|Myth:||The United States spends way too much on foreign aid.|
|Realty:||The United States spends only a minuscule amount on foreign aid.|
|Foreign Aid is a category of development aid whose main objective is the economic development and welfare of developing countries. It is formally known as Official Development Assistance (ODA).
How Large Do People Think the ODA Budget Is
In a recent poll (Table 1), people were asked to name the two largest areas of federal government spending. In the poll people said the “Foreign Aid” budget was larger than either “Medicare” or “Social Security.”
Table 1. The Quantity of ODA.
Another poll (Graph 1), done by the Chicago Council on Foreign Relations and German Marshall Fund of the United States, asked the question what percentage of the federal budget goes to foreign aid. Only two percent responded with the correct answer (less than one percent of the federal budget goes to foreign aid). The median answer was 25 percent.
Graph 1. The Amount of Dollars that People Think is Spent on the ODA Budget.
Determining the Size of the Foreign Aid Budget
In examining the U.S. federal budget (Table 2) for 2007, budget item 150 International Affairs (IA), makes up about 1.2 percent or $33.27 billion.
Graph 2. The United States Federal Budget.
The IA budget not only includes aid for various purposes — develop/humanitarian/emergency food, military, economic, multilateral and international organizations — but also money for operation and administration of embassies and consulates and various State Department programs such as the drug “war.”
Graph 3. The Budget of the U.S. Department of State.
This reduces the de facto foreign aid component of the federal budget to 0.44 percent or $12.72 billion (Graph 4).
Graph 4. The relative size of the development/humanitarian/emergency food aid portion and the other parts of the U.S. federal budget.[3 and 10]
U.S. Sources verses non-U.S. Sources
The portion of the foreign aid that is spent on non-U.S. sources needs to be determined. The need arises out of inefficiencies of the U.S. system.
Graph 5. The proportion of non-U.S. source develop/humanitarian/emergency food aid and other parts of the International Affair s budget.[3, 9, and 10]
This reduces the amount of foreign aid that doesn’t come back to the U.S. to be 0.080 percent of the federal budget or $2.28 billion (Graph 6).
Graph 6. The proportion of non-U.S. source develop/humanitarian/emergency food aid and other parts of the U.S. federal budget.[3, 9, and 10]
Comparisons with Other Countries
Not wanting to judge the U.S. foreign aid contributions in isolation: How does the U.S. compare to other countries?
Graph 7. Comparison of the United States ODA budget to other modern industrialized countries as ODA percent of GNI.
Comparing countries by the raw amount of aid given, the U.S. gives the largest amount of aid at $21.75 billion (Graph 8). This is much greater than any other country. The next best country is Germany that gives $12.27 billion. However Germany is a much smaller country with a GNI of $3,349 billion compared with the U.S.’ GNI of $13,843 billion. This is over four time the size of Germany’s GNI.
Graph 8. Comparison of the United States ODA budget to other modern industrialized countries as raw dollar amount.
Thus it is fairer to compare the amount of aid given by the U.S. to the European Union (EU) member nations of the Development Assistance Committee (DAC) as a whole to account for the size difference between the U.S. and the other countries.
Table 2. Comparison of the United States ODA budget to DAC EU group countries as ODA percent of GNI and as raw dollar amount. Data for calculation are from sources.[11 and 12]
Even with normalizing for either the higher GNI or the larger population of the DAC EU group, the U.S. still isn’t able to catch up with the DAC EU group. As Table 3A shows when normalized to GNI, DAC EU still out spends the U.S by almost 2.5 times ($62.10 verses $21.71 billions for the ODA) and their ODA percent is more than double the U.S.’s (0.40 verses 0.18 percent).
Table 3. Comparison of the United States ODA budget to DAC EU group countries as ODA percent of GNI Table A and as raw dollar amount Table B. Both Tables A and B are normalized to GNI and to population. Data for calculation are from sources.[11 and 12]
The United States spends only 0.080 percent of the federal budget or $2.28 billion on the altruism of foreign aid. Compared to other modern industrialized countries, the sacrifice the United States makes in disbursement of foreign aid is small.
Graph 9. What people believe the ODA budget should be.
By most measures, the United States does not spend too much on the altruism of foreign aid.
|1||Social marketing is where donors underwrite subsidizes to allow aid products sold to be sold at low prices through local shops.
|2||Curtis, etc. found the distribution-costs composed of wages, allowances, administration, and transport by four-wheel-drive vehicle were about $1 per net…Added to the current UNICEF bulk purchase price for nets of $1á40 each gives a base-cost of about $2.40 each.
|3||The United States Agency for International Development (or USAID) is the section of the United States federal government responsible for most ODA. An independent federal agency, it is under the control of the U.S. Department of State. With the disbursement of aid, USAID advances U.S. foreign policy objectives by giving humanitarian assistance, guidance on health and agriculture issues, democracy development, conflict prevention, and supporting economic growth and trade.
