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Aid

Aid. Relevant Questions. Evaluate the view that Transnational Corporations (TNCs) have had a significant part to play in the existence of global inequality. (30) Evaluate the view that aid cannot solve the problems of the developing world . (30). What do we mean by aid?.

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Aid

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  1. Aid

  2. Relevant Questions • Evaluate the view that Transnational Corporations (TNCs) have had a significant part to play in the existence of global inequality. (30) • Evaluate the view that aid cannot solve the problems of the developing world. (30)

  3. What do we mean by aid? • Economic, military and technical assistance both given and loaned to a country • It might also include simply writing off previous debt • It can be tied (for a specific purpose) or free (used at the discretion of the country receiving)

  4. Who gives aid? • One state to another (bilateral aid) • IGOs (Many states working through a central organisation – Multilateral aid) • TNCs (Corporate Responsibility)

  5. NGO – Non-Government Organisations • Make a list of as many charities as possible which work to make a difference in the UK • Make a list of as many charities as possible which aim to make a difference across the world • Do any of these charities do both?

  6. The up side of NGOs • It does not expect repayment • Not for profit • Take risks • Small scale projects • Work in areas normally ignored • Often more effective than governments who have hidden objectives • Responsive to donors • Their objectives are continuous

  7. Problems with Charities (NGOs) • Limited funds – which often leads to reliance on funding from governments or partners • Spending on publicity and administration • Use of inappropriate equipment/people

  8. Aid – good or bad? • Modernisation – development loans can kick-start economies • The North has much that the South could use to develop • Collier (2007) – Aid has improved recipient countries GDP by 1% a year – not much but it does help

  9. Aid – good or bad? • Neo-Liberal – aid creates dependency (although it may allow some) • If a country is reliant on aid it will not take on capitalist values • Aid can create laziness, corruption and inefficiency • If capitalist values are fully taken on then a country shouldn’t need aid it should be able to attract companies with the promise of profit • Bauer (1995) – aid implies something good. Northern countries never received aid and managed to develop through capitalist values. In reality aid goes to governments and not the people

  10. Aid – good or bad? • Dependency and world systems – aid is often conditional and goes to countries with strategic value for the benefit of the donor • Hayter (1971) – Aid as Imperialism – creates jobs and export markets for the donors – support from the recipient • 50 years of aid for what? (but is that because we never give enough?) • Participation – Participatory Poverty Assessment

  11. Aid – the middle • It can be good when it does not: • Support the corrupt • Get wasted on inefficiency • Get spent on the military • Damage the environment • Employ foreign persons • Get into the wrong hands • Has long term debt burdens • Sachs (2005) – ‘big push’ – If we gave more a real difference could be made • Easterley (2006) – bigger focus on small local initiatives

  12. Aid and the legacy of debt • 1970s loans came with interest rates • Belief in the ability to pay off the debt through modernisation • Recession in the 80s reduced markets and amount of aid available • Cuts in developing countries – mainly education and healthcare

  13. Debt Boomerang – George (1991) • Debt comes back to bite the North (it would be better write it off) • Environmental - exploitation in an unsustainable way to repay debt • Migrants flee to the north to escape poverty • Drugs - grown to repay debt • Under employment - Less money less markets for developed goods • War – to repay debt or because of social unrest • Tax – Developed countries have to pay tax to support banks write off bad debts • Jubilee Debt Campaign – Cancel the debts of the worlds poorest nations

  14. Jubilee Debt Campaign • Cancel the debts of the worlds poorest nations • It has happened slowly but still involved structural adjustment programmes

  15. Moral Hazard • Writing off debts rewards countries which used the money poorly • But this was 20-30 years ago… • Vulture funds

  16. http://www.channel4.com/programmes/dispatches/4od

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