What is foreign Aid?

Foreign aid is the global transfer of essential goods, capital and services from a donor organisation or a country to assist the needs of other nations. It can also be a military, economic or humanitarian intervention following a threatening shock such as: in Pakistan floods. Foreign aid, may in large, be related to providing technical training or financial resources to a certain nation as in the case of Taliban training in Afghanistan .It has also been linked to promoting economic, social and political development in third world countries such as: Iraq reconstruction. In such, this aid is subjected to bilateral donations between countries and sometimes takes the form of loans. Thus, foreign aid aims to combat disease, genocide, civil wars, famine, terrorism, drugs and war in order to re-establish a peaceful and self-sufficient regime.

Accordingly, Foreign aid aims to promote transformational development, strengthen fragile states, provide humanitarian assistance, support U.S strategic interests in the Middle East and maintain global disease. Since the Modern era, great powers have funded their close allies and colonies with a well-financed and secured structure in order to create a strong economy and therefore become able to gain more territories across the globe. The foreign aid system of the 21st century is, in fact, related to the Marshall Plan and International Organisations such as: the International Monetary Fund and the World Bank. Therefore, the funds and transactions which are aimed to change the lives of recipient populations are being managed through these bodies. Foreign aid has also been used by the United States and the USSR as a diplomatic weapon either to gain more allies or enemies.

Political motives were always present in aid giving, which served as a diplomatic tool to exert pressure. It has also been used throughout history in the means of resisting the spread of communism such as in Turkey and Greece following the Second World War as Lancaster puts it: “Like the other aid initiatives, it was presented as a temporary program and justified as a means of stopping the spread of communism”. In turn, other countries such as: Japan, structured their own foreign aid system which was directed towards Asian states with the purpose of repairing war damage and assisting poor nations. During the twentieth century, USA and Japan became the two major foreign aid leaders although their level of intervention has been under 0.7% of a country`s gross national income (GNI), which was set by the International Committee, putting Scandinavian countries just above the mentioned level. Since the end of the Cold War, USA`s foreign aid programme integrated peace making and keeping within its agenda, mainly targeting Sub-Saharan Africa, the Balkans and the Middle East. Such evolution included promoting democracy in corrupted and dictator regimes, capitalism in former communist regimes and economics in under-developing ones. Though some Latin American and Asian countries may have been saved by foreign aid, the situation in Africa became extremely severe despite the large amount of aid which has been provided for such a long period, reaching trillions of dollars from the Second World War. According to Dambisa Moyo, a Zambian international economist, between 1970 and 1998, when aid flows to Africa were at their peak, poverty rose from 11% to a staggering 66%. Since the 20th century, assistance to Africa has been delivered in increasing amounts, taking different forms due to the savage situation diverting from disease such as Malaria and HIV/AIDS to civil wars, poverty, famine and corruption.

Is Foreign Aid the Solution for Africa’s Underdevelopment ?

Foreign aid may be the solution for the situation in developing countries if the aid is properly delivered to the population. It firstly raises tax revenues if the donated resources are faithfully used in establishing new social and industrial structures. In such, this helps economic growth and increases the amounts of goods and services provided which in turn upsurges government incomes from different tax resources. Foreign aid also helps developing countries in emergency situation. In every natural or man-made disaster, it provides the concerned population with a necessary coverage of their basic needs by providing: food, medicine, shelter and others. Foreign aid is devoted to the immediate alleviation of humanitarian emergencies to provide relief, rehabilitation and reconstruction assistance to victims of disasters. It also supports modernization when familiarising developing societies with modern technologies and defence strategies. Yet, third world countries do not possess foreign exchange to spend on these technologies. In addition, the aid may be beneficial to recipient governments when importing basic raw materials which in turn, develop the different sectors of economic and due to the modernity of the machines used; productivity ultimately increases. Yet, this could not be achieved in most developing countries due to the lack of foreign exchange which stopped the importation of the required technology that serves the development of different sectors in society. Moreover, foreign aid helps establishing modern economic and social infrastructure which includes: transportation, gas, education, health, employment and others. Yet, this infrastructure needs both local and foreign capital which is absent in developing countries since there is little supply of domestic and foreign capital needed to finance the various development projects that would help raise the standards of living of Africans. Similarly, foreign loan contributes in balancing payments and filling the saving gap. In the case of developing countries, there is a low national income and extreme poverty thus, per capital income and saving is severely low. This little amount of saving rate creates obstacles for capital formation and economic development. Equally, the imbalance of payments between imports and exports creates a dramatic status of debt which will penalise any government from moving towards development.

Theoretical debates

Different theories of international relations have various thoughts on foreign aid. Conservatives believe that foreign aid promotes socialism when western governments intervene in other regimes` economies. They also see foreign aid as a grant for poor countries that are living beyond their economic and social capacities. In such, conservatives see that aid should only be addressed to nations who are impracticable in the market and this should be fulfilled by providing training to local inhabitants rather than transferring resources. Unlike conservatives, Marxists criticise foreign aid and consider it a tool of imperialism where weak and poor nations are controlled by wealthy ones. Liberalists see foreign aid as an important action as poor countries have the right to development just as wealthy nations. Yet, they argue that aid should be directed by the pursuers whose aims are humanitarian rather than organizers who may chase their personal interests. Ecologists, debatably, consider foreign aid a threat to environment, believing that development and globalisation destroy nature. Moreover, socialists and religious fundamentalists support foreign aid and see the real development in helping the poor and assisting other nation’s needs. In contrast, economic nationalists consider foreign aid a threat to their domestic economy; thus, it should be dropped.