Foreign Aid is one of the key instruments in the development support that rich countries provide to the developing countries of the world. As defined by the Development Assistance Committee (comprising 22 developed countries) of the OECD, foreign aid includes financial flows, technical assistance and commodities that are: a) designed to promote economic development and welfare as their main objective (thus excluding aid for military or other non-development purposes) and b) provided as either grants or subsidized loans. ‘Official Development Assistance’ (ODA) provided by member-countries of the DAC to low- and-middle-income countries accounts for the largest proportion of foreign aid. In 2007, the 22 member-countries of the DAC provided ODA to the tune of $103.7 billion. On the receipt side, according to data available, there were 150 countries and territories around the world in 2004. Debate rages over the effectiveness of aid in promoting economic growth in developing countries. Proponents of aid argue that although aid has sometimes failed, it has supported poverty reduction and economic growth in some countries. Its critics allege that aid has perpetuated bad governments, enriched the elite in poor countries or just been wasted. This book examines the concepts involved in foreign aid, the issues related to its delivery, management and effectiveness, and discusses strategies to deal with these issues.
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