A Brief History of U.S. Foreign Aid
Where and why the United States gives foreign aid has changed over time.
According to opinion polls, many Americans believe about one quarter of the federal budget goes toward foreign aid. But the truth is foreign aid makes up less than 1 percent of the U.S. budget.
These overestimations may reflect a misunderstanding of foreign aid in general. For example, a 2013 survey found that, even though about half of Americans think the foreign aid budget should be cut back, as many as 82 percent support foreign aid when asked about its specific programs or goals.
So what is foreign aid?
Foreign aid is the money, services, or physical goods that a country sends to another to help it in some way. Foreign aid might support the recipient country’s economic growth, strengthen its social programs, respond to a crisis, or improve its defense capabilities. For example, during a health crisis, a country might send money to fund local hospitals, services in the form of doctors to administer medication, and goods in the form of those medicines themselves. (A country doesn’t need to be poor to receive aid—the United States regularly gives aid to countries with relatively high gross domestic products [GDPs] such as Israel.)
Foreign aid typically falls into four general categories:
- Humanitarian aid consists of materials or other forms of assistance for people in need due to manmade or natural disasters such as war, famine, and extreme weather. This type of aid often aims to address the immediate needs of a population in crisis.
- Development aid includes investments in the long-term economic development of a country or community. This type of aid aims to give people the building blocks to develop their own businesses and continued sources of income into the future.
- Military aid includes arms, training, money, or other forms of assistance for the explicit purpose of defense.
- Political and economic aid supports political stability, economic policy reforms, and democratic institutions. It can provide general budget support in countries where the United States has strategic interests; it can also support activities such as peace talks, human rights organizing, political and criminal justice reforms, and treaty implementation.
The United States is the largest single provider of foreign aid worldwide in total dollars. But most developed countries spend a higher percentage of their GDP on foreign aid than the United States does.
Almost half of U.S. foreign aid is coordinated through an independent government agency, the U.S. Agency for International Development (USAID). Depending on the project, about twenty other departments or agencies, such as the Department of Defense, Peace Corps, and economic development-focused Millennium Challenge Corporation, can be involved as well.
The United States uses foreign aid as a foreign policy tool to further its interests abroad.
One belief that drives foreign aid is that investing in other countries creates a more stable, prosperous, and democratic world. In practice, multiple types of aid can be used to achieve this goal:
- In 2020, the United States committed $4 billion in humanitarian assistance to an international partnership aiming to provide COVID-19 vaccines to ninety-two low- and middle-income countries.
- In 2016, USAID focused on providing economic development aid to Bangladesh by partnering with local banks to give loans to low-income farmers to build their businesses.
- In 2014, following years of accusations of election corruption in Georgia, USAID sent targeted political development aid to local organizations there to train and deploy election monitors.
In 2020, the United States spent an estimated $33 billion on foreign aid—less than 1 percent of the federal budget. Dozens of countries typically receive some form of U.S. foreign aid; a handful of them stand out as the biggest recipients: countries in the Middle East, global counterterrorism partners, and countries with critical global health needs.
Does foreign aid work?
There is no simple answer to that question. Some experts note a lack of accountability for programs and places that receive aid to demonstrate effectiveness in achieving its goals; the accountability issue fuels criticisms that foreign aid is a waste of money. And in some cases, it’s difficult to determine whether foreign aid has achieved its goals: when, for example, the long-term goals include such things as sustainable development or a more peaceful world, measuring outcomes is difficult, especially in the short term.
Sometimes the effects of foreign aid can be more easily identified. As of 2020, the President’s Emergency Plan for AIDS Relief (PEPFAR) has delivered care to more than 17 million people (including 6.7 million children) and provided training for 290,000 health workers in sub-Saharan Africa. (When the program launched in 2004, only fifty thousand people in Africa had access to any antiretroviral treatment.) Projects like PEPFAR that distribute humanitarian and development assistance demonstrably save lives and promote long lasting development.
But other programs are more of a mixed bag. Despite having received more than $100 billion in U.S. aid since 2002, several USAID projects in Afghanistan remain unfinished, with corruption a pressing issue. When misused, foreign aid can perpetuate graft, reward mismanagement, and prop up authoritarians. The bottom line is that foreign aid can help but it can also be wasteful or even harmful.
What is true is that U.S. foreign aid has a far reach: economic and development aid that helped rebuild Europe after World War II, humanitarian aid in Africa, and more recently military and development aid to Afghanistan. Only a few places in the world haven’t felt the influence of U.S. aid in some way. The graphs below chart the ebb and flow of U.S. foreign aid into different countries and regions at different times. By looking at the aid flows in the context of what was happening in the world at the time, we can explore how the relationship between foreign aid and foreign policy priorities has evolved.