Development Finance
In this section we shall try to circumscribe development finance as the word is used in the book. We make a distinction between development finance and other forms of assistance which constitute foreign assistance/aid. These other forms include emergency relief, humanitarian aid and military assistance. Development finance and development assistance are also known as “foreign aid.” Sumner and Mallet (2013, p. -Pp 12) cite some of the authors who have proposed what they call normative definitions of development assistance. They believe that these definitions are conventional and have remained so despite the fact that the world is changing. These authors consider the definition proposed by the Development Assistance Committee
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Some authors, quoted by Lancaster, (2007, p. -Pp 3) based on the premise that states operate in chaotic environment, believe that power, security and survival are the overarching objective of countries that provide development finance, especially development assistance. Alesina and Dollar, (2000, pp. -Pp 33, 34) and Martens, (2002, pp. -Pp 15, 23) among others, believe that development finance is influenced by political, commercial, economic, and strategic considerations. They are actually echoing Morgenthau, and Liska, quoted by Lancaster, (2007, pp. -Pp3, 64) who stated that foreign aid is an instrument of political power. Some authors (Lancaster, 2007, pp. -Pp 3, 64) see foreign aid as being driven by self-interest. There are others, (Lancaster, 2007, pp. -Pp 3) with socialist inclinations who believe that foreign aid is a tool used by some countries to dominate and subjugate the peoples of other countries. Development finance/foreign aid is indeed a tool for foreign policy or diplomacy. Lancaster (2007, pp. -Pp 43–-50) demonstrated that foreign aid is used by different countries for different purposes at different times in the evolution of time. In Chap.ter 3Three we shall see that the motivation for foreign aid/development assistance is not static. I agree with Lancaster, that the motivation is dynamic and is to some extent influenced by the intrinsic value put on the …show more content…
-Pp 4, 6) argues that the motivation or purpose of the assistance is significantly influenced by domestic politics. This tandem motivation/domestic politics also affects the organizational arrangements put in place to manage the transfer of funds. Domestic politics, especially domestic political institutions influence many aspects of the country’s aid-giving structure. This includes the list of countries to receive assistance, the specific ultimate recipients or beneficiaries, the type and volume of the assistance received by each country in the list, the terms of the assistance, and the institutions to manage the assistance from the donor perspective. Lancaster (2007, p. -Pp 6) goes even further by stating that the “structure of government” also has a significant role to play in the area of motivation, aid policies and how the issue of assistance is handled. These policies reflect the financial situation of the government and the political situation within the country. The structure of government also assists in fostering interest groups including non-governmental organizations involved in managing aid funds and implementing programs and projects. These interest groups take various forms. Some of them are humanitarian and/or philanthropic societies, whereas others are region-specific from within the donor countries as well as from the developing countries. Others try to promote their specific causes. These groups become part of the domestic political
middle of paper ... ... 8.4 (2006): 29-56. Print. McVety, Amanda Kay. Enlightened Aid: U.S. Development as Foreign Aid Policy in Ethiopia.
Due in part to its tumultuous past, sub-Saharan Africa is a region of the world that is stricken with war, famine, and poverty. Many people in richer parts of the world, including North America and Europe, view helping the people who inhabit this part of the world as their duty and obligation. Both non-governmental organizations (NGOs) and governmental organizations such as the United Nations (UN) alike send humanitarian aid to sub-Saharan Africa. While this aid helps countless individuals and their families, humanitarian aid in sub-Saharan Africa fuels further conflict and enables violent groups, undermining the goals of the aid itself.
They state, "Aid is a tool for buying influence and policy. " In this sense, the two groups are really only separated by the sizes of their various selectorates, as their motivations for government spending and foreign aid are almost identical. Mesquita and Smith explain how corruption is inherent to power.
What Foreign Aid Is There are two words that many politicians like to shy away from, and those are the ones that aren’t two words are "foreign aid. " Taking a firm stand on either side of this topic. is usually side-stepped by decision makers. Their opinions are usually based on a case-by-case analysis. This extremely controversial topic involves whether or not to support the policy of foreign aid to needy or sometimes not so needy countries.
He states that large inflows of foreign aid can potentially change local politics for the worst. He furthers this argument by declaring that the main difference between rich and poor countries are the benefits, such as a fair legal system, that paying taxes gives citizens in the rich countries. He progresses and declares that since several countries that depend on large amounts of foreign aid, do not depend on the citizens to pay for programs, the government is less likely to develop programs that benefit its people. Thus the rulers make decisions and rule without needing the people’s consent. August Dean also explains why it is difficult for donors to stop foreign aid to corrupt leaders. He lists the donors may either be unaware of the issues, ending support may interfere with the donor country’s agenda or the fear that other countries may step in as the reasons why. Dean also mentions that foreign aid has led to positive results, but he cautions that it should be weighed with the potential negative
The way in which foreign aid is distributed is highly ineffective and fails to achieve its sole purpose. Corruption ravages the developing world; greedy diplomats and fraudulent officials are often known to embezzle vast amounts of the aid money given to help those most in need. As Lord P. T. Bauer of London School for Economics famously said, foreign aid is “an excellent method for transferring money from poor people in rich countries to rich people in poor countries.” The money does not reach those who need it but is instead pocketed by dishonest members of government in foreign countries. Over the past years more than half a billion pounds have been invested in Africa yet there is little visual improvement in extreme poverty, deprivation and the child mortality rate. Evidently, Britain’s aid scheme is uselessly trying to combat poverty against a brick wall of bureaucracy. Without doubt this money would be better invested within the UK improving health and education and lowering the deficit.
