Aid & Trade

• Aid


  The transfer of resources between countries, usually from MEDCs to LEDCs. This is often, but not always, in the form of money (it might be food, expertise, or even weapons). It can be in the form of grants or loans, including loans with interest.
• Types of aid

  • Bilateral aid
  • Multilateral aid
  • Emergency aid
  • Military aid
  • Tied aid
• Bilateral aid


  Aid transferred directly from one government to another. In the case of the UK, this is money spent by the Department for International Development.
• Multilateral aid


  Aid where money is pooled in an international organisation, such as the IMF or the United Nations, and is then paid to the developing world (whether through grants, such as those given by the European Union, or loans, such as those offered by the IMF).
• Emergency aid


  Aid collected specifically to respond to an urgent situation, rather than long-term development projects. For example, it might be the money raised in response to a natural disaster, famine or in response to a crisis caused by war and conflict, such as a refugee crisis.
• Military aid


  Aid in the form of money earmarked specifically to be spent on weapons and other military hardware from the donor country, or it might be training or logistical support.
• Tied aid


  Bilateral aid that must be spent in the donor country.
• More aid is multilateral than bilateral
• Approximately for every dollar that goes from MEDCs to LEDCs, 3 dollars come back
• Modernisation theorists' views on aid


  • Aid is an essential ingredient in development. It can help kickstart the economy and shift norms and values. It is a clear element in the early stages of Rostow's 5 stages of development.
  • Aid should not just be targeted at the poorest, but should be used in the most appropriate ways to spark growth and development. Modernisation theorists like Rostow and Parsons believe the presence of an affluent, urban middle class is an essential ingredient in development, so aid that will assist in the development of such a class is also deemed worthwhile, such as university-level liberal education.
  • Modern, individualistic, aspiration values will "trickle down" to those in lower social strata.
• Modernisation theorists see aid as an essential source of investment, but also of western values
• Feminist criticism of the role of aid


  • Aid is distributed in a patriarchal way and imports patriarchal values. New agricultural systems are introduced and men are provided with the training due to the patriarchal assumptions of the aid agencies, thus marginalising women by pushing them into a domestic role.
  • The vast majority of agricultural training in aid projects are provided by men despite, in many developing countries, women having previously done much of the agricultural work.
• Marxist perspectives on aid


  • Aid does not exist to benefit the countries who receive it, but instead exists purely to help the donor countries. It is a way in which the wealthy countries control and manipulate LEDCs.
  • Aid is used to further the donor countries' own interests and support their own foreign policies and economic policies.
  • Aid can be used as a political weapon, with aid being provided to reward friends and withheld from countries that are not approved of or who require some manipulation.
  • Structural adjustment policies and other conditions placed on aid simply help to support neoliberal ideology and allow western companies to exploit developing markets.
• Modernisation theorists would suggest that the role of international governmental agencies, like the World Bank and IMF, is governed by democratic principles with each member state having a vote in how aid is allocated
• Neoliberal views on aid


  • Aid interferes in the free market and takes away the incentive to work hard and develop and for entrepreneurs to take risks.
  • Aid is used inappropriately by corrupt regimes, with regimes hoarding aid money and resources and distributing it politically.
  • It is far better for the people to become better off as a result of economic activity than to rely on their corrupt kleptocratic governments to pass on bounty from the West.
  • Neoliberals favour commercial loans over grants, and they advocate clear conditions on aid to force countries to deregulate their economies, privatise assets and generally open up their economies to private companies in the west.
  • Neoliberals strongly make the case that trade is better than aid for countries to develop.
• Jeffrey Sachs argues that aid works, has saved countless lives, improved countless others, has helped the environment, and has driven economic growth and development
• How trade can assist in the process of development


  • Trade can create employment, with workers being employed by transnational companies producing secondary goods such as textiles or in the assembly of technological goods.
  • Trade enables the development of economic and logistical infrastructure, with companies that invest in the developing world often assisting in the development of transport infrastructure.
• Marxist theorists would suggest that the employment opportunities opened up by trade and TNCs are a form of neo-colonialism and that TNCs are exploiting workers in the developing world
• Marxists would also suggest that the trade deals that the developing world can negotiate with the West are uneven and often prices are set by western commodity speculators rather than by the seller