What is the relationship between aid and dependence?

Simply, aid can be thought of as the provision, assistance, support or relief to a cause (usually in the form of money) for nothing in return. Whether or not receiving aid leads to a country becoming reliant on it mostly depends on the type of aid, the time period over which it is received and the circumstances of the country.

Arguments for aid leading to dependence:

Zambian economic Dambisa Moyo argues that aid leads to countries becoming dependent on it because it is often received for long period of time in a non-targeted way, it leads to fewer incentives for foreign direct investment (FDI) and it leads to corruption. Moyo argues that in countries like Guinnea-Bissau, which has received net total aid many times larger than its own government expenditure for many years (decades), the aid is spent on things such as education and healthcare but the lack of targeting and government expenditure means there not jobs available for when people come out of education to boost the economy. Furthermore, she argues that some countries, such as Liberia, become so used to receiving aid that the government is less inclined to provide incentives to attract FDI to grow the economy creating a vicious circle of reliance. And lastly, Moyo suggests that bilateral aid (between governments) is often seen as 'free money' which leads to corruption as the money is not spent where it is intended.

Arguments against aid leading to dependence:

Humanitarian aid is the starkest example of aid not leading to dependence as it is generally short-term and highly targeted and as such is less likely to lead to issues such as corruption or a lack of FDI incentives. Furthermore, Bill Gates, the founder of Microsoft and philanthropist, argues that multilateral aid in combination with FDI from transnational corporations can lead to economic growth and the phasing out of aid over time, as seen in Botswana.