Does foreign aid really contribute to poverty reduction? Poverty has been an ongoing global issue with a challenging debate on how to resolve it. Whilst some believe it is a solution that intends to alleviate poverty, some may argue that it is merely a waste of public spending and highly likely that it will not go to those in need. This paper will highlight the strengths and downfalls of foreign aid through the lenses of the juxtaposing theories realism and liberalism. Firstly, I will briefly describe poverty and the different types of foreign aid. Secondly, I will argue from the liberalist perspective, the advantages of foreign aid, using the case of the United Nations’ provision of microfinance to Mozambique. Following that, I will discuss …show more content…
The most common form of it is Official Development Assistance (ODA). It can be subdivided into short and long term loans, government grants, project aids e.g. schools and hospitals, and program aids such as advancements in the education to sector to nurture young entrepreneurs. Besides aid given by the public sector, there is aid provided by non-government organisations (NGO’s) which serve aid on a smaller scale, and Humanitarian aid which aims to deliver medical and food supplies to countries in need. All of these methods share a common goal to create economic growth and development for the country, increase living standards and ultimately reduce …show more content…
Unlike a liberalist perspective who believe such international institutions can make a difference, realists adopts a “self-help system” in this dangerous world, consequently developing a psychological state of fear and mistrust. They strongly oppose to the effect of international institutions facilitating foreign aid and development, and raise a thought-provoking question: are these institutions really willing to help these economically low developing needs or are they just doing things strategically to meet powerful countries’ needs? After all, the rules of institutions like the United Nations, World Bank and International Monetary Fund (IMF) are all written by leading countries. They may project their aims to foster monetary cooperation and secure financial stability, but with the power they have to make decisions on what to do with these developing countries, the motive to influence the decisions in a way to benefit their domestic economy is very high. According to Hans J. Morgenthau, “international politics, like all politics, is a struggle for power. Whatever the ultimate aims of international politics, power is the immediate aim”. With realists’ high priority of power and focus on relative gains, regardless of foreign aid given through an international institution or given directly by the donor government, the possibility of providing foreign aid with solely the intention to meet their self
On one side of the issue the supporters of developmental aid believe that the United States is doing more than a great job by offering economic assistance to countries that need help to develop. These individuals are aware of the unfortunate poverty levels in many countries abroad. They believe that it is the duty of the American people to help reduce the poverty levels in countries in which people live with less than a dollar a day. In fact, some supporters believe that the U.S. is not offering enough support to the poorer countries. Many have
The main point of Banerjee and Duflo’s Poor Economics (2012) is that aid is neither good nor bad: there are instances where it can help greatly and instances where it can fail those it seeks to help(4). Aid is a powerful tool, therefore it’s imperative that we carefully select the right types of projects (Banerjee & Duflo, 2012, p. 4-5). Banerjee and Duflo (2012) present a few key points of action as a framework for approaching aid, with the broadest issue being the idea that too much responsibility is placed on the poor in making the most basic decisions (268-69). One example that Banerjee and Duflo (2012) offer is the fact that many of the poorest people don’t have sanitary water
According the US Census Bureau, the United States spent $44.957 billion on foreign aid in 2009, in terms of total foreign assistance. Of that, just over $11 billion was military assistance. The nations that received the most foreign aid were Afghanistan, Iraq, Israel and Pakistan. Some aid went to financial institutions and to aid agencies, and therefore is difficult to classify by country. By regions, Asia, Sub-Saharan Africa and the Middle East were the biggest recipients of foreign aid. The recipients and types of foreign aid are indicative of priorities that the US government has with respect to foreign relations. As many people applaud high levels of foreign aid from the US to poor countries around the world, foreign aid also has its critics. From a domestic perspective, criticisms include the argument that this money would be better used in the United States, and the libertarian argument against all forms of foreign aid in general. It is worth noting that many critics of foreign aid still support aid to support military objectives, which includes the four largest recipient of aid (Traub, 2011). External critics of foreign aid argue that such aid has generally failed to achieve its objectives, for a variety of reasons ranging from rapidly increasing populations to corruption to the promotion of dependency relationships (Bovard, 1986). This paper will analyze US foreign aid in the context of its success and failures and make the case that the United States
In all of these sources it analyzes whether or not three thoughts about world poverty and foreign aid are true. These three thoughts are: fears of overpopulation, foreign aid is wasted money, and whether or not poor countries are destined to stay poor forever. In every one of the videos we watched, all of these fears were proven to be myths and in fact the opposite was proven.
Foreign aid has played an enormous role in the United States government policy, especially since the mid-twentieth century, following World War II. At that time, the U.S. began providing financial aid, through the Marshall Plan, to help rebuild Europe (Williams, 2015). Today, foreign aid has evolved to mean a variety of things. Foreign aid is not strictly financial assistance. According to Williams in the Encyclopedia Britannica (2015), foreign assistance can include military assistance or equipment, medical assistance or equipment, or technical assistance and training. However, the most common foreign aid is official development assistance, which is organized through international organizations such as the World Bank, International Monetary Fund or UNICEF and used to address poverty and promote development (Williams 2015). Many people feel in the United States feel that it is necessary to provide foreign assistance to the world. It is thought that helping less developed economies improves the market for everyone. Others feel that many people are in need here in the United States and that it does not make sense to send aid to other countries when people need right in their own city, state, or country. Most people think that a large portion of the U.S. budget is devoted to foreign aid. In contrast, according to Rutsch (2015), “the U.S. spends less than 1 percent of the federal budget on foreign aid”. With the state of the world today,
This paper exemplifies a fresh perspective on the long-standing debate of the effectiveness of aid conditionalities. This perspective casts a critical eye on the effectiveness of donor institutions and states in enforcing their own rules and goals rather than the usual critiques on recipient countries. In the past, political scientists and donor institutions and states have blamed the failure of aid conditionalities on recipient country deficiencies and factors as general as domestic regime type (Kono and Montinola 2009) and political economy (Molenaers et. al 2015) and as specific as recipient government’s degree of commitment to poverty reduction programs (Cordella and Dell’Ariccia 2002). On another note, this quantitative analysis will
Foreign aid helps poor countries to reduce or stop angry sentiments. How do you know you are poor? You will know if you see someone better off than you. Relative deprivation is the absence of assets to maintain the eating routine,
The twenty-first century presents numerous transnational issues requiring collective action across the global community. Terrorism, environmental degradation, human rights abuses, violent conflicts, and international criminal networks are all examples of significant challenges that receive varying degrees of the world’s focus and resources. Many global actors are likewise diligently working toward alleviating poverty in the developing world. Some policy advocates contend that poverty should receive priority in the global governance agenda over other critical challenges to security and stability. Aside from the intrinsic moral value in mitigating human suffering, poverty is the most important contributing factor to all of the aforementioned problems. Therefore, the eradication of endemic poverty should be the principal aim of the world’s governance efforts.
