Tied loans, also known as tied aid, are loans that are given on the condition that the recipient must purchase goods or services from the lender or from a designated group of suppliers. For example, a country may provide a loan to a developing country, but the loan agreement may require that the developing country use the loan to purchase goods or services from companies in the lending country. The idea behind tied loans is that they can promote trade and investment, but critics argue that they can limit the recipient country's ability to choose the best suppliers and can reduce competition, leading to higher prices and lower quality goods and services. Some international organizations, such as the World Bank, have moved away from using tied loans in favor of untied loans, which allow the recipient country to purchase goods and services from any supplier.