Research Paper On Foreign Aid

1001 Words 4 Pages
1. What is foreign aid? Discuss basic facts on donors and recipients. What kind of knowledge and incentive problems is likely to arise in giving aid?
Foreign aid is an official development assistance given by governments from one country to another in order to improve the economic growth and welfare. In fact, foreign aid could be transferred under several forms, including capital transfer or technical assistance. The major donors are:
The United States: $72 per person
Japan: $60 per person
Spain: $14 per person
New Zeeland: $76 per person
Greece: $45 per person
Portugal: $ 45 per person
Norway: $780 per person
Luxemburg: over $800 per person
Saudi Arabia and United Arab Emirates: $ 2 billion each
The knowledge problems in foreign aid consist
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In fact, the foreign aid received from developed countries ends up into the hands of local top government officials and their entourage. The most African countries receive foreign aid in order to improve the social and economic growth as a main objective, but in reality, the foreign aid either miss the objective aimed at the first place, or the foreign aid is put in the wrong sectors due to lack of management expertise. The best way of helping Africa is to get involved as a business partners rather than donors. Indeed, there is a huge market in Africa; a market that has a great proportion of benefit for all parties involved; investors and African citizens. In other words, doing business in Africa help creating jobs, improving the local African economies, and help the African citizens gain …show more content…
In fact, this unstructured economic network employs a big portion of people around the world, especially in the developing and under developing countries, such as in Africa, India, and the Asian countries. According to Robert Neuwirth, 1.8 billion people around the globe work in the economy that is unregulated and informal. Indeed, it is a huge number to be ignored or hidden. In my opinion, there are two possible approaches to these kinds of markets; whether to fight them by setting laws or adopt and integrate them to the formal markets by constructing the informal activities in a legal frame. The contribution of these informal markets or economies is influencing the way we live in the different regions of the world indirect or indirect ways. One major issue that governments could face this phenomenon is that informal markets do not generate individual and corporate taxes to the government revenues. In my opinion, the best way to approach the informal markets is to recognize the informal markets as a potential source of economic growth, and to be aware at the same time of the negative effect of these gray markets if neglected. In conclusion, adopting and integrating these informal markets will generate more taxes and create more jobs, and create more competitive

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