What is Foreign Aid

Topics: Aid, Development aid, Development Assistance Committee Pages: 6 (2108 words) Published: May 27, 2014
Foreign aid refers to the international transfer of capital, goods or services in the form of grants or loans; sometimes it is referred to as voluntary transfer either from one government to another (bilateral assistance) or through a multilateral assistance agency like the World Bank for the benefit of the recipient country or its population. Aid can be in the form of economic, military or emergency humanitarian aid, especially during natural disasters. (Todaro and Smith 2010:229) Foreign aid was conceived as a product of the Post World War II era. Its roots are in the Marshall Plan, under which the United States gave funds to help rebuild Europe after the war. Two decades after World War II, emergence of independent nations from Europe’s colonies was experienced, especially in Asia and Africa. Encouraged by its role in rebuilding Europe, the United States took the lead in trying to help the newly emerging nations by providing capital in the form of foreign aid, especially to countries that had development plans for investing the aid they received. Accordingly, these developing countries lacked certain kinds of skills and expertise such as planners, engineers and constructors which were considered part of the aid. Hence the United States was the initial fore-father of foreign aid. Currently the number of Foreign Aid givers has increased mainly drawn from the United States, Europe and some countries in Asia such as Japan and China. The aim of all these donors has nevertheless remained the same in terms of security, economic maintenance, political interests and humanitarianism. In 1970, some of the world’s richest countries agreed to give 0.7% of their gross national income as official international development aid on an, annual basis.  Besides, it can be argued that most of these countries do not fulfil their promises and if they do, they gain a lot from the developing countries more than what they give in form of aid. This, therefore, brings in a major debate – is foreign aid working for or against the recipients? (Roger C, Riddell; Oxford University Press 2007) According to Radelent (2013), there are four main types’ aid programs Military Aid: this is the traditionalist technique for buttressing alliances. Military aid is where donors supply money and material, while the recipients provide most of the manpower. During the cold world war, United States of America and Soviet Union spent more resources on military aid than on their foreign economic program, and the objective has been the traditional one of safeguarding their own security by strengthening the military capabilities of allies. Military aid is used to create local power balance to reduce the likelihood that the donor will have to station troops abroad. Most forms of military aid have the advantages of build – in – controls. The recipients do not just depend upon the donors for creating a modern military force, but they cannot operate effectively unless the donor is willing to provide the necessary training support, replacement of parts and maintenance. The controls provide a partial guarantee that the recipient will use its military force in a manner compatible with the interest of the donors unless the recipient can obtain communication, spare parts and training from alternative sources (Barret 2007) Technical Assistance Aid: this is designed to disseminate knowledge and skills rather than good or funds. Personnel with special skills from industrialized countries go abroad to advise on a wide variety of projects such as disease control, agricultural mechanization, public administration, development of fisheries, teaching programs, land reclamation, road construction and development or medical and sanitary facilities (White 1998).

Development Loan Aid: foreign aid can also be given in form of loans. Loans present a short term transfer of funds, but since recipients pay back principle and interest, the transfer is only temporary. This kind of a loan is...

References: Todaro, M & Smith (2010) Economic Development; Pearson Education Limited, Ends Bury, American Journal of Agricultural Economics.
Roger C. Riddell, (Oxford: Oxford University Press 2007)
Barret , C.B. (1972); Food Aid; Is Development Assistant, Trade Promotion, Both or Neither?
Bauer, P.T. (1972); Dissent on Development; Cambridge, Mass, Harvard University Press.
Online - http://wiki.answers.com/society/government 11th February, 2014.
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