Provision of aid programs to nations suffering from poverty has raised intense debate on the effectiveness of the practice in eradicating poverty. Proponents of the aid programs have lauded provision of aid as one of the most viable development steps that has seen many poor economies and needy nations all over the world gain wealth and grow towards economic stability.
On the other hand, those opposing the effectiveness of aid programs claim that it increases poverty levels since it creates dependence on aid and takes away the ability of a nation to become innovative and creative. Opponents also assert that aid programs to poor nations discourage hard work in addition to creating dependency syndrome.
Aid program is a concept that has been discussed in a wide perspective by several scholars (Mehrotra 2002, p. 531). For instance, the book entitled Just give money to the poor has raised a lot of concern on the uncontrolled rising rate of poverty in Mozambique. According to the authors, one can quickly conclude that the gap between the poor and rich is rapidly widening irrespective of the rise in GDP especially in underdeveloped countries (Hanlon, Barrientos & Hulme 2010, p. 6).
It is notable that the majority of the population in Mozambique has been caught up in the poverty cycle making it difficult for them to even own a simple house. This book presents a convincing program on how to create a platform upon, which poor families can build a solid financial future. In addition, the book calls for a dramatic simplification of the already existing measures of reducing poverty by the aid industry.
In this case, it questions on the need for conditioning behavior that are related to the money transfer program (Hanlon, Barrientos & Hulme 2010, p.10). Therefore, the authors argue that the best way to decimate poverty is to motivate poor people by giving them money. It is imperative to note that the authors are emphasizing that giving financial aids to individuals who are poor should not be attached to any condition in order to ensure long-term development.
Furthermore, Barrientos, Hulme and Hanlon (2010, p. 100) strongly support the provision of aid to the poor. They argue in their book Just Give Money to the Poor: The Development Revolution from the Global South. Development Revolution from the Global South that provision of aid is an effective method of reducing the gap between the poor and rich economies. They add that without aid, the gap may continue to grow.
The argument Barrientos, Hulme and Hanlon holds is indeed strong, but it is very important to note that even with the massive achievements that aid programs have achieved in the setting up of individuals and economies free from the grasps of poverty in most parts of Asia, Africa and China, provision of aid has not been able to completely eradicate poverty. In fact, in some areas in Africa and china, the aid has done very little to eradicate poverty because it is done to nations that still have institutional problems like corruption and wars.
An overview of global poverty
The state of the global poverty is shocking. It appears that although key developments are recorded every year and aid programs are provided, levels of poverty are constantly moving up. The World Bank (2010, p. 46) reports that a greater percentage of the global population still stumble in poverty and survive on less than two and half US dollars per day.
Further reports indicate that notably, about 40% of the total world population accounts for only 5% of the world incomes while the wealthiest 20% accounts for 75% of the global income (World Bank 2010, p. 46). The World Bank report continues to indicate that about 27 to 28% of all children are underweight while 24,000 more lose their lives daily in the poorest regions of the globe.
GINI Coefficient: Social inequality and global poverty
Social inequality among different countries has increasingly been pinpointed out as one of the major cause of poverty globally. Though sharp differences have equally been evident, Kenny (2011, p. 30) explains that the large gap existing between the developed and developing nations should be addressed if the problem of poverty is to be effectively resolved.
It is worth noting that slightly over three billion of the total world population survives on less than three dollars per day while about 80% of total population lives on less than US $10 per day. This reduces their ability to afford even the basic life necessities (Kenny 2011, p. 31).
Skarbek and Leeson (2011, p. 81) indicate that of the total world Gross Domestic Product, the wealthiest countries account for 76% while the low income states account for only 3.3%. Besides, a quarter of the world total assets is held by only less than ten million people from the rich countries (Skarbek and Leeson 2011, p. 82). In addition to that, while developing countries have unemployment rates of over 30%, developed countries on the other hand only record 4% (Skarbek and Leeson 2011, p. 82).
Figure 1: A GINI Coefficient diagram showing inequality between rich and poor nations.
