Foreign Aid the international transfer of capital, goods, or services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian (e.g.  aid given following natural disasters).

In other words, Foreign aid is defined as the voluntary transfer of resources from one country to another country. This transfer includes any flow of capital to developing countries. A developing country usually does not have a robust industrial base and is characterized by a low Human Development Index (HDI).

International aid may take the form of multilateral aid – provided through international bodies such as the UN, or NGOs such as Oxfam – or bilateral aid, which operates on a government-to-government basis. There is considerable debate about whether international aid works, in the sense of reducing poverty and stimulating development.

Economic liberals such as Jagdish Bhagwati argue that trade, not aid, is more effective in delivering development, and that globalization is therefore a beneficial rather than a harmful phenomenon. From this perspective, international aid tends to promote dependency, prevent initiative and undermine the operation of the free market, so it can be considered a ‘poverty trap’ that entrenches deprivation and perpetuates global disparities.

But according to perspective of Bangladesh economy, it may require foreign aid to development and reduce poverty. Some reasons are pointed bellow-

  • For humanitarian reasons, Such as to help the poor people of Bangladesh.
  • To improve the country’s infrastructural development within a short time. By improving infrastructural development one country can have domestic investors and become available for trade.
  • If the aid given is concerned with productive fields or new technology then the economy will expand increasingly.

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