American Aid Policy

Category: Poverty
Last Updated: 07 Dec 2022
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The United States is the leading developed nation in foreign aid that considers both the interest of its own citizens and industries and those of beneficiary countries. Billions of people all over the world have benefited and appreciated the role of United States in both foreign and food aid. This research paper looks deeply into the overall effectiveness of US foreign aid policy, the need to effect any changes in policy framework or continue to handle affairs in their current form and finally examine the need to increase or decrease the amount in foreign aid.

Aid and Millennium Development Goals The achievement of the Millennium Development Goals in third world countries and specifically the African continent cannot be realized when foreign aid to these nations is not fully availed. Human development has been ignored by international donor community notably the World Bank and the International Monetary Fund, instead putting more focus on biased economic parameters. Poverty levels in these nations thus cannot be eradicated. Africa alone needs a total of 72 billion dollars in foreign aid per year to achieve its Millennium Development Goals by 2015.

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This is meager fraction in comparison to the $ 362 billion in subsidiaries developed countries paid to its home based agricultural sectors in 2006. Commitment by developed countries to increase amounts in foreign aid to 0. 7% of their national income has not been realized (Marr, Gunatilaka & Killick, 1998). United States has faired poorly in its rating with only 0. 16% and appears at the bottom of the list. Eradicating poverty and improving human life demand increase in foreign aid to developing nations and failure to honor these commitments means that the present status in terms of poverty levels will remain for a long time.

Effectiveness of Foreign Aid The close relationship that exists between foreign aid effectiveness and conditions attached to it has always been a thorny issue. Important development agendas such as the balancing of existing relationship between recipient and donor, considering first support to priorities sectors by the government, deter cases of aid programmes duplications and providing means for undertaking transparency assessment on aid performance are factors that must be put into consideration to ensure aid effectiveness.

Furthermore, donor support harmonization in aid programmes that undertake development projects in more than one country demands mutual accountability. Direct budget subsidy contributed by donor countries which still stands at 5% of aid given to developing nations should be viewed by the recipient countries as domestic; hence, implemented vividly on development agendas rather than being accountable to the donors.

Though this may be the best way of implementing aid as it create an opportunity for strong economic principles and political willingness to avoid bureaucracy, donors do not yet willing to adopt this model because of their institutionalized channel of aid flow which do onto conform with the developing countries political structures. In essence, increased direct budget support by donors and good government structure of the recipient countries will increase aid effectiveness (Guillaumont & Chauvet, 2001)

Need For Change in Aid Policy Critics have always advocated for foreign aid policy reforms. While United States foreign programme has noted high levels of success, it cannot be without a list of problems. The original aim of American aid policy was to generate and improve its economic sub-sectors such as the shipping industry, dump surpluses and promote trade. A clear example is the food aid policy in which food aid is no longer about providing a meal for the hungry but takes care of a multitude of objectives.

A half of every dollar spent on food aid goes into the related costs such as processing and shipping. This reveals that policy changes must be put in place to make food aid perform to its fullest. This is because the current food aid policy strives to accomplish very many objectives, most of which are obsolete. It takes a very long time to transport food from a farmer to its final destination and at times this period takes up to five months. Such delay in delivery leads to added costs such as insurance and crew wages.

Furthermore delay is the delivery in food aid cost lives in disaster situations. Money should be used to purchase food closer to their destination and reduce costs of transportation. A drastic shift must be made towards of food aid procuring, with purchase in the beneficiary nation and in the United States. Purchasing goods in countries closer to the beneficiary nations would strengthen agricultural market in these nations (Hansen & Tarp, 2000). The main objective here is local procurement of goods, not aid with conditions.

America must move away from tied aid to make its foreign aid policy effective. The global economic crisis has led to questions about the general effectiveness of foreign aid. Questions as to how aid can be sustained continuously in times of economic recessions must be answered to achieve high performance. At the moment, American legislation demands that 50% of aid commodities must be processed and packed at home before shipment. Furthermore, 75% of food aid is managed by the USAID and 50% is under the management of US department of agriculture (Guillaumont & Chauvet, 2001).

