DVA1502 ASSIGNMENT 5 SEMESTER 2 2025 (Answer Guide) 738083 – Due 16 September 2025

DVA1502 ASSIGNMENT 5 SEMESTER 2 2025 (Answer Guide) 738083 – Due 16 September 2025 Title Foreign Aid in Developing Countries: Definitions, Roles, Advantages and Disadvantages Introduction Foreign aid has been a central feature of the international development landscape since the end of the Second World War. Developing countries continue to rely on various forms of external assistance to support growth, address poverty, and respond to emergencies. In recent decades, the debate on the effectiveness of aid has intensified, with scholars and policymakers divided between those who view it as a vital tool for development and those who argue that it fosters dependency and undermines domestic governance (Moyo, 2009; Sachs, 2005). This assignment examines the concept of foreign aid and unpacks its role in shaping development outcomes. It begins by defining foreign aid to establish a common conceptual framework. Thereafter, the roles of the International Monetary Fund (IMF), the World Bank, and the BRICS’ New Development Bank will be analysed, highlighting their contributions and controversies. The discussion will then explore the advantages and disadvantages of foreign aid, offering a balanced perspective grounded in both theoretical and empirical evidence. Finally, the assignment concludes by synthesising these insights and reflecting on the implications for developing countries. Define “Foreign Aid” (10 marks) Foreign aid is generally understood as the transfer of financial resources, services, or goods from a donor country or international institution to a recipient, typically a developing country, with the goal of improving welfare, promoting economic development, or providing humanitarian relief. The Organisation for Economic Co-operation and Development (OECD, 2023) defines it more formally as Official Development Assistance (ODA), which includes grants or concessional loans from public sources whose primary purpose is to promote the economic development and welfare of developing countries