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Introduction Problem presentation Corruption and misuse of funds Aid use policies Aid audit due to inadequate use of funds Conclusion Problematic Feature of the Way International Development Aid is Currently Managed The term international assistance connotes a benevolent donation given to poor countries by generous, rich nations so that the former can meet the primary needs of their citizens. Unfortunately, this is highly simplistic and inaccurate. Aid does not necessarily go to the poorest countries, it often does not go toward meeting crucial development needs, and it is never a cash donation given with no strings attached -- more often, it is a loan provided by a government or international agency that the recipient must pay back within a specified period. There are various categories or types of aid that vary in popularity among donors, but none of them can be considered an outright gift.
International aid can have both positive and negative influence. Many problems in aid receiving countries are cased by international development aid distribution and management. In this research paper I will analyze such problems as corruption, inadequate funding and distribution, negative political and economic consequences caused by aid programs. Corruption in aid receiving countries is a major problem. For many years, the problem of corruption was of concern for international aid donors.
A variety of forces have put corruption back on the international policy agenda. The globalization and growing competitiveness of the world economy, and a resulting awareness within international aid and lending agencies, and aid receiving countries, suffer of the costs of corruption. New legislation was introduced to fight corruption in international aid programs (the US Foreign Corrupt Practices Act, the OECD Anti-Bribery Treaty and the OAS Anti-Corruption Convention); concern about the cost and efficacy of international development programs, and over the role corruption might play in perpetuating poverty reduced tolerance for corruption. Corrupt governments misuse international aid. Leaders in many developing countries continued to borrow and spend as if nothing had changed, while instituting absurd regulatory regimes of permits and licenses that squashed farmers and entrepreneurs while lining the pockets of bureaucrats. One of the most disturbing examples of such corruption was in the former Zaire, where President Mobutu was said to have stashed away in personal foreign accounts assets equal to his countrys entire external debt. (Bolt, Dasgupta, Pandey, Wheeler) Another perfect example of corruption can be EBRD loans for Ukraine.
Loans exceeding US$ 2 bln have also been advanced to help develop a more reliable and stable energy sector, while the EBRD is financing two new nuclear power-stations in Ukraine linked with the closure of Chernobyl. (Carter, Turnock) However, part of this US$ 2 bln loan was aimed at preventing nuclear pollution at Chernobyl, and according to Carter It is doubtful that this loan helped Ukrainians indeed. (Carter, Turnock) Money that might have been used to build health clinics or primary schools went instead to Western banks and multinational institutions, while indebted countries dumped more and more of their resources at reduced rates, thereby depleting nonrenewable resources and further depressing prices. For many countries, there was only one way out: compliance with the rigorous policy reforms demanded by the World Bank and the IMF in exchange for renewed access to international capital. Approximately forty of the worlds poorest countries are classified by the World Bank as having an un sustainably high debt burden; their total debt is more than 220 percent of their exports. Granted, some of these countries are mired in governmental corruption that is even more oppressive than their debt, and for them, debt relief would offer little comfort, as it would surely only line the pockets of well-placed politicians. Much of the U. S.
governments justification for withholding funds from the UN lies in the complaint that the agency is grossly mismanaged and riddled with corruption. The positive and negative duties implied by giving aid require placing conditions on aid, and conditionality will conflict in some way with sovereignty. (Kilby) How is it possible to fight corruption? I would suggest that donor countries should harmonize the conditions they on their assistance. To the degree that their interests and mandates allow, donors need to reconcile the terms of their assistance.
The overriding goal must be to prevent the corruption. Donors should improve international audit programs. Donors should create local mechanisms of aid audit, delegate authorities to aid receiving countries, moderate national and institutional rivalries, and consider frameworks for aid coordination. Misguided policies that are not based on the actual needs of the country but are driven purely by the world bank and Imf's belief system is another problem international aid programs face. The shortage of funds for education and advocacy is only one reason that NGOs and the American public have been so slow to see the importance of these efforts.
