The Macro Economic Management Challenges of Foreign Aid in Developing Countries

Abstract

Foreign aid is one of the most powerful weapons in the war against poverty. Many people equate aid with charity as one way act of generosity directed from high income countries to their low income counterparts. Foreign aid is indispensable for the development of less developed countries. It flows in the form of loans, assistance outright grants from various governmental and international organizations. It spreads the benefits of global integration and shared prosperity by enabling poor people and countries to overcome the health, education and economic resources barriers that keep them in poverty. There is an international consensus that human development should be the primary objective. Hence aid budgets are raising despite the several fiscal and public debt problems facing some of the donor countries.