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Foreign Aid

Foreign Aid: Its Defense and Reform

Paul Mosley
Copyright Date: 1987
Pages: 280
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  • Book Info
    Foreign Aid
    Book Description:

    Economic aid to developing countries is an important -- and often controversial -- part of foreign policy for many Western nations. But how effective is such aid in achieving the objectives of the giver and the recipient? In this important study, Paul Mosley offers a challenging reassessment of the role of economic aid for nations on both sides of the equation.

    Mosley examines in detail the foreign aid programs of the leading Western powers with particular regard to the role of aid in international politics, and then examines the effectiveness of aid as a subsidy to exports, as an instrument of development, and as a means of redistributing income and bargaining power to the very poor.

    Mosley also incorporates overseas aid into the general economic theory of public expenditure. He examines the various protagonists on the supply side of the market for aid expenditures and in particular those on the demand side. Supporting this analysis of ways in which the aid market adjusts over time are extensive data from the OECD countries for the past thirty years.

    With its searching assessment of the effectiveness of foreign aid as an instrument of dogmatic and economic policy, Mosley's new book will be essential reading for all students in the field of international relations.

    eISBN: 978-0-8131-5930-0
    Subjects: Political Science

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-ix)
  3. List of tables
    (pp. x-xi)
  4. List of figures
    (pp. xii-xii)
  5. Preface
    (pp. xiii-xiv)
    Paul Mosley

    • 1 The Theoretical Case: Overseas Aid as a ‘Public Good’
      (pp. 3-18)

      Overseas aid, for the purposes of this book, is money transferred on concessional terms by the governments of rich countries to the governments of poor countries.¹ It is big business: about $35 billion in 1985, about three-quarters of it transferred direct, and the remaining quarter multilateral institutions such as the World Bank and the UN family of agencies. This $35 billion, as illustrated by Table 1.1, amounts to about one-third of all capital inflows into the Third World as a whole, and for the poorer countries it is a great deal more. In this book we shall seek to argue...


    • 2 The International Politics of Aid
      (pp. 21-48)

      Overseas aid, so named, is a by-product of decolonisation: the expression ‘overseas aid’ is not found in newspapers or official documents until after the Second World War. But since the nineteenth century it has been a common practice for governments to transfer money on concessional terms to the governments of their colonies under the label of ‘grant in aid’, ‘budgetary subsidy’ or some such term. The governments of Britain, France, Germany and the United States all gave ‘infant colony subsidies’ of this sort before 1914,¹ but invariably on a temporary basis and without the slightest connotation of moral obligation or...

    • 3 Community and Conflict in the Aid Donor Community
      (pp. 49-84)

      In this chapter our focus will be on the organisations that spend the aid budget on behalf of governments. Sometimes these organisations are fully fledged ministries in their own right, as in the Netherlands; sometimes they are departments within the ministry of foreign affairs, as in Britain and the United States of America; sometimes they are quasi-autonomous government corporations, as in Denmark and Sweden. They are all, however, bureaucracies, and as such driven by imperatives other than the profit motive.¹ In this chapter we explore what imperatives they are driven by, and in the light of this explanation consider how...

    • 4 On the Other Side of the River: Aid from the Recipient’s Point of View
      (pp. 85-116)

      Seen from the offices of the Finance Ministry of Nepal or Tanzania, aid is something quite different from what it appears in Washington or Tokyo. For the donor, aid is an expenditure designed to further objectives of foreign and commercial policy; for the recipient, it is an inflow, designed to relieve a financial constraint. In the past a clear perception of the aid process has been made difficult by the tendency of many authors to portray one or other party as the sole controller of the manner in which aid is used.¹ To do this is, of course, as misleading...


    • 5 Aid as Instrument of Development
      (pp. 119-154)

      In our introductory chapter we argued that the main theoretical case for aid rests on the presumption that the international capital market is full of ‘holes’ which only aid could ‘fill’: that is, beneficial projects which private capital could not or would not finance. We also drew attention to a counter-argument by Bauer alleging that, even if the presence of aid flows remedies market distortions in some areas, it creates them in others by reducing the supply of government ‘effort’ and by obstructing investment from the private sector. Using Myrdal’s terminology (1957) there are potentially both ‘spread’ and ‘backwash’ effects...

    • 6 Aid as Redistributive Tool
      (pp. 155-208)

      Growth does not necessarily bring with it a reduction in poverty. In the Third World as a whole, growth in ‘low-income economies’ has actually been higher than in ‘industrial market economies’ over the period 1965–83,¹ but very many people have not benefited from this growth, and the number of people living in conditions of absolute poverty remains at around a thousand million.² To ask whether aid relieves poverty, therefore, is a different question from the question considered in the previous chapter. There is little doubt that this is, moreover, the question which those who finance aid transactions see as...

    • 7 Aid as Export Subsidy
      (pp. 209-231)

      Since its inception the practice of aid giving has been underpinned by the argument that it is not only beneficial to the recipient but also serves the donor’s commercial and political self-interest. We have examined the extent of benefit to the recipient in the two preceding chapters, and of political benefit to the donor in Chapter 2. It remains to consider, in this chapter, the available evidence on the degree to which aid is responsible for increasing exports and employment in the donor country. As we argued earlier¹ those export orders which aid is able to win will usually be...

    • 8 The Case for the Defence
      (pp. 232-242)

      This book has been an attempt to respond to Bauer’s challenge. It starts from the moral premiss that anything which can be done to improve the living conditions of very poor people, and to narrow the gap between the living standards of the average person in the West and the average person in Ethiopia or Bangladesh, is in principle worth doing. It has examined the contribution which official overseas aid has made towards these and other more narrowly nationalistic objectives. It has also, in some detail, examined its adverse repercussions.

      Its findings have been as follows:

      As an instrument of...

  9. Bibliography
    (pp. 243-258)
  10. Index
    (pp. 259-266)