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Development Aid

Development Aid

Aid from IGOs, NGOs, and governments will often go to humanitarian emergencies as short-term aid.

Multilateral aid case study: Madagascar 2022:

The UN responds to many short-term humanitarian emergencies such as natural disasters, for instance, Cyclone Batsirai, which hit Madagascar in February 2022. The most recent figures show the cyclone to have left 124,000 homes damaged or destroyed and 30,000 more displaced1. It has killed 120 people in Madagascar, all while the country is still struggling to overcome the previous cyclone and has been battling food shortages from a severe drought. The World Food Programme, part of the UN, has been working with the government as a response, providing hot meals. UNICEF and UNFPA, both also UN agencies, have been providing protection with emergency accommodation sites for the displaced as well as essential medicines and healthcare equipment.

The EU was also able to act fast with a team of 5 EU Civil Protection experts from across Europe, trained in coordinating emergencies and solving humanitarian logistics, water and sanitation, and health problems.

“UN and NGOs have landed in Madagascar to support relief efforts, thanks to the European Union, which has facilitated the necessary humanitarian air bridge” - UN spokesperson2

To get top marks in an essay, apply a case study outside of conventional textbooks to prove your contextual knowledge and application skills. Remember to meet your assessment objectives, [AO2: Apply knowledge and understanding in different contexts to interpret, analyse and evaluate geographical information and issues]

Development aid projects

For an example of a development aid project, we're going to take a look at Haiti.

Background: Haiti is an island in the Caribbean Sea and is at risk of multiple natural hazards, mainly earthquakes and hurricanes. Its relatively poor population and low HDI, ranking 163 out of 188, gives Haiti the nickname of “the republic of NGOs”. The Haitian earthquake in 2010, which killed over 220,000, led NGOs, IGOs, and governments across the world to respond with aid.

NGOs:

  • Oxfam responded by providing clean water, shelter, and sanitation immediately following the earthquake. Their focus soon shifted to funding rebuilding efforts and growth projects
  • The Red Cross sent hundreds of personnel on the ground and established field hospitals
IGOs:
  • The World Bank has further provided an amount of US$100 million to support Haiti’s recovery and reconstruction following the earthquake
  • The EU had pledged €122 million in humanitarian assistance with €30 million in an emergency relief package
Governments:
  • The US government contributed US$1.3 billion in humanitarian assistance as well as a further US$2.2 billion in recovery, reconstruction, and development projects3. USAID (US Agency for International Development) has continued to support long-term development by promoting economic growth, job creation, agricultural development, and education services. In 2020 alone, USAID secured 1,900 hectares with improved management technologies in agriculture4
  • The UK donated US$10 million as well as pledging another US$22 million in aid

Development Aid economics

We can think about development aid economics through the idea of trade. One method of donor countries giving aid is through trade, or, “aid for trade”. This bilateral aid will promote diplomatic relations between the two countries to trade their goods and services, which will open the developing country to advance their economies. A lot of low-income countries will lack the infrastructure and ability to compete in a global market. Having access to this market can allow the country to import and export goods and services, consequently encouraging more manufacturing, innovation, employment, and even potentially establishing comparative advantages. All of this ultimately allows the country to improve its economic resources and develop a better quality of life for its citizens.

Comparative advantage: This is the country’s ability to produce a specific good or service at a lower opportunity cost than any competitor. This will usually make the country the largest exporter of that specific good or service.

The World Trade Organisation (WTO) helps developing countries to trade globally through:

  1. Creating trade strategies.
  2. Offering the knowledge to be able to negotiate for better transactions.
  3. Assisting the countries to develop better infrastructure like roads, ports, and communication systems. This will allow more efficient transport for goods and services to trade.

Uganda: 48% of the country’s development aid from 2006 to 2013 was from ‘aid for trade’, the WTO initiative. The country’s exports rose by 144% and its commercial services rose by 362%.

  • Its annual GDP per capita made a huge increase, jumping from US$349 (2006) to US$880 (2014)
  • Under 40% of its population now live under US$1.25 compared to over 50% in 2006.
  • The country has also improved its development indicators, moving from a Human Development Index (HDI) score of 0.393 (2000) to 0.483 (2014)

Development Aid - Key takeaways

  • Development aid is aid designated to a developing country to support their economic, political, social, and environmental development
  • Bilateral aid is when aid is given from a developed country to a developing country directly without intermediate agencies
  • Multilateral aid is when aid from multiple donor countries will go through an intermediate agency or IGO, such as the World Bank, which will administer the money to the developing country
  • Bilateral aid can have disadvantages such as political interest involving conditions while multilateral aid has advantages like its ability to pool resources
  • International aid promotes economic growth through schemes like ‘trade for aid’ by the WTO.

