2 reasons Foreign aid is not effective in Nepal right now


1) Foreign aid is not a very effective means of dealing with the failure of nations around the world today because countries need inclusive economic and political institutions to break out of the cycle of poverty. Foreign aid can typically do little in this respect, and certainly not with the way it is now organized. Recognizing the roots of world inequality and poverty is important precisely so that we do not pin our hopes on false promises. As those roots lie in institutions, foreign aid, within the framework of given institutions in recipient nations will do little to spur sustained growth. In other words giving it to the institutions that are at fault, will not help.

2) Since development of inclusive economic and political institutions is key, using the existing flows of foreign aid at least in part to help such development would be useful. Putting conditions on aid (which is what donors overwhelmingly do in Nepal) is not the answer, as it requires existing rulers to make concessions which they usually don’t agree or just bypass. Instead, we should perhaps structure foreign aid so that its use and administration brings groups and leaders otherwise excluded from power into decision-making process.

How about using Foreign aid to:

  1. help build necessary skills in passionate previously apathetic youths to run independent “issue based” campaigns?
  2. help train youth leaders outside traditional political “syndicate” system to become stronger in influencing political decision-making by exposing them to 21st century relevant leadership and teaching them tools to repeat successful case stories from around the world?
  3. focus on prosperity generating engines like helping build business incubators which provides immediate resources and mentorship to fresh entrepreneurs with a passionate team?
  4. connect grassroots entrepreneurs and citizen activists together thereby empowering a broad segment of population than the current established exclusive elite ‘fortunate’ ones?
  5. reward any political platforms and institutions that show inclusiveness and meritocracy in action?
  6. help build leadership clubs and ‘youth parliaments’ in schools in rural Nepal where transparency and accountability are taught to young students.
  7. build leadership building academy and curriculum separate yet integrated with top educational institutions and training centers of Nepal with an inter-disciplinary studies of politics, bureaucracy and entrepreneurship.
  8. Invest in education that helps a young student want to become entrepreneurial. Open a ‘entrepreneurship’ club in every high school just like a library.

Do add your own points below…..

This summary of this article is made possible through heavily borrowing and edits based on quotes from the book “Why Nations Fail” by Daron Acemoglu and James A. Robinson. The authors hold copyright to a lot of content in this article, therefore I cannot claim any right to this article. If  you consider this stealing, I apologize in advance. I only do this because their words seem to do justice than mine. If you are copying content from here, please attribute the article to the names mentioned above properly.

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