• structural transformation
• donor country
• aid weariness
• recipient country
• aid disillusionment
• Marshall Plan
• multilateral assistance
• Two-Gap Model
• absorptive capacity
Economists have defined foreign aid as any flow of capital to the less-developed countries (LDCs) that meets two criteria: (1) its objective should be noncommercial from the point of view of the donor, and (2) it should be characterized by concessional terms; that is, the interest rate and repayment period for borrowed capital should be softer (less stringent) than commercial terms.
• eloped countries (LDCs) • debt repayment
• official grants
• second-best option
• concessional loans
• conscience money
• in kind
Even at the strictly economic level, definite benefits accrue to donor countries as a result of their aid programs. The increasing tendency toward providing loans instead of outright grants (interestbearing loans now constitute over 80% of all aid, compared to less than 40% in earlier periods) and toward tying aid to the exports of donor countries has saddled many LDCs with substantial debt repayment burdens.