A particular regard must be given to the imperialist regime, this form of regime emphasizes hierarchy in world politics, but with networked reach over space increasingly supplementing or replacing direct territorial control. With this regime, central state authority is diminished, and power is shifted to outside actors. These outside actors can range from distant, but powerful states or organizations such as the IMF and the WTO. The U.S. governing class, in alliance with the financial elites of its trading partners applied NAFTA’s principles to the policies of the World Bank and IMF. Precisely, IMF and World Bank structural adjustment plan is usually comprised of two parts – the loan and the acceptance of the conditionalities in return for the loan. The acceptance of the conditionalities of an IMF loan is a pledge to adhere to the neoliberal economic policies of the IMF which focus on privatization, reduced protection of domestic industries, cutting subsidies to domestic industries, liberalization of the economy and resource extraction/export-oriented open markets. They push countries, particularly developing countries, to open up their markets with as little restrictions as possible. Once this is implemented, the state loses its control what happens within its borders. The state 's ability to act in opposition to market forces is devastated by the fact that the state must reduce regulatory standards in order to attract capital.
Harvard Business School’s Case Study “Aid, Debt Relief, and Trade: An agenda for fighting World Poverty” outlines the steps, and missteps, that the world community has taken since World War II to address the efficacy of international assistance. The study focuses on international financial institutions (IFIs) and their ability to help poor nations break out of poverty and the possible obligations of rich, developed countries to assist the heavily indebted poor countries (HIPCs). Additionally, the study seeks to see if this assistance has been and can be parlayed into growth and investment for the HIPCs.
Part II provides a more detailed explanation to how aid has made poverty worse. Using sources from news reports, journal articles, government sites but few scholarly case studies, Moyo gives various statistics and case examples throughout the book that may seem somewhat limited as mentioned later on. Her example throughout the book of the Republic of Dongo represents a made-up country to help illustrate her points. According to Moyo, Africa has a huge untapped financial market. Like Ghana did in 2007, African countries should follow suit and look into the bond market, in order to receive bonds that have a lower interest rate than aid loans, with a longer repayment period (77). As she points out, other poor countries have followed suit and turned to bonds such as Argentina and Brazil, in order to “help finance their
For centuries wealthy countries have been giving away billions of dollars to help developing countries improve their economic situation. We have found out aid given to these countries in economic need have caused positive and negative affects towards the government. The basic reasons of giving aid are to help developing countries stimulate economic growth or directly give resources to meet people’s basic needs. The question is whether this aid is helping the developing country’s government or hurting it and by how much? Aid given to these countries can include donations, projects and technical assistance. Wealthy countries give aid to developing countries to promote their own governments internationally and fulfill their economical and political agendas. Throughout history many people have not been accountable for the effects of the aid and just made sure that the aid was there. Also countries that have been giving aid to a particular country for a period of time tend to pull out the aid because different interests arising in the donating country. This cripples the aid receiving country’s economy because the aid was holding the economy together is gone and they have to start building all over. This dependence on aid leaves the country in economic ruins when the aid disappears. Now that we have a background on aid we can see why the knowing the effect aid has on governments is so important.
When it comes to the political set up of the international organizations that positively and negatively affects poorer nations can be classified in realist’s point of view as powerful nations lobbying the international organizations to pass their agenda that affects smaller countries in the interests of promoting national hegemonic power. As a results, of this, regardless of the debts accumulated by powerful international organization’s veto power, they are still on top of the average poor nation because of its political hegemonic power and influence over International Organizations. The economic policies set by hegemonic powers to be passed down to the small nations by the international organizations sometimes keep them on the hook of a
The intertwined nature of poverty and education, as well as the interplay between the two has constantly been raised in the literature and research of development (Arnove1980; Deininger 2000; Don 2001 & Torres 2003), inter alia in search of the way for achieving universal primary education (UPE) in the Millennium Development Goals (MDGs). It is also the focus of international cooperation since UPE is one of the major objectives of international development aid (Aiglepierre & Wagner 2013). The year of 2015 is approaching but the issues such as global poverty and education inequality still persist in many developing countries. An inevitable question arises: has the international aid been a contributory factor to those recipient countries in
Foreign aid focuses on promoting economic and human development ( Williamson, R 2009).Many experts attempt to possess the knowledge and skill to help poor nations. The key theme of “Was Development Assistance a mistake?” is Easterly’s argument, how development assistance fails to achieve economic development in poor nations. In this context, Easterly discusses the efforts of development experts that try to boost economic growth in various poor countries. He criticizes the development experts and