How the Aid Industry Works: An Introduction to International Development
International development is big business. Official global aid flows from North to South are over $100 billion annually. China and India, former aid recipients, have entered the field as aid providers. The resources of private donors like the Gates Foundation have redefined international charity, for example, outstripping the annual budget of long-time donors like the UK, Canada or the World Health Organization.
The book provides a basic description of what aid practices are and how they evolved. The arguments of both proponents and opponents of aid are presented and analyzed, along with real-life examples of projects and programs in context. The book serves as an overview for development practitioners who want a handy reference covering the universe they inhabit.
Foreign Aid: Diplomacy, Development, Domestic Politics
A twentieth-century innovation, foreign aid has become a familiar and even expected element in international relations. But scholars and government officials continue to debate why countries provide it: some claim that it is primarily a tool of diplomacy, some argue that it is largely intended to support development in poor countries, and still others point out its myriad newer uses. Carol Lancaster effectively puts this dispute to rest here by providing the most comprehensive answer yet to the question of why governments give foreign aid. She argues that because of domestic politics in aid-giving countries, it has always been—and will continue to be—used to achieve a mixture of different goals.
|1||The Washington Post and the Henry J. Kaiser Family Foundation; Quantity of Foreign Aid; The Washington Post, Henry J. Kaiser Family Foundation and Harvard University; February 3-6, 2005; Accessed April 14, 2008.
|2||Chicago Council on Foreign Relations and German Marshall Fund of the United States;Worldviews: American Public Opinion & Foreign Policy; Chicago Council on Foreign Relations and German Marshall Fund of the United States; Conducted June 2002, released October 2002.
Note: The Chicago Council on Foreign Relations was renamed The Chicago Council on Global Affairs on September 1, 2006.
|3||U.S. Office of Management and Budget; Historical Tables, Budget of the United States Government, Fiscal Year 2007: Table 3.2—Outlays by Function and Subfunction: 1962–2011; U.S. Office of Management and Budget; Pages 55-72; 2007.
|4||Farrow, Mia; Photo Essay, November 2006: Crisis in Sudan and Eastern Chad; Mia Farrow’s Writings, Photos and Information on the Growing Crisis in Darfur (Sudan), Chad and Central African Republic (CAR); November 2006; Accessed April 14, 2008.
|5||Kyama, Reuben and Mcneil Jr., Donald G.; Distribution of nets splits malaria fighters; International Herald Tribune; Webpage; October 9, 2007; Accessed April 14. 2008.
|6||Letson, Perry; Why U.S. agriculture should support foreign aid; Rural Cooperative Magazine; Webpage; March/April 2000; Accessed April 14, 2008.
|7||ActionAid; Demand Changes in US Food Aid Policies; ActionAid; Webpage; Accessed April 17, 2008.
|8||Kay, Alan F.; Economic Aid, Military Aid, or Neither ~ #5; The Polling Critic; Webpage; July 17, 2002; Accessed April 17, 2008.
|9||Tarnoff, Curt and Nowels, Larry; Foreign Aid: An Introductory Overview of U.S. Programs and Policy; CRS Report for Congress; 98-916, Page CRS-21; Updated January 19, 2005.
|10||U.S. Department of State; Summary and Highlights, International Affairs Function 150, Fiscal Year 2008 Budget Request; U.S. Department of State; Pages 1-3; February 5, 2007.
|11||Organization for Economic Co-operation and Development
|12||Central Intelligence Agency; The World Factbook; Central Intelligence Agency; 2008.
|13||Curtis, Christopher | Maxwell, Caroline | Lemnge, Martha | Kilama, WL | Steketee, Richard W | Hawley, William A | Bergevin, Yves | Campbell, Carlos C | Sachs, Jeffrey | Teklehaimanot, Awash | Ochola, Sam | Guyatt, Helen | and Snow, Robert W; Scaling-up coverage with insecticide-treated nets against malaria in Africa: who should pay?; THE LANCET Infectious Diseases; Volume 3, Issue 5, Pages 304-307; May 2003.
Filed under: Federal, Uncategorized Tagged: | 2007, budget, DAC, Development Assistance Committee, foreign aid, ODA, OECD, Official Development Assistance, Organization for Economic Co-operation and Development, United States, USAID