Description
Foreign aid is an extremely controversial topic. Some people strongly support it and many stridently oppose it .
1. What do you think are the main arguments for foreign aid ? ( 200 words)
2. What are the main arguments against it ? ( 200 words)
2. What is your own conclusion about foreign aid ?( 150ECON words)
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Explanation & Answer
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Introduction.
Foreign aid generally refers to the amount of monetary value that a particular country voluntarily
transfers to another. These monetary value may be in form of a loan, grant or a gift.in other
words, Foreign aid can be referred to as the economic, military or technical aid that is offered by
one country to another with a key goal of creating a relief, rehabilitation and also stabilization
the economy of a developing country.
Arguments for foreign aid.
Foreign aid is very significant economic aspect since it helps the developing countries to import
more goods and services than what they can finance using their own exports. This, therefore,
helps to significantly get rid of the resource constraints that prevents promotion of foreign trade
in the developing nations.
Secondly, foreign aids help many developing nations in attaining or filling up of their
‘technological gap’ and ‘manpower gap’. Since all developing countries are generally
technologically poor and also lack enough high skilled personnel, they always seek for foreign
assistance by importing foreign technologies and a high-value manpower in order to enhance
economic and technological prosperity.it is important to note that These technological and
manpower gaps in the least developed countries generally supplements economic growth of the
developing countries in the same ways as the strategy of filling the financial gap through the use
of foreign aid to finances more imports.
The third argument for foreign aid is that it usually helps the least developed countries to build
more schools, roads and airports, health centers, among other forms of infrastructure since it
creates a significant increase in the country’s domestic savings. Foreign aid also encourages the
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transfer of technology and high skilled manpower to the developing countries. These, therefore,
helps the developing countries to increase their level of investment. These also leads to a
significant increase in social returns of foreign aid in relation to its costs (Dalgaard, Carl-Johan,
and Hansen, 2014).
Against Foreign Aid.
Several critics for the above arguments for foreign aid by several economists has shown that the
economic aspect of foreign aid not a sufficient or a necessary economic condition for the growth
and development of any developing country. Basing my argument on the past experiences of
England and Japan, it is significantly clear that foreign aid is not a necessary strategy or tool for
economic development and growth since these countries developed without relying on foreign
aid. In addition, foreign aid is not sufficient since it is evident that there has been no significant
sign of development in the aided countries which can be ascribed to the foreign aid. This,
therefore, shows that foreign aid might not produce a significant increase in economic benefits.
Secondly, there has been no a statistic verification of whether foreign aid has led to any
significant macroeconomic achievement in the least developing countries. Foreign aid has been
described as an aspect which can displace savings, especially the public sector savings.
Thirdly, the most popular macroeconomic studies have not clearly analyzed and presented a
strategic relationship between economic growth and foreign aid. Due to the fact that foreign Aid
serves other purposes other than promotion of economic growth through the introduction of
inappropriate technologies in the developing countries, it is therefore not a su...
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