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Aid received, per capita, in 2007, in $ of Official Development Assistance per person. Note that grey countries can either be non-recipients or ones for which data is unavailable. The data were converted into dollars using exchange rates, hence may not accurately reflect the purchasing power of the foreign aid received.[1]

Aid (also known as international aid, overseas aid, or foreign aid, especially in the United States) is a voluntary transfer of resources from one country to another, given at least partly with the objective of benefiting the recipient country.[2] It may have other functions as well: it may be given as a signal of diplomatic approval, or to strengthen a military ally, to reward a government for behaviour desired by the donor, to extend the donor's cultural influence, to provide infrastructure needed by the donor for resource extraction from the recipient country, or to gain other kinds of commercial access.[3] Humanitarianism and altruism are, nevertheless, significant motivations for the giving of aid.[4] Aid may be given by individuals, private organisations, or governments. Standards delimiting exactly the kinds of transfers that count as aid vary. For example, aid figures may or may not include transfers for military use: to cite one instance, the United States included military assistance in its aid figure until 1957 but no longer does.[5] Another issue is whether to count remittances by expatriate workers to family members in their home countries as aid. This constitutes a large but difficult to measure international flow of funds.

Depending on the definition, loans may or may not be counted as aid.

Even if the principles of a definition are set, it remains difficult to determine the effective flow of aid because aid is fungible: receiving aid may free up funds in the recipient country for use in non-aid projects that could not have been undertaken had the aid not been received. For example, receiving food aid may enable a government to divert funds from its own food-support budget to its military budget. In that case the net effect of the aid is military although the aid money might actually be spent on food.

Official organisations and those scholars who are primarily concerned with government policy issues frequently include only government-sourced aid in their aid figures, omitting aid from private sources. The most widely used measure of aid, "Official Development Assistance" (ODA) is such a figure. It is compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development. The United Nations, the World Bank, and many scholars use the DAC's ODA figure as their main aid figure because it is easily available and reasonably consistently calculated over time and between countries.[6] The DAC consists of 22 of the wealthiest Western industrialised countries plus the E.U.; it is a forum in which they coordinate their aid policies.

Aid existed in ancient times. More recently, in the nineteenth century, some private aid flowed from the Western countries to the rest of the world; missionary schools are an example. In the nineteenth and early twentieth centuries, aid from governments was tiny compared to present levels, consisting mostly of occasional humanitarian crisis relief. Some transfers that would now be counted as aid, however, came under the purview of colonial office budgets. It was at the end of World War Two, in the contexts of European reconstruction, decolonisation, and cold war rivalry for influence in the third world, that aid became the major activity that it is today.

Contents

Types and terminology

Aid may be "given" in the form of financial grants or loans, or in the form of materials, labor, or expertise. Aid is often pledged at one point in time, but disbursements (financial transfers) might not arrive until later.

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Humanitarian aid

Humanitarian aid or emergency aid is rapid assistance given to people in immediate distress by individuals, organisations, or governments to relieve suffering, during and after man-made emergencies (like wars) and natural disasters. The term often carries an international connotation, but this is not always the case. It is often distinguished from development aid by being focussed on relieving suffering caused by natural disaster or conflict, rather than removing the root causes of poverty or vulnerability.

The provision of humanitarian aid or humanitarian response consists of the provision of vital services (such as food aid to prevent starvation) by aid agencies, and the provision of funding or in-kind services (like logistics or transport), usually through aid agencies or the government of the affected country. Humanitarian aid is distinguished from humanitarian intervention, which involves armed forces protecting civilians from violent oppression or genocide by state-supported actors.

The Geneva Conventions give a mandate to the International Committee of the Red Cross and other impartial humanitarian organizations to provide assistance and protection of civilians during times of war. The ICRC, has been given a special role by the Geneva Conventions with respect to the visiting and monitoring of prisoners of war.

The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) is mandated to coordinate the international humanitarian response to a natural disaster or complex emergency acting on the basis of the United Nations General Assembly Resolution 46/182.

