Aid and Debt

Aid and Debt

1. Intro

   • Flow of resources from developed to developing
     • A financial grant or gift (not paid back)
       • A loan with interest

2. Types of Aid

   • Bilateral Aid
     • Developed world gives aid to developing world (Governments)
   • Multilateral Aid
     • UK donates capital to agencies like; the World Bank & IMF
   • Emergency Aid
     • Humanitarian relief raised for specific circumstances

3. Modernization View

   • Crucial component required for take-off into industrialisation
     • View shared by policy makers & World Bank
       • Argued that poor would benefit in long run - wealth stimulates economy and production

4. Dependency View

   • Aid sustains unequal relationships & they question the function of aid
     • Reject the view that aid assists development
       • Rather, it functions to sustain underdevelopment to benefit Western wealth & political power

5. Debt Crisis

   • 1/4 of aid Africa receives will be immediately given back in debt repayments
     • Dep, theorists say debt crisis bought about by:
       • Colonialism - developing over dependent on prod. of raw materials & cash crops
       • Little of money borrowed spent of effective development (oil, and 20% on weapons)
       • West increased interest rates - developing forced to keep borrowing to pay old debts

6. Costs of Debt

   • Oxfam - 100,000+ Ethiopian children die annually, from preventable diseases
     • Debt repayments are 4x more than health spending