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The Effects Of War And Peace On Foreign Aid

908 words - 4 pages

Foreign aid encompasses technical, military, humanitarian and financial assistance provided by developed countries to help foster economic, political and social progression in developing countries. Foreign aid results in positive and negative consequences for developing countries and is subject to decisions made by government officials with regard to its distribution (Leonard, 2006). Examined in this paper is the impact of peace and war on foreign aid distribution, specific actions undertaken by government officials to relieve problems resulting from warfare and the role of foreign aid in poverty and warfare reduction in India.
India is not immune to intrastate and interstate warfare. The ...view middle of the document...

This helped to improve living standards of Indian citizens whereby, an estimated 80 million people now belong to the middle class (Ganguly, 2006). In addition, foreign aid financed the Indian armed forces. For example, the US provided foreign assistance in the Indian-Pakistan war of 1999 emerging victorious (Wolpert, 2005).
Investigating whether or not the provision of foreign aid results in the successful reduction of poverty and warfare in developing countries continues to yield inconclusive findings; however, researchers infer that foreign aid’s impact on economic development is slim to none. Development indicators such as investment, growth of national income, and savings mirror the impact foreign aid on a developing country’s economy. In fact, many researchers concur that the rate of development is indirectly proportional to the large amounts of money disbursed by foreign, developed countries. India is no exception to the rule whereby, foreign aid received by the country resulted in negligible of negative effects on the country’s developmental indicators (Kamath, 1992).
India’s history of foreign aid attests to the fact that foreign aid plays an insignificant role in fostering economic growth and deterring warfare. Between 1955 and 1971, the USA disbursed large amounts of foreign aid to India. At the time, India was preoccupied with the nationalization of its economy. The government directed the funds received towards institutionalization of the economy, which devoid the private sector of governmental funding. Kamath (1992) estimated that the private sector received less than 5% of foreign aid funds disbursed to the Indian government. Instead, the government chose to invest in public sector projects such as government fertilizer plants, highway construction, planes for the state-owned airline, and the establishment of public universities (focused on technology and agriculture). These investments generated negligible profits with most of them operating at a...

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