The Sphere Project handbook, Humanitarian Charter and Minimum Standards in Disaster Response, which was produced by a coalition of leading non-governmental humanitarian agencies, lists the following principles of humanitarian action:

  1. The right to live with dignity.
  2. The distinction between combatant and non-combatants.
  3. The principle of non-refoulement.

Development aid

Development aid is aid given by developed countries to support development in general which can be economic development or social development in developing countries. It is distinguished from humanitarian aid as being aimed at alleviating poverty in the long term, rather than alleviating suffering in the short term.

Official Development Assistance (ODA), mentioned above, is a commonly used measure of developmental aid. Development aid is given by governments through individual countries' international aid agencies and through multilateral institutions such as the World Bank, and by individuals through development charities such as ActionAid, Caritas, Care International or Oxfam.

The offer to give development aid has to be understood in the context of the Cold War. The speech in which Harry Truman announced the foundation of NATO is also a fundamental document of development policy:

In addition, we will provide military advice and equipment to free nations which will cooperate with us in the maintenance of peace and security. Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people.

Specific types

  • Project aid: Aid is given for a specific purpose e.g. building materials for a new school.
  • Programme aid: Aid is given for a specific sector e.g. funding of the education sector of a country.
  • Budget support: A form of Programme Aid that is directly channelled into the financial system of the recipient country.
  • Sectorwide Approaches (SWAPs): A combination of Project aid and Programme aid/Budget Support e.g. support for the education sector in a country will include both funding of education projects (like school buildings) and provide funds to maintain them (like school books).
  • Food aid: Food is given to countries in urgent need of food supplies, especially if they have just experienced a natural disaster.
  • Untied Aid: The country receiving the aid, can spend the money as they chose.
  • Tied aid: The aid must be used to purchase products from the country that donated it or a specified group of countries.
  • Technical assistance: Educated personnel, such as doctors are moved into developing countries to assist with a program of development. Can be both programme and project aid.
  • Bilateral vs. Multilateral: bilateral aid is given by one country directly to another; multilateral aid is given through the intermediacy of an international organization, such as the World Bank, which pools donations from several countries' governments and then distributes them to the recipients.

OECD Categories

The Organisation for Economic Co-operation and Development's Development Assistance Committee puts foreign aid into three categories:

Criticism of aid

Aid is seldom given from motives of pure altruism; for instance it is often given as a means of supporting an ally in international politics. It may also be given with the intention of influencing the political process in the receiving nation. Whether one considers such aid helpful may depend on whether one agrees with the agenda being pursued by the donor nation in a particular case. During the conflict between communism and capitalism in the twentieth century, the champions of those ideologies, the Soviet Union and the United States, each used aid to influence the internal politics of other nations, and to support their weaker allies. Perhaps the most notable example was the Marshall Plan by which the United States, largely successfully, sought to pull European nations toward capitalism and away from communism. Aid to underdeveloped countries has sometimes been criticized as being more in the interest of the donor than the recipient, or even a form of neocolonialism.[7]

S.K.B. Asante lists some specific motives a donor may have for giving aid: defense support, market expansion, foreign investment, missionary enterprise, cultural extension.[8] In recent decades, aid by organizations such as the International Monetary Fund and the World Bank has been criticized as being primarily a tool used to open new areas up to global capitalists, and being only secondarily, if at all, concerned with the wellbeing of the people in the recipient countries.

Besides criticism of motive, aid may be criticized simply on the grounds that it is not effective: i.e., it did not do what it was intended to do or help the people it was intended to help. This is essentially an economic criticism of aid. The two types of criticism are not entirely separate: critics of the ideology behind a piece of aid are likely to see it as ineffective; and indeed, ineffectiveness must imply some flaws in the ideology. Statistical studies have produced widely differing assessments of the correlation between aid and economic growth, and no firm consensus has emerged to suggest that foreign aid generally does boost growth. Some studies find a positive correlation, but others find either no correlation or a negative correlation. In the case of Africa, Asante (1985) gives the following assessment:

