Foreign Aid

As a policy tool, aid has not been confined to the roles that foreign and economic policy theorists have prescribed for it. Foreign aid attracts controversy because it structures how global poverty will be addressed. Aid’s proponents believe that it can eradicate absolute poverty and close the income gap between rich and poor countries, but its critics believe it holds out only false hope and obscures the real nature of the problem. The unrequited transfer of wealth from a weak nation to a stronger one is an ancient tradition, but the notion that it would be powerful nations transferring wealth to advance the economic development of weaker ones was virtually unheard of until the post-World War II era, particularly during the highly polarized Cold War climate. During this time, aid was used as a means of competition between the United States and the Soviet Union for influence over Third World countries. Aid also became a tool for opening up the markets of the developing world and integrating them into the global economy. The fact that foreign aid has come to mean development assistance since has raised a series of questions debated in the scholarly literature. Moreover, it is universally acknowledged that donors use aid to achieve objectives other than development and poverty reduction.