The Effects of Foreign Aid on National Development



       There is no universal definition of Foreign Aid. The absence of universal definition as to what people from several disciplines study and use the concept of foreign aid differently. They do in a manner that best suits their research purposes buy they purpose but they all believe in foreign aid.

Encyclopedia Britannica (1994-2011) defines Aids as the international transfer of capital, goods or services from a country or international organization for the benefit of the recipient country or its population.

Kevin Davis (2004) defines aids as a term that compasses all sort of financial transfers to developing countries that are provided by multilateral institutions such as the world bank, IMF (International monetary fund) as well as countries on a bilateral, basic and private actors, such as charitable foundation or non government organizations. Supporting of foreign aid does not imply a benevolent rich nations so that the former can meet primary needs of its citizens only. Most often, it is loan provided by a government or international agency that the recipient nation must payback within specified period. It further says that foreign aids serve first and foremost the interest of the donor country and not those of the receiver.

The question of what foreign aid entails and its effectiveness is not easy one to answer, some scholars try to explain the foreign aid has made the underdeveloped nation that receives it not developed. This is because of the string or conditions for paying them back.

The American Heritage Dictionary of the English Language fourth edition, 2009 defines foreign aids as “economic or military assistance offered by one nations to another” Prof William Easterly (2001) says that in foreign aids, government of developed countries should do much to help the developing countries through a new improved bureaucracy that will be effective for developing countries to receive or get access to foreign aid and use it effectively for their development interestingly. Easterly note that politicians are often “searchers at home but planner’s abroad because of home”? They have constituencies to when they are usually accountable to offer people in other countries. Therefore no way for a feedback mechanism to have doubt, without accountability and feedback there is little chance success easterly feels. Feedback guides democratic government towards supplying services that the market cannot supply and towards providing institutions for the markets to works. While at a higher level accountability is necessary to motivate a whole organization or government to use searchers.

Branko Millianvoic (2006) claims that Easterly’s argument is misleading. He (Branko) argues that Easterly’s not clear about the definition of foreign aids that Easterly under estimates how much developed government can help the developing countries and over estimates the likely effectiveness of his proposed new grandiose bureaucracy to assess funds or aid effectively. Millianvoic provide argument for those who have argued that the best policy is to do nothing and ignore the poor world or countries. If this true, the foreign aids should be ignored because it has made the poor and ever dependent on the developed ones.

Peter Bave and Basil Yamey (1999) says that third world is the creation of western world. It is the collection of western world. It is the collection of countries whose government with the odd expectation receives official western aids. They went further to say that without foreign aids, there is no third world. Foreign aids and brought a collectively united society in demanding and receiving aids from the west. External donations have never been necessary for the national development of any country anywhere. Such donations are much likely to provide. Foreign aids increases the money patronage and power of the recipient government it intensifies the politicization of life in the third world. This result promotes, especially in the multi-ethnic societies of the most third world countries, and diverts energy and attention from productive of the political area. These gifts have enabled governments to pursue policies which retard growth and exacerbate poverty such as suppressing of productive group including minorities, restriction on the inflow of capital enterprise and skills are numerous which discoverage food production.

In the words of Benjamin F. Nelson (1997), aids appear to have established as a priority, the importance of influencing domestic policy in the recipient countries. Summarily, in October  United Nations Conference, UN secretary general Kofi Annam noted that developing countries made the sixth and consecutive and largest ever transfer of fund to other countries, in 2002 a sumtotaling 2006n funds should be moving from developed countries to developing countries but these numbers  that should be promoting investment aid growth in developing countries or building schools and hospitals or supporting other steps towards the millennium development goals are instead being transferred abroad.

All these are as a result of the strong development countries attach to their aids so that they can control the economic activities in the developing world. Different countries receive different aids to their different problems so as to solve it.



       What benefits does foreign aids have for the countries that receives it and does it have any benefit for countries who give? Some may say instead of spending money on foreign aids, money should be spent on domestic aids. These say or argue in favour of foreign aids says that it is an investment in the future of both countries that will eventually pay out. There is also another factor to consider when discussing foreign aids is being offered. There are different kinds of foreign aids and; they are

  1. Military foreign aids
  2. Emergency foreign aids
  3. Health foreign aids
  4. Foreign aids for the advantages of business
  5. Official development assistance (ODA)


