International Aid is Part of the Problem Rather Than the Solution to Underdevelopment

Underdevelopment in less economically developed countries is a constant problem to them as they refuse to open their doors to globalisation. In order to develop these countries economically, they must rely on outside links and help. This in part comes from aid which is given by foreign countries, which can include finance and resources such as food. This form of aid from other countries is called international aid. Aid is given to these LEDC's in order to aid their development, when in some cases, aid is becoming to aid underdevelopment. The different types of aid that are given to poorer countries from richer countries include bilateral, multilateral and voluntary aid. These types of aid can be simply split into two official aid and voluntary aid.

Bilateral aid falls under direct aid which is generally government to government and is often tied aid. By this I mean that there are likely to be strings attached so that recipient country may, for example have to give building contracts or buy goods from the donor. Multilateral aid is indirect and is where richer countries give money to international organisations such as the World Bank, IMF or EU. Both of these types of aid are official aid and are paid for by tax payers in the donor countries. Voluntary aid, however, is from money raised by independent organisations and private donations; an example of one of these organisations is Oxfam.

The biggest culprit of this problem which can lead to underdevelopment, I believe is bilateral aid. This is the aid that involves two countries and normally has a catch to it. The problem with this form of aid is that this catch is for the poorer, recipient country. This is again referred to as tied aid and is where the giving country expects something in return like commitments to purchase their exports. An example of this is the tied aid given to Bolivia from the United States of America, and in order to qualify for this aid, communities had to declare themselves "terrorist free zones". Also Bolivia was forced to eliminate its coca crops and grow crops preferred by the USA, this had a detrimental effect as the crops they were told to grow would not help them for some time. This sometimes leaves the recipient country falling further into debt. Developing countries regard this form of aid as economic colonialism.

W.Rostow believed that countries needed to grow internally in order to thrive and he drew up a set of stages that a country must pass through, a successful country at this being Taiwan. Taiwan's success was largely due to its land reform act, where tenants owned their own land and improve it. His theories go along with the fact that this international aid is part of a growing problem. Therefore, Rostow's theory is known as a modernisation theory as it shows development coming from internal structures. An example of a country that falls into this category of being harmed by aid is Kenya. Kenya has been a long term receiver of aid and its farmers and labourers have had to pay the price. As aid comes in such as food in the form of wheat, the locals receive all of it for no price. Meanwhile, the few wheat farmers suffer as their already small businesses lose out. Then a few years along the line, even more 'bad aid' will come in when these businesses fail. Therefore, food aid can distort and destroy local markets.

While franks dependency model may be the opposite of Rostow's it does take a similar point of view towards aids and its effect on the recipient country. Frank argues that in order for a country to develop it must sever its ties with the MEDC's. Aid presents a barrier to this and ensures that developing countries remain tied to MEDC's by the economic aid. Frank in particular targets bilateral aid that normally comes with conditions such as priority of building contracts being given to the companies based in donor countries, he argues that the conditions that the aid comes with prevents development. In Kenya a situation of conditional aid exists where corruption and bureaucracy prevents aid from reaching those who need it most. Also the conditions that are associated with the aid prevent development of Kenya's domestic industries and businesses. Frank argues that to develop a country must strive for self reliance which means separation from dependence of aid from foreign countries.

Aid, however, can help solve underdevelopment. After the Second World War, the US gave huge amounts of aid to Europe to help recovery from the damage. This was called the Marshall plan and involved billions of dollars of aid. A huge profiteer of this plan was Germany, where they were so successful that in just 20 years it has become one of the most developed economies in Europe.

Aid and its distribution is a key topic for debate throughout the world. It is essential in time of crisis such as the Asian Tsunami or the aftermath of the Second World War. However, aid can be detrimental in establishing and developing economies. Aid can provide immediate relief to crisis; however, as a long term solution aid destroys emerging economies as its cheap imports damage prices. While ties associated with aid prevents domestic businesses and industries from developing as local government out sources contracts.