Aid and Debt

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

1. Types of aid
   1. Bilateral

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      • 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

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      • 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

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

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

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

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

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

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      • 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

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      • 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

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      • 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

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      • 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

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         • 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

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      • 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

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      • 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

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      • 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

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      • 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

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      • 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

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

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      • 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

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      • 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

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      • 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

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      • 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

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      • 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