Aid and Debt

Nota:

• Figures - 2001 for every dollar that developing countries recieived in grants they paid out 13 in debt servicing 

1. Types of aid
   1. Bilateral

      Nota:

      • Govt's in developed countires giving aid to govts in developing. UK in 2012, 60% of the international development was in bilateral aid.
   2. Multilateral

      Nota:

      • Govt's donate capital to multilateral agencies such as the IMF. 37%  of the overall budget from DFID went to multilateral and 58% given to the european community with 22% to the World Bank group
   3. Commercial

      Nota:

      • Commercial banks lend at commercial rates. During 1980's a large amount of money given in aid e.g Lloyds 16.5%
   4. NGO

      Nota:

      • Charitable organisations such as oxfam. money raised via public donations is often matched by dfid. Around 50 million annually.
2. NGO approaches
   1. Welfare

      Nota:

      • Provides relief and humanitarian assistance. Less likely to be concerned with politics. attractive to governments and public
   2. Developmental

      Nota:

      • Support for self help. Aid for health, housing, educational projects etc. May involve volunteers or experts or just support for local groups.
   3. Empowerment

      Nota:

      • More radical and political. Aims to empower locals and educate with reference to rights. Problematic as dominant groups can be challenged.
   4. Educational/campain

      Nota:

      • Raising public awareness of broad developmental issues. Often mixed with other forms but quite weak in the aid section
3. Positive view of aid
   1. Neo populist

      Nota:

      • Includes charities such as oxfam and save the children, which aim to raise donations from the general public by raising awareness. Prefer to target the poorest of the poor and work on small scale projects e.g irrigation systems with voluntary groups
      1. Gen. raise 50 million annually, less than 10% of DFID and 50% is donated by DFID
   2. Modernisation and Neo Liberal

      Nota:

      • Crucial component for industrialisation- view shared by policy makers after wwII. Aimed to change cultural attititudes by setting up meritocratic education sytems and family planning progrmes Identified elite would be primary beneficiaries but argued trickle down affect. Generated early success - 1950's saw global levels of infant mortality, life expectancy and literacy levels slowly improve
4. Negative view of aid
   1. Dependency Theory

      Nota:

      • Other critics argue that organisations such as the world bank and imf have adopted inappropriate and inefficient aid strategies that have primarily served the interests of the transnational corporations that dominate global capitalism.
      1. Aid as imperialism- Theresa Hayter 1981

         Nota:

         • Official aid is a form of neo colonialism because the development promoted by aid is aimed at reproducing and legitimizing the intrest of the metroplolis Reject that its main function is to help- its function is to bring and sustain under development to benefit a western monopoly of wealth consumption and power.
5. Why give aid?
   1. Political

      Nota:

      • Aid can be given or withheld due to a countries political ideology - e.g. in the 80's UK and US withheld aid to Ethiopia on the grounds that it had a marxist gov't. Famine was responsible for 1000 of deaths and kick started bandaid.
   2. Aid business

      Nota:

      • Tied aid is given with agreement that recipients spend money on specific goods, services etc for donor companies. Aid is used therefore to pen up markets and generate more wealth e.g. post war iraq, govt's spending aid in order for a continued for their product or service.
6. Solutions to debt
   1. Structural adjustment Plans

      Nota:

      • M/F and W/B plans to rebuild countries to help out of the debt crisis. Loans were tied to gov't spending and privatisation and opening up of markets
   2. Debt write offs

      Nota:

      • Only 21 countries qualified for debt cancellation after the G8 gleneagles meeting 2005. Uk still holds 2 billion worth of debt from d/c.
   3. HIPC

      Nota:

      • Highly Indebted Poor Countries initiative Critisced for taking to long 1 over 6 years, too few countries involved, stringent rules for countries to stick to. 2005/6 29 countries qualified for exceptional debt relief and have recieved a reduction of up to 2/3 of debt.
7. Debt boomerang

   Nota:

   • George argues that debt needs to be cancelled if the d/c are going to ever develop
   1. Environment

      Nota:

      • poverty caused by debt will encourage people and countries to exploit natural resources in the least profitable and sustainable way. e.g amazon
   2. Unemployment

      Nota:

      • Ldcs would be higher if countries weren't affected by their large debts. loss of jobs due to lost exports is suggested to be 1/5 of all unemployment in us
   3. Drugs

      Nota:

      • Illegal drugs = major source of income in heavily indebted areas e.g. Columbia, Peru etc social and economic costs of illegal drugs are high ( 460 billion in us)
   4. Immigration

      Nota:

      • People will attempt to flee poverty and move towards wealthy countries. Refugee numbers are increase by unrest caused by poverty and conflict over limited resources.
   5. Taxes

      Nota:

      • Developed countries governments have used tax payers money to bale out banks that had lent money to poor countries. Banks could then write of the bad debts and the government were left to pick up the rest
   6. Conflict