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Aid Giving and Corruption

Aid Giving and Corruption

Giving aids to less developed countries remains one of the leading economic issues of our time. Millions of money go into it, governments’ performance can be judged by it. A lot of arguments have been there on whether aid is appropriate or not. Appeals for additional aid to Africa are increasing, with supporters pushing for increasing the approximately $50 billion of global aid that by now goes to Africa annually two fold.

However, facts significantly exhibit that alms to Africa have made the poor populations poorer, and slowed down economic growth. The dangerous aid culture has had its consequences: it has made African countries more prone to inflation, more debt-laden, more exposed to the unpredictable aspects of the money markets and more repellent to high-quality investment. It has raised the risk of general unrest and civil conflict. Aid is an absolute political, humanitarian and economic disaster.

I believe no individual will refute that there is a clear ethical obligation for charity-based and humanitarian aid to intervene when required, for instance during the tsunami that took place in Asia (2004). However, it is worth noting that crisis and charity-based aid may or may not help. Aid-driven scholarships have definitely assisted African girls to join school (even though not much follow-up is done to ensure they are employed after schooling). This form of aid is necessary to fight short-term suffering, though it cannot contribute to long-term maintainable growth.

It may have its weaknesses and strengths, but such charity-based alms are relatively small compared to the money that goes to Africa annually in aid from big development organizations like the World Bank or government-to-government aid.

In the last 60 years not less than $1 trillion of aid meant for development has been transferred from wealthy nations to Africa. Nonetheless, actual per-capita income at present is lesser than it was in the 1970s. Moreover, more than half of the populations (over 350 million people) survive on under as dollar a day. This figure has in fact doubled in the last two decades.

Despite extremely insistent debt-relief campaigns in the 1990s, African countries are still paying over $20 billion in debt repayments annually, a bleak reminder that alms are not free. To maintain the system, debt is repaid at the expense of African health care and education. The vicious cycle of dependency occurs over and over as poor nations struggle to repay debts with having other debts. This is corruption.

It is important to look at whether aid to poor countries poses risks associated with corruption in the receiving nations. Most often, countries with weaker institutional frameworks utilize the aid ineffectively. It has been proposed that providing aids to poor countries often result to remarkable growth of corruption, since the institutions that have the obligation to watch over the funds are weak, thereby resulting to low answerability.

In contrast, the powerful nations and other donors have been offering financial aid to countries whose governance is poorly structured as opposed to less developed countries with organized and focused leaderships. The main objective foreign aid is to alleviate suffering in less developed countries, but its helpfulness depends on stability of the receiving country. Superlatively, donors should lay more emphasis on fields that are more deserving and those that portray more receptiveness. On top of development aid, donors should also assist the beneficiary countries to eliminate corruption and enhance transparency.

 

Corruption undermines effective of aids. The usefulness of aid can be classified into very effective, completely ineffective, or the whole thing in between. This is dependent on the quality of institutions and policy-making. It is approximated that one percent of GDP in development aid can cut infant mortality and poverty by one percent in a country with good management, i.e. good institutions and policies. In nations with defective management, the amounts of aid have not influenced the degree of economic growth. There are various ways through which the usefulness of aid is subverted.

The most immediate effect is obviously the seepage of money in development projects. The falsifying impacts of corruption on projects begin as early as the project plan stage where project necessities are overstated or customized to fit one particular business, they reach into the bidding procedure where conspiracy amongst firms or between government bidders and officials makes competition unsuccessful, leading to awarding of contracts to incompetent firms at overstated prices. Moreover, bribes are needed in the provision of resources. Kick-backs also persuade administration officials to ignore slothfully executed projects, staying below contract requirements, leaving roads unfinished and support not delivered. Bribes also assist in making technical and business audits smooth and to refute payrolls and bills. Corruption at the rural community level comprises vanishing aid deliveries or wrong targeting, where the best linked and those ready to pay but not the poorest receive aid. Indonesia makes a perfect example of how corruption in aid projects happens and why it continues (Marquette, 2003).

Governance and budgetary factors can also severely mess up the usefulness of aid. Ineffective state accounts, low aptitude and diversion of community funds are a few of the main challenges of development aid in African nations. In particular, program support (commodity support, Balance of Payment support, economic improvement loaning and debt-relief) is fungible and has been utilized in the past by African governments to develop themselves without considering the distressing long-run consequences for socio-economic progress in their countries (Chheang, 2009). High levels of alms lead to a compromise to the worth of institutions, which are in working closely with the government. They also make accountability mechanisms weaker, promote corruption and rent-seeking behavior, generate dispute over management of aid, siphon off limited talent from the bureaucracy and alleviate pressures to improve unproductive institutions and policies.

