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