14 Advantages and Disadvantages of Foreign Aid

Anywhere in the world, there is a gap between the haves and the have-nots, the rich and the poor. At the local level, this is obvious. A single neighborhood can house both the homeless and those living in mansions. In a larger scale, say international, the same holds true – there rich and highly developed nations, and then there are poor and less developed nations.

Even then, when disaster strikes such as that tsunami in Japan, the earthquakes in Bohol, Philippines and Nepal, and the hurricane in the US – no matter how rich or poor a disaster stricken country is, a foreign aid is always welcome. So then, all of us have been giving and receiving of foreign aid at some point. Although the initial intention of foreign aid is to help, we should know that it does have its drawbacks.

List of Advantages of Foreign Aid

1. Save Lives.
At the onset, foreign aid is there to save lives particularly during calamities and disasters, like in the case of natural disasters.

2. Rebuild Livelihoods.
Foreign aid helps rebuild lives by providing livelihoods and housing right after a disaster so that victims can start over.

3. Provide Medicines.
Medical missions are there to offer free medical and healthcare products and services where they are needed the most.

4. Aids Agriculture.
Foreign support directed towards agriculture helps farmers and increase food production, which leads to better quality of life and higher quantity of food.

5. Encourage Development.
Industrial development projects supported by foreign aid create more jobs, improve infrastructure and overall development of the local community.

6. Tap Natural Resources.
Some less developed countries do not have the ability to maximize their otherwise rich natural resources, but with foreign support, this is possible.

7. Promote Sanitation.
Less privileged communities benefit from foreign aid aimed at providing clean water and sanitation facilities, which reduces risk of contracting infections and diseases.

List of Disadvantages of Foreign Aid

1. Increase Dependency.
Less economically developed countries (LEDCs) may become increasingly dependent on donor countries, and become heavily indebted.

2. Risk of Corruption.
There is likelihood that foreign financial support do not reach their rightful recipients, but go to the hands of corrupt political officials.

3. Economic/Political Pressure.
A donor country may place economic and political pressure on the receiving country, forcing them to return the favor.

4. Overlook Small Farmers.
Foreign support may only benefit large-scale agricultural projects, and not the less privileged, small farmers who need help the most.

5. Benefit Employers.
Most development may only benefit large corporations and already-wealthy employers, and not the people who do not have jobs or proper livelihoods.

6. Hidden Agenda of Foreign-Owned Corporations.
Foreign aid is sometimes given to a country or recipient to benefit foreign-owned corporations and entities. So the help is not actually directed to the less fortunate, but to its own people.

7. More Expensive Commodities.
When there is development and progress, there is inflation, which causes prices of commodities to increase, making the poor people more deprived.

Giving help to LECDs is a noble thing, but nations must properly monitor and manage the flow of foreign aid so that they reach the people who need it, and not go right into the pockets of corrupt and greedy entities.

Author Biography
Keith Miller has over 25 years of experience as a CEO and serial entrepreneur. As an entrepreneur, he has founded several multi-million dollar companies. As a writer, Keith's work has been mentioned in CIO Magazine, Workable, BizTech, and The Charlotte Observer. If you have any questions about the content of this blog post, then please send our content editing team a message here.