Aid inflow much like natural resources provides opportunities for wealth. They can be spent on public investment or diverted for own use by administration officials. A political battle over alms inflow can lead to instability in the short run, thus leading to a reduction in funds for the public as a whole and particularly the poor. Aid can as well be diverted by elites in the government towards projects that offer more opportunities for rent-seeking such as capital-intensive projects as opposed to basic needs and community-controlled programs (Duncan, Jancar-Webster & Switky 2008)

Similarly, Hancock (1992) indicated that in nations with competing community groups, a rise in government revenue does not necessarily lead to a rise in public expenditure, suggesting that inflow of aid does not necessarily improve the social welfare of a nation. More ominously, he also showed that prospects of aid only can improve rent-seeking behavior and therefore reduce the provision of community goods. He concludes by emphasizing on the significance of considering the impact of aid on the political process affecting public policy. The findings propose that aid promises alone can influence rent-seeking and policy-making behavior before (without) any resources changing hands at all.

Due the lack of efficacy and potentially damaging effects of aid in poor administrative environments with a high degree of corruption, a lesser amount of aid should be offered to nations with high levels of corruption, and additional aid to reward nations with excellent governance, where alms are more useful. Nevertheless, there is no practical indication that this in actual fact is the case. Observing the aid flows up to the start of 1990s, Lomborg (2004) indicated that alms in reality went in equivalent amounts to nations with bad as well as excellent governance. This is for the reason that the provision of bilateral aid is basically influenced by the donors’ strategic interests. Looking closely, bilateral alms flows to several nations revealed that political allies and past colonies got a bigger share of alms than self-ruled nations or open economies. Non democratic colonies got twice as much in aid as opposed to democratic non-colonies.

At the same time, multilateral alms have been mainly undetermined by strategic or political interest. Here, aid provision has been targeted towards poorer countries with excellent management, which received thirty percent extra as compared to badly managed nations in the similar population and income group.

It is important to look at aid for governance restructuring and anti-corruption strategies.

In spite of recommendations on accuracy policy, the implications of reducing corrupt regimes have been met by dilemma. While on one hand giving alms leads to corruption through leakages, cutting aid entirely leaves poor population without the benefits associated with it. The fact that there have been little or no mechanisms to address this dilemma has often led global donors to ignore corruption aspect and continue to lend as usual (Neumayer, 2012). The donors can deal with this dilemma with two approaches:

First, alms should be aimed at governance reform to develop the very channels through which aid is provided. This comprises knowledge and capacity building, institutional restructuring which provides incentives for implementing and public and agencies officials with well-organized reform and performance of economic management systems which reinforce transparency and accountability. Eventually, investing in institutions, capacity and knowledge building is a requirement for the provision of improved services to the underprivileged. Fortifying local and sectoral institutions to enhance the delivery of service is also crucial given the fungibility of monetary aid. So long as budgets are badly managed and grant allocations based on elite-dominated and non-transparent policies, monetary aid raises general levels of community expenditure but barely one specific sector such as health or education (Seidler, 2008).

Secondly, it implies that investing significant thought and resources into guarding development projects against corruption. This comprises enforcing the use of appropriate procurement and financial procedures including technical and financial audits, setting up grievance databases and processes of follow up, involvement of beneficiaries in designing project, execution and participation or monitoring by civil society bodies and the media. Raising lucidity also proves to be a helpful prevention for corrupt conduct.

In brief, the very existence of corruption is a demonstration of contributory systems of bad governance. This clearly shows the significance of global aid that encourages governance reform including strategies to curb corruption. The World Bank has more and more made this a main concern in its work through a four-pronged method. This entails Helping Countries Combat Corruption, by helping countries in combating corruption, mainstreaming corruption issues in their projects, checking corruption in World Bank projects and by sustaining global efforts to fight corruption. Other donor bodies have put in strong efforts to address corruption issues in their projects as well.

A lot of arguments have been put forward regarding the desirability of the foreign alms. Some suggest that foreign aid offers weak countries more harm than benefits. This argument has been supported by three reasons. The first one is that foreign aid does not contribute significantly to financially viable strides in developing nations, and the second is that alms present the psychological and political harm. The third explanation is that foreign alms widen the gap of influence and power between the strong nations and the weak nations.

