Advantages And Disadvantages Of Foreign Aid: Development And Economic Development

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Introduction:

Foreign aid, in the form of official development assistance (ODA) was once seen as the panacea for the development and the transformation of the developing countries. In the early phase of de-colonization, after the end of the World War II, newly independent countries were seeking to lead their people out of the poverty and backwardness bequeathed to them by the colonial era. It was seen in some new countries even after a few decades to have reliance on official development assistance.

Foreign aid has in different periods of history played an important part in the economic development of many countries, which are now industrially advanced and prosperous are included among them. For instance, the United Kingdom received aid from the Netherlands in the 17th and 18th centuries. The United States, now a leading donor country, was assisted by the UK in the middle of 19th century. The Soviet Union also received foreign assistance in its early stage of development. The linkage between foreign aid and development has, thus, a fairly long history.

Foreign aid can encourage countries to adopt positive political and economic policies if that is its principal objective. But it may, on the contrary, undermine development if it is given to countries that are unlikely or unwilling to make necessary political, economic and governance reforms. Since there are some different thoughts on foreign aids, critics of aid such as Peter Bauer have argued that aid is never necessary. For example, “Foreign aid is a central component of world development”. So in 1981, said Professor Hollis Chenery, then Vice President of World Bank in charge of economic research, how can he have been right? Large scale development occurs in many places with...

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...pient in current world, in terms of the flow and efficiency with which aid has been used in the country’s efforts to develop. First part of my study will focus on the quantity of foreign aid the country received according to the development issues to find an ample dependency on it. And the second part would attempt to find a policy to reduce the dependency on foreign aid to maximize the chance of effective use of the country’s strategy. Therefore, it seems to be reasonable to explore the research on the role of foreign aid in Bangladesh’s development in a more qualitative form, banking on in-depth research or case studies of particular foreign aid programs. The study would be based on an array of evidence in the form of studies, reports, evaluations and documents based on information from the major aid agencies and research institutes in Bangladesh and abroad.

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