UNTIE TIED AID

I was part of an international conference in Milan where [b]Tied Aid[/b] was one of the issues on the table.
Tied aid is foreign aid that must be spent in the country providing the aid (the donor country) or in a group of selected countries. A developed country will provide a bilateral loan or grant to a developing country, but mandate that the money be spent on goods or services produced in the selected country. ( Source -Wikipedia)

According to the UN report with the exception of four countries namely Norway, Denmark, the Netherlands and the United Kingdom most of the major donors offer tied aid as developmental assistance with binding conditions which seriously limit the recipient country’s market access thereby jeopardizing their economic independence.

Instead of offering Tied Aid and exploiting the less advantged nations , the donors should make an effort as much as possible to provide Untied Aid. I know its not possible for all the donor nations yet countries like UK have made it look quite possible. ( Tied aid is now illegal in the UK by virtue of the International Development Act, which came into force on 17 June 2002, replacing the Overseas Development and Co-operation Act (1980). wikipedia)

However, untying aid should go hand in hand with the promotion of local enterprises on the basis of targeted procurement instead of reinforcing dependency on the donor nations. I think UN agencies ; international and local NGOs can provide assitance in this regard.

Check out this article on the issue of tied aid.
"Stingy Samaritans-
Why Recent Increases in Development Aid Fail to Help the Poor"
By Pekka Hirvonen
http://www.globalpolicy.org/socecon/develop/oda/2005/08stingysamaritans.htm

In recent years, aid amounts have been on a constant rise. In 2004, official development assistance to poor countries reached its highest level ever. The United States alone provided almost $19 billion in aid – more than ever before.(3)
But the recent increases do not tell the whole truth about rich countries’ generosity, or the lack of it. Measured as a proportion of gross national income (GNI), aid lags far behind the 0.7 percent target the United Nations set 35 years ago. Moreover, development assistance is often of dubious quality. In many cases, aid is primarily designed to serve the strategic and economic interests of the donor countries or to benefit powerful domestic interest groups. Aid systems based on the interests of donors instead of the needs of recipients’ make development assistance inefficient. Too little aid reaches countries that most desperately need it, and, all too often, aid is wasted on overpriced goods and services from donor countries.
This paper presents an overview on the volumes, targeting and geographical allocation of development assistance over the past five years. It analyzes various features in rich countries’ development assistance policies that make aid both insufficient and inefficient – despite the recent increases in nominal aid amounts that make rich nations seem generous.