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Economic Development

Solutions: aid and debt relief

  • 3 things to know
  • All three components

Overview

International aid, difference between bilateral and multilateral aid and tied aid.

What you need to know

Answer each one before you reveal it.

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Key term

What is the difference between emergency relief and development aid?

Key term

What does the evidence say about whether aid works?

Numbers

What was the Heavily Indebted Poor Countries initiative?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is international aid?

    Model answer

    International aid is the transfer of resources from richer to poorer countries to promote development. Grants, concessional loans, technical assistance and goods in kind are the usual forms.

  2. 2

    What is the difference between bilateral and multilateral aid?

    Model answer

    Bilateral aid passes directly from one government to another. Multilateral aid is channelled through an international institution such as the World Bank or a United Nations agency, which then allocates it.

  3. 3

    What is tied aid?

    Model answer

    Tied aid is assistance given on condition that it is spent on goods or services from the donor country. Critics argue it functions partly as a subsidy to donor firms and raises costs for the recipient.

  4. 4

    What is the difference between emergency relief and development aid?

    Model answer

    Emergency relief meets immediate needs after a disaster or conflict. Development aid funds longer-term investment in infrastructure, health, education or institutions. The two are frequently confused in public debate.

  5. 5

    What is the case in favour of aid?

    Model answer

    Aid has funded vaccination, treatment for HIV and malaria, water supply and schooling with measurable results. The poorest economies also lack the capital to escape a poverty trap without an external injection.

  6. 6

    What did Dambisa Moyo argue against aid?

    Model answer

    Moyo argued in 2009 that sustained aid to African governments has fostered dependency and weakened accountability. A government funded by donors need not raise taxes and so need not answer to its citizens. She advocated trade, investment and capital markets instead.

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