NCPA - National Center for Policy Analysis

Despite Decades of Waste And Failure, Leaders Want Increases in Foreign Aid

March 18, 2002

The U.S. and its allies have poured roughly $1 trillion into foreign aid since World War II. But aid specialists report that most people in Latin America, the Middle East and Central Asia are poorer than at the Cold War's close.

Undaunted, President Bush and the leaders of 57 other nations will gather in Monterrey, Mexico, this week to discuss strategies to improve aid performance.

  • Leaders and experts attending the meeting are deeply divided about what went wrong and what to do now.
  • Britain and the World Bank want rich countries to double their contributions -- while United Nations Secretary General Kofi Annan has persuaded industrialized countries to cut poverty in half by 2015, a goal he says will cost $50 billion a year or more, including tens of billions from the U.S.
  • The Bush administration proposes devoting far smaller amounts to combat poverty and AIDS, then more foreign aid in 2004 -- but only if recipients meet many conditions which demonstrate the effectiveness of the spending.
  • American aid spending has remained at about $10 billion a year since the close of the cold war.

Numerous studies have found no real correlation between aid levels and the economic performance. China and India, among the most successful, have received little assistance relative to their economic output. African nations have gotten the most aid -- but most have performed dismally.

Monterey participants have already agreed poor countries must create and maintain strong legal systems, open markets, full rights for women and workers, low inflation and effective banking regulations - policies that rich nations see as crucial for poorer ones to attract investment and stoke economic growth.

Source: Joseph Kahn and Tim Weiner, "World Leaders Rethinking Strategy on Aid to Poor," New York Times, March 18, 2002.


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