6 Pros and Cons of Foreign Aid

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6 Pros and Cons of Foreign Aid

In March 2019, the Trump Administration announced that it will cut foreign aid for Guatemala, Honduras, and El Salvador. This action comes in response to individuals either applying for asylum or coming to the United States illegally in larger numbers.

The pros and cons of foreign aid are essential to consider because its presence can help or hurt others.

List of the Pros of Foreign Aid

1. It builds diplomatic relationships.
Foreign aid can build unique individual, corporate, and political relationships that improve the diplomacy that occurs between two countries. It is usually given at a time when domestic conditions are challenging to manage for local authorities.

2. It can reduce the impact of extreme poverty.
Four out of every 5 people in the world today earn less than $10 per day in wages. A significant majority of them earn less than $2 daily. Offering foreign aid is a way to help these households meet their basic living needs.

3. It encourages independence.
Foreign aid can help a government to stay in power when conditions are present which could force officials from power. By creating stability in the country, it becomes easier to help those who are in need.

List of the Cons of Foreign Aid

1. It can be a system that creates favoritism.
Israel receives over $100 billion each year in foreign aid from the United States, even if the funds are not always classified in such a way. Only five countries receive more than $1 billion annually from the U.S. each year. Countries that offer money can influence local politics in unique ways.

2. It requires direct supervision.
Without supervision of its disbursal, foreign aid is usually wasted. Even resources given to the United States have not been used as intended. Over $1 trillion in aid has been spent in Africa since 1971 with little stability to show for it.

3. It creates dependencies.
Some countries rely on their annual foreign aid package as a way to balance government spending. The GDP of some small African nations from outside help is more than 50%. When there is a dependency in place, then there is little motivation to change.

The pros and cons of foreign aid show us that targeted help can be meaningful, but blind giving is wasteful. It can influence political policy in positive ways when given correctly. If not, then the country giving out aid can even harm itself.