However, as that is rather an exception than a rule, in this essay I will look at the cons of foreign aid claiming that it is actually not fulfilling it’s purpose. The reasons behind giving aid are simple and somewhat naive. Countries that are better off feel morally obliged to help poorer countries in need. It is believed that aid will improve people’s lives and will reduce poverty. However noble the cause, generous contributions without thorough analysis do not always lead to good outcomes.
Foreign Aid and Economic Growth The economic objectives of foreign aid are to induce high growth rates in Less Developing Countries which in turn will generate additional domestic savings and investment. However, there is much dispute as to whether development assistance to poor countries has been successful in achieving these objectives. There have been numerous attempts to investigate the effects of foreign capital in terms of direct foreign investment, and foreign aid and other foreign inflows on developing countries, their results have been conflicting. Aid antagonists like Bauer claim there is a negative causal relationship between aid and growth in less developing countries. This is because aid retards growth by substituting
As situations in different countries continue to take new forms, aid can also be provided concerning military, economic means, etc. It is essentially a transfer of useful resources to a country, but that in fact raises some significant issues. Foreign aid has always been characterized as a generous and conscious effort by developed countries to aid developing, poorer countries. Although that is not always the case and it is important to note the negative repercussions that can result for a country at the receiving end. The perception with foreign aid does indeed seem ideological and in fact hopeful.
INTRODUCTION In recent years there has been great progress in reducing poverty in the world. In 1990, lived 38% of the world 's people live in extreme poverty. Today the figure is 10% and that means that the proportion of extreme poor in the world has declined by over two thirds in 25 years. Overall, this means that there are 1 billion people fewer living in extreme poverty today than in 1990. The good news is that today is the first time that both the number and proportion of extreme poor declining in all parts of the world simultaneously.
Since 1990, the world has reduced the number of people who live in extreme poverty by over half. But that still leaves 767 million people living on the edge of survival with less than $1.90 a day.2 The numbers of world hunger has gone down by a lot, but yet world hunger is still going on. Some of the poorest countries in the world have few to no jobs, and the few jobs that there are, are paid very little each day. Survival is key to these people and with the little money they have, it’s hard to do that. Across the globe, conflicts consistently disrupt farming and food production.
Imagine being so hungry you can’t even move. Having to sleep in a house made of dirt, or being so thirsty because there is no safe drinking water. People around the World face these problems everyday. 328,000,000 children live in extreme poverty, and 1 in 10 people live on less than $1.90 a day. The conditions they live in are horrible and everyone should do what they can to help end poverty and world hunger.
However, this may cost more than necessary for the donor country as training/technical expertise will be required for the recipients, along with any other resources. This money will be provided by the taxpayers of the donor countries, which may lead to some issues as to people will be curious on why their tax money is for the foreign countries. But at the end, it does improve the Donor country’s image and overall reputation which will be good for any expats wanting to visits, or generally if any alliances between countries would want to be made. Aid can also be ineffective if it is used to fund projects that don’t help the long term development of a country. A constant supply of aid can cause dependency on the poorer country.
Another thing people might say is that if we stop giving foreign aid the poor countries will worsen. This is true but not all of it. Sources say that the reason why third world countries are doing so bad is because of the foreign aid we give them. According to World Economic Forum, “Does foreign aid always help the poor?” written by Ana Swanson “Deaton argues that, by trying to help poor people in developing countries, the rich world may actually be corrupting those nations' governments and slowing their growth.” The third world countries are becoming worse because of us because they depend too much on the other countries giving money to them so they don’t want to
In donor countries, citizens support and encouraged their governments to support poor countries. The US and the Soviet Union during the cold war used aid to win the support of developing countries and to bring them under their influence. For instance, in the 1980’s, the US government provided substantial amount of aid to Egypt and Israel as a support for the Camp David Peace Accord signed in 1979. Many donor countries such as France and Great Britain also provide aid to their former colonies so they can retain political influence over them (Alesina and Dollar, 2000). Bilateral aid is mostly tailored supporting the economic interests or some sectors or firms of the donor country.