Discuss the potential benefits and costs of official development assistance as a contributor to socio-economic development.
Back to the 1950s after the Second World War, in the framework of the Marshall Plan, the United States provided aid to its European allies in helping these countries rebuild previously destroyed economy and promote future economic growth. The success of this aid has raised optimism for the underdeveloped countries to possibly lift themselves out of poverty thanks to external assistance (Aime 2010). This kind of foreign assistance was then widely used as an indicator of international aid flow, or Official Development Assistance (ODA). However, while ODA is believed to have a positive impact on the socio-economic development of recipient countries, others argue that the costs that these countries have to burden need to be taken into account as well. Thus, the effectiveness of ODA as a contributor to the socio-economic development is still a question of controversy over the decades. The following essay will begin by defining the concept of ODA, followed by a critical analysis of both potential benefits and costs that the less-developed nations have to experience to their socio-economic development through the reception and dependence of ODA. Finally, a discussion will be provided to conclude this essay.
The Concept of ODA.
The concept of aid rooted from the United Nations Charter adopted by the world leaders who committed to promote social progress and better standards of life in larger freedom in 1945. According to Organization for Economic Cooperation and Development (OECD), ODA is the flow of official financing aiming to promote economic development and welfare of the countries listed as Aid Recipients by the Development Assistance Committee (DAC), with at least 25 percent of grant. The transfer of aid from donor governments to the countries that need assistance can be made through either official agencies or executing agencies.