Sociology

Foreign aid refers to money given to developing countries by developed countries as a way of boosting the former economically. It is meant to supplement the limited resources that developing countries have. Many developing countries have been receiving foreign aid from economic giants. This form of aid is meant to help the underdeveloped countries to upgrade their systems such as roads and industries. However there has been massive criticism regarding this aid with many arguing that it is not necessary and that the reason for which that the fund was first meant for has since been eroded. This discussion examines the value of foreign economic aid to assist underdeveloped countries (Gang, I.N., and H.A. Khan. 355-359).

Economic aid plays a key role in the process of development especially in third world countries. Most of the countries of the south do not have enough resources to sustain development projects and thus the economic aid provided by developed countries always come in handy. However despite the great role played by this form of economic assistance many have been on the forefront to criticize this aid arguing that it rarely goes to fulfill the very mission for which it was intended (Haggard, S. 114-118).
Firstly development aid in most cases is given with strict conditions by the donors. For example in many cases the country receiving the aid is required to participate in international politics while giving their support to a particular candidate as dictated to by the donor country. Sometimes this donor funding is also given with the main intention being to influence various political processes in the country that is receiving the aid. Whether this aid is of importance to the receiving country depends largely on whether the receiving country agrees to the terms and conditions given by the donor country. A good example is the period when there was a tussle during communists and capitalists back in the twentieth century. Developed countries like the United States of America used economic aid to force third world countries to rally behind them and support their ideologies (Polak, J. J. 144-150).

It has also been noted that sometimes big economic giants give economic aids to underdeveloped countries with an aim of expanding their international markets. Some countries even go to the extent of dictating to the receiving country what kind of project is to be funded by the donated money.
It cannot be ruled out that aid from developed countries is necessary especially if the rate of economic growth in developing countries is to be accelerated. These economic funds are supposed to ensure that developing countries have enough resources to sustain them and the population without depending on donor funding (Browne, S. 77-81). However, whether this intention has been achieved and whether most current situations of underdeveloped countries are reflective of this intention remain a big question.

Many studies have been carried out in an attempt to establish whether there exists any relationship between the economic aid given to a particular country and the economic growth rate of that country. While some studies cite the economic aid as a contributory factor to the increased growth rate in many undeveloped countries, other studies create the impression that there is no correlation whatsoever between these two. Some studies have further argued that economic aid has the reverse effect in that it tends to retard the economic growth rate of a country (Polak, J. J. 156-160).

Looking at the practical scenario on the ground one may be excused for arguing that the conclusions of all the studies that have been carried out on value of economic aid are true but only to a certain extent. This is because, while the economic situations of some countries seem to have remained dormant despite receiving donor funding in large amounts other countries seem to be doing quite well economically as a result of the same. Perfect examples of countries that seem to be doing pretty well as a result of the donor funding include Zambia, Gambia, Ethiopia, Bangladesh, Jordan, Syria among a couple of others (Gang, I.N., and H.A. Khan. 360-364). A recent research on the value of economic fund to developing countries show that only a minute fraction of this money help to increase the domestic savings of a country. The larger fraction is said to increase consumption.

There are a number of reasons why economic giants decide to offer financial assistance to developing countries. While the major one is economic development, others are as is the case in most situations political, humanitarian, military and commercial. More often than not donor countries give funding to developing counties with the aim of getting some form of favor in return (Browne, S. 89-94).

The primary motive for most of the donor countries is more political as opposed to humanitarian or moral. A good example is the massive foreign aid that has been given to Egypt, Turkey, Israel and Greek. While it may have been out of good will that USA gave donor funding to these countries it is also not beyond our notice that these countries are significally positioned politically and geographically as far as US politics are concerned. It is obvious that one of the reasons that USA decided to offer donor funding to these countries is to strategically gain support on matters of democracy and communism among many others. This was also evident during the Cold War where the United States of America rewarded the countries that were opposed to communism.

Although economy boost should be the main aim why foreign aid is given to undeveloped countries, it always comes second and always comes as a veil that covers other motives that the donor country may be having (Polak, J. J. 164-168).

On the other hand, recipient countries also have their reasons as to why they accept donor funding from economic giants. The main one just like is the case for donor countries is political mileage. By accepting economic aid people already in leadership feel that there are higher chances of remaining in power as foreign funds provide a greater leverage politically. Economic empowerment is the other reason why undeveloped countries accept foreign aid (Browne, S. 101-104). Despite the massive criticism on the ineffectiveness of foreign aid in boosting economic growth of underdeveloped countries, it is a fact that the latter cannot do without such forms of financial assistance.

In conclusion therefore foreign aid is very crucial to under-developed countries especially in promoting economic development. With the limited resources that many third world countries have had to contend with, it is no doubt that countries of the south need financial assistance to at least stand on their own two feet. The only way however of ensuring that foreign aid is effective in assisting developing counties is by formulating policies that govern such programs in order to ensure that such money is only given for the purpose and with the right motive. It is only by so doing that economic development as a result of donor funding will be visible.