Running head: FOREIGN AID: A CURSE OR BLESSING?

Foreign aid: A Curse or Blessing?

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FOREIGN AID: A CURSE OR BLESSING? 2

Foreign aid: A Curse or Blessing?

Since the 1960s, foreign aid to developing countries increased dramatically. Influential

nations including the United States and other Western European countries used it to help

promote economic, political, social, and environmental development of the nations. A majority

of the developing countries, especially in Africa, depended on foreign aid to develop critical

infrastructure including roads, schools, and hospitals, as well as alleviate poverty. Despite the

receipt of foreign aid for decades, emerging nations remain underdeveloped and poverty-ridden.

As a result, foreign aid has been treated with increased skepticism in regards to its effectiveness.

Subsequently, this paper will evaluate foreign aid and determine whether its negative aspects

exceed the positive.

Foreign aid has failed to alleviate poverty within developing countries. Different forms of

foreign aid including economic bailouts are intended to help overcome financial challenges that a

country undergoes. However, the assistance only deteriorates the situation further; for instance,

the IMF compels its recipients to implement policies with adverse effects on the economy on the

long-run (Niyonkuru, 2016). Niyonkuru (2016, 2) adds that “IMF-based aid retrenches the

operation of the public sector by freezing public sector hiring, the retreat ratio increases and

social services are NGOized while basic social services delivery are put in the hands of private

business entity and in so doing, do increase poverty and suffering of the poor who can’t afford

social services anymore.” Thus, foreign aid is incapable of alleviating poverty within the

developing nations.

Foreign aid leads to overdependence on rich nations. Scholars agree that foreign aid is a

short-term intervention that lacks a lasting and sustainable impact. Furthermore, aid is only

geared towards the benefit of the donor; thus, it does not place any regard to human welfare in
FOREIGN AID: A CURSE OR BLESSING? 3

the receiving nations (Asongu & Nwachuku, 2016). As a result, developing nations will keep on

requesting financial assistance from western powers, which in turn does not help them become

self-sufficient over time. Therefore, the countries will remain reliant on foreign aid to the extent

that they cannot survive without such assistance.

Foreign aid has been used as a tool to exploit developing nations in favor of the donating

nation. According to an article in The Guardian, Malik (2018) notes that foreign aid is not sent to

the poorest countries in the world, rather, its beneficiaries are Ethiopia, Syria, Nigeria,

Afghanistan, and so forth, which are major markets and also serve a geopolitical purpose for the

donors. Rather than promoting development, foreign aid is used to augment political claims and

bolster the country’s trade. Therefore, it is an exploitation tool for the majority of donors that

serves an ulterior motive.

In conclusion, foreign aid is an ineffective tool that is more destructive as opposed to

constructive in recipient nations. Key among the reasons as to why it is ineffective include the

fact that it has failed to alleviate poverty, has led to over-dependence on developed countries,

and also, is used to exploit developing countries. As a result, better alternatives to foreign aid

that are sustainable in the future should be sort after instead.

FOREIGN AID: A CURSE OR BLESSING? 4

References

Asongu, S. A., & Nwachukwu, J. C. (2016). Foreign aid and governance in Africa. International

Review of Applied Economics, 30(1), 69-88.

Malik, K. (2 Sep. 2018). As a System, Foreign Aid is a Fraud and Does Nothing for Inequality.

The Guardian. Retrieved from:

https://www.theguardian.com/commentisfree/2018/sep/02/as-a-system-foreign-aid-is-a-

fraud-and-does-nothing-for-inequality

Niyonkuru, F. (2016). Failure of foreign aid in developing countries: A quest for

alternatives. Business and Economics Journal, 7(3), 1-9.