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Question: How far does foreign aid contributes to the economic development of the poor countries? Answer:
Developed or rich countries help developing or poor countries by providing aid to them. Currently lots of third world countries receive foreign aids from developed countries. This situation is lasting for many years and has both positive and negative aspects. Foreign aid from various sources can reach recipients through bilateral or multilateral delivery systems. Literally the world is becoming more and more closely linked but still the gap between rich and poor is widening. In spite of that the aid poor countries get from rich countries is contributing a lot in the economic development. Foreign aids contribute a lot in economic development of the poor countries by opening up trade barriers, so that poor countries can sell their goods to other countries. Another is by removing subsidies, so that imported goods from poorer countries can compete fairly. Also by forgiving debts: forgiving huge interest repayments on old loans, so that the poor countries can overcome from a huge burden. Rich countries might be going through some hard times but it does not change the fact that they owe the rest of the world. Giving aid to poor countries is hardly a great act of generosity. There are many reasons for helping poor countries. Like humanitarian reasons, some think that it is their duty to help poor countries who are suffering from drought, famine, war or disease. Many rich countries donate aid for political or diplomatic reasons because they want to maintain a good relationship. And there may be some economic reasons like the donor country may want to control the supply of commodities such as: oil, water, wheat or they may want to ensure markets of their own products whether the products are planes, shoes or computers. In case of foreign aid we cannot deny the vital role of the World Bank, IMFs and UNICEF, which contributes a lot in the development of poor countries. Every year billions and billions of dollars are dispersed among many recipients through these institutions. The World Bank helps many poor countries by lending loan to them but they are not also totally generous.