These commodities must be shipped in vessels flying US flags. Such conditions must be constantly reviewed to do away with long procedures of aid handling and delivery. While there are efforts to reform the aid policy, it is expected to take time before full effectiveness is achieved. The 1961 Foreign Assistance Act and the Farm Bill under President George Bush are some efforts to restructure United States foreign aid policy. An examination into different types of foreign aid reveals a complex scenario on how effective its overall objectives are.

The reconstruction of countries reeling from effects of war such as Iraq and Afghanistan are always controversial in nature. Given the overlap in time due to security related issues, it is almost impossible to accurately determine how much and to what level of effectiveness these aid constitute (Dalgaard & Hansen, 2007). Another area that requires total change is the technical cooperation. This is poorly defined due to its ambiguity and thus hard to measure. They are always under criticism due to the huge amounts involved but often not properly accounted for.

Technical cooperation always means transfer of skills and knowledge from the donor country to the beneficiary country but always become controversial when they involve military aid assistance such as generous packages to Israel and Egypt. The so-called aid for national interest always attracts huge aid packages than moral areas such as poverty and disease alleviation. Pakistan is a major recipient of United States aid due to its influence and geographical location with Afghanistan and receives this foreign aid to maintain stability and peace in the region. America must do away with some aid conditionality.

The imbalance in aid contracts creates conditions which translate into donor demands for change in social, political and economic affairs (Burns, 1984). One of the most absurd conditions from the western donors is the system of state control over all sectors of the economy. The demand for democratic states and good governance, free and fair elections, constitute to some of these conditions. Considering achievement of these conditions a yardstick to receiving foreign aid undermines its role and objects and thus makes it a political tool to control affairs of other countries.

Reforms must be made on how aid is channeled to the beneficiary countries. Multilateral aid is always channeled through World Bank and other regional development banks while bilateral aid is paid direct to the beneficiary countries (Miyashita, 2003). Multilateral aid has so far recorded greater success than bilateral aid since it is not selective and undertakes its programmes on neutral basis. These aids are in the form of grants that ensure maximum utilization for the set objectives. Reforming policies in these sectors to ensure maximum transparency and reduce levels of political interference would definitely improve its performance.

Conclusion Bilateral aid must not be used to hood-wink political leaders. It is obvious that some developing countries whose economic performances are poor depend mainly on foreign aid to support their programmes. Application of selective strategies and tough conditions driven by greed to control the smaller nations will eventually render the foreign aid ineffective. The way to go in improving the performance is forging a close alliance with the beneficiaries and improving levels of transparency (Toye, Harrigan & Mosley, 1995).

The handling of foreign food must take into consideration the overall improvement of agriculture and provision of close markets for agricultural markets to regions close to the beneficiary country. Foreign aid must therefore seek to improve the level of human development. References: Burns, W. J. , (1984), Economic Aid and American Policy towards Egypt. Sunny Press Dalgaard, C. J. & Hansen, H. , (2007), On Aid, Growth and Good Policies, The Journal of Development Studies, Taylor and Francis Journals, vol. 37(6), 17-41. Guillaumont, P. & Chauvet, L.

, (2001), Aid and Performance: A Reassessment, The Journal of Development Studies, Taylor and Francis Journals, vol. 37(6), pages 66-92 Hansen, H. & Tarp, F. , (2000), Aid effectiveness disputed, Journal of International Development, John Wiley & Sons, Ltd. , vol. 12(3), pages 375-398. Marr, A. , Gunatilaka, R. & Killick, T. , (1998), Aid and the Political Economy of policy change, Routledge. Miyashita, A. (2003), Limits to Power: Asymmetric dependence and Japanese foreign aid policy, Lexington Books. Toye, J. F. Y, Harrigan, J. J. & Mosley, P. (1995), Aid and power; The World Bank and Policy–Based Lending, Routledge.

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American Aid Policy. (2016, Jul 10). Retrieved from

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