The Virtual Developing Country is a case study of Zambia. There are a series of field trips available looking at different issues connected with economic development. This page looks at all the economic theories associated with the Foreign Aid Tour.

Introduction to Economic Theory

Each tour covers a variety of economic theory related to the issues raised in the tour. In the Foreign Aid Tour the following theories are considered:

• The Arguments for Foreign Aid
• The Arguments Against Foreign Aid
• Development Assistance Philosophy
• The World Bank
• Types of Aid
• Why Donor Countries Give Aid

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Economists use economic theories and model for essentially two reasons:

1. To enable a better understanding of a particular economic problem.
2. To allow predictions to be made about the effect of changes in variables, policies and strategies.

Many students new to economics find the constant desire to express what on the face of it seems to be a common sense assertion frustrating. Particularly when many of the models used are based on simplifying assumption. Nevertheless reality is often very complex and influenced by numerous interconnected variables. Often assumptions such as ceteris paribus must be made if we are going to be able to isolate certain variables and consider the impact of a change in these.

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