Would international aid save the world in pandemic?
Due to COVID-19, I was unable to attend class in person. While I was complaining about the internet problem in my house, it is probably hard to believe that on the other side afar this destructive disease had marred the peaceful life of many people, bringing them to bankruptcy, homelessness, and hunger. According to World Bank, the restrictions on mobility and economic activity to counter the health impact have widened the divide between the rich and the poor, putting a disproportionately significant burden on people with little income. In 2015, more than 736 million people lived below the international poverty line. With Covid kicking 70 more million people under the poverty line in 2020, a sad tone is cast upon us once we consider what the future would be like. Fortunately, for countries suffering from poverty, international aid is always a method they can count on. While some say that international aid for developing countries is useless, biased, hurts developed countries’ economies, and decreases the resiliency of developing countries’ economies. I suggest that developed countries increase international aid for developing countries because international aid is the most effective way to promote developing countries’ economies.
International aid, also called foreign aid, is the voluntary transfer of public resources from official organizations to developing countries to promote the development of the economy in developing countries. The source of aid is usually from the government of developed countries. The US, for example, is giving 5% of its GDP in helping the development of developing countries. The aid could be expressed in many ways. Special offers in trade, direct money transfer, low-interest loans, free health services, food assistance, etc.
Of all these ways of aid, there exist three main forms. The first kind of aid is in the form of basic materials. Many developing countries are still suffering from hunger, diseases, and homelessness, which greatly hindered the countries from rapid development. Therefore, the international institutions would provide basic healthcare, food provisions, and basic shelters for people suffering from those conditions. With the workforce problem solved, those countries could enjoy a better production environment, improving their economies faster. The second form of aid is giving direct aid to people in need. The international institutions would directly provide financial support for people suffering from financial difficulties, improving their economic conditions. The third form gives better trade deals, technological support, and low-interest loans. By improving the business environment in developing countries, those countries could enjoy tremendous economic boosts with flourishing enterprise and technological improvement.
International institutions issue all the aid and have a vital role in effectively giving the aid to developing countries. Those institutions have excellent programs that could alleviate developing countries’ economic stress in various forms. WTO, for example, has special provisions for developing countries like prolonged periods for commitment plans to increase trade opportunities. WTO also offers support for developing countries in trade disputes and technical standards. To facilitate trade, WTO initiated a plan called “aid for trade.” Although WTO does not guarantee a trade increase, it would bring developing nations with donors to discuss the trading terms. In the plan, WTO would also bring specialized people to the developing countries, teaching them practical ways to alleviate poverty. The “aid for trade” plan would also support developing nations with infrastructures for further economic development and reduce the cost of lowering tariffs. According to WTO, OECD data show trade-related ODA commitments running at about $25–30 billion a year in the past few years.
World Bank is also a vital institution in international aid that uses loans to foster developing countries’ economic growth. A large amount of concessional loans is being issued from the World Bank to help the economy of the developing nations. International Monetary Fund also serves the same function of providing concessional loans. To help low-income countries in fighting the coronavirus, the IMF “The Fund provided financial support to 53 of 69 eligible low-income countries in 2020 and the first half of 2021, with about US$14 billion disbursed as zero percent interest rate loans from the Poverty Reduction and Growth Trust.
Some people might argue that the government could hold the aid instead of letting the aid go to the hands of people who really need it. However, if the aim is precise, like fighting aids and pandemics, there is little chance for such things to happen. The global fund, for example, is an active participant in the fight against diseases in developing countries. Due to their effort, 44 million lives were saved. With the reduction in infected populations, the country’s economy could be stimulated with the increase of population. Until January 25, 2022, the global fund invested 4.1 billion US dollars in fighting the COVID-19 pandemic. With such specific goals, we can expect an excellent result.
There also exists doubt about whether international aid is worth it. When international aid is given to developing countries’ enterprises, while the aid indeed gives an advantage for developing countries’ industries, aid also lifts them from the market competition. Without competition, developing countries could suffer from a lack of innovation and efficiency, making the economy less resilient. While this argument considered the competition, it failed to acknowledge the inferior position developing countries have in the global competition. With advanced technology, the developed countries could enjoy giant “price scissors” while dealing with developing countries. Without aid, the economy of developing countries could only become worse. India is an excellent example of having an economic transformation with the help of aid. In the beginning, India was an aid receiver. However, with the aid accelerating the economy of India, now it has become an active aid giver with efficient technology to compete in the global market. With enough aid, more and more developing countries would be able to transform and shorten the time needed to bring themselves out of the poverty line.
After illustrating the effectiveness of aid, we have to ask ourselves, is this enough? With the current pandemic, the world economy has been dramatically damaged. With more and more countries falling back under the line of poverty, we have to take action and upgrade this most effective weapon called international aid against poverty. If we could participate more in advocating an increase in international aid, the governments would be more prone to carry out the policy. With the countries increasing the aid, the negative effect of this epidemic would be more effectively countered, helping the developing countries, and creating a positive cycle, thus reviving the developing countries’ economies. There’s no time to waste.
