Ecodev 9-10

• Foreign Aid started, especially in Europe


  After World War II
• There was a need to rebuild a severely devastated region that be restored by other countries like the United States of America
• World Bank was formed with the aim of rebuilding and starting reconstruction of Europe


  1944
• United Nations was founded with the intention to maintain and secure peace among nations


  1945
• International Monetary Fund (IMF)


  Started to stabilize and oversee the international monetary system
• Agreement signed in Bretton Woods, New Hampshire, USA that created the IMF


  1944
• IMF


  Set the rules for exchange rate behavior and created a pool of common currencies, thereby making the IMF the world's "lender of last resort"
• Foreign Aid


  Donation or transfer of help in the form of money, goods, and services to a country that needs it
• Aims of Foreign Aid

  • Foster peace and security among nations
  • Assist in the growth and development of one country
  • Enhance the health and education systems
  • Share technological advances
  • Protect the environment
  • Adjust the effect of inflation
  • Help in the time of disasters like earthquakes, tsunamis, and wars
• Two forms of Foreign Aid

  • Official Development Assistance (ODA)
  • Non-governmental Organization (NGO)
• Official Development Assistance (ODA)


  One of the government's sources of funds to finance programs or projects that promote social and economic development in the form of loans or grants
• Non-governmental Organization (NGO)


  Established to work toward public or social welfare goals, such as human rights, voters' rights, healthcare, helping the poor, and preventing cruelty to animals. NGOs can be funded by donations and grants.
• Humanitarian aid


  Helps managing short-term sufferings, providing assistance to those who are affected from a recent typhoon or hurricane, flooding, earthquake and other disasters
• Development aid


  Long-term loans provided to build infrastructure programs
• Foreign aid


  May encourage more corruption, as government officials in some countries tend to use the funds for their gains, like for reelection purposes
• Foreign aid


  Dependency becomes more evident, and effort for economic development tends to be neglected
• Foreign aid


  Can be used to push for economic policies that may be favorable to the donating country that may negatively affect the recipient's own people's benefit
• A study published in the African Journal of Governance and Development in 2019 suggested that in general, foreign-aid had a negative impact on the African economy that has weak governance
• Furthermore, foreign aid from the USA has a detrimental, negative impact on the African economy compared to that of European Union countries
• The United States under the leadership of then-President Harry Truman signed the Marshall Plan, also known as the European Recovery Program, which aimed to rebuild Europe that was devastated by the war


  After World War II
• Marshall Plan


  A substantial 5% of the US GDP was allotted to this recovery program at that time, mainly to restore production, boost and expand trading, and of course, keep communism from spreading in Europe
• It was believed that salvaging these big countries will eventually be beneficial to the US and the world but not all countries in Europe devastated by war were recipients of the said foreign aid
• Those who fought with the Axis power, such as Germany and Italy, as well as the neutral Switzerland, received smaller amounts as compared to the members of the Allied Powers
• The European Recovery Program lasted for four years, but there are some economists who believed that the impact of which was immaterial as the aid was estimated only to be 3% or less of the national incomes of the receiving countries
• Conflict-sensitive development aid


  Allows peacekeeping-activities and those that reduce the inflation of an affected nation, hence fostering peace among the people
• Since the creation of the United Nations in 1945, it has been their objective to maintain international peace and security by deploying peacekeepers in various areas that are susceptible to conflicts
• Foreign assistance awards by certain US agencies have reported aid specifically aimed for peace and security, counter-terrorism, transnational crime, and combating weapons of mass destruction
• One of the main goals of foreign aid

  To eradicate certain diseases that cause an 'economic disruption, like HIV-AIDS, malaria, and dengue
• As an active arm of the United Nations, the World Health Organization (WHO) promotes the attainment of the highest level of health and safety. It is the organization that directly responds to health emergencies worldwide, like what we are experiencing: the COVID-19 pandemic
• The World Health Assembly is the decision-making body of the WHO led by member states of the United Nations
• Remittance


  The sum of money that is sent by a worker to his/her own country, predominantly developing countries such as India, China, the Philippines, and Mexico, among others
• Some countries may even have remittance as a huge chunk of their GDP like Nepal and some countries in Eastern Europe
• Advantages of remittances


  Contribution to the buying capacity of the families left behind, allowing them to participate in economic activities like buying more goods and services
• In the 2019 Survey on Overseas Filipinos, the total remittance sent by Overseas Filipino Workers (OFWs) during the period April to September 2019 was estimated to be P211.9 billion, sent as cash and in-kind, 157.9 billion of which was cash and remitted through banks, money transfers, agency, local office, and door-to-door or delivered by friends or co-workers
• On average, the remittances of overseas Filipinos amount to around 9% of the GDP of the country, undeniably a material amount to sustain economic activities of the Philippines
• Dutch disease


  Exhibits the following two chief economic effects: It decreases the price competitiveness of exports of the affected country's manufactured goods and it increases imports. Both phenomena result from a higher local currency. In the long run, these factors can contribute to unemployment, as manufacturing jobs move to lower-cost countries. Meanwhile, non-resource-based industries suffer due to the increased wealth generated by resource-based industries.
• Intergovernmental Nonprofit Organizations


  • United Nations Children's Fund (UNICEF)
  • International Red Cross and the Red Crescent Movement
  • The World Food Program
  • Doctors Without Borders
• Intergovernmental Nonprofit Organizations


  Tax exempt in most countries around the world, and their funding normally comes from a few investors who believe in their goals that are mostly aiming for human development
• However, we are cautioned about the real intent of some institutions as some may be fraudulent or at least poorly managed, which is such a waste of donation funds
• Macroeconomics


  Attempts to provide enlightenment to concepts of quality of life, by understanding the average enjoyment of individuals, firms, and governments, measured in terms of GDP