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War and Peace Effects on Foreign Aid in Bangladesh Research Paper

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Updated: Apr 9th, 2020

Financial Aid for Bangladesh

On the surface, the connection between the distribution of foreign aid and the political situation of a particular state is quite obvious. Seeing that foreign aid is traditionally meant for the people suffering from poverty, it is reasonable to send foreign aid to the areas that are affected by an economic crisis. The latter, in its turn, traditionally occurs in the states, where war is taking place. Therefore, war triggers a major increase in foreign aid supplies to the people in need.

As a result, foreign aid may be misused by the government of the states that receive the financial assistance. In other words, the instances of corruption may become increasingly frequent in the states that require financial support from donors. Bangladesh is a prime example of the specified case; although the financial aid received from other countries allowed for a short economic revival of the state, corruption rates among the Bangladeshi authorities increased several times (Wig & Kolstand, 2014).

Leaders’ Actions: Analysis

As it has been stressed above, the Bangladeshi leaders used the money retrieved from the donors to redesign the state economy and enhance the production process. Much to the credit of the Bangladeshi government, the specified step was carried out quite successfully – according to the official statistical data, the country delivered rather impressive results in its GNI, the latter having increased by 2% in 2012 and by 9% from 2006 to 2009 (Mahmood, All & Islam, 2013).

Therefore, one must admit that, despite bureaucracy and corruption, the country managed to allocate the resources made available with the help of the United States and other donors in a rather impressive manner. Seeing that a comparatively humble amount of money was donated to Bangladesh, the U.S. donations making $ 2.2 billion total (2000–2015) and the humanitarian amount reaching $87 million (Bangladesh, 2015), the significance of foreign aid in Bangladesh is rather high.

The state government, in its turn, seems to have been making a very wise use of the financial assistance provided by the United States and other countries. For instance, the fact that financing entrepreneurs was the first step undertaken by the state authorities after the financial support was retrieved (Alam & Haisna, 2013) shows that the key problems created by the war will be addressed in a proper and timely manner.

Specifically, the revival of the state economy will provide opportunities for the residents to improve their financial status; as a result, the poverty issue is likely to be resolved with the help of the set of measures suggested by the state government. Indeed, by promoting the development of local SMEs, the Bangladeshi authorities will help increase the number of employment opportunities for the citizens; consequently, the issue of unemployment will no longer be of major concern for Bangladeshi.

Extension of Foreign aid

Despite the fact that the effects of foreign aid are admittedly vast in Bangladesh, claiming that the provision of financial support to the state that suffers a military and a political conflict is the ultimate means of salvation for the local residents will be quite a stretch. Although the poverty rates have been addressed to some extent, the number of people suffering from the lack of money in the specified state is still high according to the nationwide statistics (Khandker & Samad, 2013).

Particularly, the fact that the provision of financial support does not address the key reason for poverty rates to grow deserves to be mentioned. Indeed, a closer look at the situation in the target state will show that the poverty rates can be attributed to not only the lack of work and the ability for employment, but also to poor quality of state education: “Adult illiteracy rate is very high at 60 per cent. About 80 per cent of active household members have no education or have attained only primary education” (Zaman & Akita, 2012, p. 20).

The financial resources provided by the United States and the EU, therefore, must be used primarily for reinforcing the state education system, yet the current standards of education in Bangladesh remain just as low as they used to be several decades ago. Therefore, it can be assumed that Bangladesh needs a redesign of its financial strategy; particularly, the principles of financial resources allocation will have to be reconsidered.

One must mention the positive effect, which the financial assistance provided by the USA and the EU has had on the Bangladeshi agriculture. Because of the foreign investments and the support provided by the above-mentioned states, Bangladesh has received a major boost in terms of agriculture development: “In order to address the issue the GoB can make the financing choices easier in terms of introducing favorable agricultural-credit guarantee and reducing additional overhead interest in cases of NGO-MFIs” (Sharmeen & Chowdhury, 2013, p. 167).

Although the funds provided by the U.S. are used primarily for restoring the agriculture and entrepreneurship of the state, the assistance provided is bound to have a positive effect on the financial situation of Bangladesh residents, as it opens a plethora of opportunities for work. However, it is desirable that the education sector should also receive enough support to help the citizens acquire the necessary skills.

Reference List

Alam, A. & Haisna, N. (2013). Constitutional voice for good governance in Bangladesh. Global Disclosure of Economics and Business, 3(3), 2307–9592.

. (2015).

Khandker, S. R. & Samad, H. A. (2013). Microfinance growth and poverty reduction in Bangladesh: What does the longitudinal data say? Bangladesh: Institute of Microfinance.

Mahmood, S. A. I., All, S. & Islam, R. (2013). Shifting from infectious diseases to non-communicable diseases: A double burden of diseases in Bangladesh. Journal of Public Health and Epidemiology, 5(11), 424–434.

Sharmeen, K. & Chowdhury, I. (2013). Agricultural growth and agricultural credit in the context of Bangladesh. Bangladesh Research Publications Journal, 8(2), 174–179.

Wig, A. & Kolstand, I. (2014). Expanding foreign investment in the energy sector Challenges and risks for Bangladesh? CMI Brief, 13(4), 1–4.

Zaman, K. A. U. & Akita, T. (2012). Spatial dimensions of income inequality and poverty in Bangladesh: An analysis of the 2005 and 2010 household income and expenditure survey data. Bangladesh Development Studies, 35(3), 19–51.

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IvyPanda. 2020. "War and Peace Effects on Foreign Aid in Bangladesh." April 9, 2020. https://ivypanda.com/essays/war-and-peace-effects-on-foreign-aid-in-bangladesh/.

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IvyPanda. (2020) 'War and Peace Effects on Foreign Aid in Bangladesh'. 9 April.

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