This is the process where resources from the developed world come to help the developing world. There are two main types of aid;
Financial grant or material gift that does not have to be paid back
It can be in capital or in the form of experts to help with an issue or practical help etc. In 2005 the quantity of aid provided by rich countries to the developing ones topped $100 billion, which is pretty much double what it was in 2001 ($52 billion).
Aid can be classified as to where it comes from;
Aid by voluntary agencies and NGO's like Oxfam and Christian aid.
Official developmental assistance (ODA), where a country (which is a member of the OEDC-explained next) has an aid budget. ODA takes the form of grants ad 'soft' loans to promote economic development and welfare of developing countries. These can be given directly to a country (bilateral aid) or to (multilateral) organisations like the UN, World bank and EU.
Governments of richer developed countries giving aid to poorer developing countries. Namely from the 'Organisation for Economic Co-operation and Development' (OECD) which is what says which countries should give aid. 25 countries are members and each member has to have an aid budget. In the UK the Department for International Development is what creates and manages the budget, in 2007/8 £2962m (57%) of DFID programme was bilateral aid.
Involves giving money away to organisations aid programmes for them to use to develop countries. The UK donates (43% of the DFID budget) to agencies like the World bank, the IMF (international monetary fund), the European commission, and the UN.
Banks give loans at commercial rates to developing countries. In 2000/1 private flows from the UK to developing countries were £1.4bil
Like Oxfam try to fundraise here and target the poorest of the poor using voluntary groups in developing countries and generally focus on local scale rather than countries wide schemes. For example irrigation. Generally NGO's like Oxfam raise £50mil annually for developing countries and this is usually matched by the DFID.
This is given in response to a specific event like war, famine, tsunami's or earthquakes (Israel, Ethiopia, south eat Asian or Hati respectively).
Rich countries according to the UN should aim to allocate 0.7% of their GNP to ODA excluding loans and military aid. Only 5 countries met the target in 2012 and 2013; Norway, Sweden, Luxembourg, Denmark and the UK. Luxembourg gave 1.00% of the GNP, Norway, 0.93%, and the Netherlands 0.71%. The UK only gave 0.56 in 2012 however jumped up to 0.72 in 2013. The US didn't make the top 7.
This only shows a governments support for international development, it doesn't use private donations from individuals. When these are taken into account the US had better standing; for example Bill gates gives millions each and every year to combat HIV/AIDs in Africa. According to Toussaint 2008 the financial crisis of 2007/8 caused much disarray, and a lack of want to give credit to developing countries.
The top country to receive most DFID bilateral aid in 2009,2010, and 2012 was India in 09 (295m), India in 10 (279m) and Ethiopia (324m).
The top Asian country to receive DFID bilateral aid in 2012 was India with 284.359m
The top African country to receive DFID bilateral aid 2009, 2010, and 2012, Ethiopia 09 $214, 86m, 10 $350, 533m, 12 £324,435m
Official aid is a crucial part of developing poorer countries because it promotes take-off. During Rostow's writing time many developed countries were giving aid post WWII. It allows countries to develop technologies and investment in industries.
In the developing countries, aid was spent improving agricultural industry which would them improve productivity. Which would then create money which could be spent on industry and infrastructure. It aimed to change cultural attitudes by setting up meritocratic education systems, which value competition and achievement and this would lead to a shift in attitudes. It would also develop literacy skills, promotes woman's wealth and health and education. In turn this would impact family planning and thus free woman.
These early modernisation strategies suggested wealth would benefit the elites at first but then trickle down to the poorest in the country. The elites which had access to education would then build up their skills and become entrepreneurs which would invest in and develop industries. The wealth would trickle down because their investment would make more jobs for others. Over time development for the whole population would occur.
The main successes of aid distribution in the 1950's was that initially it lead to improvements in infant mortality, life expectancy, and literacy levels for about 20 years. Many African countries had economic growth.
However since the 1970's growth was not sustained, poverty still existed for large populations and debt continues. Previously eradicated diseases (TB) have returned. There had been a decline in growth in some countries as a result of aid; Bangladesh.
USAID into Pakistan for education, to get more student enrolled, better teaching standard and more woman in education. But it hasn't done much to shift opinions of the west.
Neo-Marxist's think the role of aid is not to aid development, but instead to secure under-development and a dependency on the west. Aid aims to sustain under-development as well as wealth, consumption and political power of the west. Dependency theorists are critical of the IMF and World bank because they see their aid as inappropriate and ineffective and really they are benefiting the western TNC's.
Theresa Hayter argues that official aid is a form of Neo-colonialism and aim to reproduce, legitimise and maintain the interests of the capitalist metropolis.
