The problems of hunger and poverty in developing countries appear to be of great importance nowadays. However, the issues regarding foreign aid tend to be disregarded and usually do not find proper reflection in the minds of politicians leading both supporting and needy nations. At the same time, hunger and poverty are not the typical characteristics of wartime, but rather evident images of the gap between rich and poor countries that has been widened over the past decades. It is important, therefore, to investigate the effects of war actions and peacetime on developing countries, and reveal the possible way to shorten the increasing gap that contributes to the vivid inequality that takes place throughout the world.
In times of war and peace, foreign aid has always proved a crucial factor that helped to maintain the financial condition of suffering nations. At the same time, the provided aid appears to be criticized due to its wrong distribution. Indeed, the idea that foreign aid can appear to cause more harm than benefits seems ridiculous at first sight. However, that is the position of Angus Deaton, the Nobel Prize Laureate in Economics in 2015 (Inman, 2012, Angus Deaton). Deaton, who studied the problems of poverty in India and South Africa, received a reward for the research dealing with the situations when poor people take decisions about saving or spending money (Deaton, 2013, p. 116). At the same time, his ideas regarding foreign aid appear to be quite provocative. According to Deaton, by trying to help poor people in developing countries such as India, rich countries actually foster the inner corruption of these nations and retarding their development (Ravallion, 2015, p. 529). As stated by Deaton and other economists adhering to his point of view, the major part of the $135 billion that have been contributed to developing countries in 2014, have not proved useful at all (Swanson, 2013, Why Trying).
The concept of rich countries donating financial aid to other nations free of charge gained traction in the end of the 1960s, when due to television a wide audience was introduced to the humanitarian crisis. In his article in New Yorker in 2010 Philip Gourevitch recollects the times when watching TV programs American people saw the starving people in Biafra, a region rich in oil that had separated from Nigeria and appeared to be block by Nigerian government (Gourevitch, 2010, Alms Dealers). The protesters so ardently called Nixon's administration for action that eventually it led to the foundation of the biggest non-military airlift that had ever been carried out (Gourevitch, 2010, Alms Dealers). Just after a quarter of a century since the times of Auschwitz, humanitarian aid seemed to give hope to fight evil without confronting with each other. With that, of course, it all was accompanied by heated disputes about political and economic issues regarding foreign aid. In the middle of the 20th century many economists believed that economic growth, both in rich and poor countries, could be triggered by investing large finances in factories, plants, road construction, and the development of other fields of infrastructure. Due to this reason, attempting to spread the Western democratic model and market economy, the U.S. and the nation of Western Europe started to render assistance to small and poor nations that could be possible caught under the influence of the Soviet Union and China.
The scale of foreign aid to India, as well as to other nations throughout the world, began to increase rapidly in the 1960s, reaching its peak by the end of the Cold War, whereupon it reduced for some time, and then grew again. The performances at Live Aid increased the overall awareness of society about such problems as hunger in India and Africa, at the same time urging the U.S. to develop initiatives to render assistance to poor countries (Wuestawald, Portraits of People). The World Bank and its proponents, however, strongly opposed the researches that evidenced the crucial support proved by foreign aid (Deaton, 2013, p. 114). With that, Angus Deaton is not the first economist that dared to challenge these assumptions, but over the recent years his arguments have started to attract a considerable amount of attention. However, it was he who managed to support his concepts by a deep understanding of the issue regarding foreign aid. In the final analysis, Deaton's skepticism considering the advantages of foreign aid increased during the following research that included the detailed investigation of household in developing countries, which allowed to observe the effect of foreign aid (Banerjee, 2007 pp. 55-57). Daron Acemoğlu, an MTI economist, claims that Diton's understanding of how the world functions at the micro level made him quite suspicious regarding the methods allowing poor countries to improve their financial conditions quickly. The gathered information stated that statements of the proponents of foreign aid do not always find confirmation. Thus, the works of William Easterly, a New York University economist, demonstrate that despite the increasing foreign aid granted to India during the latest decades, the overall economic situation has only worsened (Corbridge, Harriss, Jeffrey, 2013, p. 34). The concept of the futility of foreign aid given to India, however, was strongly opposed by Bill Gates, who does not agree with the view that rich countries allegedly spend too much needless sums to help the poor (Ravallion, 2015, p. 529). In a point of fact, even Norway, that is likely to be regarded one of the most generous countries, allocates less than 3% of its budget for foreign aid, with the U.S. spending less than 1% (Foreign Assistance).
