Question

A major criticism of foreign aid to developing nations is that it Multiple Choice

O encourages dependency rather than self-sustained growth.
O leads to widespread underemployment and unemployment
O provides incentives to reduce the role of government.
O is capital-using rather than capital-saving when it is spent.

Answer 1

Foreign aid to developing nations is often criticized for encouraging dependency rather than promoting self-sustained growth, with figures like Dambisa Moyo suggesting that aid can do more harm than good by reinforcing corruption and deterring other investments. The correct answer is option A.

Step-by-step explanation:

A major criticism of foreign aid to developing nations is that it encourages dependency rather than self-sustained growth. While foreign aid can play a critical role in the short-term reduction of human suffering and the provision of basic needs, there is substantial debate over its effectiveness in fostering long-term economic development. Development economists, such as Dambisa Moyo, argue that foreign aid can lead to detrimental consequences, such as reinforcing corrupt regimes and stifling other forms of investment, like trade and private investment, which may offer more sustainable growth opportunities. Cases like the Canadian foreign aid organization's (CIDA) project in Tanzania have shown that despite good intentions, aid can result in negative human rights impacts and hinder the self-reliance of the local population.