AID

AID

1. Humanitarian aid

   • Political reasons
   • Food Aid Issues
     • may force down domestic food prices and affect domestic farmers
   • Risk of continued dependency on Aid
     • little incentive to be innovative

2. Tied Aid

   • Not effective
     • Does not create employment or increased output
     • imports may replace domestic products
     • domestic country has to buy goods and service from donor country

3. too focused on the modern sector

   • may cause a greater gap in incomes and living standards between sectors

4. Aid will only be effective if the country agrees to adopt certain economic policies

   • Policies that emphasise the free market principles of liberalisation, deregulation and privatisation to encourage economic growth