Effectiveness As A Method Of Poverty Alleviation Economics Essay

The thesis of this paper is to size up foreign assistance and analyze why it failed to take down the rate of poorness in developing states expeditiously. This essay is divided into 3 subdivisions. First subdivision will give the briefly background about foreign assistance and the purpose and definition of foreign assistance. The 2nd subdivision will exemplify how foreign assistance plants in ideality and in world. The last subdivision will give grounds why internal and external of foreign assistance has failed to extinguishing poorness in developing states, a existent illustration related to Africa will be given at last..

Section 1

To cognize how effectivity of assistance, it is necessary to turn to the inquiry, “ what precisely is foreign assistance? ” The term foreign assistance is besides known as international aid, development cooperation, proficient aid, and partnership, no affair what appellation it is, the coverage of this topic is immense, complex and fragmented ( Tomasevski cited in Burnell 1997, p. 1 ) . The enterprise of first major foreign assistance program — – Marshall — – was launched by the U.S. after the Second World War since many European states collapsed in the war and experienced ruined in industries, substructure and economic system. The program operated under recipient-friendly footings to back up these states retrieving from corruptness and guarantee the U.S. earns net incomes from the investing ( Sogge 2002, p.1 ) . The DAC ( Development Assistance Committee ) defined the aim of foreign assistance as the resources transferred to better the development in economic system and public assistance of developing states under concessional fiscal footings ( Burnell 1997, p.4 ) .

Section 2

Conventional wisdom of foreign assistance for short term development is to better populating criterion in developing states which accompanied with economic growing, while for long term development require enlargement in economic sustainably. After the Second World War, people start to recognize that capital is the chief factors affect growing ( Dedu, Staicu & A ; Nitescu 2011, p. 41 ) . The fact is that in developing states they do non hold adequate capital to put in subdivisions such as economic system and substructures which can further growing since low flat income in the development states made them have no excess money to make investing. As a consequence, foreign assistance is a method for developing states to acquire rid of poorness. However, it is impossible that foreign assistance investing can make a long term growing in developing state ‘s domestic income since the cardinal feature of foreign assistance is “ inactive receiving ” instead than “ active fishing ” ( Dedu, Staicu & A ; Nitescu 2011, p. 41 ) .

Section 3

Southern crosss that foreign assistance has failed to eliminate poorness can be classified into two major external points. As Collier and Dollar ( 2002, p. 1475 ) provinces, givers can act upon in growing by apportioning foreign assistance sagely and which would take to diminish in the rate of poorness in low-income states. On the contrary, misallocation of foreign assistance by bringing states can do waste of money or enormous state corruptness. The other point is political government. The influence of political government on the effectivity of foreign assistance is as illustrations have been reported, a figure of leaders and administrative officials in developing states have become billionaires by defalcating assistance. Economic systems in most undeveloped states and several developing states are socialism ; leaders from the states frequently request fiscal assistance from Western states without specific intents. On one manus, to fulfill their ain involvement in economic and position, on the other manus, to keep and better the socialist system ( Dedu, Staicu & A ; Nitescu 2011, p. 40 ) .

Furthermore foreign assistance is non perfect itself, the intrinsic defects which might impede assistance from obtain its primary end to poverty relief are concluded by Dedu, Staicu & A ; Nitescu ( 2011, pp. 42-43 ) . The first defect is that fiscal assistance does non travel straight to single or entities that are fighting for support alternatively assistance can stop up with funding personal or group involvements. Even the assistance given by UN can non assure an equal allotment.

The 2nd defect caused hapless public presentation of foreign assistance is that bulk of fiscal assistance which donors deliver to the states in demand are loans alternatively of grants. The loans are “ autonomous duties of the having state ” that givers have no right to pull off its allotment or make up one’s mind where to back up precisely so this can take to the same stoping as the first ground.

The 3rd failing is related to the givers ‘ aims. Based on “ fiscal friendly relationship ” ( Dedu, Staicu & A ; Nitescu 2011, p. 42 ) from bilateral understanding, assistance bringing states prefer to back up states which willing to interchange foreign assistance with political, military or commercial dependants. Donors made the underdeveloped states engaged in bilateral understanding by coercing them purchase arms, nutrient and being trueness to givers ‘ political relations. However, most of states which truly necessitate support are in utmost poorness that they are excessively hapless to acquire attending from givers.


The followers is a practical illustration of foreign assistance on Africa extracted from Akonor ( 2007 ) . During the twelvemonth 1980 to 1988, Sub-saharan African states received about $ 83 billion dollars of fiscal assistance from West. Many people might believe that the economic system in those states will see a dramatic encouragement by the great fiscal investing. Unfortunately, the anticipation of the consequence is opposite to world. Harmonizing to the probe made by international statistics shows that populating criterion in those states dropped by 1.2 between 1965 and 1984 and the one-year growing rate in 18 African states was less than 1 per centum. It is surprising to detect that the common characteristics in those states are foremost, they engaged in the same political government — – military absolutism and secondly, they all received assistance from the Western states through the non official aid plan. It is obvious to admit failing of foreign assistance through the illustration provided.


Numerous empirical experiences have showed the failure in official foreign assistance, and about all the people who look at the information has come to a common consensus that assistance has failed ( Shleifer 2009, p. 380 ) .

Peter Bauer ( cited in Shleifer 2009, pp. 379-380 ) described foreign assistance as “ a transportation of resources from the taxpayer of a donor state to the authorities of a receiving state ” . It is obvious

In Malek ‘s ( cited in Burnell 1997, p. 3 ) words, ‘By its really definition the sole motivation behind assistance is selflessness ‘ ; and Zinkin ( cited in Burnell 1997, p. 3 ) : ‘Aid is charity. If it is non charity, it is non aid. It may be enlightened self-interest ; common defense mechanism ; a encouragement for the export trade ; a sop to a troublesome ally ; it can non be aid ‘ .

Failed to cut down poorness because givers ne’er learned to cognize receivers states

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