4.6 Foreign aid

aid-related facts

types of aid

aid and development

effective

ineffective

motives for offering aid

aid and NGOs e.g. Oxfam

i/r is lower than commercial loans

repayment period is longer

granted on concessionary terms

2010: largest donors were USA and UK

largest rich countries give less per person than smaller countries

total aid flows were $128.7Bil in 2008

multilateral

tied

bilateral aid

project

programme loans

political motives

economic motives

humanitarian motives

US to Haiti in 2010

aid rose by 241% that year to US1.1Bil

closer strategic relations

secure friendly relationships

bargaining chip for intl negotiations

develop markets

dispose surpluses

promote X of mfg goods, M of raw materials

expand X market through tied aid

EXAMPLE: CHINA TO SUB-S AFRICA POST 2000

labour, environmental and human rights scrutinised, sometimes change is forced upon MNCs

business forced to care about workers' welfare, not just effects on their share price

regulation of wastes

not tied to buying products

reinforced by non-corrupt govt

narrowly targeted

too little aid too thinly spread (only 860 NGOs)

incentive to postpone improvements

often wasted instead of spent productively (corrupt)

when solely for negative motives e.g. political

poorest often landlocked, hard to increase PPC

when tech and advice are inappropriate

massive infusions needed to break pov. cycle