The Effects Of Foreign Aid On Developing Countries

1616 Words Nov 3rd, 2016 7 Pages
It is stated that global growth and development has increased by 3.3% in 2015. The findings are less than the calculated 6.1% documented for the previous year. In total, in 2013, over 130 billion dollars have been contributed to development in specifically, developing countries and countries far below the poverty line. Many countries maybe facing their internal financial issues, but the funding towards developmental assistance has increased. This paper is focused to investigate if foreign aid is in fact assisting the appropriate and relevant subjects. To demonstrate the effect of foreign aid on developing countries, data has been used from developing countries on different continents, such as sub-Saharan Africa, and Asia. The correlation between the net ODA (official development assistance) given and the GDP (gross domestic product) is not significant, even though the coefficients between the FDI (foreign direct investment) and the GDP establish a positive correlation. Developing countries are advised to keep their savings rate low, and not attempt at utilizing policies in order to grow their economies alone according to the current aid policies towards foreign aid. Foreign aid is meant to help and truly assist developing countries to reach out of their poverty line and grow their economies. After analyzing the countries, the aid received, it will be evidently shown that foreign aid does not help the underdeveloped and poverty poisoned countries.

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