Duflo and Banerjee (2011, p. 12) reports that about 25,000 children in the poorest countries die every day die due to poverty while further 27% are estimated to be stunted in the same regions. Unlike in developed countries where over 90% of children have access to education, 72 million of those in developing countries did not attend school in the year 2005 (Anon 2010, p. 168).
While most people in the developed countries have enough access to piped water, about 1.1 billion and more 2.6 billion lack adequate access to water or basic sanitation in the developing countries respectively (Anon 2010, p. 168). Addressing poverty is therefore a complex issue that requires holistic approach to effectively address it.
Issues underlying global poverty and provision of aid
In a collaborative approach, Hanlon, Barrientos and Hulme (2010, p.23) develop the idea as the only effective strategy to develop and revolutionize poor countries. The authors also reflect on the fact that developing countries give financial aid to the less developed countries with conditions attached. Such conditions include political, social and economic gains. Additionally, they closely supervise how the funds are managed just to make sure that they are not misappropriated.
The idea of cash transfers (CTs) to poorly developed countries has been controversial drawing sharp arguments from scholars and economists all over the globe. However, in this article, the authors appear to have no doubt on the merit of their suggestion as issuance of monetary aid is attached to the already mentioned attached conditions. Having had a competent and readable compendium about poor countries through research, they hold a clear track record on how such counties can develop (Hanlon, Barrientos & Hulme 2010, p. 45).
To defend the claim they argue that their strategy is affordable. Moreover, in the book, they state that whenever money is given to the poor countries freely, they will be able to manage it effectively without major cases of misappropriation. In line with this, there is an argument that such monetary or non monetary aid will relatively reduce the rate of poverty at the grass root level.
Even though, foreign aid enhances economic growth as well as human development and also decimates the chances of lagging to poverty in future. Nevertheless, there are two controversial issues identified in the book. These include the concept of conditioning and targeting the beneficiaries (Hanlon, Barrientos & Hulme 2010, p. 21). At this juncture, questions emerge as to whether the small grant should be given to many people and vice versa.
Moreover, there is growing debate on whether the recipients should be made to satisfy certain conditions such as educating their children or engaging on voluntary labor. All the same, the authors’ argument seems to capture a wider scope of the historical picture. In their argument, they assert that CTs should be considered as the paradigm through which a shift or revolution from north to south will occur (Hanlon, Barrientos & Hulme 2010, p. 44).
In this case, they give a summary of the current state of CTs. The article also confirms that they are necessary since they target to enhance social protection and security for the aged people, disabled and children by providing them with necessary financial empowerment. Definitely, Heikens (2009, p. 281) indicates in his article Rethinking the role of the World Bank in the battle against hunger that, CTs trigger economic growth and development a factor that provide security for investment.
Besides this, they also break the chains in which poverty inter-generate and hence boosts the welfare of the recipients in terms of education, nutrition and healthcare. All the same, the book makes it clear that CTs become beneficial only when they are nationally driven (Hanlon, Barrientos & Hulme 2010, p.61).
The authors point out that donors’ pressure appear to counter their productivity. In this case, the authors appear skeptical on how donors monitor CTs and raise interesting opinion that poor countries should just be given money without donor conditions.
On the same note, the idea of cash transfer has globally been embraced especially in the third world countries. Abhijit Banerjee and Esther Duflo fictious book entitled Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty presents a compelling argument that anti-poverty program could be effective to eliminate poverty. Nevertheless, the authors assert that this can only be achieved on the basis that the program must be properly designed to make it work appropriately (Duflo & Banerjee 2011, p. 12).
The authors in the book suitably engage in an investigation on the standard approaches that can best be used to eradicate poverty. In this book, the authors become cynical on the fact that economists are unable to eliminate poverty. Besides this, they explore through observations and experiments to find out how poor countries have coped to survive in poverty. For a long period the authors have worked closely with poor people in many countries in all the world continents (Duflo & Banerjee 2011, p.52).
