To What Extent Is Aid Effective?

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  • Topic: Aid, Development Assistance Committee, Marshall Plan
  • Pages : 6 (2123 words )
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  • Published : June 5, 2012
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To what extent is aid effective?

The world is split in two, on one side the prosperous global north whose early industrialisation and development has led to the population having long lasting and comfortable lives, while on the other side, the global south falters collapsing in a pit of poverty and despair. The answer would seem simple, for the rich and well-off to give generously to the poor, so that the whole world can share in the abundant resources that this planet produces. However, sixty years on since the Marshall plan and the birth of the modern aid movement, there has been no change to the status quo, the global south still suffers from the biblical famines and deaths and the north still prospers from welfare and advanced healthcare. Thus, how effective can aid really be?

It would be simple to argue the merits and demerits of aid if there was only one type, however the concept of aid is made even harder by the fact that aid can come in numerous forms and with numerous different clauses. However, the generally agreed definition of aid is the voluntary process of transferring resources from one country to another with the objective of partly benefiting the recipient country.

The differences between types of aid focus mainly on the delivery system of the aid as aid can be either Bi-lateral, where a state's government gives aid directly to another government. For example, the UK gives around 0.7% of its GDP in aid to developing countries. Or multi-lateral meaning a government gives aid to a non-governmental organisation who distribute the aid themselves. Both delivery methods of aid have been criticised for differing reasons, while a more controversial aspect of aid is that it can come in the form of tied aid in which the donor country transfers aid in exchange for a service by the recipient country.

The aim of this essay is to make a conclusion on whether aid is effective, which I shall do by firstly briefly explaining the growth of the modern international aid movement and then showing the advantages and disadvantages of aid. The first argument for aid is that aid can level the playing field, in terms of compensating for the structural biases that favour developed countries. The second argument is aid can be used to further development in a country. The arguments against aid being effective are that firstly that corruption prevents aid from reaching the poor and secondly that aid can cause a dependency culture to occur.

In July 1994, 700 delegates from 44 countries agreed a global system of financial aid, known as the Marshall Plan, a US-financed attempt to financially reconstruct the near bankrupted countries within Europe after the financially draining and socially damaging period of World War 2. Around $85 billion of aid was spread around Europe, to repair the broken infrastructure and provide political stability to the region. The modern aid movement though did not start and end with the Marshall Plan but continued on with more countries adopting aid policies. In 2000, 189 heads of state met at the UN millennium summit, where an extra $50 billion of aid was made available and culminated with the G8 committee in Gleneagles, were the eight larges countries pledged even more aid, with even newly developed countries, such as China and India contributing to the aid fund. Throughout, this period individual contributions to NGO’s were also increasing as there was now an increased awareness of the horrors in Africa, due to charity appeals and concerts, such as Live Aid.

The global economy is not fair, there is no level playing-field in the global markets, there is instead obvious structural biases that means the global economy favours prosperous developed countries and hinders rather than helps the developing countries, aid would therefore be seen as a way of countering these structural disparities. The main structural bias that works in favour of developed countries are trade barriers. For...
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