What, in your opinion, is the most sensible and soundest among the following thr

Question

What, in your opinion, is the most sensible and soundest among the following three views regarding the relationship between foreign aid, economic growth and sustainable economic development,

• View 1: Although not always successful, on Average, foreign Aid has a positive impact on economic growth and development;

• View 2: Foreign aid has little or no effect on economic growth and actually may undermine economic growth;

• View 3: Foreign aid has a conditional relationship with economic growth, stimulating growth only under certain circumstances, such as in countries with good policies or institutions.

Clearly indicate your reasons and supporting evidence for your preferred view.

Explanation / Answer

View 3: Foreign aid has a conditional relationship with economic growth, stimulating growth only under certain circumstances, such as in countries with good policies or institutions.

Reason: Foreign aid is the help provided to a country from other countries from rest of the world to help it fight its domestic issues or start on its development path, which it is unable to do because of a credit crunch.

However, it is possible only when the recieving country has sufficient policies and infrastructure to absorb and make use of the funds recieved, else it all goes in vain.

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