Every second of everyday, countries compete on everything; from muscles to scientific research, a tiny economic fluctuation or a single word change in regulation is enough to determine who does business where and alternately the power of nations. But, while all of this is happening, countries turn around to give billions of dollars in foreign aid. Why do countries give foreign aid? The assumed explanation should never be kindness or carelessness, but rational and selfish calculations.
History has proved that self-reliance is the base upon which the edifice of a nation’s economy should be constructed. The role of foreign aid in promoting economic growth and stability is an arguable issue and remains uncertain at theoretical, subjective and empirical levels.
Is foreign aid boosting socio-economic growth in Pakistan? Is it being used appropriately and adequately?
The nations which offer foreign aid to the weaker ones usually have nefarious interests which are always clandestine. The interests of the giver nations are always against the interests of the aid-receiving nations. Unfortunately, Pakistan relies deeply on this aid and has received a substantial amount since 1947 but very little socioeconomic improvement has been observed. We take loans and aid from international financial institutions and foreign countries. As a result, our policy makers and the power holders have to yield assent to the demands of the giver nations and sometimes even bear losses.
On a brighter side, foreign aid has somewhat helped us in boosting the GDP, making advancements in agricultural and industrial sectors and funding different developmental projects. But on the down side, the impact of foreign aid on Pakistan’s socio-economic development is turning into a wave of debt burden.
Foreign aid simply proves perilous to the recipients in the long run. If such countries mobilise their own resources, they would be able to generate their own funds and fulfill their needs and would be in a better position to shape policies. Such a nation would also lessen it’s non-developmental expenditures and enhance the developmental ones. This would put the country on the path of progress.
A paradigm shift has always been there when it comes to equipaging someone with capital, from friendliness to animosity due to heavy interests and principal payback. It is rightly said that there are always political strings and vested interests attached to bilateral loans.
In Pakistan, foreign aid has induced some economic growth on one hand and reduced domestic savings of the nation on the other hand. The developed economies of the world declare that aid never gives stability; it’s the indigenous designs and reforms, generation and utilization of resources that makes a country economically stable.
Foreign aid, in Pakistan, has not influenced significant socio-economic growth be it aggregate or disaggregate level. Furthermore, the demerits of foreign aid are not only limited to harsh covenants from the givers, at times, it even calls for compromising the sovereignty of the nation, corruption and disagreements within the government and bureaucracy, fiscal circumspection and poor institutions.
Pakistan has historically been among the top recipients of the US aid but its social index still remains poor. Foreign aid is not only ineffective but actually counterproductive to fixing problems. The alternative is to not receive aid at all. One solution may be accepting aid; but more strategically. Instead of taking money upfront, it can be done conditionally over a period of time.
Behind these power games are innocent citizens. It is better not to give false hopes in guise of foreign aid than give what would alternately hurt a blameless population.
The writer is an English Literature and Linguistics graduate based in Islamabad.