Benefits Of Foreign Aid

, , 1 Comment

Benefits of Foreign Aid

Foreign aid, which is given by wealthy nations, is meant for offering financial and development assistance to developing nations. Donor countries use this foreign aid for furthering their economic and political interests. Critics believe foreign aid promotes dependency amongst poor countries, whereas other views the aid like a kind of unwanted Western imperialism.

1. Types
Aid can reach a struggling nation in various forms. Some of the most used forms include grants, preferential trade contracts, loans or other shipments of grain, military supplies and technological hardware. Loans that qualify like foreign aid are those that carry very low interest rates if any.

2. Benefits
The main foreign aid benefit is that it attempts to alleviate suffering. Most developing nations have limited infrastructures with regards to a good economy. In such cases, foreign aid is an excellent means of assisting the nation in developing lasting solutions to issues related to poverty.

Some countries have difficulty settling their debts and thus the aid enables them settle these debts. In other instances, the aid is meant for relieving an immediate problem like poverty caused by war. The aid can also offer solutions to long term problems like strengthening the financial sector and local banking system.

3. Limitations
Foreign aid can encourage a dependency culture and some nations normally live solely on aid. This aid therefore acts like an excuse for avoiding doing actual structural reforms. For donor countries, foreign aid is somewhat problematic, particularly if the donor countries themselves cannot pay their own debts.

In most instances, the foreign aid could be inappropriate. It might come from a donor’s perception of problems that might not even exist. Furthermore, this aid may sustain an administration or government that could be causing these problems in the first place.

4. Conclusion
Foreign aid nowadays is not limited to only providing a country some money. However, it is about attitudinal and structural reforms. Its main aim is bring key governments onto the worldwide market place. The money that will be given to enhance that country’s economy is supposed to offer this type of transition.

Please help us improve. Please rate this article:


One Response

  1. matias iinkono

    April 25, 2015 2:04 pm

    with the aid of diagrams and appropriate examples, explain the benefits of a government subsidy given to enhance maize production

Comments are closed.