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Mar 02, 2014 News
Shakespeare in his play Hamlet exemplified the striking contrast between his protagonist’s humility and anger utilizing only five words, “to be or not to be” that indeed is the question, to be and to avenge the death of his father or not to be and be humane in his approach to his father’s death. In this case, the contrast is exemplified in the aid that developing countries like Guyana receive from developed nations that are economically endowed to provide such a service.
Should we receive aid or should we not receive aid? And what are some of the pros and cons associated with this “big brother” service that some scholars posit makes a developing country more dependent, while others argue that it accelerates the promotion of democracy within a country now struggling to grow.
There are clear advantages that can be garnered from the proceeds of aid, especially in poorer countries that are war-torn or ravaged by natural disasters. Aid going to these countries helps tremendously in off-setting economic stagnation that comes with these occurrences.
When Guyana was devastated by the floods of 2005 we received a lot of aid from international organizations (UNDP, OCHA, CDB, USAID) and individual countries like Japan, France and China to name a few, and that helped in providing immediate comfort for persons displaced and affected, as well as providing the impetus for faster economic recovery. According to the European Commission – Humanitarian Aid & Civil Protection (ECHO), Guyana collectively received approximately 1,000,000 Euros in aid during the 2005 floods.
However there are situations where the rendering of aid by developed nations has led to the host nation becoming more degenerate and corrupt in its functioning. An online report done by the British Broadcasting Corporation (BBC) on poorer countries receiving aid outlines that while aid helps rebuild livelihoods and housing after a disaster “Aid may not reach the people who need it most. Corruption may lead to local politicians using aid for their own means or for political gain.”
According to Satish Lohani in his Research Honors Paper titled, “Effect of Foreign Aid on Development: Does More Money Bring More Development?, and which was presented for the Department of Economics at Illinois Wesleyan University in 2004, the results of aid are mixed.
“In some cases, it has neither reduced poverty nor contributed to overall development. It has actually worsened the situation by increasing corruption as well as income inequality. One such instance is the increase in poverty in the Philippines under President Marcos’ rule (Congressional Budget Office, 1997). Although the Philippines received $33 billion between 1966 and 1986 as foreign aid, a great proportion of assistance was simply channeled by President Marcos and his family to their private foreign bank accounts (CBO, 1997). Consequently, poor people in this country did not benefit from the inflow of foreign aid.”
In other cases he outlined that “some countries have improved both their GDP and human development index. For example, Bangladesh received $1766.6 thousand in bilateral social aid from the OECD (Organization for Economic Cooperation and Development) countries in the years 1998 and 1999. Statistics on the illiteracy rate and GDP show that the social aid Bangladesh received was effective. Its adult illiteracy rate decreased from 61.1 % to 58.9% from 1998 to 2002 (World Bank). In the same period, GDP grew from 44.1 billion dollars to 47.3 billion dollars (in 2000 US$). Although the increases in literacy rate and GDP are slight, they move in a favorable direction.”
Not forgetting the golden rule enshrined in economics that there is no such thing as a free lunch. Most of the aid rendered by international organizations such as the United Nations is for the most part humanitarian in its objective. It is the aid coming from individual countries, however, those that have their own ideological or economic agenda masked in the pretense of “gift diplomacy” or “bilateral trade” where only one side benefits, that we have to be concerned about.
BBC online further outlined that “aid can be used to put political or economic pressure on the receiving country. The country may end up owing a donor country or organisation a favour.”
In most cases we find that countries generally want to build stronger relations with developing countries because the host country has much to offer in the long run that would further “aid” in the development and growth of the developed country.
There is an old adage that says not everything that glitters is gold, and developing countries and more so Guyana should take heed of this and be wary of countries that show a vested interest in the economy and come bearing abundant aid upfront, with the expectation that by doing so, that country is entitled to entrench itself in the economy and development of the developing country. A classic example of such is the role of China in Africa. (Dwijendra Rooplall)
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