The United States is one of the leading suppliers of Foreign Aid in the world, and even though the US gives billions, European countries give aid money to the same countries, this causes many areas of the Middle East, Africa, and Asia to be almost fully dependent on foreign aid. This means that without aid from other countries, they would not be able to support themselves at all. Foreign aid is meant to help countries that are struggling with civil unrest, disease, or natural disasters, it is not meant to help keep the country out of debt, but that is where more and more of the US and The EU’s foreign aid budget is going. The question is, does all this money actually go where it is intended? It should be going towards the government and to help the people, but in many cases, the countries government does not have the resources to properly track the flow of money. The countries in most cases have poor infrastructure and corrupt or oppressive leaders, not always at a national level, but in the towns and cities. So this means there is almost no way to oversee the flow of foreign aid through the country, all we can see is that their situations aren't getting any better and the countries are still impoverished. If this is the case, where are the millions of dollars going? Countries like Afghanistan and Iraq receive the most money from American foreign aid and European aid, yet they are still under oppressive governmental rule and there is still an extreme difference between the rich and poor. Garrett Harding’s theory of “Lifeboat Ethics” exemplifies how not giving aid to others will allow the strongest of society to thrive, while teaching the impoverished to help themselves. He believes that giving aid to poor countries will only make ...
Foreign aid is financial help given by a country to another for purposes of economic stabilization, poverty and living standard. This essay will elaborate an issue that it is necessary to spend money on foreign aid. There are three premises supporting the main conclusion, the first reason is that aid saves lives, while the premises that aid improves education and aid reduces poverty rate both can be objected and rebuttal are also given. Furthermore, there are also two objection given which can be rebutted.
Cooper, Mary H. “Reassessing Foreign Aid.” CQ Researcher 27 Sept. 1996: 841-64. Web. 20 Feb. 2014.
Berg, Andrew, and Jonathan Ostry. "Finance and Development." IMF. Equality and Efficiency, Sept. 2011. Web. 06 May 2014.
The IMF was not designed to be an aid agency but its role in economic
The International Monetary Fund and the World Bank were created as a result of the Bretton Woods Conference. Both provide assistance to countries suffering economically. While the IMF is a cooperative institution that aims to create an organized global system of payments and receipts, the World Bank is an institution that aims to help developing countries (Driscoll 1). Both play a part in the economies of struggling nations with the goal of reducing their burden and helping them to survive in the global economic system. Unfortunately, in many cases their practices within developing nations have been seen to create more harm than good. This is possibly because both institutions use a one size fits all approach when aiding countries rather than gaining a deep understanding of each country they are involved in and catering their approach as a result. In this paper I will examine the practices of the IMF and World Bank in developing nations that have led to failure and the effects the policies had on these countries.
“If you owe your bank a hundred pounds, you have a problem; but if you owe it a million, it has.(1)”
Poor countries have been receiving aid from the international community for over a century now. While such aid is supposed to be considered an act of kindness from the donor nations or international bodies, it has led to over dependence among the developing countries. They have adopted the habit of estimating and including international aid in their national budgets to reduce their balance of trade deficits. It is believed that foreign aid is necessary for poor nations in order to break the cycle of poverty that ties their citizens in low productivity zones and so their economy will not be weak. However, some critics view the extension of aid to poor countries as means of keeping the nations in economic slumber so that they can wake up from only by devising ways of furthering self-sustainability. Because of these two schools of thought concerning the topic, debate has arisen on which side is more rational and factual than the other. The non-sustainable nature of international aid, however, leaves the question of what may happen in the event that foreign aid is unavailable for the poor nations. After thorough consideration on the effects of the assistance to poor countries, it is sufficient to state that giving international aid to the poor nations is more disadvantageous than beneficial to the nations. This point is argued through an analysis of the advantages and disadvantages of giving international aid to the poor countries with appropriate examples drawn from various regions of the world to prove the stance.
“…increasing international trade and financial flows since the Second World War have fostered sustained economic growth over the long term in the world’s high-income states. Some with idle incomes have prospered as well, but low-income economies generally have not made significant gains. The growing world economy has not produced balanced, healthy economic growth in the poorer states. Instead, the cycle of underdevelopment more aptly describes their plight. In the context of weak economies, the negative effects of international trade and foreign investments have been devastating. Issues of trade and currency values preoccupy the economic policies of states with low-income economies even more than those with high incomes because the downturns are far more debilitating.1”