Q-31= What are costs and benefits of foreign economic assistance. Analyze it in the light of Pakistan’s economy
BENEFITS OF FOREIGN AIDForeign economic assistance is very important for economic development of Pakistan. The benefits of such assistance/aid are as under: -
1. Foreign loan/assistance bridges savings gap and that of balance of payments gap
2. Development needs are met and productivity of various economic sector increases
3. Establishment of modern economic and social infrastructure
4. Due to industrialization employment opportunities increase
5. Level of technology increases and higher quality goods are produced
6. Emergency requirements are fulfilled particularly food items are obtained
7. Country’s defense requirements are met
8. Tax revenue is increased
COSTS / DISADVANTAGES OF FOREIGN AIDForeign economic assistance and aid results in the following disadvantages.
1. Increases foreign Aid’s debt servicing
2. Production cost increases
3. Habit of dependence on foreign loan develops
4. Foreign aid is misused
5. Exploitation of donor countries
6. Commodity aid discourages local agricultural output
7. Dependence of imported raw material from the donor country industry
8. Donor countries may give project tied loans for less priority projects of country
9. Proportion of tied aid and severity of hard terms increases.
BENEFITS OF FOREIGN AIDForeign economic assistance is very important for economic development of Pakistan. The benefits of such assistance/aid are as under: -
1. Foreign loan/assistance bridges savings gap and that of balance of payments gap
2. Development needs are met and productivity of various economic sector increases
3. Establishment of modern economic and social infrastructure
4. Due to industrialization employment opportunities increase
5. Level of technology increases and higher quality goods are produced
6. Emergency requirements are fulfilled particularly food items are obtained
7. Country’s defense requirements are met
8. Tax revenue is increased
COSTS / DISADVANTAGES OF FOREIGN AIDForeign economic assistance and aid results in the following disadvantages.
1. Increases foreign Aid’s debt servicing
2. Production cost increases
3. Habit of dependence on foreign loan develops
4. Foreign aid is misused
5. Exploitation of donor countries
6. Commodity aid discourages local agricultural output
7. Dependence of imported raw material from the donor country industry
8. Donor countries may give project tied loans for less priority projects of country
9. Proportion of tied aid and severity of hard terms increases.