They are keen to evaluate what the people know, their assumptions and how they can make choices out of poverty. From the authors’ perspective, there are some efforts that can be made both at private and public level to eradicate poverty. The authors are also suggestive that there are several facets of poverty. In the investigation, they get the idea why poor people should borrow funds for saving, start businesses that do not expand and other surprising facts related to poverty (Duflo & Banerjee 2011, p. 36).
Just like in the book “Just give money to the poor” this book argues that the battle against scarcity can only be won when effective strategies are applied. In line with this, the book analyze that there is need to have a passable understanding of poverty, patience and careful thinking (Duflo & Banerjee 2011, p.103). Moreover, people might be willing to learn from disorganized control trials in order to derive effective approaches for fighting poverty.
Meghnad Desai who is an economist in London School reinforces the idea presented by Hanlon, Barientos and Hulme. Desai suggests that giving the poor a dollar per week would work better than overseas aids. He points out that the idea has been exercised in Mozambique especially among the flood and drought victims. Pronk (2001, p619) reinforces Desai idea and he states that effective methods should be formulated to ensure that such aids benefit the poor.
However, Desai declare that conditions should be imposed on to recipient countries. In his opinion, such countries should be gender sensitive, encourage direct participation by the poor and also to endorse transparency (Desai 1992, p.64). Just like the authors Abhijit Banerjee and Esther Dufloin in the book Poor Economics, Desai argue that aid can only be effective if it is only allocated depending on individual poverty levels.
He also emphasizes that it would be better to give money directly to the poor rather than giving it to the governments (Desai, 1992 p64). Certainly, this would help the poor to get out of poverty whose behavior must be conditioned to ensure elaborate management of the funds.
To sum up the arguments, it is apparent that aids program are essential since they help to raise the living standard of poor people in the third world countries. Nevertheless, there is need to have elaborate strategies through which funds will be managed to ensure that poor people develop economically and also to lay a firm foundation for their future Mehrotra 2002, p. 532).
Malthusian theory
It is perhaps the works of Robert Malthus that first pointed at the problems that would result from miserable poverty. Sen (2005, p. 153) reports that Malthus saw poverty as a factor of supply and demand largely based on food, prices and the ever growing number of people in the developing and poor nations. He indicated that poverty is indeed a natural phenomenon anchored on the rising population in the globe and highly rigid food supplies.
Furthermore, he noted that the best way to raise a society in poverty is by providing it with assistance of aid programs. However, though Malthus was partially correct largely from the occurrences of his time, he only factored Charles Darwin’s consideration of natural selection, a reason that lacked the notion of posterity.
Kaprov and Kaprov (2009, p. 234) argue that Malthus failed to appreciate the fact that modern times would see critical evolution of technology which would maximize land productivity, for instance through organic enrichments, irrigations and condensed foods such as carbohydrates and multivitamins.
As global population continue to rise, hunger and poverty remain two interconnected difficult issues that are defying odds on how to effectively address. As such, provision of aid without proper measures to address eradication of poverty may not be helpful (Aar & Claudio 2007, p. 380)
Meghnad Desai view on Poverty as a structural failure
In his view, Meghnad Desai, a British economist considers poverty as a structural failure at institutional and community levels. Desai (1992, p. 64) argues in his publication Population and Poverty in Africa that poverty emerges in the society from a breakdown or malfunctioning of infrastructure at leadership and community level. He cites major disconnection between people and their leaders in countries with the highest levels of poverty.
In a country like Swaziland, poverty is defined by sheer failure of the administration with poor majority lacking hope in their administration and therefore only headed for more poverty (Desai 1992, p. 66). As such, providing financial aid where there are no proper institutional structures may not be beneficial in solving poverty issues. Despite the aid being given to this country, a lot has not changed as the levels of poverty still soar (Sandra, S 2010, p. 78)
Causes of poverty
Dominant economies
Using Perroux theory of dominant economies, it is important to note that the irreversible influence of dominant economies plays a crucial role of creating global demands (Kjøllesdal & Welle-Strand 2010, p. 6). They do with intentions of making individual gains at the expense of other nations.
