Foreign Aid in Developing NationsAug 09


What are the challenges and possibilities for foreign aid programs?

Prepared by Alex Johnston and Don Ball

For the video inclined, TED has two lectures which should open up the discussion about the needs which aid fails to meet:

The experts square off on the need for more foreign aid: sachseasterly8may8,1,3796907.htmlstory?coll=la-util-op-ed

How is aid administered?

(see attached, “The Future of Aid”),

(see attached, “Why Foreign Aid is Hurting Africa.”  (in particular “A constant stream of “free” money is a perfect way to keep an inefficient or simply bad government in power. As aid flows in, there is nothing more for the government to do — it doesn’t need to raise taxes, and as long as it pays the army, it doesn’t have to take account of its disgruntled citizens. No matter that its citizens are disenfranchised (as with no taxation there can be no representation). All the government really needs to do is to court and cater to its foreign donors to stay in power.”)

Aid and debt, trade, and accountability.

(see attached, “Too Big to Fail.”)

  • Under what circumstances is aid necessary or beneficial?
    Under what circumstance can it do more harm than good?
  • Does foreign aid undermine accountability?

Consider some of the primary motivations behind aid:

  • Altruism, humanitarian, pr, trade promotion, soft power/political favors, political stabilization, investment opportunities, economic ties, military alliances, tax benefits,etc?

What are the best vehicles for aid and under what circumstances are
they appropriate?

  • Government to government (traditional infrastructure,
    trade/custom/quota agreements, peacekeeping, disaster relief, etc)
  • Private to private (private investment, NGO-driven
    health/education/infrastructure programs, etc)
  • Government to private (health research, subsidies or insurance for investment, etc)

Closing discussion:

What parties are most capable of raising, managing and distributing aid? What are some case studies where different forms of aid have been successful? What are some case studies where different forms of aid have been detrimental?What can we learn from these case studies? How does the emergence of new investor and donor nations (e.g. China) affect the aid landscape?What alternative are available to aid-based development strategies?Given growing public sector debt and private sector frailty due of the financial crisis, can we expect to see big changes in the aid  landscape?

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