The effectiveness of foreign aids to the third world developing countries is a controversial issue. Liberal economists thought, key to economic success is appropriate usage of loans, and if it is utilized effectively, such loans can have a hugely important role to play. Loans can contribute to poverty reduction, to fill the deficit of budget gap, to build big construction such as bridge, roads, public buildings, educational institutions etc. But critique of foreign aid such as Andre Gudner Frank argues that foreign aid is a means of domination, dependency, exploitation to the third world developing countries. In the colonial era, imperialist countries accumulated raw materials, natural resources, mineral resources etc. directly through colonialism or imperialism. In the present neocolonial or neoliberal society, aid is a new form of domination, dependency to the third world countries and also a means of trade, marketing of machineries, technologies etc.
Bangladesh, located in South Asia, is one of the poorest countries in the world. According to the UNDP’s 2010 Country Summary report, the country has a large population 164.7 million and having GDP per Capita is $ 1300. External debt is $ 316.7 per $ 1000 GDP. Foreign aid both grants and loans has impacts on the economy of Bangladesh. It contributes to the development works like bridge, roads, highways, infrastructural works etc. But it is also leading to growing indebtedness, dependency, domination etc.
Padma Bridge project is the most recent and best example of foreign aid as means of development or dependency of a country. World Bank is gradually delaying the project for the acquisition of corruption against SNC- Lavalin Company and former communication minister Sayad Abul Hoshen etc. But there is also acquisition against World Bank that it was itself was in favor of fault lender institution. Recently, Bangladesh has withdrawn its proposal from World Bank but World Bank has declared that proposed loan for Padma Bridge is fixed for Bangladesh and Bangladesh can use the loan in other development projects.
My paper argues that foreign aid has impact on the development but it is also means of domination and trade of donors. Bangladesh is not self sufficient not to take the aid but if the aid is channeled through appropriate biding and utilized effectively, such aid can have hugely important role for development.
Table of Contents
1. Abstract
2. Introduction
3. Definition of foreign aid
4. Historical background of foreign aid
5. Foreign aid to Bangladesh
6. Motives of foreign aid
6.a. The recipient perspectives
6.b. The donor perspective
7. Foreign aid and development
7.a. Dependency
7.b. Aid and trade
7.c. Corruption
7.d. Debt entrapment
8. Conclusion
Research Objectives and Core Themes
This work examines the effectiveness of foreign aid in developing countries, specifically focusing on the case of Bangladesh and the contentious Padma Bridge project, to determine whether such assistance fosters genuine economic development or contributes to long-term dependency and debt.
- The economic impact of foreign aid on developing nations like Bangladesh.
- The political and strategic motives of donor countries versus recipient needs.
- The role of foreign aid in major infrastructural development projects.
- The challenges of corruption, debt entrapment, and economic dependency.
- The importance of effective aid utilization and governance for sustainable growth.
Excerpt from the Book
Corruption
‘Only 25 per cent of foreign aid effectively went to the poor,’ says Barakat. ‘For each $100 aid, $25 went back to its origin on repayment terms, $30 were ‘eaten up’ by the bureaucrats, politicians, commission agents, consultants and contractors, and another $20 went to the urban and rural elite in different forms,’ he adds. This comprises a formidable loss and a blow to the nation’s attempts to development, he says. (Yousuf Sadek Ahmed and Alamgir Mohiuddin, 2009). For example, in Padma Bridge project, accusations of corruption have been raised against communication minister, lender company SNC- Lavalin Company and also against donor institution World bank.
The Padma Bridge project has been stalled for the corruption of communication minister Sayad Abul Hoshen. World Bank has directly charged against him. The international representatives of Shako, an institution owned by Sayad Abul hoshen have been accused to want bribe or commission by facilitating to get tender in Padma Bridge.
Canadian police has found initial corruption of SNC-Lavalin Company. Corruption has been done in Padma Bridge related project. World Bank has banned SNC-Lavalin temporarily. In the SNC- Lavalin Companies’ website, this news has been confessed as truth. Canada based SNC Lavelin Company is one of the most prominent engineering company among the top ten companies of the world. But before this, they were accused of corruption in a current project of of Karala in India.
Summary of Chapters
1. Abstract: Provides a concise overview of the controversy surrounding foreign aid and introduces the case study of the Padma Bridge project.
2. Introduction: Outlines the broader debate on foreign aid effectiveness and details Bangladesh's reliance on aid for budget and infrastructural needs.
3. Definition of foreign aid: Clarifies the standard definitions of foreign assistance as provided by international bodies like the OECD and defines aid types relevant to the Bangladeshi economy.
4. Historical background of foreign aid: Traces the evolution of capital flows from the colonial era through the establishment of modern international financial institutions.
5. Foreign aid to Bangladesh: Examines the specific classification and operational practice of foreign aid within the Bangladeshi government framework.
6. Motives of foreign aid: Analyzes the diverse reasons for aid provision and reception, contrasting humanitarian objectives with self-interest and geopolitical agendas.
7. Foreign aid and development: Investigates the multifaceted impacts of aid on development, highlighting risks such as dependency, trade constraints, corruption, and debt crises.
8. Conclusion: Synthesizes the arguments regarding aid effectiveness, emphasizing that the value of aid lies primarily in its efficient management and utilization.
Keywords
Foreign aid, Bangladesh, Padma Bridge, Economic development, Debt entrapment, Dependency, World Bank, Corruption, Infrastructure, Donor perspective, Recipient perspective, Grants, Soft loans, Governance, Policy ownership.
Frequently Asked Questions
What is the primary subject of this publication?
The publication analyzes the role and effectiveness of foreign aid in the context of developing nations, using Bangladesh as a primary case study.
What are the core themes addressed in this work?
Key themes include the economic impact of aid, the motivations of donor versus recipient countries, the challenges of corruption, and the consequences of long-term dependency on external funding.
What is the central research question?
The study questions whether foreign aid serves as a genuine catalyst for development or whether it inadvertently leads to debt entrapment and political dependency in recipient countries.
Which scientific methodology does the author apply?
The author employs a qualitative analysis of historical data, economic reports, and existing literature, combined with a case study approach focused on the Padma Bridge project.
What is covered in the main body of the text?
The main body explores the definitions and history of aid, the specific aid landscape in Bangladesh, donor and recipient motives, and the practical challenges of development projects.
Which keywords define this document?
The work is characterized by terms such as foreign aid, economic development, debt entrapment, policy ownership, and infrastructural corruption.
How does the Padma Bridge project illustrate the author's argument regarding corruption?
The project serves as a practical example where allegations against government officials and international firms led to stalled funding, illustrating how corruption compromises developmental goals.
What is the author's conclusion regarding the necessity of foreign aid for Bangladesh?
The author concludes that while aid can be vital, Bangladesh must improve its internal tax collection and technological capabilities to reduce its dependency on external grants and loans.
- Quote paper
- Bachelor of Social science in sociology. Atikul Islam (Author), 2013, Foreign aid and development in Bangladesh., Munich, GRIN Verlag, https://www.hausarbeiten.de/document/213400
