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This is an archived USAID document retained on this web site as a matter of public record.
Objectives, Outcomes and amounts of foreign aid
>> Foreign Aid in the National Interest >> Chapter 6 >> Objectives, Outcomes and amounts of foreign aid Jump to Chapter 6 Sections:
>> Objectives, Outcomes and amounts of foreign aid >> Sources and amounts of private investment and lending >> Sources and amounts of private aid >> Taking the full measure of U.S. International assistance >> Notes >> Background paper >> References
Foreign aid has also been used for security assistance in countries where the United States has had strategic interests in combating communism, promoting peacekeeping, maintaining military bases, and controlling nuclear weapons and narcotics. During initial peace talks and in sudden crises-such as the Gulf War and the U.S. war on terrorism-this assistance has contributed to stronger alliances and agreements.
But since the terrorist attacks of September 11, 2001, intense scrutiny has focused on the effectiveness of foreign aid in influencing developing country policies and protecting Americans from terrorism. In some instances terrorism has been nurtured by countries that are among the top recipients of US assistance.
The emerging consensus in the development community is that aid reduces poverty only when economic policies support sustained economic growth and when the benefits of growth are widely shared.4 But economists and scholars have also concluded that countries implement economic reforms when they choose to-not because of aid offered or withheld. Recent efforts to provide debt relief and to tie aid to country policies have also not achieved their intended results. These approaches do not create incentives for growth. Instead, many governments have strangled growth by allowing high inflation, black markets, negative interest rates, corruption, excess regulation, and failed public services.Amounts
U.S. foreign aid goes far beyond official development assistance (ODA)-the "donor performance" measure developed by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD). The OECD is made up of industrial countries that provide the bulk of development aid to developing countries, and every year the DAC publishes a report comparing the generosity of donors based on their ODA as a percentage of their GNP.
At $9.9 billion, ODA accounts for just 18 percent of total U.S. assistance-public and private-to developing countries (table 6.1). Private international assistance, by contrast, is $33.6 billion-60 percent of the U.S. contribution, and projected to grow to 65 percent by 2010. Every year the publication of the DAC report results in press reports and statements by academics and opinion leaders disparaging America’s "stinginess," asserting that U.S. foreign policy will be ineffective without more ODA, and claiming that U.S. foreign aid programs collapsed after the Cold War. But ODA is a limited and outdated way of measuring a country’s giving. Given the enormous growth in the private sector around the world, donors should reevaluate the measure.
More assistance than meets the eye
TABLE 6.1
Estimated U.S. international assistance to developing countries, 2000
US$ billions Share of total (%) U.S. official development assistance 9.9 18 All other U.S. government assistance 12.7 22 U.S. private assistance 33.6 60 Foundations 1.5 Corporations 2.8 Private and voluntary organizationsa 6.6 Universities and colleges 1.3 Religious congregations 3.4 Individual remittances 18.0 Total U.S. international assistance 56.2 100 a. Including volunteer time.
Source: OECD 2002; OMB 2002; USAID 2002; various private sources.
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Last Updated on: October 07, 2009 |