Summing up the experience of African countries both at the national and at the regional levels it is no exaggeration to suggest that, on balance, foreign assistance, especially foreign capitalism, has been somewhat deleterious to African development. It must be admitted, however, that the pattern of development is complex and the effect upon it of foreign assistance is still not clearly determined. But the limited evidence available suggests that the forms in which foreign resources have been extended to Africa over the past twenty-five years, insofar as they are concerned with economic development, are, to a great extent, counterproductive.[9]

The economist William Easterly and others have argued that aid can often distort incentives in poor countries in various harmful ways. Aid can also involve inflows of money to poor countries that have some similarities to inflows of money from natural resources that provoke the resource curse. [10][11]

Manycriticize U.S. Aid in particular for the policy conditionalities that often accompany it. Emergency funds from the International Monetary Fund (IMF) and World Bank, for instance, are linked to a wide range of free-market policy prescriptions that some argue interfere in a country's sovereignty. Policy prescriptions from outsiders can do more harm as they might not fit the local environment. The IMF can be good at helping countries over a short problematic financial period, but for poor countries with long lasting issues it can cause harm.[citation needed] In his book The White Man's Burden, Easterly argued that if the IMF only gave adjustment loans to countries that can repay it, instead of forgiving debts or lending repetitively even if conditions are not met, it would maintain its credibility.

In addition to the above criticisms, the logistics in which aid delivery occurs can be problematic. An earthquake in 2003 in Bam, Iran left tens of thousands of people in need of disaster zone aid. Although aid was flown in rapidly, regional belief systems, cultural backgrounds and even language seemed to have been omitted as a source of concern. Items such as religiously prohibited pork, and non-generic forms of medicine that lacked multilingual instructions came flooding in as relief. An implemenation of aid can easily be problematic, causing more problems than it solves. [12]

James Shikwati, a Kenyan economist, has argued that foreign aid causes harm to the recipient nations, specifically because aid is distributed by local politicians, finances the creation of corrupt government such as that led by Dr Fredrick Chiluba in Zambia bureaucracies, and hollows out the local economy. In an interview in Germany's Der Spiegel magazine, Shikwati uses the example of food aid delivered to Kenya in the form of a shipment of corn from America. Portions of the corn may be diverted by corrupt politicians to their own tribes, or sold on the black market at prices that undercut local food producers. Similarly, Kenyan recipients of donated Western clothing will not buy clothing from local tailors, putting the tailors out of business. [13] In an episode of 20/20, John Stossel demonstrated the existence of secret government bank accounts which concealed foreign aid money destined for private purposes.

Some believe that aid is offset by other economic programs such as agricultural subsidies. Mark Malloch Brown, former head of the United Nations Development Program, estimated that farm subsidies cost poor countries about USD$50 billion a year in lost agricultural exports:

"It is the extraordinary distortion of global trade, where the West spends $ 360 billion a year on protecting its agriculture with a network of subsidies and tariffs that costs developing countries about US$ 50 billion in potential lost agricultural exports. Fifty billion dollars is the equivalent of today's level of development assistance." [14][15]

Some have argued that the major international aid organizations have formed an aid cartel. [16]

In response to aid critics, a movement to reform U.S. foreign aid has started to gain momentum. In the United States, leaders of this movement include the Center for Global Development, Oxfam America, the Brookings Institution, InterAction, and Bread for the World. The various organizations have united to call for a new Foreign Assistance Act, a national development strategy, and a new cabinet-level department for development. [17]

See also

Notes

  1. ^ World Bank, World Development Indicators, 2010
  2. ^ The Development Assistance Committee of the Organisation for Economic Cooperation and Development defines its aid measure, Official Development Assistance (ODA), as follows: "ODA consists of flows to developing countries and multilateral institutions provided by official agencies, including state and local governments, or by their executive agencies, each transaction of which meets the following test: a) it is administered with the promotion of the economic development and welfare of developing countries as its main objective, and b) it is concessional in character and contains a grant element of at least 25% (calculated at a rate of discount of 10%)." (OECD, The DAC in Dates, 2006. Section, "1972".)

    Former USAID official Carol Lancaster, in her book Foreign Aid (2007) defines foreign aid as: "a voluntary transfer of public resources, from a government to another independent government, to an NGO, or to an international organization (such as the World Bank or the UN Development Program) with at least a 25 percent grant element, one goal of which is to better the human condition in the country receiving the aid." (p 9.)

