The viability of foreign aid


The debate surrounding the viability of foreign aid has been intense among third world countries over the past few decades. In most cases, developing nations depend on assistance from first world countries (donors) to finance the deficits in their budgets. However, there has been outgrown concern from the academic community on the impacts of foreign aid to the economies of third world countries. This paper intimates whether foreign aid really works by delving into the upsides and pitfalls of overdependence on foreign aid among the developing nations.

It is emergent that third world countries recognize that foreign aid plays a critical role in their economies. The providence of goods and services such as water and roads to the public is an affair that most private investors are never daring to venture into; this is attributed to their uncertain nature in returning economic rates. However, with the presence of foreign assistance, these countries can provide the essential needs for a society (Amarda, 2014).

Moreover, most Asian countries like China and India are beneficiaries of foreign aid, which has contributed to immense economic growth. The health sector has received drugs and training for their human resource from donors, leading to the rapid development of this industry, and ultimately improved living standards in these countries. The fact that developing nations have been experiencing slow population growth due to the adoption of family planning is a testament to the gains ascribed to aid (Jeffrey & George, 2009). Additionally, there has been enormous success in the manufacturing sector among developing nations such as Korea in the 1960s that were beneficiaries of the Japanese technological advancement. Apparently, foreign aid has been critical to the achievement of the millennium development goals whose primary agenda was to eradicate extreme poverty. Seemingly, the modernization of farming methods through which farmers irrigate their lands in the most optimal way and the same time accrue-quality seeds has made these countries secure in terms of food productivity.

On the flip side, despite all the gains realized through foreign aid, some developing nations mostly in Africa are still staggering economically even though they possess tremendous economic potential. Foreign aid in a way lacks the capacity to impact positively on the economic development of recipient countries owing majorly to the misappropriation of funds meant to spur their economies. Research on the operational frameworks of emergent economies intimates that most developing nations lack proper administrative structures, which results in the spending of foreign aid on poorly planned projects. Apparently, foreign aid has made most third world countries over-dependent on support making them less innovative even when it comes to accessing essential household commodities (Jeffrey & George, 2009).

Summative, through foreign aid, it has become possible for developing countries to develop accountability, improved living standards, reduced maternal deaths, and higher literacy levels, which overall, have had a positive impact on the economies of these countries-hence, with proper management, foreign aid is viable as a solution to the predicaments ascribed to developing countries. However, to maximize the gains of foreign aid, there is a need for significant reforms in the administration of the relief efforts while empowering the civil societies and anti-corruption agencies to implement their mandate as essential stakeholders in ensuring out and out operational structures in light of aid management.

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  1. Amarda R. (2014). Advantages and Disadvantages of Foreign Assistance in Albania. Forum Scientiae Oeconomia (Volume 2, No. 3). Albania: Credins Bank.
  2. Jeffrey S., & George B. N. (2009). Can Foreign Aid Reduce Poverty? Controversies in Globalization. (Chapter 3, Pp. 69-98). New York: CQ Press.
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