Lending financial aid to poor countries has become a trend of rich countries since the second half of the 20th century. In my opinion, it doesn’t matter whether rich countries should lend poor ones financial aid or not but the way poor countries utilize this capital source because financial aid has both pros and cons. For the first reason, financial aid is a helpful source to poor countries. It provides huge capital for these nations to develop infrastructure, improve education as well as health care systems and carry out big projects which can not be conducted without a large amount of money.
Moreover, because this aid is lent at low interest rates in a limited time, receivers will gain advantages if using this source reasonably. However, to some extend, poor countries often depend on rich countries who lend them money. For example, these nations often have to make some agreements with creditors in using the financial source. Sometimes rich countries even make their voice on political problems of poor countries. Borrowing large amount of money, in turn, they often have to make some economic commitments and give lenders priorities in auctioned projects in their countries.
In additions, financial aid may put poor countries at risk. For example, when they borrow too much money but can not control this source effectively, they may go insolvent. And this will become a burden for the later generations. The debt crisis recently in Greece is a warning to any country that has borrowed too much and cannot use the loans cleverly. Therefore, the way a poor nation use financial aid takes an utterly important role in deciding the effectiveness of this support.
Rich Countries Often Give Money To Poor Countries
Simplifying administrative procedures, preventing corruption, investing reasonably and many other controlling methods are requirements posed for the governments so that they can keep them relatively independent of rich countries and well utilize the loans. In conclusion, lending financial aid is neither totally good nor totally bad. Its positive meanings depend on the real demand of poor countries and the way they use this aid. Poor countries will enhance their economies remarkably if they can use this aid effectively. In contrast, they may become the victim of overwhelming debt.