Official Development Assistance and Underdevelopment Research Paper

Official Development Assistance and Underdevelopment - Research Paper Example First, we begin by laying down the chosen theoretical framework. Frank’s main thesis is that contemporary underdevelopment is in large part the historical product of pas and continuing economic and other relations between the satellite underdeveloped and the now developed metropolitan countries. These relations are an essential part of the structure and development of the capitalist system. Underdevelopment was and still is generated by the development of capitalism. Frank talked a great deal about the metropolis-satellite relationship. He noted that this relationship is not limited to the imperial or international level, but also penetrates and structures the economic, political, and social life of (LA) colonies and countries. Thus, a whole chain of constellations of metropoles and satellites is created. Each of these satellites serves as an instrument to suck capital or economic surplus out of its own satellites, and channel a portion of the said surplus to the world metropo les (i.e. Europe and US). This notion was further developed by Wallerstein who proposed the idea of â€Å"unequal exchange† between the strong states and the weak ones and a view of capitalism that â€Å"involves not only appropriation of the surplus value by an owner from a labourer, but an appropriation of surplus of the whole world-economy by core areas.† by core areas.† (p. 401). ... Public financing transactions are moving away from multilaterals, which had been found quite inept in resolving the world’s problems. The option which provides government less than market price loans (in terms of interest rates) is through bilateral arrangements. Commonly facilitated through state-to-state negotiations, bilateral lending’s advantage lies with the fact that it is easier to trace, clarify, and assert the advantages and interests of both donor and beneficiary states – making easier to resolve potential opposition. China has been the trumpeting its achievements in trading with Africa. In a document entitled, â€Å"China-Africa Economic Trade Cooperation† it was stated: China-Africa bilateral trade volume was only US$12.14 million in 1950, it rose to US$100 million in 1960, and exceeded US$1 billion in 1980. After reaching the US$10 billion mark in 2000, China-Africa trade has maintained a momentum of rapid growth ever since. In 2008, China-Afr ica bilateral trade volume exceeded US$100 billion, of which US$50.8 billion is  China's exports to Africa and US$56 billion is imports from Africa. In the past, loans were used to help developing countries, particularly those in a post-conflict setting. Killick (1998: 4) states that: There has also been a powerful move to link aid with the promotion of â€Å"good governance† (accountability, transparency, the rule of law, the prevention of corruption, etc.) the observance of human rights and the promotion of multi-party democracy. There has been a growing use of conditionality in these areas, particularly by bilateral donors but also by the World Bank. But when it became clear that it was possible to expand the business interest of the donor country