Foreign Aid: A Neoliberalism Phenomenon

Foreign aid is officially defined as the transfer of either capital, goods or services from a foreign country or international organization . This new component to a countries foreign policy is relatively modern as it has been developed off the ideals of neoliberalism, which only begun to flourish in the 1970s . Foreign aid can be represented in many different forms, the most common being economic, military and humanitarian aid . For the most part economic and military aid will be given to a country from another foreign country, whereas international organizations tend to prioritize humanitarian aid. Two of the largest humanitarian aid organizations are Oxfam International and The World Food Programme . In 2004 it is estimated that foreign aid totaled 100 billion dollars amongst countries and international organizations, and it is estimated that between 1960 and 2004 approximately 1.4 trillion dollars had been given in foreign aid . It is also important to note that these monetary funds account for not just physical cash being pumped into countries but also accounts for capital goods and foreign aid workers providing services on the ground.

Background

The idea of foreign aid really began to take shape following World War Two. With the end of the war countries were left devastated both physically, mentally and economically. Therefore to help these countries affected by the war the United Nations developed the United Nations Relief and Rehabilitation Agency (UNRRA) . Unfortunately this agency was shut down in 1947. However actions such as the creation of the UNRRA promoted the idea of foreign aid and led to the development of institutions such as the World Bank. Established in 1946, to date, the World Bank is one of the biggest contributors to foreign aid in its efforts to secure monetary funds for developing countries . It is also important to note the United States role as a leader in foreign aid. Following the Second World War, the United States implemented the Marshal Plan, which led to them give $13 billion dollars in foreign aid to post war Europe . To this day the US remains a world leader in foreign aid .

Benefits of Foreign Aid

There are many different benefits to foreign aid. The most obvious is that is can help developing countries through monetary aid. Such form of aid also can increase democratic relations amongst countries as they work together to help one another. It is true that the act of foreign aid is one of the key factors responsible for the spread of democracy around the world . Another important benefit is the aid humanitarian organizations give to countries undergoing health crisis. In 1996 the United Nations formed the Joint United Nations Programme on HIV/AIDS to help countries suffering from the epidemic of HIV/AIDS. Since its inception, the UNAIDS has helped fight the AIDS epidemic around the world by providing the proper medication and care to those in need . An argument can also be made that foreign aid helps increase a countries economic independence. When foreign aid is administered properly it can in fact help countries establish their own institutions to help promote growth within their own country .

Critiques of Foreign Aid

Ever since its conception, foreign aid has been criticized for a multitude of reasons. However it is very important to note that these critiques are very dependent on ones political views. Nonetheless the central critique of foreign aid is who receives the aid. Unfortunately there have been many case of foreign aid being pumped into countries and the monetary funds ending up in the hands of the government or the military, which may or may not be corrupt. When this happens the locals who are in most cases the ones in dire need, are left with nothing. Another effects this has it that it ends of impeding economic growth, especially in developing countries, as it increases the gap between the rich and the poor . Another critique of foreign aid that when funds are given to the country and are received by the locals, there are not the proper institutions established to help these people become self sufficient. Therefore the funds given to them do for a short period of time have positive effects, however once these funds run out they are left in the same exact situation as before .