ABSTRACT
The theoretical rationale for aid developed in the 1950s and 1960s was appealing, but it has proved to be unrealistic. Private charities and aid organisations have hugely expanded their roles in both development and relief activities, and governments are channelling more resources through the non-governmental organisations. The role of aid was primarily of gap-filling: to prime the capital accumulation process and to help pay for necessary imported inputs. The amounts of investible funds within aid programmes have varied enormously from recipient country to recipient country. The ‘displacement theorists’ conclude that in the neediest countries aid has been diverted to other than productive uses and has removed the incentive for recipient governments to improve fiscal and monetary discipline and raise public and private savings performance. One of the principal justifications for aid was as a temporary expedient for developing countries to fill an external payments gap and sustain imports.
