Aid and Debt

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  • Aid and Debt
    • Types of aid
      • Bilateral
        • Directly from one government to another
        • DIFD who give 7% of Britain's GDP to countries like India and Bangladesh
      • Multilateral
        • When a country gives an organisation such as the UN who then choose what to do with the aid
        • Groups like the UN or World Bank finance infrastucture projects or development projects like bottom-up development schemes such as HEP or solar
      • NGO's
        • NGO's in the UK raise over £50 millionand put this towards small irrigation schemes in developing countries
    • Dependency theory and aid
      • The political agenda of aid
        • During the Cold War, countries were rewarded with aid if they aligned themselves with the capitalist world
          • The Ethiopian famine in the '80s was worsened by the fact that the US and UK gov refused to give aid on the grounds that they had a Marxist government
          • This is the same today, countries must still align themselves with the instrest of the west or no aid for you
      • The economic agenda of aid
        • Neo-Marxists argue that there is an economic motive at the heart of all official aid and favors the expansion of capitalism
        • Aid is aimed at opening up new markets for western goods and services
          • This is supported by the amount of tied aid coming out of the UK - over 75%
            • This means that in return for what the UK offers in aid, countries must prioritise trade with the UK, with goods at reduced prices
          • Evidence also suggest that aid given to Indonesia and Malaysia was used to secure weapons
            • John Major, the PM at the time, admitted that he was looking out for Britainish interests in foreign countries
        • MOney that could have gone to eradicating extreme poverty but insted goes on loan repayments
      • Modernization and aid
        • Due to globalization a "global village" - diseases like tuberculosis are making larger impacts
          • Bangladesh have actually become poorer as TNC's exploit the work force and diseases have become more difficult to eradicate
        • Aid also reinforces western values
          • As education system are funded by western NGO's or IGO's mean meritocracy whislt trying to give rights to women under patriarchal societies - this causes societal conflict
      • Aid sustains unequal relationships
        • Aid only benefits western monopoly of wealth, consumption and political power
      • Hayter argues that it is a form of neo-colonialism
    • The debt crisis
      • IN 1980 the debt owed was $600 billion, by the '90s it was $2.2 trillion
        • The majority of the problems were the colonial era that resulted in the exploitation of African countries minerals and metals as well as the displacement of locals
          • Some solutions include SAP (Structural Adjustment Programmes) which deduct the fees of debt but in return western companies privatise of economic development
        • The money borrowed was not spent of economic development but on war and tourism
    • Aid: good or bad?
      • Erixon says aid has failed despite the billions of dollars, because
        • The money is used in the worng way (kleptocracy too)
        • Aid has stopped the development of free trade and foreign investment
      • Sachs says it works when it is specifically targetted
        • aid has eradicated dieases, improved yeilds due to technology (green revolution in India)
          • Aid has brought over 12% of economic growth in Mozambique


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