Disadvantages of Foreign Aid

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Modernization theories discovered that the only thing that was lacking in developing countries was capital, it was suggested that if private foreign investment in the third world these countries would be able to spend on capital goods such as infrastructure. Industries being established would provide employment for people, which lead to higher rates of capital formation and further economic growth. In community development aid is needed for it to fulfill the purpose, so I will discuss the effect that foreign aid has on community development initiatives’ positive and negative effects, what is foreign aid, its advantages and disadvantages and why is it needed for development.

What is foreign aid?

Foreign aid is any type of official development assistance granting loans or government-sponsored financial grants presumption to developing countries. Countries can provide aid through capital, food, and services such as humanitarian aid and military assistance (Frik de beer ) (htt2). It is the international transfer of capital, goods, and services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian e.g. aid is given for natural disasters (Frik de beer ). It covers a wide spectrum from technical assistance to construction projects, from structural adjustment programs to food aid, and it excludes private transactions such as bank loans and direct private investment on a commercial basis.

There are two types of aid it can be multilateral and bilateral. Multilateral aid is when assistance is given by an organization consisting of more than one state such as the World Bank or the United nations. Bilateral aid is when one country such as Britain or France gives aid directly to another country. (Frik de beer ). Foreign aid is only given by governments or their development agencies, such as the World Bank or the United Nations on which most governments are represented. Non-governmental organizations are playing a huge role as aid agencies, their actions may be inspired by humanitarian concerns such as the anti-apartheid movement. Development practitioners are advocating channeling aid through NGOs, then through governments as NGOs have earned a reputation for being able to aid the poorest ( Madley 1991:109) . Examples of foreign aid are money, food, and supplies, healthcare, etc.

Disadvantages of foreign aid

Increase dependency-less economically developed countries (LEDCs) become more dependent on donor countries and become heavily dependent, which causes the economy the stay at equilibrium.

Risk of corruption-there is a probability of a specified outcome that foreign financial support does not reach its rightful recipients, but go the hands of corrupt political officials. Frankly, money from donor countries sometimes does not fulfill its purpose because some officials do corrupt and make fruitless spending.

The economic political pressure-donor country may place economic and political pressure on the receiving country, forcing them to return a favor. For example, America donated to South Africa money now they blackmail them by wanting Gold in demand but there was no agreement on that. (htt2)

The hidden agenda of a foreign-owned corporation usually hide that they have their own businesses aside that also need to benefit. Foreign aid is sometimes presumption to a country to benefit foreign-owned corporations and entities. So in that action, the help is not actually directed to the less fortunate but to its own people.

Benefit employers- most development may only benefit large corporations and wealthy employers, not the people it was directed to. Rich people exploit the poor for their long wealthy people who do not even have proper livelihood benefit nothing. (htt2)

Overlook small farmers-foreign support may only benefit large-scale agricultural projects and not less privileged, small farmers who help the most. With that done there is no change in the economy of the poor.

More expensive commodities-when there is the development and there is progress in it there is inflation which causes prices of commodities to increase, making the poor more deprived. Giving help to LEDCs is a good thing but the nations must monitor and manage the flow of foreign aid so that it reaches the people who really need it, it must not go to the pocket of greedy and corrupt people.

The negative effect of foreign aid on community development projects

A lot of corruption happens when it comes to development the officials are sometimes corrupt and greedy. Foreign aid can donate money to developing countries knowing that they need help only to find out that the government officials want to make fruitless spending, and fulfill their personal needs. The government gives a certain amount of money for development only to find out that thing is not even done the local officials used the money recklessly. Aids can create more dependency in countries that are donors and the political and economic discussion become disadvantageous. Sometimes the money donated to developing countries also affects them because they get into a lot of debt and they end up owing many countries and end up getting blackmailed by those rich countries for them to do their own dealings.

The aid from the government to the government only favors the rich people and the poor only have little effect, they use aid to consolidate their power (Frik de beer ). Aid benefits the political powerful groups in the recipient countries powerful people only cares about their wealth rather than helping the poor, people who are poor are usually oppressed by the rich and they exploit them in order for them to be richer. Government usually says that the aid is aimed at the poor so that their lives can improve but they know very well that the foreign aid is used for economic, political, and other reasons in maintaining the current character of world inequality rather than challenging it (Regan 1996:160). Developing countries as they are recipients become powerless as they always receive in order for them to develop their communities. In most cases, the aid does not reach the people they need the most, political corrupt aid a lot. (Frik de beer )

Foreign aid sometimes helps sometimes it does because in its help some people get exploited, for instance, rich people exploit the poor, and political official uses aid for their political or personal benefit. The community depends a lot on foreign aid so it is helpful to it. In South Africa foreign aid is the key to development as it is a developing country, for our economy to grow we need foreign but sometimes our political officials are greedy.

References

Book (Introduction to development studies) (Frik de Beer) (Hennie Swanepoel)
Journal of economic growth, 5 (1), 33-63
Ridell, R. (2008) Oxford University Press 2008

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Disadvantages of Foreign Aid

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