According to Seidler (2008), the United States provided a number of forms of foreign assistance to around 150 countries. Israel and Egypt have been the leading beneficiaries since the late 1970s, even though Iraq, getting over $20 billion for rebuilding activities since mid-2003, is the largest beneficiary from 2004. Using the above example, foreign aid can mean humanitarian assistance, bilateral development assistance, military assistance and multilateral assistance. This implies that nowadays, foreign alms are considered as commonplace and natural. Nonetheless, while many people take foreign aid as a favorable campaign, there are many detrimental facts about foreign aid. These harmful effects can broadly be classified into psychological and political. Moreover, it makes the gap between economies bigger. Therefore, the disadvantages should be checked and revised (Seidler, 2008).

Foreign aid may be in the form of capital transfers or technical assistance; and training for either military or civilian purposes. Its use in the present time started in the 18th century. After World War II, foreign aid became a more sophisticated tool of foreign policy. International bodies were formed to grant aid to countries ravaged by war and freshly freed colonies. These are bodies such as the United Nations Relief and Rehabilitation Administration (Bealinger, 2006). In 2000, United States foreign aid amounted to $10 billion. Some proponents of foreign aid state that since it offers the opportunity for growth then it is an excellent campaign. In contrast, those opposed to foreign aid claim that since it ultimately encroaches the power of the assisted nations then it is not good campaign (Miller, 2010). However, in spite the virtues of foreign alms, there are numerous disadvantages.

The main reason is that foreign alms do not contribute considerably to economic improvement in less developed countries. Aid that is projected to boost development may facilitate some governments to divert funds to other, non-productive activities (Cremer, 2008). In similar words, foreign aid intended for economic growth is used to create wealth for certain people such as the governors. It has been the order of things especially in developing nations. Therefore, aid goes into waste in nations that do not have the administrative or technical ability to take up and utilize it properly. Additionally, if infrastructural projects, like road, electricity and plant, are the main concern of foreign, then many people who need food and water will have a lot of mistrust towards the government and the foreign policies. Thus foreign aid brings about unsuccessful outcome such as the mistrust and corruption.

Moreover, foreign alms often give the poor countries governmental handicap and psychological harms. Pomerantz (2004) asserted that aid has notable distorting outcomes in the administrative life of receiving countries. Aid is normally transferred to the authorities of these countries, which tends to reduce the government’s aptitude. In other words, the countries that give foreign support to the developing and the impoverished countries want to enjoy command over poor and the developing countries. That is to say, the objective of foreign aid is to meddle with the freedom of the poor countries unobservant of the original purpose of the foreign aids. Besides, foreign aid is able to get the citizens of the poor countries lose their homeland life. In other words, foreign aid is not entirely financial assistance. That is to say, not only significant relief but also psychological aspect, attitude and culture are distinctly introduced. In this time people living in the poor country will experience the turmoil of psychology for the reason that they will use the cultures and habits which are amalgamated between their own cultures and donor countries’ culture. As the result, this suggests that the poor and developing countries will be subjugated by the countries which provide support. On evidence of encroachment of freedom and disruption of the culture, foreign aid is not useful. Finally, foreign alms make the donor countries stronger. From the past to present, some powerful countries are overwhelmed all over the globe in terms of diplomacies, society and economic system. It entails abuse of power. In other words, due to foreign favors, the inequality will deepen.

Currently, a lot of economically strong nations are competing for the provision of alms to the weak and poor countries. Nonetheless, the nations which provide support to weak countries seek to receive the raw materials and resources from the receiving countries more than the value of things which they gave to the poor nations. To be more specific, nowadays, donor countries want to acquire a lot of natural resources and the right to do business without obstruction by the receiving countries. Due to foreign aid, the stronger the donor countries are, the weaker the less developed countries become. In other words, foreign aid is a non-existent help. Due to foreign aid, the gap of economic and political influence is centered on a small number of developed countries.

Proponents of foreign aid argue that foreign aid creates employment. Yet, this claim does not look at the beneficial effects. For instance, in the weak countries, the organization makes use of companies that hire workforce and pay very poor salaries. When that happens, the owners of the companies send enormous proceeds to their own country. Even though the business has made massive profits, they do not make the most of money for the poor countries that the large company already invested. It is similar to a situation where the poor countries are robbed of the labor force by the wealthy nations. Due to this, foreign aid makes poor nations poorer.

