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    Assignment 2

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    Nizar Belhaj
    Foreign aid refers to resources such as money, materials, and manpower provided by wealthy countries to help poorer countries. It can be provided as loans, grants, or emergency aid. While foreign aid aims to promote development, some argue it also benefits donor countries through exports and employment. Remittances sent by migrant workers are a major source of funding for developing countries, exceeding $400 billion in 2012. In Tunisia, remittances accounted for over 5% of GDP in recent years and benefited around 300,000 households. Non-governmental organizations (NGOs) have become important development partners, filling gaps in rural areas through projects and empowering communities in countries like Ghana. There is a need for oversight and capacity building

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    Assignment 2

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    Nizar Belhaj
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    Foreign aid refers to resources such as money, materials, and manpower provided by wealthy countries to help poorer countries. It can be provided as loans, grants, or emergency aid. While foreign aid aims to promote development, some argue it also benefits donor countries through exports and employment. Remittances sent by migrant workers are a major source of funding for developing countries, exceeding $400 billion in 2012. In Tunisia, remittances accounted for over 5% of GDP in recent years and benefited around 300,000 households. Non-governmental organizations (NGOs) have become important development partners, filling gaps in rural areas through projects and empowering communities in countries like Ghana. There is a need for oversight and capacity building

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    Foreign aid refers to resources such as money, materials, and manpower provided by wealthy countries to help poorer countries. It can be provided as loans, grants, or emergency aid. While foreign aid aims to promote development, some argue it also benefits donor countries through exports and employment. Remittances sent by migrant workers are a major source of funding for developing countries, exceeding $400 billion in 2012. In Tunisia, remittances accounted for over 5% of GDP in recent years and benefited around 300,000 households. Non-governmental organizations (NGOs) have become important development partners, filling gaps in rural areas through projects and empowering communities in countries like Ghana. There is a need for oversight and capacity building

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    26 views4 pages

    Assignment 2

    Uploaded by

    Nizar Belhaj
    Foreign aid refers to resources such as money, materials, and manpower provided by wealthy countries to help poorer countries. It can be provided as loans, grants, or emergency aid. While foreign aid aims to promote development, some argue it also benefits donor countries through exports and employment. Remittances sent by migrant workers are a major source of funding for developing countries, exceeding $400 billion in 2012. In Tunisia, remittances accounted for over 5% of GDP in recent years and benefited around 300,000 households. Non-governmental organizations (NGOs) have become important development partners, filling gaps in rural areas through projects and empowering communities in countries like Ghana. There is a need for oversight and capacity building

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    of 4

    Assignment 2

    Belhaj Nizar BA/IBE

    What Is Foreign Aid?


    -The most basic definition of the term is "resources given from one
    country to another." But it’s usually understood to mean money,
    materials, and manpower given or loaned by governments,
    organizations, and individuals in rich countries to help people in poor
    countries. Also referred to as international aid, economic aid, or
    development aid/assistance, foreign aid is a category distinct from
    military aid. Foreign aid, the international transfer of capital, goods, or
    services from a country or international organization for the benefit of the
    recipient country or its population. Aid can be economic, military, or
    emergency humanitarian. Foreign aid is defined as the voluntary transfer
    of resources from one country to another country.
    - This transfer includes any flow of capital to developing countries.
    A developing country usually does not have a robust industrial base and
    is characterized by a low Human Development Index. Foreign aid can be
    in the form of a loan or a grant. It may be in either a soft or hard loan.
    This distinction means that if repayment of the aid requires foreign
    currency, then it is a hard loan. If it is in the home currency, then it’s a
    soft loan. The World Bank lends in hard loans, while the loans of its
    affiliates are soft loans.
    -resource flows among countries in response to market incentives
    enhance global economic efficiency and welfare in both rich and poor
    countries. It has also been argued that in the presence of capital market
    imperfections the transfer of resources from developed country
    governments to the governments of developing countries on commercial
    terms, either directly or through multilateral agencies, can normally be
    expected to be welfare-enhancing in both developed and developing
    countries.
    -Donor self-interest theory: It tends to assert that development
    assistance promotes the economic or political interests of the donor
    country. This argument is frequently made in official and popular
    pronouncements in defense of developed country aid budgets.
    The donor self-interest argument has also been made by the critics from
    the left who assert that aid impacts negatively on political and economic
    development in poor countries. For example, aid promotes exports from
    and employment in the donor country. The crude version of this
    argument simply appeals to the obvious gains to the U.S. economy from
    exports of commodities or services or to the specific industries whose
    commodities or services are subsidized by the assistance program. U.S.
    producers of food grains benefit from food assistance, workers in the
    maritime industry gain from cargo preference provision, and U.S.
    engineering firms gain from contracts associated with infrastructure
    development projects. In addition, Commercial contacts developed
    during a period of assistance for the development of a nation's
    transportation or communication network can be expected to continue.
    As the recipient country's infrastructure develops, commercial demand
    for new and replacement equipment compatible with the aid-assisted
    investments is expected to widen commercial sales opportunities.
    Similarly, technical assistance for the development of a less-developed
    country grain milling and feed processing industry is viewed as
    enhancing the commercial demand for food and feed grains from the
    donor country.

