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How the Information Shown Can Be Considered Both Good and Bad for the Developing World

Updated on June 29, 2016
OECD Official Development Assistance (aid) to the developing world, 1990–2007.
OECD Official Development Assistance (aid) to the developing world, 1990–2007. | Source

The large spike in debt relief in 2005 is likely to be due to the heavily indebted poor countries (HIPC) initiative, managed by the International Monetary Fund (IMF); whilst this provides a short-term pressure drop on the governments of developing nations, by reducing the amount of their revenue which has to be spent on debt servicing, the subsequent fall indicates that if the source of the problem is unchanged, the interest from more economically developed countries (MEDCs) is no longer present.

Under the HIPC initiative, Uganda had $650 million of multilateral debt cancelled; this allowed the government to provide free primary education, and increase public healthcare spending, thereby improving the average quality of life. However, developing countries continue to take loans, but now predominantly from private credit agencies, and so unsustainable, runaway debt is likely to be a future problem once again, but simply cancelling the debt may be a much more complicated process.

The slight increase in bi-lateral aid could represent increased funds for top-down projects, such as large dams, which could be used to generate cheap electricity for large populations; however, it does increase the risk of corruption. Bi-lateral aid may also be tied to conditions which are designed to benefit the donor country; for example, the UK's £234 million loan to Malaysia in the early 1990s was in return for a promise to buy £1 billion of the UK's fighter jets.

The increase in aid from non-governmental organisations (NGOs) is likely to represent an increase in the number of bottom-up, community-lead projects; these are likely to have the most significant impact on individual citizens in developing nations, as the lack of corporate and governmental interest means that the voice of the local populous is taken into account.


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