Types of Foreign Aid


There are four main types of aid programs:
a) Military Aid
Steven Radelet, “A Primer on Foreign Aid”, Working Paper (Center for Global Development, July 2006), 5.7
It is the traditionalist technique for buttressing alliances. The donors supplied money and
material, while the recipients provided most of the manpower. During Cold War, United States
and Soviet Union have spent more resources on military aid than on their foreign economic
program- and the objective has been the traditional one of safeguarding their own security by
strengthening the military capabilities of allies. Military aid is used to create local power
balances or preponderance, thus reducing the likelihood that the donor will have to station troops
abroad or intervene militarily to protect its interests.
Most forms of military aid have the advantages of build-in-controls. Not only are the recipients
dependent upon the donors for creating a modern military force, but they cannot operate the
force effectively unless the donor is willing to provide the necessary training support,
replacement parts, and maintenance. Thus, the controls provide a partial guarantee that the
recipient will use its military forces in a manner compatible with the interest of the donors-unless
the recipient can obtain ammunition, spare parts, and training from alternative sources.
b) Technical Assistance
Technical assistance is designed to disseminate knowledge and skills rather than goods or funds.
Personal with special skills from industrialized countries go abroad to advice on a wide variety
of projects. Malaria controls, agriculture mechanization, public administration, development of
fisheries, teaching programs land reclamation, road construction, and development of medical
and sanitary facilities.
c) Grants and Commodity Import Programs
Grants or gifts for which no economic repayment was expected are the most preferred method.
But outright gifts of this type always create problems for the donor and recipient, as the
governments of the major power have replaced grants with long term loans.
d) Development Loans
Foreign aid in the form of loans is not, strictly speaking, aid at all. Loans represent a short-term
transfer of funds, but since recipients pay back principle and interest, the transfer is only
temporary. Only to the extent that bilateral and multilateral loans are made to recipients with 8
very poor credit ratings, or at interest rates lower tan prevailing in international financial
markets.
Bilateral loans are often “tied”, that is recipients are required to use loan funds to buy products
from the donor. Often these are at costs above market rates, or the goods are of inferior quality.
Tied loans are, in fact, primarily a subsidy by the donor’s government to its own business and
shipping interests, despite these negative features of loans, they can be and have been used to
wield political influence over recipients.
According to Hans Morgenthau, there are six types of Foreign aid which deals with the transfer
of money, goods and services from one nation to another. They are
a. Humanitarian foreign aid
b. Subsistence foreign aid
c. Military foreign aid
d. Bribery
e. Prestige foreign aid
f. Foreign aid for Economic development
Only humanitarian aid is per se non political. The aid which governments have traditionally
extended to nations which are victims of natural disasters, such as floods, famines and epidemics
falls in that category. So do the services, especially in the fields of medicine and agriculture,
which private organizations, such as churches and foundations, have traditionally provided in
Asia, Africa, and Latin America.
While humanitarian aid is per se nonpolitical, it can indeed perform a political function when it
operates within a political context. The foreign aid that private organizations provides will be
attributed for better or worse to their respective governments insofar as humanitarian aid
emanating from a foreign country is recognized by the recipient country or its inhabitants to
perform a political function. Thus the agriculture aid which the Rockefeller Foundation has
provided for many years to certain Latin American countries.  Humanitarian aid extended by
governments may have a political function.
Subsistence foreign aid is extended to governments which do not command the resources to
maintain minimal public services. The giving nation makes up the deficit in the budget of the
recipient nation. Subsistence foreign aid is akin to the humanitarian type in that it seeks to
prevent the breakdown of order and the disintegration of organized society. But it also performs
the political function of maintaining the  status quo, without, however, as a rule, increasing its
viability.
Bribes proffered by one government to another for political advantage were until the beginning
of the nineteenth century an integral part of the armory of diplomacy. No statesman hesitated to
acknowledge the general practice of giving and accepting bribes, however anxious he might be
to hide a particular transaction.
Much of what goes by the name of foreign aid today is in the nature of bribes. The transfer of
money and services from one government to another performs here the function of price paid for
political services rendered or to be rendered. These bribes differ from the traditional ones
exemplified above in two respects:
 They are justified primarily in terms of foreign aid for economic development
 Money and services are transferred through elaborate machinery fashioned for genuine
economic aid.
Foreign aid for military purposes is a traditional way by which nations buttress their alliances. In
contrast to traditional practice, military aid today is extended not only to allies but also to certain
uncommitted nations. The purpose is here not so much military as political. It seeks political
advantage in exchange for military aid. It obligates by implication, the recipient toward the giver.
The latter expects the former to abstain from a political course which might put in jeopardy the
continuation of military aid. Military aid is here really in the nature of a bribe.10
What happens as military aid may also be actually in the nature of prestige aid, to be discussed
below. The provision of jet fighters and other modern weapons for certain underdeveloped
nations can obviously perform no genuine military function. It increases the prestige of the
recipient nation both at home and abroad. Being in the possession of some of the more
spectacular instruments of modern warfare, a nation can at least enjoy the illusion of having
become a modern military power.
As bribery appears today in the guise of aid for economic development, so does aid for economic
development appear in the guise of military assistance. The purposes of aid for economic
development are likely to suffer when they are disguised as military assistance, as we can say
that the purpose of bribery suffer when disguised as aid for economic development. The military
context with in which aid is bound to operate, even though its direct administration is in the
hands of the civilian authorities, is likely to deflect such aid from its genuine purposes.

