19 Nov 2015

Development Aid: A puppeteering game?

Alicia writes*

For centuries, less-developed countries have bowed at the feet of their more economically developed counterparts and begged for aid, but this often comes with strings attached. When the recipient country solely relies on the donor country for goods and services related to aid-financed projects, and when grants are given only after the recipient country meets the conditions set by the donor, this is referred to as tied aid. The most archaic form of this transaction is known as, performance-based aid. This term is straight forward, whereby the recipient of this aid is based on the extent to which they are capable of meeting the conditions. This type of aid is an incentive for the host country to make political and economic reforms that not only benefit their country but the donor country as well.

The main problem with performance-based aid is that it ignores the sovereignty of the decision making processes within the host countries. By agreeing to this type of aid the recipient country may be ‘selling its soul’ without even knowing it. The conditions set by donor countries have the ability to expand over the hosts’ investment policies, trade regulations and government structure- core elements which define a nation. Additionally, tied aid can sink the recipient country further into debt and/or force them to adapt inappropriate technologies and infrastructure that may not be conducive to their environmental, social or economic needs. Although less economically developed countries may be trying their best to advance by relying on tied aid, it is perhaps impossible to grow and develop sustainably with another country pulling the strings.

Bottom Line: The desperation of blindly accepted aid can undermine the self-determination of developing countries and instead has the potential to turn them into puppets of their donor countries.

* Please comment on these posts from my growth & development economics students, to help them with unclear analysis, other perspectives, data sources, etc.