Aid and Debt Flashcards
Aid
Moore et al: “the flow of resources from developed countries to the developing world which may take the form of financial grants that don’t need to to be paid back or a loan without interest”
Debt
A sum of money that is owed or due
Introduction
- Transferred by organisations for economic aid and for the development of countries.
- One government to another (Bilateral Aid)
- Through IGOs like the World Bank, IMF, UN or EU to governments (Multilateral Aid)
- Also commercial lenders (Banks) NGOs or Emergency Aid
- The debate over effectiveness of Aid
Modernisation: Rustow
- Aid is a good thing
- They draw inward investment that would stimulate movement through his five stages of development. Particularly Stage One (Traditional Society) and Stage Two (Pre-Conditions for Take Off) and then onward to Stage Three (‘take off’) where the country has development momentum.
Modernisation Theory
- Aid is a crucial component in stimulating the ‘4 motors of development’=Investment, Education, Mass Media and Urbanisation.
- Can’t modernise without them as they provide jobs, houses, improve literacy and changing cultural attitudes
- Aid is crucial in shifting countries away from traditional values and poverty to economic progress and ‘modern’ values such as entrepreneurs, consumerism and meritocracy
- World Bank policies focus on industries and expanding agriculture productively. Wealth is will trickle down to the less well off and lead to better education and businesses
Modernisation Theory: Example
=Ad distribution in the 1950s led to decreased IMR, a rise in life expectancy and literacy levels for 20 years. Many African Countries experienced economic growth.
=Asia has experienced economic ‘take off’ over the past 30 years due to the Green Revolution of India, China and Southeast Asia. Asian farmers could grow more food, feed their families and communities, diversify cash crops and expand into non-agriculture based activities. Sponsored mainly by the US government and the Rockafella Centre.
Modernisation Theory: Evaluation
- The US is the biggest aid giver but it is selective over who it goes to, over 50% of its budget goes to middle-income countries in the middle east over poverty-stricken countries for tactical reasons (Isreal)
- Estimated 80 cents for every dollar US given is returned to the American government through American TNCs and Corporations
Neo-Populist Theory
- Agrees with Mod. Aid is crucial for development and can promote it
- But aid needs to be ‘people-centred’ small scale and proportionate.
- Focusing on the needs of the people rather than large scale aid projects
Neo-Populist Theory: Example
=ODA (1994) states aid from Britain helps people escape poverty. For example, they provided electricity to a market in Bangladesh, support for primary education and access to clean water in Somalia
=Aid from big corporations can be helpful when on a small scale. Coca Cola trained one million poor women in 44 countries from 2014 to 2017 who have set up small scale business ventures. Examples include Mango Farmers in Kenya and Sari Sari convince stores in the Philippines
Neo-Populist Theory: Evaluation
-Gov aid is wasteful
=The US has given 1 trillion over 50 years. 1970 to 1995 they gave increasing amounts to Africa. GDP decreased during this time and dependency increased and is now worse off.
-63% is bilateral aid
-Most aid comes with things attached. Told what to spend and how and eventually have to pay it back with interest. Debt Spiral.
-Aid is used to generate more wealth for the west. FMC.
=Post War Iraq. Companies from the west have given aid with the aim that recipients will develop a need for their products and or services
-EASTERLY: Big aid fails to get where it is needed most which is why micro-projects work better at dramatically improving the lives but this remains on a small scale and has very little impact on the bigger issues at hand
Neo-Liberal: Aid and Dependency
- Opposes mod but share the view that countries in the developing world are poor due to ‘internal factors’
- Aid serves to compensate for and reinforce internal weaknesses like kleptocracy, inefficiencies and lack of entrepreneurial spirit
- Countries become lazy as a culture of dependency. They are over-reliant on low-interest loans from the WB/IMF
- They need to stand by themselves and find projects that are economically viable that will attract foreign investment
- Aid demotes people, slows growth and a fatalistic approach
Neo-Liberal: Bauer, Mayo and Caldusi
- )B: Economic Achievement depends on peoples attitudes and motivations. Developed nations developed without aid so poor countries bring Poverty on themselves. Aid has become an industry. Benefits of those investing and not needy.
- ) M: Aid in Africa isn’t working. Aid has made it worse. 10% in poverty in 1970 and 70% in 2016
- ) C: A former WB official. Poverty is self-inflicted, poor management of aid and lack control of border conflicts.
Neo-Liberal Evaluation
-Can’t better themselves or get themselves out of the situation if they are indebted
-Aid is ineffective and not appropriate as they have no local knowledge to help them use it effectively
= American company once set 19 tonnes of food to Kampuchea during the famine. Drugs expired 15 years earlier and food was so old that they stopped feeding them to animals at the San Fran Zoo.
=More aid from DEED went to the Adam Smith Institute in London than Somalia
Dependency Theory
- Aid is a political weapon wielded by donor countries to serve their own interests. They exercise power over the poor and this is a new form of imperialism
- Gaunder-Frank: Aid is the third expression of Neo-Colonialism, don’t help to develop and industrialise but serve underdevelopment.
- Aid (loans) result in a spiralling debt crisis as they borrow more to pay back to debts. Crisis caused by newly dependent countries being dependent on cash crops with falling prices, corrupt elites and inappropriate spending
Dependency Theory: Example (Political Ideology)
- ‘Global Gag Rule’ that was enforced by the Trump Government that withheld aid to Clinics run by NGOs that provided information or provided abortions because of the governments own pro-life stance.
- Countries punished for not supporting ideology even though many women were put at risk. As it is known that it increases deaths.
