Effects/impact of Foreign Aid on the development of the country.
Positive impact/Benefits of foreign aid
- Closing the saving – investment gap
- Closing the foreign exchange gap/inflow of foreign exchange.
- Closing the technologic al gap / leads to technological transfer
- Fills the government-revenue expenditure gap / source of government revenue through borrowing, grant etc.
- Fills the (skilled) manpower gap I enables the country to get skilled labour (from other countries)
- Facilitates development of infrastructure.
- Alleviates effect of catastrophes.
- Provision of employment.
- Strengthens international friendship / improves international relations .
- Foreign aid in form of capital investment accelerates industrial growth in the country / diversifies the economy.
- improves local skills through training.
- Promotes economic growth.
- Exploitation of idle resources hence avoidance of resources wastage:
- Promotes political stability.
Negative impact(s) of foreign aid in the country
- BOP problems due to repayment obligations.
- Unemployment due to automation
- Undermines capital formation due to debt servicing and payment.
- Debt servicing sometimes denies nationals essential goods and services.
- Encourages laziness/kills local initiatives.
- Makes planning difficulty due to aid being inconsistent, inadequate, tied, etc.
- Political strings attached to aid undermine our political sovereignty.
- Underutilization of local resources reduced domestic production of some goods / hinders growth of some consumer goods.
- High costs of borrowing due to aid being tied to source / Purchase tied aid.
- Leads to brain drain.
- Leads to cultural erosion / corrodes social values.
- Worsens economic domination by donors
- Sometimes preset conditions are disastrous.
CATEGORIES General
TAGS Dr. Bbosa Science