This does not only create a gap in terms of rich and poor nations, but enhances poverty levels as many nations may not be able to fit in the newly created markets or to meet the various market demands. Besides, on realization that poor economies cannot meet the various demands created, the dominant economies sets of offering them financial aid via loans and grants, factors that tie these nations to poverty due to dependence and inability to clear loans.
Most developing countries which form some of the poorest states have their histories tracing back to colonial era. According to Desai (1992, p. 70) poverty must be viewed as a refusal of development and its application. Colonial-masters in developing countries were involved in two major aspects that created a roadmap which dipped many nations into massive poverty. To begin with, they took control of their hosts’ resources which they used to develop themselves alone.
In India, South Africa and Kenya among other nations, the British government was largely interested in gathering raw materials while obstructing locals from getting either effective education or sustainable skills (World Bank 2010, p 61). By drawing away key resources, these nations have remained behind without resources to develop either infrastructure or human capacity. Providing them with aid might not be helpful since they need a long terms solution that will sustain them
Although, Marxists have defended this model of operation, ethical theorists have strongly condemned it indicating that colonial masters were poorly motivated. Besides, Amidon (2010, p. 110) reports that many of the poorest nations directly assumed a “colonial” system of administration that have seen them replace “colonial era administrators” with “local colonialists”. For instance, in India, large trucks of land and wealth is only held by the people in authority while the poor majority lack access to key basic needs.
Poor leadership and corruption
Poverty in the modern society must be viewed as a factor of leadership and its application in the community. Many countries living in absolute poverty appear to share a common factor called poor leadership. A country that assumes poor leadership, according to Desai’s (1992, p. 90) reports it lacks the ability to effectively prioritize essential aspects, creates ego-centric models and facilitates massive corruption.
Ans and Rob-van (2006, p. 800) also report that in North Korea, development of citizens has been put as the third factor next to creation of weapons and their acquisition. People are therefore forced to go without basic needs as leaders consider it less important. Leadership in other states such as Uganda and Sudan has focused on resources towards maintaining leadership and power in family lines.
In Uganda, the president’s wife, children and relatives are fixed to key ministerial and administrative positions, a factor that undermines creativity and competitiveness (Desai 1992, p. 70). The focus of this form of leadership becomes aligned to defending these positions as opposed to creating room addressing poverty.
Corruption has become a common occurrence in many developing nations. As a result, development becomes a fantasy as key resources are diverted for personal gains. In Nigeria, the late president Sani Abacha took away millions of dollars from the government for his personal and family use. Countries with high corruption levels such as Afghanistan, Burundi, Central African Republic and Yemen have recorded high levels of poverty (Desai 1992, p. 70).
Personal failure
Stempel (2010, p. 2010)) on the other hand view poverty as a personal failing. Personality traits such as laziness and illiteracy reduce the overall creativity of an individual; a facet that leads to reduced levels of income. However, Stempel (2010, p. 2010) view has been greatly criticized for failing to see poverty holistically.
Most people who are indeed very poor in developing countries have very desirable traits but key leverage requirements such as modern education and infrastructure are unavailable.. However, human causes take a greater bearing as leadership in most of the poorest nations fail to effectively enact the needed preferences to guide them out of poverty
Anti-aid arguments
Zetland (2010, p. 331) posits that poverty forms the most distressing social-economic problem due to its extended negative impacts that cuts across the globe while directly and indirectly threatening the very existence of many communities. While definitions of the term “poverty” remain a highly contended one, economists and sociologists have expressed their concerns over its increasing levels and equally high resilience of negative implications of giving aid programs to poor nations.
Scholars like Stempel (2010, p. 2010) and Zetland (2010, p. 332) have sounded a warning on the looming danger that the globe would experience if nations fail to address the skyrocketing poverty levels through better methods other than giving of aid programs.
Certain factors they indicate should be looked into and addressed before coming to offer aid programs are based on questions like: What are the causes of poverty and how did the problem begin? What are the current trends of poverty and their implications? Why and how have the current social inequalities remained so large? Are there mechanisms that can be used to address the problem of poverty in the globe apart from aid programs?
