11 - Foreign Finance, Investment And Aid 2

Question 1

Why recipient countries accept aid

Answer 1

• Major reason probably economic
• Greater political leverage in both donor and recipient countries to the existing leadership to suppress opposition and maintain itself in power (Central America in 1980s)
• Obligation of the rich countries because they owe the poor nations reparations for past exploitations

Question 2

The role of NGO’s in aid

Answer 2

• One of the fastest and most significant forces in the field of development assistance
• Many NGO’s give local control to their developing country affiliates or other local groups they support

Question 3

NGO’s have 2 important advantages

Answer 3

• Less constrained by political imperatives so are able to work more effectively at the local level
• By working with local people, many NGO’s are able to avoid suspicion and cynicism on the part of the mostly poor people whom they serve that their help is insincere or likely to be short lived

Question 4

Examples of NGO’s

Answer 4

• Red Cross
• Oxfam
• Save the children

Question 5

Some NGOs: role of the private sector

Answer 5

• Works to build vibrant and tolerant societies whose government are accountable and open to the participation of all people
• Bill and Melinda Gates foundation - Reduce Inequality

Question 6

Purpose of aid

Answer 6

• Responsibility following decolonisation
• Alleviation or suffering and making world more equitable (humanitarian)
• Reduce probability of further decline and potential for instability
• Enhance,ent of own economic, political and strategic interests through encouraging exports or shaping economic/political ideas in recipient countries

Question 7

What’s conditional aid

Answer 7

Capital, food or other incentives given or loaned in exchange for policy reform and structural adjustment

• Such aid forms 7-8% of GNP in the average developing nation

Question 8

Disadvantages of aid

Answer 8

• Developing countries can rely too much on aid, forming large external debt
• Donor countries profit from this

Question 9

Criticisms of aid

Answer 9

• Has financed creation of monstrous projects that have ruined the environment
• over 2.3 trillion dollars has been spent on foreign aid that has fails to impact growth due to poor governance and politics

Question 10

How can aid further the gap between rich and poor in developing countries

Answer 10

Aid Stimulates growth of the modern sector

Question 11

Consequences of armed conflict

Answer 11

• Loss of preventive and curative health functioning
• Destruction of wealth
• Worsening hunger and poverty
• Loss of schooling
• Torn social fabric

In sum: Development in reverse

Question 12

Causes of armed conflict

Answer 12

• Horizontal inequalities
• Natural resources for basic needs
• Struggle to control exportable natural resources