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Rich countries are giving away more in aid than at any other time on record. There is actually a lot of different kinds of aid, and these kinds of aid can create debt for the developing nations, or not, depending on the type of aid. You may have seen the food and supplies distributed as a television news crew reports the latest humanitarian disaster.
But emergency relief is only one part of how Australian government and NGOs contribute to effective global aid and development. I think the first thing which needs to be acknowledged is that we were much more optimistic about the role of foreign aid and growth in, say, the s.
Foreign aid is really a trade for policy, with the benefit of appearing more like charity: You might imagine that development aid levels are dropping dramatically, given the world-wide rise in nationalism, populism and xenophobia. But that's not the case. Motives for providing overseas aid have always been varied and mixed.
The story of international development assistance has long been one of pragmatism and cynicism, as much as altruism. Hello, Antony Funnell here, welcome to Future Tense.
Over the next two programs we'll examine some of the major trends in development assistance and what they might mean for the future. One of the biggest changes of note has been the arrival of a substantial new player.
We have held fast to solutions with Chinese characteristics. In recent years China has gone from being a recipient of development aid to a mega donor. But they keep the details of their work secret.
He and a team of around people have just spent five years crunching the data on China's aid activities. That puts China roughly neck and neck with the US government in terms of the scale and scope of its spending.
And so we didn't know this until very recently, until we had hard evidence. One way of looking at it is that China's new emphasis on overseas aid is designed to match its drive to become a dominant global player in trade and infrastructure development. Indeed, last year, China's Foreign Ministry officials were exalted by Beijing to: And if that list seems at odds with the sorts of countries who get foreign aid from the West, well, that's because it is.
This is overseas development with Chinese characteristics. But the underlying motivation for such a program should be familiar, according to AidData's Brad Parks. In some ways Beijing has taken a page out of Washington's playbook.
So one of the best predictors of where US aid goes is to countries that align their foreign policy preferences with those of the US government.
You can capture this in the way that countries vote in the UN General Assembly. And likewise, that's one of the strongest predictors of where Chinese aid goes.
It disproportionately flows to those countries that vote with China in the UN General Assembly, which is essentially a proxy for the extent to which another government is aligning its foreign policy positions with those of China or the US.
The fact that China is sending development aid to Russia will interest many people, surprise many people. What is that money being spent on, what types of projects? The first important caveat to make is that the money that's going to Russia is not aid in the strict sense of the term.
China actually provides a lot of state financing that is more commercially oriented and is provided market terms or close to market terms. And so much of the money in fact that is going to Russia is not aid in the strict sense of the term, they are loans offered on close to market rates, and China is offering those loans in part because it's one of the world's largest net creditors, it's sitting on very large reserves, it wants to earn an attractive financial return on its capital, and so it has an aggressive overseas lending programs.
So China wants those loans to be repaid with interest. And that is a stark contrast to how Western donors and lenders spend their overseas budgets.
And the effectiveness of that ODA spending, what do we know about that? Before this study was released there was a narrative that was gaining currency in the media and even with very senior policy makers in the US and Europe and Australia, and that narrative, I like to call it the rogue donor or rogue lender narrative, and it is suggested that in its zeal to help developing countries efficiently install the hardware of economic development, so think of highways, railroads, dams, bridges, ports and the like, that China had prioritised speed over equality.
And so Beijing's critics often charge that it's really financing these white elephant projects. So, for example, roads that wash away because of substandard construction work, or hospitals that are built without the necessary equipment and personnel.
That made be anecdotally true, there may be poorly constructed roads or insufficiently staffed and stocked hospitals. What we set out to determine is is this systematically true across the broader portfolio of nearly 4, projects that China is financing.
If it's systematically true, then we would expect the economic growth dividends from these large-scale infrastructure projects to be lower than the economic growth dividends that one sees from Western funded infrastructure projects.
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