Aid is any form of assistance offered by one country to another in the form of loans, weapons, medicines, technology etc. whereas trade is buying and selling of goods in between two countries. When we talk about foreign aid, the top recipients are Afghanistan, Bangladesh, Israel, India, and Pakistan to name a few. But the question is, by providing aid are we focusing just on the short term solution to a given problem and not looking at the broader picture? Is providing aid sufficient to help a developing country become developed?
Obviously the answer to this is NO! Aid is just an instant remedy, not cure. We can’t deny the fact that there is a huge gap between foreign aid rhetoric and foreign aid reality. Aid always comes with strings attached, no aid is provided until and unless there is any strategic motive behind it. No aid is free and has a cost associated with it, making the recipient countries liable to the nation or organization providing the aid, therefore adding an extra burden.
Whereas when we talk about trade, both the nations’ gets equal representation, there is not much scope for the opportunity of having an upper hand of one nation over the other. Trade can help boost development and reduce poverty by generating growth through increased commercial opportunities and investment, as well as broadening the productive base via private sector development. Trade leads to sharing of resources, encourages innovation by providing exchange of know – how, technology and investment in research and development as well as FDI.
Consider India, it became a global market and conditions of people improved when it opened its gates to other nations in 1991.The overall development of the country including human development factors was improved. Due to this initiative by government, we became more competent as we were forced to reduce the cost of inputs, acquire finance through investments, increase the value of its products and move up the global value chain. It also expanded business opportunities for local companies by opening up new markets, removing unnecessary barriers and making it easier for India to export. The employment opportunities also increased by boosting economic sectors that creates stable jobs and usually high incomes, thus improving livelihood.
Thus we can see that trade actually liberates economy. It earns on assets and makes developers self-sufficient as well as paves way to explore their potential. Though we cannot deny the necessity of aid in times of crisis, but otherwise countries should focus on achieving self sufficiency and development through trade. For counties to make a transition from developing to developed countries we need education, growth in business, employmentopportunities, latest technology and healthy environment which is without any doubt achieved through Trade.
There is a very famous quote: Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.
This quote very beautifully and efficiently differentiates between the objectives served by trade and aid. It is always moreworthwhile to teach someone to do something than to do it for them.
Views presented in the article are those of the author and not of ED.