Foreign Aid

20 March 2012

Economic and Development Problems in Africa

Reviews

• Week 7– Watch Mwenda video– Read case study

1. What are Mwenda’s three main reasons why he believes aid is a ‘curse’?

2. Why have rich countries agreed to cancel debt and provide more aid to poor countries? Provide three reasons

3. In your opinion, should the West be giving more aid to Africa or less? Explain why or why not.

Reviews

• Week 7– Watch Mwenda video– Read case study

1. What are Mwenda’s three main reasons why he believes aid is a ‘curse’?

2. Why have rich countries agreed to cancel debt and provide more aid to poor countries? Provide three reasons

3. In your opinion, should the West be giving more aid to Africa or less? Explain why or why not.

Not all information is of equal value!!

Case StudyCase Study

Case study questions

• What are Mwenda’s 3 main reasons why he believes aid is a ‘curse’?

Neopatrimonialism

• Yoni is the home village of Sierra Leone’s president, Ernest Bai Koroma.

• “The biggest challenge our continent is facing is how we can foster incentives for governments to develop a vested interest in building functional public institutions that can deliver public goods and public services through public institutions or political institutions impersonally to anonymous citizens”

• Aid Dracula in charge of the blood bank?

• What is the solution? • Role of threats? HIV/AIDS & Ugandan army [+ Rwandan Govt]

Mwenda

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Assignment 2

Assignment 2

Case study questions (1)

• Why have rich countries agreed to cancel debt and provide more aid to poor countries? (i.e What are the reasons behind their actions?)

Case StudyQuestions (2)• Breakdown of $100 of aid– $16 to consultants in donor countries– $26 to emergency aid and relief operations– $14 to debt servicing ________________

Remaining $44? Patronage? Inefficiency? Bureaucracy?

• Should aid only be given to countries that can use it effectively? Or should it be allocated based on need? [Trade-off] where is the line between need and outcomes?

Politics

Questions (2)

Case StudyQuestions (3)• Can aid flows help poor nations break out of

poverty? How?

• Should aid only be given to countries that can use it effectively? Or should it be allocated based on need?

Aid for development? Growth?

• “Growth is not an end in itself. But it makes it possible to achieve other important objectives of individuals and societies. It can spare people en masse from poverty and drudgery. Nothing else ever has. It also creates the resources to support health care, education, and the other Millennium Development Goals to which the world has committed itself. In short, we take the view that growth is a necessary, if not sufficient, condition for broader development, enlarging the scope for individuals to be productive and creative. “(p. 1).

Spence report on growth

Aid for development? Growth?

Aid for development? Growth?

• Should the West be giving more aid to Africa or less?– Why?

– Why not?

– Are there any caveats?

Question 5: Is aid conditionality good or bad?

Questions (4)

Aid 2.0 ?

• Cash on Delivery (COD) ?• Kiva.org?• NGO’s?• Microfinance?

Remaking the Rainbow Nation – HBS Case Study1. In 1990, Nelson Mandela famously said that ‘a change or modification of

our views in this regard [nationalization] is inconceivable” Yet once in power, his government apparently went in the opposite direction, implementing GEAR. Why did Mandela change his mind?

2. Looking at both the case study and the Van der Berg article – explain the main trends in poverty and inequality since 1994.

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