Despite the provocative conceptions, the Indian government has declared its readiness to accept foreign and from the Group of Eight, as well as from the Western financial donators. With that, the Indian government does not refuse to accept grants and credits from Canada, Italy, France, and Scandinavian states (India Biggest Recipient, 2015). Comparing to that, the old government of India intentionally limited the circle of donates, shortening it to the U.S., Great Britain, Russia, Germany, Japan, and the EU, thus attempting to preserve the reputation of a donator rather than a recipient. On practice, the Indian economic course consists of decreasing the dependence on foreign aid through the simultaneous readiness to provide loans to the less developed countries of Africa (Banerjea, 2015, India Pledges $600 Million). This strategy, however, is criticized by the Western experts. With that, the Indian policy regarding its cross-border assistance seems complicated and confused, since there appears no strict reference points in economic and political sphere. Furthermore, the Indian government does not seems to be able to provide the transparency during the realization of the particular projects. The Indian authorities that are well aware of the pretentions made towards the donators throughout the world are often criticized for the existing obligations for the receiving country to purchase goods and service in the donating country.
On the whole, considering the facts that contributed to the contemporary effectiveness of foreign aid to developing countries like India, it is undoubtedly that these simple measures prove to be insufficient (Wuestawald, Portraits of People). Though paying attention to the aid granted to the developing countries, the overall economic situation in these countries remains poor, which evidences the inadequacy of the rendered assistance. Of course, the once established mechanisms driving the modern economy cannot be stopped by means of a simple initiative, but foreign aid continues to support the needy populations, regardless of its actual treatment by governments. The modern conditions of developing countries, however, require united actions towards decreasing the economic gap that is so evidently manifested in the modern era of globalization.
Banerjea, U. (2015, October 30). India Pledges $600 Million in Aid to Africa; Militant Linked Charity Provides Pakistan Quake Relief; Afghan Government Mobilizes Militias. Retrieved January 30, 2016, from http://foreignpolicy.com/2015/10/30/india-pledges- 600-million-in-aid-to-africa-militant-linked-charity-provides-pakistan-quake-relief- afghan-government-mobilizes-militias/
Banerjee, A. V. (2007). Making Aid Work (pp. 55-57). Cambridge, MA: MIT Press.
Corbridge, S., Harriss, J., & Jeffrey, C. (2013). India Today: Economy, Politics and Society (p. 34). Cambridge, UK: Polity Press.
Deaton, A. (2013). The Great Escape: Health, Wealth, and the Origins of Inequality (pp. 114, 116). Princeton: Princeton University Press.
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Gourevitch, P. (2010, October 11). Alms Dealers. Retrieved January 29, 2016, from http://www.newyorker.com/magazine/2010/10/11/alms-dealers
India Biggest Recipient of US Economic Assistance Over 66-Year Period: USAID. (2015, July 14). Retrieved January 30, 2016, from http://www.dawn.com/news/1194228
Inman, P. (2012, October 12). Angus Deaton wins Nobel Prize in Economics. Retrieved January 29, 2016, from http://www.theguardian.com/business/2015/oct/12/angus- deaton-wins-nobel-prize-in-economics
Ravallion, M. (2015). Economics of Poverty: History, Measurement, and Policy (p. 529). Oxford: Oxford Univ. Press.
Swanson, A. (2013, October 13). Why Trying to Help Poor Countries Might Actually Hurt Them. Retrieved January 29, 2016, from https://www.washingtonpost.com/news/wonk/wp/2015/10/13/why-trying-to-help- poor-countries-might-actually-hurt-them/
Wuestawald, E. (2014, April 7). Portraits of People Living on a Dollar a Day. Retrieved January 29, 2016, from http://www.motherjones.com/mixed-media/2014/04/living-on- a-dollar-a-day-photos-renee-byer-thomas-nazario