ABSTRACT
This chapter provides certain economic issues relating to the principal forms of aid for promoting development. It discusses the contribution of direct commodity aid to development. The aid technique argument probably constitutes the strongest case for having at least a portion of total aid provided in program form. The experience of Agency for International Development (AID) under its program loans does not warrant unqualified judgment of either success or failure. Critics of AID program loans point to the unwillingness of the United States to exercise its power to reduce or suspend disbursement on the basis of poor performance and to the consequent lack of "credibility" of the sanctions involved in program lending. Practitioners in the art or diplomacy of foreign aid are dealing with societies that in large measure are poor because they lack the social and political as well as the economic prerequisites for economic growth; they are not manipulating hypothetical growth models.
