4.10.4—Investment, aid, and development assistance
- Syllabus
- First assessment 2022
- Objective
- 4.10.4
- Level
- SL
Aid and investment can raise capacity but create dependence
Aid and investment can raise capacity but create dependence.
Capital, concessional finance and development assistance may fund infrastructure or skills, while debt, conditionality and donor priorities shape outcomes.
Example
A transport project can reduce export costs, but a foreign-currency loan becomes harder to service after depreciation.
Separate the immediate injection from long-run productivity and financing risks.
Aid volume alone is not development evidence; governance and project quality matter.
Inward FDI can add capital, jobs, technology, management and export access, but profits may be repatriated and bargaining, environmental or linkage effects vary. Distinguish humanitarian aid for immediate relief from development aid for longer-run capacity; debt relief frees fiscal resources; Official Development Assistance is official concessional support; NGOs may deliver specialist local programmes. The World Bank supplies development finance and expertise, while the IMF focuses on macroeconomic and balance-of-payments support. Evaluate conditionality, ownership, tied aid, debt, governance and whether capability remains after funding ends.