Aid and development Flashcards
(14 cards)
Aid Definition
Aid is the flow of resources from developing countries to the developing world Aid can be in the form of money, goods and services. This can be direct from a government to government, banks or charities
Types of Aid
Bilateral Aid-
governments in
developed countries
giving aid to to
governments in
developing countries
(also known as “Official
Development
Assistance”)
Multilateral Aid-
governments donate
capital to multilateral
agencies such as the
World Bank, IMF, UN,
EU
Commercial Lending-
commercial banks lend
to countries at
commercial rates of
interest
Non-governmental
Organisations (NGOs)-
charitable organisations
e.g Oxfam, Save the
Children. Money raised
via public donations
(some receive
government funding
also)
Aid as beneficial- NGOs
Aid as beneficial- NGOs
NGOs argue aid has a crucial role to play
in development HOWEVER it needs to; be
“people centred”, small scale and
appropriate, and also focus on the needs
of the people rather than large scale aid
projects.
Aid as Beneficial - Modernisation
Modernisation theorists say that aid is
crucial for “take-off”. Countries were
advised to spend aid money on Western
technology and experts to improve
agriculture and speed up industrialisation.
Aid is also said to help change values e.g
meritocratic education systems. Money
would “trickle down” to the poorest but start
with the elites in developing countries.
Aid as “dependency”- Neo-liberal
Neoliberalism would argue aid is further increase inequalities as Aid further created dependency between the developed and the developing world. This is explored by Dambisa Moyo, Moyo found that aid given to developing countries leads to aid dependence, crowding out private investment, corruption, incentive distortion ineffective allocation, alternative models. This is seen as a main source of inequalities this is because the resources are misallocated this aid to ensure that the elites’ profit this in turn create difficulties for those in the working class this further reinforces the dependency culture between the west and developing countries. This is further explored by the work of Thomas Ditcher; he found an overall conclusion that the aid provided should be limited to emergency and refugee assistance and maybe some limited technical assistance on neoliberal issues of good governance and poverty otherwise it will only ever corruption. This highlights the impact that the misallocation of aid that has create barriers to development. This has created more inequalities this because individuals are unable to gain benefits from aid due to the corrupt nature of their government
Dependency view on aid-Hayter
Dependency theory argue that aid is means for governments to push political and economic agenda onto developing countries Theresa Hayter supports this idea by saying that aid acts as the “smooth face of imperialism”, meaning that on the surface aid appears to be beneficial for LEDCs(less economically developed countries) and also serves the purpose of making developed countries look good. However, aid is used to control LEDCs through processes such as “tied aid”, where the donor country (developed) stipulates what the LEDC must spend the aid on, this is usually on goods produced within the developed country. The process causes inequalities in LEDCs as it does not allow the LEDC the freedom to use the aid on what is most beneficial for their development, instead keeping them underdeveloped. This further supported by the idea of the aid business, dependency theory has also raised concerns about the aid business which now employs hundreds of thousands of people worldwide. Hanock refers to the largely white and western administrators of world bank,imf,and large charities as the lords of poverty because of the amount that is spent on large salaries administrative expenses and attendance at international conferences he further argues that organisations are overly bureaucratic and are secretive bloated. This highlights how aids prevents benefits to the individuals within the developing countries due to misallocation of this aid this creates cyclical narrative of inequalities within these countries.
The Debt crisis
developing countries are struggling to pay back the money provided to them through aid
causes of the debt crisis
The transfer of debts from colonial powers to newly independent
states left a burden of debt before new economies could become
strong, in addition there were high levels of interest on high levels of
debt! Commercial lending by banks to developing countries (awash
with oil money) and the rise in interest rates during the 1970s oil
crisis. Prices of cash crops dramatically decreased over time.
Dependency theory & debt
Dependency theorists argue that the debt crisis was brought about
by: - Newly independent countries being dependent on cash crops &
the failure of free-market policies (falling prices of cash crops) - Rising prices of commodities such as oil & rising interest rates - Inappropriate spending in LEDCs encouraged by the West e.g
“use aid money to buy our technology” - Corrupt elites pilfering mone
The debt boomerang- Susan George
Susan George (1992) “The Debt Boomerang”
There are six ways in which developing world debt impacts us all:
Environment- people & countries exploit natural resources in the
least profitable & sustainable way. Increase in global warming & loss
of bio-diversity.
Unemployment- exports to LEDCs would be higher if it wasn’t for
large debts. Loss of jobs due to “lost exports”
Drugs- illegal drugs are a major source of income in heavily indebted
countries e.g Columbia, Peru. Social & economic costs of illegal
drugs in North are high (est. $60 billion in U.S)
Immigration- people will flee poverty and move towards wealthy
countries. Refugee numbers increase due to unrest and conflict
caused by poverty
Taxes- developed countries governments used tax payers money to
bail out banks that lent money to poor countries. Governments
picked up the banks bad debts
Conflict- debt creates social unrest & war, conflict emerges over lack
of resources, creates refugees & demands action from developed
world
Debt Relief & Cancellation
these are the different methods that help the developing countries with their debt
e.g stuctural adjustment programme
Structural adjustment programme
IMF & World Bank plans to rebalance countries’ economies to help them out of
debt. These loans were tied to government spending plans, they were essentially
a “neoliberal” approach to economic development. Meaning privatisation, opening
markets and cutting back on government spending (reduction in money for
education, health and welfare).
Vulture Funds
This is where countries sell debt owed to them by other countries to
private firms as part of “debt write off” plans. These firms purchase the
debt with the sole intention of recouping the money from LEDCs to
create profit for their investors.
