Since Truman’s time though, the United States reasons for the bestowal of aid have altered somewhat. The primary objective of U.S. foreign aid is now to preserve its own territorial and political security. Foreign aid is also provided to ensure the political security and cooperation of the United States’ strategically important allies (Hoy, 1998).
Locally, the New Zealand government provides a large proportion of its foreign aid to a number of Pacific Island countries. The government takes the view that a major factor influencing countries poverty is their level of participation in the global economy. Further they recognise that basic education is a vital element of economic development. Based on those foundations New Zealand grants the largest slice of its aid to education, health and population (Webster, 2000). This seems to be fairly selfless and tilts toward simply humanitarian motivations.
Another example of western donors is those of the Nordic countries. These nations are commonly perceived to have the most progressive aid programs and have some of the highest rates of contribution per capita in the world. The monies are directed toward different sectors depending on the particular countries’ area of interest and expertise. The aid is supplied on the premise that representatives of the developing nations will be directly involved in the decision-making and implementation of any aid supported project. Aid beneficiaries are looked upon as partners and usually only a few are chosen. Recently though, as globalisation becomes more widespread, some have begun to question whether commercial interests are now threatening the ‘purity’ of Nordic aid. Economic growth has certainly received greater attention and prominence in recent years, while the social aspects of development have been neglected somewhat (Hoy, 1998).
The donors discussed so far contribute their official assistance directly to the government or an internal group of the country concerned. This is called bilateral aid. Of a different sort is multilateral aid, whereby a proportion of the contributions go to an intermediary international agency. This collective donation is then allocated to needy countries. The World Bank plays the largest part in distributing this type of aid around the world. Multilateral aid came about in response to concerns of duplication and confusion where multiple and possibly conflicting aid packages were being contributed to a single nation (Hoy, 1998). The World Bank was founded in 1944 and is owned by more than 180 member countries who play a large part in the decision making process. The World Bank is made up of a number of different institutions; the two that are most applicable to this discussion are the International Bank for Reconstruction and Development (IBRD) and the International Development Agency (IDA). IBRD’s initial purpose was to implement private capital transfers to help rebuild Western Europe after the war. Today its goal is to make loans and provide economic development and reconstruction assistance for developing countries. The bank loans they provide only have slightly better terms than average market rates and so are not considered aid by everyone. The IDA provides an alternative for the poorest of the developing nations, which cannot afford the hard loans offered by the IBRD. IDA loans are interest free and do not require repayments until ten years after the signing of the loan agreement. There is only a small percentage change for the loan and a timeframe of around forty years before maturity. In order to be eligible for these loans, the per capita income of the country must fall below a certain mark. The two types of loans are very similar except for the financial terms and this can lead to the established problem of new debt financing old debt (Hoy, 1998).
Some critics argue that the United States largely dictates the lending of the World Bank and that is essentially a tool of U.S. foreign policy. The U.S. holds a large percentage of the shareholdings and the president of the World Bank has always been an American. However America does not sway the World Bank’s policy on all important issues, the staff’s attitude that they are less susceptible to pressure means only a certain amount of force can be applied (Nelson, 1995).
The third type of aid providers is international non-governmental organisations and Hoy (1998) categorises them into three main roles, firstly and most well known are the traditional disaster-relief agencies, the second group is the technical assistance organisations and the third and smallest group is the institution and network builders. While they operate on a smaller scale than other types of aid, they have come up with new methods in some fields, such as primary healthcare and rural development approaches focusing on self-help. The have worked with issues that have a lower profile at the World Bank (Nelson, 1995) and simply because they have smaller budgets, they are more likely to fund smaller projects which it is argued, are far more effective than huge projects that tie up vast amounts of resources. They have the advantage of having permanent staff working in the field. This makes it much easier to develop relationships with local people and this provides NGO’s with crucial local knowledge.
So it seems that though out the various providers of aid the reasons for providing it vary. In the examples that I have provided, the United States is clear that their purpose is to gain maximum strategic benefits while New Zealand and the Nordic countries seem to have a genuine concern for the welfare of countries poorer than themselves. Even so, Hoy (1998) states that there is not a donor country in the world that would deny the impact of interdependence. Additionally, the simple knowledge that the acquisition of a firm trading relationship will pay back a nations generosity in years to come is enough to encourage a potential donor. The World Bank does a great deal of work in fostering economic development in poorer countries but has to battle criticism that is not entirely true to its altruistic principles and the NGO’s seem to be mostly wholesome with their intentions. This all combines to suggest that foreign aid was initially based purely around humanitarian concerns but in this day and age it is no longer entirely the case.
References
Bauer, P. (1995) 'Foreign Aid: Central Component of World Development?', in Development Studies: A reader edited by S. Corbridge, London: Arnold.
Hoy, P. (1998) Players and issues in international aid, USA: Kumarian Press.
Johnston, R.J. (2000) The dictionary of human geography, Oxford: Blackwell.
Nelson, P.J. (1995) The World Bank and Non-Governmental Organisations, New York: St. Martin’s Press.
Webster, P. (2000) ‘New Zealand’, in The reality of Aid 2000: An Independent Review of Poverty Reduction and Development Assistance edited by J. Randel, T. German, D. Ewing & Development Initiatives, London: Earthscan.
