Development aid has been provided by more developed countries to assist and help foster the development of poor countries, in order to narrow the gap between the former and latter on economic, social and human aspects. Development aid can be channeled from donors to recipients in two ways: bilateral and multilateral form. Development aid is also being provided in two forms: loans and grants, which loans has to be repay by the recipients to donors within a certain time range, whilst grants are non-reimbursable donation. Often development aid has been oversimplified by general as beneficial for recipient countries, and the aid just "flow from donors to recipient countries" (Boyce 2002, ppg 239). In fact, there are many controversies lies within the issue of development aid, which question the power of development aid in achieving the goals of improving poor countries situation, and helping these countries to achieve sustainable development in different aspects in long run. This essay focuses on several major controversies in development aid, which are the motivations of donors, effectiveness of aid on recipients and donors' choices of recipients.
The real motivations and incentives of donors providing aid to the recipients is one of the controversies of development aid. Rather than simply providing aid based on charity, donors may use development aid as "a means to pursue other foreign policy objectives including diplomatic, commercial and security interest"(Brown 2009, ppg 141). Donors may also provide aid to developing countries as to seek recipients' cooperation politically and economically. They may "allocate aid to that recipient to enable it to respond to donor requests, to insure the recipient's allegiance, or to encourage cooperation with the donor in international affairs" (Balla 2008, ppg 2568). This might impact on the recipients' political and economic autonomy. Donors could have potential to influence domestic policy and recipient countries might have to work for donor's interest in order to receive aid continuously. Dependency of recipients on donors might deepen both economically and politically when development aid has been changed into an instrument for donors to maximize their power and interests at other regions (Kenny 2008). One of the typical examples would be during the Cold War; the capitalist and communist bloc offered aid to different countries respectively in order to gain support internationally, and to prevent the expansion of the ideology of the opposite bloc. Recipient countries which accept the aid would then be attached to the donors both in political and economic aspect, as they have to show support to the donors in order to receive aid continuously. The aim of development, which is to help recipients to exercise leadership over their domestic policies, to achieve sustainable growth and to reduce their dependency on foreign aid, should be questioned under such circumstance.
Donors' choices of recipients are one of the controversial issues in which it focuses on which countries should receive development aid from donors. Poor countries usually lag behind the developed countries are usually due to insufficient domestic savings, and low level of investment which hinders the overall economic growth. Foreign aid would be beneficial to developing countries in a sense that it could help by "supplementing domestic savings or foreign exchange reserves and this increase investment and in turn growth." (McGillivray et al., 2006, ppg 1032). Foreign aid can offer helping hand in poor countries, but debates then addresses on whether well-governed countries or countries with high poverty rates should receive aid. Many scholars (Sobhan 2002, McGillivray et al. 2006) point out that aid can be effective to foster growth, but it depends on the "policy regime"(McGillivray et al., 2006, ppg 1033) and the "quality of governance" (Sobhan 2002, ppg 540) of the recipient country. On one hand, well-governed countries with low corruption rate within governments would appear to make better use of development aid, whilst development aid might have been beneficial to the government officials rather than broader part of the society in low-income countries with poor governance. On the other hand, well-governed countries are indeed having more ability to attract foreign investment comparing to the countries with high-rate poverty. Without foreign aid, extremely poor countries might face difficulty in improving the governance and attract foreign investment (Brown, 2009). The vigorous cycle might then continue. Thus, it can be seen that donors' choices of recipient countries would trigger debates and make development aid more controversial.
The effectiveness of foreign aid is another controversial issue. The goals of development aid can be diverse, but the ultimate goal is to reduce poverty, reduce inequality both nationally and internationally, and promotes economic growth in recipients' countries. However, what contributes to the debate on the effectiveness of development of aid is the negative impact it might bring to the recipient countries. As mentioned above, aid might be ineffective if the recipient countries have poor governance and poor policy regime. Both multilateral and bilateral aid would trigger debate which in these high poverty and poor governance countries, the development aid might ultimately flow to the parties, for instances, government officials or private sectors which hold power within the nation. The parties which receive the aid from donors, such as government, non-governmental organizations, might not be distributing the aid evenly among the society. The powerless groups might have chances not benefitting from the aid. Hence social and economic inequality gap has not only failed to be demolished, but has been widened with the ineffective use of aid (Boyce 2002).
Another ineffectiveness of aid is that it might fail to lead to sustainable economic growth. Mentioned above, the self-interested motivation of donors to provide aid to the recipient countries might deepen recipients' dependency on donors' politically and economically. What worsen the case is that some donors might provide tied aid. Tied aid, which is meaning that recipient countries have to "purchase goods and services from the donor countries even if they are not the cheapest or the best value for money" (Brown, 2009, ppg 143). Tied aid would hinder long term economic growth as recipients would be unable to buy goods and services with lower prices, but due to dependency on aid, recipients were forced to accept tied aid. In addition tied aid would bring obstacles to long-tern economic growth and lead to detrimental effects on the independency of the recipients' countries (Singh 2002).
Development aid could also be regarded as ineffectiveness depending on the forms of aid to be provided. Aid can be provided in two forms, either in form of grants or loans. This can post controversy as the latter, which if aid is provided to the recipient as loans, the power of repayment of the recipients is to be questioned (Boyce 2002). Cases of recipients incapable to repay loans and become heavily in-debt are evidences of the ineffectiveness of aids. If the debts cannot be written off by the donors' countries, which are regard as debt forgiveness, aid provided in loans form could only provide short term economic growth, whilst in long terms; the debt would distort economies in the recipient countries which are unable to repay debts (Collier and Dollar, 2001). Such impact is negative on the recipients' development and could be seen as controversial on the effectiveness of aid.
To conclude, through assessing the motivations of donors, donors' choices of recipients and the effectiveness of aid, it can be seen that development aid (both bilateral and multilateral) is controversial. Development aid cannot be oversimplified and it should be assessed thoroughly in order to make development aid more effective in helping recipient countries to achieve independency and sustainability on development growth, also in poverty reduction.
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