Aid

Relevant Questions

• Evaluate the view that Transnational Corporations (TNCs) have had a significant part to play in the existence of global inequality. (30)

• Evaluate the view that aid cannot solve the problems of the developing world. (30)

What do we mean by aid?

• Economic, military and technical assistance both given and loaned to a country

• It might also include simply writing off previous debt

• It can be tied (for a specific purpose) or free (used at the discretion of the country receiving)

Who gives aid?

• One state to another (bilateral aid)

• IGOs (Many states working through a central organisation – Multilateral aid)

• TNCs (Corporate Responsibility)

NGO – Non-Government Organisations

• Make a list of as many charities as possible which work to make a difference in the UK

• Make a list of as many charities as possible which aim to make a difference across the world

• Do any of these charities do both?

The up side of NGOs• It does not expect repayment• Not for profit– Take risks– Small scale projects– Work in areas normally ignored

• Often more effective than governments who have hidden objectives

• Responsive to donors• Their objectives are continuous

Problems with Charities (NGOs)

• Limited funds – which often leads to reliance on funding from governments or partners

• Spending on publicity and administration

• Use of inappropriate equipment/people

Aid – good or bad?

• Modernisation – development loans can kick-start economies

• The North has much that the South could use to develop

• Collier (2007) – Aid has improved recipient countries GDP by 1% a year – not much but it does help

Aid – good or bad?• Neo-Liberal – aid creates dependency (although it may

allow some)• If a country is reliant on aid it will not take on capitalist

values• Aid can create laziness, corruption and inefficiency• If capitalist values are fully taken on then a country

shouldn’t need aid it should be able to attract companies with the promise of profit

• Bauer (1995) – aid implies something good. Northern countries never received aid and managed to develop through capitalist values. In reality aid goes to governments and not the people

Aid – good or bad?

• Dependency and world systems – aid is often conditional and goes to countries with strategic value for the benefit of the donor

• Hayter (1971) – Aid as Imperialism – creates jobs and export markets for the donors – support from the recipient

• 50 years of aid for what? (but is that because we never give enough?)

• Participation – Participatory Poverty Assessment

Aid – the middle• It can be good when it does not:– Support the corrupt– Get wasted on inefficiency– Get spent on the military– Damage the environment– Employ foreign persons– Get into the wrong hands– Has long term debt burdens

• Sachs (2005) – ‘big push’ – If we gave more a real difference could be made

• Easterley (2006) – bigger focus on small local initiatives

Aid and the legacy of debt

• 1970s loans came with interest rates

• Belief in the ability to pay off the debt through modernisation

• Recession in the 80s reduced markets and amount of aid available

• Cuts in developing countries – mainly education and healthcare

Debt Boomerang – George (1991)• Debt comes back to bite the North (it would be better write

it off)– Environmental - exploitation in an unsustainable way to repay

debt– Migrants flee to the north to escape poverty– Drugs - grown to repay debt– Under employment - Less money less markets for developed

goods– War – to repay debt or because of social unrest– Tax – Developed countries have to pay tax to support banks write

off bad debts• Jubilee Debt Campaign – Cancel the debts of the worlds

poorest nations

Jubilee Debt Campaign

• Cancel the debts of the worlds poorest nations

• It has happened slowly but still involved structural adjustment programmes

Moral Hazard

• Writing off debts rewards countries which used the money poorly

• But this was 20-30 years ago…

• Vulture funds

• http://www.channel4.com/programmes/dispatches/4od