Foreign Aid in Third World: Necessity vs. Lumbered

The history suggests that it is not the developed countries who started to give aid and loan; it’s the Third World Nations who asked it by themselves. There is no way foreign aid can always be that very bad and only focuses on developing colonies, being called neo-colonialism. There are two sides of the foreign aid the Third World receives: One- they are capital deficient and need extra capital to foster land, labor, organization and capital of the country; Two- the countries think that even if borrowed, it gets sufficient enough to repay back earlier loans if not sufficient to carry out new programs with that. Besides that, one must understand that the donors are not benevolent enough to give whatever we demand. Giving aid is an investment to them which will result in profit that is obviously greater than the monetary interest they would receive- both social and monetary interests. And there is a saying “Poverty of one zone is threat for the prosperity of nearby zone”. Poverty and Terrorism have no political and economic border.

We usually go through the advocacy that foreign aid increases dependency and that they also imbalance the net social welfare in the country. But, is that true? Well, to some extent it is. Let us look into one condition:

Once percentage differential foreign aid starts getting greater than the percentage differential Total Revenue generated by the aid, then the dependency starts, and that can actually be avoided. How? We have gone through various declarations by now on Aid Effectiveness from Rome to Busan meant to escalate the Aid-sustainability and cut the Aid-dependency. The common agenda in almost all declarations has been Good Governance which says Aid should be participatory, consensus oriented, accountable, transparent, responsive, effective & efficient, equitable & inclusive and follows the rule of law. It also emphasizes on transparency and the minimization of corruption. Has these effectiveness measures been taken place with the Aid in LDCs- the common answer would be NO, still we are happy enough to point out the flaws of Aid-providers.

It’s not at all about being on one side rather it’s about performing own duties first before blaming that others don’t work. Where is the transparency required to check the progress in development programs, where is the political stability required to bring formal investments rather by the global investors which can enhance the job creation in the market, where are the skilled bureaucratic personals who can design social welfare maximizing development programs for the country?

There are lot many questions that are unanswered, but we have been fooled enough to accept the fact that we are not responsible for the expected output from the Aid we receive.

Note: This article was published in The Himalayan Times, Perspectives