Development Aid
Development aid refers to financial, technical, or material assistance provided by governments, organizations, or individuals to support the economic, social, and political development of developing countries. It aims to reduce poverty, improve infrastructure, and enhance healthcare and education. Development aid can take the form of grants, loans, or technical assistance, and is often provided by international organizations and donor countries.
4 Key excerpts on "Development Aid"
eBook - ePub- David Hudson(Author)
- 2014(Publication Date)
- Routledge(Publisher)
...5 Development Aid DOI: 10.4324/9780203381250-5 Learning outcomes At the end of this chapter you should: Be able to describe what aid is, its internationally agreed definitions and the accounting standards used to define what is and what isn’t official development assistance. Know the history and geography of the international aid regime. Understand who gives Development Aid (donors), to whom (recipient or partner countries), and how (via a discussion of the different modalities or types of aid). Know the aid effectiveness debate, i.e. whether and how aid has an impact on development through economic growth and welfare measures. Understand the critical and radical critiques of aid as a form of imperialism and as perpetuating the dependency of low income countries. Be aware of the contemporary policy issues surrounding the international aid regime such as aid effectiveness, donor coordination and transparency. Key concepts Aid, official development assistance (ODA), modalities, determinants of aid, aid effectiveness, fungibility, transparency, absorptive capacity, OECD Development Assistance Committee (DAC), Paris Declaration Introduction International aid is the transfer of resources from rich to poor countries. Peter Bauer (1981 : 87) famously opined that ‘The Third World is the creation of foreign aid: without foreign aid there is no Third World’. Bauer’s views on aid were famously negative and conservative – viewing it as a source of patronage, corruption, stifling market forces and entrepreneurship, all issues picked up later in the chapter. As such, for Bauer, foreign aid serves to maintain poverty and underdevelopment. But, more generally, Bauer’s comment also suggests the centrality of aid to the development project; aid is almost constitutive of development and is indeed what most people think of if you stop them in the street and ask them about ‘development’ (see Box 5.1 on public attitudes to aid)...
eBook - ePubDevelopment Economics
Theory and Practice
- Alain de Janvry, Elisabeth Sadoulet(Authors)
- 2021(Publication Date)
- Routledge(Publisher)
...The business of development assistance relies on a combination of addressing developing-country needs and seeking the means to meet those needs. The former are in plain sight in the global economy, but mobilizing the latter often requires active marketing for what is essentially a major global service industry. Looking more deeply into the aid industry, we can expect to see incentive problems, including, among other things, self-promotion and reporting biases that may overstate the importance of these services over time (Hancock, 1994). Independent reviews of the World Bank and other institutions have evidenced the existence of biases of this kind, and many leading agencies have established watchdog facilities to limit them. Rigorous impact evaluations of aid projects—for example, in the field of microfinance—thus have a tendency to deflate presumed results, creating ambiguity among aid agencies about the desirability of such evaluations. To a significant extent, individual or national aid projects may also be captured by their local missions (the so-called mission-creep effect), and seek perpetuity even though global priorities may be shifting. Aid Recipients Some countries are highly dependent on foreign aid. As can be seen in Table 19.5, column 4, in 2012–2013, measured as a share of GDP, ODA reached 52 percent in Somalia, 48 percent in Guinea-Bisseau, 35 percent in Equatorial Guinea, and around 30 percent in Gambia and Lesotho. It also reached high levels in large countries such as 20 percent in Mali and Tanzania, 17 percent in Jordan, 16 percent in Haiti, and 14 percent in Mozambique and Niger. For sub-Saharan Africa overall, aid as a share of GNI peaked at 7 percent in 1994 and declined to 3 percent in 2012. In most cases, aid relationships are not managed by the intended beneficiaries, principally the country’s poor, but by leadership systems at the national or community level...
eBook - ePubForeign Aid and Foreign Policy
Lessons for the Next Half-century
- Louis A. Picard, Robert Groelsema, Terry F. Buss(Authors)
- 2015(Publication Date)
- Routledge(Publisher)
...19 Aid and Development A Conceptual Perspective from Development Economics Siddharth Chandra DOI: 10.4324/9781315704289-19 Is there a connection between aid and development? This question has interested people in the development professions for decades. The goal of this chapter is to investigate, conceptually, the relationship between foreign aid and development in the context of developing countries, using a perspective from development theory and economics in particular. In the first part of this chapter, trends in the field of development economics and the impact that these trends have on thinking about foreign aid will be discussed. In the second part of this chapter, the changing notions of what constitutes economic development and, by extension, what drives economic development, will be discussed. If the goal of aid is to foster economic development, than any evaluation of the efficacy of aid must incorporate an understanding of the prevailing notions of development at the time the aid was being administered. Early Development Economics: A Brief Summary, with Implications for Aid As a field, development economics, or at least the modern version of it, can arguably be said to have originated in the mid-twentieth century. As colonies in Asia, Africa, and other parts of the world gained their independence in the 1940s and 1950s, economists were quick to recognize that there were questions specific to the economies of these former colonies that traditional models in economics, which had been developed in the prewar years, were unable to answer. The most basic of these was how to take a former colonial economy, which had often been used primarily as a source of raw materials, and convert it into a developed economy, which had as its base a vibrant industrial sector. A characteristic of developing economies that defined the field of development economics in its early stages was dualism...
- George Auma Kararach(Author)
- 2022(Publication Date)
- Routledge(Publisher)
...Some authors caution that when aid is a pure unilateral transfer, the conventional short-run terms-of-trade improvement that result from a home bias in consumption causes harmful delays in the transfer of technology that can lead to mutual immiserisation. Conversely, aid that directly or indirectly expedites technology transfer and learning in developing countries can be mutually beneficial (see Benarroch and Gaisford, 2004). Aid and the funding gap Africa needs about US$500bn–US$1.2tn annually between 2021 and 2030 to fill the financing gap if it is to meet the SDGs. Indeed, Pallage and Robe (2001) note that foreign aid has been a major source of economic growth for developing countries, especially in Africa, where it averages 12.5% of the GDP and is a critical source of foreign capital. Given the funding needs of the continent, foreign aid has the potential to boost economic growth as well as reduce poverty. While Development Aid is currently a big portion of social investment, it has been declining over the past five years. Increasingly, aid is being replaced by private sources linked to foreign direct investment (FDI) and remittances (Figure 4.3). Figure 4.3 Trend in ODA, FDI and remittances. Source: World Development Indicators database. Aid, the private sector and corruption There is a growing disquiet that external capital may have significant negative effects on the economic growth of recipient countries. According to this view, in most cases foreign aid gets fully consumed; tends to substitute rather than complement domestic resources; facilitates the import of inappropriate technology; distorts domestic income distribution and funds bigger, bloated, inefficient and corrupt bureaucracies in developing countries (Moyo, 2009)...
