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Foreign and Economic Development

             There is a fierce backing for the motion that aid doesn't do much for its intended motives of development and poverty alleviation however it should be noted that Bilateral aid is a strategic aid often induced by underlying political policy incentives (Heinrich 2013, p. 423). Alesina and Dollar found that "donor countries disburse foreign aid largely as a function of strategic and geo-political considerations, rather than real needs of the receiving countries [Alesina and Dollar (1998)] " (Alesina & Weder 2002, p. 5). Opponents of foreign aid like Dambisa Moyo argue that the recipient countries would be better off relying on global capital markets raising bonds to finance development. .
             In her book "Dead Aid," Moyo describes Africa's aid dependency suggesting the use of raising government bonds to raise funds rather than borrowing from World Bank or governments giving the example of Nigeria, which has already been successful. Djankov et al gives that "unconstrained foreign aid will likely increase public consumption rather than investment (Djankov, Montalvo & Reynal 2008, p. 16) and thus the lack of investment is unlikely to promote any economic growth. Donors often providing constrained aid impose conditionality with imperfect knowledge of the environment causing more harm than good (Bourguignon & Sundberg 2007) and thus the governments are better off raising funds themselves. Raising capital that governments are accountable to have produced stellar outcome sin Nigeria and Zambia making the approach credible and efficient compared to grants.
             Microfinance and Bootstrapping .
             Jeffery Sachs, the main face of the "Big Push " foreign aid, emphasizes the need to double the foreign aid due to the low level of capital leading to poor marginal productivity and negligible savings in LDCs. Bangladesh's success in boosting entrepreneurship, pulling people out of poverty using micro-credit gave birth to the "microfinance revolution " (Imai & Azam 2012).

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