The Role of Aid in Human Capital Development in Developing Countries DOCX
| Title | The Role of Aid in Human Capital Development in Developing Countries |
|---|---|
| Author | Karen Rono |
| Pages | 3 |
| File Size | 17 KB |
| File Type | DOCX |
| Total Downloads | 325 |
| Total Views | 591 |
Summary
c c c c ! "#$%&&'& Aid is the Official Development Assistance (ODA) to a recipient country, which includes grants: financial flows and technical cooperation, and is ...
Description
THE ROLE OF AID IN HUMAN CAPITAL DEVELOPMENT IN DEVELOPING COUNTRIES. Karen Rono (MA Economics University of Dar es Salaam, 2011)1 Aid is the Official Development Assistance (ODA) to a recipient country, which includes grants: financial flows and technical cooperation, and is an important source of finance to a majority of developing countries. The macroeconomic rationale for foreign aid is to supplement domestic savings and government revenue thereby contributing to higher growth. The flow of aid to developing countries over the years has been increasing. The G8 summit in Gleneagles made commitments to increase the level of ODA to developing countries by around $50 billion a year by 2010 as compared to 2004 levels of which about $25 billion (Wangwe, 2009). Human capital is the improvement in the education and health of individuals in order to give rise to increased future income. Aid from developing countries has over the years been used to improve the human capital of the developing countries. However studies have found that it is not a guarantee that an increase in aid leads to increased human capital development. A study covering developed and developing countries found that countries with more extensive human capital-where governments are committed to human development, such as China-have realized an increase in government spending in human capital development with an increase in aid and hence increasing the overall growth of the country. In countries with limited human capital, however, government spending on human development may actually decrease with an increase in aid. These are the developing countries like Burkina Faso and Niger (Kosack, 2006). Based on human capital development, the role of aid is defined through interventions that focus on the measures of human capital: life expectancy, infant mortality, literacy, gross enrolment in primary, secondary and tertiary education. This is in line with the attainment of the MDGs two of which are related to education and three related to health (CBO, 1997). Foreign aid has sponsored research and education for example the U.S. foreign aid in Egypt contributed significantly to the increased enrollment in primary school, particularly for girls. The project constructed, and equipped, more than 1,800 schools that enroll 900,000 students each year (CBO, 1997). Immunization programs that have led to the control of various diseases have been funded by aid. Formed in 1999, the Global Alliance for Vaccines and Immunization (GAVI) is a collaborative effort to expand vaccine and immunization research and provision to developing countries. Similarly, the Global Alliance for TB Drug Development works on the development of a new generation of drugs to address the global tuberculosis resurgence (USAID, 2002). Past studies have identified that determining what role foreign aid has played in promoting growth and development is difficult for many reasons. First, the country specific characteristics and social progress are complex processes and are influenced by many factors with some remaining unidentified. Second, many social and economic trends may occur together with the flow of international aid, which makes determining causality elusive. Third, there is no clear and universally accepted framework for evaluating the impact of various sorts of aid activities. Finally, the data for a research effort designed to determine the role of foreign aid or any other factor are problematic; for example, less than a tenth of the low-income populations of Asia, Africa, and Latin America live in developing countries with incomplete vital statistics, much less economic accounts (Natsios, 2002). It is also imperative to mention that sometimes aid is not effective. Effective aid requires the right timing and the right mix of money and 1 The author can be contacted on [email protected]...
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