To sum up, foreign relief produces harmful results rather than helpfulness. Most of all, foreign relief involves mistrust and corruption. Additionally, in terms of psychological and political aspects, it gives rise to much harm than benefits. Eventually, foreign alms make the crack between the poor and the rich countries bigger. At times, there are supporters of foreign alms. However, as seen from the above examples of foreign alms, we can appreciate that the harm and disadvantages are in excess of benefits. Therefore, strong countries have to cease supporting the weak nations.

According to Pomerantz (2004), anti-corruption convention in Beijing assists Canadians for the reason that an attempt to fight corruption is good for financial viability growth, peoples’ lives, and confidence in non governmental and governmental bodies. Firstly he stated that anti-corruption efforts are prevalent all over the globe by a range of organizations. In addition, he says that the degree of corruption varies from one nation to another. Then, he elaborates on the disadvantages of corruption. Those comprise obstruction of the economic growth, deterioration of peoples’ quality of life and a reduction of trust to each body. Thirdly, he talked about the ways that are available to put into practice. That implies proper legislation, respect to the rules and strict execution of policies. To conclude, the author mentions that there are even difficulties of fighting corruption. However, based on the example of Canada, he clearly stated the benefits of anti-corruptions.

It is not lucid that anti-corruption is very helpful since its futile efforts. It can not save cash as well as citizens from communal problems. The writer has the helpful judgment. Anti- corruption has a lot of advantages. Nevertheless, diverse bodies including governmental, private and non-governmental organization should advise that anti-corruption efforts be reduced because of dissimilar culture of each country’s expected characteristic of human beings and ineffectiveness of the anti-corruption.

First of all, anti-corruption campaigns can not be in command of diverse cultures of each and every nation. Cultural diversity brings about differences in terms of ideologies. For instance, a nation that compliments the most imperative families and friends has a preference for guarding relationship to observe the anti-corruption regulations. Thus, the everyday anti-corruption effort is fruitless. Secondly, anti-corruption campaign cannot succeed due to the intrinsic human traits. The view of human nature as primarily wicked proposes that human beings are originally black-hearted. This means humans like to violate the regulations and boundaries on account of the innate nature. As a consequence, no matter how stern and strong the anti-corruption campaigns are, people will just not regard and they will treat the efforts as trivial. In brief, people will overlook any rules and restrictions.

Another issue is that due to mishandling of aid, anti-corruption pains give rise to worse problems. Generally, people are envious of achievement and advancement of others. To be more specific, all through history, we can say that successful and expectative great men were murdered by the conspiracy of other people. If in reality the anti-corruption policy exists, most people will abuse it to make other men suffer. Moreover this phenomenon arises from the mistrust among the people. Thus, anti-corruption efforts will fail because of disbelief.

To conclude, anti-corruption efforts are of no meaning. Firstly, diverse habits and cultures keep people from upholding the anti-corruption services. Secondly, greed makes the anti-corruption fruitless. Lastly, since foreign aid has often been put to wrong use, anti-corruption campaigns are insignificant. Based on the above reasons, we can identify the ineffectual effects of the anti- corruption efforts.

References

Chheang, V. (2009). The Effect of Foreign Aid on Economic Growth and Corruption in 67 Developing Countries. Washington, D.C.: Georgetown University.

Cremer, G. (2008). Corruption & development aid: confronting the challenges. Boulder, Colorado: Lynne Rienner Publishers.

Duncan, W. Jancar-Webster B., & Switky B. (2008). World Politics in the 21st Century: Student Choice Edition. Stamford: Cengage Learning.

Hancock, G. (1992). The Lords of Poverty: The Power, Prestige, and Corruption of the International Aid Business. Berkeley: Pgw

Lomborg, B. (2004). Global Crises, Global Solutions: Costs and Benefits. London: Cambridge University Press.

Marquette, H. (2003). Corruption, Politics and Development: The Role of the World Bank.Basingstoke: Palgrave Macmillan.

Miller, R. ( 2010). Globalizing Justice: The Ethics of Poverty and Power. London: Oxford University Press.

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Neumayer, E. (2012). Pattern of Aid Giving. London: Taylor & Francis.

Pomerantz, P. (2004). Aid Effectiveness In Africa: Developing Trust Between Donors And Governments. Lanham, Maryland: Lexington Books.

Seidler, C. (2008). Agencies and Policies: The Performance of Bilateral Donors in Fighting Corruption. Berlin: Diplomica Verlag.

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