    Both definitions employ the concept that benefit to the people of the receiving country must be one but not necessarily the only objective.

  3. ^ Lancaster, p 13, writes, "For much of the period of this study [World War Two to the present] foreign aid was used for four main purposes: diplomatic [in which she includes a government's international security and political interests abroad], developmental, humanitarian relief and commercial."
  4. ^ Lancaster, pp 4, 5.
  5. ^ Lancaster, p 67: "In 1957 the administration (with congressional support) separated economic from military assistance and created a Development Loan Fund (DLF) to provide concessional credits to developing countries world-wide (i.e. not, as in the past, just those in areas of potential conflict with Moscow) to promote their long-term growth.
  6. ^ Lancaster uses either ODA or ODA plus OA ("Official Assistance" -- another DAC government-aid category) as her main statistic. She considers it better to add the OA but very often just uses the ODA figure alone; eg., for Table 1.1 (p 13), Table 2.2 (p 39) and Table 2.3 (p 43). In any case the difference is now moot since the DAC recently merged the two categories.
  7. ^ S.K.B. Asante, "International Assistance and International Capitalism: Supportive or Counterproductive?", in Gwendolyn Carter and Patrick O'Meara (eds) African Independence: The First Twenty-Five Years, 1985; Bloomington, Indiana, USA; Indiana University Press. p. 249.
  8. ^ Asante, p. 251.
  9. ^ Asante, p. 265.
  10. ^ Collier, Paul (2005). Is Aid Oil? An analysis of whether Africa can absorb more aid. Centre for the study of African Economies, Oxford University.
  11. ^ Djankov, Montalvo, Reynal-Querol (2005). The curse of aid. The World Bank.
  12. ^ Habibzadeh, Yadollahie, Kucheki (2008). International aid in disaster zones: help or headache? Lancet.
  13. ^ Thilo Thielke (interviewer), translated by Patrick Kessler. "For God's Sake, Please Stop the Aid!"
  14. ^ [1] Address by Mark Malloch Brown, UNDP Administrator, Makerere University, Kampala, Uganda, 12 November 2002
  15. ^ [2] "Farm Subsidies That Kill", July 5, 2002, By NICHOLAS D. KRISTOF, New York Times
  16. ^ [3] The cartel of good intentions, Foreign Policy, Washington, Jul/Aug 2002, Authors: William Easterly, Issue: 131, Pagination: 40-49, ISSN: 00157228
  17. ^ Loewenberg, Samuel (June 10, 2008) Coalition seeks cabinet-level foreign aid. Politico.com. Retrieved Dec. 4, 2008.

References

Further reading

  • Moyo, Dambisa (2010). Dead Aid: Why Aid is Not Working and How There is Another Way for Africa. Penguin. ISBN 978-0-141031-187. 
  • Riddell, Roger C. (2008). Does Foreign Aid Work?. Oxford University Press. ISBN 978-0-199-544446-2. 
  • Banerjee, Abhijit Vinayak (2007). Making Aid Work. The MIT Press. ISBN 978-0-262-02615-4. 
  • Calderisi, Robert (2006). The Trouble with Africa: Why Foreign Aid Isn't Working. Macmillan. ISBN 1403971250. 
  • Easterly, William (2006). The White Man's Burden: Why the West's Effort to Aid the Rest Have Done So Much Ill and So Little Good. Penguin. ISBN 1594200378. 
  • Lancaster, Carol; Ann Van Dusen (2005). Organizing Foreign Aid: Confronting the Challenges of the 21st Century. Brookings Institution Press. ISBN 0815751133. 
  • Oxfam America (2008). Smart Development: Why US foreign aid demands major reform. Oxfam America, Inc.. 
  • Sogge, David (2002). Give and Take: What's the Matter with Foreign Aid?. Zed Books. ISBN 1842770691. 
  • [4] The cartel of good intentions, Foreign Policy, Washington, Jul/Aug 2002, Authors: William Easterly, Issue: 131, Pagination: 40-49, ISSN: 00157228

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