Aid

Relevant Questions Evaluate the view that Transnational Corporations (TNCs) have had a significant part to play in the existence of global inequality. (30) Evaluate the view that aid cannot solve the problems of the developing world. (30)

What do we mean by aid? Economic, military and technical assistance both given and loaned to a country It might also include simply writing off previous debt It can be tied (for a specific purpose) or free (used at the discretion of the country receiving)

Who gives aid? One state to another (bilateral aid) IGOs (Many states working through a central organisation – Multilateral aid) TNCs (Corporate Responsibility)

NGO – Non-Government Organisations Make a list of as many charities as possible which work to make a difference in the UK Make a list of as many charities as possible which aim to make a difference across the world Do any of these charities do both?

The up side of NGOs It does not expect repayment Not for profit Take risks Small scale projects Work in areas normally ignored Often more effective than governments who have hidden objectives Responsive to donors Their objectives are continuous

Problems with Charities (NGOs) Limited funds – which often leads to reliance on funding from governments or partners Spending on publicity and administration Use of inappropriate equipment/people

Aid – good or bad? Modernisation – development loans can kick-start economies The North has much that the South could use to develop Collier (2007) – Aid has improved recipient countries GDP by 1% a year – not much but it does help

Aid – good or bad? Neo-Liberal – aid creates dependency (although it may allow some) If a country is reliant on aid it will not take on capitalist values Aid can create laziness, corruption and inefficiency If capitalist values are fully taken on then a country shouldn’t need aid it should be able to attract companies with the promise of profit Bauer (1995) – aid implies something good. Northern countries never received aid and managed to develop through capitalist values. In reality aid goes to governments and not the people

Aid – good or bad? Dependency and world systems – aid is often conditional and goes to countries with strategic value for the benefit of the donor Hayter (1971) – Aid as Imperialism – creates jobs and export markets for the donors – support from the recipient 50 years of aid for what? (but is that because we never give enough?) Participation – Participatory Poverty Assessment

Aid – the middle It can be good when it does not: Support the corrupt Get wasted on inefficiency Get spent on the military Damage the environment Employ foreign persons Get into the wrong hands Has long term debt burdens Sachs (2005) – ‘big push’ – If we gave more a real difference could be made Easterley (2006) – bigger focus on small local initiatives

Aid and the legacy of debt 1970s loans came with interest rates Belief in the ability to pay off the debt through modernisation Recession in the 80s reduced markets and amount of aid available Cuts in developing countries – mainly education and healthcare

Debt Boomerang – George (1991) Debt comes back to bite the North (it would be better write it off) Environmental - exploitation in an unsustainable way to repay debt Migrants flee to the north to escape poverty Drugs - grown to repay debt Under employment - Less money less markets for developed goods War – to repay debt or because of social unrest Tax – Developed countries have to pay tax to support banks write off bad debts Jubilee Debt Campaign – Cancel the debts of the worlds poorest nations

Jubilee Debt Campaign Cancel the debts of the worlds poorest nations It has happened slowly but still involved structural adjustment programmes

Moral Hazard Writing off debts rewards countries which used the money poorly But this was 20-30 years ago… Vulture funds

http://www.channel4.com/programmes/dispatches/4od