Any type of assistance that one country voluntarily transfers to another, can take the form of money, military assistance, or humanitarian resources
Types of foreign aid
Bilateral (aid given by the government of one country to another)
Multilateral (aid provided by multiple countries to or through multilateral agency)
Public (Official Development Assistance, USAID, AECID)
Private (Private Development Assistance, NGOs, charity-based organizations)
Top-down aid
Assistance provided by governments or international organizations to recipient countries based on the priorities and decisions of the donors rather than the recipients
Bottom-up aid
Also known as grassroots aid, a type of foreign aid approach that focuses on working directly with local communities and organizations to address their needs and priorities
Tied aid
Assistance provided with the condition that the recipient country must use the aid funds to purchase goods or services from the donor country or specific suppliers designated by the donor
Untied aid
Donor country provides assistance to the recipient country without requiring that the funds be spent on goods or services from the donor country
Reasons for foreign aid
Ethical
Economic
Self-interest
Political
Kinds of foreign aid
Humanitarian and disaster relief
Economic aid
Military aid
Healthcare aid
Debt
Financial obligations that arise when one party borrows money from another, involving the borrower agreeing to repay the borrowed amount, often with interest, over a specified period
Sovereignty
A governing body's full right and power to govern itself without any interference from outside sources or bodies, encompassing internal sovereignty (supreme authority within a territory) and external sovereignty (recognition of a state's independence by other states and international bodies)
Sovereign debt
Money borrowed by a country's government, typically used to finance development projects, cover budget deficits, and manage economic stability, issued in the form of government bonds and can be held by domestic or international investors
Debt management
Strategies and techniques used to control and reduce personal or organizational debt, for public debt management the main objective is to ensure the government's financing needs and payment obligations are met at the lowest possible cost
Causes for sovereignty debt issues
Excessive borrowing
Economic shocks
Poor fiscal management
Policies imposed by institutions
External factors
Consequences of sovereignty debt issues
Economic recession
Currency depreciation
Social unrest
Loss of sovereignty
Strategies to solve sovereign debt crisis
Debt restructuring
Fiscal reforms
Economic diversification
International assistance
Transparency and accountability
Dependency theory
Explores the idea that resources flow from a 'periphery' of poor and underdeveloped states to a 'core' of wealthy states, enriching the latter at the expense of the former
Metropole-satellite relationships
Economic structures link wealthy 'metropole' nations with dependent 'satellite' nations
Center-periphery dynamics
Structural inequality where 'core' countries benefit at the expense of 'peripheral' countries
Dependency leads to economic stagnation and political subordination of the periphery by the core nations
Key contributions from texts
Economic Development (Todaro & Smith, 2015)
Development as Freedom (Sen, 1999)
Institutions, Institutional Change, and Economic Preference (North, 1990)
Why Nations Fail (Acemoglu & Robinson, 2012)
Capital in the Twenty-First Century (Piketty, 2014)
Globalization and Its Discontents (Stiglitz, 2002)
International relations theory
Realism
Liberalism
Marxism
Understanding Dependency Theory and its intersection with International Relations provides valuable insights into global inequality and development strategies