    Remittances:
    -Remittance is a major source of external funding for developing nations.
    It has been an important source of migrant workers in countries suffering
    from labor shortage, and it also helps these countries in building up their
    foreign exchange reserve that help them to meet the balance of
    payments and help stabilize the value of the local currency against the
    US dollar. It is almost inflow from developed to developing countries
    have received great attention among academician and policymakers,
    because that transfers in form of remittances undertaken by migrant
    workers to their countries of origin increased substantially in the last
    decades. The data had reported by World Bank in 2012, remittances
    flows to developing countries have more than quadrupled since 2000.
    Global remittances, including those to high-income countries, are
    estimated to have reached $529 billion in 2012, compared to $132 billion
    in 2000. Developing countries is the largest share of remittances
    receiving. In year 2012, developing countries to receive it over 400 billion
    US dollar, an increase of 5.3% over the previous year and are expected
    to increase at an annual average rate of 8.8 percent in the next three
    years. They are also forecast to reach $468 billion in 2014 and $515
    billion in 2015 of all flow to developing countries.
    -Remittances impact on Tunisia economy:
    For many factors such as unemployment and institutional and political
    conditions, migration becomes an important phenomenon in Tunisia.
    Indeed, with the rapid evolution of illegal migration to Europe and the
    greatest demand of visa for skilled migration, mainly to Canada,
    migration has become a solution for individuals as well as for makers. It
    is true that by the presence of high unemployment , migration constitutes
    a good solution for a great number of unemployed skilled and unskilled
    workers and an important income source of many families. In fact, about
    300,000 households have benefited by the remittances. This number is
    very near to the number of poor families estimated to 297,000 families in
    2010. Remittances are evaluated to 3538.8 million dinars in 2012. Their
    share in GDP is equal 4.52% in 2011 and 5.26% in 2012. They
    exceeded the FDI flows which represent 2.6% of GDP in 2011 and
    3.74% in 2012. Then, their importance increases every year whence they
    grew from 403 million dinars in 1987 to 3538.8 million dinars in 2012. In
    fact, remittances increased by about 9.07% in average in each year
    between 1987 and 2012.
    According to data from the Central Bank of Tunisia (BCT), these
    remittances reached a record of 5.8 billion dinars in 2020, up 11.3%
    compared to the previous year, accounting for 5.3% of GDP.

    Role of NGOs in development:


    -Over the last decade there has been a dramatic growth in the number of
    NGOs involved in development aid, in both developed and developing
    countries.The total amount
    of public funds being spent through NGOs has grown dramatically and
    the proportion of development aid going through NGOs, relative to
    bilateral or multilateral agencies, has also increased.
    -Non-governmental organizations (NGOs) have become an important
    ally in the development process of the Third World.
    -NGOs fill the void in rural development, although operating with limited
    funds of its own, the NGOs makes it possible for rural communities to
    construct their needed projects at very minimal costs.
    For example, the NGOs have been a force in rural development in
    Ghana. Through its activities, over six hundred villages have been able
    to erect school buildings and health clinics; construct drainage systems,
    village dams, roads; undertake agricultural programs; women
    empowerment, payment of school fees, granting loans, microfinance,
    provision of mosquito net, payment of apprentice fees, organize health
    education programs and disseminate information and knowledge to the
    rural masses.
    -There is a need for establishment of criteria for NGOs to secure
    required standards of management skills and quality in their project
    implementation. NGOs that do not meet the agreed standards should not
    receive funds for emergency, rehabilitation and development work. There
    is the need to empower NGOs‘ ability to source funds and help them
    realize their goals. Alternative sources of funding will assist particularly
    small NGOs which are not well established but work closely with the
    needy such as the poor, orphans, children.
    - Training and development in areas of organizational, project and
    financial management as well as capacity building are some of the
    measures to improve NGO management.
    -NGOs should also play their role in practicing good governance through
    transparency, equity and timely reporting regarding their achievements
    and areas where they need assistance.

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