Aid is the giving of resources from one country to another and it can take many forms, Development aid is given to help a country develop its economy or services in an effort to improve the quality of life for all people in the recipient country. There is Emergency aid this is given after a disaster. Also there is Military aid, which can include expertise as well as weapons. Project aid is given for specific projects such as a dam, school or road. This is often referred to as ‘tied’ aid because the donor country usually has some control over the project.
Lastly there is Programme aid; this is not linked to specific projects. It could be used to improve a country’s trade imbalance. Aid can be bilateral, when one country gives help to another country, or it can be multilateral, in which several countries give money to an international organisation such as the World Bank or the international monetary fund (IMF). Non-governmental organisations (NGO) are one set of groups who support the idea of aid. There are various charities, aid agencies and pressure groups involved. They say that aid is necessary to combat poverty and they see this as a major achievement since 1950.
While they support the idea of aid they are critical of its actual application and the particular way the amount committed to aid by the UK government has been cut in recent years, and the way aid has been guided by immediate political interests. They call for long-term aid, which is primarily based on helping everyone. They have also set targets they would like to government to meet such as to increase aid to 0. 7% of Gross National Product, they also want a greater focus on poverty relief and steps to make sure that these policies are applied across all governmental organisations.
Other sources of capital is that brought by Trans-national corporations (TNC’s) locating in or expanding activities in a country this is known as foreign direct investment (FDI) or overseas direct investment (ODI). Although the economic and political power of TNC’s is great and they are able to exert great influence on the countries in which they locate, they also provide more work and spread new technologies. The World Bank and IMF will give aid or loans only if the country is willing to run it economy in a way that they approve of. They will insist upon a ‘Structural adjustment plan’ (sap).
Both the World Bank and the IMF subscribe to new right beliefs that, economic growth can only come from opening up national economies to the world market, development requires governments to peruse polices of economic stabilisation. And that wealth will trickle down from the rich to the poor. Sap’s form the centrepiece of the demands made on new borrowers. Walton and Seddon (1994) state that 37 saps were implemented between 1980 and 1986. Most sap’s involved 19 policies with 100 separate conditions. While in economic terms some of these policies would lead to a degree of stability, the overall economic effect is very recessionary.
With up to 40 countries trying to simultaneously to increase their exports. The result therefor is a glut of products. Giving aid is usually based on the idea that it does fulfil the role set out in the modernisation theory. Aid helps development; the overseas development administration (ODA) justifies this by saying that aid from Britain helps people in the developing countries to escape their awful grind of poverty. UK aid of example has been used to provide electricity at a market in Bangladesh, a tree nursery and health clinics in Tanzania, support for primary education in India and access to clean water in Somalia.
There are three main critiques of aid are, aid as a form of dependency culture, aid as inappropriate and ineffective and aid as imperialism. The most surprising thing about aid is that most of it goes to countries who are relatively well off. In 1992 the British government gave more aid to Oman, which is an oil rich state than to Ethiopia for example. In view of the dependency theory aid is supposed to make up for some of a counties capital shortage, but The Economist argues that the low rate of savings which contributes to this lack of capital is caused by rich individuals failing to save.
Therefore aid in some senses subsidizes the expenditure of these rich people. Many aid interventions centre on large-scale technological projects. There is concern that there is often insufficient local involvement this then leads to aid projects not being beneficial or them being positively harmful. One example is of an operation in Somalia where they imported refrigerators operating at 11o volts, whereas Somalia operated a 220-volt electrical system. This was state by Hancook (1991). In imperialism, the work of Hayter has been to expose the conditionality of aid, they way it becomes ‘tied’ aid.
Aid donors can use it to great extent on its potential recipients. Hayter says that we should consider aid as imperialism, a way for rich western countries to continue to dominate and affect the affairs of the previously independent states. Aid can be beneficial to countries that are in desperate need for it, such as after a disaster. Countries who become donors should not expect to have ‘ties’ with its recipients and should only give them gentle encouragement in the way of development. All countries in need should be helped but if this causes more debt and poverty in the long term then is aid a good thing?
It all depends on the circumstances of each country. The most important factor for it to be able to work are that it should not be ‘tied’, that is should be used in the most needy areas, e. g. on health rather than on military. The aid needs to be in right amount so that everyone gets the benefit and that it needs to be appropriate to the country and its situation. Many problems must be overcome before the method is easy to execute and a moments notice. This will then hopefully benefit all countries long term and short term.