Foreign Aid Pros And Cons

The granting of foreign aid/ development assistance to developing and underdeveloped countries can often is a challenging task. While these countries definitely need assistance from the developed world, charitable intentions doesn’t necessarily translate into desired outcomes. That is why the decision makers in government and other international financial institutions will have to weigh the pros and cons of each grant and come to a conclusion based on individual cases. The rest of this essay will elaborate the positive and negative factors that facilitate or thwart foreign aid issuance.

Firstly, citizens in donor nations often think of their aid to developing countries as a humanitarian cause. Their intention is to do the morally correct thing and to demonstrate goodwill toward disadvantaged people of the world. Whether this intention is manifest as private philanthrophic aid or government sanctioned aid, it is often regarded as a “gift or a way of acting on fundamental values, particularly religious tenets, humanitarian principles, and universal rights.

” (Dervil, et. al, 2010, p.1) Such altruistic and benevolent intention needs to be appreciated and rewarded. It also brings a sense of solidarity among people of different nationalities, which is a desirable outcome.

Cons Of Foreign Aid

It could also be argued that covering one’s strategic interests is a legitimate goal by itself. Thereby, one could justify the encompassing of foreign aid under the strategic policy framework. For example, much of the assistance provided around the world by the United States during the Cold War was aimed at shaping spheres of influence without much regard for actual development.

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Proponents argue that this was essential in maintaining power equations in global politics and in preventing catastrophic military entanglements, such as the hypothetical Third World War. (Siegle et.al, 2004, p.66) Similarly, such outlays are in contrast to another variety of wielding influence as illustrated by the Marshall Plan, which was projected as “development assistance in the form of investment”. (Siegle et.al, 2004, p.66) In contemporary global politics, a similar policy is being adopted by China, whose development assistance to Africa is seen as a manifestation of its growing global clout. (Dervil, et. al, 2010, p.2)

Furthermore, development assistance can also be viewed as one key instrument among an array of policy measures that is deployed as a way of gaining a return on investment. Return on investment in turn translates into economic security and global stability. Similarly, purported efforts to stimulate and help grow emerging market economies in Asia and South America can be seen as diversification of investment risks panning the globe. That such influx of funds will lead to sustainable and balanced economic growth is the key imperative and development of democracy and transparent governance is incidental to the cause. This has generally been the attitude shown by the Group of Twenty countries that essentially assign and prioritize distribution of aid internationally. Further,

“Aid programs targeting pandemic diseases and the capacity of developing country systems to execute quality surveillance, treatment, and prevention can be viewed as an investment in the productivity of those countries and in global public health. On the harder, military security side of the equation, civilian conflict prevention and conflict transformation efforts in fragile states are frequently touted as cost-effective investments in comparison with military intervention and the costs of either peace enforcement or war.” (Dervil, et. al, 2010, p.1)

Coming to the negative aspects of the practice of giving financial aid, many countries in Sub-Saharan Africa, Asia and Latin America qualify for Highly Impoverished Poor Countries category. But not all of them get due attention and assistance from the international community, and aid does not always get distributed based on how compelling the conditions are. In contemporary geo-politics the United States plays an important role in deciding which countries get aid and which do not. But these decisions are not dictated by local economic imperatives, considerations for democracy promotion or the prospect of improved governance in the receiving country. In other words, assistance that is labeled development aid is also used by some governments purely as a means of geopolitical influence.

Although such influence is also intended to benefit the donor’s economic and security aims, “what distinguishes this approach from a true development investment approach is that, in this form, aid is treated wholly as an instrument of political leverage, and development outcomes are neither the end nor the means to the end”. (Dervil, et. al, 2010, p.4) As decisions to give aid have usually tended to discount democratic criteria, a large percentage of development assistance aid has been provided to autocratic leaderships. Barring the rhetoric about the thrust for democracy promotion, the ground reality is that Western democracies, led by the United States works within a policy framework that is tilted against democracy. So, developmental aid can help both the donor and recipient nations, without fostering democratic institutions in the latter. This is one of the major drawbacks in the practice of giving financial aids. (Carothers, et.al, 2007, p.3)

Key decision makers should also be mindful of the fact that aid handed over to unreliable receivers is bound to be misused. In most cases, even the intentions behind aid giving tend to be business oriented. As a result, the term ‘aid market’ has come into parlance, reflecting the commercialization of what was originally meant to be a humanitarian enterprise. If not outright business interests, aid tends to be directed toward strategically important geographic locations irrespective of urgency. Security policy objectives will usually be bound together with anti-poverty goals, often with no unifying implementation program. This approach is likely to lead to dismal outcomes. (Carothers, et.al, 2007, p.3) Many poor countries also see aid as a threat to their sovereignty and refuse infusion of funds on these grounds.

Hence, the practice of providing aid to impoverished or crisis-ridden countries is seldom a straightforward process carried out with noble intentions. It involves a lot of complexities and hurdles. One of the key hurdles is the continued presence of institutional barriers that make aid initiatives prone to budgetary restrictions. Diminished willingness to accept aid in the prevailing structural arrangement has also dampened aid transfers in recent years. There are some desperately poor countries that are willing to put up with these handicaps and willing to accept aid, but unfortunately are unable to convince donors that the funds would be properly expended. And finally, another hindrance to foreign aid “is the new cozy relationships with private and voluntary organizations, funded by official aid, and competing with them for taxpayer and commercial support.” (Rogerson, et.al, 2004, p.2)

Finally, when one employs sophisticated analytical tools to track delivery of aid, to measure governance and transparency, to gather public opinion in the recipient nations, then a greater understanding of financial aid can be achieved. By using these tools, experts are able to conclude that accountability is one of the weak areas. (Siegle et.al, 2004, p.66)