Effects of War and Peace on Foreign Aid

Sociology -- Effects of War and Peace on Foreign Aid

Foreign aid has been an organized effort since the end of World War II. Through I outright aid, investments, loans and grants, industrialized countries sought to help underdeveloped countries recover from the devastation of war. Predictably, some nations also used foreign aid to further their own interests, sometimes to the detriment of nations such as India, which relied heavily on foreign aid. India's leadership, mindful of the dependence and ravages on the country's resources, eventually developed a more India-centered system that has developed India and reduced poverty and war. However, poverty and war are not completely erased and are still problems in that the vast country of India must face.

Body: Effects That War and Peace Have on the Distribution of Foreign Aid

a. Analyze how funding in the form of aid, investment and loans moves from industrialized nations to the developing world to alleviate the problems caused by warfare.

Organized foreign aid as we know it initially developed in response to the widespread damage and economic instability caused by World War II. The current structure of foreign aid is largely based on international efforts begun immediately after World War II (Singh, 2008, p. 1). Using such agencies as the United Nations Relief and Rehabilitation Agency (UNBRA), the World Bank, the International Bank for Reconstruction and Development, the Marshal Plan and the Columbo Plan, nations first sought to rebuild other nations devastated by the War (Singh, 2008, p. 1). Foreign Aid typically takes the form of outright aid, investments, loans and grants. Though much of the early Foreign Aid was a multinational effort, it was also given by individual nations for their own purposes. During the Cold War in the 1950's, the United States was giving up to two-third of Foreign Aid in order to keep countries from "going Communist" and mixing developmental aid with military aid (Singh, 2008, p. 1). The Soviet Union, the Cold War enemy of the United States, also developed aid programs to help developing nations and to help itself. As industrialized nations, such as the United States, sought to assist developing countries, those donor nations also sought to increase their power and influence throughout the world.

b. Assess the positive and negative effects that peace and war, respectively, have on the distribution of foreign aid in India. Support response with concrete examples of each of the results cited.

Peace has both positive and negative effects on foreign aid to India. During time of extended peace, India has been able to shift from slavish reliance on foreign contributions of food, materials, money and personnel to a far stronger infrastructure allowing India to better control its own economic cycles, pre-pay some of its expensive debts and actually refuse some additional aid offered by countries with ulterior motives (Singh, 2008, p. 3). Ironically, peace also has a negative effect on foreign aid to India, at least in the past. Though India has received great sums of foreign aid, that aid has historically been inadequate to meet India's needs. Since foreign countries have not been in critical need of India's cooperation at times of peace, there was less urgency to meet the internal economic needs of India. Furthermore, peacetime efforts of some other countries have focused on the subjugation of India's resources rather than on their development. For example, India's "Green Revolution" of the 1960's was largely funded and pushed by the United States and its businesses in order to conquer nature through the use of chemical fertilizers and pesticides, rather than cooperate with nature through environmentally wiser methods. As a result, India's natural resources were exploited and contaminated and India was largely kept in a dependent uniformity on western aid, with its economic and natural diversity severely compromised (Singh, 2008, pp. 7-9).

War also has positive and negative effects on foreign aid in India. Eager to solidify their strength, donor countries turned greater attention to India's vast resources, not only in its huge population but also in its natural resources. This concentration led to the development of the "Aid India Consortium," which first helped India out of terrible poverty through outright food contributions, investments, loans and grants (Singh, 2008, p. 3). War also has negative effects on foreign aid, however. During the First Gulf War of 1990-1, for example, there was an economic crisis that made India's "balance of payment" position -- its ability to repay principle and interest on foreign aid loans -- far worse, creating a huge trade deficit, greater restrictions on imports to deal with the deficit, and a resulting devaluation in India's currency and decrease in its industries (Singh, 2008, p. 10). Consequently, both peace and war provide benefits for foreign aid but also present difficult challenges.

c. Analyze the specific actions that the leadership of India has taken, through the use of its foreign aid from donor nations and international lending institutions, to relieve the severe problems caused by warfare.

Indian leadership has first used foreign aid to raise the country out of terrible poverty, and then stand on its own two feet. In the case of India, those forms of aid have been tailored to India's specific needs. Outright aid, for example, included bilateral food assistance through programs such as the "PL-480" so India can strive toward "food security" (Singh, 2008, p. 2). In addition, nations have invested heavily in India, not only in the form of money but also in the form of substances such as fertilizer, seeking to increase India's agricultural productivity but also seeking a return on their investments and a large increase in the usage of chemical fertilizers produced by manufacturers in industrialized countries (Singh, 2008, p. 8). India has also received a series of long-term financial money loans that had to be repaid and money grants that did not have to be repaid. Loans and grants to India were initially through the "Aid Indian Consortium," composed of all countries donating to India with the direction of the World Bank. Eventually that group was overshadowed by the India Development Forum, which became more intent on strengthening India's economic infrastructure through partnerships and through finding "catalysts for reform" (Singh, 2008, p. 3). These partnerships have caused India's "IT revolution," in which sectors of India's population serve international Information Technology needs while greatly increasing their own incomes, and has also moved assertively into such industries as textiles, pharmaceuticals and electronics, all boosting India's economic strength while serving international needs in those areas (Sachs, 2005, p. 16). While the results are not perfect, India has prospered in its economy and in the intimately connected areas of education, health, trade, research and development, steadily progressing in all those areas as charted by the OECD from 2005 through 2012 (Organization for Economic Co-operation and Development, 2013). In sum, India's leadership has succeeded in moving the vast country from a slavishly dependent and subjugated nation to a far financially stronger leader in several key worldwide markets.

d. Discuss whether or not the extension of foreign aid has successfully reduced poverty and the incidence of warfare in India. Support your response with examples.