Foreign aid

Updated: Aug 20, 2021

The administered transfer of resources from the advanced countries for the purpose of encouraging economic growth in the developing countries. Funds transferred to the developing countries from governments and international institutions in the form of official aid account for about one third of the total transfer of fonds to the developing countries (the remainder being accounted for by loans through the commercial banks and direct investment). For the least developed countries, however, official aid accounts for over 80 per cent of such transfers. Official aid from the advanced countries represented in the Organization for Economic Cooperation and Development’s Development Assistance Committee accounts for 0,35 per cent of the gross national product of these donor countries. In 1980 the U.K. committed a total of £1 billion to all forms of foreign aid. U.K. aid is currently administered by the Overseas Development Administration.

Reference: The Penguin Dictionary of Economics, 3rd edt.

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