Foreign aid and support have been an important tool of international politics for more than 60 years already. The globalization of the world economy takes into account the emergence of reforms regarding a number of global issues that cannot be achieved by some countries on their own. This results in a range of serious problems such as the environmental crisis, world poverty, social marginalization, macroeconomic instability, internationalization of organized crime, and others (Morrison, 2009: 247).
The main consequence of these processes is the loss of fertile land, forest, and biological resources, shortage of fresh water, drought, desertification, etc. In most cases, such countries experience social and economic regression, accompanied by the worsening of the political situation that induces civil wars and conflicts (Pupavac, 2007: 102). The complex nature of these problems and potential threats to the world community require a coordinated action by the entire world community to reduce poverty through foreign aid, which is believed to be successful at this task. However, foreign aid is able to reduce poverty only in case all the expenses are controlled and political and fraud intentions do not affect this process.
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The Issue of Poverty
Poverty is a situation when a country and some people worry only about their own interests; therefore it is the consequence of such an attitude. For example, governments of wealthy nations pay little attention to the problems of world poverty as they are chosen in a democratic way and, therefore, should please their constituents. They are interested in the development of agriculture in their country, thus preventing sales of agricultural products from poor states. Farmers from economically developed countries receive generous support from the government and can successfully compete with farmers in poor states. It is clear that the main cause of poverty is the fact that people and governments desire to defend their own interests, which is part of human nature.
Nowadays, the most widespread types of aid include assistance to the population having survived different kinds of disasters and shocks: natural (earthquakes, volcanic eruptions, tsunamis, floods, etc.), man-made (accidents), social (civil wars, ethnic conflicts), and environmental (drought, desertification, contamination of drinking water, the sudden loss of biological resources), This is done in order to alleviate the suffering and save lives (Blackmon, 2008: 183). The humanitarian assistance is provided in the form of food as well as other essentials. Depending on the source of funding, foreign aid can be divided into three types: the official assistance provided by means of interstate bilateral or multilateral relations; private assistance provided to corporations, non-governmental organizations as well as private persons; and mixed (Mayo, 2009: 67).
Foreign Aid Ability and Strategies to Reduce Poverty
The debate about the effectiveness of foreign aid and the ability of its comprehensive assessment has been very extensive in the last decade. Extraordinary sharpness of these sets of issues that formed in the architecture of international development needs to promote the forthcoming consolidation and coordination of efforts by donor and recipient countries with different interests at once. However, the only willingness of the parties to solve this problem has been obvious enough so far. In practice, in some cases, there is a discrepancy between the official rhetoric and the progress toward increasing the effectiveness of development programs. This is confirmed by the findings of analysts presented in different reports to assess the results of assistance programs conducted by the donors.
The world is closer than ever to the goal of eradicating poverty in the world. For a little over two decades, from 1990 to the present day, the proportion of people living in extreme poverty decreased from 40 percent to 20 percent worldwide (Lischer, 2003:93). During this period, more than 700 million people have risen above this threshold. The society is on the right path, but people must do more: poverty is declining, but not fast.
Money should be used to provide a good income in developing countries and, at the same time, help millions of people escape from poverty. In the creation of the movement for the eradication of global poverty, civil society is another key factor. The civil society plays an important role not only in providing services to the poor but also in the creation of social movements.
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The idea is that financial assistance should be provided only to those poor countries that enact the “right” economic policies that are radically different from traditional practices, under which the aid is directed to developing countries, to the states regardless of the course that they follow, or just for the purpose of encouraging economic reforms. Even if the principle of selectivity could somehow bring the effective result, its practical application is limited to mass obstacles as it will undoubtedly be influenced by political considerations, selfish interests of the bureaucracy, and overprotection on the part of the Congress.
All the new ideas in order to enhance the effectiveness of aid are almost entirely based on the research data of the World Bank, whose empirical accuracy is questionable. The World Bank claims that his credits are allocated solely on the basis of selectivity; therefore, they allow to promote economic growth, fight poverty, and increase investment.
Difficulties Foreign Aid Has to Overcome in Order to Reduce Poverty
As it appeared, helping poor countries reduce poverty is harder than helping the rich ones rebuild after the war. In Europe, all the industries were already developed, and trade and transport systems had just to be rebuilt. But in poor countries, all these aspects need to be created from the start, and this task is much more complicated and expensive. Besides, people continue to suffer from poverty because of an underdeveloped domestic and foreign trade and the lack of natural resources.
The causes of poverty are complex and intractable, including the fact that children have severe malnutrition, are poorly developed mentally and physically; so, when they become adults, they are unable to care for their children. Also, when rich countries flood the poor countries with their food as “aid,” local farmers and traders lose their income, which leads to more poverty (Harrison, 2001: 657). Financial assistance to poor countries often creates difficulties of another kind: it is easy to steal money, and this can give rise to corruption, which in turn leads to the impoverishment of the population. That is why help from some prosperous countries does not reach its target mainly because the underlying causes of poverty are not addressed.
The practical problems associated with the use of the selectivity approach are very serious and sometimes even insurmountable. Moreover, the countries conducting reasonable economic policies can achieve economic growth without foreign aid. Provision to such countries can improve their performance, but it is possible that it will contribute to the dependence of these countries on such financing. Consequently, this may hinder all the further reforms and cause problems inherent in traditional aid programs.
