Global Poverty and Foreign Aid in US Foreign Policy

GOV 312L: US Foreign Policy

Module 24: Global Poverty and Foreign Aid in US Foreign Policy

Instructors: Rob Moser, Pat McDonald
Institution: The University of Texas at Austin

Outline

  • Global distribution of wealth and poverty

  • Social costs of poverty

  • Foreign aid and economic growth

  • Politics of US foreign aid

Global Distribution of Levels of Economic Prosperity

  • Economic Prosperity Variation:

    • Relative economic prosperity and power show vast differences across countries globally.

    • Variation in economic development is dependent on several measurements:

    • National GDP: The total value of all goods and services produced by a country.

    • GDP per capita: The economic output per person, dividing the nation's GDP by its population.

    • Average Economic Growth: The rate at which a country's economy grows over time.

Global Distribution of Poverty

  • Extreme Poverty Conditions (2013 Data):

    • Over 10% of the world's population lived on less than $1.90 per day.

  • Moderate Poverty Conditions (2013 Data):

    • Over 28% of the world's population lived on less than $3.10 per day.

  • Historical Context:

    • A significant decline was observed: in 1990, over 35% (approx. 1.85 billion people) lived in extreme poverty.

  • Geographical Concentration:

    • While poverty exists in every country, it is predominantly focused in regions like Africa and Asia.

Social Costs of Poverty

  • Importance of Alleviating Poverty:

    • Poverty drives many severe social issues, including:

    • High infant mortality rates

    • Low life expectancy

    • Increased crime and corruption

    • Poor education systems

    • Gender and ethnic inequalities

Foreign Aid by Country

  • Definition of Foreign Aid:

    • Monetary assistance extended to governments of developing countries or to specific groups within those countries.

  • US Foreign Aid Spending:

    • The US is the largest foreign aid donor in absolute monetary terms.

    • However, it contributes less than 0.20% of its Gross National Income (GNI) in foreign aid, significantly lower than Sweden, which is five times more generous.

Targets of US Foreign Aid

  • Distribution of Aid:

    • Objectives of US foreign aid:

    • Economic aid: 71%

    • Military aid: 29%

    • About 25% of total US foreign aid goes to five primary countries: Afghanistan, Israel, Jordan, Egypt, and Iraq, with military aid predominant for these nations.

    • Economic aid is more widely spread among recipient nations, with Afghanistan still receiving the highest volume. Other significant recipients in Africa include Kenya, Nigeria, Tanzania, and Ethiopia.

Foreign Aid and Economic Development

  • Effectiveness of Foreign Aid:

    • Despite significant financial investment, there is limited evidence linking foreign aid to improved economic development outcomes.

  • Reasons for Limited Impact:

    • Wealthy countries do not provide enough resources to effectively reduce poverty.

    • Aid infrastructure in recipient countries is often compromised by corruption, leading to ineffective use of funds.

    • Donor countries and organizations may not target aid efforts properly, leading to inefficiencies.

Why Foreign Aid?

  • Humanitarian Motives:

    • Aid is rooted in humanitarian concerns, but also serves political interests:

    • It can be used to build political influence by supporting domestic political factions in target states that align with foreign policy goals.

    • Domestic political stability can be enhanced through economic support to governing coalitions.

    • Example: The US has provided economic support to the Egyptian military, maintaining regime stability.

    • Economic Gains:

    • Foreign aid aims to stimulate development efforts in education, infrastructure, and public health.

    • Policy Concessions:

    • Aid can be linked to specific policy changes or concessions.

    • Example: EU aid to Turkey is contingent upon Turkey hosting Syrian refugees to mitigate migration flows to Europe.

    • Cost-Effective Alternative:

    • Foreign aid can be a more economical strategy than military intervention, maintaining government stability without conflict.

    • Example: The US provided military aid to Ukraine as an alternative to direct NATO commitments.

    • Consequences of Withdrawal:

    • Ceasing aid can destabilize local governments as these governments become part of the political and economic status quo.

    • Example: The implications of aid withdrawal were notably visible in post-Cold War Africa.