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Is foreign aid actually beneficial to economic development?

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by

Nicola Volz

on 27 April 2014

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Transcript of Is foreign aid actually beneficial to economic development?

Is foreign aid actually beneficial for economic development?
Agenda
Interpretation
Definitions
Correlation
Foreign Aid
Economic
Development
Charity
Help to help
International Aid
Volunteering
Open borders
Co-operation
Economic Growth
GDP
Education
Wealth
Health
Security
Equality
Stable Institutions
Environment
Conclusion
Foreign Aid
Economic
Development
References
HDI
Between Aid and Development
Opinions
For Aid
Against Aid
& Types
Development,
for whom?
Weapons
The aim with Economic Development, is it wealth?
Ethical, Sociological, Environmental or other views?
An economic model - Want an economic result
Altruism, or giving aid to exploit?
Who created the measurements?
No “best practice”
"In 1990, approximately 43 percent of the world’s population was living on less than $1.25 a day and that has dropped to about 16 percent in 2008"
Beneficial? Yes and No!
Definition
Definition
By: Adam Ekström,
Miriam Klein,
Nicola Volz
Term:
human capital, infrastructure, competitiveness, health, safety, literacy rates, life expectancy, living standards, poverty

Michael Todaro:
life sustaining goods and services
higher incomes
social and economist choices
Development vs. Growth
4 tiers
3 indicators
social and economic development
criticism -> IHDI (2010)

HDI 2013
1. Norway 0.955
2. Australia 0.938
3.
United States
0.937
4. Netherlands 0.921
5. Germany 0.920
6.
New Zealand
0.919
7. Ireland 0.916
8. Sweden 0.916
9. Switzerland 0.913
10.
Japan
0.912
11. Canada 0.911
12.
South Korea
0.909
13.
Hong Kong
0.906
14. Iceland 0.906
15. Denmark 0.901
16. Israel 0.900
17. Belgium 0.897
18. Austria 0.895
19.
Singapore
0.895
20. France 0.893
21.
Finland
0.892
22.
Slovenia
0.892
23. Spain 0.885
24.
Liechtenstein
0.883
25. Italy 0.881
HDI and IHDI ranking 2013
IHDI 2013
1. Norway 0.894
2. Australia 0.864
3. Sweden 0.859
4. Netherlands 0.857
5. Germany 0.856
6. Ireland 0.850
7. Switzerland 0.849
8. Iceland 0.848
9. Denmark 0.845
10.
Slovenia
0.840
11.
Finland
0.839
12. Austria 0.837
13. Canada 0.832
14.
Czech Republic
0.826
15. Belgium 0.825
16.
United States
0.821
17.
Luxembourg
0.813
18. France 0.812
19.
United Kingdom
0.802
20. Spain 0.796
21. Israel 0.790
22.
Slovakia
0.788
23.
Malta
0.778
24. Italy 0.776
25.
Estonia
0.770
Strategies
6 main approaches
monetarism
open economy
industrialization
green revolution
redistributive strategies of development
socialist strategies

Evaluation based on resource utilization, level of income; savings, investment and growth; human capital formation; poverty and inequality; the role of the state; and participation, democracy and freedom
Classification
Bilateral aid:
aid given by a government (donor) directly to the government of another country (recipient)
Non-governmental
organisations
Multilateral aid:
aid given by certain financial institutions, agencies or organisations to the government or organisations of developing countries

Short term aid
(emergency aid)
Long term aid
(development aid)
Types
Financial aid
Food aid
Technical assistance
Military assistance
International research
Foreign Direct Investment (FDI)
Donors economic policies
South Korea

first country to become a donor (2009) after receiving foreign aid
1946 - 1978 $60 billion from US
developed globally successful companies
new approach concerning corruption

Questions & Answers
Thank you for listening!
Now its time for

http://priyankaseconomicblog.wordpress.com/2011/04/04/foreign-aid/
(26.02.2014)
http://priyankaseconomicblog.wordpress.com/2011/04/04/foreign-aid/
(26.02.2014)
http://hdr.undp.org/en/data (26.02.2014)
Afghanistan
“Afghanistan in many ways is sort of a perfect case study of how not to give aid”
about 100 billion $ in non-military funds by the US
low income per capita, bad HDI ranking, corruption

http://www.svbic.com/node/24
http://www.edinburgh.gov.uk/info/690/council_departments/869/economic_development
http://www.businessdictionary.com/definition/economic-development.html
http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-what-is-economic-development
http://www.diffen.com/difference/Economic_Development_vs_Economic_Growth
http://hdr.undp.org/en/statistics/hdi
http://www.theguardian.com/global-development/poverty-matters/2011/nov/28/south-korea-development-model
http://www.worldaffairsjournal.org/article/money-pit-monstrous-failure-us-aid-afghanistan
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTURBANDEVELOPMENT
http://www.oecd.org/dac/stats/final2012oda.htm
http://www.borgenmagazine.com/where-does-the-money-go-understanding-different-types-of-foreign-aid/
http://www.s-cool.co.uk/gcse/geography/development/revise-it/aid
http://www.fas.org/asmp/profiles/aid/aidindex.htm Federation of American Scientists
http://www.oocities.org/znuniverse/Economics_of_Planning/foreign_aid.htm
World Vision 2007 - ABN 28 004 778 081 Ref#5120
http://www.answers.com/topic/foreign-aid#ixzz2uKcY16ur
http://dictionary.reference.com/browse/foreign+aid

Official Development Assistance (ODA) in recipient countries in 2012
http://www.compareyourcountry.org/chart.php?project=aid-statistics&page=0&cr=oecd&lg=en
Source: OECD, Feb. 2014
In 2012 net ODA was USD 127 billion.

Missing Transparency:
e.g. survey 2013 by the Development Initiatives in Bristol: 22 billion US $ of the 100 billion $ reported weren't transferred

The wrong countries receive the aid
When broken down by region since 1970 the poorest countries have received just a quarter of all DAC aid.
Source: SciVerse ScienceDirect Journals
Is Part Of: World Development, 2011, Vol.39(11), pp.1918-1929 [Peer Reviewed Journal]
Author: Ghosh, Anirban ; Kharas, Homi

Our own merged definition:

"Economic, technical or military assistance given from one nation to another for the purpose of post-war rehabilitation, promote economic development, strengthen military defence or serve in catastrophic situations."
Provide a better situation for people in need
Need to see it in a new way
Increase human rights
e.g. Uganda
Promotes environmental work
To many different organisations make it inefficient
Full transcript