Chenery and Strout (1966) see ODA as an effective instrument to overcome economic failures and hence encourage economic growth through increasing productive investment and technical knowledge.
The Benefits of ODA.
According to Rosenstein-Rodan (1944), poor countries face with backwardness when the important sectors, such as economy and infrastructure, are not adequately invested. To be more specific, these countries cannot escape from poverty themselves as their economic growth is hampered by inadequate savings and foreign exchanges, resulting in limited exports and restricted imports of capital goods. Consequently, it is rather difficult for the less-developed countries to call for international investments. .
Chenery and Strout (1966) argue that ODA, by offering additional resources beside the domestic savings, can act as a powerful tool to push the economic growth. A large volume of research has shown that increases in ODA can lead to growing investment and increasing rate of domestic savings (Clemens et al. 2012). As a result, the capital is accumulated and a large amount of income is saved. It thus can be said that ODA capital contributes significantly to the growth of the economy by increasing national income growth, or increasing Gross Domestic Product (GDP) (Khakoo 2006; Levy 1988). Recent studies by Chatterjee et al. (2003) and Clemens et al. (2012) also emphasize that the long-term growth of recipient countries can be achieved through the investments of external resources in infrastructure and productive sectors.
In addition to physical capital, it is of profound importance to invest in human capital, including two major fields namely health and education (Moe 2008). Chenery and Strout (1966) even stress that the growth of a country can be seriously hindered by insufficient human capital. According to the United Nations (2006), in Sub-Saharan Africa Countries, the losses in terms of health expenses, productivity and labour diversion were far greater than the total aid assistance for the region.
The state is in a decade long recession, and it is to the benefit of the state that it become more of a global player. ... The states external environment led to many internal political developments. ... The 20th century, that has seen the two world wars, was not only a time of development, but also a time of lessons. ...
China, " transformed itself from an isolated society into [a] superpower with global interests and responsibilities" (Hickey & Guo, 2010 p. 10) in the fields of politics, economy and foreign assistance. ... As mentioned, China's emergence in the global economy also created opportunities and benefits for the rest of the world. ... The cheap goods produced in China do not only benefit trading partners, but also maintain economic stability, increase incomes and create job opportunities in those countries (Uberoi, 2008 p. 124). ... China is involved in the official development (O...
