Foreign Aid

OFA (Official Development Assistance)/ Aid:

* Non-commercial

* Concessional -> interest and repayment is less stringent

Money or resources that are transferred from one country to another without expecting full repayment. (MEDCs -> LEDCs) Foster economic development

Commitment of ODA of 0.7% of GDP -> UN 1970 -> only Scandinavian countries, the Netherlands and Luxemburg has met this target by 2003 -> USA bottom of OECD (Organisation for Economic Cooperation and Development)

OECD (Organisation for Economic Cooperation and Development)

* Support sustainable economic growth; Boost employment; Raise living standards; Maintain financial stability; Assist other countries' economic development; Contribute to growth in world trade

Public or ORA

* Individual government assistance -> bilateral aid

* Multilateral donor agencies

Private Development Assistance

* Private NGOs

Tied Aid

Conditions laid down by donor country about how the money should be used

Tied aid by source: Spend on exports of donor country

Tied aid by project: spend on specific project e.g. road or dam

Commercial or economic benefit of the firms in the donor country

\Is Aid beneficial to the development of a country?

Define AID: refers to any money or resources that are transferred

Foreign aid is not beneficial -> does not yield many beneficial results for the poor

The effectiveness of aid has recurrently been a subject of much investigation. Though results have been mixed, a consensus that foreign assistance does not generally benefit its recipients sufficiently has emerged. Foreign aid refers to any money or resources that are transferred from one country to another without expecting full repayment. Although foreign aid is indeed provided to less economically developed countries, it does not yield many beneficial results for the poor. This is attributed to the fact that donor countries generally give aid because it is in their own interest to do...