Different Types of Aid
The main aim of aid (also known as 'official development assistance' – ODA) is to provide resources on concessional terms for the promotion of economic development and welfare in developing countries. Most often the transfer of these resources is in the form of grants and loans on concessional terms from the developed (mostly northern countries) to developing countries (mainly in the southern hemisphere). The US' Marshall Plan (1948–51) aid to economic reconstruction in Western Europe post World War II set a successful precedent of pro moting development the objective of the multilateral organizations (such as the World Bank, International Monetary Fund (IMF) for, African Development Bank (ADB), the Asian Development Bank (ADB), and the Inter American Development Bank (IDB)) has been the transfer of knowledge as the solution to poverty and lack of development in developing countries. Development was seen as a technical issue until the mid 1990s. There are mainly two forms of aid: development aid and humanitarian aid (mainly dispersed to provide relief after disasters and conflicts). Substantial amount of military aid, which is very limited nowadays, was mainly given by the Soviet Union and the United States during the Cold War. Although there are different forms of aid, aid intended for one purpose can lead to another.
The Development Assistance Committee (DAC) was established to improve and coordinate international aid efforts in the 1960s. Over 95% of ODA now comes from DAC members comprising 22 countries plus the European Commission. Multilateral institutions occupy a dominant role in the global political economy and in the developing world as they provide both much needed loans and technical assistance (in projects on power, transport, and telecommunications). About 30% of development aid is managed by the multilateral donors, such as the World Bank, which also make interest free loans to the least developed countries. Many official donors also provide substantial additional amounts of humanitarian aid which is administered through nongovernmental organizations (NGOs). Besides these official donors there are (NGOs) such as Oxfam who provide assistance in the region of $6 billion annually. Northern based NGOs have branches based in southern countries in which they work. Often they run projects in partnership with NGOs in the south, effectively bypassing those of the state. NGOs have become increasingly globalized, and are working through transnational networks, forging new enduring alliances and networks to maximize their impact and engage in global policy processes. Along with bilateral aid, multilateral aid through agencies such as the World Bank, UN, EU, and NGOs has gained a higher profile in formulation and implementation of development policy, becoming key actors in the political economy of development. Over the period 2001–05, sub-Saharan Africa was a recipient of 31% of all ODA, which has steadily increased over the years (see Tables 1 and 2 for detail). On the other hand, aid to China and India has steadily declined in importance. Smaller countries are treated more favorably on a per capita basis and are among the most aid dependent, for example, Bangladesh and Nicaragua.
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