Foreign Aid Case Study

1760 Words 8 Pages
Register to read the introduction… “Tied aid comes with the requirement that a certain percentage of it has to be spent on goods from the donor country, which makes the recipient likely to be overcharged since it increases the market power of the donor country’s firms and often amounts to little more than ill disguised export promotion” (Easterly & Pfutze, 2008, p. 45). In fact, after the Cold War, foreign aid became important particularly to serve domestic economic interest. Tied aid is important for donor countries to ensure their export industries continue to progress. High progression in export industries leads to high level of profits to donor countries. However, it leads to ineffectiveness of aid flow because is able to hinder development and create poverty in the recipient countries (Fleck & Kilby, 2001). In Cambodia, for example, even with more than five million dollars (USD) aid flowed in 2007, child mortality and inequality have never improved since then. However, most recipient countries keep obtaining the aid even though they are aware of the drawbacks because they are highly dependent on aid as well as have no choice (Ear, …show more content…
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Fleck, R.K., & Kilby, C. (2001). Foreign aid and domestic politics: Voting in congress and the allocation of USAID contracts across congressional districts. Southern Economic Journal, 67(3), 598-617
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