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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
Although the United States consistently ranks first or second in absolute amounts of foreign aid, it falls last among industrial countries when aid is measured as a percentage of GNP. The DAC has set an annual target for foreign aid of 0.7 percent of GNP. But this target has no bearing on the quality of aid projects, their effectiveness, or their impact on economic development. The idea of a fixed percentage dates to 1958, when the Central Committee of the World Council of Churches called for countries to devote 1 percent of their national incomes to international development. Over time the target was modified, but there was little discussion of why a fixed 0.7 percent contribution is preferable to a strategic approach designed to provide aid for the right projects in the right countries at the right time. Denmark, Luxembourg, the Netherlands, Norway, and Sweden are the only countries ever to have achieved this target.
In an official DAC report one concerned nongovernmental organization (NGO) argues that
the further countries are from meeting the 0.7 percent of GNP target, the less committed they
are to development. Declaring a "crisis in development policy and financing" and highlighting
the 0.09 percent contribution by the United States, the critique adds, "Amidst the longest
boom in a generation, it stands as an indictment of the governments of the developed countries,
and a source of shame for their citizens." But the same report offers a more realistic view: "Despite some calls for a doubling of aid volume and for bilateral donors to meet the United Nations 0.7 percent ODA/GNP target . . . the political reality of aid suggests that, at the aggregate level, expectations of these magnitudes will not be met. Even if they were, it would not solve the problem, nor could many developing countries deal effectively with any such surge."
Moreover, the U.S. government budget for international affairs contains many items not included
in ODA (table 6.2). In 2000 the international affairs budget totaled $22.6 billion-so at $9.9
billion, ODA accounted for less than half. ODA consists primarily of allocations to USAID, the
Peace Corps, most multilateral institutions, and certain programs sponsored by the State
Department and Department of Defense. The other $12.7 billion spent on international affairs
represents all other contributions, including those to part 2 countries, the International Monetary
Fund (IMF), Export-Import Bank, Overseas Private Investment Corporation, State Department
operations and other items, and Department of Defense international security assistance. Part 2
countries, as defined by the DAC, are excluded from ODA data because they have graduated
from developing country (or part 1) status. These countries include all of Central and Eastern
Europe, Belarus, Israel, Russia, Ukraine, and a variety of island states such as Cyprus. In 2000 the
United States provided $2.5 billion in aid to part 2 countries, accounting for 37 percent of their official aid from DAC donors.
Nearly $23 billion in all: U.S. government international assistance
TABLE 6.2
Total U.S. government international assistance by agency, classification, and selected programs, 2000
| Official development assistance—$9.9 billion | Other government assistance—$12.7 billion |
| USAID |
|
Operations | Israel |
| Development assistance | Newly independent states |
| Child survival, humanitarian | Eastern Europe and Baltic States
| | Disaster relief, food aid | |
|
State Department |
|
Refugees, narcotics | Operations |
| Asia Foundation | Broadcasting (Voice of America, Radio Marti) |
| International organizations | Peacekeeping |
| | Educational and cultural exchanges |
| | International organizations |
| | National Endowment for Democracy |
|
Department of Defense |
|
Humanitarian | Military education and training |
| Peacekeeping development | Foreign military loans |
| | Antiterrorism, nonproliferation |
|
Other agencies |
| Peace Corps | Export-Import Bank |
| U.S. Trade and Development Agency | Overseas Private Investment Corporation |
| Multilateral institutions | Inter-American Foundation |
| Security assistance (Egypt and others) | |
Source: U.S. Office of Management and Budget.
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