 2003: 97). Foreign aid, therefore, deals with the problem of poverty with the aim of helping to generate growth in struggling economies. The Millennium Development Goals announced by the U.N. in 2000 had this specific objective of overcoming poverty to encourage foreign aid flows (Isard, 2006: 219). The idea is therefore benevolent but it only works if the aid is firstly channeled properly and secondly only if it is utilized efficiently. The alternative to foreign aid for recipient countries would normally be to acquire foreign debt or else linger with the financial deficiencies. Foreign aid can, therefore, prevent or alleviate the long-term problems associated with debt financing. Countries with lack of finance can thus continue to engage in developmental projects without the worry over affording the costs. At the same time, the giving of foreign aid could also benefit the donors as a means of marketing their products and services. It can, therefore, be a mutually beneficial practice to promote growth in both the donor and recipient countries. Objections and complications with giving foreign aid, On the other hand, others view the giving of foreign aid negatively.   ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Foreign Aid: Does it promote growth or is it ineffective in promoting Essay”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1416188-essay
(Foreign Aid: Does It Promote Growth or Is It Ineffective in Promoting Essay)
https://studentshare.org/macro-microeconomics/1416188-essay.
“Foreign Aid: Does It Promote Growth or Is It Ineffective in Promoting Essay”, n.d. https://studentshare.org/macro-microeconomics/1416188-essay.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Does organic pollution affect E.Coli growth
From this research it is clear that the changes in the growth and protein synthesis of E.coli under stress makes it suitable as a bio-indicator of water pollution. Further studies are needed to examine the usefulness of detecting synthesis of specific stress proteins by E.coli as sensitive bio-markers of water pollution.
21 Pages(5250 words)Essay
Foreign aid. Does the developed world have an obligation to give aid to the developing world
As a team, we support this motion because of the benefits and facts associated with the aid. The following are some of the reasons why we support the motion that the developed world has an obligation to give aid to the developing world.
3 Pages(750 words)Essay
Are Tax Cuts Promoting Economic Growth
As profits increase, businesses-both small and big-can expand for greater profit potential. As businesses expand, employment opportunity increases. As more people are employed, more goods and services are bought, thus further increasing profit. A similar growth occurred under President Reagan's tax cuts which "stimulated a 17-year economic expansion, interrupted only by an eight-month downturn in 1990-91" (Commonwealth Foundation, 2005, n.p.).
2 Pages(500 words)Essay
Aid impedes development, it does not promote it. Discuss
er, there are staunch opponents of development aid who view it as one of the reasons for the continued state of underdevelopment in many poor countries. This essay seeks to evaluate the debates presented by both the opponents and proponents of development aid, with the objective
12 Pages(3000 words)Essay
Foreign Aid: Does It Promote Growth or Is It Ineffective in Promoting Growth
This paper examines whether foreign aid promotes socio-economic growth and development. It presents both sides of the debate, i.e. the argument that it does promote growth as well as the argument that it is ineffective in promoting growth. It also includes a short case study of Pakistan to illustrate the points raised.
8 Pages(2000 words)Essay
What is economic growth Discuss the factors that promote economic growth in ( Australia )
However, economic growth is the resultant of new services and products that are coming to the fore. Therefore economic growth is a force that makes sure that development is dependent on how much a
1 Pages(250 words)Essay
Does outside interference from international players by providing foreign aid & accommodation impede or promote democracy based on their own political interests at the expense of the quasi-states, their populations and potential for successful democracy
The players send their representatives who lobby for certain policies. For instance, Palestinian conflict with Israel has attracted interest of United States and other
5 Pages(1250 words)Essay
How population growth can spur economic prosperity and promote progress
This has been due to the fact that greater population growth leads to higher per capital income as well as higher national income for the economy. Both
12 Pages(3000 words)Research Paper
Foreign aid
There are various types of Foreign Aid; bilateral aid and multilateral aid. As argued by Nelson (2010) bilateral aid refers to the aid that is given by a donor state to a needy state. Most third world countries are the recipient countries as they are
1 Pages(250 words)Essay
Does income inequality hurt economic growth
Because of that challenge, the unfortunate population’s health, employment, family and safety is often unflavoured. Studies indicate that even countries with the best and strongest economy also stand being hurt by inequality in
5 Pages(1250 words)Term Paper
Let us find you another Essay on topic Foreign Aid: Does it promote growth or is it ineffective in promoting growth for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us