Bangladesh receives aid from Germany in the form of energy cells which power the large proportions of the country without access to the power grid. They cost a lot and power houses and systems that need electricity (70% of rural Bangladesh). Germany also funds sustainable energy plants like Bio gas plants for cooking. But even with this, Bangladesh cannot provide electricity for themselves, even the electricity they do have doesn't work all the time and the government can't afford the huge demand for electricty. Bangladesh want to get into the Nuclear power industry but German sent advisors over to stop this and suggest sustainable environmentally friendly alternatives. So Germany create dependence on energy cells and then try to control when the country wants cheaper alternatives.
The political agenda of aid:
Aid sometimes comes with a catch such as having to fulfil things for the US and UK. The US and UK aid allocation depends on willingness to adopt political ideology and practices of the west.
Ethiopia's famine of the 1985 was forewarned by UN but both UK and US refused to help due to it's Marxist government.
Focus on anti-communism led to US spending 4:1 proportion of military to economic aid in south and central America
Kenya was rewarded with aid for providing US forces port facilities during the Gulf War in 1991 while Turkey was denied aid for refusing to let USA lease aid basis.
In 2005 developing countries were rewarding for assisting the USA's war on international Islamic terrorists
Poor countries with no political, strategic or commercial advantages are neglected.
Neo-Marxist's argue that essentially aid is just used as the expansion of capitalism, because it opens up new markets for western goods and services; e.g 75% of British aid is tied i.e the recipient country has to spend the aid in the UK. The UK economy has boosted in a number of ways because of this;
A number of jobs depend on orders placed by developing countries using official aid.
The DFID control what the money is spent on, for example, in other countries they may insist that the aid they give is infrastructure or technology that the UK supplies.
Evidence suggests that the UK aid to Malaysia and Indonesia in return of weapons, aircraft and construction contracts for British government
Tied aid creates artificial trade because the aid recipient country will need spare parts and technical advice
Neo-Liberals – aid creates dependency
Aid is like teaching people to depend on handouts, it takes away their own ability and want to grow on their own. They think that countries are poor because of their own issues, like war, corruption and laziness. Third world countries demand aid as their 'right', and Neo-liberals draw lines between aid and welfare, saying that 'scroungers' also demand a right to handouts. If something is worth doing it will attract investment and private sector funding, if it isn't then it shouldn't be done. Peter Bauer (1995) was an economist who said that aid is not necessary for development because the west didn't need it, and the term aid is seen as positive and 'donors' of aid are seen as doing the right thing, whereas they are not helping the poor people, just the third world corrupt governments.
Neo-Marxism – aid as imperialism
Aid is never without some form of condition or strings attached, as such it is a way for the rich countries to exercise power over the poorer ones. It is a new form of imperialism. Teresa Hayter argues that the West is hypocritical in saying that aid helps as it is designed not to, it keeps the poor poor for the West's own benefit. Aid is a benefit by giving trade ties between countries, gaining votes in international decisions, having back up if they need it and most importantly cheap labour.
Some aid works but not all and not at the rates needed to show large scale development in the 50 years of aids provision. There are some reasons why it might not work:
aid that support corrupt or undemocratic governments, or where money is wasted through inefficiency
aid that is used to boost armed forces
projects which do more harm than good and are not appropriate in the long run
projects that are bad for the environment
projects which employ highly trained experts with no local knowledge at all
projects which are ignorant or with lack of thought; sending food and money to sufferers in war zones will likely be seized by combatants.
Modernisation theory – justifications for aid
The West/North have so much to offer in terms of money, expertise, experience, knowledge and educated body power to help the South and poorer parts of the world to get them out of poverty. Jeffery Sachs (2005) says that we need large scale, focused and integrated aid to lift developing countries out of poverty. Collier (2007) argues that over the past 30 years has added one percentage point to the annual growth rate of the countries in the bottom billion. This means that countries would have been poorer without aid. They challenge Bauer's view that poor are poor and it's there fault because it is luck that you are born in the North or South and through no fault of your own, they believe that in some natural justice to give aid as a moral imperative.
Current debates about aid
Sachs (2005) vs Easterley (2006)
These are both on the middle ground, rejecting extremes.
There should be a 'big push' with all rich nations and IGO's working together to solve the issue. This means increased, focused and integrated aid. E.g erradicating infectious diseases like malaria would cost $10bil a year that is just £15 from every person in a develop country.
They kick off about the 'top down' approach and say that small-local initiatives which actually get to the poorest of the poor is best. Because big aid hardly ever gets down to those who need it and helps. But then there is an issue over whether many small projects would make a big impact.
+Provides for basic needs and infrastructure e.g roads (Cassens 1986)
+People centred aid works e.g. through immunisation Small Pox eradicated for $100million
+Aid works when practical, targeted and measurable (Sachs 2005)
+Africa Commission 2005 state aid has bought 12% growth to Mozambique
-Neo-Marxist Teresa Hayterargues that aid is a form of imperialism and that most aid doesn't go to the people who need it the most (the poorest of the poor)
-Creates a dependency culture (Bauer 1981-Neolib)
-Money is often spent in the wrong way administration and corruption. (Erixon 2005 -neolib)
-Supporting bad economic practices that prevent investment and trade
