Foreign Aid Challenges
Like all concepts, foreign aid has both advantages and drawbacks. Foreign financial assistances are not always beneficial for the economy of recipient countries.
The disadvantages of foreign aid are enlisted and briefly described below:
Foreign aid can be used as a means to create sufficient economic or political pressure on the receiving countries, in instances such as repayment of the aids taken as loans. The purpose of disbursing foreign aid to a particular country is to improve its overall economic conditions, both in the large and small scales.
It is often noticed that such finances are mostly used for funding welfare projects and programs on a large scale, and the small industrial and agricultural sectors remain deprived.
- There is no uniformity in the practical utilization and application of foreign financial aid. As a result, such aids do more good to the employers rather than the needy employees.
- Foreign economic aid generally makes recipient countries highly dependent on their doner counterparts.
- Corruption on the governmental level may lead the officials and politicians to misuse foreign aid for their personal benefits and political advantages, rather than utilize them for popular welfare projects and programs.
- Foreign aid from doner countries sometimes come in the form of large loan amounts and not contributions. Additional pressure is created on the poor and underdeveloped countries to arrange repayment of high loans. amounts.