Another contributing factor is certainly the complexity of hunger and poverty issues; unlike some of the popular causes that rally public support these days, there are no easy answers to the monumental problems of underdevelopment, and this often leads to a paralyzing form of apathy. The majority of aid not only falls to reach the countries most in need but also falls to support the sectors most critical to the poorest populations in the world. Despite the fact that the livelihoods of the majority of people in developing countries depend on agriculture, today less than one-sixth of all aid resources supports agriculture. Instead, international aid tends to favor the urban sector, where the poorest do not live.
Aid is more likely to go toward the construction of an urban hospital than a rural clinic or to be allocated toward higher education rather than primary education. Only about a tenth of all international aid goes to social development sectors such as education, primary health care, and reproductive health, and in the U. S. aid budget, only 0. 1 percent goes to basic education and a mere 0. 3 percent to basic health care.
For those organizations dedicated exclusively, or even partially, to improving development education and advocacy efforts, funding is a constant problem. Foundations rarely fund projects that aim to change public policies, and if they do, support is usually limited to one-year grants. In the United States, funding levels for development education represent a mere 0. 2 percent of all funding to NGOs. Furthermore, raising funds for advocacy or education via NGOs usual methods (solicitation newsletters or ads) is a hard sell for an audience that demands visible results for the dollars they put into a return envelope. IMF should establish additional mechanisms to mobilize resources rapidly for key needs of aid receiving countries. Individual donors should either designate new budget lines for reconstruction activities or streamline such assistance within their humanitarian or development budgets.
Collectively, donors should consider the value of an expanded consolidated appeals process and a global reconstruction fund. Donors should ensure that their aid programs correspond to realistic needs assessments and recipient priorities of aid receiving countries. Besides consulting with local officials and broader elements of civil society, donors should finance important public sector expenditures, relax insistence on macroeconomic and fiscal rigor, facilitate debt reduction, and mobilize local resources. Few audits are actually carried out to assess the impact of the aid -- also most reports tend to focus on short term -- and not long term needs. Current audit programs make it difficult to finance programs falling between humanitarian relief and traditional development assistance, and existing pledging conferences are inadequately responsive to local needs. Aid programs aimed on recovery activities must strengthen and accelerate their audit programs to respond to the needs of countries.
The United Nations agencies, international financial institutions, and bilateral donors should provide greater authority and resources to their audit units. Also, donor countries must ensure that the various conditions it places on aid are appropriate, coherent, and consistently enforced. In particular, donors need to reconcile their support for macroeconomic stabilization and structural adjustment. Whether there exists an international aid program that effectively and honestly supports development is a question.
Focusing primarily on U. S. foreign aid to developing countries and the various channels through which that aid is provided, the present volume supplies the tools required to think critically about foreign aid and the role it plays in the sustainable human development of our world. It is evident that international development aid system should be reformed. Financial aid to corrupt countries should be cut.
Aid programs do not change much in the lives of a poor countrys citizens, while a countrys officials usually misuse funds and profit from aid. More attention should be paid NGOs, because they have well-established networks and their programs are primarily aimed in providing aid in medicine and education. NGOs international aid proved to be more effective than programs of IMF and World Bank. Personally, I believe that some of IMF international aid programs are intentionally developed to pull out commodity resources from poor countries by putting them into debt and this is really sad. Strict control over IMF programs is not a solution.
Bibliography: Carter F. W. , David Turnock. Environmental Problems of East Central Europe. Routledge, 2002 Bird, Graham. IMF Lending to Developing Countries: Issues and Evidence.
Routledge, 1995 Minute Particles, Major Problems: New Policies Show Promise for Saving Millions of Lives by Clearing the Air in the Developing World, Journal article by Katherine Bolt, Submit Dasgupta, Kiran Pandey, David Wheeler; Forum for Applied Research and Public Policy, Vol. 16, 2001 Aid and Sovereignty, Journal article by Christopher Kilby; Social Theory and Practice, Vol. 25, 1999
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