Introduction
While analyzing the article on foreign we need understand two important terms, one is foreign aid and the other is development. Let us begin our analysis with a brief description of these two terms.
Key terms:
Foreign Aid: Foreign aid refers to the assistance received by a country in distress from other countries of the world. The aid can take the form of transfer of physical goods like food, medicines, clothing etc. from one country to another. It also includes foreign capital used to build important infrastructural or social overhead capital in the receiving nation. Foreign can also take the form of military assistance in times of some political strife plaguing the country. Often services like medical aid, technical assistance are part of foreign aid. The main characteristic of foreign aids is that they are mostly unilateral transfers. Even if it is an aid in term of provision of investment funds the interest payable is quite low. That is the loans given in aid are mostly soft loans.
Development: Development is a multi-dimensional term used to define the level of progress achieved by a country. We know that increase in income or increase in total product of a country leads it to growth. But development means improvement in terms of better health conditions of the people, spread of education among the masses, availability of basic and essential infrastructural facility to all regions of the country, reduction in poverty and income inequality, increase in productivity and self reliance.
While it is very important for a country to be on the path of development and growth it is also important to understand the ways and means that can take the country to the path of development in a consistent manner. This article expresses the concern of the leader of a country about the drawback and danger of foreign assistance in terms of foreign aid. The article points out that foreign aid come with strings attached to it. It requires the country to abide by certain conditionality accompanying the external assistance. Such conditions may not be acceptable to the state or may even be demeaning in some cases. The rest of the article presents an analysis of the relationship between foreign aid and development and then we critically evaluate the contentions presented in the article.
It has been found that foreign aid leads to consistent growth in the economy . There is a positive relationship between foreign aid and GDP as expressed in figure 1 below:
Figure 1
GDP
Foreign Aid
Foreign aid or external assistance often comes in the form of loans or grants from other countries or international lending agencies like the World Bank and the International Monetary Fund (IMF). These funding bodies provide development assistance to the less developed countries or countries facing some economic crisis. The financial assistance can come for some particular project or for overall reconstruction of the core sectors of the economy. Thus foreign aid in the form of capital flow leads to increased investment in the countries receiving the aid as shown in figure 2 below:
Figure 2
Investment
Foreign Aid
Thus we see that foreign aid increases investment in the country. It also has a direct positive impact on the growth of the country.
Evaluation
The president of Kenya has urged the leaders of other countries of Africa to reduce their dependence on foreign aid. But he was categorical in his statement. He urges the leaders to reduce the inflow of funds and physical aid that is solely charitable in nature, that is, the aid that is unilateral. It should be stressed in this context that aid in the form of investment like foreign direct investment is essential for a country as it helps in the development of onsudtries and infrastructure in the country. But charitable aids often have certain conditions attached to it that often undermines the growth of the economy. It has certain clauses and makes certain reforms obligatory for the country. These reforms may not always be beneficial for the long –term or even immediate development of the country. For example, the IMF had insisted the developing nations in Asia to allow more foreign inflow of capital which ultimately jeopardized the financial conditions in these nations as portfolio investment flowed out in the same manner as they entered the nations.
Ac country should strive to be self sufficient and self reliant. Being self reliant requires external assistance in the form of loans and FDI but if it takes the form of charity it creates some form of dependence by the country receiving the aid on the aiding country. It often lead to political interference of the adding nations into the internal affairs of the countries receiving the aid. So the Kenyan president Uhuru Kenyatta rightly has rightly pointed out that charitable assistance should not be accepted anymore and the African countries should maintain their self reliance as well as sovereignty.
Works Cited
Trap, (ed) Finn. Foreign Aid and Development. Lessons learnt and directins for the future. New York: Routledge, 2000. English.
