Limitations of Aid
Economics: IB Diploma, topic 3.9.2
Limitations of Aid
Here are some of the arguments for why the benefit of aid is limited:
Corruption
- Corruption can restrict aid from getting to where it needs to go.
Conflicts of interest
- Aid can lead to less economically developed governments focusing on keeping the donors happy rather than on their own citizens.
Aid dependency
- African economist Dambisa Moyo argues that a dependency culture on aid might be created, where no government has an incentive to improve.
Market distortions
- Firms will focus their resources on trying to secure aid, rather than putting their resources to the best use.
Test yourself on Limitations of Aid
Which of the following are arguments against aid?
Which argument against aid suggests that governments will have little incentive to improve?