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The Effects of Grants and Donor Aid

            Aid can be defined as grants or loans provided to governments or other entities in developing countries by governments or major multilateral institutions from developed countries in order to promote economic growth and human welfare. A lot of literature have springed arguing on the impact of the development aid on developing countries with some criticising it as a poverty entrenching facility whist some have supported development aid as it leads to economic growth and sustainability of many developing countries governments. This essay joins the numerous scholarly writings discussing the impact of development aid on developing countries.
             Scholars who support the thesis that development aid has positive impacts on the developing countries have argued that development aid has positive and tremendous impact on the economic growth in the developing countries. Thus thesis is backed by scholars like Mosley et al (1987) who argued that the theoretical case for foreign aid rest on the presumption that the aid could fill the shortage of international capital in developing countries. Eroglu (1997) concurred with Mosley by stating that foreign aid supplements the scarce domestic resources for developing countries and also provide the government coffers with the much needed forex which is useful in importing of machinery and other resources that helps in running a countries economy. The absence of foreign aid in many developing countries has proved catastrophic with many economies being put into reverse gear. For instance the withdrawal of donor aid in Malawi saw the country's economy grounding to a halt as the government could not find the much needed forex to import fuel for vehicles and other machinery.

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