The pessimistic attitude toward foreign aid programs generated by decades of negative experience began to disappear by the end of the 1990s. The failure of past programs is recorded in many studies. Massive cash injections do not lead to a corresponding increase in well-being. Scientists came to the conclusion about the absence of any link between foreign aid and economic growth, or the change in the basic indicators of human development. Agencies that specialize in development issues recognize that recipient countries developed a dependence on foreign aid, and it often brought them more harm than good. So, even the World Bank notes that the aid programs sometimes suffer complete failure.
The private sector is also essential for society to meet the demand of developing countries for investment in infrastructure. This is a considerable sum, but it is still far from enough. For example, over the next five years, India will need 1 trillion dollars for funding the infrastructure, which means that all foreign aid in the world will not be sufficient to meet its infrastructure needs (Boyce, 2002:1034). It also means that precious aid has to be used to encourage new private investment in developing countries.
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Besides, aid allocated to countries pursuing failed policies can not only lead to economic growth but also prevents its further development; and foreign aid is distributed without regard to this fact. The experts from the World Bank have found that aid does not have a systematic impact on economic policy, and foreign aid can lead to the slowing of the reforms because it helps the governments conduct a wrong policy. This conclusion is consistent with the general position that the main determinants of policy change are economic realities and political and economic conditions in the country.
One of the most acute problems faced by the recipient countries is the difference in the purpose of the donor in regard to the objectives of their national development. This problem of ownership follows the existing relations between donors and recipients. However, as practice shows, the choice of donor assistance does not always take place in the interest of the recipient. This is due to the fact that developing countries often use this money to achieve particular political goals. In such cases, foreign aid, instead of solving urgent problems of the recipient country, is the fundamental cause of poverty and a source of instability. Moreover, it can contribute to the strengthening of the unpopular and anti-people regimes and personal enrichment of their senior management (Manor, 2007: 34).
The lack of systematic and comprehensive information on the amount of funding for the health system in the country makes it very difficult to assess the effectiveness of the analysis of the use of foreign aid in the recipient country. A low level of public systems for the collection and analysis of information in the statistical totality of the volatility of foreign aid has a negative impact on the ability of governments in the less advanced countries in the world to produce the budget plan. The analysis indicates that the evaluation of the effectiveness of promoting international development is an important tool in determining the focus of the forthcoming evolution of the system. The solution of complex socio-economic problems of the South only by the growth of foreign aid without a significant increase in the efficiency of its use is very problematic. Of course, the evaluation of the impact of aid on recipients allows finding which of the used aid instruments have proved their effectiveness in certain social, economic, and political criteria.
The government has no moral right to take external loans as these loans are borne by taxpayers. Loans are essentially taxes on the current and future earnings of the taxpayers. If the government take loans at will today, it means that people will give part of their income in the future to repay the funds received.
Moreover, the condition is forced by extensive fraudulent practices that result in prevalent poverty, and the fight against fraud is in line with the institution-building and co-building of the state processes. Corruption does not only reduce the effectiveness of aid but also compromises humanity. There have been cases when resources were intended to facilitate civilian suffering caused by prolonged drought or other natural disasters. For example, during the famine in Ethiopia in 1984-85, about 95 million dollars of aid for the starving in Ethiopia happened to be in the hands of groups trying to overthrow the government (Wells, 2015: 5-6). Therefore, the need to build good governance and institutions is dictated by the fight against corruption, which reduces the efforts of aid, donors, and progressive countries to accelerate economic growth and eliminate economic backwardness (Alvi & Senbeta, 2012: 958). Efficient management should ensure that the resources transferred by the developed countries will be used for aid purposes.
Recent events in North Africa and the Middle East serve as a warning to the international community that there are many unresolved issues in the world, and poverty is one of them. Poverty decrease is a time-consuming and painful process; however, it is possible to lessen its further expansion with the help of particular reforms and the global aid system. Although there are controversial statements about the efficiency of foreign aid programs, there is still hope that foreign aid and support can help decrease poverty in the world. Politicization and the prevalence of many traditional sources of assistance will inevitably weaken the effect of all the efforts taken in order to establish a well-planned program on the basis of the selective approach. Further reforming of the international aid system should be based on the need to create a permanent system of insurance of all the global risks in order to protect the weak and poor countries from the devastating effects of the global economy.
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It is urgent to find alternatives to humanitarian assistance and mobilize the necessary resources to address the urgent health needs of the population. Otherwise, some poor countries risk facing a scenario typical of other African countries emerging from conflicts, where the medical needs are unmet during the recovery period. The plight health of the vast majority of the population is discussed in all the major national and international documents devoted to the analysis of the current situation.
The experience of other African countries shows that there is a high risk of underestimating the effort required to adequately respond to the medical needs of the poor population during the recovery period. Studies show that after the end of hostilities, the mortality rate continues to exceed the emergency threshold, and public health facilities are unable to adequately respond to this situation.
Moreover, the new system of international aid should be able to mobilize resources in the amount necessary to ensure sustainable socio-economic stability of the poorest countries. The role of foreign aid is to provide reliable, predictable, and sufficient financial support to all the developing countries suffering from poverty.