Developing better poverty eradication mechanism
Anti-aid economists strongly oppose the issuance of aid programs and indicate that the ability to develop better and positive poverty eradication mechanisms by both rich and poor nations forms a major pillar that will support the fight against poverty. While developed nations such as the US have for many years been highly influential on people’s livelihoods due to the issuance of aid programs to poor nations as Zetland (2010, p. 331) pillories has not been fully effective in meeting the demands created by the dominant economies.
As the definition of aid programs goes, it seeks to create a sense of improvement for the different people in the United States and other poor nations for higher economic achievements. However, the current economic divide has however been obstructive towards the aid programs objectivity. With the original objective of aid programs is to create a level playing ground for all, the current economic divide as Sobhee and Nath (2010, p. 299) indicate, appear to act on opposing direction.
Notably, the high social class has increasingly assimilated the dominance of key economic units such as industries and privately owned institutions. Sobhee and Nath add that though this notion takes root silently, its implications are strongly felt. There is therefore a need to create equality among nations through fair distribution of resources and controlling of dominance of economies by certain nations.
Minimizing the global divide between the rich and the poor
Reducing the global divide should take a highly integrated outset to ensure clear objectivity and their attainment. Kjøllesdal and Welle-Strand (2010, p. 4) argue that the developing countries should seek to raise the levels of literacy rates in their countries and not depend on aid programs. By raising education levels, it would be possible to establish a highly focused population with clear understanding of the need for eradicating poverty (Anon 2010, p. 168).
In addition, Kjøllesdal and Welle-Strand (2010, p. 4) indicate that leadership should further be changed to create a new vision towards reducing the poverty levels. At this point, it is critical that poor countries facilitate establishment of leadership and management of resources that has long-term objectives of prosperity for all as opposed to the ruling elite.
As Stempel (2010, p. 2010) indicates, the developed nations should further come out to facilitate growth and development for the poor countries with both the resources and human capacity. Though the notion of the world changing its views towards social equality has remained highly controversial Sobhee and Nath (2010, p. 299) point out, it would be very critical in addressing social inequality.
Dealing with globalization, technological and gender inequality issues
While the actual causes of poverty and the need to give aid programs to the poor have indeed been highly debatable, the following considerations are cited to increase its severity. Globalization as Kenny (2011, p. 31) indicates has weakened poorer countries’ economies by exposing their products and services to very harmful competition.
Notably, most of the developing countries lack the needed capacity to produce products that can compete with those from developed countries. As a result, the open market has great preference for the developed countries products, a consideration that has seen poor development in production sectors and consequent poor economic developments. As such, dominant economies should make market entry and survival for poor nations possible by reducing the levels of competitions.
Though technological development has been cited as one of the most important aspects in the globe due to its ability to make work easier in production, its negative implications are very severe. Zetland (2010, p. 331) explains that most technological developments are available in the developed countries which consequently increase the quality of their products to further create a competitive advantage over those from developing countries.
Besides, introduction of technological developments such as information technology to some of the poor countries only creates further unemployment as previous workers are laid off. Mourmouras and Rangazas (2009, p. 787) point out that there is need for more technological training and advancement among poor nations as well as creation of more jobs to reduce layoffs.
Gender inequality as Collier (2009, p. 281) indicates, has remained a major accelerating factor of poverty among women by posting one gender especially the female to be inferior. Notably, in most developing countries especially in Africa and Asia, women are not educated and are considered to be part of the family wealth. As a result, their literacy levels are very low and can therefore only perform odd jobs that have poor payments (Anon 2010, p. 168).
In other areas, they are highly discriminated in jobs as men are preferred on the basis of local beliefs and stereotypes. On this issue, Strand (2010, p. 978) posits that instead of giving money to them, there is need for agencies that fight for right of women to be established, awareness be created on the need to treat men and women equally in the society and more empowerment be given to the female gender.
Current efforts to address poverty
Kaprov and Kaprov (2009, p. 234) argue that addressing poverty is indeed one of the most difficult tasks in the globe. International community has provided aids over the years in form of finances, food and even technical capacity in different aspects of the society.
