DOES FOREIGN AID HELP TO ACHIEVE ECONOMIC STABILITY? Correct My Mistakes Please (02)

[Einstein plus Newton]

INTRODUCTION

Foreign aid, also termed as Official Development Assistance (ODA), is the voluntary transfer of services from one state or international organization to another state. It is intended to bring some positive changes in the lifestyle of people of developing countries or help achieve Millennium Development Goals (MDGs). The concept of foreign aid can be traced back to the foundation of United Nations Organizations (UNO), a multinational organization committed to advance the social and economic progress of all people around the globe. In the recent past, foreign aid, under the brand name Marshall Plan took the credit for economic recovery and growth in war-torn Europe. However, there is a negative correlation between growth and foreign aid in Sub-Sahara Africa, Latin America, Middle East and Asian countries. This dubious role of foreign aid in state economic growth has earned a lot of attention in the international political economy recently.

Considered by some political scientists as a “big push” for economic progress and development, it is in fact, a trap towards rent-driven growth. It results in a decrease in tax collection, suppresses local businesses and growth, catalyzes a vicious circle for low development, hampers long-term policies, discourages economic freedom and increases the debt burden. Furthermore, foreign aid political clout of the donor state in the recipient state helps in advancing the influence of developed countries in the affairs of developing countries. Moreover, it contributes to damage the quality of good governance and causes rampant corruption. Fruits of foreign aid often do not reach poor people but help the rich become richer. It strengthens dictatorship if provided in the form of military aid. Foreign aid often focuses on modernization which does not alleviate poverty or improve the lifestyle of poor people. It damages the country image at the global level. It often results in negative economic growth. Given all the above facts one can conclude that foreign aid is ineffective and indecisive in boosting the economic progress and development of a country........................................... .........!!