References

  1. Madagascar: Emergency teams deploy to areas hit hard by deadly cyclone, UN News, 2022
  2. Madagascar death toll from Cyclone Batsirai nears 100, Al Jazeera News, 2022
  3. Haiti: Is US AID effective? First Session, 2013
  4. USAID, Haiti, 2022]
  5. Aghalino, Combating the Niger Delta Crisis: an appraisal of Federal Government response to Anti-Oil protect in Niger Delta, 2004
  6. Fig. 1: Development aid, government expense (https://en.wikipedia.org/wiki/File:Development-assistance-as-share-of-government-expense.png) by Our World in Data (https://ourworldindata.org/grapher/development-assistance-as-share-of-government-expense?time=2015) licensed by CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/)
  7. Fig. 2: Development aid, government aid GNI (https://ourworldindata.org/grapher/net-oda-to-ldcs-as-percentage-of-donors-gni?tab=map) by Our World in Data (https://ourworldindata.org/grapher/net-oda-to-ldcs-as-percentage-of-donors-gni?tab=map) licensed by CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/)

Frequently Asked Questions about Development Aid

Yes, foreign aid can promote economic growth through schemes such as 'aid for trade'. Investments into trade will give the country access to the global market allowing it to import and export goods and services. This will consequently encourage more manufacturing, innovation and employment. This isn't the only way of improving its economic resources as loans and grants for specific projects can do this too, ultimately almost always developing the country's economy as long as the aid isn't held back with corruption. However its extent of success can be up for question depending on the project and external interests.

This agency and agencies similar to USAID, will provide aid to authorities and will also distribute relief packages accordingly as short term aid. However, as government agencies, USAID will also spread their own political interests attached to their provision such as advancing democracy. Other aid agencies may do the same unless they are NGOs.

International aid is aid, typically given as money, designated to a developing country to support their economic, political, social and environmental development. This development in low income countries is vital in reaching goals such eradicating poverty and ending world hunger.

Schemes such as 'aid for trade' will bring investments into a developing country that will teach a country how to operate in a global free market, which can accelerate economic growth and stability. This will be done as goods and services will now be imported and exported subsequently encouraging more manufacturing, innovation and employment. Through optimising and improving economic resources in a country, it will also improve other development indicators such as literacy rates and infant mortality.

As development aid improves the low income countries' human development, poverty will drop along with world hunger and a multitude of social issues such as minors working in dangerous conditions. These are part of the UN MDGs which countries across the world are committed to achieving.

Final Development Aid Quiz

Question

What is development aid?

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Answer

Aid designated to a developing country to support their economic, political, social and environmental development. 

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Question

Name two types of development aid.

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Answer

Bilateral and multilateral

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What is the difference between multilateral and bilateral aid?

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Answer

Multilateral aid goes through an intermediate agent, which pools resources and administers the aid to the developing country themselves. Bilateral aid is administered by the donor country.

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Name the main advantage of multilateral aid?

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Answer

It can pool resources which allow for bigger and more cost-effective projects.

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Name two disadvantages of bilateral aid.

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Answer

The aid is subject to the donor country's conditions, which the receiving country is obliged to meet.

As the aid is typically given government to government, the money can be held back in corruption.


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Question

Who gives development aid?

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Answer

All of them

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Question

How did an NGO respond to the Haiti earthquake?

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Answer

  • Oxfam responded with providing clean water, shelter, and sanitation.
  • The Red Cross sent hundreds of personnel on ground and established field hospitals.

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Question

How did IGOs respond to the Haiti earthquake?

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Answer

  • The World Bank has further provided an amount of US$100 million to support Haiti's recovery and reconstruction following the earthquake.
  • The EU had pledged €122 million in humanitarian assistance with €30 million in an emergency relief package.

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Question

How did governments respond to the Haiti earthquake?

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Answer

  • The US government contributed to US$1.3 billion in humanitarian assistance as well as a further US$2.2 billion in recovery, reconstruction and development projects3. USAID (US Agency for International Development) has continued to support long term development by promoting economic growth, job creation, agricultural development and education services. In 2020 alone, USAID secured 1,900 hectares with improved management technologies in agriculture4
  • The UK donated US$10 million as well as pledging another US$22 million in aid.

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Question

How did the EU respond to Cyclone Batsirai in Madagascar?

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Answer

The EU sent five Civil Protection experts from across Europe, trained in coordinating emergencies and solving problems in humanitarian logistics, water and sanitation, and health.

This is an example of an advantage of an IGO pooling resources and increasing efficiency. 

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Question

How does development aid promote economic growth?

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Answer

The provision of money, usually loans and grants, is used to optimise and improve economic resources. One such investment initiative is called 'aid for trade' which introduces countries to the global market and increases their imports and exports of goods and services. This subsequently encourages more manufacturing, innovation, employment and even potentially establishing comparative advantages. All of this ultimately allows the country to improve its economic resources and develop a better quality of life for its citizens. 

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Which IGO started the initiative called 'trade for aid'?

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Answer

WTO

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Question

How much did Uganda's exports rise by?

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Answer

144%

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Question

Uganda's GDP per capita was US$349 in 2006 (when the 'aid for trade' started). What figure has Uganda's GDP per capita risen to in 2014?

