Type of aid
Aid can be broadly defined as all activates by government or citizens of one country which are primarily intended to help citizens of another; it stresses the welfare intention of aid and its humanitarian aspects. The Development Assistance Committee (DAC) uses the term aid to refer to “financial and technical resources made available to developing countries” which excludes changes in trade and other policies which might help poor countries. Transfers of resources explicitly for military purposes are also excluded.
Aid can take the form of concessional loans, grants, gifts in kind or technical assistance. It emphasizes the fact that aid is probably of as great assistance to developed countries as it is to the developing nations. Donor countries receive economic benefits in terms of increased trade openings, payments for services such as insure, shipping and licenses, and money repatriated by foreigner experts.
The tying of aid that leads to these advantages to donor direct negotiation of aid between a donor and a recipient country. Many developed countries prefer this type of aid, not only for the reasons already discussed, but because they feel that they can exercise greater control over the programmers or projects supported, and that it creates a closer relationship between donor and recipient.