The enigma of aid

What to do with foreign aid, and what to do without it? I have wrestled with this question in the Nepali context for a major part of my working life, both as a public practitioner of the art and science of foreign aid, and as an independent analyst of Nepal´s political economy. I am nowhere nearer to a practical answer now than when I was Nepal´s Head of the Foreign Aid Division or, later, Finance Secretary in the 1970s. Nor did the answer become clearer in 1983, when I helped organise the first-ever seminar on "Foreign Aid and Development in Nepal" on behalf of the Integrated Development Systems (IDS). When democracy finally dawned two years ago, I got an opportunity to serve briefly as the Finance Minister, This role, too, passed without any success in aligning the course of foreign akt with that of the expectations of the long-suffering people of Nepal and the needs of sustainable development.  Aid is not simply a resource that which bridges the investment-savings gap, as economists understand it. Nor is it simply a resource that policy-makers of recipient countries would channel into investment as they see fit. It is more than mere capital inflow, even if we were to concede that, broadly understood, such capital includes technology and transfer of skills. Aid derives its complexity from its symbiotic, if paradoxical, relationship with the totality of societal forces, where the influence of these forces on the process of development can be positive as well as negative. Foreign aid is thus something that is critically needed in a poor country like Nepal, and yet it is something that is better avoided, at least in part, if its counter¬productive influences outweigh the productive ones.

OF BUMS AND BEGGARS
What is amazing is not that critical analyses of the motive and mechanisms of aid have not made a visible impact on the utilisation of foreign aid for its stated purpose, but that the major issues regarding aid management remain almost the same now as they were in the 1960s, though they might now be presented in different forms to suit current priorities.