However, provision of aids has been criticized of failure to raise major creativity that can be used to totally liberate these communities from poverty. In addition, institutions such as the World Bank and the United Nations run key programs on education, health and development to reduce poor health and leverage self-dependence (Harrison 2007, p. 64).
Even though aid programs may not be helpful, a major effort that cannot go unnoticed is the use of force to facilitate good governance in poor nations. Joh and Kurt (2007, p. 380) report that sanctions in nations such as North Korea, Zimbabwe and Iran have been applied with an intention of reviving leaders’ consideration of poverty and its alleviation.
However, although these efforts have indeed been well intended, they have most often not met equal and perhaps greater resistance and have yielded disobedience from leaders such as Robert Mugabe of Zimbabwe and his counterpart of Iran, President Mahmoud Ahmadinejad (Duflo & Banerjee 2011, 132). It is from this consideration that a new model of addressing poverty without actually giving money and aid programs is indeed required urgently to avoid plunging the globe into a major disaster.
There is also need to develop a better approach towards addressing poverty that incorporates the local communities. It is particularly critical that local communities should be supported in fighting poverty as opposed to models of provision of aid programs which fade with time as people slide back to poverty. Finally, it is imperative for leadership to be improved through facilitating democratic ideologies, empowering women and improving literacy levels.
A microeconomic analysis of pro and anti aid arguments
Many poor people have been great beneficiaries of a wide range of aid programs that have been offered by different countries. Aar and Claudio (2007, p. 315) indicate that the general program of assisting individuals with assistance in form of cash, low income housing assistance, medicaid, and food stamps has been a practice in most countries although has in the last years shrank due to establishment of welfare reform initiatives.
As already mentioned in the analysis of the pro and anti-aid program arguments, the trend of issuance of aid to the poor has yielded both positive and negative effects, a consideration that begs to know whether it should be carried on or not.
Since both pro aid and anti aid economists and researchers cannot quite generalize that issuance of aid programs have or have no absolute growth and development of an individual or society, it is imperative to employ an enlightened approach in its analysis. It is apparent from the above arguments that raising the standards of poor individuals can be understood on a case to case basis.
In terms of stabilizing weak economies, there are those economists who have argued out that giving aid to poor nations is indeed an important undertaking that should not be taken for granted bearing in minds that most of the well developed economies have largely benefitted from young economies through the importation of human labor and other important raw materials.
Hence, the qualitative argument behind giving such help is of economic importance. On the other hand, most economists in the third world countries are quite categorical that the western world has been a liability to the younger economies. They have also posted that most of the poor states have found themselves in such tricky financial status due to the myriad of unfavorable deals and partnerships that are initiated by the wider western world.
When these arguments are all considered, it is definite that the whole concept of balancing resources and reducing disparity between the rich and poor states will continue to be a delicate affair regardless of the efforts that are being put in place. In addition, the continuing debate on this matter may not necessarily lead to a fair settlement of the issue bearing in mind that the growth in Gross Domestic Product (GDP) of most low income states is still dismal and far much below the mean level of most first world giant economies.
Needless to say, the main growth factor that needs to be put into consideration when developing poor nations is the ability to integrate and harmonize policy documents that have clear economic blueprints. While the latter perspective may be adopted, numerous cases of rampant corruption, embezzlement and graft of public funds is still a nightmare in most low income earning regions.
Lump-sum principle and the efficiency of aid programs
Many economists as noted in the anti aid arguments have clearly expressed their lack of support for provision of aid programs to poor individuals and nations based on strong evidence of their ineffectiveness. By referring to the lump-sum principle, Ans and Rob-van (2006, p.789) indicate that providing low income individuals with grants and aid programs to end their poverty and enhance their purchasing power will only raise their utility but will not solve the problem of poverty.
The grants given to them as Collier (2009, p. 281) adds to concur with Ans and Rob-van should in be carried out in other better and effective ways such as in the subsidizing of specific goods. Indeed, the arguments by Collier and Ans and Rob-van on the intuition of subsidizing specific goods hold a lot of weight and leads to a utility maximization hypothesis that the subsidies on products or income tax will enhance a poor individual’s ability to make a free choice on how to allocate or spend his or her final income. Besides, raising poor individuals’ income earned will reduce the need for grants as illustrated in the diagram below.
