Topics: International Monetary Fund, United Nations, Human Development Index Pages: 12 (4020 words) Published: February 27, 2013
Running head: Implications of Official Development Assistance

The Implications of Official Development Assistance (ODA) for Developing Nations: A Case Study of Kenya

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Introduction to the Research Problem
The effectiveness of official development assistance (ODA) in the facilitation of economic growth and development in developing nations has been questioned all around the world. This is especially so because quite a number of developing nations which have been regular recipients of ODA have remained poor (Bloom and Sachs, 1998). As such, concerns have been raised that ODA is not at all effective in especially alleviating poverty and fastracking growth, and as such it ought to be stopped and other forms of developmental approaches pursued by developing nations. For if indeed ODA was effective in achieving its intended purpose of facilitating economic development in these nations, then all them would long have shed off the poverty tag and achieved significant growth, perhaps not only economically but also politically. Studies undertaken in a number of developing nations, especially with regard to measuring these countries’ GDP growth per annum relative to that of developed nations, show that developing nations still lag behind with a significant proportion of their citizens living below the poverty line (less than one US dollar per day) (Easterly, 2003). Kenya is one such developing nation where poverty remains rampant and GDP growth is so low that it has been difficult to achieve any worthwhile and sustainable economic growth (IMF, 2012). The country has a Human Development Index (HDI) of 0.509, making 143rd out of 185. This means that Kenya is one of the poorest nations in the world (United Nations, 2011). Half the Kenyan population lives in absolute poverty. As per the data from, the Kenya National Bureau of Statistics, Kenya’s economic growth has averaged a mere 1.1% between 2005 and 2010 (IMF, 2012). During this period, foreign aid continued to come to the country, especially as a means of helping reduce its budget deficit. For a along time, aid agencies (notably the World Bank and the International Monetary Fund (IMF)) and nations in the developed world have been channeling aid to Kenya in order to fund the country’s various developmental agenda and help finance the country’s huge budget deficits (IMF, 2012). Normally, it would be expected that the influx of millions of dollars worth of foreign aid to Kenya would have helped reduce its rampant poverty by helping spur economic growth (Nunn, 2004). Yet this is not at all the case. The levels of poverty remain so high that there is bound to be no real development that is going to be realized in the country any time soon. Yet donors continue to pump aid into the country, believing as they do that poverty will be alleviated and general development realized (IMF, 2012). Simply put, the flow of foreign aid to Kenya has not been able to achieve the intended purpose of spurring economic growth and development, and the cause of this state of affairs needs top be uncovered (United Nations, 2011).

Justification for the Study
While this is a case study of Kenya, empirical evidence point to a lack of correlation between foreign aid (as measured by ODA) and actual development in a number of developing nations. If indeed aid to the developing nations does not seem to help at all in facilitating economic growth and development, then it is no use continuing to offer it. It is possible that there are other avenues through which the money initially intended for funding development agenda ultimately gets channeled to. Otherwise, the manner in which the aid is given, including the conditions that come with the aid, is such that it promotes other agenda other than development....
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