Th4.3: OS - Aid

Question 1

What is aid?

Answer 1

when a country voluntarily transfers resources to another or gives loans on concessionary terms

Question 2

What are the different types of aid?

Answer 2

tied aid
bilateral aid
multilateral aid
concessional loans

Question 3

What are the benefits of aid?

Answer 3

reduces absolute poverty
fills the savings/foreign currency gap
increased globalisation and trade

Question 4

Reduces absolute poverty

Answer 4

aid can reduce absolute poverty, particularly emergency relief provided after disasters such as the Haiti earthquake - does depend on how money is spent though, as infrastructure spending won’t be too beneficial to those suffering most

Question 5

Fills the savings/foreign currency gap

Answer 5

fill the savings gap, as outlined by Harrod-Domar, and thus provides funds for investment and also provides foreign exchange to fill the foreign currency gap

Question 6

Increased globalisation and trade

Answer 6

aid can contribute to increased globalisation and trade as well as reducing world inequality

Question 7

What are the disadvantages of aid

Answer 7

dependency culture
corruption
spending

Question 8

Dependency culture

Answer 8

some argue it results in dependency culture where countries are unconcerned by their finances as they know they can receive aid from another country

Question 9

Corruption

Answer 9

in the long term, tied aid and concessional loans may mean the country loses out - countries may only spend on things they know they will see a return in in the short term

Question 10

Spending

Answer 10

difficult to know the best way to develop a country and therefore it is difficult to know the best place to spend the aid