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Answer

US$880

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Question

What is environmental degradation?

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Answer

This is the deterioration of the environment because of the depletion of resources.

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Name 3 examples of environmental degradation?

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Answer

Any from:

Deforestation,

Contamination,

Quality of air,

Quality of water,

Quality of soil

Damage to ecosystems 

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Question

What are the effects of 'land grabs' in Senegal?

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Answer

  • At least 12% of arable land is now under foreign ownership in Senegal
  • Local people are less able to feed themselves by farming
  • 20% of the population in Senegal are undernourished

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How does economic development in low-income countries impact the environment?

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Answer

Their economies consist of Primary sector employment, which means extracting natural resources is usually required for trade and economic. Popular examples of this include agricultural expansion, mining, and drilling. These actions are usually carried out unsustainably ignoring environmental concerns as economic interests are prioritised. 

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In Nigeria, how much does oil revenue account for as a percentage of the total government revenue?

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Answer

28%

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How much does oil is exported by Nigeria as % of Nigeria's total export earnings?

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Answer

49%

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Despite the income from oil in the Niger Delta, how many people from this area live below the poverty line?

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Answer

70%

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Name 3 environmental impacts of the oil production in the Niger Delta:

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Answer

Any 3 from:

  • Pollution and contamination in the area are widespread and are disturbing access to safe and clean drinking water.
  • Traditional lifestyles and occupations of the people here are being endangered by pollution and contamination from oil production. Some examples include agriculture and fishing being disrupted by the negative externalities of oil production. This ultimately also decreases the quality of life for the local people.
  • Thousands of oil spills pollute the groundwater and soil. 550 spills occurred in 2014 alone according to Amnesty International. This causes extensive deterioration to human health, forests, and swamps
  • Natural gas burning whilst oil is being extracted leads to severe health and environmental issues. The effects include acid rain and pollutants that can contaminate farmlands and can cause a higher risk of cancer. This is also responsible for global warming.
  • Mangrove forests, which are vital in protecting coastal areas and ecosystems, are being destroyed

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Which players do the NGOs and local people blame for this situation, and why?

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Answer

NGOs blame the government's dependence on this oil revenue and its poor governance, which ultimately leads to the exploitation by large foreign TNCs. Tension has recently been rising towards the government and TNCs from the local people.

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Question

Why may local people of Niger Delta not feel the economic development of Nigeria?

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Answer

Due to many reasons including:

  • <20% if the region is accessible by adequate roads.
  • Poorly funded schools and hospitals, usually at insufficient capacities.
  • Pollution and contamination in the area are widespread and are disturbing access to safe and clean drinking water.
  • 70% of the people here live below the poverty line.
  • agriculture and fishing being disrupted by the negative externalities of oil production. This ultimately also decreases the quality of life for the local people.

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Question

What are the causes of economic inequality?

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Answer

  • Globalisation (TNCs, national development levels)
  • Regeneration/Gentrification
  • Unequal access to resources (education, technlogy). 
  • Discrimination
  • Income inequality
  • Political decisions 

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What are gated communities?

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Answer

The separation between groups of people - wealthy people can afford to live in fenced or gated areas, making economic inequality much worse. 

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What is the name of the makeshift housing areas that often symbolise poverty in the developing world? 

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Answer

Slums

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True or false: economic inequality exists only between individuals

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Answer

False

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What is economic inequality?

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Answer

Differences in income, wealth, opportunities and basic standard of living across the economic distribution. 

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Why does globalisation create economic inequality?

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Answer

Unequal power relations that exist between countries. 

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What are the main ways to break out of the poverty cycle?

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Answer

Improved access to education and technology.

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What can affect the quality of education?

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Answer

Teaching quality and funding (resources)

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True or false: it is mandatory for every child in the world to obtain an education

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False

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True or false: the main barrier to technology access for less wealthy people is the availability of disposable income.

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Answer

True

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True or false: discriminating against somebody on the grounds of protected characteristics is illegal.

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Answer

True

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Why are monopolies bad?

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Answer

They cause a lack of diversity in offering, can set inaccessible prices and stunt the evolution and innovation of the market. 

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True or false: poverty is associated with lower life expectancies.

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Answer

True

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True or false: economic inequality does not generally affect crime rates.

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Answer

False

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What are the negative impacts of political instability caused by economic inequality?

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Answer

It can eventually result in conflict on a much larger scale. It also acts as a hindrance when it comes to governance, which acts as a challenge for improving the situation.

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How may people show their discontent with economic inequality?

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Answer

  • Demonstrations and protesting
  • Strikes

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What can cause income inequality?

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Answer

  • Poorly paid jobs
  • Unsustainable minimum wage
  • Economic crisis

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What is a 'command economy'?

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Answer

The government has control, which can cause limited economic growth. North Korea offers an example of this.

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What does monopolisation cause?

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Answer

It creates inaccessible and unaffordable prices and stunts the growth of the market. This restricts industry development and affects people across the economic distribution.

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