Why Foreign Funds are Important for Developing Nations

The world is classified into rich and poor, east and west, developed and underdeveloped nations. This classification is based upon the political, social and economic conditions of the countries. Countries which produce a lot in different efficient ways and are owners of fast and innovative technology are the rich, powerful and dominating nations. On the other hand, countries which are unable to produce properly and are facing serious hurdles related to economic growth are classified as the poor or developing nations of the world. In many ways, developing nations rely on developed nations and the most important one is foreign funding. Foreign funds are important because:

  • Developing nations mostly face fiscal deficits and are unable to service the daily needs of their nations. The revenues generated by poor governments are too low.
  • Poor nations are unable to raise their foreign reserves as their currencies experience a continuous decline in the value which makes them weaker.
  • Problems like poverty, illiteracy, poor health, etc, are the core issues. To tackle them, foreign funds are important.
  • Without foreign funds, emergency situations like floods, hurricanes, earthquakes, etc, which mostly occurs in poor countries, are hard to be faced. Developing nations need funds in order to eliminate the worst outcomes.

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