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Some countries provide resources to other countries inform of foreign aid. An international firm voluntary loan resources to a foreign country and these resources include finance, labor, materials, food and other commodities.
The aid offered can either be directly or indirectly. Before considering foreign aid, analyses the following pros and cons.
1. Help fight local issues effectively: Resources offered to the country inform of foreign aid enables the country to fight local problems that affect their quality of life. They combat HIV/AIDS, terrorism, famine, and any other problem.
2. Encourage positive diplomatic relationships: Providing help to other countries may benefit the country providing aid. It helps to create a good relationship, promote job opportunities and trade agreements.
3. Reduce poverty: Foreign aid allows countries to receive food, shelter, water, and other resources reducing poverty in less developed countries.
4. Creates an independent world: Loaning financial resources to other countries enables them to achieve their independence. With foreign aid countries, no longer have to worry about which part to sell in order to balance their spending.
5. Saves lives: When there is an emergency in a country like earthquakes, volcano eruption, and other natural calamities, some foreign countries can come to their rescue by providing access to medical resources, food, and others resources.
6. Given with a donor caveat: Foreign aid can be given for a specific purpose and many nations provide a tied foreign aid instead outright donation. A certain percentage of the aid is used to buy goods and services from the country offering the aid.
7. Low or no interest loan: Not all the financial aid in form of gift and grants. Some countries offer foreign aid in form of loans which attract low or no interest rate.
8. Eradicate diseases: Diseases like Ebola, cholera, measles, polio, and malaria affect people across the world thus, humanitarian aid is provided to help prevent the spread of the diseases.
9. Create positive back and forth relationship: Countries giving foreign aid always receive some in return. What goes around always comes back.
10. Humanitarian aid: There are firms which are established to promote the development of nations and foresee the rights of individuals.
1. No guarantee of benefit: Some countries offer foreign aid to other nations but there is no guarantee that those countries will benefit in return. They only provide help when needed.
2. Creates dependency: Foreign aid can create dependencies in some countries even when it is no longer part of their financial priority.
3. Proving nation get involved in governing: Reliance on foreign aid can affect the quality of governing in the receiving nation. It reduces accountability placed by government on its leadership to people instead the work to ensure the donor is pleased with their actions.
4. Underutilized: Foreign aid is mostly sent from one government to another and sometimes it fails to reach the intended recipient due to corruption or even left to spoil without being distributed.
5. Providing nations may become targets: Nations which provide high levels of foreign aid may become targets to terrorism especially if there is tension between the receiving nations and the neighboring countries.
6. Perpetuate conflict: Political instability can lead a country to receive foreign aid and if the aid they receive is tied to the stability of the government then there is a chance the government will remain unstable so as to receive the aid.
7. Neglects domestic needs: Offering financial aid to other countries may affect the domestic needs of the donor country. They spend a lot of money on other countries instead of improving health care and poverty levels in the country
8. Increased prices of commodities: In cases of tied aid, firms can increase the prices of commodities by 30% since the receiving nation is expected to buy the items. This affects the growth of the receiving nation.
9. Future influence: The donor nation can put political pressure on the receiving nation making the donor nation receive future favors and returns in exchange for the aid.
10. Benefit employers: Foreign aid offered for developments benefits larger organizations instead of people with no jobs and livelihood.