2. Types of Foreign Aid:There are four main types of aid programs:a) Military Aid                                                          3Steven Radelet, “A Primer on Foreign Aid”, Working Paper (Center for Global Development, July 2006), 5.7It is the traditionalist technique for buttressing alliances. The donors supplied money and material, while the recipients provided most of the manpower. During Cold War, United States and Soviet Union have spent more resources on military aid than on their foreign economic program- and the objective has been the traditional one of safeguarding their own security by strengthening the military capabilities of allies. Military aid is used to create local power balances or preponderance, thus reducing the likelihood that the donor will have to station troops abroad or intervene militarily to protect its interests.Most forms of military aid have the advantages of build-in-controls. Not only are the recipients dependent upon the donors for creating a modern military force, but they cannot operate the force effectively unless the donor is willing to provide the necessary training support, replacement parts, and maintenance. Thus, the controls provide a partial guarantee that the recipient will use its military forces in a manner compatible with the interest of the donors-unless the recipient can obtain ammunition, spare parts, and training from alternative sources.b) Technical Assistance Technical assistance is designed to disseminate knowledge and skills rather than goods or funds. Personal with special skills from industrialized countries go abroad to advice on a wide variety of projects. Malaria controls, agriculture mechanization, public administration, development of fisheries, teaching programs land reclamation, road construction, and development of medical and sanitary facilities. c) Grants and Commodity Import ProgramsGrants or gifts for which no economic repayment was expected are the most preferred method. But outright gifts of this type always create problems for the donor and recipient, as the governments of the major power have replaced grants with long term loans. d) Development LoansForeign aid in the form of loans is not, strictly speaking, aid at all. Loans represent a short-term transfer of funds, but since recipients pay back principle and interest, the transfer is only temporary. Only to the extent that bilateral and multilateral loans are made to recipients with 8very poor credit ratings, or at interest rates lower tan prevailing in international financial markets. Bilateral loans are often “tied”, that is recipients are required to use loan funds to buy products from the donor. Often these are at costs above market rates, or the goods are of inferior quality. Tied loans are, in fact, primarily a subsidy by the donor’s government to its own business and shipping interests, despite these negative features of loans, they can be and have been used to wield political influence over recipients.4According to Hans Morgenthau, there are six types of Foreign aid which deals with the transfer of money, goods and services from one nation to another. They area. Humanitarian foreign aidb. Subsistence foreign aidc. Military foreign aidd. Bribery e. Prestige foreign aidf. Foreign aid for Economic development 5Only humanitarian aid is per se non political. The aid which governments have traditionally extended to nations which are victims of natural disasters, such as floods, famines and epidemics falls in that category. So do the services, especially in the fields of medicine and agriculture, which private organizations, such as churches and foundations, have traditionally provided in Asia, Africa, and Latin America. While humanitarian aid is per se nonpolitical, it can indeed perform a political function when it operates within a political context. The foreign aid that private organizations provides will be attributed for better or worse to their respective governments insofar as humanitarian aid                                                           4 K. J. Holsti, 230.5 Hans Morgenthau, “A Political Theory of Foreign Aid”, The American Political Science Review, Vol. 56, No. 2. (June, 1962): 301-309.9emanating from a foreign country is recognized by the recipient country or its inhabitants to perform a political function. Thus the agriculture aid which the Rockefeller Foundation has provided for many years to certain Latin American countries.  Humanitarian aid extended by governments may have a political function.Subsistence foreign aid is extended to governments which do not command the resources tomaintain minimal public services. The giving nation makes up the deficit in the budget of the recipient nation. Subsistence foreign aid is akin to the humanitarian type in that it seeks to prevent the breakdown of order and the disintegration of organized society. But it also performsthe political function of maintaining the  status quo, without, however, as a rule, increasing its viability. Bribes proffered by one government to another for political advantage were until the beginning of the nineteenth century an integral part of the armory of diplomacy. No statesman hesitated to acknowledge the general practice of giving and accepting bribes, however anxious he might be to hide a particular transaction. Much of what goes by the name of foreign aid today is in the nature of bribes. The transfer of money and services from one government to another performs here the function of price paid for political services rendered or to be rendered. These bribes differ from the traditional ones exemplified above in two respects: They are justified primarily in terms of foreign aid for economic development  Money and services are transferred through elaborate machinery fashioned for genuine economic aid.Foreign aid for military purposes is a traditional way by which nations buttress their alliances. In contrast to traditional practice, military aid today is extended not only to allies but also to certain uncommitted nations. The purpose is here not so much military as political. It seeks political advantage in exchange for military aid. It obligates by implication, the recipient toward the giver. The latter expects the former to abstain from a political course which might put in jeopardy the continuation of military aid. Military aid is here really in the nature of a bribe.10What happens as military aid may also be actually in the nature of prestige aid, to be discussed below. The provision of jet fighters and other modern weapons for certain underdeveloped nations can obviously perform no genuine military function. It increases the prestige of the recipient nation both at home and abroad. Being in the possession of some of the more spectacular instruments of modern warfare, a nation can at least enjoy the illusion of having become a modern military power. As bribery appears today in the guise of aid for economic development, so does aid for economic development appear in the guise of military assistance. The purposes of aid for economic development are likely to suffer when they are disguised as military assistance, as we can say that the purpose of bribery suffer when disguised as aid for economic development. The military context with in which aid is bound to operate, even though its direct administration is in the hands of the civilian authorities, is likely to deflect such aid from its genuine purposes.

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2 thoughts on “Types of Foreign Aid

  1. diyakhan

    there must be taken some steps to make this country be developed,economically we are far behind in the long run, there r no proper policies for economic growth,poverty is on the top…….. Y this is so? Y we can’t be developed? Y we can’t be independent….. too much critical situation

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