However, proponents of aid programs such as Sobhee and Nath (2010, p. 299) and Barrientos, Hulme and Hanlon (2010, p. 100) disagree with the above argument and are of the opinion that the lump sum principle lacks efficiency. Their argument hinges on the notion that subsidies and taxes have an effect that distorts that choices and alters their purchasing power as the schemes used are incorporated with artificial prices.
Its is worth agreeing with Barrientos, Hulme and Hanlon on the fact that social policy calls for efficiency and whatever decisions are made to aid the poor should elevate their status and not generate disturbance. Provision of aid program raises the utility and budget of an individual with a typical low income.
Provision of an anti-aid program via subsidies of prices and taxes to concur with Sobhee and Nath (2010, p. 299) on a product or income will indeed shift the mentioned individual’s utility and budget constraint up but will not be cost effective as studies on poor people and spending patterns indicate that the subsidies are normally very minimal to effectively raise utility.
Donor preferences and paternalism
The wealth of information from the arguments relating to provision of aid and apparent economic growth of poor people leaves no consensus on whether aid programs can influence change at that microeconomic levels. Economic and statistical analysts point out that the aid programs and their microeconomic effect on individuals can be positive or negative depending on an individual’s specific condition.
Opponents of aid programs have lauded in-kind programs as opposed to cash assistance, a consideration whose focus Joh and Kurt (2007, p. 376) state stems from paternalism. Indeed, many policy makers in any government behave in manners that suggest they understand individuals’ specific conditions and how well a poor person should his or her income.
As such, they have increasingly preferred in-kind subsidies and given less attention on the value of the subsidies and how sensible they are. Certain factors are therefore important in determining the effectiveness or ineffectiveness of aid programs. Those factors include time factor and aggregate treatment of aid programs. Social inequality among the different countries has increasingly been pinpointed in the pro aid and anti aid arguments as one of the major causes of poverty in the globe.
Though sharp differences have equally been evident, it is imperative to mention that the large gap between the developed and developing nations should be addressed if the problem of poverty is to be effectively addressed. Efficacy in coordination, cohesion, objectivity and clear focus of a country’s institutions forms the basement of microeconomic growth and development. Clear internalization and harmonization of a microeconomic growth programs further provides a holistic platform for all people to exercise variant freedoms and therefore anchor the necessary progress both locally and internationally.
Economic analysts indicate that over the years, it is only those countries that have maintained effective institutions that are able to generate a sustainable growth model. From the above discussion, it is imperative to note that while the arguments for and against giving aid to poor countries has been diversified, the provision of aid programs to nations suffering from poverty is still an issue of international concern bearing in mind that the effectiveness of the practice in eradicating poverty is of great importance in the poor economies today.
It is also quite evident that economists are divided on the issue of giving aid programs and anti-aids, considerations that are being analyzed to find better solutions. It is indeed an open secret that there is great social inequality between the rich and poor nations. As such, it would be worth to mention that there are myriad of factors causing poverty accelerating and which needs to be addressed to reduce the effects of the same in society.
While the issues on effectiveness and ineffectiveness of aid programs continue to prevail and the need to give aid programs to the poor becoming highly debatable, it is imperative to note that the effectiveness of an aid program is dependent on a political economic environment. Nations with good policies exhibited in protectionism, low budget deficit and low inflation encourage the effectiveness of aid programs.
However, as noted in the paper, globalization has weakened poorer countries’ economies by exposing their products and services to very harmful competition. Notably, most of the developing countries lack the needed capacity to produce products that can compete with those from developed countries.
As a result, individuals in these nations cannot be able to access products. Besides, the open market has great preference for the developed countries products, a consideration that has seen poor development in production sectors and consequent poor economic growth. This calls for provision of aid to enhance the utility of individuals in terms of income since this will enhance their ability to access the products they are in need of.
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