Foreign Aid - 3759 Words

EFFECT OF FOREIGN AID IN KENYA 1. Introduction Foreign aid is usually associated with official development assistance, which in turn is a subset of the official development finance, and normally targeted to the poorest countries (World Bank, 1998). Foreign aid represents an important source of finance in most countries in sub-Saharan Africa (SSA), where it supplements low savings, narrow export earnings and thin tax bases. In recent years the donor community has become more stringent about fiscal discipline and good policies, which has led to freezing of donor funds to governments that do not conform with aid conditionalities. The Kenyan government has experienced such aid cuts in the past. 1.1 Definition The standard definition of†¦show more content†¦A well-designed aid plan can support effective institutions and governance by providing more knowledge and transferring technology and skills. It is recommended to decentralize the aid flows in recipient countries. Money aid is important but idea aid is even more important. Aid can be the midwife of good policy in recipient countries. In poor-policy countries, idea aid is especially more essential than money aid. This implies that in a good-policy environment, aid increases growth via the investment channel whereas in a poor-policy environment, it nurtures the reforms through policymakers training or knowledge and technology transfer. These non-money effects are believed even more important and viable than the money value of aid. Aid works much better where the reform is initiated or internalized by local government rather than when it is imposed by outsiders. Therefore, aid is normally more effective when it facilitates effici ently and timely reforms triggered by the local authority (World Bank, 1998). Foreign aid or (development assistance) is often regarded as being too much, or wasted on corrupt recipient governments despite any good intentions from donor countries. In reality, both the quantity and quality of aid have been poor and donor nations have not been held to account. In 1970, the world’s rich countries agreed to give 0.7% of their gross national income as official international development aid, annually. SinceShow MoreRelatedForeign Assistance For Foreign Aid1553 Words   |  7 Pages The dictionary definition of the term foreign aid is: The administered transfer of resources from the advanced countries for the purpose of encouraging economic growth in developing countries. [Bannock:1988 P.164] However, so as not to confuse foreign aid with the investments of multinational corporations or commercial banks, many economists require foreign aid to meet two distinct criteria: 1) Its objective must be noncommercial from the point of view of the donor and 2) it sh ould be characterizedRead MoreThe Matter Of Foreign Aid1721 Words   |  7 PagesThe matter of foreign aid is complicated. Through our own policies, the policies of international organizations, and assorted agreements with numerous countries, our role in foreign aid has continued to change over the decades to meet the growing needs of the developing and developed worlds. While we try to aid the developing world to the extent of our capabilities, there are several elements to consider – some of which in the past have often been neglected. When providing aid to countries in needRead MoreThe Beginning Of Foreign Aid Essay1505 Words   |  7 PagesIntroduction: 1.The beginning of Foreign Aid All human beings regardless of their background require a set of resources to survive. These are food, water, shelter and clothing in addition to this, healthcare, education and sanitation are also essential for a person’s wellbeing. 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