  1. MILITARY FOREIGN AIDS: Military foreign aids is given by a country through sending funds to another country to develop their military. Giving weapons and troops for dispense, it is on record that Nigeria sent troop to Liberia help stop the fight or war there. This act is regarded as military foreign aids.
  2. Emergency foreign aids: Emergency foreign aids is referred to aids given to assist receiving countries to tackle thing like earthquake, flood, famine outbreak of diseases etc Health foreign aids could also be inform of sending doctors to help in the treatment of people in the receiving nation.
  3. Health foreign aids: Health foreign aids refers to aid assistance from one country to another to help combat diseases and other health related illness, and as well as building of hospitals, providing drugs and health machines such as cardiophascolar machine etc. Health foreign aids could also be in form of sending doctors to help treatment of people in receiving nation.
  4. FOREIGN AIDS FOR THE ADVANCEMENT OF BUSINESS: This type of foreign aids means a developed country sending its entrepreneurs into an undeveloped country to help in the development of business in the counter and also employment of unemployed people and training of people.
  5. OFFICIAL DEVELOPMENT ASSISTANCE (ODA): This foreign aids is given to assist and promote development of combat poverty. The primary source of (ODA) which some countries represents only small portion of their assistance is by bilateral grants from one country to another. Although some of the aids is in form of loans and sometimes the aid is channel through international organization and non-governmental organization (NGO’s) for example, the international monetary fund (IMF). The world bank aid united nations children fund (UNCEF) have provided significant amount of aids to countries and to (NGO’s) involved in assistance activities.



       We may ask ourselves why do countries give foreign aids. It is because they are rich? The truth is that countries often provide foreign aids to enhance their own securities. This economic assistance may be used to prevent friendly government from falling under the influence of our friendly ones or as payment for the right to establish or use military base on foreign soil.

Foreign aids is also used to achieve a country’s diplomatic goal enabling it to gain diplomatic recognition together support for it to position in international organization or to increase its diplomats access to foreign aids include promoting a country’s export e.g. though to use the aids to purchase the donor country’s agricultural goods, spreading its language culture or religion.

Countries also provide aids of relieve suffering caused by natural or manmade disaster such as famine, disease and war, to promote economic development to help establish or strengthen political institutions and address a verity of transnational problems including disease terrorism and other comes aid destructions of the environment.

Since most foreign aids designed to serve several of these purposes simultaneously, its difficult to identify any one of them as most important.



For everything in life, there must be good and bad part. Let us work at the advantages and disadvantages of foreign aids.


  1. The important of foreign capital reduces the shortage of domestic saving through the inflow of capital equipment.
  2. It helps countries to provide the necessary infrastructure for development such as rails, roads, canals and power project which they are unable to undertake without aids.
  • It helps in industrializing the economy by assisting the recipient country to establish steal machines tools, heavy electric and chemical plant.
  1. It helps to create employment opportunity within the economy.
  2. It helps to improve the health care for longer lives of the citizens.


  1. It has made recipient countries to owe large external debts.
  2. It encourages governments to embark on ambitious plans involving large expenditures that tends to run their foreign exchange reserves.
  3. Foreign aids often politicizes life in the less developed countries there by contributes to social and political tension which ultimately retards notional progress and development.



       Changing to democratic role on 29th May, 2003 after long year of military rules, the health rule, the health care in the country was in shambles. Hospitals and equipment were in bad shape, take and adulterated drugs were in circulation, childhood killer diseases such as polio was ravaging the northern part of the country and HIV/AIDS pandemic, malaria etc were revenging the country. This made the country in 1999 to seek for aid to improve health care, foreign agencies and countries came to Nigeria rescue. Among such agencies is united state agency for international development (USAID).

USAID through the United States government yearly spent seven (7) million dollars on health care in Nigeria. (USAID) which added in the fight against HIV/AIDS by providing free antiretroval drugs to HIV victim in collaboration with the federal government. It is also embarked on sensitization campaign on HIV/AIDS and its prevent through the electronic and print media and also going to schools. In fighting malaria, the United State agency for international development (USAID) with the federal government provided free mosquito nets throughout the country and enlightenment program on prevention and fight against malaria. In ensuring the survival of children against children disease the federal government with the help from US government though (USAID) and also World Health Organization embarked on immunization of children most especially children against polio. The country Nigeria’s embarked on upgrading hospitals to meet the health needs of the citizens and also providing food, drugs and improved the fight against fake drugs and their dealer through (NAFDAC) National Agency for Food and Drug Administration and Controls.



       Donor government, non government organization (NGO’s) working in Nigeria and Nigeria government have responded to the (AIDS) Epidemic primarily to attempting to reduce the number of new (HIV) infections programmes and projects aimed at combating the disease typically provide information on how the disease is spread and how it can be avoided through media posters, lectures etc. Donor sponsored, voluntary counseling and testing programs was provided enabling their status.



       This research contingency theory of understanding the relationship among factors influencing the structure, management and operations of work organization, the theory of contingency believers that it develops a more though understanding of complex situations and to take appropriate action in the effect of foreign aids to national development on the study of foreign health aids in Nigeria by drawing attention to the difficulties with mixed forms of organization and to the important of different structures for activities and situation on the national development.



From this chapter, different authors and people gave their own definitions on the topic in question. The authors all agreed that foreign aid gives to developing nations and other nation in need. Foreign aids is good but the interest and conditions which they are given is the problems that hinders development of the nation along with embezzlement on the part of the government of the receiving nations.

Countries receive foreign aids and develop in the type of foreign aid that they need to suit or solve their problem, the also looked in this chapter brought out the advantages and disadvantages of foreign aids, how they improve their economy and development of the receiving nations.

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