Development aid has gained widespread criticism due to its inefficiency in solving problems. Vast amounts of aid are given every year for humanitarian assistance, economic development, and improvement in bilat-eral trade relations. While we cannot deny the hidden political aims of donor nations and organizations, or ignore the misuse of funds and corruption ensued by aid, it is still important to argue for the importance of aid. Aid is still necessary in different shapes and modes for the socio-economic development and infrastruc-ture projects in developing countries. In cases where there is a bad governance, aid should be spent on solv-ing governing issues at its initial stages. Eventually, we can start using aid for development purposes once we have setup the appropriate institutional machinery.
Keywords: foreign aid, governance, development, corruption.
JEL Classification: P35, H11.