Q62+-+Development

//**Distinguish between the forms of aid, which a developing country might receive. **//

Bilateral, multilateral, grant, soft loans, official, and tied aid are all different types or forms of aid, which developing countries may receive.

As implied by the name, bilateral means two sides, and occurs when one country supports another directly. This can be in the form of money, machinery/tool shipments, food, medicines, housing, an d infrastructural specialists. Multilateral means multiple sides, and occurs when the World Health Organization (WHO), UNESCO, or the World Bank allocate funds collected from multiple nations.

When bilateral aid is conditional or involves reciprocation, it is termed as tied aid. Often, this entails the agreement that loans or donations must only be used on goods and services from the lending nation. This provides the receiver with funds and the donor with exports.

Official aid, also known as official development assistance encompasses bilateral and multilateral aid. In essence, it is all sort of aid except that given by charities such as Oxfam and religious organizations. The United Nations sets targets for developed countries to direct official aid towards developing countries. __Unfortunately, only Luxembourg, the Netherlands, Norway, Sweden, and Denmark meet this target.__

Grant aid can be thought of as a “gift” and can take place in the form of money, goods, and capital. What distinguishes grant aid is that it does not require a reciprocation or condition. Soft loans are different. “When money is lent on [favorable] terms – i.e. at interest lower than market rates and/or with longer [amortization] periods – then one speaks of soft loans.” The World Bank and national development banks usually handle these loans.

 //** Photo cred ****it:** http://www.riazhaq.com/2009/04/foreign-aid-continues-to-pour-in-india.html //

 The image above depicts the proportion of aid that different countries receive from the United States of America. They may be indicative of the degree of partnership with the U.S.A or the presence of conflicts that exist in these nations.