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Foreign Aid

What even is foreign aid?

Foreign aid is the support and assistance provided by donors such as governments or NGOs, NPOs, among others, for reasons ranging from moral and altruistic interest to political and economic ones. (Quiviger, 2020).

Foreign aid can take many forms, from the transfer of basic resources such as food and medical supplies to grants and loans. However, more rare cases of foreign aid can also include training and advice provided by developed nations on farming or school methods. One example is the donation of £230m by the UK to West Africa in the fight against Ebola.


Figure 1 displays the top countries most generous in providing foreign aid, along with the figure relative to GNI.

Foreign aid has always been an important discussion in UK parliament, as well as other governments around the world, as rich and developed countries have been encouraged to continue funding promises to emerging and developing countries. The UK’s current foreign aid target is an expenditure of 0.7% of GNI (gross national income) on overseas aid for five consecutive years, committed back in 2017, representing a total of £14 billion. While many people believe that foreign aid is crucial in providing support to nations who need assistance, as we simply are able to, many others believe that it is worthless, as the issues of poverty and inequality are fueled by instability and corruption within these developing countries. Does the aid actually go to those who need it? Or does it end up in the hands of the corrupt? There is also the question of how effective is the aid if it is solely provided in the short term? Or is there a need for continuous assistance that extends over the long run?


Many people also believe that foreign aid programmes are an example of the failure of government intervention (Boone, 1996). Boone finds that aid does not significantly increase investment within the countries who receive it, nor does it improve HDI (human development indicators), but does, in fact, increase the size of the government. The effectiveness of aid does not vary according to how democratic a government is, or how free a country may be, as the political elite may continue to reap the benefits of the programmes.

References

Boone, P., 1996. Politics and the effectiveness of foreign aid. European Economic Review, 40(2), pp.289-329.

Myers, J., 2020. Foreign Aid: These Countries Are The Most Generous. [online] World Economic Forum. Available at: <https://www.weforum.org/agenda/2016/08/foreign-aid-these-countries-are-the-most-generous/> [Accessed 26 October 2020].

Quiviger, W., 2020. WHAT IS FOREIGN AID AND DOES IT WORK? | IE School Of Global Public Affairs. [online] IE School of Global Public Affairs. Available at: <https://www.ie.edu/school-global-public-affairs/faculty-and-research/ie-explains/foreign-aid-work/> [Accessed 26 October 2020].

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