Monday, 9 April 2012

Aid - Is it working? To what extent is it helping LDCs develop?

Hello - I hope everyone's revision is going well, it is hard work isnt it!!! I have had a few requests for this topic, and am going to link in African debt, so here goes.....

Aid is a rather controversial subject as is whether we should cancel LDCs debt...... How effective is the aid we give? Is it actually helping improve peoples quality of life? How dangerous is reliance upon aid? When should we stop giving aid to countries i.e India? Is trade better than aid? Should debts of LDCs be cancelled?
First up though, a few key definitions:
BILATERAL AID = aid that is directly given to the government of one country from another
MULTILATERAL AID = aid that is given by governments to international organsiations which use the money to assist programs in other pooer countries
NON-GOVERNMENTAL ORGANISATIONS (NGOs) = distribute aid in a variety of ways. Many are charities which raise money for development projects, ensuring aid is directed to the people who truly need it
SHORT TERM AID = given in response to a sudden problem within a country - usually a natural disaster
LONG TERM DEVELOPMENT PROJECTS = where help, advice and investment is given on such things like agriculture, energy supplies, infrastructure, education and medical supplies
TOP DOWN AID = where a responsible body, internally or externally, directs the operations 'from the top'
BOTTOM UP SCHEMES/GRASSROOTS INITIATIVES = often funded by NGOs, working closely with local communites and using their ideas and knowledge to bring about more change (more sustainable???)
TRADE = the act or process of buying, selling, or exchanging commodities, at either wholesale or retail, within a country or between countries.
HIPC = Heavily Indebted Poor Countries

Origins of African Debt
- For somer countries, like Ghana, debt began with ambitious development projects in the 1960s following independence and the formation of dictatorships which were a result of vast power vacuums generated
- By the 1970s most independent sub-Saharan countries were seriously in debt
- Oil crisis of 1970s dramatically increased the price of imports
- Worldwide recession decreased the willingness of the USA and former colonial powers to distribute aid in grants
- Consequently, between 1970-1976 Africa's public debt quadrupled
- Debt servicing began to take a substantial portion of GDP
- Demands of debt and structural adjustment often rendered governments less able to supply the needs of their people and less able to claim grassroots legitmacy
- Debt seen as attached to a country, not a government - therefore is transferred even when government is deemed illegitimate

Aid - NOTE: not all aid given is in the form of money!
- Since the 1970s, general trend has been a decrease in aid to Africa (halfed by 1990)
- A large proportion of what is counted as aid by donor countries is known as 'phantom' aid - e.g same 50% of all technical assistance is said to be wasted due to inappropriate usage on expensive consultants, their living expenses and training
- Aid frequently carries restrictions with regards to its use

- Most donor countries use aid as part of a broader forgein policy focused on 'national interests'
- USA has directed aid to regions which pose national security threats whereas Sweden has targetted 'progressive societies' and France to preserve and spread its language and culture
- However, as of 2000, over 2/3 of American aid was tied

Recent Improvements......
- A shift towards more grassroots projects following the successes of NGOs in small scale poverty alleviation
- Norway, Denmark, the Netherlands and the UK have untied their aid from trade agreements
BUT aid has been reduced - Value of OECD aid drops for first time in 15 years, and in the UK where the government announced last year that we were reducing our aid contributions to 0.7% of GNI - Was this a good move?
Whilst on the topic of aid given from the UK, we still give aid to India, despite the fact their economic growth is greater than ours and the country themselves say that they do not need money but that other forms of aid would be more appropriate, this short video clip is worth watching - Do you think we should still be given aid to India?

Trade vs Aid
Whilst in theory, aid sounds like a great idea, in reality this has not been the case and trade is arguably a more sustainable alternative, capable of provoking cumulative causation within a country and accelerating development. Trade is more predictable and a safer option, with aid dictated my economic climate of other countries and aid dependency a dangerous occupation. However, some countries do not have the ability to trade (especially worn torn sub-Saharan nations) or do not have desirable raw materials and for long term development this is problematic as aid often only offers a short term solution.

This area of the module is very debatable, I may try and start of focusing on this area in the next live discussion. The only way to form opinions on it is to read about it; but when you have let me know what you think.....

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