Foreign Aid Case Study

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Development assistance negatively affect state or private investment. The government savings may be affected through revenues whiles the private savings would be affected through interest rates or increased indebtedness (Riddel,2007). Aid encourages corruption in the recipient countries (Pack and Pack, 1993). Fungibility occurs when donors provide aid for say project A which the recipient country have already allocated fund for. Fungibility increases the possibility of corruption. The recipient country is likely to divert funds meant for specific projects (Conchesta, 2008). Aid in Sri Lanka and in Indonesia has been found to be more fungible at the sectoral level ( Feyzioglu, et al 1998). This situation affect the economic outlook of the…show more content…
The components of human development index include capital, schooling, life expectancy. A lot of recipient countries have benefitted from infrastructure facilities such as schools, healthcare facilities. The relationship between foreign aid and human development is significant as it has helped developing countries to increased their human index. Studies conducted by Fielding et al 2006, examined the impact of foreign aid on education, health and concluded that the relationship is positive. That is the impact of foreign aid on human development index is very…show more content…
Evidence shows that primary school enrolment is very low in some countries which have received a lot of foreign aid. Foreign aid has also not been able to eradicate infant mortality in developing countries hence the impact of aid on human development taking into consideration primary school enrolment and infant mortality is negative (Boone, et al 1996). In addition, other studies have also concluded that foreign aid has helped to reduce infant mortality (Mishra, et al 2007). In sub- Saharan Africa, from a sampled of thirty- nine countries it has been established that foreign aid has helped to reduce infant mortality. Donors have assisted in the provision of healthcare facilities, affordable drugs and finance of immunization programs such as polio eradication. All these has helped to reduce infant mortality which has contributed to improvement in the human development index (Asiama, et al 2009). Developing countries have benefited from donor assistance programs such as immunization, free maternal care which has helped to prevent infant deaths. Foreign aid has helped to reduce infant mortality in developing countries (Yontcheva and

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