Foreign aid: help on better terms than markets offer.
Kinds of foreign aid
| Kind | What it is |
|---|---|
| Humanitarian aid | Emergency food, shelter and medicine after a disaster or war |
| Development aid | Long-term help: schools, clinics, roads, water |
| Official development assistance (ODA) | Aid from governments, as grants or cheap loans |
| NGOs | Charities such as Oxfam and Médecins Sans Frontières |
| Debt relief | Cancelling or cutting a poor country's debts |
| Tied aid | Aid that must be spent on the donor's goods |
The points to remember
- Humanitarian = short-term emergency; development = long-term.
- Tied aid must be spent on the donor's goods.
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Two big lenders work for many countries at once: multilateral assistance.
The World Bank
- Long-term loans and grants for development.
- Projects: roads, power, schools, health.
- Advice on running projects and policy.
The IMF
- Short-term loans in a balance of payments crisis.
- Loans come with conditions: spending cuts, reforms.
- Watches economies and gives technical advice.
The points to remember
- World Bank: development projects, long term.
- IMF: crisis loans, short term, with conditions.
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Aid breaks the poverty cycle when it raises investment.
When aid works
- It fills the savings and foreign-exchange gaps.
- It pays for health and schooling: smallpox was wiped out by 1980.
- South Korea used large aid flows in the 1950s and 1960s.
When it fails
- Corruption: aid to Zaire under Mobutu was stolen.
- Dependency: governments rely on donors, not taxes.
- Tied aid serves the donor's firms and politics.
Paper 1 asked this in May 2024, as part (a) for 10 marks.
Explain the benefits of foreign aid for economically less developed countries.
Model answer plan
See the answer broken into clear points, with guidance on how each point earns marks.
How the 10 marks are given
| Marks | What your answer needs |
|---|---|
| 9–10 | Theory fully explained, terms used correctly all the way through, the diagram included and fully explained |
| 7–8 | Theory explained, terms mostly right, the diagram included and explained |
| 5–6 | Theory partly explained, some terms, the diagram included |
| 1–4 | Theory only described or stated; few relevant terms |