Does foreign aid help achieve economic stability?

Key Words: Foreign aid and economic stability

No, it does not lead to economic stability.

OUTLINE

1. Introduction

Thesis statement: Foreign aid is incapable of achieving economic stability.

2. Defining the variables
2.1 Foreign aid
a) Grants
b) Loans
2.2 Economic stability
a) Healthy GDP growth rate
b) Single-digit Inflation Rate
c) Low Unemployment
d) Low levels of Poverty

3. Why foreign aid does not lead to economic stability:
3.1 Foreign aid provides only a temporary relief in altering balance of payment problems, which is not an indicator of long-term economic stability
3.2 Developing countries are unable to pursue independent fiscal policies
3.3 Foreign aid creates the vicious trap of debt-servicing
3.4 IMF Structural Adjustment Programmes
3.5 Institutional reforms, which lead to industrialization and job creation, are not initiated because of foreign aid
3.6 Kills the spirit of self-reliance and continuation of crooked regimes in developing countries
3.7 Sometimes, the aid comes with explicit conditions disallowing use for economic improvement e.g. Military Aid through Coalition Support Fund
3.8 Foreign Aid prevents Foreign Direct Investment, a major determinant of economic stability

4. Examples of countries which crushed the begging bowl and achieved economic stability:
4.1 Turkey
4.2 Brazil
4.3 India

5. Way Forward: How economic stability can be achieved:
5.1 Instituting tax reforms
5.2 Trade, not aid
5.3 Dedicated political leadership
5.4 Role of media and other stakeholders

6. Conclusion
Foreign aid is unable to achieve economic stability.